by Roland Duchatelet | Sep 30, 2016 | Opinion
During the 20th century, the increase in purchasing power of the workers in Western Europe was negotiated by the labour unions and paid for by the spectacular increase in productivity of agriculture and industry: we made more and better products with less workers. This yielded generous increases of net salaries and on top of that it allowed governments to pay for schools and health care. This resulted in the general belief that the wealth of a nation is the result of labour, because it paid not only for salaries, but also for social security and other government spending. Since then, the world elite believes that labour participation is the basis of our social security system and our wealth.
There are a few problems with this belief, however.
The first problem is that with the collapse of communism in 1989, the size of the economy grew from 1 billion participants (Europe, the US, Japan and a few small countries) to 6 billion. Cheap labour supply became abundant while the world wide bargaining power of labour unions became irrelevant. Many manufacturing companies moved their production to low cost countries. The “low cost” of these countries was mainly due to the insignificant tax on labour there, compared to Western Europe, where the labour tax was between 100 and 200% of the (higher) net salaries. The saving of the high labour tax was a major cost reduction driver for companies which moved their production, much more than the net salaries of the highly qualified, well trained, loyal, productive local workers which lost their jobs. Political Europe was sleeping apparently, not realising that the corresponding financing of the social security was moving away with the factories.
The second problem is that increasingly machines, robots and computers used in production of goods and services decrease the need for human workers.
The third problem is that social security contributions from the rapidly increasing public and subsidised employment are not real, because the wallet which collects them is the same wallet which pays them: the state.
The fourth problem is that life expectancy is growing, affecting the cost for the state paid pensions. Since health care cost is much higher in old age, the cost of state paid health care increases as well.
The fifth problem is that income from savings is trending toward zero. Citizens owning property are mostly excluded from social aid provided by the state, since they are supposed to derive an income from their property. This induces a new type of poverty. Moreover, the decrease in income from capital affects overall consumer spending, also within the working class.
As a consequence, the purchasing power of the working class has stalled in Western Europe and the US since 2000. This is hidden in the national accounts because in those figures the “income” which households derive from labour is the “gross” income including social security contributions and income taxes. The latter have risen.
Some political parties start to plead the reduction of social security benefits, which would be the start of a negative spiral.
The labour tax based system is structurally unstable. When sales decrease due to economic slowdown and workers are laid off, their income decreases so they buy less leading to further sales decreases and job losses in other businesses. The “Labour Church” will tell you that the central bank then should decrease the interest rate to stimulate investment and spending. This is speculative and slow to start effect. In any case, the interest rate is now zero and hence cannot be reduced anymore. The “Labour Church” system is in deep trouble. They seem to hope for a miracle: I see no “Plan”.
There is however one stabilising factor, our social security, which makes people continue to spend money when they have no work. This hints to the fact that “Purchasing Power” could be the solution to our stalled economic system. When the economy weakens, we should inject additional purchasing power into the economy. When the economy gets overheated, we could reduce the purchasing power injection.
Purchasing Power injection, Basic Income, should replace “labour” as the motor and regulator of our economic system. The distributed purchasing power generates spending, entrepreneurship and work for those who want to earn more money. Tax on labour can only be an auxiliary source of funding if we want such a system to be stable.
Basic Income supporters are a minority still. But we have a Plan.
by Andre Coelho | Sep 30, 2016 | News
Marcus Brancaglione (credit to: Central European University)
The under title of this article is: “Not in Quatinga Velho, not in all places in the world. Except one: here in Brazil”. Marcus opens the article exposing the partiality of Brazilian media, who stubbornly refuse to refer the pioneering basic income experience at Quatinga Velho. But it seems those days are over. In a style heavily loaded with irony, Marcus “thanks” Big Media and Big Politics for everything they never did for the basic income movement in Brazil. Near the end, he concludes: “(…) we have learned that nothing is given to whom doesn’t belong to the “family”, everything has to be gained: from rights to recognition. From basic income to our place in the world.”
More information at:
Marcus Brancaglione, “Renda Básica Universal já não é mais um assunto tão maldito assim [Basic Income is not an issue so damned anymore]”, Medium, July 27th 2016
by Kate McFarland | Sep 29, 2016 | News
The think tank Singularity University, based in NASA’s research campus in Silicon Valley, has published a short video in which the famed futurist Ray Kurzweil addresses the question “Is universal basic income a good idea?”
Kurzweil begins by answering “I actually think that’s a good idea…” before going on to compare and contrast his view of automation and work with that of Google cofounder Larry Page. While Kurzweil says that he has always been of the view that people will continue to find more work despite advances in automation, he credits Page with the view that we ought to take advantage of automation just to work less.
As Kurzweil explains, this apparent disagreement turns on different notions of what is meant by ‘work’. Page uses ‘work’ to refer to the sort of drudgery we perform merely for money, while Kurzweil applies the term to productive activity more broadly — exemplifying a distinction relevant to much of the discourse surrounding basic income.
