Canada: Meet the minister who wrote the book on Basic Income

Canada: Meet the minister who wrote the book on Basic Income

Written by: Pierre Madden

On November 12 and 13 I attended a congress of the Liberal Party of Quebec, which is currently in power in the province.

The Minister of Employment and Social Solidarity, François Blais, confirmed that a joint working group, with his colleague in Finance, will issue a preliminary report on Basic Income in the Spring. Our neighbouring province of Ontario (which, together with Quebec accounts for 62 percent of the population of Canada) was just released a working paper on a pilot project to begin in April 2017. Quebec does not seem to be leaning towards a pilot project.

In his talk, Minister Blais placed much emphasis on the principles underlying the development of the government’s project:

  • The development of human capital (though education, for example)
  • The obligation of protection from certain risks (with unemployment insurance and health insurance, for example)
  • Income redistribution

The minister’s speech was highly focused on incentives to work or study (especially for the illiterate or those without a high school diploma).

The principle of unconditionality, a fundamental aspect of Basic Income, will likely not be a feature of the government’s plan.

On the second day of the congress it was the minister’s turn to ask me if he had answered my question. I described my own situation as a case in point. I am 62, three years away from my public pension which here in Canada is sufficient to raise most people out of poverty (works for me!). Why would the government be interested in the development of my human capital? The minister replies: “In a case like yours, we would have to go back in time to see what choices you made.” I have several university diplomas, which doesn’t help his argument. I am still either underemployed or unemployable.

The minister could only answer: “I would have to know more about your individual case.”

And that is what the government does and will continue to do for all those considered “fit for work.” Petty bureaucratic inconveniences for those “unfit for work” will be removed and their inadequate benefits will be improved by dipping into the funds previously used for the “fit” as they return to the workforce. The government sees no difficulty in a law it passed just last week (Bill 70: An Act to allow a better match between training and jobs and to facilitate labour market entry). The government highlights the positive measures it imposes to help participants join the job market. Those who prefer a non-paternalistic approach (“Give me the money and let me make my own decisions”) are penalized.

The irony is that before he entered politics Minister Blais actually wrote a book in support of Basic Income for all. He confirmed to me that he still believes what he wrote 15 years ago.

In Canada, both the federal and the provincial governments partially reimburse sales tax. Here in Quebec, the Solidarity Tax Credit refunds part of the estimated sales tax paid by consumers. The higher your income, the lower the monthly payout, so it works like a negative income tax. The minister was asked about this as a stepping stone towards Basic Income. He simply said it would be “a more radical approach.” Of course, tax credits don’t impact on “human capital.”

You can be sure I will be rereading François Blais’ book when his work-group’s report comes out next year.

 

About the author: Pierre Madden is a zealous dilettante based in Montreal. He has been a linguist, a chemist, a purchasing coordinator, a production planner and a lawyer. His interest in Basic Income, he says, is personal. He sure could use it now!

Netherlands: Thirty years of Basic Income

Netherlands: Thirty years of Basic Income

By Alexander de Roo

The discussion about basic income has changed completely.

Thirty years ago, it was a very principled debate. High unemployment. No future. Thus, give us a basic income, because the system cannot give us paid work. The counter argument was you must do paid work to receive an income. A basic income is morally unacceptable.

How different is the discussion now: when we go out and hand leaflets in the streets, 50 to 90 percent of the population takes our leaflets (50 percent in rich area’s and 90 percent in poor neighborhoods). The most common reaction is: basic income is a good idea, but how do you finance it? Who pays for it?

A very pragmatic discussion no longer principles banging against each another.

Alexander de Roo at BIEN's 30th Anniversary event (credit: Enno Schmidt)

Alexander de Roo at BIEN’s 30th Anniversary event (credit: Enno Schmidt)

The confidence in the present social system in The Netherlands is shaken compared to 30 years ago. Previously you got five years’ unemployment money and one could easily look for another job. Now even middle class people lose their well-paid job and after two years of unemployment money must ‘eat up’ (meaning sell) their own house to get social assistant money…. five million people have a steady, normal contract. That is ten percent less than ten years ago. Two million people have flexible contracts for bull-shit jobs, two million people live from social benefits (in different forms), one million people are independent professionals without access to unemployment money (ZZP or freelancers), the pension age keeps going up (now 67 years), while people above 50 years have zero (or realistically around 1 percent) changes on the labor market.

