by Guest Contributor | May 10, 2016 | Opinion
To tackle spiraling deflationary trends, governments and central banks will soon have no other choice but to resort to printing money and giving it directly to the people.
Article by John Aziz, originally published on azionomics.com under the title “Universal Basic Income Is Inevitable, Unavoidable, and Incoming.”
The last time I saw universal basic income discussed on television, it was laughed away by a Conservative MP as an absurd idea. The government giving away wads of cash responsibility-free to the entire population sounds entirely fantastical in this austerity-bound age, where “we just don’t have the money” is repeated endlessly as a mantra. Money, they say, does not grow on trees. (Only as figures on the screen of a computer).
In this world, universal basic income seems like a rather distant prospect. Yes, there are some proposals, like Finland which is set to start local experiments in 2017 and Switzerland which is holding a referendum on universal basic income next month. I don’t expect the vote to pass. The current political climate is just too patriarchal. We live in a world where free choice is unfashionable. The mass media demonizes the poor as feckless and too lazy and ignorant to make good choices about how to spend their income. Better that the government spend huge chunks of GDP employing bureaucrats to administer tests, to moralize on the virtues of work, and sanction the profligate.
But this world is fast changing, and the more I study the basic facts of economic life in the early 21st century, the more inevitable universal basic income begins to seem.
And no, it’s not because of the robots that are coming to take our jobs, as Erik Brynjolfsson suggests in his excellent The Second Machine Age. While automation is a major economic disruptor that will transform our economy, assuming that robots will dissolve jobs entirely is just buying into the same Lump of Labour fallacy that the Luddites fell for. Automation frees humans from drudgery and opens up the economy to new opportunities. Where once vast swathes of the population toiled in the fields as subsistence farmers, mechanization allowed these people to become industrial workers, and their descendants to become information and creative workers.
As today’s industries are decimated, and as the market price of media falls closer and closer toward zero, new avenues will be opened up. To that end, Canada has seen a surge in startups in recent times. Towns that were once oblivious to people in the country have become a melting pot for fresh Fintech startup ideas. Case in point is this FinFund Media app that aims to simplify getting loans in The Pas for individuals by leveraging the power of local rural communities to send and receive money. Similarly, new industries will be born in a never-ending cycle of creative destruction to keep the economy churning. Yes, perhaps universal basic income will help ease the current transition that we are going through, but the transition is not the reason why universal basic income is inevitable.
Welcome to the world of hyperdeflation
So why is it inevitable? Take a look at Japan, and now the eurozone: economies where consumer price deflation has become an ongoing and entrenched reality. This occurrence has been married to economic stagnation and continued dips into recession. In Japan – which has been in the trap for over two decades – debt levels in the economy have remained high. The debt isn’t being inflated away as it would under a more “normal” rate of growth and inflation. And even in the countries that have avoided outright deflationary spirals, like the UK and the United States, inflation has been very low.
The most major reason, I am coming to believe, is rising efficiency and the growing superabundance of stuff. Cars are becoming more fuel efficient. Homes are becoming more fuel efficient. Vast quantities of solar energy and fracked oil are coming online. China’s growing economy continues to pump out vast quantities of consumer goods. And it’s not just this: people are better educated than ever before, and equipped with incredibly powerful productivity resources like laptops, iPads and smartphones. Information and media has fallen to an essentially free price. If price inflation is a function of the growth of the money supply against growth in the total amount of goods and services produced, then it is very clear why deflation and lowflation have become a problem in the developed world, even with central banks struggling to push out money to reinflate the credit bubble that burst in 2008.
Much, much more is coming down the pipeline. At the core of this As the cost of superabundant and super-accessible solar continues to fall, and as battery efficiencies continue to increase the price of energy for heating, lighting, cooking and transportation (e.g. self-driving electric cars, delivery trucks, and ultimately planes) is being slowly but powerfully pushed toward zero. Heck, if the cost of renewables continue to fall, and advances in AI and automation continue, in thirty or forty years most housework and yardwork will be renewables-powered, and done by robot. Water crises can be alleviated by solar-powered desalination, and resource pressures by solar-powered robot miners.
