Comments on Jacobin’s “The UBI Bait and Switch”

“The UBI Bait and Switch” by Bruenig, Jauhiainen, and Mäkinen: A Critical Response

By Otto Lehto, political economist, King’s College London; former chairman of BIEN Finland (2015-2016).

A recent article in Jacobin Magazine on the Finnish UBI experiment is mostly an accurate and well-researched piece of journalism. I was especially impressed by its fastidious attention to detail in its account of the timeline of events leading up to the experiment. However, as someone well-acquainted with Finnish UBI experiment, allow me to bring another perspective on the matter. Jacobin Magazine has all the right to be as firebrand leftist as it wants to be. No question, the rhetoric of the commentary is in line with its socialist ethos. But I would just like to point out a few things that are inaccurate or misleading.

I, too, have written about the government’s proposal in harsh and unforgiving tones in the past, so I really can’t fault them for that. The experiment, let us not mince words, is badly mangled, expert advice is ignored or distorted, and the government coalition’s commitment to any form of basic income is half-hearted, with the gracious exception of a few MP’s. The narrow focus on reducing unemployment and increasing workforce incentives is unfortunate. It becomes tragic when one realises that this ideological agenda drowns out the human rights perspective.

But this is where it gets tricky to fully agree with the Jacobin article’s apocalyptic spin. It describes the current experiment as a “UBI-as-workhouse nightmare”. Now hold on a minute. A workhouse is a place where you must work in exchange for basic amenities. This is a preposterous description of the UBI proposals and experiments underway today. Even under the most critical lens, the (partial) UBI model under experimentation in Finland, while obviously targeted too narrowly and with too many exclusions, significantly reduces the “workhouse nightmare” nature of the benefit system.

What are we to make of the conundrum? It would be useful to separate the general political ambitions of the Sipilä government and the UBI experiment itself. The Sipilä government has an admittedly “schizophrenic” attitude towards basic income. While, on the one hand, it is committed to seeing through the UBI experiment, it is simultaneously, via other channels, pushing for stringent workfare conditionality. These draconian practices – nonsense baked in the tears of unemployed people – are truly deplorable, even from the point of view of austerity itself, i.e. even if one believes the anti-Keynesian line that one must balance the budget when national output is down. The proposed and enacted cuts are disproportionately hurting poor people, relative to the cuts affecting the mid income and high income sectors. The richest people have even been given delicious tax cuts, while students, pensioners, sick people, disabled people and others have suffered.

All that is worth criticising. Some other enactments of the government, like drastically deregulating the opening hours of stores, or shaking the stiff and moribund government monopoly on alcohol sales, I personally find most welcome developments. But all things considered, the general direction of the austerity program, and the government’s attitude towards poor people, leaves a lot to be desired. But I would argue that one shouldn’t judge the UBI experiment on this basis.

I will concede that the general ethos of the Sipilä government certainly permeates the parameters of the experiment. The limits of the experiment were decided after the 2015 elections. The result is a predictable beast built upon the sorrowful soil of a Protestant work ethic that fetishises work incentives and bemoans the metaphysical sinfulness of laziness. It involves the misguided and conscious exclusion of people who are either too old or too young, or who are not currently recipients of the mainline unemployment benefit. This distorts the experiment from the start.

But here’s something to consider. The only people for whom the current UBI experiment is a significant welfare-reduction are people who fulfill all of the following criteria: 1) they happen to be long-term unemployed, 2) they happen to be taking part in the UBI lottery and 3) they happen to have received a slightly higher level of benefit from the state in the past. The diversity of benefits in Finland translates to a diversity of levels of income security, with some people relatively well-off while others receiving pennies (if anything at all). The universal UBI level of approximately €560 can be a reduction to people who have received approximately €650 in the past. The UBI is topped off with housing benefits and other types of discretionary benefits. But a few will obviously be net losers in any equalizing scheme. This is understandable. But this hardly qualifies as a “workhouse nightmare.” In fact, the reduction in quantity comes with many obvious upsides that may or may not compensate for the marginal reduction in the absolute level of welfare income for some people.

Even with net-losers mixed in with net-gainers (in a yet-to-be-determined proportion), the proposed UBI model is an improvement over the current system in almost every respect: 1) it is given automatically and without hassle (for the duration of the experiment), 2) it provides a long-term safety net (a steady shower rather than a drizzle of sporadic benefits) and 3) it is not withheld from people who take up part-time or full-time work (thus improving work incentives). I will surely not need to enumerate for my audience the other well-known benefits of a non-utopian UBI system.

In fact, since the tax system hasn’t (yet) been reformed to account for the UBI system, those lucky participants in the experiment who find employment, full-time or part-time, will also gain significantly in terms of post-tax income. To this extent the experiment is arguably too generous. The tax system obviously needs to be reformed as well, since money doesn’t just grow on trees.

But there’s another thing. Some of the aims of the utopian left, as evinced by this piece, are just contradictory or confused. One cannot simultaneously call for more legal power to the unions, in the style of the old corporatist model of the Nordic welfare state, and to call for a truly universal basic income guarantee. This, however, is the paradoxical cry of the Jacobin piece, whose logic I simply cannot comprehend. The power of the unions has been traditionally very strong in Finland. This has meant, e.g., the legally protected collective bargaining of wages and benefits. For all the good this has brought to industry-insiders, this has meant very little for people outside the framework. It has created a natural opposition between “inside” and “outside” groups: the “insiders” being the members of the protection racket of the unions and the employer’s associations, who receive good and generous benefits, while the “outsiders” being all the other people that fall outside the “standard” model of employment. The insiders have received semi-automatic and hassle-free benefits for a long time, while outsiders have suffered from the “workhouse nightmare” of the discretionary welfare bureaucracy. The guarantee of a non-union-based unemployment and sick leave benefit scheme in the form of a UBI naturally chips away at the monopolistic power of unions to determine who deserves what, when and under what conditions. This is a good thing.

