by Guest Contributor | Sep 12, 2017 | Opinion
In 1970, conservative Republican US President Richard Nixon introduced a health bill into the American Congress. It passed but was defeated in the Senate. He did not realize it was a health bill, nor did many of his fellow politicians. It was called the Family Assistance Plan, a guaranteed income for families with children, not adequate to bring the income up to the poverty line, but substantially more than was previously on offer.
It required the breadwinner to accept work if available. Thus it was targeted, conditional, and inadequate by itself to eliminate poverty, but it was a huge change in thinking from a conservative leader in the United States. It came with this impressive rhetoric
“Initially this new system will cost more than welfare, but unlike welfare this is designed to correct the condition it deals with and thus lessen the long range burden and cost.”
The health-income gradient and the failure of ‘welfare’
We know that health and poverty are inextricably linked, that health outcomes follow the income gradient, and that the basis for this association in wealthy countries with good health systems is not simply access to care, but poverty and its own associations. Thus the Nixon proposal was a health bill.
The famous Whitehall study of British public servants who all had similar access to the National Health Service demonstrated a clear association of income with health outcomes. Those most in control of their own lives lived longer and suffered less.
Because of concern about wasting taxes on welfare and about the so called ‘welfare trap’, we have developed a highly targeted welfare system in Australia, with a strong emphasis on mutual responsibility. Our efforts to identify any welfare ‘fraud’, accidental or intentional, have become increasingly intense.
We continue to force people to chase jobs which do not exist or which they could not do. We hound them with letters generated by computers and then make it difficult for them to question any charges against them. We demean them. We dis-empower them even further than their poverty, unemployment, mental illness, or physical illness already does.
A BIG idea
An alternative is needed. The concept of a Basic Income Guarantee (BIG) is not new. Thomas More wrote about it 400 years ago in his book Utopia. Variations of it have been advocated for centuries. Bismark’s social insurance in Germany has some elements of the concept. Nobel Laureate economist and free marketeer Milton Friedman advocated it in the form of a negative income tax (NIT).
Dr. Tim Woodruff
Four trials in the 1960-70s in the United States used Friedman’s model (p 107-109). If an individual’s tax return indicated a low or no income, a tax rebate was paid as a monthly deposit to a bank. The size of the rebate declined slowly as income was earned, ensuring earned income led to an increase in total income. The largest of these four trials involved 4,800 families, and the amount given varied from 50 to 100 percent of the poverty level. There were no work requirements.
The alternative model to NIT is a cash payment. This was trialed in Canada in 1974, where 60 percent of the Low Income Cutoff (poverty level) was paid. For every dollar earned the payment was reduced by fifty cents. Analysis of results showed that even though only one third of the population ever qualified over the 4 years of the trial, high school completion results increased and hospital admissions decreased during the trial compared to the control group.
An even more simple model is one in which the cash payment goes to every individual adult and is not means tested. This eliminates any negative perception of being needy, because everyone receives it. For those who do not need it, the money can easily be recouped by changes in taxation.
Counting costs, reaping benefits
The Basic Income Earth Network established in 1986, defines a basic income guarantee (BIG) as “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement”. This does not specify the level of the cash payment but the simplest and likely the most effective method would be to make the level at or slightly above the poverty line.
Concerns about the basic income guarantee relate both to the benefits and the costs. The Canadian trial mentioned above, demonstrated both health and education benefits. Analysis of the effect of increased household income in the Cherokee Indian community as a result of distribution of profits of a Cherokee owned casino showed less criminality and improved education down the track. None of this is surprising.
But does this mean people will not work as hard? The US trials referred to previously showed a decrease in hours worked particularly among women and young adults. Is that bad? It is not clear from the data what they did instead of working so much. Were women spending more time looking after their families? Were young adults looking more carefully at work options and training?
Men reduced their work hours by about six percent but it did not appear that they were permanently unemployed. Rather, it appears they were spending more time between jobs. The sky did not fall in. Most people who can earn a little more than a poverty level income will do just that.
Is it affordable?
A basic tax free income guarantee of $22,000 (the poverty line at 50% of the median income for a single person) for every adult Australian (18 million people) would cost $400 billion a year. But the idea is not to increase the net income of millionaires by $22,000. It keeps administration simple to give the basic income to everyone and recoup in taxes from the wealthy. So the real cost is much less.