But the Netherlands is still one the five or ten richest countries in the world!

The two biggest newspapers held polls about basic income! About 40 – 44 percent comes out in favor. A reliable national poll measured 40 percent in favor, 45 percent against and 15 percent do not know. The majority of the electorate of the green and left parties are in favor. With the two right wing parties it is the opposite: their electorate is against: “we are working hard and do not want to pay a basic income for these (lazy) people that just want to have a basic income”.

Most interesting is that the voters for the Freedom party of Mister Wilders (our local Trump) are divided: 37 percent in favor and 46 percent against, 17 percent don’t know. Almost the same as the national average! Politically we must use this.

But the leaders of the green and left wing parties do not take up the issue of a basic income. They stick to repairing /amending the old social system. They think (and hope) the economy is recovering, unemployment will fall and then this basic income discussion will go away like it did around the year 2000.

But they are wrong we have now one year economic recovery: the result 12,000 new steady jobs and 78,000 flexible low-value jobs. The flexibility of the labor market keeps growing. We will turn back the clock on these flex jobs; providing more jobs is the answer of the green and left wing leaders.

Our answer is to increase our support for the basic income alternative in the upcoming national elections March 15, 2017. Around 60,000 people signed a petition for a basic income in 2018. Demonstrating that 800 € for every citizen in the Netherlands is easily affordable and that even 1,100 € is easily financed.

After the elections, we will work with respectable institutions to come up with a transition route from the present situation to a full basic income.

Annotation: A basic income of 800 € requires 10 billion € more per year then the present situation, 1,100 € will cost around 30 billion euro more. The present government (Conservatives + Social democrats) have cut the state expenditure with 30 billion € and raised indirect taxes with 16 billion euro’s: in total 56 billion in the last 4 years.


Alexander de Roo is a founder of BIEN in 1986, former BIEN treasurer (1986-2004), and now Chairman of the Dutch branch of BIEN.

 

Interview: China’s basic income movement

Interview: China’s basic income movement

Europe has received a lot of attention for its recent moves toward experimenting with a basic income policy. What has been lost in this focus are the developments that are taking place in the rest of the globe, including the world’s second biggest economy: China.

Cheng Furui is one of the organizers of the China Social Dividend/Basic Income Network, and has done extensive research on China’s social safety net. In the interview below, she said a basic income would resolve many of the problems facing China’s current welfare program.

As the international economy faces increasing automization, Cheng said basic income is a potent answer to this issue in China.

“I believe that basic income and China’s status quo are aligned because it is in accordance with the essence of both socialism and the market economy,” she said.

The full length interview is below:

What is different between Universal Basic Income and China’s Minimum Livelihood Guarantee (Dibao)?

Dibao is China’s Minimum Livelihood Guarantee program. Anyone with an income below the minimum can receive a supplementary income up to the standard. In this way, Dibao is unconditional: no one can take away someone’s right to the Dibao income. The Dibao only provides a grant to those that are below the Dibao income standard. Thus, the government must conduct strict evaluations of recipients’ economic situations, which creates a lot of implementation problems and issues of abuse. By contrast, Universal Basic Income provides the grant to every person, regardless of income. Moreover, China’s Dibao benefit has a large discrepancy across different regions, consistent with the regional economic inequality that China already faces. Here is more information for reference: China’s MCA.

How do the Chinese view basic income? Do the Chinese generally understand about this policy?

Most Chinese don’t know about the basic income concept. Nonetheless, there are some places that are currently carrying out this policy, although they do not call it basic income. The areas that are implementing basic income all have different situations. The differences are not just regional, even neighboring areas have large differences depending on the community members’ organizational depth and shape.

Why should China implement basic income? What type of impact would it have?

The foundation for China’s implementation of basic income comes from China’s public ownership system itself. State owned enterprises, urban land, and mineral resources already exist, much like Alaska in the United States. Every person should have a share of public resources. This relies on the profit from the public resources being utilized as a basic income revenue, not only does everyone receive equal payment. This means the government does not have to collect more taxes from the rich only to give back to every person.

