by Guest Contributor | Dec 19, 2016 | Opinion
What is a negative basic income?
“A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” A negative basic income would be one where a periodic cash payment is unconditionally demanded from all on an individual basis, without means-testing or a work requirement. This is nothing but a per-head tax or a poll tax, a payment for existence, an equal amount taken from everyone, unconditionally.
The extreme unfairness is apparent. How can you take the same amount from the billionaire and the beggar? Not surprisingly, there have been very few pure poll taxes in history – most had a number of exclusions, especially for the poor. However, there is a different kind of per-head tax that is large, widespread, and right under our noses. This is when there is loss or diversion of the commons.
Let’s take a toy example to understand this. Imagine a tiny commons, 100 people who own a 1 kg slab of gold in common, inherited from the past. As they are worried about theft, they store it under the protection of the local deity. But it is a continual worry. The community decides to sell the gold, and to invest in a piece of land. They reason that at least the land can grow a crop, whereas the gold generates no income. As long as they maintain the fertility of the land, they can all share the crop. This would be the equivalent of a commons dividend or a cooperative dividend, essentially a Universal Basic Income for the community.
Now imagine that when they go to sell, they find the gold is simply stolen. Clearly it is a loss of 10 grams each (100 persons x 10 grams = 1,000 grams = 1 kg). This is nothing but a per-head imposition of the equivalent of 10 grams of gold. Since it is an inherited asset, the loss is suffered by all future generations as well. In a different sense, the loss is the opportunity to receive the commons dividend, the universal basic income in perpetuity.
We can extend this logic to diversion of either the capital (the value of the gold), or the income stream from the new asset (the land). If the government appropriates the value to finance infrastructure or health or education, it is still effectively financing these investments with a hidden per head tax.
This is even clearer in the instance of the fruit of the land and the commons dividend. If the government appropriates the entire crop, then it is identical to distributing a commons dividend as a basic income, and taxing it simultaneously to the exact same extent – the negative basic income.
This kind of underselling of the commons is widespread, particularly in minerals. To take a couple of examples, it has been estimated that the United Kingdom and Norway have extracted approximately equal amounts of oil from the North Sea. However, the United Kingdom received approximately GBP 400 billion less than Norway[1]. For a population of 64 million, this is a loss or a poll tax of GBP 6,250. Had this amount been saved, it could have financed a Citizen’s Dividend of GBP 250 in perpetuity, assuming a real return of 4%.
Another common problem is that the money received for the minerals is treated by the government as taxation revenue, not as the sale of the commons. Consequently, instead of creating a new asset, such as the land in the toy example, or more seriously, Future Generations Funds or Permanent Funds, the government simply spends the money as income. While this boosts the GDP figures, it is both the consumption of our inherited asset as well as the hidden imposition of a per head wealth tax. . Alaska only deposits 25% of its money from oil in to its Permanent Fund. The remaining 75% is treated as revenue in the state budget. This year, Alaska’s Permanent Fund Dividend was set at US$2,072. By extension, the remaining 75% that was spent through the budget could have financed an additional dividend of $6,216 per annum.
The Norway oil fund presently saves all receipts from minerals in the Norway Government Pension Fund. This is the single largest fund in the world, approximately USD 900 billion. However, instead of paying out a commons dividend or a Citizen’s Dividend, the money is appropriated into the budget. This is clearly equivalent to imposing a per head tax on all Norwegians. The 2016 budget estimates a transfer of NOK 208,994 million to the budget[2]. For a population of 5.084 million[3], that is a negative universal basic income of NOK 41,108, or approximately USD 4,863[4]. It is doubtful that any modern democracy can impose a per head tax of such a staggering amount.
The Goenchi Mati Movement, a people’s movement in Goa has adopted simple principles that they advocate for governing mining of the commons. In short, the principles are:
- We, the people of Goa, own the mineral in common. The state government is merely a trustee of natural resources for the people and especially future generations (Public Trust Doctrine).
- As we have inherited the minerals, we are simply custodians and must pass them on to future generations (Intergenerational Equity).
- Therefore, if we mine and we sell our mineral resources, we must ensure zero loss, ie. capture of the full economic rent (sale price minus cost of extraction, cost including reasonable profit for miner). Any loss is a loss to all of us and our future generations.
- All receipts from minerals must be saved in the Goenchi Mati Permanent Fund, as already implemented all over the globe. Like the minerals, the Permanent Fund will also be part of the commons. The Supreme Court has ordered the creation of a Permanent Fund for Goan iron ore and already Rs. 94 crores is deposited.
