by Patrick Hoare | Nov 4, 2017 | News, Research
In a paper released in October 2017, the International Monetary Fund (IMF) has analysed the feasibility and effects of introducing a Universal Basic Income (UBI) in various economies, looking at how it might help ease destructive levels of inequality present in many societies around the globe.
The ‘IMF Fiscal Monitor: Tackling Inequality’ focused on how fiscal policy can help governments address high levels of income inequality (from here simply ‘inequality’) while minimizing potential trade-offs between efficiency and equity. As part of the second half of the discussion, the UBI was considered as a mechanism of fiscal redistribution currently being widely debated.
Underpinning the analysis of UBI were a number of premises. The first of these was the assumption that some inequality was inevitable within a market-based economic system. Even though data reveals a decline in the global levels of inequality over the last three decades, the increased inequality within certain economies has had adverse effects, not only in terms of social corrosion and political polarisation but also in terms of economic prosperity. As such, the inequality the report sought to address was the type that was specifically having a negative impact.
The second premise clarified that measures aiming to alleviate inequality should not come at the expense of achieving economic GDP growth. Supporting this, data was presented showing that between 1988 and 2008, across all types of economies, there had been an average growth of real income per capita across every income bracket, even if the increases had been greater for those earning more. It was also shown that an increase in overall growth between 1985 and 2015, in particular in East and South Asia and the Pacific Region, had coincided with huge reductions in relative poverty and absolute poverty, and, therefore, with increases in social welfare. With no clear trend between increased inequality and growth, and with various studies suggesting, contrarily, either that redistributive policies may slow growth or that redistributive policies may help growth (given that the marginal propensity to consume among the poor is higher), it was determined that, on balance, growth should not be unduly undermined.
The third condition stipulated that, given the limited fiscal space most economies operate within, simulations measuring the impact of a UBI should be performed under the assumption of budget neutrality. The vast drop in progressivity among the tax systems of the OECD member states, in particular the drop in the average top rate of personal income tax (PIT) from 62% to 35% between 1980 and 2015, does not seem to have been economically motivated, since during this period there was no evidence of: increased income tax elasticity; proportionally less income going to the top earners (the opposite was the case); increased support for the social welfare of the rich; decreased support for redistribution (the opposite was the case); or, a more progressive tax system being harmful to growth (there was some evidence to suggest the opposite could be the case). It was therefore accepted that this lower progressivity must be the consequence of political preference. As such, in order to control for various political perspectives, the funding for a UBI would have to come from a combination of spending cuts and increased taxes.
Following the establishment of such conditions, the central examination of the UBI was based around simulations of implementation within eight economies: Brazil, Egypt, France, Mexico, Poland, South Africa, the UK and the US. The choice of countries controlled for heterogeneity in geographical area, developmental stage (emerging market and advanced economies), and the generosity and progressivity of the countries’ current noncontributory transfers. The analysis of a UBI was then judged on whether it could increase coverage (the number of beneficiaries) and progressivity (those most in need benefiting proportionally more) of current redistributive programs, without impeding growth.
In almost all cases coverage increased, given the universality of UBI, however improvements in progressivity very much depended on the financing method and the existing level of progressivity within a particular economy. Where UBI was seen as a replacement for current benefit systems, countries with low progressivity but high coverage, such as South Africa, saw larger swathes of their lower earners suffer at the expense of a smaller percentage of beneficiaries within the same income category. In this circumstance, where consumption inequality is higher as a consequence of income inequality, progressivity as well as coverage could be improved if a UBI was financed by increased indirect taxation (consumption tax) rather than through cuts to the current system. In economies where both coverage and progressivity are already relatively high, such as the UK and France, replacing the current system with a UBI would be regressive. Similarly, even in a country where progressivity is high but coverage low, such as Brazil, the introduction of a UBI as a replacement would likely trade one off against the other, ultimately negatively affecting lower income households. In the situation where PIT among the top-earners is increased as a way of financing a UBI (altering the economic behaviour of these payers), the model calibrated to the US economy (moderate coverage and progressivity) found that, although efficiency, in terms of output forgone, was lower than against a system with indirect taxes, the PIT increase yielded greater overall welfare, especially where aversion to inequality was high. The final scenario, where simulations focused on comparing a UBI funded either directly, indirectly or through cuts, against the expansion of a benefit – the Earned Income Tax Credit (EITC) in the US – at the same fiscal cost, found that, due to the targeted nature of the EITC subsidy, welfare improvements were higher than would experienced under the implementation of a UBI.