Chinese history applies the profit from publicly owned resources to supplement the country’s public finances, therefore lowering the private sector’s tax rate. In turn, conducting large scale investment in service sector and infrastructure development, including constructing railroads, and the systems that support the economy such as education and healthcare. These systems provide benefits to the vast majority of people. During China’s period of urbanization and gradual improvement of infrastructure and even completion of these projects, the profit of public resources perhaps can be used as a benefit to each person. Certainly, this will lower society’s overall wage rate or working hours. Simultaneously, some places have collective ownership of resources, and most of Chinese social dividends come from these resources.

What is the status of China’s basic income movement?

The basic income concept is currently only being discussed among Chinese academics and there are currently few researchers of the policy. However, the general public is already exploring implementation of basic income, also it is genuinely that every person in those areas can enjoy the local basic income. For example, much of the revenue for basic income programs is contributed by the collective organizations’ dividend bonus.

Since the founding of the People’s Republic of China, rural China has implemented collectivization of land, the household farm quota system allows the individual to use the land for production, but they cannot sell the land to others. During the movement toward urbanization, one part of the land was acquired by the government. Some of these collective resources that were taken were compensated with urban-based resources, in turn producing new benefits. From there, it produced social dividends within these communities. Looking at the entire country, this was not a rare case.

In BIEN News, I recently introduced these types of cases. China is putting into effect the policy of ‘separation of three land rights’ (ownership, contracting right, and operating right), which will promote the land right equity investment Recently, our main work has focused on excavating the essence of these cases, evaluating the likelihood of wide-spread promotion of this policy. Under the recent pessimistic economic environment, we want to offer a feasible path forward.

Does basic income suit China currently? Does it fit with Chinese culture?

I believe that basic income and China’s status quo are aligned because it is in accordance with the essence of both socialism and the market economy. However, Chinese culture encourages labor and looks down upon laziness. With the development of automatization, machines will continue to replace human labor. As a result, Chinese people will start to rethink this issue. If a basic income is put in place, after it is implemented it is feasible that the entire country will uniformly cut down on the weekly work schedule. Previously China had a six-day work week, and now it has been cut down to five days. In the future, it is possible it can be reduced to a four-day work week.

Additionally, China’s various regions have had drastically different levels of development, and the cost of living differences are also quite large. The social security system has not yet achieved nationally uniform administration. Public resources and financial data also need to be gradually made more transparent. This lack of transparency has impeded the ability to evaluate the potential impact of basic income.

 

About the interviewee:

Cheng Furui is doing her Post-doctoral program in Chinese Academy of Social
Science. She got her PhD in Tsinghua University. Her research interest is social
policy. “Social Assistance and Poverty Alleviation Divergence: A Capability
Approach” is her $rst published book based on her doctoral dissertation,
which explores Chinese social safety net in details. She is a voluntary news
editor of BIEN now. She is also one of organizers of China Social
Dividend/Basic Income Network: bienchina.com

The left needs fresh ideas and a new language if it’s to win again

Image result for pics idea bulbsRutger Bregman spares so-called liberals and progressives no punches in the online Guardian 8/19/16. Bregman castigates the Left for its pathetic failure in not seizing the moment after the 2008 U.S. “financial crisis… borne of blind faith in market wisdom and an utter lack of public oversight”.

Bregman acknowledges that the Left has a long history of championing for the underdog, the poor, asylum seekers, the discriminated against, the disabled and others. But these groups do not stir the imagination of the masses. Instead, the masses look away, are distrustful and often too judgmental to care. We want winners, they cry!

For Bregman the Left needs to stand up, raise its collective voice and champion things like real, effective banking reform, meritocracy, innovation and investing in a nation’s human capital through the use of a Basic Income for all to reclaim that lost ground.

Re-inventing social security

Re-inventing social security

About 25 years ago, when internet emerged, I addressed an audience saying: “If newspapers [didn’t already] exist today” there is “no way investors or bankers would support the business-idea to collect news, print it on paper around midnight and dispatch this printed stuff using thousands of vehicles to bring it to shops and individual readers before morning comes”.