Out of the four demons conjured by the authors of the Jacobin article in the concluding paragraph – “forcing unemployed workers into bad jobs while undermining organized labor, earnings equality, and the welfare state” – the first one, about forcing people into bad jobs, is simply false (nobody is forced under the UBI system to accept any bad jobs, either de jure or de facto); the second one, about undermining organized labor, is actually a mixed blessing (since it actually helps “outsiders” gain benefits at a cost to “insiders”); the third one, about earnings equality, is something that the authors give no reason to think is threatened by the experiment (and indeed, it seems like a complete throwaway line); and the fourth point, about undermining the welfare state, is a tad question-begging.

The real question is, which structures should be reformed and which not. The existing welfare state has obviously failed in many ways to provide effective welfare for all people, and it is impossible to reform the system (for the better) without breaking a few eggs.

If the accusation is levelled at the other stuff the Sipilä government is doing, or the broken moral compass of the austerity crowd, the accusation sticks much better. But I have tried to show these should be kept separate. The UBI experiment is, indeed, severely compromised as a result of a confluence of factors. It survives, barely, within narrow ideological bounds. But the important thing is that the experiment tests the waters for a paradigm shift – slowly, ineluctably.

Even a compromised UBI marks a steady improvement over the status quo in almost all conceivable dimensions. And those are just the conceivable dimensions.


Reviewed by Kate McFarland

Photo: Finland’s “frozen waves”, CC BY-ND 2.0 Marjaana Pato

Funding basic income through data mining

Funding basic income through data mining

Written by: Craig Rhodes

We are fast entering an era in which there’s going to be a chronic shortage of jobs for millions looking for employment. That trend is only going to accelerate. Everyone’s job is on the line now. If we don’t begin to address this problem, then we will suffer long-term consequences: mass unemployment and political alienation of millions because jobs are fast disappearing mainly due to automation.

My suggestion is strategic not tactical. The details can be worked out in committee negotiations.

Corporations are mining nearly every piece of online data that we as individuals produce and then selling it to the highest bidders including the NSA for hundreds of billions per year. To find out how to protect yourself from this visit websafetyadvice.com.
It’s an unregulated modern day gold rush happening under our very noses without notice. We as individuals should be compensated for our data in the same way that corporations are compensated for their data. Copyright law should protect us in the same way it protects corporations. Terms of Service Agreements should be outlawed. Copyright laws should be amended or rewritten.

There’s a reason Google and Facebook do not bill us. We’re not their consumers — we’re their product. The lion’s share of profits made by Google, Facebook, AT&T, Verizon, and scores of other corporations are from the data we produce. Facebook’s billion plus users are the largest unpaid workforce in history.

If a corporation profits from our data, whether it be browsing history, emails, buying habits, contact lists etc. then they should have to pay us for it just as we must pay for their movies, music, software and more. Such compensation might go a long way toward alleviating our chronic employment problems as well as help the working class who are losing jobs faster than any other demographic. It would not be welfare nor would it involve raising taxes. It would be payment for services rendered in the form of a subsistent guaranteed income similar to the Alaskan model.

Manufacturing jobs are not going to come back. And in time automation will begin to affect the professional class as well. Those who depended on such jobs should be dealt with or our nation is going to suffer catastrophic consequences.

This and many more initiatives should be included in a robust strategy. We must be bold.

About the author: Craig Rhodes is a retired art teacher after 34 yrs. Active in politics since an early age. Rhodes held elective office. Lifelong gardener, musician, environmentalist, avid reader of all subjects both non fiction and fiction, potter, portrait artist, and more. Rhodes is active on any number of social media including Facebook and have been surfing the internet since it first appeared on the scene as the Arpnet under DARPA.

What Is Poverty, Exactly?

What Is Poverty, Exactly?

Written by: Pierre Madden

Basic Income, it is argued, provides an effective and efficient means of conquering poverty. What, exactly, is the problem that we are trying to solve? Mention poverty to someone and they are likely to immediately think of the Third World. Bringing the focus back to poverty in developed countries is fraught with preconceptions. People have predispositions to think about issues in certain ways. They share these predispositions with all other members of society regardless of specific opinions on social questions. Various models are utilized rather than others based upon how we frame the issue.[1] And so we feel that we have an intuitive grasp of the subject.

Courts will accept eyewitness testimony that someone was drunk. If a person were to get in an accident while driving and damage another’s car, then during the time of car accident settlements, the defense lawyer can bring in an eyewitness who can testify to the fact that the driver was intoxicated. The witness is not an expert. No Breathalyzer test was done; no blood sample was taken. They can just tell from a person’s demeanor and the nature of the accident whether or not it could have been a DUI case. It is considered common knowledge. The same can be argued for poverty. Broad definitions of poverty exist, such as: “the condition of a human being who is deprived of the resources, means, choices and power necessary to acquire and maintain economic self-sufficiency or to facilitate integration and participation in society.”[2] “In 1958, John Kenneth Galbraith argued, ‘People are poverty-stricken when their income, even if adequate for survival, falls markedly behind that of their community.'”[3]

The problem is translating this qualitative information into numbers so that policies can be implemented and progress tracked.

Some people accept that poverty is undefinable because it is a personal experience. This complexity is highlighted in the expression ‘poverty and social exclusion.’ A concept that you can’t define is difficult to measure. We may be evaluating actions taken to reduce poverty by a method which measures something completely different. Just counting the poor turns out to be a daunting task.

Many approaches are taken to arrive at a threshold value that defines poverty. I will present examples from Canada, Europe in general, the United States and the United Kingdom. Debates surrounding the various metrics are discussed as they come up. Some work incomes and welfare benefit numbers provide context.

In Canada, no official definition of poverty exists. Statistics Canada has been making this point for almost 45 years[4]. What is measured is low-income. Some countries like the United States have an official definition of poverty even if ‘there is still no internationally accepted definition of poverty-unlike measures such as employment, unemployment, gross domestic product, consumer prices, international trade and so on.’[5]

Statistics Canada tracks three low income statistics.

  1. The Low Income Measure (LIM) is 50% of the adjusted mean income of Canadians[6]
  2. The Low Income Cut-Off (LICO) starts with the spending of the average Canadian family on shelter, food and clothing (43% of after tax income).[7] The threshold is set at 20% more.[8] Any family earning less is below this Low Income Line.[9]
  3. The Market Basket Measure (MBM) ‘is a measure of low income based on the cost of a specific basket of goods and services representing a modest, basic standard of living.’[10] It takes into account the ability to reasonably participate in community activities as well as physical health. It varies by geographical location.

