At the World Economic Forum in January this year, four panelists were invited to talk about universal basic income (UBI): Professor Guy Standing (University of London), co-founder of BIEN and author of several books on UBI, Neelie Kroes, former minister in the Dutch Parliament, former EU commissioner, and current member of several boards, Amitabh Kant, CEO of the National Institution for Transforming India (NITI Aayog), and Professor Michael Sandel (Harvard University), author of “What Money Can’t Buy, the Moral Limits of Markets”.
According to Guy Standing, there has been much evidence gathered through foundational research on the feasibility, affordability and implications of UBI, but this research has been ignored for many years. Due to the realisation of the potential effects of automation, however, interest in UBI has recently increased. Automation is not Standing’s personal motivation though—he advocates for UBI for three main reasons:
It is a means of realising social justice in line with Thomas Paine, Henry George and others, who have claimed that public wealth is created over generations. Therefore, if private inheritance is permitted, we should also establish public inheritance as a social dividend of this public wealth.
It is a means of enhancing republican freedom: freedom from domination by figures of authority using their arbitrary power.
It is a means of providing people with basic security. It is not designed to eradicate poverty per se, but rather to address the issue of insecurity, which underlies the rise of populism we see today. It is known that mental health and mental development is improved by basic security.
Standing: “I wish people would look at the evidence rather than continue with their views. We have done pilots, covering thousands of people and most fundamentally we found that the emancipatory value of a basic income is greater than the money value.
It gives people a sense of control of their time, so that the values of work grow relative to the demands of labour. The values of learning and public participation grow, the values of citizenship are strengthened. We found evidence from UBI experiments showing that the values of altruism and tolerance are enhanced. At the moment, society is suffering from a deprivation of altruism and tolerance.”
When asked to explain the support for UBI from both left- and right-wing politicians, Kroes argues that the flexibility of the concept is a reason why there is an interest from both left- and right-wing political movements: it can either decrease or increase the role of the government, the level of the UBI can vary and there are a number of different ways to fund it.
As Kroes explains, the UBI could replace large parts of the existing welfare system and would require choices to be made in advance regarding which benefits would be cut. This specificity would make it more difficult to find support from politicians across the political spectrum, which is why Kroes suggests starting off with a more modest system that would more easily find political support and can be seen as a starting point.
“The least ideological arguments in favour of a UBI are coming from technical entrepreneurs in Silicon Valley at the moment”, Kroes continues, noting that “they are trying to defend their own future”.
Kant is asked to explain the attractions of a UBI from a governmental perspective. He explains that the huge rural employment guarantee scheme and the public distribution system in India are very inefficient, mostly due to corruption.
Furthermore, India is facing changes in the labour market, where low skill-low pay jobs are decreasingly necessary, while the demand for high skill-high pay jobs is increasing. This shift requires radical restructuring of the educational system to provide the right skills, Kant argues.
There are huge inequalities in India: one third of the population is living below the poverty line. These are the people that should be targeted with a UBI, and 1000 rupees per person per month would be affordable, says Kant. India also has a few specific advantages, he further argues. There is a huge infrastructure of biometric and mobile phone payment systems in the country. At the same time, India recently transformed its ‘black economy’ of almost 1 trillion US dollars (parallel to a 2 trillion US dollar formal economy) into a ‘white economy’. This resulted in a significant increase of government tax income, so there is enough money to potentially fund a UBI, Kant explains.
Kant suggests it would be best to provide people with a UBI in the form of an interest-free loan for a period of three years, ensuring the money is repaid and recycled so it can reach more people. Simultaneously investing in creating jobs on the back of domestic consumption would give this scheme a push.
In response to this, Standing argues that, “in our pilots in India, we found that people improved their nutrition, family health, schooling, schooling performance, and entrepreneurship. The consequence was that they were generating more income and lowering the public service costs, as they were healthier. I would be very wary about turning it into a loan, because a loan rewards the entrepreneurial and therefore would increase the inequality in the villages. Where there was a basic income, it didn’t sort out the potential winners from the losers, it increased community solidarity”.
Professor Sandel is asked to talk about the role of work and the importance of paid work. “We tend to think of work primarily as a source of income, but work is also a source of meaning, an identity. The debate about basic income forces us to debate about the social meaning of work,” he explains.
There are two basic arguments for a UBI that are fundamentally distinct, according to Sandel: the ethical argument, which suggests that one can still choose to work and contribute to society, and the compensatory argument (from Silicon Valley), which sends the message that one is compensated for accepting a world without work and contribution to society is no longer of value.