In most western countries, social security became significant approximately 70 years ago, when it got an extensive legal basis. It now plays a crucial role in developed countries to give purchasing power to citizens who do not have an income from a job. Moreover, in many countries it provides free health care for everybody.

Just like internet changed the way news is distributed, the fact that computers and robots replace human work is a “game changer” for social security, which was totally based on labour contributions since its inception. More and more jobs are subsidised and therefore do not really “contribute” to the social security system anymore. Just like we continue to get news, even better and faster, we want to keep social security and improve it despite paid labour becoming less important in our economic system. In most West European countries, the amount distributed by the social security system increased constantly as a share of income of households and is now, if you include benefits in kind, more or less equal to the net pay households get from work. There is little political awareness of this fact.

Assuming social security never existed and we decide to create it, how would we organise the cash redistribution part of it?  Just like blood in the human body redistributes blood cells to make all parts of our body work, money fulfils a similar role in society: allowing exchange of goods and services amongst individuals.

Like the heart of the human body pushes blood in various parts of our body and collects the blood on the other side, the social security system injects money, purchasing power, into society to fuel exchanges of goods and services.

In the future, the total amount of money distributed should be no less than today, and should gradually increase when automation further decreases the demand for paid labour in our economic system because we need purchasing power to drive economic activity.

The conditional character of the current social security system limits freedom to work, to move in with friends and so on. It is a huge deterrent to work and enjoy life. Assume a Belgian person gets 1200 € unemployment benefit and could get a job paying 1350 € net per month. Because that person loses the 1200 € as soon as she/he starts to work, the marginal reward is 150 € per month. Since there are approximately 150 working hours in a month, it is only worth 1 € per hour. Stupid system, yes indeed.

Therefore, the biggest part of the new social security system’s cash distribution, around 90 percent, should be a straightforward unconditional basic income distributed to everyone, the amount solely depending on the age. In the example above, this unconditional basic income could be 800 € per month for the 26 to 67 age group, lower than the highest “replacement income”, but not much lower than the average unemployment benefit in Belgium today. A second layer to the system should be conditional, based on specific needs or situations like invalidity, requiring administration. By comparison the administration cost of the new social security system would be roughly 90 percent lower than the current one.

There is no need of for additional taxes in the new system (see this Economist graph) if the basic income becomes a part (and does not come in addition) of the current income from work (or current social security benefits). For example if we decide the basic income for adults in the US to be 900 $ per month and a person’s net income from work is presently 1900 $, his pay-check will read: “basic income 900$, income from work 1000 $”. This could be done in two ways. The first way is the employer pays the basic income of his employee. The second way is that the state pays the basic income to the employee but charges a tax equal to the basic income to the employer. Either way, the employee keeps getting the same income, the employer has the same employment cost as before and the state has no extra cost.

Only citizens which have no income at all or less than 900 $ would get more cash from the new system than what they get today. This extra distribution of money can be funded thanks to the lower administration cost of the basic income system in comparison to the present one.

If we could start all anew, we would cherish the local economy, promoting free and uncomplicated exchanges of goods and services between individuals to improve our well-being. With an unconditional basic income based social security, working for each other would be allowed. It would be even better if there were no labour taxes on services individuals provide to each other in the “proximity economy”.

Would the state lose much of the revenue from the income tax? Not much, since those exchanges of services do not tend to occur now, unless in “black”. But there would be an increase in revenue for people involved in proximity services, like for those who do not perform paid work today. Retired people would also consider earning money on top of their pension if they are sure there is no paperwork hassle and no risk for them to lose part of their retirement benefit.

The extra income would – for example – be spent in restaurants. That spending will yield income taxes and consumption taxes for the state, paid by those restaurants.

The social security system we know is a 70-year-old house to which our governments did not stop adding extensions. Meanwhile, they changed the windows, put in a new kitchen and bathroom, isolated the roof and connected everything by lots of cables.

We can reorganise the redistribution or purchasing power in a much better way: let’s build a new house.

BIEN Celebrates Thirty Years: Basic income, a utopia for our times?

BIEN Celebrates Thirty Years: Basic income, a utopia for our times?

