by Guest Contributor | Jan 3, 2018 | Opinion
The crux of opposition to taxless spending (that is, money spent by a government that has not been raised through taxation) is inflation caused by creating additional money.
In The Affordability of Basic Income, a paper written by Geoff Crocker, it states that a government can create additional money without increasing inflation as long as the money supply does not exceed the productive capacity of the economy: and recent quantitative easing in both the US and Europe has given empirical backing to that claim. However, increasing the money supply beyond that point will inevitably create additional inflation.
It would be unfortunate if we never tested the boundaries of our productive capacity. Capacity utilization in the United States averaged 80.32 percent from 1967 until 2017, according to Trading Economics magazine. So far in 2017 the utilization is less than 78%. That means approximately 20% of the productive capacity in the US is an unused resource. Most nations in the world are in a similar utilization bracket, according to Trading Economics magazine.
The GDP of the US in 2016 was $18.5 trillion dollars according to Trading Economics. 20% of that is $3.7 trillion dollars. This is the amount of taxless money that could be added to the economy in the US each year, without causing inflation, in theory. Adding too much too quickly could cause inflation though, because the logistics of using 100 percent capacity takes time to implement.
The key would be to start with a small annual amount, then increase it slowly, if inflation did not occur. If the economy received a slow steady influx of taxless money from the government, the slow steady increase in demand should lead first to a slow steady use of full production, and then to a slow steady increase of production capability, as industry invests in increased production to match increased demand. This would be a platform for continued growth and utilization of taxless government spending, without causing inflation.
The government could introduce taxless spending through any number of programs, and Basic Income could be one of them. It could also lead to lower spending on federal interest payments if it were used to balance the budget, instead of increasing the national debt to do so. Many other programs could benefit as well, such as healthcare, infrastructure repair, education, etc.
Government would still collect taxes, and would still be able to use them to encourage or discourage activities as deemed necessary.
It is also a technology that would require no expensive change to the infrastructure. All major technological advancements in the past that could affect the economy by 20 percent required major investments in time, resources, and investments. The steam engine, railroads, cars, cell phones, and the Internet all took 20 to 30 years, billions of dollars, and countless man-hours to implement. Taxless government spending requires only the change of policy. No new airports, factories or cell towers, just a change in policy.
Taxless spending could provide a form of basic income funding that could be utilized in many nations around the world, without creating a burden on taxpayers, if implemented properly. It would filter into the economy and every person on the planet could benefit from it, not just the well to do. We all deserve to benefit from such a simple solution to an age-old problem, poverty.
Michael Keith has been in the construction industry for 30 years, spent 15 in the Carpenters Union building offices, skyscrapers, and condominiums. Keith had a California Contractors license, and built many custom homes there. He presently remodels Braum’s Ice Cream Store and Restaurants in 5 different states in the US.
Reviewed by Malcolm Torry and Tyler Prochazka
by Guest Contributor | Dec 27, 2017 | Opinion
We know that basic income has risen dramatically in the public consciousness and also up the political agenda in the last two to three years. How has this been achieved? The academic literature offers theoretical explanations but no empirical evidence from any of the existing pilot projects. Therefore, I carried out research in four of the locations undertaking pilot studies, Finland, Scotland, the Netherlands and Ontario, to understand how basic income was legitimised as a policy, what problems they hope to address, and how the interpretation and implementation of basic income varies between them.
Through interviews with policymakers, experts and advocates involved in these pilots and in the promotion of basic income in these countries, I discovered a great deal of similarity in the factors which have allowed basic income onto policy agendas. Some have occurred by accident, some through long-term advocacy and political lobbying, and some through economic change. Importantly, these factors occurred at similar points in time, enabling them to interact and strengthen each other.