And just as computers and the internet have made huge quantities of media (such as this blog) free for users, 3-D printers and disassemblers will push the production of stuff much closer to free. People will simply be able to download blueprints from the internet, put their trash into a disassembler and print out new items. Obviously, this won’t work anytime soon for complex objects like smartphones, but every technology company in the world is hustling and grinding for more efficiency in their manufacturing processes. Not to mention that as more and more stuff is manufactured, and as we become more environmentally conscious and efficient at recycling, this huge global stockpile of stuff acts as another deflationary pressure.
These deflationary pressures will gradually seep into services as more and more processes become automated and powered by efficiency increasing machines, drones and robots. This will gradually come to encompass the old inflationary bugbears of medical care, educational costs and construction and maintenance costs. Of course, I don’t expect this dislocation to result in permanent incurable unemployment. People will find stuff to do, and new fields will open up, many of which we are yet to imagine. But the price trend is clear to me: lots and lots of lowflation and deflation. This, ultimately, is at the heart of capitalism. The race for efficiency. The race to do more with less (including less productivity). The race for the lowest costs.
I’ve written about this before. I jokingly called it “hyperdeflation.”
Global Japanization
And the obvious outcome, at the very least, is global Japan. This, of course, is not a complete disaster. Japan remains a relatively rich and stable country, even after twenty years of deflation. But Japan’s high level of debt – and particularly government debt – does pose a major concern. Yes, as a sovereign currency issuer borrowing in its own currency the Japanese government runs no risk of actual default. But slow growth and deflation are stagnationary. And without growth and inflation, the government will have to raise taxes to cover the deficit, spiking the punchbowl and continuing the cycle of debt deflation. And of course, all of the Bank of Japan’s attempts at reigniting inflation and inflating away that debt through complicated monetary operations in financial markets have up until now proven pretty ineffectual.
This is where some form of universal basic income comes in: ultimately, the most direct stimulus for lifting inflation and triggering productive economic activity is putting cash in the people’s hands. What I am suggesting is nothing less than printing money and giving it away to people – as opposed to trying to push it out through the complicated and convoluted transmission mechanism of financial sector lending. This will ultimately become governments’ major backstop against debt deflation, as well as the temporary joblessness and economic inequality created by technological acceleration. Everything else, thus far, has been pushing on a string. And the deflationary pressure is only going to become stronger as efficiency rises and rises.
Throw enough newly-created money into the economy, inject inflation, and nominal tax revenues can rise to cover the debt load. Similarly, if inflation gets too high, cut back on the money-creation or take money out of circulation and bring inflation into check, just as central banks have done for the last century.
The biggest obstacle to this, in my view, is the interests of those with lots of money, who like deflation because it increases their purchasing power. But in the end, rich people aren’t just sitting on hoards of cash. Most of them do have businesses that would benefit from their clients having higher incomes so as to increase spending, and thus their incomes. Indeed, in a debt-deflationary spiral with default cascades, many of these rentiers would face the same ruin as their clients, as their clients default on their obligations.
And yes, I know that there are legal obstacles to fully-blown ‘helicopter money‘, chiefly the notion of central bank independence. But I am an advocate of central bank independence, for a variety of reasons. Indeed, I don’t think that universal basic income should be a function of fiscal spending at all, not least because I think that dispassionate and economically literate central bankers tend to be better managers of monetary expansion and contraction than politically motivated – and generally less economically literate – politicians. So everything I am describing can and should be envisioned as a function of monetary policy. Indeed, what I am advocating for is a new set of core monetary policy tools for the 21st century.
by Guest Contributor | May 5, 2016 | News
Sunday #41 March (April 10th), place de la République in Paris. Hundreds of people were present to discuss the basic income and other topics related to employment. The French Movement for Basic Income attended the meeting thanks to the invitation of the #NuitDebout movement. This citizens’ movement was created following demonstrations against the proposed French labour reforms and has since organized several popular gatherings in Paris as well as in dozens of towns in France and abroad.
Employment, housing, refugees, feminism, participatory democracy, constitution. Many subjects, concerns and values were discussed every day at the Place de la République since March 31. These discussions demonstrated the real concerns of citizens without the filter of the media. With the revelations from the Panama Papers, public institutions, particularly political parties, do not seem to inspire much confidence.