Original post can be found at TRANSIT

Written by Bonno Pel & Julia Backhaus

On Saturday October 1st 2016, the Basic Income Earth Network celebrated its 30th anniversary at the Catholic University of Louvain in Louvain-la-Neuve (Belgium). The picture shows the founding meeting in 1986, but is also quite applicable to BIEN 30 years later. The conference was held at the same location and many of the founders and their fellow militants met in good atmosphere to commemorate the early beginnings of the network. Together with other scholars and generally interested people, they discussed current developments in science and policy and ‘the way forward’ for the basic income movement.

Image source: https://www.uclouvain.be/512812.html
picture source

An unconditional income for all

First, the picture is telling for the ways in which BIEN pursues transformative social innovation, namely through the development, discussion and dissemination of persuasive “new framings” and “new knowings”. The seminar room in the picture gathers several individuals who by now have become eminent scholars in economy, social philosophy or sociology. Over the course of three decades and together with activists, politicians and citizens, BIEN members have developed a whole complex of arguments, evidence and framings around the basic income. The idea itself is simple: An unconditional, individual income entitlement, more or less sufficient for fulfilling basic needs, promises real freedom for all.

It offers individual empowerment in the form of income security and the material conditions for a self-determined existence in society, but it is also in many aspects about changing social relations: between men and women (as the conventional breadwinner model is challenged by individual income entitlements), between employed and unemployed (as stigmatization lessens when entitlement is universal rather than for the ‘unproductive’ only), and between employee and employer (the latter’s possibilities to exploit the former are decreased by the basic income security). In current institutional-ideological constellations, the idea of a basic income is bizarre and outrageous for rewarding jobless ‘free-riders’. Apparently relinquishing hard-earned social security arrangements, BIEN members met (and continue to meet) with tough press, sidelining them as ‘irresponsible freaks’. Yet the power of BIEN members’ socially innovative agency resides in showing that it is actually many common ideas about work and income that are outdated, and harmful even.

Claus Offe (credit: Enno Schmidt)

Claus Offe (credit: Enno Schmidt)

Impressive examples of outdated conceptions were provided by prof. Claus Offe, who argued that we do not earn our income, as commonly believed. Wage flows from labour that forms part of ever-extending production chains of individuals and machines. The availability of jobs fluctuates cyclically, and independently from individuals’ employability efforts. Moreover, the current productivity in highly industrialized countries is possible because ‘we stand on the shoulders of giants’. It is largely inherited from previous generations. So it is rather the current insistence on employability, on meritocracy and on ‘earning one’s income’ that is out of tune with economic reality. Production has become post-individual, and this requires a matching social security system. Harmful effects of a capitalist system that ignores its obviously collective character through individualist ideology include blaming the losers and accepting precarious conditions for some. Economist Gérard Roland outlined how the basic income provides a better trade-off between labor market flexibility and precariousness than current social security arrangements. Sociologist Erik O. Wright views the basic income as a “subversive, anti-capitalist project”. He expanded how the concept allows moving on from merely taming to escaping the globalized, capitalist system. For him, the basic income can provide the basis for numerous social innovations that also the TRANSIT project considers, such as social and solidarity economy initiatives or co-operatives.

BIEN thriving on internal differences: many streams forming a river

Second, based on the variance of people’s clothing, the picture above also visualizes how BIEN has developed as an association of very different individuals. At the conference various founding members recalled the routes they had traveled towards the transformative concept. They arrived at the idea on the search for liberalist re-interpretations of Marx, through feminist commitments, when rethinking meritocracy, as a response to the structural unemployment of the time, or as a logical conclusion of a transforming and ‘robotizing’ economy. The forthcoming case study report on BIEN by yours truly spells out in more detail how these different little streams came to ‘form a river’, as expressed by a founding member. The internal differences between the generally principled and intellectually sharp BIEN members led to fierce debates, it was recalled. According to a longstanding motor, evangelizer and lobbyist for the basic income, BIEN has only survived as a network for members’ capacity to ‘step back a bit’ from their ideological disputes at times, and to recognize what united them. BIEN even thrived on its internal divisions. It functioned as a discussion platform, and helped to institutionalize basic income as a research field. Since 2006, there is even an academic journal on this example of transformative social innovation: Basic Income Studies.

