by Citizens' Income Trust | Jan 7, 2013 | Opinion
BIEN now stands for ‘Basic Income Earth Network’. Once every two years BIEN holds a congress, and this year’s showed just how appropriate the name now is and how inappropriate it would be to still call it the ‘Basic Income European Network’. There were participants from South Africa, Namibia, India, Japan, South Korea, the United States, Canada, Latin America, and numerous European countries. Over three hundred in all gathered for forty-eight hours of plenary sessions, workshops and panels: often six different workshops and panels at one time, with three or four speakers each, to enable all of the papers to be delivered and discussed.
The congress was titled ‘Pathways to a Basic Income’. There was a sort of pattern to the timetable. Friday’s sessions were largely on the current state of the debate, Saturday on routes towards implementation of a Citizen’s Income, and Sunday on a Citizen’s Income’s relationships with such vital themes as ecology, rights, justice, and democracy: but nothing is that tidy, and each day contained a wide diversity of presentations and discussions touching on all of those areas.
The high point was a set of presentations by Guy Standing and representatives of India’s Self Employed Workers Association on the Indian Universal Cash Transfers pilot project and on some of the interim results. Of all of the sessions that I attended this one got by far the longest applause. The other high point, though a rather lower key presentation, was the significant story of Iran’s Citizen’s Income told by Hamid Tabatabai during one of the panel sessions.
The Congress was a quite inspiring mixture of the visionary and the realistic, of the broad-brush and the detailed, of the theoretical and the practical, and Germany’s Netzwerk Grundeinkommen (Basic Income Network) is to be congratulated on organising such a highly successful event.
by Citizens' Income Trust | Oct 23, 2012 | Opinion
Karl Hinrichs and Matteo Jessoula (eds), Labour Market Flexibility and Pension Reforms: Flexible Today, Secure Tomorrow? Palgrave Macmillan, 2012, xviii + 262 pp, hbk, 0 230 29006 8, £55
Time was when a lifetime of full-time employment would be followed by retirement on a contributory state pension supplemented, for the fortunate, by an occupational pension, and, for the less fortunate, by a means-tested state supplementary pension. Those who are even more fortunate may have invested in a life insurance policy that lasts into their elderly years. Nonetheless, this hasn’t stopped some people wondering does Guaranteed Universal Life expire? Both employment and retirement income were relatively secure. Employment is now less secure, and increasing numbers of people experience part-time employment, short-term contracts, and periods of unemployment, making ‘flexicurity’ an important social policy aim: flexible labour markets accompanied by secure incomes and public services. There are also fears of an uncertain pension future, especially when it comes to investment; saving for a pension can be risky. Just like with everything in life, there is most likely a solution for this issue.
The chapters in this book are the result of a European Commission funded research project on the prospects for income security in old age in a Europe increasingly characterised by insecure employment and therefore flexible employment patterns. The problem that policy-makers and the book’s authors face is that many state and occupational pension schemes are posited on the now outdated notion of the ‘standard employment relationship’ – lifelong, stable full-time employment. Such schemes, whether state, occupational, or private, are funded by employee and employer contributions. Less stable employment patterns mean fewer and lower contributions and thus less income security in old age.
Each of the book’s chapters studies the current pension structure, labour market position, and recent reforms, in a particular country. There are chapters on Germany, Italy, Poland, Switzerland, Denmark, the Netherlands, and the UK. The editors conclude that these countries fall into three groups and that each group exhibits a particular pattern of recent reforms. Countries that previously relied for retirement income on state contributory pensions have raised contribution rates and/or subsidized the insurance fund out of general taxation, and have now introduced private and occupational pension schemes, which could be worth looking into when finding the right time to step away from your business. In countries with already more than one of the three ‘pillars’ of pension provision – state, occupational, and private – the emphasis has tilted towards private and occupational schemes, and now towards compulsory enrolment in funded portable defined contribution schemes which blur the boundary between private and occupational pensions. Eastern European countries are seeing both the development of contributory public schemes and a transition into privately funded pensions.
On the basis of the research results presented in the individual chapters the editors conclude that in segmented labour markets (for instance, in Germany, where ‘insiders’ still experience considerable employment security, and ‘outsiders’ highly insecure employment) pension provision ‘dis-integrates’: that is, it is worse at poverty prevention and income maintenance for those experiencing more fragmented labour market participation than for those in more secure employment; that in countries with more homogenous labour markets (as in the UK, where employment insecurity is more equally shared across the labour market) there are integrating elements in the pension system; and that where the labour market is highly homogenous, as in Denmark, the pension system is highly integrated. Central to the integrating characteristics of Denmark’s and the Netherlands’ systems are their ‘generous basic pensions based on residence … These schemes are crucial in preventing poverty in old age, especially for workers with interrupted carers or on an atypical contract, as well as women, who mainly work part-time’ (p.244). What isn’t entirely clear is what’s causing what: Does a more or less homogenous labour market result in a particular pattern of reforms, or is there some third factor causing both the labour market type and the reform pattern?