This last metric developed in the late 1990s by Human Resource and Skill Development Canada is different from the other two, introduced by Statistics Canada. The first two statistics are unambiguously relative. Strictly speaking they measure income inequality. While the Conference Board of Canada does not hesitate to refer to the MBM as absolute[11], the specialist I spoke to at Statistics Canada was not so sure.[12] However, he felt that the basic-needs poverty line (BNPL) proposed by Professor Chris Sarlo of the Fraser Institute might qualify as absolute. Sarlo himself nuances this view:

This basic-needs approach to poverty is often referred to as an ‘absolute’ measure. This label is misleading insofar as it suggests that the list can never change and is therefore completely out of place in our rapidly changing society. While the basic needs line does propose a broad list of necessities that remains in place over time, the nature, standard of quality, and the quantity of each of the components will vary across societies and will vary over time in a given society. In other words, the basic-needs approach is partly absolute (the list is limited to items required for long-term physical well-being) and partly relative, reflecting the standards that apply in the individual’s own society at the present time.[13]

Stepping back a bit, you can often use absolute poverty as a synonym for extreme poverty, a term applicable to deprivation in very poor countries. Even so, relative elements remain: you can’t compare the situation of someone with no heating in the Arctic to that of someone with no heating in the Tropics. Moreover, Sarlo’s BNPL is approximately 30% lower than the MBM using a similar approach. Clearly, relative and absolute measures overlap and both involve a degree of judgment and arbitrariness.

There are many other variations on these themes. I will cover just a few.

In Europe, they use a measure called the at-risk-of-poverty threshold to define poverty. It represents a ‘percentage of the median or mean value of the Equivalised disposable Income after social transfers.’[14] ‘A threshold of 60% is the most commonly used.’[15] EU countries simply referred to the 60% level as ‘generally accepted.’ [16] Tables sometimes show statistics calculated at 40%, 50%, 60% and 70%, without comment.

The official United States poverty threshold has a fascinating history.[17] Based on the work the Social Security Administration economist Mollie Orshansky, it is often referred to as absolute. However its creator labelled it ‘arbitrary but not unreasonable.’[18] As early as 1959, Orshansky was aware of the pitfalls and limitations of the standard budget (usually called market basket today) approach to defining poverty. At the time, and even today, only with food, because of its nutritional value, can we reach some consensus about what minimal requirements are. Orshansky used the two lowest budgets devised by the Department of Agriculture: the low-cost food plan and the even less expensive economy plan. For the non-food portion, she used Engel’s Law (named for the statistician Ernst Engel not Marx’s collaborator Friedrich Engels), a normative principle establishing that a family spends one third of its total income on food. Using a multiplier of three for food costs under both plans, with adjustments for childless couples and single people, 124 thresholds were developed for farm and non-farm families of various compositions. With a few minor modifications and yearly inflation updates, this measure, based on the economy plan, is still in use today to count the poor in the United States.

A novel variant of the market basket approach, the Minimum Income Standard for the United Kingdom (MIS) is maintained by the Centre for Research in Social Policy at Loughborough University in Leicestershire, UK. [19]

MIS is based on detailed research with groups of members of the public specifying what items need to be included in a minimum household budget. The groups are informed by expert knowledge where needed, for example on nutritional standards. The results show how much households need in a weekly budget and how much they need to earn in order to achieve this disposable income.’ [20]

MIS is not an absolute measure like the US poverty line nor is it entirely relative.[21] ‘MIS also seeks to ensure that minimum income is looked at in the context of contemporary society, but does so in an evidenced way.’[22] Rather than make assumptions about societal standards, public input is used. Also, the UK’s Joseph Rowntree Foundation, which created the MIS, does not consider it to be a measure of poverty[23] and uses the 60% of mean measure in reports it publishes such as Monitoring poverty and social exclusion 2016.

To understand how different the figures are and to visualize the impact they have on the number of poor that are counted, I have converted all the metrics discussed into dollar amounts, in the table below. I make no claim that these numbers are comparable, only that they are reasonably accurate and up-to-date. The last three numbers are actual welfare payments rather than poverty statistics. They are strikingly lower than the rest and this fact does not speak for itself. It does, however, tell a story, if I may digress. The usual reaction when seeing these numbers is: how can someone live on such little income? I would ask: how does one get out of poverty under such straitened conditions? 5 In Quebec, a welfare recipient is allowed to earn $200 per month without penalty. Over that amount, for every extra dollar made their benefits are cut by a dollar (a 100% marginal tax rate). In France, every Euro earned is deducted. This is what is known as the poverty trap. The system is structured so as to remove any incentive to get out of poverty.[24] When governments set payment schedules so far below poverty lines and also discourage the poor from improving their situation, what message does that send?[25] And in case you were thinking that the answer is ‘Get back to work’, item 11 shows what those who cannot work receive about 50% more, still nowhere near any threshold, except Sarlo’s BNPL (item 4), which has been ‘criticized as being too stringent and even “mean-spirited”.’13 More on that later.

Items 8 and 9 are incomes for a 40-hour workweek. These numbers indicate that poverty is not an issue confined to the unemployed. For example, in 2014, ‘Walmart’s low-wage workers cost US taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing.’[26]

Annual thresholds for a single person in 2016[27] CDN$ US$
1 Canadian Low Income Measure (LIM) [28] $22,652 $16,904
2 Canadian Low Income Cut-off (LICO) [29] $20,788 $15,513
3 Canadian Market Basket Measure (MBM) for Montreal [30] $17,944 $13,391
4 Sarlo of the Fraser Institute: Basic-Needs Poverty Line (BNPL) (Canada) 13 [31] $12,205 $9,108
5 European low-income measure (60% of mean income) applied to Canada. $26,941 $20,105
6 US poverty threshold [32] $16,202 $12,091
7 Minimum Income Standard MIS (UK)[33] [34] [35] $28,533 $21,293
8 Pre-tax full-time earnings at minimum wage in Quebec [36] $22,360 $16,687
9 Pre-tax full-time earnings at US federal minimum wage [37] $20,207 $15,080
10 Actual welfare payment in Quebec for those deemed fit for work. [38] $7,476 $5,579
11 Actual welfare payment in Quebec for those deemed unfit for work. [39] $11,340 $8,462
12 French Revenu de Solidarité Active (RSA) [40] $8,752 $6,531

As mentioned previously, the most striking pattern in the table is how the last three entries are low, compared to the rest. The others cluster together with the notable exception of item 4 (Sarlo’s Basic-Needs Poverty Line) and Item 10 (the US poverty threshold). Both of these statistics tend towards absolute measures, which are meant to focus on deprivation rather than income inequality. Which measure is appropriate in a developed country? If all you have achieved is to avoid destitution, are you no longer living in poverty? Not if integration and participation in society is beyond your reach. This is why relative measures of poverty are deemed more appropriate choices, especially in developed countries: they account for social inclusion.