#MFRB Debout
On this #41 March (lets accept this new calendar!) two dozens of MFRB members from all over France have met on the Place de la République to take part on the first day of the convergence of struggles. The atmosphere was rather cordial. Questions and answers were exchanged with passers-by all day long. A conference was held with the MFRB, the Réseau Salariat network and the Economist and basic income supporter Baptiste Mylondo.
Workshops, co-facilitated by members of the MFRB and the network Réseau salariat, have enabled hundreds of people to discuss the basic income, living wage and on matters related to work as well as education, equal opportunities, free time, and many other topics. By late afternoon, a debate enabled participants to better understand these topics.
Conference about work, basic income and living wage
At the beginning of the afternoon, Nicole Teke, international coordinator of the MFRB, introduced the conference presenting the French Movement for a Basic Income, the notion of basic income and how the idea is currently progressing in France, Europe and the world. Past experiments in Brazil, Namibia and India were also presented, the results of which in terms of health, schooling, women’s emancipation and economic recovery are very convincing.
Benoît Boritz, member of the CGT trade-union (General Confederation of Labour), journalist and author of the book Coopératives contre capitalism (“Cooperatives against capitalism”) has presented examples of companies that are self-managed by their employees in forms of cooperatives (SCOP). This form of organisation has been gaining ground since 2010, as a number of companies have chosen it for its greater capacity to ability adapt to an evolving economy. The SCOP often aims at integrating ecological issues in their production and daily operations. Since 2013 the SCOPs’ number has grown considerably, and today they employ about 51,000 workers.
Following this, Baptiste Mylondo, member of Utopia and teacher in economy and political philosophy presented his counterproposal to the labour reforms, in five articles:
Article 1: Recognize everyone’s work by giving everyone the status of producers and contributors, whether one is unemployed or employed, active or considered inactive.
Article 2: Free work from the constraint of employment. “We all work every day as volunteers in a large organisation called society” said Baptiste Mylondo.
Article 3: Establish a sufficient citizen’s income to a level equivalent to the poverty line calculated at 60% of median income, i.e. 1,000€.
Article 4: Set up a cooperative working model to free us from the grip of capitalism and exploitation.
Article 5: Free our lives of work’s temporal control by a reduction of working time and the creation of an unconditional right to chosen part-time work.
In conclusion, Baptiste Mylondo specified his thoughts and suggested what could be the first reform to be associated with the introduction of a basic income:
“I speak about a sufficient income, not a minimum income. About a space of acceptable inequalities. To escape poverty and exploitation, to create a society where everyone can participate in democratic life. I am in favor of a ratio of 1: 4 between the lowest income and the highest one.”
Finally, Stéphane Simard, member of the network Réseau Salariat, presented the living wage project – different from basic income, even though some similarities can be noticed. Starting from 18 years old, this life-long living wage is based primarily on the evolution of labour in the twentieth century, mainly through the creation of the general scheme of Social Security in 1945. The amount could increase by validation of qualifications – in regard to the individual’s contribution to the society in the previous years. This living wage would be financed through an overhaul of the contributions’ system. Each company would contribute with 60% of its added value to the salary fund, meaning the same 1250 billion now paid for salaries, and another part would be paid into an investments office that would be dedicated to financing projects as an alternative to bank loans.
Convergence of struggles
Dissociation of labour and income, the need to change subordination to work, the willingness to recognize everyone’s contribution to the common good, the recognition of social utility, the interest to the SCOP initiatives… The convergence of struggles supported by the #NuitDebout from the very beginning of the movement has definitely enabled basic income to take a prominent place in the public debate.
To see the photos of the event: https://www.flickr.com/photos/revenudebase/
Collectively written by the MFRB – translated by Celine Le Carpentier
by Guest Contributor | May 4, 2016 | News
Article originally written in French by Basile Durand (MFRB), translated by Henri Geist (MFRB).
Answering the meteoric surge of interest provoked by the Finnish proposition to experiment with the basic income, the MFRB organized a conference on March third regarding UBI pilot programs and the Finnish Embassy in Paris. This conference was aimed at promoting understanding of the Finnish proposals and its motivations as well as opening the debate about the possibility of starting UBI experiments in France as well.