Only about six million Australians currently receive income support. Another one million or so have some funding from the Federal Government. Being generous, for eight million to receive the BIG would cost $176 billion, almost completely offset by replacing the welfare budget of $150 billion. That could be abolished.
Removing the tax free threshold of $18,200 for the 12 million earning more than that would generate $41 billion. But anyone on a low income would still have a total income of more than $22,000.
Tweaking the tax rates on higher incomes would effectively remove the BIG from higher income earners. Provision for children would add to the cost. Reducing BIG for dual income households to a level which would reflect economies of scale, in the same way as pensions do currently, would reduce the cost.
Most Australians would not lose a cent. All Australians would be guaranteed a basic income, whether sacked, disabled, unable to find work, or simply unemployable. The NDIS and Medicare would continue unchanged. This is all possible. Even the Productivity Commission thinks it’s worth investigating (p69):
“While Australia’s tax and transfer system will continue to play a role in redistributing income, in the longer term, governments may need to evaluate the merits of more radical policies, including policies such as a universal basic income.”
A bold move for health
If Australia introduced BIG we would have a system that almost eliminates poverty, thus appealing to those deeply concerned about the plight of the disadvantaged. We would also have a system which gives such people the genuine capacity to make their own decisions about what they do with their lives, which should appeal to those committed to individual responsibility.
Implementing this idea would do away with the current cruel, dis-empowering, wasteful welfare system. It would improve health outcomes. It could improve productivity. It would improve the life prospects of the 13% of Australians who currently live in poverty, the 17.4 percent of kids who are being raised in poverty, and the 40 percent of children in single parent families who live in poverty.
This is a health issue. Medical groups of all types should think about how we might use our knowledge and concern about health to bring this issue to the minds and actions of our politicians.
About the author:
Dr. Tim Woodruff is president of the Doctors Reform Society, an organisation of doctors and medical students promoting measures to improve health for all, in a socially just and equitable way. On twitter @drsreform
Edited by Tyler Prochazka
by Guest Contributor | Aug 30, 2017 | Opinion
The relationship between health and social context includes a range of factors influencing overall well-being. Social status, class, lifestyle, education, and environment primarily shape these factors. Age, gender, race, and ethnicity are structural variables of equal importance to health outcomes. Health is being facilitated or inhibited by the socioeconomic, cultural, and political backgrounds, in which one is born and raised. The people that view these data points and makes correlations between socioeconomic status and backgrounds to health issues have an interesting career because they constantly have to adapt to the understanding of new societal groups and focus on why a certain group would make a certain decision, for example.
In the last few decades, we have seen growing income inequality between the poor and rich. Since the 1980’s, the United States of America has seen a shift in wealth from the middle class towards the wealthiest people and transnational companies. The top one-tenth of 1 percent owns as much as the bottom 90 percent. Firebaugh and Beck argued economic growth would automatically benefit the masses, which in hindsight seems questionable.
As health outcomes and life expectations closely liaise to within-country income inequality, policies should aim at finding appropriate actions to address this phenomenon. Meaning, getting basic family urgent care, in terms of medical needs cannot be compromised. Currently, in some countries, those who earn more are able to find medical treatments to treat their injuries or illnesses, whilst those who don’t have as much money are having to cope with their illness or find other treatments. For example, those who suffer from digestive problems would have to pay a significant amount to get their illness looked at, so people on lower incomes will find supplements to help them instead. The bio complete 3 supplement can deliver prominent improvements for people’s digestive systems, so people are able to treat these problems. However, not all problems can be treated with supplements. This is why changes have to be made.
Wilkinson and Pickett found health issues to be strongly correlated to income inequality within a country. To support this finding, they used two different measurement tools. The first index, applied to Western countries, was a ratio of the 20 percent top incomes in relation to the 20 percent of the bottom earners. For different states within the USA they used a second index, the Gini-index, which adopts a different methodology. Where ‘Gini = 0′ represents perfect equality (same income for everyone) and ‘Gini = 1′ is total inequality (if all income goes to one person). The outcome of these results showed that the widening income gap led to an increase of different health issues related to mental disorders, life expectancy, infant mortality, obesity and teenage births. Societal problems that correlated to income inequality included: lower levels of trust, less educational performance, more homicides, higher imprisonment rates and a lack of social mobility. Some authors found Wilkinson and Pickett’s dismissal of poverty in relation to health outcomes incorrect as they did not measure it. On the other hand, research by Beckfield and Bambra confirmed the correlation between life expectancy and health stating that the lagging welfare state in the USA led to an average loss of 3.77 quality life years in comparison to other OECD countries. The USA has an income gap of 8:1 (the average biggest earners have 8 times the wage of those at the other end of the spectrum) leading to a life expectancy of 78.7 years, which is in contrast with Japan reaching an average of 83.0 years with an income gap of 4:1. The same age dependent relation has been found in Scandinavian countries having similar income gaps as Japan.