I have tried to frame the question of poverty in such a way as to provide a better understanding of the numbers that inevitably come to define it at some point. Many judgments and choices are involved in calculating these numbers. Agreeing on a number requires social consensus. Unfortunately, focusing on the numbers is not conducive to building such a consensus and is even counterproductive, in that it immediately evokes highly emotional questions of cost and fairness. The whole debate sidesteps issues of social exclusion and lack of opportunities, to which people can better identify in their own lives.

Getting back to the original question, we need a definition of poverty to implement Basic Income. However, labeling it with a threshold number is both necessary and self-defeating. It is not possible to implement Basic Income without pinning down the benefit and cost numbers, yet focusing on these numbers distracts from the positive principles that would muster support for them. Framing the question of what poverty is in such a way that principles are explored before we formulate a numerical definition is more important than the number itself. This reframing is thus a prerequisite to Basic Income.

 

Author biography: Pierre Madden is a zealous dilettante based in Montreal. He has been a linguist, a chemist, a purchasing coordinator, a production planner and a lawyer. His interest in Basic Income, he says, is personal. He sure could use it now!

 

Sources:

[1] Volmert, A., Gerstein Pineau, M., & Kendall-Taylor, N. (2016). Talking about poverty: How experts and the public understand poverty in the United Kingdom. Washington, DC: FrameWorks Institute.

[2] An Act to Combat Poverty and Social Exclusion, CQLR c L-7 Quebec, Canada, art. 2

[3] Galbraith, J. K. (1958). The Affluent Society. Boston: Houghton Mifflin. Quoted in Wikipedia: Poverty threshold

[4] On poverty and low income by Ivan P. Fellegi, Chief Statistician of Canada September 1997

[5] Ibid.

[6] Statistics Canada Table 206-0091 Low income measures (LIMs) by income source and household size in current dollars and 2014 constant dollars.

[7] Statistics Canada Low-income cut-offs

[8]Twenty percentage points are used based on the rationale that a family spending 20 percentage points more than the average would be in ‘straitened circumstances.'” Ibid.

[9] LICO for a single person in a metropolitan area in 2012 = $19597

[10] Market Basket Measure (2011 base)

[11] https://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx#ftn12

[12] Andrew Heisz, assistant director of the Income Statistics Division of Statistics Canada, personal communication, October 19 2016

[13] Sarlo, C. (2006). Poverty in Canada: 2006 Update. The Fraser Institute.

[14] E-mail from Geoffroy Fisher, Eurostat User Support, Eurostat helpdesk December 28, 2016.

[15] Ibid.

[16] Institut national de la statistique et des études économiques (Insee)

[17] All of the information in this paragraph and much more, as well as a wealth of references to primary sources can be found in Gordon M. Fisher, The Development of the Orshansky Poverty Thresholds and Their Subsequent History as the Official US Poverty Measure, May 1992-partially revised September 1997

[18] Orshansky, “Counting the Poor: Another Look at the Poverty Profile,” Social Security Bulletin, Vol. 28, No. 1, January 1965, p.4. Quoted in Fisher (see previous note)

[19] https://www.lboro.ac.uk/research/crsp/mis/

[20] https://www.lboro.ac.uk/research/crsp/mis/whatismis/

[21] “…We would not expect the content of a MIS basket to stand still. But we also don’t think that changes in the average AUTOMATICALLY trigger proportionate changes in the minimum, and in this sense it is not a relative measure.” Donald Hirsch, Director of Centre for Research in Social Policy, personal communication, Nov 1 2016

[22] Donald Hirsch, Director of Centre for Research in Social Policy, personal communication, Nov 1 2016

[23] Joseph Rowntree Fondation Press Office, personal communication, January 11, 2017

[24] John Stapleton Why is it so tough to get ahead? How our tangled social programs pathologize the transition to self- reliance. Metcalf Foundation November 2007

[25] There is no question that low welfare payments are a political choice. In 1969, when Quebec introduced its first welfare legislation, benefits for people under 30 were set at 70% of the amount provided to everyone else. Accounting for inflation, this still represents more than what someone unfit for work receives today.

[26] Forbes April 15 2014

[27] Throughout, $US1 = CDN$1.34

[28] Statistics Canada Table 206-0091 Low income measures (LIMs) by income source and household size in current dollars and 2014 constant dollars.

[29] Statistics Canada Table 1 Low-income cut-offs (1992 base) after tax. 2014 figures for large metropolitan areas adjusted for inflation.

[30] Statistics Canada Market Basket Measure thresholds (2011-base) for reference family of two adults and two children, by MBM region Data for Montreal converted to single person (see note 1 in table)

[31] $10314 X 129.1/109.1 = $12,205

[32] US Census bureau Poverty Thresholds for 2015 by Size of Family and Number of Related Children Under 18 years $12082 adjusted for US inflation (0.1%), 1 US$ = 1.34 CDN$

[33] https://www.lboro.ac.uk/research/crsp/mis/

[34] Minimum Income Calculator

[35] £1 = US$1,23

[36] Minimum wage in Quebec = CDN$10.75

[37] US$7.25 per hour as of July 2016

[38] Emploi Quebec How benefits are calculated

[39] Ibid.

[40] Le revenu de solidarité active (RSA)

Basic income could help resolve Hong Kong woes

Basic income could help resolve Hong Kong woes

Among the political turmoil experienced by Hong Kongers, there is another crisis that is eroding the societal foundations of the global financial hub: debilitating poverty.