Standing responds to Sandel’s view: “We need to reconceptualise what we mean by work. I believe the technical revolution is actually creating more work. The only problem is that it is not being remunerated, so it is contributing to growing inequality. The reason why Silicon Valley types are worried is because they think income is going to the owners of the robots and the others are going to be without an income.”
“The affordability question is a very easy one to answer,” Standing replies to a question asked by the chair. “Somehow, with Quantitative Easing [QE], the US government managed to fund Quantitative Easing of 475 trillion dollars. If that money had been used to pay a basic income, every American household could have received 56,000 dollars. That is just one little example. But I strongly believe that we must frame basic income as paid from rentier capitalism and from rentierism. Because at the moment the corruption of capitalism about which I’ve written is primarily because the returns to property and intellectual property and the rentier incomes from natural resources are going to a tiny minority – and we need to be sharing that.”
A mix of Dutch speakers from different fields, all in favor of a basic income, interactively discussed the concept of a universal basic income (UBI) during the symposium “a basic income, full speed ahead!!” [“het basisinkomen, volle kracht vooruit!!”] on January 23rd . The aim was to gather ideas about how to progress to make UBI a reality in the Netherlands as soon as possible. The symposium was organized by “Basisinkomen2018”, the organization behind the petition signed by more than 66,000 citizens (a number that is still growing).
Johan Luijendijk, co-founder of “Basisinkomen2018”, announced a few activities his organization will be organizing and/or funding in the Netherlands such as competitions between universities and informative movies aimed at countering negative preconceptions about a basic income.
He states that supporters can be found in left as well as right wing populations, but the image of a basic income is that of a left wing idea. There is still a lack of understanding of the concept of a basic income and many still believe it will make people lazy. There is also an obstinate, Calvinistic opinion in the Netherlands that one has to work for every penny, argues Luijendijk.
The audience expressed the need for a clear overview of each political party’s stance on basic income in the Netherlands. (On March 15th, the country’s Parliamentary elections will take place).
“Overall, the idea of a basic income is very much alive in the Netherlands, and Basisinkomen2018 will continue to invest in explaining the concept to the people,” Luijendijk assured the audience. An explanatory animation about basic income was introduced during the meeting, including strategic instructions about how to share it (not all at once).
According to Reinier Castelein, chairman of a Trade Union “de Unie” (financial sector), very few trade unions focus on a basic income because they are traditionally focused on work. However, he went on to say:
“An ever-increasing number of people are living on social benefits. Unemployment is increasing and will continue to increase, especially if you realize you disappear from the statistics when you don’t apply for jobs anymore. In the financial sector alone, 60,000 jobs have disappeared and more are expected to disappear. Due to the misbehavior of some people at the top of some banks, there is no empathy for these people in society.“
“More and more people are working in multiple small jobs in order to earn enough money for a decent living. With a basic income, unemployment can be abolished.” Castelein continues, “a basic income would contribute to a redistribution of work and income with less working hours a week, creating possibilities for participation in caring roles or other (currently unpaid, but useful) work.” People from the audience complemented these expected results with positive effects on health, decreasing criminality, and more room for creativity and contribution to solutions for the problems in society.
Employees can better focus on their work if they are not distracted by the struggle to make a living and the quality of work will improve under such circumstances, argues Ton Stuy, an employer in the transportation sector.
“With a basic income you can take away discontent and it is an answer to Brexit and Trump’s protectionism. Furthermore, a basic income creates room for lowering wages and it will not cost more than the crazy things we spend money on now, “ he states.
With respect to the affordability of a basic income, Stuy argues: “If you invest in the well-being of people, it will come back and therefore it will not cost anything, but will even be profitable. Employers who treat their employees well should get more attention.”
Liesbeth van Tongeren, a politician from the Green Left party (“GroenLinks”), compares the discussions about basic income with the discussions about the abolishment of slavery and the discussions about women’s empowerment in the past. In both cases, people originally argued it would be unaffordable and an unachievable goal. Eventually both turned out to be achievable and affordable.
The concept of a basic income also touches the question of what is appreciated: effort or the economic benefits? Many people say, “My job is a useless job, nothing would change if I didn’t do my job.” In reaction to the remark of Ton Stuy, who thinks a basic income will have a decreasing effect on wages, van Tongeren argues that the effect will be in both ways: some jobs will be paid more and others less. It will change the established hierarchy in society and it will also change the interrelationship of many men and women. These effects cause anxiety, according to van Tongeren.
For van Tongeren, the reality is that more and more people are falling out of the system. At the same time, 90 billion euros a month are created and spent in Europe in the context of quantitative easing. This money could instead be divided amongst the European citizens, which would be a good start. It would help if the IMF would make a statement about it in this context, van Tongeren states.