- Any real income (after inflation) from the Goenchi Mati Permanent Fund must only be distributed to all as a right of ownership, a Citizen’s Dividend. This is like the comunidade zonn, but paid to everyone.
We argue quite simply that any other structure would impose per head taxes, which is fundamentally regressive and obviously unfair. The principle of zero loss mining was clearly violated in the UK receiving GBP 400 billion less than Norway. The principle of saving all receipts from minerals is widely violated, largely due to the way governments account and report for this – windfall revenues instead of it being a capital receipt. And where permanent funds do exist, in most cases the government appropriates the income instead of distributing it as a commons dividend.
This problem is not confined to minerals. All over the world, the commons are being destroyed at a rapid rate. For example, the “Mickey Mouse extension” of copyright is also nothing but a transfer from the commons to the private sector, an imposition of a negative basic income.
It is time that activists for basic income seriously hunt out instances of negative basic income. Simply eliminating them could achieve many of the desired benefits of basic income, with a moral argument in favour, rather than the uphill battle of helicopter money.
About the author: Rahul Basu
[1] Did the UK Miss Out on £400 Billion Worth of Oil Revenue?, David Manley & Keith Myers, Natural Resource Governance Institute, 5 October 2015
[2] https://www.statsbudsjettet.no/Upload/Statsbudsjett_2016/dokumenter/pdf/budget2016.pdf
[3] https://www.google.co.in/search?q=population+of+norway&oq=population+of+no
[4] Google. 1 NOK = 0.12 USD, 41,108 NOK = 4,863.76 USD. 13 Dec 2016, 12 noon GMT
by Guest Contributor | Dec 8, 2016 | Opinion
Written By: Pierre Madden
It is Voltaire who quipped that the Holy Roman Empire was neither holy nor Roman nor an empire. I am convinced that Basic Income will be implemented in the next decade. By its definition, BI is universal, individual and unconditional. However, none of these features will be a part of BI as it first materializes.
A universal demogrant is just too expensive to contemplate, except in Alaska where oil revenue is distributed to every man, woman and child. Giving the same amount to everybody only to claw it back in taxes from most, while philosophically pure, flies in the face of common sense. That is why all serious proposals are structured as a negative income tax (NIT). In fact, there are already features in the Canadian federal and provincial fiscal systems that function as NIT with regular cash transfers.
The basic unit in our society is the family. Statistics are kept by households. An individual is no more than a couple divided by the square root of two. This is in part just the common-sense recognition of the economies of scale of collective living. It is not four times as expensive to live as a family of four than to live alone, only two times (i.e.: cost of living alone times the square root of four). In Québec, two individuals sharing an apartment would each receive $623 per month for a total of $1,246. At some point, the government will consider them to be living in a “common law marriage” and cut the benefits to $965 in total (the government does not follow the square root rule). The fact that you do not sleep together or that you are siblings is not a defence. Across the board individuality would raise the problem of “the banker’s wife.” The banker is very rich but his wife who benefits from his wealth has no income of her own and would therefore qualify for any income subsidies. Of course, it has been argued forcefully that these women are often trapped in their gilded cage, unable to escape an abusive marriage, for instance.
Finally, governments are reluctant to abandon conditionality of benefits, a paternalistic remnant of the distinction between deserving and undeserving poor. A liberal democracy’s commitment to providing everyone with a quality education, for example, is not paternalism but the recognition of a basic right. This right is expanding to include people in their late twenties and early thirties as jobs for this generation disappear and those that are left require more qualifications. All non-health-related government benefits today are based on the condition of job seeking. The benefits themselves must in no way compromise the incentive to work. Part of the justification for this is economic, the fear that wages will skyrocket, profits will plummet and the economy will collapse if no one is willing to work anymore. Another part is ideological; education and work are seen as developing and preserving “human capital.” Government wisdom rather than individual freedom decides how that is defined.
While I am optimistic that Basic Income will see the light of day in my lifetime, I am prepared to accept an imperfect version and leave to future generations the task of improving it.
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!
by Guest Contributor | Dec 6, 2016 | Opinion
Written by: Pierre Madden
On November 12 and 13 I attended a congress of the Liberal Party of Quebec, which is currently in power in the province.
The Minister of Employment and Social Solidarity, François Blais, confirmed that a joint working group, with his colleague in Finance, will issue a preliminary report on Basic Income in the Spring. Our neighbouring province of Ontario (which, together with Quebec accounts for 62 percent of the population of Canada) was just released a working paper on a pilot project to begin in April 2017. Quebec does not seem to be leaning towards a pilot project.