In all four of the pilot locations interviewees described how long-term support and advocacy for basic income has allowed public and political opinion about the idea to develop over time. Alongside this, long-standing problems such as unemployment and poverty have proved extremely difficult to address, and dissatisfaction with existing policies has grown. Interviewees explained how anxieties about the changing nature of work and the inability of social security systems to properly adapt to this new world have led increasing numbers of people to look to basic income as a radical alternative. Existing systems are seen as delivering poor outcomes, stigmatising those in poverty and being overly complex and bureaucratic. The assessment of basic income as a holistic and intersectional policy, capable of delivering multiple outcomes, was cited by several interviewees as reinforcing the desire to implement a pilot. Each pilot study aims for a range of positive impacts, both economic and social, pragmatic and ethical.
Interviewees in all four of the pilot locations reported high levels of public debate and engagement with the idea of basic income, and this appears to have been crucial in legitimising it as an idea . Public interest reached a critical mass, which, coupled with other factors, prompted political action. These pilot studies have not been developed solely by civil servants in a bureaucratic bubble but have been strongly influenced by campaigners, basic income advocates and experts from think tanks and academia. Evidence from the interviews shows that formal and informal coalitions and collaborations between these different groups has helped to shore up support and consolidate basic income as a legitimate policy.
Interviews in all of the pilot areas noted a context of growing interest in evidence-based social policy, and each pilot is framed as an experiment, not necessarily the precursor to a full roll-out of basic income. In Finland for example, both advocates and opponents of basic income supported setting up the pilot in order to evaluate if basic income can live up to its promises. The emphasis on experimentation was an important factor in enabling the Finnish pilot to take place but also meant that it does not necessarily signal deep political or social change.
It should be noted at this point that none of the pilot studies that are running (Finland, Netherlands, Ontario) are experimenting with a ‘full’ basic income: a universal, non means-tested payment with no obligations or conditions attached, paid regardless of other income.
Each study retains some element of conditionality, targeting or an earnings cap, above which the basic income payment is reduced. A clean break with existing policies and paradigms of social security has not been achieved or indeed attempted for the most part. Interviewees discussed political, bureaucratic, and experimental pressures that led to compromises in the scope and ambition of their pilots. These compromises appear to have been critical in allowing the pilots to take place, as they resulted in proposals that were deemed to be politically and experimentally acceptable. At a detailed level, each of the pilots look very different in how they were designed, whom they target, and how they operate; local influences proved powerful in translating the core concepts of basic income into operational models.
These compromises could be considered as a de-radicalisation of basic income, and have resulted in a curious situation in which pilots are not testing a ‘full’ basic income but have retained the basic income ‘brand’. This appears to be a presentational issue; many interviewees described a desire amongst politicians to demonstrate innovation, leadership and radical thinking, and basic income was seen as a way to do this. Retaining the basic income ‘brand’ even though the experiments deviate in important ways from the core ethical and economic values of basic income confers a positive light on those involved and attracts international attention.
When look at their specifics, each pilot in the study is different, influenced by myriad local factors. However, each pilot demonstrates striking similarities in the clustering of a number of factors that have allowed basic income onto the political agenda. Broad agreement on the importance of tackling poverty and unemployment, and the steady rise in public interest in basic income coupled with a desire for evidence-based policy and the hope that basic income could tackle multiple problems. As a small-scale, qualitative study, these findings cannot be considered a ‘how-to’ guide for other places hoping to develop their own pilot project but may prove useful in understanding how a radical idea such as basic income can find a place in mainstream policy.
Anna Dent is a consultant working in employment and skills policy and implementation for the public and non-profit sectors. She has particular interests in low-income workers, the changing nature of work, and welfare benefits. She holds an (Master of Science) in Public Policy from the University of Bristol, and is a fellow of the RSA (Royal Society for the Encouragement of Arts, Manufacturing and Commerce).
by Guest Contributor | Nov 22, 2017 | Opinion
Portuguese basic income activist Miguel Horta is pushing for a basic income “for all.” Horta wants to ensure that the people control their basic income, not the government.
