by Faun Rice | Feb 19, 2018 | News
Image by MaxPixel: Trakai Castle Lithuania
On December 6, 2017, Swedbank published a report on the Baltic Sea Region entitled “Heart-warming growth is a poor excuse to postpone reforms.” The report includes a chapter on Universal Basic Income, wherein the bank models the current economic feasibility of UBI in the Baltics.
Swedbank is a bank based in Stolkholm, Sweden. Its research arm publishes annual economic assessments of Baltic Sea region countries, which include Germany, Denmark, Norway, Sweden, Finland, Russia, Estonia, Latvia, Lithuania, and Poland. The December 2017 report and executive summary focus primarily on Swedbank’s four main markets: Sweden, Estonia, Latvia, and Lithuania.
The report highlights a time when global economic growth has helped Baltic Sea region countries reach cyclical economic peaks. However, it states that geopolitics, and populism in particular, remain risks to further growth.
Swedbank suggests that rising income inequality, combined with fears about unemployment driven by automation and globalization, contribute to populism and need to be combatted in order to ensure sustainable economic growth. The report proposes that populism can be circumvented by socioeconomic policy that ensures that growth is inclusive (i.e., where prosperity is distributed equitably across all of a country’s economic classes).
As such, Swedbank’s report argues that this period of prosperity in the Baltic Region has created an ideal context for reform and investment in long-term economic wellbeing. The report delivers an in-depth analysis of the economies of Sweden, Estonia, Latvia, and Lithuania, commenting on GDP growth and the potential to create new socioeconomic policies. It also targets specific needs in each country, referencing indicators based partially on the UN’s sustainable development goals.
Sweden scores higher than the Baltics on most of Swedbank’s UN SDG-based indicators. However, the report comments on the need for all identified countries to take the opportunity to enact policy reform.
Swedbank addresses Universal Basic Income as one potential option for reform that will reduce income inequality and encourage sustainable growth. The report concludes that UBI is currently unaffordable for the Baltics, but that elements of a basic or guaranteed income, introduced carefully, could come with numerous social benefits.
Swedbank in Lithuania. Credit to: Delfi
UBI: Current feasibility for the Baltic Region
Swedbank identifies several arguments for UBI, including the idea that it will increase income security and thus reduce fears around unemployment and job loss, along with suggestion that UBI solves or mitigates problems with existing social security systems. The argument that UBI will minimize bureaucratic costs associated with social security systems is less relevant in the Baltics, where only 1.2 to 2.1% of total “social protection” expenditure is administrative.
The report provides a summary overview of some of the questions associated with UBI implementation, such as its impact on employment and the economy, or the concern that it would negatively impact assistance given to the disabled or elderly.
Using 2015 data on government spending on social protections in Estonia, Latvia, and Lithuania, Swedbank evaluates the feasibility of a budget-neutral UBI in these countries. The report tries two different models, one in which old-age pensions are retained by the elderly, and the other in which pensions are included in the money redirected towards UBI. For each of these two scenarios, the report presents two further options: one wherein all residents of a country receive UBI, and another wherein children up to the age of 16 receive only 50% of adult UBI payments. Swedbank does not make any changes to tax revenue in these examples.
The report finds that, given existing budgets, UBI monthly payments to individuals would only reach 48-55% of the at-risk-of-poverty threshold for each Baltic country, less if old-age pensions were retained for the elderly. A UBI at the poverty line, distributed to all residents equally, would require doubling social security budgets in Latvia and Estonia, or an 82% increase in Lithuania, becoming 20-25% of each country’s GDP.
While Swedbank concludes that a UBI is currently unaffordable in the Baltics, the report comments that some components of a “basic income model” might simplify and improve existing social security programs. The authors suggest that governments could improve their systems’ accessibility by eliminating means testing and other conditions currently in place for those trying to get support. They also propose that a gradual decrease in benefits, rather than a sharp removal once a person becomes employed, might help incentivize recipients to stay in the labour market.
Another alternative discussed is a “partial” guaranteed income delivered only to particular cohorts of people. For example, Lithuania has an existing program that provides lump-sum cash benefits to every child born, with no conditions placed upon family income.