In the UK we might soon be moving in a more universalist direction. If we want to prevent poverty in old age then the evidence of this book suggests that it is in this direction that we should move, because it is in this direction that flexicurity can be achieved. The more general lesson to be drawn from the book is that poverty prevention and income maintenance in old age will be best served across Europe by universal state pensions accompanied by compulsory enrolment in portable funded defined contribution schemes to which both employer and employee contribute.
This is a well researched, well edited, and clearly written book, and anyone with anything to do with pensions policy should be reading it.
by Citizens' Income Trust | Oct 22, 2012 | Opinion
It is always interesting to read detailed arguments for a Citizen’s Income, but might I invite your readers to consider a broader reform programme which would entail a long-term foundation for the Citizen’s Income we all want to see? A reform programme which would reconcile socialism and capitalism? Of course a claim such as this cannot be fully argued in the space of a letter, but the principles can be simply stated.
The most important element in a new framework for the economy would be the evaluation of the social costs and benefits of each kind of enterprise and, through a system of levies and grants, their introduction into market prices. Other demands on industry and commerce, most notably taxation of profits, would cease. Taxation would be confined to individual participants in the economy, but in their capacity as citizens or residents paying for the benefits society brings them. The Citizen’s Income should not be paid for out of a levy on economic enterprise.
Society, for its part, should recognise its capital value as an instrument which makes enterprise possible. And it should translate this value into a practical tool by the creation of a sovereign wealth fund which would invest in stocks and shares at home and abroad in parallel with other funds. Income from the fund would be dedicated to the citizens, thus providing a funding base for a true citizen’s income, though the fund could also be used for collective initiatives. The model would be Alaska’s Permanent Fund. I leave on one side the priority support needed by those who cannot be expected to support themselves in the economy, that is: children, who are too young to work; the very elderly, who are past working; and people who suffer chronic sickness or disability.
The size of the fund ultimately required to make it worthwhile should not be underestimated. As to practicalities, nations such as China already have sovereign wealth funds. The way forward will become clearer once the principles and implications are widely understood. Even if one doesn’t want to go the whole way in redesigning the framework of the economy, the creation of a sovereign wealth fund surely provides a way forward by translating the value of society into a practical reality for the benefit of all its members without imposing a levy on the economy. At the same time, the fund would help to reduce the serious inequality in the ownership of our capital.
The way to pursue the objectives of a basic income needs to be looked at in the light of a reconciliation of socialism and capitalism, which has been the great unsolved problem of the last 100 years. The advent of globalisation has pointed up a way to do this.
The starting point is the recognition that it is no longer satisfactory to treat the economy as if it were simply society at work, the way in which its members make their living. Globalisation has made it as clear as can be that society needs to clarify and redefine the framework within which it allows the economy to operate.
Here are the principal elements of a new framework:
- Capitalism must be required to operate in its most competitive forms, subject only to the laws of the land and effective constraints on monopoly ( whilst recognising that some monopolies are an indispensable adjunct of privately owned initiatives ).
- Market prices of products and services must reflect social as well as private costs and benefits. These costs would include such things as the use of public communications systems, the consequences of pollution and effects on health of products sold.
- The most instructive example of this is the labour market. Employers provide the indispensable benefit to society of gainful work by its members. On the other hand they receive the benefit from society of a readily available labour force. Recognising their joint interest society and industry and commerce should jointly meet the cost of maintaining the supply of readily available labour. A great advantage of this approach is that employers of all kinds would immediately apply their minds to the invention and support of all kinds of scheme for reducing and even eliminating unemployment.
- Alongside this would be a requirement that all those participating in the economy must insure themselves against the risk of unemployment – through ill health or redundancy for example – under a system of mandatory minimum cover and optional higher levels. Society would no longer pay benefit to unemployed people capable of working.
- Profits as such would no longer be subject to tax, for which there would no longer be any justification. Taxation would be confined to individuals as citizens or visitors.
- Society would, of course, continue to play its own direct part in the economy through social enterprises such as health services, and education and, increasingly it seems, local and national collective initiatives.