In summary, The Fiscal Monitor concluded that a perfectly implemented means-tested system would always be superior to a UBI, since it would ensure the necessary coverage and provide the greatest level of progressivity within the bounds, constraints and conditions assumed. Therefore, in countries where there is a ‘good’ transfer program, the finance necessary to fund a UBI would be better used on improving the current system. That said, in reality, given the existence of imperfections in such systems, a UBI could be a powerful means of combating poverty and extreme poverty, especially in countries where both progressivity and coverage is poor. It was also noted that a UBI could be implemented for other reasons, such as in combatting job market disruptions associated with technological progress.
More information at:
IMF Publications, ‘IMF Fiscal Monitor: Tackling Inequality, October 2017’, International Monetary Fund website, October 2017
by Patrick Hoare | Nov 1, 2017 | News
David Simon. Credit to: Flickr
Whilst talking about his new HBO show ‘The Deuce’, David Simon, creator of the award winning series ‘The Wire’, has advocated for a “guaranteed income” to be introduced in the US.
During an interview with David Remnick on The New Yorker Radio Hour on the 29th of September, when asked about the nature of his politics given the content of his journalism and shows, Simon said that he was a “lefty” on “around 85% of the issues” citing a “guaranteed income” as an example of a policy he supported. He explained that, as far as he could see, “we’ve reached the death of work”, and “where we’re going as a society” in terms of “automation” means that we should be guaranteeing people some sort of income. Whilst it was not clear from the interview whether Simon was referring to a Universal Basic Income (UBI) or some form of Guaranteed Minimum Income (GMI), he explained that direct cash transfers to the financially poor were economically viable since the “20 or 30 or 40 thousand dollars” people would receive would go “right back into the economy”. He also pointed out that former US president Richard Nixon initially supported a form of GMI in the 1970s, alluding to the fact that even those who weren’t traditionally seen as being in favour of governmental welfare based solutions to economic growth could be amenable to related mechanisms.
Simon’s thoughts are somewhat of a continuation of the ideas he expressed in a talk at the Festival of Dangerous Ideas in Sydney in 2013. In a critical analysis of the prevailing iteration and implementation of capitalism, he lamented the idea that ‘profit’ was the metric through which we judged the health of both an economy and a society. Although he was unwavering in his support of capitalism as an economic model through which growth and progress occurs, he said that the use of it as a framework to assess the moral justness of people’s experience was mistaken and has led to ‘greed’ being considered as good. In order that we fulfill the notion of what he considers society to be – “that everybody feels as if, if the society succeeds, I succeed, I don’t get left behind” – he believes that “labour doesn’t get to win all its arguments, [and] capital doesn’t get to [either]”, but rather that “it’s in the tension, it’s in the actual fight between the two, that capitalism actually becomes functional”. In this regard, his advocacy of some sort of guaranteed payment policy chimes with other social commentators such as Peter Barnes, author of ‘With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough’, who see basic income as a social dividend rightfully distributed to everyone as a way of representing the fact that the majority of wealth is created together by society.
More information at:
David Remnick, ‘David Simon on the Rise of Pornography’, New York Public Radio, 29th September 2017
‘About Basic Income’, Basic Income Earth Network
Peter Barnes, ‘With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough’, Amazon Books, 30th August 2014
by Patrick Hoare | Oct 6, 2017 | News
Jon Altman and Eva Cox. Credit to: Alfred Deakin Institute (Deakin University, Melbourne)
The Alfred Deakin Institute at Deakin University in Melbourne, Australia, hosted a forum on the 17th and 18th August discussing the concept of a universal basic income.
