What do we have here? IMF economists defending basic income?

What do we have here? IMF economists defending basic income?

(image credit to: The Economist)

IMF’s (International Monetary Fund) Deputy Director for Capacity Development Andrew Berg, Research Department Senior Economist (at IMF) Luis-Felipe Zanna and Edward Buffie, a Professor of Economics at Indiana University Bloomington, just published an article articulating an analysis revolving around technological development and its implications on society, particularly regarding labor, capital and (in)equality. At the end of the article they refer to basic income as a possible solution, in order to redistribute the excess capital brought by the computerization of production.

But what do we have here? A miracle conversion of hard-core capitalist economists into soft-hearted left-wing liberals? Can we, after all, turn lead into gold? No, of course not. What we have here is textbook capitalist economy, with a new ingredient: basic income.

So their logic goes like this: We have inequality, but that is fine. Inequality is merely a result of market forces; we can live with that because we belong to that fortunate group of people who have not experienced poverty and cannot imagine experiencing poverty. But there are a couple of challenges with too much inequality: people revolt and cannot buy all these wonderful things corporate capitalism churns out daily. You see, this humanity thing has one big problem: it is full of humans. And humans, unlike machines, have two amazing features, which these brilliant economists have just discovered: they tend to fight back if pressed too much and cannot survive without their basic needs met.

The reason for this sudden, latent, realization has to do with the one thing all capitalists share: they are not entirely human. They hold this strange belief that there’s nothing wrong with trying to extract more water from the well than the amount that exists there. It is like writing a three-thousand-page essay and drawing this sole conclusion: 1+1=3.

But back to the logic. So, inequality is tolerable, but not too much. The solution? Give these poor people a basic income and, all of a sudden, they stop being such bad loser crying babies and resume buying enough stuff to maintain this completely absurd system of domination, privilege and exploitation. Shut them up, so we can keep doing our thing without distraction. Note that I have not, until now, said a single thing about robots, computers or automation. Because at bottom it has nothing to do with that. With robots or not, the capitalist mind just wants to extract wealth. How they do it is irrelevant, or relevant only to the extent as it is efficient in doing so.

What these enlightened IMF economists, and possibly other IMF officials do not realize is that basic income is a complete game changer. It will allow people to say “no”, to enjoy enough freedom to completely turn the capitalist system on its head. And these people will start doing much more bizarre things, like volunteering for causes close to their heart, or starting their own businesses (refusing to be slaves to some capitalist boss), and enjoying more leisure time, and time to care for family and friends (go figure out why). Living out their own lives, for a change.

I predict that, after basic income is implemented, in part following up these economists’ recommendations, capitalism will hardly resemble its own shadow in 10 to 20 years. Society will barely recognize itself, when looking back at today’s world. Mark my words.

 

More information at:

Andrew Berg, Edward F. Bufie and Luis-Felipe Zanna, “Robots, Growth, and Inequality”, Finance & Development, vol. 53 nº3, September 2016

An Unconditional Basic Income for 60 Plus

An Unconditional Basic Income for 60 Plus

Last August 21, the Dutch woke to find an interesting article in their morning paper, written by Mrs. Annemarie van Gaal. In her weekly Monday column she suggested abolishing the AOW and all other income schemes for individuals above 60 years of age, with their unworkable obligations, bureaucratic regulations, and fees and punishments. Instead, AOW recipients would receive an unconditional basic income of €1100 to €1200 a month. This would greatly decrease the seriousness in which they need to take these 9 considerations to make before you retire into account, decreasing worries and stress for the elderly.

For many people, the article came as a surprise, because it was published in the daily journal, De Telegraaf (The Telegraph), which is legendary for its right-wing liberal and right-wing populist bias. And a recent poll among right-wing voters revealed that the majority do not approve of the idea of a basic income.

opdoekenThe Dutch abbreviation ‘AOW’ means ‘Algemene Ouderdomswet’ — the 1956 law installed a state pension for the elderly, above the age of 65. From 2016 onwards, the retirement age is expected to increase quickly: to the age of 66 in 2018, and to 67 in 2021. And as of 2022, entering the AOW scheme will be linked to the average life expectancy.