George van Houts, from the theater group The Seducers (“De Verleiders”), shares his experience with the audience and explains the role theater can play in the discussion about the current financial system. His theater group played several pieces around this topic and attracted full theatres. “We are informed by a group of scientists (Our Money, “Ons Geld”), who check if the information is accurate.” Van Houts explains that money is made by commercial banks, as debt.
“We performed a play around this topic at the Dutch central bank (“De Nederlandsche Bank, DNB”), and we were not argued against, but Klaas Knot (President of the DNB) asked why we would worry the people. ”Many top bankers know something will have to change, as the system is about to burst, according to van Houts. The responsibility of the creation of money should be given back to the government and it should not be created as debt, which is the case now.
Van Houts indicates a parallel system is already in place: the DNB-coin (similar to the bitcoin). This system can function parallel to the euro and people could be given a bank account at the DNB, which could be used for a basic income, for example. This could then be managed by a public organization that is not dependent on ‘voters’ favour’.
A basic income is inevitable, according to Jan Rotmans, Professor in Sustainability Transitions at Drift (Erasmus University Rotterdam). He supports this prediction by comparing the current stage of the “digital revolution” with the industrial revolution of the 19th century. “We live in a time of chaos, anxiety and social inequality, but eventually, the optimists were right.” The most important resistance comes from within, Rotmans explains. “It is better to have one small success story than many meetings trying to think it all through in order to implement it on a large scale. Just start doing it. Examples of such small scale initiatives in The Netherlands are the crowd funded basic income project in Groningen and the initiative in Terneuzen.” (The city council of Terneuzen thought they had found a way to implement a basic income for a small group of citizens on social benefits, but a few days after the symposium the central government claimed it was illegal). The technological developments are causing a battlefield in the middle part of the working-class and this is likely to cause a downward spiral of fear that “it will happen to me”. “Can we keep everyone at work? No,” so radical solutions are necessary, according to Rotmans, one of which can be a basic income.
Info and links
Special thanks to Josh Martin and Jenna van Draanen for reviewing this article
Photo: symposium a basic income, full speed ahead!!, January 2017, Rotterdam the Netherlands by Hilde Latour (at the desk from left to right: George van Houts, Jan Rotmans, Liesbeth van Tongeren and Johan Luijendijk)
Business Insider published an article based on an interview with co-founder of BIEN, Guy Standing, focusing on his analysis of the working class in the Western world.
Standing sees a growing class of “precariat” workers, caused by a political agenda promoting market-led competition since the 1970s. A significant group of this “precariat” is prone to listen to ugly voices playing on their fears and supporting neo-fascist populism as a result. This helps explain the election of Donald Trump in the US, but also Brexit and the popularity of Marine Le Pen and Geert Wilders in Europe.
He refers to his book “The Corruption of Capitalism”, where he describes a growing group of wealthy citizens (the “rentier class”) who live on income from investments and property (including copyright and patents that often last for 20 years). This increases the gap between the rich and the poor.
According to Standing, at least part of the solution could be the introduction of a universal basic income (UBI), and he has seen growing support for this idea from both left and right wing politicians, economists and many others in the last few years.
“I see no reason why we will not have it within the next ten years — and maybe sooner.”
Standing states that a UBI can be seen as a matter of social justice, as a compensation for a system of property that results in a loss of natural inheritance, a point argued extensively by Thomas Paine, who introduced the idea of a citizen’s dividend back in 1795. It would also enhance individual liberty and give people a sense of security.
The affordability of a UBI is not a problem, Standing argues. It would replace other forms of public spending, and could be funded by the establishment of capital funds, like those derived from oil in Alaska and Norway, and the rental flows from patents.
The belief that UBI would remove the incentive to work is ridiculous, he further claims. Enough evidence is available to show it is the opposite:
“If you had a basic income, it would mean that everybody would have a base, on top of which their earned income would be taxed at the standard rate of tax. That would increase the incentive to take low-wage jobs.”
The current Western systems of ‘social welfare’ discourage people from taking low-wage jobs. These systems are poverty traps, argues Standing.
“We must have a new income distribution system [as] real wages will continue to decline in OECD countries, insecurity will continue to grow, and rental incomes will continue to go to the top. That is a recipe for economic instability, political extremism, and a lot of other nasty things.”
Info and links
This article is the second in a two-part series based on Thomas Colson’s interview with Standing. The first article contained ambiguities that lead to inaccurate reports about the Indian situation. It was corrected in a Basic Income News article “Jumping the Gun in India“.
Special thanks to Josh Martin and Genevieve Shanahan for reviewing this article.