Hailed as one of the freest economies in the world, Hong Kong now has a higher per capita income than its former colonizer Great Britain. However, they also have a high and persistent poverty rate at nearly 20 percent.

It is not just relative poverty compared to the lavish lifestyles of many Hong Kongers. Many locals have become homeless or McRefugees (those who sleep in McDonalds at night) due to the prohibitively high cost of housing across the autonomous region.

One of the main contributors to the dissatisfaction with Hong Kong’s government is the sense of economic unfairness. Hong Kong youth have low social mobility; despite higher levels of education, they are unable to secure the wages their parents did at their age. The more serious factor is the high level of economic inequality, which threatens social stability.

Social welfare is severely lacking in Hong Kong, partly because many slip through the cracks. However, the lack of a comprehensive welfare system makes Hong Kong an ideal location to implement basic income. The large pool of wealthy individuals means a universal system would be feasible. The market-oriented nature and efficiency of basic income is also in line with its free market tradition.

The basic income would begin to address the various economic issues plaguing the youth and low-income individuals in Hong Kong. Youth will be able to search for more suitable jobs and have cash to afford rent. Those in poverty would not have to worry about finding a place to stay or finding their next meal.

Importantly, it would address many of the underlying factors that are causing tensions to undermine social harmony in the “city of protests.

As of now, it appears the basic income movement does not have a significant presence in Hong Kong. A conversation with Hong Kong’s basic income Facebook page revealed the administrator was unaware of any prominent activists or academics in Hong Kong pushing the idea. Other regional activists were also unaware of individuals pushing for basic income in Hong Kong.

Due to the increasing awareness in interest in the basic income in China and Taiwan, as well as across Europe, it is probably only a matter of time before the idea gains greater traction in Hong Kong. For the sake of the people sleeping on the streets, and the youth worried about their future, let’s hope it is sooner rather than later.

 

BIEN affiliated organisations and their definitions of Basic Income

BIEN affiliated organisations and their definitions of Basic Income

Introduction

By Malcolm Torry, director of the UK’s Citizen’s Income Trust (CIT) and co-secretary of BIEN

There has been much discussion, at congresses and elsewhere, as to what should be included in the definition of Basic Income. In order to inform the ongoing debate, I have studied the definitions to be found on the websites of organisations affiliated to BIEN, and subsequently the BIEN news team has contacted affiliated organisations in order to check and if necessary amend the information.

We can conclude from the survey that all of the definitions of BI employed by BIEN affiliates describe it as unconditional, nonwithdrawable, individual, and a right of citizenship, although not necessarily in those precise words. They either say or assume that the payment will be regular and of a consistent amount, i.e., weekly or monthly, not annually, and not variable. Some state that the BI will be a right of citizenship, or of legal residence, and others might be taken to assume this.

But there are differences when it comes to the levels at which BI will be paid. In the table at the end of this article, if the definition given on the website does not mention the amount of the BI, then the second column in the table is empty. Where a definition on the website does mention the level of BI, only the relevant part or parts of the definition are quoted.

Conclusion:

Definitions of BI are quite diverse in relation to the amount to be paid.

  • Some do not mention the issue, suggesting that the amount to be paid is not integral to the definition;
  • Some say that a democratic process will be used to decide the amount;
  • One mentions a particular amount (Southern Africa);
  • And some offer a description of the kind of life that the BI will be expected to fund (‘subsistence’, ‘dignity’, ‘participation’, ‘poverty line’) in relation to the national context, but without specifying the relevant level of BI.

If BIEN is to be the global body to which national organisations will affiliate, then any definition that BIEN offers will need to include all of the national definitions. This means that it will mention unconditionality, non-withdrawability, and a BI’s individual basis; it might wish to say that BI would be a regular and invariable but uprate-able payment; and it might use ‘rights’ language (in relation to legal residence or citizenship).

In relation to the levels at which BIs should be paid, there are two options that would include all of the national definitions: a) the definition should not mention the amount at all; b) the definition should say that in each country the normal democratic process will determine the levels of BIs and their funding mechanisms.

 

Table: BIEN affiliated organisations’ statements about the BI levels included in their definitions of Basic Income

EUROPE: Unconditional Basic Income Europe (UBI-Europe) ‘UBI is universal, individual, unconditional, and high enough to ensure an existence in dignity and participation in society.’

https://basicincome-europe.org/ubie/unconditional-basic-income/

SOUTHERN AFRICA: 1. Studies in Poverty and Inequality Institute (SPII), and 2. UBI Africa 1.               ‘Amount: The grant should be no less than US$15.00 per person per month on introduction, [*which in 2013 was sufficient to meet peoples’ basic needs in the region], and should be inflation indexed.’ https://www.spii.org.za/index.php/sadc-big-principles/

2. ‘A wide variety of Basic Income proposals are circulating today. They differ along many other dimensions, including in the amounts of the Basic Income, the source of funding, the nature and size of reductions in other transfers that might accompany it, and so on.’ https://ubi-africa.blogspot.co.uk/

ARGENTINA: Red Argentina de Ingreso Ciudadano
AUSTRALIA: Basic Income Guarantee Australia (BIGA) ‘A Universal Basic Income (Basic Income Guarantee) is an unconditional cash payment to individuals sufficient to meet basic needs (Universal Basic Income New Zealand, 2003).’ https://www.basicincome.qut.edu.au/about-basic-income/frequently-asked-questions.jsp
AUSTRIA: Netzwerk Grundeinkommen und sozialer Zusammenhalt – B.I.E.N. Austria

 

‘Existenzsichernd: die zur Verfügung gestellte Summe soll ein bescheidenes, aber dem Standard der  Gesellschaft entsprechendes Leben, die Teilhabe an allem, was in dieser Gesellschaft zu einem normalen Leben gehört, ermöglichen.’ https://www.grundeinkommen.at/index.php/grundeinkommen

[Ensuring existence: The sum made available is intended to make possible a life that is modest, but corresponding to the standards of society, and participation in everything that belongs to a normal life in this society.]

BELGIUM: Belgian Network for Basic Income

 

‘Ce revenu de base vise à permettre à chacun et chacune de mener une vie digne et de participer à la vie en société sous toutes ses formes.’ https://basicincome.be/fr/quest-ce-que-le-revenu-de-base/

[This basic income is intended to enable each and every individual to lead a dignified life and to participate fully in society.]