Workshop co-convenor Jon Altman (Deakin University and ANU) suggested that part of the impetus for the workshop was the sense that discussion of UBI in Australia was not as advanced as it was in other countries. As evidence of this he cited the comment made by Chris Bowen (Shadow Treasurer for the Labor party), who said that UBI was “a terrible idea”. Tim Hollo – Executive Director of the Green Institute – also highlighted the fact that the Greens were the only major party in Australia currently in support of the concept.
Dr Tim Dunlop – author of Why the Future is Workless – gave context to the discussion by talking about the state of work, technology and automation. He said the “salient point” in labour market analysis is that many problems are current. Evidencing this, he summarized some figures from the International Labour Organization, including; global unemployment exceeding 200 million in 2017; stagnation of real wage growth; decline in proportion of wealth going to wages; 760 million men and women worldwide in “vulnerable work”, defined as work unable to bring them above the the world poverty threshold of AUD $3.10 per day; millions in refugee camps and jails; record levels of over and under-employment; and the creation of “increasingly precarious” work.
Looking at future technology, Dr Dunlop said that the consistent finding was that “around 40 to 50% of jobs are at high risk of automation in the next twenty years” (Oxford Martins School Report, 2015) under “currently existing technologies” (McKinzie Report) and that it would be “close to a form of denialism”, therefore, to state, as many do, that “concerns about technological unemployment are overstated”. Associate Professor Karl Widerquist agreed with this point, stating that “people are not interchangeable parts” and often find that their “learn[t] skills” are “not needed any more”. In this regard, he said a UBI could compensate for the continual disruption of technology, and the inherent inability of workers to adapt and provide themselves with income. Phillip Ablett (USC), summarising work by Mullally, added that neo-liberalism’s emphasis “on ‘individual responsibility’ for poverty” contributed to this persecution of workers, where we tend “to blame individuals for their ‘failure’ to succeed in the market economy rather than consider the structural impediments to achievement”.
Professor Widerquist said a shift away from labour prosperity to capital prosperity has led to an “incentive problem” where employers don’t have an incentive to treat their employees appropriately since employees don’t have any power to refuse their conditions. The universal nature of a UBI, as such, would allow for a “voluntary participation economy instead of a mandatory participation economy”. Dr Frances Flanagan agreed that “capital accumulation” was central to the problem of “acute inequality”, however she expressed concerns that discussions around UBI focused too heavily on wage leverage and monetary incentive. Citing “care work” as an example “utterly antithetical” to the taylorisms of tasking and efficiency, Dr Flanagan said we need a more positive definition of ‘work’ since there are always ‘jobs’ that “require empathy, judgement and relationships”. UBI, consequently, needs to be “supportive of the fight for better jobs” and “[be] supportive of the fight against marketisation”. Professor John Quiggin (UQ) echoed Dr Flanagan’s concerns that UBI risks the possibility of replacing social services with a single payment, though he did point out that an unconditional stipend could destigmatise the concept of welfare payments to individuals, undermining the concept of the “deserving and undeserving poor”. Professor Eva Cox (AO) was also critical of UBI as a means to empowering a “protestant, male, Anglo” market system, where humans are economically judged as being good or bad “consumers”. She reiterated the need to revisit the concept of ‘work’ through a lense where humans were considered “social”, “dependent” and “interdependent”, advocating a UBI that was used to redefine “the social contract between the nation state and the individual”, with “reciprocity built into it”.
On the subject of evidence to support a UBI’s practical plausibility, both Professor Widerquist and Professor Greg Marston (University of Queensland) said that trials investigating the effects could be strategically dangerous since the trial conditions are often neither unconditional nor universal. Marston pointed to climate change as an example of where the accumulation of data has brought about, in many cases, confirmation bias in support of inactivity rather than impetus to instigate change. It was generally agreed that the issues of design and implementation were not, therefore, easily separated. Professor Quiggin, Troy Henderson and Dr Ben Spies-Butcher advanced the idea of a staged introduction, a “stepping-stone” approach which would retain the “big idea” excitement for voters and simultaneously satisfy technocrats. Quiggin’s preferred model was to favour the “basic” over the “universal” through various mechanisms and adjustments to tax regimes, introducing a full UBI payment to selected, vulnerable populations, and then gradually increase the number of people covered. The cost of everyone in Australia receiving a full UBI was estimated to be around 5-10% of GDP. Henderson and Spies-Butcher offered modelling that began by universalising the age pension, and by also introducing an “unconditional Youth Basic Income paid to those aged 20-24 based on a negative income tax model.”