Goda and Torres Garcia looked at the rise of global inequality and confirmed previous results by stating that within-country inequality is responsible for 70 percent of the global inequality, suggesting 30% is due to in-between country inequality.
Taking national and local figures into account for the UK, the Office for National Statistics observed a life expectancy for new-born baby boys to be 83.3 years in the Kensington and Chelsea area. Meanwhile, the life expectancy for the same cohort in Blackpool is merely 74.7 years. Nationwide, the female life expectancy is 86.6 years in Purbeck and the lowest in Glasgow City with an expectancy of 78.5 years. The authors conclude that inequality has increased over the last two decades despite improvements in these local areas.
Medical technology has improved greatly over the past two decades, with many illnesses that were fatal twenty years ago proving simple to treat now. Simple technological breakthroughs such as RFID labeling and instant messaging have meant that medical practices can be streamlined, saving time and money which can then be invested back into treating patients. With all these improvements in technology, why is there still little improvement in life expectancy in some areas? The answer lies again with income inequality, with areas that suffer from low income also suffering from lower government funding. This directly impacts the access local hospitals have to new technology, meaning they have fewer new technologies to utilise for their patients.
We may assume a strong relation between income inequality and health outcomes on a global scale as Dorling in recent research concludes there are overarching arguments. Dorling (2007) confirmed a strong relation between income inequality and negative health outcomes on a global scale after an observational study performed in 126 countries.
The academic world has provided alternatives to deal with the widening gap between poor and rich. Reformed minimum wages, living wages, basic income or a global ‘fair tax’ and redistribution are only a few austerity counter-proposals to ensure overall well-being by reaching or transcending the poverty line. Minimum wages have proven insufficient and a basic income is still globally debated. An international fair tax may even prove more challenging as this requires global political support.
Minimum wages and living wages have the same aim; raising income for the least fortunate to reduce the impact of a growing income gap. A minimum wage is defined as a minimum market valued income, imposed by law and paid by employers. A living wage is a locally liaised and negotiated pay rate that a fulltime employee needs for a household of four to reach the poverty line. For the latter, societal context is important, as living in a metropolitan area is more expensive than living in the countryside. The Basic Income Earth Network defines basic income as “a periodic cash payment unconditionally delivered to all on an individual basis, without means, test or work requirement”.
A locally implemented living wage project in the UK, facilitated by the General and Municipal Boilermakers Union in 400 councils, has proven to be successful in reducing (health) inequalities as well as being beneficial for government tax income. Awareness within the community influenced policy in a way that living wages became accepted as a benchmark for society. In this regard, a living wage clearly will contribute to individual well-being and social cohesion – both factors improve health within communities.
Proposals for a Universal Basic Income (UBI) are slowly reaching the minds of global policymakers, but this process will take more time in achieving broader support. In developing a short-term response tackling inequality, a living wage appears to be a possible solution for developed countries yet remains a huge challenge for developing countries.
Emerging new technologies will demand economical strategies that are able to cope with less job certainty and keeping up with growing demands in healthcare.
A redistribution of capital, as proposed by Thomas Piketty in his book ‘Capital in the Twenty-First Century’, in combination with a UBI may prove to be the best strategy in the long-run to counter income-related health inequalities on a global scale. We must urge politicians to finally face transnational companies and the top one percent in order to obtain a globally acceptable taxation rate.
About the author:
Sam Brokken hails from Belgium and lives near the city of Leuven. He studied physiotherapy, sports physical therapy and manual therapy practicing these areas for years in private practices within local communities. He lectures in musculoskeletal disorders in relation to manual handling and ergonomics for healthcare service providers.
He is currently engaged in postgraduate work at the Robert Gordon University (Aberdeen – Scotland) within the MSc Public Health and Health Promotion course.
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by Guest Contributor | Aug 21, 2017 | Opinion
Why do so many leading economists pronounce themselves in favor of a Basic Income? Because of its positive economic effects on the distribution side, for example. Basic Income stabilizes the overall domestic consumption and provides a kind of regulation for the ratio between expenditures and savings. Furthermore, the Basic Income helps up to a certain degree to equalize the “unnecessary” distortions arising from the free play of market forces within the context of automation, digitalization, delocalization and further developments in society. And finally, Basic Income constitutes a lean and just system to provide every single individual with the minimal share of the wealth of nations that he/she is entitled to.