This plan for the increase of the pension age was agreed upon by the current coalition of VVD (People’s Party for Freedom and Democracy) and PvdA (Labour Party) in order to cut government spending. These austerity measures are expected to save the Treasury €3.6 billion by 2024. De Telegraaf was a vocal supporter of the increase in the retirement age.

Mrs. van Galen is a well-known TV personality and businesswoman. In her television program, she teaches benefit claimants how to get a job. She demonstrates how much money the candidate will earn from accepting certain kinds of work, sends him to intensive job application training, and gives him a full makeover: a new haircut, new clothes, and if necessary, new teeth. Dress for success!

Her suggested basic income plan is very appealing because it would affect two major social problems in Dutch society.

The first problem concerns the growing group of people over 60 who have lost their jobs, often in the crisis of 2008-2009, and during the austerity measures that followed.

As Mrs. van Gaal puts it:

The unemployed above 60 are not to be envied. Unemployment among this group has never been so high. Their whole life they worked hard. Now they have lost their work and as a consequence have to deal with sharply declining living standards, whereas their chances to find a new full-time job is nearly zero, so the years to come will be full of uncertainty before they get the state pension (AOW), and what at that time will be left of their saved pensions?

Despite their dire prospects, the UWV (Employee Insurance Schemes Implementing Body) requires that the unemployed over 60 continues to apply for jobs, whether they can or not. The meager allowances of those who don’t (or can’t) are cut down or withdrawn. In other countries such as America, it can become a lot worse, elderly citizens with no allowances or health care end up forgotten about, without insurance these elderly are very prone to medical emergencies, requiring the aging population to think about insurance early on in their lives. When it comes to dental insurance for seniors, PPOs are the most common insurance plan. They offer a network of preselected dentists that they can choose from. Only if they were to visit one of those dentists will they save money. Otherwise, the elderly population has minimal options when it comes to oral healthcare. Is this how it is looking for the Dutch?

But for businesses to take on an older applicant, the ten different allowances and arrangements assigned to them creates a process so complicated that it’s frequently necessary to hire a third party simply to manage the process. Creating this kind of bureaucracy in the workplace does no one any good, and is certainly no way to encourage employment.

In recent years, the Dutch government has pumped hundreds of millions of euros into job training, networking events, and other arrangements for the older and unemployed. And the effectiveness of these measures is yet unknown, says the Court of Audit, and is hardly expected to dramatically increase employment prospects anytime soon.

The second issue with AOW, is that it’s almost an unconditional income — the state pension is dependant on your living situation. If you are going to live with another person, whether it is a partner, a family member who provides care, or a lodger, you are financially punished, whereas if you choose assisted living you may receive more. And if you have little or no saved pension, pension benefits as supplements are means-tested, so to earn some extra money is nearly impossible. The healthy and elderly will not move in with their children, for example, to babysit the grandchildren, because their income will only be reduced. Strange, indeed, because it would save the government a great amount spent on medical expenses and childcare allowances.

Mrs. van Gaal:

Ultimately, a basic income is the best route for the future, so let’s introduce it on a limited scale, namely into the group aged 60 years and above, regardless of [if] they work or not, irrespective of their living conditions. [And] if you live with another 60 plus [you would] have twice that amount. Look after your grandchildren, start volunteering, help your neighbors, go traveling or take up a small job for a few hours per week. I’m sure we will [have] a much better society. All seniors will take part in society without restrictions and rules, without being cut and without compromising. How nice.

anne marieThe reaction to Mrs. van Gaal’s column was overwhelming. Within a few hours she was invited onto several talk shows, and many websites took notice of the column and hundreds of comments appeared online. One site recommended appointing her as the first female Prime Minister of The Netherlands.