More information at:
“Baltic Sea Report: Heart-warming growth is a poor excuse to postpone reforms,” Swedbank, December 6th 2017
“Sustainable Development Goals,” United Nations
“Swedbank Macro Research: Baltic Archive,” Swedbank, February 2018
Vlada Stankūnienė and Aušra Maslauskaitė, “Family Policies: Lithuania (2015),” Population Europe Resource Finder & Archive, 2015
by Faun Rice | Jan 26, 2018 | News
In a July 2017 televised Town Hall with KCET, Economic Security Project co-chairs Chris Hughes and Natalie Foster were asked about the principles of a Universal Basic Income. Public questions from Facebook were delivered by the moderator, the first common concern of which was: should we “give everybody a Basic Income,” even the lazy and wealthy?
Foster took the question and responded with a “yes,” commenting that a universal policy “had more political resiliency” (programs with universal access would attract more support), and that shifting economic situations for the American middle class suggested that support for everyone was logical. She clarified that a Basic Income, whatever the size, is intended to be delivered to everyone with “no strings attached.”
Hughes followed up during a second question on the affordability of Basic Income. He commented that a program could be made more affordable by starting small and scaling up, by, for example, beginning with small monthly payments of $200 to American adults (not quite universal, but not means tested), between the ages of 18 and 64, placing the brunt of the tax burden for this measure on wealthy Americans or in a carbon tax. Hughes also compared Basic Income’s feasibility to existing social security programs.
More recently, Hughes’ new book, Fair Shot: Rethinking Inequality and How We Earn (February 2018), will propose a guaranteed income of $500 per month for working adults whose households earn less than $50,000 annually, with the same provided for students and unpaid caregivers.
Hughes’ book is promoted by but independent of the Economic Security Project, “a network committed to advancing the debate on unconditional cash and basic income in the United States.” Their purview includes, but is not limited to, a Universal Basic Income (UBI), as defined by BIEN: “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.”
Chris Hughes. Credit to: SpeakerHub
The version of guaranteed income that Hughes promotes is very different from that espoused by others at ESP, such as senior fellow Andy Stern, whose 2016 book Raising The Floor makes a case for UBI, because a test based on household income and employment is not the same as giving every individual an unconditional Basic Income. Ongoing coverage of guaranteed income experiments has shown that many governments and organizations follow the same trend as Hughes, pursuing studies that offer cash payments that are means-tested, based on employment status, or revoked when income or employment status exceed minimum limits. Several Dutch experiments encountered obstacles to implementing a UBI pilot not just in public opinion but also in federal compliance issues. UBI proponents may face pressure to give money only to the worthy, and to define that worthiness socioeconomically.
The idea that a guaranteed income is best directed at the poor (and more specifically the working poor) is reiterated in Hughes’ press release email for Fair Shot:
As I write in the book, I’m the first to recognize how lucky I got early in life, but I’ve come to believe this luck doesn’t come from nowhere. We’ve created an economy that creates a small set of fortunate one percenters while making it harder and harder for poor and middle-class people to make ends meet. But we also have a proven tool to beat back against economic injustice—recurring cash payments, directly to the people who need them most. A guaranteed income for working people would provide financial security to all Americans and lift 20 million people out of poverty overnight. It would cost less than half of what we spend on defense a year.
The question raised by the KCET Facebook commentators about ESP’s proposal to give money to “everyone” reflects the same ongoing public concerns that some have about welfare and social programs. It asks for beneficiaries to prove that they are worthy in order to receive public money, and it raises the suspicion that recipients will be lazy or will not attempt to re-enter the workforce. Hughes’ new message in Fair Shot attempts to counteract this by arguing that the beneficiaries are worthy: they are employed, hard working, and “need it most.” He thus reassures the reader that the recipients are deserving.
In contrast, the answer given by Foster in the July 2017 town hall promoted a “no strings attached” UBI. The Economic Security project and associated individuals encourage research and debate around Basic Income and guaranteed incomes; the parameters of upcoming affiliated projects like the Stockton Demonstration (yet to be fully released at this time) suggest an interest both in UBI and in guaranteed income systems.