The economist and former head of the Hamburg World Economic Institute Thomas Straubhaar does not put the emphasis on the macroeconomic aspects. In 2006, he was one of the originators of the liberal Basic Income proposal “Solidary Citizens’ income” promoted by Dieter Althaus, member of the center-right party CDU and Thuringia’s prime minister at the time. Straubhaar’s new publication “Radikal gerecht” (radically just) shows some interesting development, while maintaining the core of the arguments in favor of a Basic Income from a liberal perspective.
The principles remain the same: Basic Income is paid unconditionally, to each individual, in addition to existing income and an amount that allows for a dignified living of each person. According to Straubhaar, Basic Income is a liberal concept because it promotes free choice of the individual (including the poor) and abolishes social bureaucracy. And it is a just cause because people with a high income pay more net taxes than those with a low income. While the citizen’s income of 2006 was calculated at €600 per adult per month (Bürgergeld), Straubhaar now speaks of €1,000 per person. He does not insist on this sum, saying that a) the basic needs of the individuals have to be re-evaluated periodically by the responsible office, for instance the federal statistical office, and b) in addition the amount is and will be a function of the political debate. A higher Basic Income requires higher taxes, which is the expression of the political will respectively of the political majorities. “It is obvious that the amount of the Basic Income and the tax rate are the levers of the policy makers and of the population to steer this new social system”, he writes on page 17.
Straubhaar presents the Basic Income as a kind of radical reform of the tax system. He calls it a negative income tax, however. A core element of this tax reform would be a flat rate tax on all kinds of income, not only wages, but also capital revenues and revenues from automats and robots. Here, Straubhaar reacts in a raw form to the fact that in the future, products from fully automated factories are going to have a price as well. Hence these have to be taxed like any other income. This is a major difference to most other models (and specifically the solidary citizen’s income of 2006) which deal mostly or exclusively with revenue taxes, and it is very welcome to see such an adaptation from the liberal side and in a systemic (even if at this moment still rather crude) form.
Concerning the financing, Straubhaar argues that the €960 billion cost of a Basic Income of €1,000 per person per month (80 million x €12’000) is somewhat higher than the actual expenses for the social state in Germany of €880 billion. The actual gross value-added amounts to €2.73 trillion (2015), which means that a flat rate of tax of 40% on this (at the moment it is transformed into income) would provide €1.1 trillion. The rest of the state’s expense would be covered by indirect taxes. At the same time, the contributions for the classical social insurance that actually are deducted from the gross salaries would largely be abolished.
Straubhaar admits this calculation to be very rough and not able to reflect all the possible and dynamic effects of the introduction of a Basic Income scheme, and insists on the flexible elements such an introduction will imply (estimation of cost of living, political process etc.). As with other authors, financing is not the core of this motivation. He sees the Basic Income as the best and most viable solution to adapt the classical system of social insurance of the 19th century to the 21th century. It creates a sort of a “blind” social policy, contrary to the targeted schemes whose advantage all too often is only to maintain a class of social bureaucrats who decide on sums and subjects. Furthermore, it is a core contribution to big issues of our times, namely an ageing population, digitalization/automation, individualization, and so on. Economically, it is not only viable, but it makes sense within the context of globalization and full automation. And he insists on paid labor continuing to be the main source of income but in new, more flexible and open forms, as activities and careers keep changing, as we witness already today. In this context, the existing organizations like trade unions or entrepreneurs’ federations will maintain their significance. The work motivation, which some economists see threatened by a Basic Income, will not decrease, but on the contrary increase thanks to the increased degree of freedom.
Straubhaar’s book is an important step for the liberal promotors of the Basic Income scheme in Germany. He aligns in practice with the other wings (Netzwerk Grundeinkommen, Goetz Werner) by speaking now of a sum of €1,000 per person per month (without being categoric about it). He urges it as a core element for the rebuilding of the social state, an adaptation to the 21th century and a blind social policy with arguments that are widely acknowledged by intelligent people. However, it is not certain that his fellow liberal economist colleagues in Germany are willing to follow his arguments. Many of them are still anchored in the concept of a 19th century social state. On the promotor’s side, some might be tempted to criticize Straubhaar’s concept of a negative income tax. Furthermore, several questions about the additional tasks of the social state remain.