BRAZIL: Rede Brasileira de Renda Básica de Cidadania

 

A RBC é uma renda suficiente para que uma pessoa possa prover as suas necessidades vitais, como alimentação, saúde, educação e outras, que sera paga pelo governo a toda e qualquer pessoa residente no país, inclusive as estrangeiras residentes há cinco anos ou mais no Brasil, não importa sua origem, raça, sexo, idade, condição civil ou mesmo socioeconômica.’ https://eduardosuplicy.com.br/renda-basica-de-cidadania/

[The Basic Citizenship Income (CBR) is a sufficient income for a person to provide for his or her vital needs, such as food, health, education and other necessities, which will be paid by the government to all persons residing in the country, … regardless of their origin, race, gender, age, civil status or even socioeconomic status.]

CANADA: Basic Income Canada Network / Réseau canadien pour le revenu garanti ‘A basic income guarantee (BIG) ensures everyone an income sufficient to meet basic needs and live with dignity, regardless of work status.’ https://www.basicincomecanada.org/
CANADA: Quebec – Revenue de base Quebec (RBQ)

 

‘Le revenu de base est un revenu versé par une communauté politique à tous ses membres sur une base individuelle, sans condition ou contrepartie, dont le montant et le financement sont déterminés démocratiquement.

Un revenu de base garantit ainsi un niveau de vie décent à tous et il reste cumulable avec tout revenu perçu par ailleurs.’ https://revenudebase.quebec/

[A Basic income is an income paid by a political community to all of its members on an individual basis, without condition or withdrawal, of which the amount and the funding method are determined democratically.A basic income thus guarantees a decent standard of living for all and to it can be added income from other sources.]

CHINA: BIEN China

Affiliated in July 2016

Cheng Furui: 对基本收入定义,我们的网站和BIEN网站的一样。但是,关于我们所做的研究和推广,会更加注重社会分红,基于中国的实际情况。网站原文如下:“我们关注当前世界范围的“基本收入”运动,但基于中国公有资产占社会总资产的相当比例的国情,我们力促“社会分红/基本收入”的研究与教育活动。”

Regarding basic income, our website and BIEN is the same. But, regarding our research and what we promote, we emphasize the social dividend, considering China’s actual circumstances. The website originally states: “Our attention is on the modern global movement for the Basic Income, but considering the proportion of China’s publicly owned resources, we are pushing for a social dividend/basic income in our research and education activities.

[Translation: Tyler Prochazka]

DENMARK: BIEN Denmark (Borgerlønsbevægelsen)

 

‚Hvor stor skal basisindkomsten være? I princippet kan den have en hvilken som helst størrelse, som man i et samfund kan blive enige om, men den mest almindelige holdning er, at den skal være på et niveau, som gør det muligt at leve af den, om end på et beskedent niveau. Hvis man har en defineret fattigdomsgrænse i et samfund kan dette være et vejledende niveau for en basisindkomst. Basisindkomsten kan gradueres, så der er lavere satser for børn, for unge osv.‘ https://basisindkomst.dk/hvad-er-basisindkomst/

[How big should the basic income be? In principle, it can have any size, as agreed by a country, but the most common view is that it should be at a level that makes it possible to live on, albeit at a modest level. If you have a defined poverty line in a society then that can be a guide for the level of basic income. Basic Income can be of different amounts, so there would be lower rates for children, young people, etc.]

FINLAND: BIEN Finland – Suomen perustuloverkosto ‘According to the model of BIEN Finland, basic income is paid monthly for every member of society with no strings attached. Basic income would simplify the complex jungle of the current social security system, would facilitate the reconciliation of work and social security, and fill the gaps in the social protection. Income increase by UBI for people with high and middle income would be reclaimed from their earned income taxes. For implementation of basic income, there are several different models.’ * [English translation provided by Jouko Hemmi]
FRANCE: Mouvement Français pour un revenu de base

 

‘Le revenu de base est un droit inaliénable, inconditionnel, cumulable avec d’autres revenus, distribué par une communauté politique à tous ses membres, de la naissance à la mort, sur base individuelle, sans contrôle des ressources ni exigence de contrepartie, dont le montant et le financement sont ajustés démocratiquement.’ https://www.revenudebase.info/mfrb/

[Basic income is an inalienable, unconditional right, cumulative with other income, distributed by a political community to all its members, from birth to death, on an individual basis, without control of resources or counterpart requirement, of which the amount and funding mechanism are adjusted democratically.]

GERMANY: Netzwerk Grundeinkommen ‚Ein Grundeinkommen ist ein Einkommen, das eine politische Gemeinschaft bedingungslos jedem ihrer Mitglieder gewährt. Es soll die Existenz sichern und gesellschaftliche Teilhabe ermöglichen, …‘ https://www.grundeinkommen.de/die-idee

[A basic income is an income which a political community unconditionally grants to each of its members. It shouldensure subsistence and enable social participation …]

INDIA: India Network for Basic Income (INBI)

 

‘Basic Income is modest income paid by government unconditionally to all its citizens. It is paid monthly to every individual, irrespective of their social and economic status, i.e., without any means test or work requirement. The basic principle behind this idea is that every citizen is entitled to a basic income, as a matter of right, so as to meet her / his basic material requirements of life.’ https://basicincomeindia.weebly.com/
IRELAND: Basic Income Ireland

 

‘A basic income is a payment from the state to every resident on an individual basis, without any means test or work requirement.

It would be sufficient to live a frugal but decent lifestyle without supplementary income from paid work.’ https://www.basicincomeireland.com/

ITALY: Bin Italia (Basic Income Network Italy) [I can’t find a definition]
JAPAN: BIEN Japan

 

ベーシックインカムとは

ベーシックインカムとは、全ての人が、生活に足るだろう所得への権利を、無条件でもつ、という考え方です。

考え方としては200年ほどの歴史があります。思想家、哲学者、経済学者たちが議論する一方、土地の共有化を求めたり、分権的な社会主義を求めたり、金融の民主化を求めたり、福祉から性差別をなくすことを求めたり、といった社会運動のなかでも要求されてきました。https://tyamamor.doshisha.ac.jp/bienj/bienj_top.html

Basic income is the idea that everyone has the unconditional right to an income to live on.