We turn now to the changes in society itself which will secure the objectives of socialism alongside its wholehearted commitment to capitalism as the best way of maximising the national product. Society’s financial support for its members should be concentrated in the first place on those who cannot be expected to support themselves in the economy, that is: children, who are too young to work; the very elderly, who are past it; and those who are chronically sick or disabled. The funds for this support should be provided by the collective ownership of productive capital. The amount of capital required to generate the necessary income should not be underestimated. But support will gather as taxpayers realise that the demands on them will fall as the capital increases.
Beneficiaries would receive their income as of right but expenditure would be administered in a three-way partnership with a family carer, if any, and the state, normally represented by a dedicated social worker. The capital funds would be managed by professional investment managers alongside their commercial analogues.
Once we have provided for those who cannot operate in the economy income from the sovereign funds can be used to introduce a basic income for all. It is entirely right that this, rather than the income of working taxpayers, should be the source of the basic income.
by Citizens' Income Trust | Oct 21, 2012 | Research
The latest edition of the Citizens Income Newsletter contains an editorial, the research note: “A Citizen’s Income scheme’s winners and losers” by Malcolm Torry, a review essay: “The message of James Robertson’s Future Money” by Conall Boyle,” book reviews, a viewpoint: “Why Austerity is the Wrong Answer to Debt” by Geoff Crocker, and more.
It’s online at: https://www.citizensincome.org/
by Citizens' Income Trust | Oct 20, 2012 | Opinion
Hartley Dean, Social Policy, 2nd edition, Polity, 2012, xi + 157 pp, pbk, 0 7456 5178 1, £12.99
Hartley Dean’s passion for social policy is rooted in twelve years spent working for an advice centre in Brixton. This reviewer’s passion for the subject stems from just two years working in Brixton’s Supplementary Benefit Office around the same time, but the question that has stayed with both of us is the same: How can we most effectively make provision for diverse human need? This second edition of Dean’s ‘short introduction’ on social policy is even more focussed on this question than the first edition, and although it retains the structure and much of the content of the first edition, it fully recognises the social and social policy change that has occurred during the last six years: for instance, the increasing expectations of the voluntary sector in relation to service provision.
Rather than being structured around such topic areas as education, health, and poverty, as some introductory texts in social policy are, this book is structured around a series of questions: What is social policy? Where did it come from? Why on earth does it matter? What does human wellbeing entail? Who gets what? Who’s in control? What’s the trouble with human society? Can social policy solve social problems? How are the times a-changing? Where is social policy going? A topic approach offers the student an understanding of discrete social policy fields, but will not necessarily enable them to grasp what social policy is or why it matters, whereas reading Dean’s book, and grappling with the questions that it asks and attempts to answer, will hammer home for the student that social policy is about the systematic meeting of human need. (The new edition has benefited from Dean’s recent work on human need, published in 2010 in his book Understanding Human Need.)
If there were to be a third edition then I would ask for two additions:
As an advice worker, Dean would have grappled with the administrative complexity of the means-tested benefits administered by the office for which I once worked. The code of regulations filled a bookshelf, and knowing one’s way around those regulations was a major task in itself. But whilst means-tested benefits are discussed in the book, there is no mention of the administrative complexity which they impose on individuals and households. ‘Administration’ is not in the index. A general long-term shift in academic interest is in evidence here. If Dean had been a professor at the LSE during its earlier years, then he would have worked in the Department of Social Policy and Administration, rather than in the Social Policy Department. To include material on the administrative complexity of means-tested benefits in the next edition of his book would help tor reinterest social policy departments in such important administrative matters.
Dean helpfully distinguishes between Social Policy (capitalised: the academic subject) and social policies and social policy (lower case: policies enacted, and the category to which they belong). What would be helpful in the next edition of the book would be more discussion of the policy process: that is, how do social problems come to be recognised as such, how are political considerations in practice involved in the process, and how do policy ideas become legislation and regulations? Perhaps in the next edition we shall find ‘civil service’ and ‘think tank’ in the index.
But having said all that, this is a most useful book, and it is good to have an updated edition. Social policies matter, and therefore Social Policy matters. The book will give to undergraduate social policy students a good grounding in the questions at the heart of their discipline, and will remind them why they are studying the subject. What would be even more interesting would be for an examinations board to establish an A level in social policy ( – a social policy module already exists within a sociology A level) and for a new edition of Dean’s book to be written in a format appropriate for sixth formers. This would do wonders both for Social Policy and for social policy.