This video was published as part of an on-going “Ray Q&A” series (“The show where Ray Kurzweil answers questions about the future”).
Singularity University, “Is Universal Basic Income a Good Idea? | Ray Kurzweil Q & A | Singularity University“, YouTube; published August 11, 2016.
Ray Kurzweil photo CC BY-NC-ND 2.0 Dominik Gubi
by Kate McFarland | Sep 29, 2016 | News
The amount of this year’s Alaska Permanent Fund Dividend was announced by the Governor on Friday, September 23: every Alaskan will receive $1,022, less than half the amount of last year’s dividend.
Since 1982, the State of Alaska has distributed annual cash dividends to all of its residents, including children, funded from income from the state’s sovereign wealth fund. Because the payment is universal and unconditional, it has often been discussed as a “real world” example of a basic income. Last year, the Permanent Fund Dividend (PFD) reached its peak amount of $2,072. (The historical average about of the PFD is about $1,150.)
Earlier this year, however, Governor Bill Walker vetoed about half of the allocations to the PFD passed by the state legislature. As a result, this amount of this year’s PFD will drop to $1,022 — according to an official statement issued by the Governor on Friday, September 23.
Walker tasked junior high school student Shania Sommer (who also announced the size of last year’s PFD) with the announcement:
As Walker explains in response to questions from Sommer, he believes that reducing the size of the dividend was necessary in order to preserve the dividend program “for generations to come” in the face of the state’s present budget crisis (Alaska currently faces a $4 billion deficit).
Walker further elaborated upon his decision in an editorial in Alaska Dispatch News, published shortly after the announcement of the size of the 2016 dividend:
In the past few years, revenues have plummeted while Permanent Fund investment earnings have grown. The current dividend formula would have us spending more on dividends than any other state service – including education. It’s not a sustainable path.
If we do nothing, the fund’s earnings reserve will likely be depleted within four years. Then dividends will be zero. I don’t want that to happen.
My commitment to Alaska and Alaskans has never wavered. I believe we must find a balance between the wants of today and the needs of tomorrow. If we don’t make changes, we’re on a course to economic disaster. It’s a 100 percent preventable disaster, and I will do everything I can to prevent it.
The official statement from the Governor’s Office also specified that, were it not for Walker’s veto, the PFD would have been $2,052.
Following Walker’s veto of half of the PFD funding, polls revealed a significant drop in his approval rating and popularity amongst American governors. Recently, a Facebook group called “Alaskans Against Gov. Walker’s PFD Theft“–which is planning its first protest on October 1–has attracted over 12,000 members.
A state senator, Democrat Bill Wielechowski, filed a lawsuit on September 16, demanding that the courts require the corporation that manages the Alaska Permanent Fund to transfer the full original amount of the PFD. Wielechowski claims that Walker’s veto of the funds was not authorized by law. The Alaska Democratic Party has expressed support of Wielechowski’s action. However, the suit is not expected to be resolved before October, when the Alaskans begin to receive their $1,022 checks.
References
Nathaniel Herz, “Gov. Walker’s veto cuts Alaska Permanent Fund dividends to $1,022“, Alaska Dispatch News; Sep 23, 2016.
Cameron Mackintosh, “$1,022: Governor Walker reveals exact amount of 2016 PFD checks“, KTUU; Sep 23, 2016.
Bill Walker, “Dividend cut hurts, but it’s the wise course for Alaska“, Alaska Dispatch News; Sep 23, 2016.
Liz Raines “Walker’s popularity dips after announcing PFD cap, polls show“, KTVA Alaska; Sep 21.
Reviewed by Dawn Rozakis
Image: Shell Oil drilling platform CC BY-NC-ND 2.0 Tom Doyle
Made possible in part by Kate’s supporters on Patreon
by Kate McFarland | Sep 28, 2016 | News
BIEN co-founder and honorary co-president Guy Standing will be among the speakers at a TEDx event in Prague on October 30.
This is Guy’s second lecture in Prague this year. In May, he spoke at the “Of Men and Money” conference at the DOX Centre for Contemporary Art:
The overall theme of this year’s TEDxPrague event is “ours and theirs” or “ours and foreign”. In the words of organizer Matěj Novák:
Ours and Foreign comprises a wide range of topics, from current migration to national identity, from our relationship with our surroundings to immunity, nanotechnology or self-driving cars. Our aim for this year is to bring visitors the most interesting programme that TEDxPrague has ever offered.
For more information on TEDxPrague, including a list of other speakers, see the event webpage.
TED is a nonprofit foundation that aspires to “make great ideas accessible and spark conversation” through activities such as its TED Talks. The TEDx Program supports independent organizers who wish to convene events in their own communities.
Reviewed by Genevieve Shanahan
Photo CC BY 2.0 Moyan Brenn
Special thanks to Kate’s supporters on Patreon