In conclusion, the consistent theme of the two days was that UBI cannot be offered as a silver-bullet solution to issues around inequality, welfare, social security and the potential growing precarity of work. So while there is a tendency amongst advocates (worldwide) to present UBI as a single policy response for addressing many of the problems societies have with these issues, the very strong feeling of the workshop was that this could be a dangerous over-reach.
You can view some of the contributors speaking here.
More information at:
Kate McFarland, ‘NEW BOOK: Why the Future is Workless’, Basic Income News, November 5th 2016
Hilde Latour, ‘KARL WIDERQUIST: About Universal Basic Income and Freedom’, Basic Income News, July 31st 2017
Homepage of the International Labour Organization
James Manyika, Michael Chui, Brad Brown, Jacques Bughin, Richard Dobbs, Charles Roxburgh, Angela Hung Byers, ‘Big data: The next frontier for innovation, competition, and productivity’, McKinsey Global Institute, May 2011
Karl Benedikt Frey and Michael Osborne, ‘Technology at Work: The Future of Innovation and Employment’, Oxford Martin School, University of Oxford, February 2015
Oxford University Press, ‘The New Structural Social Work: Ideology, Theory, Practice 3rd Edition’, Bob Mullaly
by Patrick Hoare | Oct 5, 2017 | News
A new poll POLITICO/Morning Consult conducted between the 14th and 17th September 2017 surveying 1,994 registered US voters, found that, of those asked whether they would support or oppose ‘a proposal in which the government would provide all Americans a regular, unconditional sum of money, sometimes referred to as universal basic income’, 43% either ‘strongly supported’ or ‘somewhat supported’ the idea.
The subgroup data showed that 23% ‘strongly supported’ the notion, 20% ‘somewhat supported’ it, 14% ‘somewhat opposed’ it, 25% ‘strongly opposed’ it, and 18% ‘didn’t know’ or ‘had no opinion’ on the idea. Males were slightly more in favour than females, with 46% compared to 39% supporting the idea. The breakdown by age showed that younger people were more receptive to the idea of a UBI than older people, with 48% of 18-29 year olds supportive of the idea compared with 32% against, while 52% of 30-44 year olds were supportive of the idea compared with 33% against. Within the 45-54 year old age group, 43% were in favour versus 39% against. Though 55-64 year olds were more opposed to a UBI than were supportive of it, 41% were still in favour of the proposal. Support amongst the over 65s was only at 30%, with 49% of this age group opposing the concept.
Of those who identified as having a ‘liberal ideology’, 32% ‘strongly supported’ and 27% ‘somewhat supported’ the proposal. Only 26% of this group either ‘somewhat opposed’ or ‘strongly opposed’ the idea. Consistent with what might be expected, those who identified as having a ‘moderate ideology’ were marginally more supportive of the proposal than opposed it: 44% against 39%; and those who identified as having a ‘conservative ideology’ were significantly more in opposition of it than they were supportive: 60% against 26%. Slightly surprisingly, given that highly educated adults – particularly those who have attended graduate school – are far more likely than those with less education to take predominantly liberal positions, there was a trend away from support of the proposal the more education the respondents had received. Of those who did not hold qualifications from college or higher, 46% were in general support of a UBI, compared with 38% of those with bachelor’s degrees and 34% of those with postgraduate degrees. A majority of those holding higher-education qualifications: 50% of those with bachelor’s degrees and 53% of those with postgraduate degrees, were in opposition to the proposal.