MEXICO: Red Mexicana Ingreso Ciudadano Universal [Website not available]
NETHERLANDS: Vereniging Basisinkomen

 

‚Het bedrag is hoog genoeg voor een menswaardig bestaan

Hoog genoeg : Het bedrag moet zorgen voor een fatsoenlijke levensstandaard, die aan de sociale en culturele normen voldoet in het betrokken land. Het moet materiële armoede te voorkomen en bieden de mogelijkheid om te participeren in de samenleving en in waardigheid te leven.‘ https://basisinkomen.nl/informatie/de-vier-criteria-voor-een-onvoorwaardelijk-basisinkomen/

[The amount is high enough for a decent life:High enough: The amount should provide a decent standard of living according to social and cultural norms prevailing in the country concerned in order to avoid material poverty and provide the opportunity to participate in society and live in dignity.]

Adriaan Planken, VBi secretaris a.i. adds: ‘UBI is universal, individual, unconditional, and high enough to ensure an existence in dignity and participation in society.’

NEW ZEALAND: Basic Income New Zealand Incorporated (BINZ)

 

‘A basic income is an individual income paid to all legal residents as of right without means test or work requirement. … the government and the public together decide how much it will be. BINZ does not promote any particular solution. Additional funding can be nothing at all for an income-neutral basic income where each household receives the same total income after tax as it does now. It can be moderately redistributive like the examples shown in the handbook published on the BINZ website that substantially reduce poverty by redistributing about 2% of national income. Or it can be any other greater or lesser amount.’ https://www.basicincomenz.net/faq
NORWAY: Borgerlønn BIEN Norge

 

‚En universell, individuell og ubetinget inntekt som er høy nok til å gi hver og en av oss et verdig liv, uavhengig av arbeidsstatus.‘ https://www.borgerlonn.no/

[A universal, individual and unconditional income that is high enough to give each of us a dignified life, regardless of employment status.]

PORTUGAL: Rendimento Básico

 

‘O Rendimento Básico Incondicional é uma prestação atribuída a cada cidadão, independentemente da sua situação financeira, familiar ou profissional, e suficiente para permitir uma vida com dignidade.

Um RBI é:
– Universal – não discrimina ninguém, todos o recebem
– Incondicional – um direito para todos, sem burocracias
– Individual – garante autonomia às pessoas em situação vulnerável
– Suficiente – para viver com dignidade’ https://www.rendimentobasico.pt/

[Unconditional Basic Income is a benefit attributed to each citizen, regardless of their financial situation, family or professional, and sufficient to allow a life with dignity.An RBI is:

– Universal – does not discriminate against anyone, everyone

– Unconditional – a right for all without bureaucracies

– Individual – guarantees autonomy for people in vulnerable situation

– Enough – to live with dignity]

SCOTLAND: Citizen’s Basic Income Network Scotland ‘A basic income is a fixed amount of money paid to citizens which never decreases or disappears no matter the circumstances of that citizen. For example, unemployed, low wage, and rich people of the same age-bracket (i.e. not a child or a pensioner) would all receive the same basic level of state support. Children, adults, and pensioners would be provided with different levels of basic income. The objective of a basic income is to alleviate poverty caused by low wages and the benefits trap.’ https://cbin.scot/what-is-a-basic-income/
SLOVENIA: Sekcija za promocijo UTD v Sloveniji [I couldn’t find a definition]
SOUTH KOREA: Basic Income Korean Network (BIKN)

 

따라서 기본소득은 보편적 복지이자 그 이상입니다. 모든 구성원의 적절한 삶을 보장한다는 점에서 보편적 복지이고, 단순한 재분배정책이 아니라 사회적 생태적 전환의 기초가 된다는 점에서 이행전략입니다. 기본소득은 정의상으로는 매우 단순하지만 필요성, 정당성, 지향성의 측면에서는 복합적이고 심층적입니다. www.basicincomekorea.org/all-about-bi_definition/

Therefore, basic income is more than universal welfare. It is a universal welfare in that it guarantees the proper life of all members, and is a transition strategy in that it is the basis of social ecological transformation, not a simple redistribution policy. Basic income is by definition fairly simple, but complex and deep in terms of necessity, legitimacy, and direction.

SPAIN: Red Renta Basica

 

‘La renta básica puede ser definida de distintas formas. En la web la Red Renta Básica ha utilizado esta definición: la renta básica es un ingreso pagado por el estado, como derecho de ciudadanía, a cada miembro de pleno derecho o residente de la sociedad incluso si no quiere trabajar de forma remunerada, sin tomar en consideración si es rico o pobre o, dicho de otra forma, independientemente de cuáles puedan ser las otras posibles fuentes de renta, y sin importar con quien conviva. En menos palabras: una renta básica es una asignación monetaria pública incondicional a toda la población.’ https://www.redrentabasica.org/rb/que-es-la-rb/

[Basic income can be defined in different ways. On the web the Basic Income Network has used this definition: basic income is an income paid by the state, as a right of citizenship, to each full member or resident of the society even if they do not want to work in a paid way, without taking In consideration whether he is rich or poor or, in other words, regardless of what the other possible sources of income may be, and regardless of who he lives with. In less words: a basic income is an unconditional public monetary allocation to the entire population.]

SWITZERLAND: BIEN Switzerland ‘The unconditional basic income (UBI) is a monthly payment by a public agency, to each individual, of a sum of money high enough to cover basic needs and enable participation in social life, as a monthly, lifelong rent. It is the concretization of a basic human right.’ https://bien.ch/en/story/basic-income/what-unconditionnal-basic-income
TAIWAN: Global Basic Income Social Welfare Promotion Association in Taiwan
UNITED KINGDOM: Citizen’s Income Trust

 

‘A Citizen’s Income is

‘Unconditional’: A Citizen’s Income would vary with age, but there would be no other conditions: so everyone of the same age would receive the same Citizen’s Income, whatever their gender, employment status, family structure, contribution to society, housing costs, or anything else.

‘Automatic’: Someone’s Citizen’s Income would be paid weekly or monthly, automatically.