Horta is an employee of Portugal’s Finance Ministry, where he deals with tax avoidance issues. He originally heard about the “gratuity of life” from Agostinho da Silva. Eventually he came across basic income, and believed there was a close connection between the two ideas.
From there, Horta developed a financing scheme for Portugal.
In October, Horta was interviewed by Basic Income Korea Network’s Hysong Ahn. The interview was originally published in Korea’s The Times. The full interview can be found below.
Miguel Horta, on left. Hyosang Ahn , on right.
First, can you tell us about your previous employment, and your current role in the UBI movement?
I worked as a tax inspector for the Portuguese government since 1995.
My position in the movement Basic Income of All for All is that of a member equal to all the others. Our movement does not assign specific functions to its members, nor does it have any kind of hierarchy.
What are your personal and group activities since you adopted the basic income idea in the early 1990s?
Despite being ready for it since the 1990s, as I said before, personally I had no activity related to basic income before 2013. That’s when I heard about an organized activist group on the internet for the first time, and I joined it.
In the first two or three years of activism, my activity was essentially to participate in public discussions about basic income, especially on the internet, and to study the question of its financing.
Later, we founded our local movement in Lisbon and began to organize public events to discuss the idea; to get in touch with other organizations and activist groups from other causes, to show them the basic income proposals; and, whenever we have the opportunity, organize debates on basic income with students in secondary schools.
We are also active on the internet, with a blog, a YouTube channel and a Facebook page.
Explain the differences between the movement “Basic Income of All for All’ and the other groups or persons in the basic income movement in Portugal.
Other groups and individuals generally conceive of basic income as the demand for a “right” made by the people from the State or, if not from the State, from central banks, the financial sector, or large corporations. This is a conception of basic income as a “top-down” program, a program of power, be it political, monetary, or economic power.
In contrast, our movement conceives of basic income as a construction of ordinary people, who will emancipate themselves and make a different society happen, by their own efforts and for their own good.
So, our basic income model is different because it is a people’s program. This has important implications. One is this: we are convinced that a basic income made by any of those “powers” I mentioned will probably end up being put to the service of that same power. In a matter of time, a basic income offered by a government will eventually be used by that same government, or, if not the same, by other future governments, for their own electoral purposes or, in a worse scenario, to keep population under its control. Similarly, a basic income offered by an economic power will likely be put at the service of the economy; one offered by a monetary power will most probably be used as a mere tool to manage inflation rates, and so on. The basic income we propose, on the contrary, being directly financed and controlled by ordinary people, is much more likely to remain at the exclusive service of the people.
Moreover, the basic income models other groups and individuals advocate are often shaped to fit in and to be friendly to their previous ideologies or causes. For instance, that’s the case of a basic income financed with taxes over capital, as a way of favoring the working class; or with taxes over speculative financial operations, as a way of favoring a moralization of financial practices; or with taxes over alcohol, as a way of favoring people’s health, and so on.
Our movement is different here too. For us, basic income should not be the way to serve any other cause apart from everybody’s freedom and dignity. For that purpose, we focus only on people, not on particular population groups (such as the rich and the poor, workers and capitalists, “good consumers” and “bad consumers”, etc.), and the goal is everyone to be treated absolutely the exact same way, as equal peers, through the process of solidarity we conceived, which requires the same effort from all and gives the same benefit to all.
So, the idea that animates our movement differs from others also in this: we do not want basic income to favor one social or economic group over another. We want to benefit all individuals, and we like to see our proposal as a way to reconcile interests and promote the best for absolutely everyone in society.
Is the Portuguese government likely to accept the plan your group proposed?
The Portuguese government doesn’t seem ready to accept it at the moment. I hope that will happen in the future, but it will depend on the support we can find within the Portuguese society, and perhaps abroad.
Of course, we are aware that it will probably be easier for a government to please their citizens by offering them some sort of “helicopter money”, without requiring any active role or effort from them, than to allow a scheme that assigns such role and demands such efforts, as ours does.