Those with lower incomes were more supportive of the idea than those with higher incomes. Amongst those with an annual income of $50k or less, 47% were either ‘strongly supportive of’ or ‘somewhat supportive of’ a UBI, compared with 41% of those with an annual income of between $50k and $100k, and only 29% of those with an annual income of more than $100k. Consistent with ethnic wealth distribution in the US, fewer identifying as ethnically white were supportive of the idea than were identifying as Hispanic or African American. Of the latter group, 61% were either ‘strongly supportive of’ or ‘somewhat supportive of’ the idea of a UBI, compared with 51% of those identifying as Hispanic and 39% of those identifying as white. The support, across the different employment sectors – private, government, self-employed, homemaker, student, retired, unemployment, other – was fairly consistent, ranging from 43% to 50% being generally supportive of the concept, with only the retired segment – in line with the results from the breakdown by age demographic – being generally opposed to the idea, where only 33% were ‘strongly’ or ‘somewhat’ supportive.
Geographically – Northeast, Midwest, South, West – there was not a great deal of fluctuation either in support of or in opposition to a UBI, with figures hovering around the overall averages. Urban communities were more receptive than suburban or rural communities, with 52% being generally supportive against 40% and 39% respectively.
For proponents of a UBI, the overall results compare favourably against a poll conducted by YouGov US and the Huffington Post on January 7th and 8th in 2014. When asked whether they would ‘favor or oppose expanding Social Security to every American, regardless of age, to guarantee a basic income to every American’, only 18% said they would ‘strongly favor’ the idea with an additional 17% saying they would ‘somewhat favor’, compared with 16% who said they would ‘somewhat oppose’ and 38% who would ‘strongly oppose’ the notion. The increasing popularity of a UBI in the US was also consistent with a poll conducted toward the end of 2016 by 50+1 Strategies and David Binder Research on behalf of the Economic Security Project, which found that, of the 500 people surveyed, 46% of were in favour of the idea, with 35 percent opposed and 19 percent undecided.
More information at:
Morning Consult and Politico, ‘Morning Consult National Tracking Poll #170911’, September 14th-17th, 2017
Pew Research Center, ‘A Wider Ideological Gap Between More and Less Educated Adults: Political polarization update’, PeoplePress.org, April 26th, 2016
Peter Moore, ‘Poll Results: Guaranteed jobs and basic income’, YouGov.com, January 9th, 2014
Patrick Caughill, ‘Survey Reveals Nearly 50% of Americans Favor a Universal Basic Income’, Futurism.com, December 20th, 2016
by Patrick Hoare | Sep 22, 2017 | News
Bündnis Grundeinkommen gathering at Brandenburg gate. Credit to: Enno Schmidt and Bündnis Grundeinkommen
The Bündnis Grundeinkommen, Germany’s political party campaigning on the single issue of introducing a basic income in the country, has held an open air event in preparation to participate in their first national election.
Hosted together with Kulturimpuls Grundeinkommen eV (a German broadcaster), the event took place on July 29th at the Brandenburg Gate, Berlin. There was a celebratory tone to the day with music provided by Kiezkneipenorchester, Juri di Marco and Bertram Burkert, and entertainment in the form of slacklining, by world record slackliner Alexander Schulz. Guest speakers included: Prof. Dr. Sascha Liebermann, Head of Education and Social Change in The Department of Education at Alanus College in Germany, Dr. Liebermann was one of the first advocates of UBI in Germany and adopted the campaign slogan “freedom instead of full employment”; Martin Bohmeyer, a 29 year-old web-developer, who self-imposed a basic-income in his own personal trial in 2014 and is now running an initiative called Mein Grundeinkommen in order to crowd-source for other individuals; Ralph Boes, a sit-in protester in central Berlin, who campaigns and argues for a guaranteed “livable income”; Prof. Dr. Bernhard Neumärker, Director for The Department of Economic Policy and Order Theory at The University of Freiburg; Enno Schmidt, who, in 2006 with entrepreneur Daniel Häni founded the Swiss Basic Income Initiative (Initiative Grundeinkommen) in Basel, which, in 2013 submitted 126,000 signatures in favour of the introducing of an unconditional basic income, leading to the UBI referendum in June of 2016; and Susanne Weist, the first chairman of the Bündnis Grundeinkommen, who received attention in 2009 due to her petition to the German Bundestag to introduce a basic income.