However, in stark contrast, some politicians reacted bleakly to the proposal. After all, they had worked hard (and were well paid) to develop and defend the new retirement pension scheme and all other relevant legislation. Coalition partners, VVD and PvdA, consider the plan too radical, too expensive and ‘the wrong solution’ to this particular problem. The VVD even said it ‘abhors’ the idea of a basic income. One of their MP’s pointed out that society should not exclude the elderly, and that according to him, that’s what a basic income does. “Then we say to the elderly: you are no longer needed and that is not true. Their knowledge and experience are highly valued in the workplace.”

Norbert Klein, the leader of the Vrijzinnige Partij (Cultural Liberal Party), a party with one seat [in the Tweede Kamer], is pleased with the ideas of Van Gaal — but the plans do not go far enough for him. He has written a memorandum that calls for an unconditional basic income for every Dutch citizen from the age of 18 onwards. On September 19th this memorandum will be discussed with members for the Committee for Social Affairs and Employment of the Second Chamber of Parliament and the Minister for Social Affairs and Employment, Lodewijk Asscher of the PvdA.

Several organizations as well are not very sympathetic to the idea of an unconditional basic income for the 60 plus. “Mrs. van Gaal acts as an elephant in a China shop,” said a spokeswoman for the Unie-KBO, the union for the elderly, “but we are pleased with all the attention [these urgent matters are receiving].” Nibud, the National Institute for Family Finance Information, considers €1100 or €1200 too low to cover all household costs.

But a huge amount of readers reacted positively and enthusiastically. “An idea which is very close to my heart”, commented someone. “Abolish the bureaucracy for 60 plus,” another responded, “finally, someone who really understands the problems of older unemployed”. Readers, too, hinted at a political career for the Telegraaf columnist. “This is a plan which a sane man cannot ignore. Better and more pleasant than the plans that are figured out by the pundits in The Hague. The government may try to increase job opportunity for this group, but now it is clear that this policy fails.”

Annemarie van Gaal:

Dutch people want a simpler society. No more complicated rules, no hassle with endless discounts or correct taxes. We want it to be simpler, easier to understand and implement for everyone. The introduction of an unconditional basic income is inevitable over time. Utopia? No, it just requires some guts of our government.


Reviewed by Cameron McLeod

Basic Income Makes Headway at the World Social Forum 2016 in Montreal

Basic Income Makes Headway at the World Social Forum 2016 in Montreal

Basic Income Québec (RBQ) and the French Movement for a Basic Income (MFRB) had been preparing for the World Social Forum (WSF) event for almost a year. Their efforts paid off – the activities organized by the France-Québec team were an unmitigated success. For the first time ever, basic income achieved prominence at WSF, reflecting the growing worldwide interest in the idea.

A successful opening march with basic income robots that did not go unnoticed

The six members of the MFRB delegation teamed up with their counterparts of RBQ in order to organize several initiatives centered on basic income at the WSF in Montreal.

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A wild workshop, a prelude to the Create-a-thon planned for Tuesday, August 9th, led to the creation of two robots (a concept developed by the MFRB local group of Lyon) along with signs and ponchos for the opening march taking place that day in Montreal, from Lafontaine Park to the Place des Arts that attracted about 15,000 people.

Marcus Brancaglione, Brazilian guest from the ReCivitas association, joined the jubilant “gang” of dozen-or-so activists who merrily spread the word about the program for the week, inviting passersby to come and take part in the workshops, conferences and debates.

The robots attracted quite a bit of attention. They were a big hit…or as the co-founder of RBQ (Luc Gosselin) put it, they “made a splash,” using a Quebec expression. They served as a rallying point throughout the week.

On the morning of August 10th, the group took possession of the two rooms that were graciously provided by the University of Quebec in Montréal (UQAM), enabling them to welcome more than two hundred motivated participants during the three days (excluding the Grand Conference).

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Create-a-thon. Eighteen hours of creation. Fourteen stories from around the world.

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The creation marathon was organized by the RBQ team. This two-and-a-half day event began with Lenny Watson’s presentation on the first Create-a-thons organized in San Francisco, Los Angeles and Finland.

Following an exchange between participants, an idea emerged. Inspired by a participant’s story about her mother, they began collecting stories of people they knew and explaining how a basic income would change their lives.