In his talk, Minister Blais placed much emphasis on the principles underlying the development of the government’s project:
- The development of human capital (though education, for example)
- The obligation of protection from certain risks (with unemployment insurance and health insurance, for example)
- Income redistribution
The minister’s speech was highly focused on incentives to work or study (especially for the illiterate or those without a high school diploma).
The principle of unconditionality, a fundamental aspect of Basic Income, will likely not be a feature of the government’s plan.
On the second day of the congress it was the minister’s turn to ask me if he had answered my question. I described my own situation as a case in point. I am 62, three years away from my public pension which here in Canada is sufficient to raise most people out of poverty (works for me!). Why would the government be interested in the development of my human capital? The minister replies: “In a case like yours, we would have to go back in time to see what choices you made.” I have several university diplomas, which doesn’t help his argument. I am still either underemployed or unemployable.
The minister could only answer: “I would have to know more about your individual case.”
And that is what the government does and will continue to do for all those considered “fit for work.” Petty bureaucratic inconveniences for those “unfit for work” will be removed and their inadequate benefits will be improved by dipping into the funds previously used for the “fit” as they return to the workforce. The government sees no difficulty in a law it passed just last week (Bill 70: An Act to allow a better match between training and jobs and to facilitate labour market entry). The government highlights the positive measures it imposes to help participants join the job market. Those who prefer a non-paternalistic approach (“Give me the money and let me make my own decisions”) are penalized.
The irony is that before he entered politics Minister Blais actually wrote a book in support of Basic Income for all. He confirmed to me that he still believes what he wrote 15 years ago.
In Canada, both the federal and the provincial governments partially reimburse sales tax. Here in Quebec, the Solidarity Tax Credit refunds part of the estimated sales tax paid by consumers. The higher your income, the lower the monthly payout, so it works like a negative income tax. The minister was asked about this as a stepping stone towards Basic Income. He simply said it would be “a more radical approach.” Of course, tax credits don’t impact on “human capital.”
You can be sure I will be rereading François Blais’ book when his work-group’s report comes out next year.
About the author: 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!
by Guest Contributor | Dec 1, 2016 | Opinion
By Alexander de Roo
The discussion about basic income has changed completely.
Thirty years ago, it was a very principled debate. High unemployment. No future. Thus, give us a basic income, because the system cannot give us paid work. The counter argument was you must do paid work to receive an income. A basic income is morally unacceptable.
How different is the discussion now: when we go out and hand leaflets in the streets, 50 to 90 percent of the population takes our leaflets (50 percent in rich area’s and 90 percent in poor neighborhoods). The most common reaction is: basic income is a good idea, but how do you finance it? Who pays for it?
A very pragmatic discussion no longer principles banging against each another.
The confidence in the present social system in The Netherlands is shaken compared to 30 years ago. Previously you got five years’ unemployment money and one could easily look for another job. Now even middle class people lose their well-paid job and after two years of unemployment money must ‘eat up’ (meaning sell) their own house to get social assistant money…. five million people have a steady, normal contract. That is ten percent less than ten years ago. Two million people have flexible contracts for bull-shit jobs, two million people live from social benefits (in different forms), one million people are independent professionals without access to unemployment money (ZZP or freelancers), the pension age keeps going up (now 67 years), while people above 50 years have zero (or realistically around 1 percent) changes on the labor market.
But the Netherlands is still one the five or ten richest countries in the world!
The two biggest newspapers held polls about basic income! About 40 – 44 percent comes out in favor. A reliable national poll measured 40 percent in favor, 45 percent against and 15 percent do not know. The majority of the electorate of the green and left parties are in favor. With the two right wing parties it is the opposite: their electorate is against: “we are working hard and do not want to pay a basic income for these (lazy) people that just want to have a basic income”.
Most interesting is that the voters for the Freedom party of Mister Wilders (our local Trump) are divided: 37 percent in favor and 46 percent against, 17 percent don’t know. Almost the same as the national average! Politically we must use this.
But the leaders of the green and left wing parties do not take up the issue of a basic income. They stick to repairing /amending the old social system. They think (and hope) the economy is recovering, unemployment will fall and then this basic income discussion will go away like it did around the year 2000.
But they are wrong we have now one year economic recovery: the result 12,000 new steady jobs and 78,000 flexible low-value jobs. The flexibility of the labor market keeps growing. We will turn back the clock on these flex jobs; providing more jobs is the answer of the green and left wing leaders.