The conference was organized around four speakers and centered around the basic income and its experiments. The speakers included Olli Kangas, director of the research department of KELA (Finnish Institute of Social Welfare); Martine Alcorta, Aquitaine Limousin Poitou-Charentes regional councilor delegated to social and societal innovation, who aims to test a basic income in her region; Arnauld de l’Épine from Ars Industrialis, an international association for an industrial policy of the spirit technologies (founded by Bernard Stiegler) who said he is in favor of a contributory income; and Jean-Eric Hyafil, co-founder of the MFRB (French Movement for a Basic Income).
This article summarizes the discussions and includes some tweets exchanged during the conference with the hashtag #rdbfinlande.
Finnish experiments will start in 2017
Finland is currently in the process of establishing definitions and studying the feasibility of a basic income experiment. To cope with the complexity of social protection and the risk of poverty traps, a debate on the establishment of a universal income has taken shape in recent years. An intermediate report showing four types of experiments is due to be published in the coming days. Then Finland will choose one of the four experimentation options, which will be presented in the final report this November. The goal is to start the pilots at the beginning of 2017, which will run for a period of two years.
The first proposal offers a basic income distributed to everyone without conditions. The second proposal is a form of unconditional RSA, replacing the current social minima benefit. The third option is creating a basic income through a negative income tax. And the fourth option is left open for now. The questions of the amount of the basic income, the number of participants in the study and the unconditional nature of the benefit are also still under debate. On top of that, there are some additional concerns that must be sorted out, including fear of constitutional litigation or residency requirements. The introduction of the basic income requires a total overhaul of the welfare system, and this generates tension with some groups in society, particularly labor unions, which are major actors in the current system.
In France, a change of paradigm is necessary
Quoting Amartya Sen, who wished that everyone improved their own abilities without being constrained to find a job, Arnauld de l’Epine insisted on the importance of the freedom of choice, referring to the Declaration of Philadelphia or the Community Charter of Fundamental Social Rights of Workers which states that “Every individual shall be free to choose and engage in an occupation according to the regulations governing each occupation.” Building on the report of the French National Council of Digital, introduced in January, which proposed to experiment and study the project of basic income in France, Arnauld de l’Epine then supported the idea of establishing a guaranteed income to deal with automation and the rise of unemployment. The association Ars Industrialis is collaborating with Plaine Commune (agglomerations community of Seine-Saint-Denis) to test a supplemental income targeting young people.
Jean-Éric Hyafil recalled the cross-party nature of the MFRB. In its charter, the MFRB promotes an unconditional basic income without impairing the situation of the helpless or jeopardizing unemployment allowances, retirees or health insurance. Thus, one of the MFRB’s proposals would be to implement a national basic income gradually. The first step could be to implement an allowance like the RSA (French Solidarity Labor Income) for children, then by automation, individualization and finally the universalization of the RSA.
All speakers agreed on the need to experiment with a basic income prior to fully implementing such a policy, mirroring the process in Finland and Netherlands. In France, the experimentation project in Aquitaine is still in its embryonic state. But the agreement signed between EELV (French Ecologists) and the PS (French Socialists) during the last regional elections included the basic income experimentation project. Martine Alcorta stated she needed to study the subject in order to propose an experimentation model. The settings are thus not yet set. Quoting Amartya Sen. “Wealth is the ability to choose your life”, Martine Alcorta showed us her willingness to complete this experimental project.
France could therefore use the Finnish proposal to build its own experimentation, adapting it to the French context. By raising the subject, submitting ideas and reporting the various proposals, this conference gave us the opportunity to highlight the growing debate about the basic income. The MFRB stays at the disposal of all communities that desire to think about this important Twenty First Century idea.
Watch the video of the conference online (with English subtitles): https://youtu.be/mp5h9klZ0gI
by Guest Contributor | Apr 23, 2016 | Opinion
From the Basic Income Canada Network by
Roderick Benns, on March 29, 2016
Robert-Falcon Ouellette
As a youth growing up in Calgary, Robert-Falcon Ouellette remembers being inspired by the 1988 Olympics. Ouellette’s parents struggled financially, and his father was in and out of the picture. But his mother managed enough money so he could enjoy swimming at the City pool where he took to the water “like a fish.”
“I was there as much as possible – I just loved every minute of it,” says Ouellette, who is now Member of Parliament for Winnipeg Centre.