‘Nonwithdrawable’: Citizen’s Incomes would not be means-tested. If someone’s earnings or wealth increased, then their Citizen’s Income would not change.

‘Individual’: Citizen’s Incomes would be paid on an individual basis, and not on the basis of a couple or household.

‘As a right of citizenship’: Everybody legally resident in the UK would receive a Citizen’s Income, subject to a minimum period of legal residency in the UK, and continuing residency for most of the year.’ https://citizensincome.org/faqs/

UNITED STATES: U.S. Basic Income Guarantee Network (USBIG)

 

‘The Basic Income gives every citizen a check for the full basic income every month, and taxes his or her earned income, so that nearly everyone both pays taxes and receives a basic income. … A partial basic income guarantee is any income guarantee set at a level that is less than enough to meet a person’s basic needs.’ https://www.usbig.net/whatisbig.php

[* added following circulation of the original summary to affiliated organisations]

Funding social security after automation

Funding social security after automation

Finding the money to pay for our social security is becoming more difficult, because paid work is being replaced by robots — the financial foundation of the social security system is crumbling. This is true whether we talk about financing basic income or any other social security system. Increasingly, automation is replacing “productive” jobs. There is still room to create jobs in basic services. However, such jobs do not create enough “added value” to “contribute” to the financing of our social security system. We are happy that these new jobs provide an income to those families. But it is too far stretched to believe that prices for such “proximity” services, helping each other, can be inflated by social security contributions.

Because the distribution of purchasing power is essential to fuel our economic system, time has come to search for other sources of funding, other than “social security contributions” from labour.

An obvious tax-free way to help fund social security is to reduce the cost of public administration and public services through productivity gains. Another tax-free way is to use the profits of state owned companies to fund social security. Many countries own companies, in full or in part, such as in transportation, mobility, housing, banks, car manufacturing, electricity, water distribution, telecommunication etc. Some of those companies do well, others do not. In most countries, the sum of the profits (and losses) derived from those state-owned companies is low in comparison to the cost of the social security system. Sovereign wealth funds are a special category of state owned companies. Their goal is to generate profit out of the collective savings by the country to cover future social security expenses, like retirement benefits, but also to conduct economic stimuli programs in periods of economic decline.

This induces a discussion regarding to which part of the social security should be funded by savings and which part should come from “redistribution” (sometimes referred to as “repartition”). There are both public and private schemes to fund retirement benefits out of savings. However, in most countries repartition funds the biggest part of the retirement budget. In most countries, the non-retirement social security benefits like child allowances, unemployment, illness, and health care are almost entirely funded by redistribution. It is largely recommended that no matter what state your country’s economy is in, you should always save money yourself for your retirement too. It is possible that you might become incapacitated and unable to decide how this money is handled due to old age, therefore electing someone to have power of attorney on your behalf is also a crucial part of planning for your future. You can learn more about power of attorney here.

Very little academic work has been done on the ideal mix of social security funding between savings or repartition. Imagine a social security system which would be completely funded by (public and private) savings. That would be a huge challenge for any economic system because the percentage of required savings in the real economy would be extremely high. Moreover, there would be huge asset inflation leading to high volatility in stock markets and perceived personal wealth, this in turn yielding high instability in spending in the real economy. The short answer therefore is that the part of savings in our social security system should be relatively low.

Some defend the idea of money creation to fund basic income. The problem with this proposal is that it supposes an expanding economy while the population in most European countries are starting to shrink.

What would happen if we dig a hole into the ground and we discover tonnes of gold, gold available in massive quantities, just like water? What would be its value? Except for a few industrial applications, gold is useless. The reason it is used in jewels is based on its scarcity rather than its beauty.

However, we found something more useful while digging: oil. It can be used to make plastics and all sorts of other useful materials. Moreover, it can be used to produce heat or electricity. In oil or gas-rich countries the oil industry is massively contributing to the state income: social security is funded, at least in part but often completely, by this “black gold.”

Astonishingly, so far, the benefits of the black gold bonanza were only moderately used in countries which do not have these natural resources. They could have levied far higher import or consumption taxes on oil products than they actually did.

Higher taxes on energy consumption is an obvious way to finance social security in 2017, rather than demanding low income workers to share a big part of their small income to fund their health care and future retirement. Such a tax would surely reduce energy consumption and lower CO2 emissions. What is wrong with that? Either way when it comes to finances and especially retirement in our day in age now, more people are in fear of their own instability, if you’re one of these people you should be looking at ways to increase your retirement pot.

Maybe there are other “good” taxes? In Macau, the gambling tax, which is mainly contributed by visitors, finances a yearly basic income for all inhabitants as well as a fair share of the health care system. While in Sweden, their gambling tax seems to be in order to regulate their gambling market, preventing it from spiraling. You can read more here – https://battrenyheter.se/artikel/spelskatten-taljer-guld-at-svensk-ekonomi/. Different countries require gamblers to file their winnings in different ways, so it’s important for people to check their country’s regulations on gambling income. For anyone who is interested in bringing in some gambling income, it might be worth looking for an online livemobile66 slot game. That will give users the option to play for money, allowing them to start bringing in some gambling money.

Any other taxes?

Taxes should fulfill 3 requirements:

  • They should be significant enough such that the cost of enforcing and collecting them is small compared to the revenues.
  • They should be socially desirable. For example, a tax on exchanging services with each other is undesirable. A tax on cigarettes is a very good tax, a tax on alcoholic beverages as well, just like a tax on electricity or oil products.
  • They should be difficult to avoid or defraud.

Why not a smart tax on robots? For example, a tax on products made by robots, while it doesn’t matter if those products are made in the country or elsewhere. However, even if a smart phone would cost twice the current price, we still would buy it, just like we would buy our PC or fridge at twice the price. The easy way to implement such a tax in practice is to increase the value added tax or the sales tax on such products. The goal is to replace the “social security contributions” on low wage labour, because tax on low paid jobs is a bad tax. The problem is that the political world is not aware of that yet.

The replacement of high added value jobs by robots undermines the current mechanism of redistribution of wealth, such that some political voices emerge which are pleading to reduce social security benefits. We need to find a better way to fund our social security. This is essential to win the battle for basic income.