Our answer is to increase our support for the basic income alternative in the upcoming national elections March 15, 2017. Around 60,000 people signed a petition for a basic income in 2018. Demonstrating that 800 € for every citizen in the Netherlands is easily affordable and that even 1,100 € is easily financed.
After the elections, we will work with respectable institutions to come up with a transition route from the present situation to a full basic income.
Annotation: A basic income of 800 € requires 10 billion € more per year then the present situation, 1,100 € will cost around 30 billion euro more. The present government (Conservatives + Social democrats) have cut the state expenditure with 30 billion € and raised indirect taxes with 16 billion euro’s: in total 56 billion in the last 4 years.
Alexander de Roo is a founder of BIEN in 1986, former BIEN treasurer (1986-2004), and now Chairman of the Dutch branch of BIEN.
by Guest Contributor | Nov 21, 2016 | Opinion
Original post can be found at TRANSIT
Written by Bonno Pel & Julia Backhaus
On Saturday October 1st 2016, the Basic Income Earth Network celebrated its 30th anniversary at the Catholic University of Louvain in Louvain-la-Neuve (Belgium). The picture shows the founding meeting in 1986, but is also quite applicable to BIEN 30 years later. The conference was held at the same location and many of the founders and their fellow militants met in good atmosphere to commemorate the early beginnings of the network. Together with other scholars and generally interested people, they discussed current developments in science and policy and ‘the way forward’ for the basic income movement.
picture source
An unconditional income for all
First, the picture is telling for the ways in which BIEN pursues transformative social innovation, namely through the development, discussion and dissemination of persuasive “new framings” and “new knowings”. The seminar room in the picture gathers several individuals who by now have become eminent scholars in economy, social philosophy or sociology. Over the course of three decades and together with activists, politicians and citizens, BIEN members have developed a whole complex of arguments, evidence and framings around the basic income. The idea itself is simple: An unconditional, individual income entitlement, more or less sufficient for fulfilling basic needs, promises real freedom for all.
It offers individual empowerment in the form of income security and the material conditions for a self-determined existence in society, but it is also in many aspects about changing social relations: between men and women (as the conventional breadwinner model is challenged by individual income entitlements), between employed and unemployed (as stigmatization lessens when entitlement is universal rather than for the ‘unproductive’ only), and between employee and employer (the latter’s possibilities to exploit the former are decreased by the basic income security). In current institutional-ideological constellations, the idea of a basic income is bizarre and outrageous for rewarding jobless ‘free-riders’. Apparently relinquishing hard-earned social security arrangements, BIEN members met (and continue to meet) with tough press, sidelining them as ‘irresponsible freaks’. Yet the power of BIEN members’ socially innovative agency resides in showing that it is actually many common ideas about work and income that are outdated, and harmful even.
Claus Offe (credit: Enno Schmidt)
Impressive examples of outdated conceptions were provided by prof. Claus Offe, who argued that we do not earn our income, as commonly believed. Wage flows from labour that forms part of ever-extending production chains of individuals and machines. The availability of jobs fluctuates cyclically, and independently from individuals’ employability efforts. Moreover, the current productivity in highly industrialized countries is possible because ‘we stand on the shoulders of giants’. It is largely inherited from previous generations. So it is rather the current insistence on employability, on meritocracy and on ‘earning one’s income’ that is out of tune with economic reality. Production has become post-individual, and this requires a matching social security system. Harmful effects of a capitalist system that ignores its obviously collective character through individualist ideology include blaming the losers and accepting precarious conditions for some. Economist Gérard Roland outlined how the basic income provides a better trade-off between labor market flexibility and precariousness than current social security arrangements. Sociologist Erik O. Wright views the basic income as a “subversive, anti-capitalist project”. He expanded how the concept allows moving on from merely taming to escaping the globalized, capitalist system. For him, the basic income can provide the basis for numerous social innovations that also the TRANSIT project considers, such as social and solidarity economy initiatives or co-operatives.
BIEN thriving on internal differences: many streams forming a river
Second, based on the variance of people’s clothing, the picture above also visualizes how BIEN has developed as an association of very different individuals. At the conference various founding members recalled the routes they had traveled towards the transformative concept. They arrived at the idea on the search for liberalist re-interpretations of Marx, through feminist commitments, when rethinking meritocracy, as a response to the structural unemployment of the time, or as a logical conclusion of a transforming and ‘robotizing’ economy. The forthcoming case study report on BIEN by yours truly spells out in more detail how these different little streams came to ‘form a river’, as expressed by a founding member. The internal differences between the generally principled and intellectually sharp BIEN members led to fierce debates, it was recalled. According to a longstanding motor, evangelizer and lobbyist for the basic income, BIEN has only survived as a network for members’ capacity to ‘step back a bit’ from their ideological disputes at times, and to recognize what united them. BIEN even thrived on its internal divisions. It functioned as a discussion platform, and helped to institutionalize basic income as a research field. Since 2006, there is even an academic journal on this example of transformative social innovation: Basic Income Studies.