“Until one day a coach spotted me and invited me to join the University of Calgary swim team.”
The coach talked to both Ouellette and his mother, but the cost was a couple thousand dollars per year. He remembers the coach telling his mom that her son had great natural talent which should be developed. But the financial barrier was too severe for the family. In fact, even the visits to the City pool for leisure swimming soon stopped, also for financial reasons.
“That was a real dream of mine,” says Ouellette. “I’m still marked by it.”
Ouellette, who has gone hungry before as a youth and even spent one summer homeless, says he is sure there are many stories like this that have played out similarly across Canada, many much worse than his. Persistent poverty and lost opportunities are the kinds of things he suspects would dramatically be reduced if Canada had a basic income.
A basic income guarantee can take different forms but it is generally understood to ensure everyone an income that is sufficient to meet their basic needs, regardless of work status. The rookie MP is determined to have empirical evidence of how such a social policy change might benefit Canadian families, by establishing basic income pilot projects in the country.
His determination to have data undoubtedly comes from his depth of education. Ouellette is something of a Renaissance man, with degrees in music, education, and a PhD in anthropology. He also has 19 years under his belt with the Canadian Armed Forces, retiring from the Royal Canadian Navy with the rank of Petty Officer 2nd Class. Even now, he remains a part of the naval reserve.
The MP, who serves on the House of Commons’ finance committee, recently invited Professor Evelyn Forget to Ottawa to make a presentation because he wants his Party to consider testing the idea in a few regions across Canada, including rural, urban, and on a First Nations’ reserve. Forget was the researcher who unearthed promising data from the well-known Mincome experiment, which ran from 1974 through 1978 and which helped establish a minimum income for about a third of the people who lived there.
Forget dug up the records from the period and found there were fewer emergency room visits and less recorded incidents of domestic abuse. As well, less people sought treatment for mental health issues and more high school students continued on to finish Grade 12 to graduate.
When she appeared before the committee, Forget recommended a basic income of $18,000 per year. It would be paid, when necessary, by using the existing federal tax system. People could still earn money over and above this basic income but Forget recommends it be taxed back at a rate of 50 per cent on each dollar earned over $18,000.
When he was running for a seat in the federal election, Ouellette actually met a woman in a working class neighbourhood of Winnipeg who had been a participant in the Mincome experiment. It was a story Ouellette found inspiring. The Mincome money she received allowed her to go back to school to finish her education while she raised her three sons. Today, two of her sons have their Masters degrees, with one working for the City of Winnipeg and the other for Manitoba Hydro. The third son owns his own business.
“Here’s a single mom who was always just trying to get ahead. She now owns her own, small home and she helped her sons do well. That’s the hope for basic income – that’s why it deserves to be tested,” says the MP.
To that end, Ouellette has sponsored an online petition here to bring pressure and attention to this issue for his own government to support further study. He will likely have some high level supporters in Ottawa. Jean-Yves Duclos, federal Minister of Families, Children and Social Development, stated to several media outlets that a guaranteed minimum income is a policy with merit for discussion. As well, Senator Art Eggleton, has just called on the federal government to launch a basic income pilot.
Quebec has strongly signalled its interest in turning their existing income support tools in the direction of a basic income guarantee and Ontario recently announced it would fund a basic income pilot in an undisclosed location.
“We often hear poor people just make bad choices. Sometimes societies make those choices for us, though. If we have a society that supposedly believes in meritocracy without opportunity, then you don’t have a society of merit you have one of privilege,” he says.
“And as a society we just might be losing out.”
by Guest Contributor | Mar 29, 2016 | Opinion
By Clive Lord
Almost everyone I know of who supports the Basic Income (BI) does so on the grounds of social justice. I agree of course, but for me less inequality is only the second most important of three reasons to support the Basic, or as we call it in Britain, the Citizen’s Income.
When I joined the embryonic PEOPLE, now the UK Green Party, in 1973, I listened as an enquirer to a spiel based on the threats to the global environment caused by indiscriminate economic growth, which had been exposed by the Massachusetts Institute of Technology report Limits to Growth in 1972. I agreed with every word, but I had a question:
“What is your social policy? You are proposing a deep recession. I agree it will be necessary, but every recession to date has caused widespread hardship. What will you do when desperate people start looting?”