More information at:
KCET Facebook feed, ‘Town Hall Los Angeles: Q&A with Chris Hughes and Natalie Foster’, KCET Broadcast and Media Production Company, 26th July 2017
Chris Hughes , ‘Fair Shot: Rethinking Inequality and How We Earn’, FairShotBook.com (‘Amazon Review: Fair Shot: Rethinking Inequality and How We Earn’, Amazon.com)
‘Kirkus Review’, KirkusReviews.com, 24th December 2017
Kate McFarland, ‘NEW BOOK: Raising the Floor by Andy Stern’, Basic Income News, 11th June 2016
Andy Stern, ‘Moving towards a universal basic income’, The World Bank.org Jobs and Development Blog, 4th December 2016
Kate McFarland, ‘Overview of Current Basic Income Related Experiments (October 2017)’, Basic Income News, 19th October 2017
by Faun Rice | Dec 21, 2017 | Research
“Wise Cities & the Universal Basic Income: Facing the Challenges of Inequality, the 4th Industrial Revolution and the New Socioeconomic Paradigm” by Josep M. Coll, was published by the Barcelona Centre for International Affairs (CIDOB) in November 2017. CIDOB is an independent think tank in Barcelona; its primary focus is the research and analysis of international issues.
The Wise Cities Model
CIDOB has published other works about a concept it calls “Wise Cities,” a term intended to holistically encompass words like “green city” or “smart city” in popular usage. Wise Cities, as defined by CIDOB and others in the Wise Cities think tank network, are characterized by a joint focus on research and people, using new technologies to improve lives, and creating useful and trusting partnerships between citizens, government, academia, and the private sector.
The 2017 report by Coll opens with a discussion of the future of global economies; it highlights mechanization of labour, potential increases in unemployment, and financial inequality. It next points to cities as centres of both population and economic innovation and experimentation. A Wise City, the paper states, will be a hub of innovation that uses economic predistribution—where assets are equally distributed prior to government taxation and redistribution—to maximize quality of life for its citizens.
Predistribution in Europe: Pilot Projects
Universal Basic Income (UBI) is one example of a predistribution policy. After touching on UBI’s history and current popularity, Coll summarizes European projects in Finland, Utrecht, and Barcelona in order to highlight city-based predistribution experiments. Coll adds that while basic income is defined as unconditional cash payments, none of these pilots fit that definition: they all target participants who are currently, or were at some time, unemployed or low-income.
Finland’s project began in January 2017, and reduces the bureaucracy involved in social security services. It delivers an unconditional (in the sense of non-means-tested and non-work-tested after the program begins) income of 560 €/month for 2,000 randomly selected unemployed persons for two years. Eventual analysis will consist of a comparison with a larger control group of 175,000 people, and the pilot is a public initiative.
The city of Utrecht and Utrecht University designed an experiment which would also last two years, and would provide basic income of 980 €/month to participants already receiving social assistance. The evaluation would assess any change in job seeking, social activity, health and wellness, and an estimate of how much such a program would cost to implement in full. The author comments that the program was suspended by the Netherlands Ministry of Social Affairs, and the pilot is currently under negotiation.
Barcelona has begun an experiment with 1,000 adult participants in a particularly poor region of the city, who must have been social services recipients in the past. “B-Mincome” offers a graduated 400-500 €/month income depending on the household. After two years, the pilot will be assessed by examining labour market reintegration, including self-employment and education, as well as food security, health, wellbeing, social networks, and community participation. Because the income is household-based, and not paid equally to each individual, it is not a Basic Income, but the results could still provide useful evidence for the possible effects of a future Basic Income.
The Implications
Coll identifies several key takeaways from a comparison of these projects. None of the experiments assess the potential behavioural change in rich or middle class basic income recipients. In addition, multi-level governance may cause problems for basic income pilots, but these issues may be mitigated as more evidence assessing the effectiveness of UBI builds from city-driven programs. Coll also acknowledges that all of the experiments listed in his paper are from affluent regions.
In conclusion, the author argues that UBI is a necessary step to alleviate economic inequality. While cities are experimenting with the best ways to implement UBI, they are often not real UBI trials (as they are not universal), and they do not always take an individual-based approach; however, they are nevertheless useful components of the Wise City model.
More information at:
Josep M. Coll, “Why Wise Cities? Conceptual Framework,” Colección Monografı́as CIDOB, October 2016
Josep M. Coll, “Wise Cities & the Universal Basic Income: Facing the Challenges of Inequality, the 4th Industrial Revolution and the New Socioeconomic Paradigm,” Notes internacionals CIDOB no. 183, November 2017
by Faun Rice | Nov 23, 2017 | News
Ontario Basic Income Network delegates. Credit to: Lindsay Advocate.