Evolving communication: spreading the word
Philippe Van Parijs (credit: Enno Schmidt)
Third, the black and white photo immediately suggests how different the world was three decades ago. At the time of founding, network members and conference participants from various countries had to be recruited through letters. Initially, the newsletter was printed out, put in envelopes and stamped, for which members gratefully sent envelopes with pesetas, Deutschmarks and all the other European currencies, subsequently converted at the bank by standard bearer professor Philippe Van Parijs and his colleagues. Today’s e-mail, website and Youtube recordings obviously make a crucial difference when it comes to facilitating discussion and spreading the word fast and wide – especially for this social innovation that primarily travels in the form of ideas. The presentations on the history of basic income underlined the significance of the communication infrastructure. The history of basic income can be conceived of as a long line of individuals working in relative isolation, often not knowing of others developing similar thoughts and blueprints. The evolution of BIEN very instructively shows the importance of evolving communication channels and knowledge production for transformative social innovation – critical, weakly-positioned, under-resourced individuals no longer need to re-invent the wheel in isolation.
BIEN, a research community? Ways forward
A fourth, telling element the picture above is the confinement of the seminar room. There have been discussions about BIEN’s existence as a researchers’ community, with the expert-layman divides it entails (during this meeting of experts, yours truly fell somewhat in the latter category). There are in fact also other networks of basic income proponents that have rather developed as citizen’s initiatives and activist networks. BIEN, as a network that can boast such a high degree of conceptual deepening and specialization, is illustrative for the ways in which it remains confined in its own room. It is significant in this respect that the current co-chair brought forward two lines along which the network should reach out more. First, BIEN should be more receptive towards and engaging with the various attempts to re-invent current welfare state arrangements. While this may imply using a more practical language and taking off the sharp edges it may yield real contributions to social security. Often these change processes (regarding less stringent workfare policies, for example) are not undertaken under spectacular headings and transformative banners, but they involve application of some basic income tenets such as unconditional income entitlements. A second line for outreaching confirms the importance of comparative research into transformative social innovation like TRANSIT: The co-chair highlighted that BIEN will explore and develop its linkages with other initiatives, such as Timebanks and alternative agriculture movements more actively.
Basic income: a ‘powerful idea, whose time has come?’
Fifth and finally, the seminar room setting depicted in the photo raises attention to the knowledge production that BIEN has been and is involved in. The socially innovative agency of its members can be characterized as ‘speaking truth to power’. Basic income activism has taken the shape of critiques, pamphlets and counterfactual storylines (Thomas More’s ‘Utopia’ being a 500 year-old example), but also featured modeling exercises, forecasts, and economic evidence to support the case. BIEN members’ key resource is their expertise. Moreover, considering the strong arguments and evidence gathered in favor of the basic income over the past decades, there are reasons to be confident in basic income ending up as the ‘powerful idea, whose time has come’. As described in Pel & Backhaus (2016) and currently considered further, it is remarkable how much BIEN seems to have developed in line with the trend of evidence-based policy. The commitment to hard evidence gives rise to an important internal discussion on the recent developments towards basic income-inspired experimentation (such as in Finland and in the Netherlands). The common stance of BIEN members is that these experiments fall short of providing any reliable evidence for their limited duration and scope, and for the system-confirming evaluative frameworks that tend to accompany them. However, there is also a somewhat growing attentiveness to the broader societal significance of experiments and pilots in terms of legitimization, awareness-raising and media exposure. It is therefore instructive for the development of TSI theory to study the basic income case for the new ways in which ‘socially innovative knowings’ are co-produced and disseminated.
About the authors:
Bono Pel (Université libre de Bruxelles; bonno.pel@ulb.ac.be) and Julia Backhaus (Maastricht University; j.backhaus@maastrichtuniverstiy.nl) are working on TRANSIT (TRANsformative Social Innovation Theory), an international research project that aims to develop a theory of transformative social innovation that is useful to both research and practice. They are studying the basic income as a case of social innovation, focusing on national and international basic income networks and initiatives.