There is one point that cannot be conceived in the way Straubhaar does. On page 98, he writes that every German citizen is part of the Basic Income scheme from birth until death, and those living abroad would have a right to their full claim, independent of their new country of residence. This is a flashback to the 19th century concepts of citizenship and nationality. Today, we speak of resident population and debate the introduction of a Basic Income in the whole world. Thus, if a German citizen would live in France, he would get the French Basic Income without the German Basic Income. But this is a tiny remark and does not impair the substantial progress of “Radikal gerecht”.
Finally, although Straubhaar labels Basic Income as radically just, he does not close the loop from a moral perspective to a legal standpoint, by omitting the step from basic income to basic right. As Thomas Paine wrote in 1796, the whole earth was originally in the possession of the whole human race. Now, on the base of an immensely increased wealth of nations and individuals, Basic Income represents the entitlement of every individual to a minimal (or basic) share of this wealth.
More information at:
(in German)
Thomas Straubhaar, Radikal gerecht [Radically just], Edition Körber-Stiftung, 2017
Written by: Albert Jörimann
Albert Jörimann, was president of BIEN-Switzerland from 2008 until 2013. His main research subject is financing questions of basic income.
Works cited:
Das Solidarische Bürgergeld. Analyse einer Reformidee.» Konrad Adenauer Stiftung, Edited by Michael Burchard, Lucius & Lucius, Stuttgart 2007.
by Guest Contributor | Aug 18, 2017 | Opinion
According to the OECD, basic income (BI) is not an effective tool for reducing poverty. However, the outcome would depend on the model chosen for implementing a BI system, as well as the changes made in other parts of social protection.
The Organisation for Economic Co-operation and Development (OECD) published in May a Policy Brief paper studying the feasibility of a basic income model in four OECD countries, one of which was Finland.
On June 16, Kela organized a seminar in which Herwig Immervoll, a senior economist at the OECD, discussed the findings of his study and analysed the strengths and weaknesses of a BI scheme. After the seminar, the national broadcasting company YLE reported: “Universal basic income might increase poverty and inequality”.
Apart from Finland, the OECD study includes France, Italy and the United Kingdom. The analysis was done with the help of the EUROMOD microsimulation model. In each country, the starting point for the analysis was to take all existing spending on social cash-transfers together and see what level of BI they would amount to. Eventually, the level of BI was set near the existing levels of guaranteed minimum-income benefits for single individuals in each country, adjusted so that it would not increase the public expenditures.
In Finland, this resulted a BI of 527 euros for the working age adults and 316 euros for children and youth under 18 years of age. Those entitled to old-age pensions within the current main statutory retirement age (in Finland over 65-year-olds) were excluded from the BI model.
In the BI model used in the OECD analysis, all existing working-age benefits (including social insurance benefits) apart from cash transfers for housing and disability would be abolished. Also, the zero-rate tax bands of income-tax schedules and equivalent tax-free allowances would be abolished, and all income-tax thresholds would be shifted downwards by a corresponding amount. BI would be made taxable under personal income taxation alongside other taxable incomes.
The OECD model would create many gainers and losers
The most important outcome of the OECD study is that the simulated BI model would strongly impact the income distribution in all studied countries. However, the effects vary greatly among the countries.
In all income groups, the BI model would create many gainers and losers. It would change the net income of most people in one way or another. It would lift some groups out of poverty and thrust others below the poverty line.
The simulated BI model would increase the income level of those small income groups who are currently not receiving any social benefits, or whose benefit level is very low. In turn, those receiving earnings-related benefits or several means-tested benefits would see a decline in their standard of living.
In Finland, those below 65-years-old receiving old-age pensions and single parents with low incomes would be among the losers of the model. The middle-income earners instead would generally benefit from the model.
The conclusion of the OECD is that particularly in countries with a comprehensive social protection BI is not an efficient tool for reducing poverty, since it does not target the benefits effectively. According to the OECD, a budget-neutral BI would not be distributionally neutral. High enough to be socially and politically meaningful and fiscally realistic, a BI would still require tax rises as well as reductions in existing benefits.
A very low basic income, instead, would have little other significance but increase poverty.
The outcomes of BI depend on reforms in taxation and social protection
How the findings of the OECD study are to be interpreted in the Finnish context?
Perhaps the most important issue that the research sheds light on is the fact that there are many institutional challenges in implementing a BI system, and those challenges differ among countries due to their different systems of social security and taxation.