On November 4th 2017, the Ontario Basic Income Network (OBIN) held its annual meeting in Lindsay, Ontario, Canada. Lindsay is one of the sites of the Ontario basic income pilot project, with approximately 2,000 residents registered in the experiment. Delegates at the November 4th meeting unanimously passed “The Lindsay Declaration for a Progressive Basic Income.”
The Lindsay Declaration draws from human rights outlined in the United Nations Universal Declaration of Human Rights and the Canadian Charter of Rights and Freedoms. It also highlights what it considers the benefits of basic income and the momentum built by the Ontario government’s three-year basic income pilot (ongoing).
The Declaration proposes nine principles to guide basic income policy. These state that basic income must be promoted as justice rather than charity, and as abundance rather than austerity. The principles further assert that basic income must be reliable, based on cost of living and protected from creditors. Finally, the Lindsay Declaration supports basic income that does not preclude a “comprehensive social security system,” and that aligns with progressive “personal and corporate taxation.”
After the meeting, delegates voiced their intention to use the Lindsay Declaration as a tool for basic income advocacy across Canada. The Declaration has received attention from regional news and social media.
More information at:
The Lindsay Declaration
Basic Income Canada Network endorsements
“Ontario delegates pass ‘Lindsay Declaration’ on basic income,” Kawartha Lakes This Week, November 7th 2017
Roderick Benns, “‘Lindsay Declaration’ on progressive basic income passed by delegates,” The Lindsay Advocate, November 7th 2017
“Town of Lindsay chosen to host basic income pilot program,” Global News, October 12, 2017
by Faun Rice | Nov 15, 2017 | News
Dolly Parton, 2011. Credit to: Eva Rinaldi Photography
Approximately 1,300 homes were destroyed by wildfires in Gatlinburg, Tennessee in November of 2016. Singer and actress Dolly Parton, who comes from the same county, created a fund through the Dollywood Foundation to help families uprooted by the fires. The My People Fund provided $1,000 USD per month to each family who lost a home, beginning in December 2016 and ending in May 2017 with a final payment of $5,000. Approximately 900 families were found eligible for this program.
Stacia West, Assistant Professor of Social Work at the University of Tennessee, made a link between the My People Fund and basic income in a recent interview. West worked with the Dollywood Foundation to develop an evaluation of the My People Fund, using a survey that assessed family finances, housing, wellbeing, and sources of support. The first survey was answered by approximately 100 voluntary participants in April 2017, and preliminary findings are available. The same questionnaire will be distributed in December 2017. This approach is intended to help the team assess whether or not the My People Fund had a positive impact on recipients’ lives, and if so, to what extent.
In an email communication with Basic Income News, Dr. West commented on the link between the My People Fund and basic income:
“Though intended solely as financial support for survivors of the wildfires, the My People Fund cash transfers mirror some components of basic income, particularly that the transfers were provided without a means test and for a somewhat extended duration of 6 months. Final results of the longitudinal evaluation will be available in early 2018, and I look forward to learning how the transfers impacted financial, social, and health outcomes for the sample.”
Credit to: UT Knoxville
The preliminary findings of the My People Fund Evaluation state that on average, respondents experienced an increase in housing costs (mortgage or rent) following the wildfires. For example, partnered or married households shifted from spending 38% of their income on housing before the fires, to 64% after relocation. Most respondents reported having to take time away from work, and 74% of respondents had fire-related expenses not covered by insurance. Some experienced depression, anxiety, or a loss of self-efficacy following the fires. In addition, 62% of respondents noted that cash donations were the most useful form of support following the fire.
Download the full report here.
More information at:
Steve Ahillen, “Dolly Parton’s ‘My People’ money paid off for those who lost homes in fires, study shows,” USA Today Network-Tennessee. November 16th 2017.
“UT Releases Preliminary Findings of ‘My People Fund’ Evaluation,” Tennessee Today, November 16th 2017.
Stacia West, “My People Fund Evaluation: Preliminary Findings,” The University of Tennessee Knoxville College of Social Work, October 1st 2017.