Evolving communication: spreading the word

Philippe Van Parijs (credit: Enno Schmidt)

Philippe Van Parijs (credit: Enno Schmidt)

Third, the black and white photo immediately suggests how different the world was three decades ago. At the time of founding, network members and conference participants from various countries had to be recruited through letters. Initially, the newsletter was printed out, put in envelopes and stamped, for which members gratefully sent envelopes with pesetas, Deutschmarks and all the other European currencies, subsequently converted at the bank by standard bearer professor Philippe Van Parijs and his colleagues. Today’s e-mail, website and Youtube recordings obviously make a crucial difference when it comes to facilitating discussion and spreading the word fast and wide – especially for this social innovation that primarily travels in the form of ideas. The presentations on the history of basic income underlined the significance of the communication infrastructure. The history of basic income can be conceived of as a long line of individuals working in relative isolation, often not knowing of others developing similar thoughts and blueprints. The evolution of BIEN very instructively shows the importance of evolving communication channels and knowledge production for transformative social innovation – critical, weakly-positioned, under-resourced individuals no longer need to re-invent the wheel in isolation.

BIEN, a research community? Ways forward

A fourth, telling element the picture above is the confinement of the seminar room. There have been discussions about BIEN’s existence as a researchers’ community, with the expert-layman divides it entails (during this meeting of experts, yours truly fell somewhat in the latter category). There are in fact also other networks of basic income proponents that have rather developed as citizen’s initiatives and activist networks. BIEN, as a network that can boast such a high degree of conceptual deepening and specialization, is illustrative for the ways in which it remains confined in its own room. It is significant in this respect that the current co-chair brought forward two lines along which the network should reach out more. First, BIEN should be more receptive towards and engaging with the various attempts to re-invent current welfare state arrangements. While this may imply using a more practical language and taking off the sharp edges it may yield real contributions to social security. Often these change processes (regarding less stringent workfare policies, for example) are not undertaken under spectacular headings and transformative banners, but they involve application of some basic income tenets such as unconditional income entitlements. A second line for outreaching confirms the importance of comparative research into transformative social innovation like TRANSIT: The co-chair highlighted that BIEN will explore and develop its linkages with other initiatives, such as Timebanks and alternative agriculture movements more actively.

Basic income: a ‘powerful idea, whose time has come?’

Fifth and finally, the seminar room setting depicted in the photo raises attention to the knowledge production that BIEN has been and is involved in. The socially innovative agency of its members can be characterized as ‘speaking truth to power’. Basic income activism has taken the shape of critiques, pamphlets and counterfactual storylines (Thomas More’s ‘Utopia’ being a 500 year-old example), but also featured modeling exercises, forecasts, and economic evidence to support the case. BIEN members’ key resource is their expertise. Moreover, considering the strong arguments and evidence gathered in favor of the basic income over the past decades, there are reasons to be confident in basic income ending up as the ‘powerful idea, whose time has come’. As described in Pel & Backhaus (2016) and currently considered further, it is remarkable how much BIEN seems to have developed in line with the trend of evidence-based policy. The commitment to hard evidence gives rise to an important internal discussion on the recent developments towards basic income-inspired experimentation (such as in Finland and in the Netherlands). The common stance of BIEN members is that these experiments fall short of providing any reliable evidence for their limited duration and scope, and for the system-confirming evaluative frameworks that tend to accompany them. However, there is also a somewhat growing attentiveness to the broader societal significance of experiments and pilots in terms of legitimization, awareness-raising and media exposure. It is therefore instructive for the development of TSI theory to study the basic income case for the new ways in which ‘socially innovative knowings’ are co-produced and disseminated.

About the authors:

Bono Pel (Université libre de Bruxelles; bonno.pel@ulb.ac.be) and Julia Backhaus (Maastricht University; j.backhaus@maastrichtuniverstiy.nl) are working on TRANSIT (TRANsformative Social Innovation Theory), an international research project that aims to develop a theory of transformative social innovation that is useful to both research and practice. They are studying the basic income as a case of social innovation, focusing on national and international basic income networks and initiatives.