The press team at Bündnis Grundeinkommen said that “humans need security to thrive” and that “basic income is a secure economic base” which would allow humans to live in a new way, “pursu[ing] the lives they want to live”. The BGE:Open Berlin event was described as “a visual impression of this concept”, with Alexander Schultz’s slacklining performance embodying the concept of “basic income as a permanent earnings floor no one could fall beneath, offering security and personal freedom”.
Talking about the possibility of a UBI being introduced to Germany, Susanne Wiest, chair of Bündnis Grundeinkommen, said: “Basic Income may not only be about social security, but also about a better work-life balance and higher [level of] happiness. The days of people being exploited by the market wage would end. If people only work in jobs they enjoy, they would be more passionate about their work. No one would be excluded from society because they can’t find a job”.
Cosima Kern, vice chair of Bündnis Grundeinkommen, added: “Maybe the most important change would be a feeling of a shared prosperity, that we are all together in this”.
Commenting on the day itself, the speeches and the entertainment, Enno Schmidt stated that it was “amazing to see this UBI performance directly in front of the Brandenburger Tor, the symbol of the capital of Germany”. Regarding the meteoric rise of the party and of its origins, Mr Schmidt described how the co-founder of Bündnis Grundeinkommen Ronald Trzoska conceived of a party for basic income “on the day of the popular vote about the introduction of an UBI in Switzerland”. Although Germany does not have “the right of a people’s initiative, like the Swiss have”, Mr. Trzoska envisioned that a party could be formed within the MMP system at the German Bundestag, and campaign for the single issue of a UBI.
Mr. Schmidt stressed that the purpose of the Bündnis Grundeinkommen is “short and clear: unconditional basic income is electable”. It is a tool that means that “the people can do something for their ideal”. He did warn that “many make the mistake of mixing other issues with unconditional basic income and disguising the idea”, rather than focusing on it being an unassailable right, or, as he puts it: “[an] idea [that] is the human being”. There is often, also, too much focus, he says, on the concept of political parties, which are divisive and compartmentalizing. The time for political parties, as he sees it, is over. The “post-party party” of the single issue, such as the Bündnis Grundeinkommen, is more of a democratizing “social movement”, allowing direct participation and ensuring that the “trap” of waiting is avoided and that there is no temptation to “submissive[ly] attempt to participate in old sick forms”. “The party”, he summarized , “is a signal, it is an art form, it is a life platform and allows life for the unconditional basic income”.
On September 9th and 10th, German UBI activists met in Göttingen at BGE:open to discuss the political progress of UBI in Germany and worldwide. The elections the Bündnis Grundeinkommen participate in will take place on September 24th, 2017.
More information at:
[In English]
Albert Jöerimann, ‘GERMANY: Single-issue political party founded to promote UBI’, Basic Income News, October 5th 2016
Kate McFarland, ‘GERMANY: Basic Income Party Set to Participate in National Elections’, Basic Income News, July 9th 2017
Josh Martin, ‘GERMANY: Michael Bohmeyer Starts Crowdfunding Organization to Finance Individual Basic Incomes’, Basic Income News, August 10th 2014
Barrett Young, ‘GERMANY: Ralph Boes’ Sanction Starvation’, Basic Income News, September 11th 2015
[In German]
Grundeinkommen eV Hompage, Grundeinkommen TV
‘BGE:open air Berlin – #GrundeinkommenIstWählbar, 29.7.2017’, Youtube, August 8th 2017
Prof. Sascha Liebermann Interview, Unternimm Die-zukunft De
Mein Grundeinkommen homepage, Mein-grundeinkommen.de
Wir-Sind-Boes Homepage, Wir-sind-boes.De
Initiative Grundeinkommen Wikipedia page, Wikipedia.Org
Peter Bierl, ‘Bedingungsloses Grundeinkommen [Let’s talk about: Unconditional Basic Income]’, Süddeutsche Zeitung De, September 26th 2016
Homepage, ‘BGE: open 17.5 in Göttingen from 9 to 10 September’, Bündnis Grundeinkommen.De