David Piachaud, Emeritus Professor of Social Policy at the London School of Economics and an associate of The Centre for the Analysis of Social Exclusion (CASE), published a discussion paper on Citizens’ Income (CI) in December of last year.
Abstract:
A Citizen’s Income, or a Basic Income, is not a new idea but it has been receiving
increasing attention. There is confusion about the idea and an attempt is made to
distinguish different concepts. Then a full Citizen’s Income is examined in relation to four key criteria: the justice of an unconditional benefit; the possibility and fairness of a simple individual benefit; economic efficiency; and political feasibility. On all four criteria, Citizen’s Income fails. It is concluded that Citizen’s Income is a wasteful distraction from more practical methods of tackling poverty and inequality and ensuring all have a right to an adequate income.
Summary
Piachaud first acknowledges that a CI, or a basic income, is attractive in its simplicity, and he cites article 25 of the UN Declaration of Human Rights of 1948: “Everyone has a right to a standard of living adequate for the health and well-being of himself and his family.”
Piachaud states, “A Citizen’s Income could ensure that right was achieved.”
He then describes four different concepts of a Citizen’s Income (CI):
Bonus CI (a basic income based on a dividend)
Partial CI (a basic income for particular groups only)
Supplemental CI (additional income alongside a social security system)
In the rest of his paper, Piachaud examines a full CI (which in his definition is not based on dividend but fully financed out of taxation) in relation to four key criteria. Through his analysis, he concludes that Citizens’ Income fails all four of these tests:
The possibility and fairness of a simple individual benefit
A full CI is intended to ensure (in a simple manner) that needs are met, but not everyone has the same needs. Piachaud gives examples related to disability, diversity in housing costs, and diversity in living arrangements (people living alone or with others). Basing a CI on individuals and assuming their needs are identical, is therefore unjust, Piachaud argues. “The social security and in some ways the tax system attempt to take these factors into account, however inadequately.”
Economic efficiency
Piachaud defines a full CI as an unconditional income fully financed out of taxation. With respect to the economic efficiency, he argues:
“A full CI goes to everyone unconditionally, whereas social security is targeted at certain groups who in the absence of social security would be most likely to be poor. In consequence, a full CI that replaces social security is far more costly than social security, and this has to be paid for from higher taxes on all incomes with far-reaching economic consequences. The inevitable conclusion is, therefore, that a targeted social security system was, is, and will be more efficient and equitable than a full CI.”
Political feasibility
Piachaud finds it very unlikely any political party will adopt an unconditional CI as a policy proposal either in the full or supplemental forms
After this analysis, David Piachaud concludes, “Citizen’s Income is a wasteful distraction from more practical methods of tackling poverty and inequality and ensuring all have a right to an adequate income.”
On December 15th 2016, the ‘committee for citizens’ initiatives’ decided not to allow a discussion in Dutch Parliament about the proposal, organized by Basisinkomen2018, to implement a universal basic income (UBI) in 2018.
Although enough citizens signed the citizens’ initiative (more than the threshold of 40.000), UBI will not be discussed in Parliament because it already has been discussed in reaction to the ‘note of initiative’ (“initiatiefnota”) of the member of parliament Norbert Klein in September last year.
The rule is that a topic cannot be forced onto the agenda by means of a citizens’ initiative if it has been discussed in the past two years.
Klein’s proposal was submitted after the start of the citizens’ initiative, it was only discussed (and not decided about) in a meeting of the committee of social affairs and did not concern an implementation of a UBI (it asked for more research). Nevertheless, the ‘committee for citizens’ initiatives’ (one of its members being Norbert Klein) decided the proposal did not meet the criteria to be admitted for discussion in Parliament.
In reaction to this decision, Norbert Klein spoke in the House of Representatives, “To the 65,000 people that signed this citizens’ initiative, the procedural side is of course subordinate to the content. That’s why I consider the great support for the basic income as especially valuable and as a support for me to continue to push for a basic income. The basic income is on the agenda and will remain on the agenda in 2017.”
Johan Luijendijk, Pieter Parmentier and Michael Amendeone from Basisinkomen2018 are disappointed but remain positive:
“We will invite the political parties ourselves. We organized a symposium: Basic Income, Full Power Ahead (“Het Basisinkomen, Volle Kracht Vooruit“) that will be held on January 23rd. We are honored that a union leader (Reinier Castelein), a scientist (Jan Rotmans), a theater man (George van Houts) and an entrepreneur (Tom Stuij) want to contribute to the discussion as convinced ambassadors of a UBI.”
No more seats are available for this symposium, which emphasizes the popularity of the concept of a UBI in The Netherlands.