As the OECD report (p. 5) notes, BI as an idea is simple, but the existing social protection systems are not. Therefore, there are grounds to argue that the same model of BI does not fit everywhere. If a reform such as BI were to be carried out, it needs to be adjusted to the existing institutions of social protection and taxation in each country separately. The parameters of the model should be adjusted so that it will not produce excessive changes in people’s incomes.
The greatest problems of the OECD’s microsimulation are that the income taxation is not changed to correspond with the BI model, and that the existing systems are demolished by the same means everywhere without examining the structures of social protection in each country separately. Due to this, BI seems to have unpredictable effects to income distribution.
The income distribution produced by a BI model can be influenced by adjusting the parameters of taxation and social security. In his presentation at the Kela seminar, Herwig Immervoll mentioned that tax reforms should be discussed in parallel with BI. Indirect taxes, such as environmental or value added taxes, have often been proposed as a complementary source for financing a BI scheme, combined with income taxation.
However, the OECD report does not mention these alternatives, and the premise seems to be that taxation in any form should not be increased.
In Finland, as well as in many other countries, some organisations and individuals have launched models of BI adjusted to the local context. Their objective has often (yet not always) been to not radically alter the income distribution or cause reductions in people’s after-tax incomes, especially in the lowest income groups. Microsimulation has been employed at least in the models of partial BI by the Green Party and the Left Alliance, and in the preliminary study for the national BI trial conducted by Kela.
In these models, BI is linked with a reform in income taxation that is designed so that radical changes in after-tax incomes will not occur in any income group. The aim is also to make the models budget neutral, that is, to cover the costs of BI by reforms in taxation and replacing the existing benefit systems. In these models, the old system will be abolished only in those parts where the level of benefits is lower than the BI.
One of the problems with the BI trial currently underway is that due to time constraints, the taxation reform proposed by the research team that designed the experiment was not included.
Will Finland implement a BI?
Though there exist BI models in Finland that would technically allow implementation of a BI system without radical changes in income distribution or public financing, the road of BI will probably be rocky even here.
The preparations of the BI experiment scheme revealed many institutional challenges in implementation of a BI model. The greatest obstacles for a BI are, however, ideological.
In Finland, BI has gained interest especially as a possibility to improve the incentives for paid work. The possibility to combine wages with social benefits more smoothly than today is an issue that no party opposes. Yet, many still find it morally wrong to give people money with no obligations. The opponents of BI fear that the “free money” would reduce people’s willingness to work and give a moral legitimacy to not apply for jobs.
If the only, or at least the most important function of BI is to improve work incentives, the great promises of BI may not be fulfilled after all. The preliminary studies for the BI trial revealed that BI models do not always unambiguously remove incentive traps, if parts of the old social security stay intact.
However, it seems likely that in Finland, as well as in other industrialised countries, the social security will be reformed in a direction that may contain some elements of BI, but not necessarily a ‘pure’ BI model.
If the political thinking emphasizing the labour supply and austerity in public economy prevail, the prospects for more generous BI models seem to be low. In the framework of current economic policies, the implementation of a BI would most probably mean at least demolishing large parts or other forms of social security.
BI as a social dividend?
The OECD report (p. 8) ends up recommending some kind of ’partial’ alternative of a BI model. One option mentioned is a possibility to introduce BI as a separate system from the existing social protection, whose function would be to share the benefits of globalisation and technological progress more equally.
This idea of ‘social dividend’ has often appeared in BI discussions. The state of Alaska is already giving an annual share of the permanent fund based on oil revenues to each citizen as a social dividend. There is similar thinking linked also to the idea of “helicopter money”, originally introduced by Milton Friedman, a cash transfer paid by the central bank to people’s accounts to stimulate consumer demand in economic downturns.
Considering BI as a social dividend would locate it in a new frame, where its function would not be to fix the problems of social security systems, but to distribute purchasing power also to those who lose their jobs or end up in low paid precarious jobs in the labour market turmoil caused by digitalization.
If BI were paid on top of other social benefits, its level could even be lower, or for instance connected to macro economy indicators. In that case, it could also be used to stimulate economies in downturns.
Johanna Perkiö
M.Soc.Sc., Doctoral Candidate
University of Tampere
email: johanna.perkio(at)uta.fi
Original article:
Johanna Perkiö, “The OECD and the problems of basic income“, Kela, June 30, 2017.