The answer was: “If we have to, we shall shoot them in the street. Social breakdown is hardly the best way to alleviate poverty.”
It is all very well readers being as appalled as I was, because the basic premise was right. The speaker then challenged me:
“Do you have a better social policy in mind?”
I didn’t. I spent the journey home wrestling with my own question. Guess what I came up with. I discovered later that the Basic Income had already been invented several times, for different reasons, starting with Thomas Paine in 1798. But even now, 43 years later, limiting economic activity to the ability of the ecosphere to cope was not part of the “successful” Paris climate agreement in December 2015. It will fail without that. A Basic Income will allow a steady state economy to be acceptable to whole populations, and so become a policy option, but it will have to be world-wide.
It will be dismissed as “unaffordable” – this would only be true if the economy has collapsed beyond the ability to provide basic necessities for all, but if linked to ecological realities it will entail drastic redistribution. This brings us to the more common justification for a BI of reducing inequality, but if all the Basic Income does is allow the poor to spend money confiscated from the rich, the Paris agreement is doomed.
However, I am continually perplexed by the widespread failure to grasp the malevolence of means testing – taking benefits away as soon as the claimant has any other income.
The next few paragraphs refer to the UK but will apply anywhere means tested benefits are used. For the person losing a means tested benefit, the effect is identical to a massive marginal tax. The clearest demonstration of this can be found in an unexpected source: the 2009 report Dynamic Benefits: towards welfare that works, released by the Centre for Social Justice. The Centre was set up by Iain Duncan Smith, who has been Work and Pensions secretary in the UK Coalition, now Conservative government since 2010 – and has recently resigned in protest against announced cuts to disability benefits. Dynamic Benefits was the foundation for the government’s welfare ‘reform’ policies. Its key recommendation was the Universal Credit (UC), whereby on finding employment a claimant would retain 45% of their former benefits. The former Work and Pensions secretary reduced this to 35% on taking office. This means that the former claimant is faced with a tax rate equivalent of 65%. Bankers on the highest tax rate lose 45% of their income.
In Dynamic Benefits, there are several graphs showing benefit withdrawal rates as though they were taxes. In fact, the first part of the report, outlining the problem, is an excellent statement of the case for a Basic income. The UC is an emaciated BI which attempts to remove the work disincentive of means testing, but still penalises beneficiaries disproportionately vis-à-vis high-income earners.
While Iain Duncan Smith’s stated reason for resigning was cuts to disability benefits, I believe the real reason is the imminent scrapping of the UC. In four years since being announced, the UC has only reached 5% of the 4.5 million who should be eligible. The Department of Work and Pensions is claiming that the UC will be fully rolled out by May 2021. The track record of slippage to date makes that improbable. That the initiator of benefit sanctions, the bedroom tax, and Work Capability Assessments presents himself as the defender of the weak and vulnerable is sickening, but Dynamic Benefits remains a useful document for basic income debates.
But my third reason is much more fundamental. A Basic income can begin a shift to a totally new culture. Instead of haves vs have nots, or bosses vs workers , the new fault line will be those who want to preserve natural systems versus those who believe there will always be a technological answer. This will enable a low growth economy to protect the ecosphere.
Milton Friedman, an archetypal neo-liberal, was in favour of the Basic income. Market forces are a basic pillar of neo-liberalism, but instead of the current system whereby the strong can exploit the weak, persuasion will replace work compulsion. The would-be employee will have equal bargaining power with the boss. Needless to say, Employee Benefits such as healthcare cover will also need to be negotiable. Experiences in India and Namibia show that far from encouraging idleness, a BI facilitates entrepreneurship. But it will also allow people generally to heed eco-constraints, notably climate change, where competitive capitalism does not.
Anyone curious to know more, my Book, Citizens’ Income and Green Economics (2011) is available from the Green Economic Institute. My blog www.clivelord.wordpress.com which is more up to date, but 
inevitably less coherent, discusses the Tragedy of the Commons, population, the Greek crisis, migration and fracking.
We may yet save “Paris” (and the planet), and feed everyone. There is even something in it for the capitalists.
Clive Lord is a founding member of the British Green Party, a major contributor to the party’s first “Manifesto for a Sustainable Society” and a basic income advocate.