Either way, we will be doing our best to present our idea and to encourage people to consciously decide the solution they will support.
What began your interest in Basic Income?
I was ready to adopt the idea since the early 1990s, when I heard an old man declaring on TV: “Men were not born to work, but to create”. The man’s name was Agostinho da Silva, a Portuguese mystic and poet, who used to talk and write a lot about a future in which machines would do all the work, while people would create, contemplate, improve themselves or do whatever they wanted. His message made total sense to me, and so, many years later, when I first heard the name “basic income”, I understood it immediately as the path to the future that Agostinho da Silva used to talk about, and I joined the cause that same minute.
What aspects of Basic Income do you focus on?
When I first started working on the idea, my first focus was on the financial question: how to finance a basic income, from what source, and what financial effects it would have, both for people and for the State sphere.
But I’ve shifted my focus since then. Now my main interest is to understand the profound implications of different models of basic income on people’s freedom, sense of purpose and attitude towards material goods.
Explain the current situation of basic income movement in Portugal. And what is your evaluation?
The movement seems to be growing slowly but steadily. The number of activists and the public actively involved in the discussion, both on the internet and in face-to-face events, have grown in recent years.
And the movement is growing not only in numbers but also in maturity, as people involved become aware of the wide variety of different things “basic income” can potentially become (being possible to classify as “basic income” not only different but even opposite schemes, in their essential features).
This is what enabled us in Lisbon to create an organized group to defend a single one of all these possibilities, something impossible two or three years ago. I’m talking, of course, about the movement “Basic Income of All for All”.
What is the political and philosophical background of your basic income scheme?
It is the conviction that solidarity among people is the right foundation for a society.
A community where people are bound by mutual solidarity will promote the best possible life for all. Although you might say that this is a mere personal inclination – in the sense that I just prefer to believe in this rather than the opposite – the idea is nevertheless reinforced by the recognition that all ancient human societies were based on solidarity. In the tribe, the hunted animal did not belong to its hunter, but to all in the group. In the tribe everybody shared the same luck and resources, and looked after each other. This is how humankind lived for hundreds of thousands of years – the most of our time on Earth – until the rise of the first sophisticated civilizations and empires, and, mostly, before the emergence of the “empire” of capitalism; which now rules everywhere, shaping human societies with the values of competition rather than cooperation, and accumulation instead of sharing. Clearly, this is not fostering our freedom or happiness as the “old” solidarity would.
Do you have any strategy to introduce the basic income scheme in Portugal?
In fact, I developed a plan for that purpose a few months ago, and together with my fellow members of the movement Basic Income of All for All, we took the plan to the Portuguese Minister of Labor, Solidarity, and Social Security.
In very simplified terms, the plan is to create a governmental pilot program, allowing small local communities to apply and, in those accepted, exempt voluntary members from national personal income tax, provided they begin to share a part (half) of their income between them.
So, this would begin to be applied in voluntary communities and, in these, by volunteer persons. In these communities, a common fund would then be created, and the volunteers would start putting half of all their incomes, of any source, in it. At the end of each month, the fund’s accumulated total would be equally and unconditionally distributed by them, creating for the participants a basic income based on local solidarity.
The government would manage the scale of the pilot program at will. It may start with one or two communities and then, if the results turn out to be good and there are other communities willing to do the same, expand the program in succession until, in the limit, it becomes a nationwide program.
In the Portuguese reality, the impact on the State budget of such a scheme should not be negative, mainly because the creation of the universal income guarantee would render a wide range of social programs useless, thus allowing savings of amounts close to the lost revenue of the personal income tax for the State.
As for the Portuguese government’s response, we are still waiting for it…In any case, the plan does not depend exclusively on that answer; it can be applied anywhere in the world.
Interview by:
Hysong Ahn, Basic Income Korea Network
Edited by:
Tyler Prochazka
André Coelho (contributed to introduction)