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They started filming the next day. Aurélie Hampel handled video while Louise Allaire did the scripting and by day’s end 14 stories had been made, thanks to the many people who dropped by. Each told their story, stories from around the world, in their own language: in English, French or Portuguese.

On Friday, Aurélie and Louise pulled out the key themes and words from these stories. They were grouped into five chapters.

The following themes were chosen:

A basic income… when life is merciless

A basic income… to find one’s place in life

A basic income… in case of extreme poverty

A basic income… freedom to choose your own path in life

A basic income…to provide end-of-life care for loved ones

Teaser: https://youtu.be/wpKPSuSmZT4

All videos will be available on the MFRB YouTube channel, by the International Basic Income Week.

Ğeconomicus

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The goal of the Ğeconomicus workshops was to promote the idea of changing our money system to bring about basic income without getting mired in politics and to start changing our debt-money-induced behaviour.

Carole Fabre and Damien Vasse hosted two game sessions, testing different monetary systems through card-playing. To sum up, each player exchanged cards with others to form squares. Each square represented a created value and was accounted for with a piece of candy (a new candyless version is possible. See website).The number of created value was tallied up at the end.

Human lifespan was introduced to test monetary exchange systems while keeping the same markers introduced in the Théorie relative de la monnaie by Stéphane Laborde.

With two and a half hours set aside for each workshop, they changed the rules and reduced human lifespan to 60 years as well as the duration of each round of play. They then played using a monetary system based on debt–today’s current system – and using a monetary system based on basic income and open money. Other systems could also be tested, such as barter and mutual credit, but they were unable to do so due to time constraints.

This game helps us understand how the structure of the monetary system affects our behaviors and exchanges.

Debt-money is boisterous and full of competition, trickery and knavery. With open money, tensions subside after two rounds, cooperation emerges and the ambiance changes. They were able to set aside over half an hour at the end of each workshop for a post-game discussion and debate. It was very rewarding each time, as people became aware of the debt-money trap and the unbelievable power of banks. With basic income in money creation, people saw that it was still possible to create value, but with a different behavior.

Co-creating our basic income using open money is finally possible, thanks to Duniter, an open money generator that took four years of work by developers and coders to make it fully operational. Now that it has proven successful in computer simulations, it is ready for the real world. The game provides an opportunity to show people that the system works and that it is up to us to make it happen.

Convergence Assembly: From realistic utopia to public policy

The two convergence assemblies were developed and facilitated in cooperation with Pierre Barbès and Gilles Charest, sociocracy experts at l’École Internationale des Chefs. The aim was for these meetings to be as inclusive as possible and to make people aware of the working methods we used by the MFRB, with a focus on sociocracy.

Right, Pierre Barbès,speaker and author, certified in sociocracy and community spirit development.

Right, Pierre Barbès,speaker and author, certified in sociocracy and community spirit development.

The conference ended with a round table giving everyone a chance to share what they gained from the workshop.

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Convergence Assembly: “Income: A non-medical remedy?”

The idea for the assembly came from the Forum’s Health Space Committee, which two members of Basic Income Quebec took part in. The committee consisted of Quebec health professionals. RBQ wanted to ensure that one of the determinants of health – income – would be discussed and that everyone knew about the proven efficiency of basic income in areas where pilots had been conducted. Committee members were very receptive to the idea, as many of them were already familiar with the concept of basic income.

RBQ considers it as an important strategic step in Quebec. The group would like to see Quebec health professionals adopt a position in favor of basic income, just like their English Canada counterparts, both within their organizations and individually. The English group played a key role in the Ontario government’s decision to launch a basic income pilot, which is currently being developed.

The meeting reflected the keen interest in basic income by people from different countries who are primarily concerned with health, either as professionals or as citizens. Various courses of action were suggested.

Workshop: “On the Equitable Sharing of Wealth: Considering a Universal Basic Income and Maximum Wealth”

Many people pre-registered for this workshop as soon as it was announced, and it drew an at-capacity crowd. Wealth-sharing is an issue that has been addressed in various ways at the Forum. A universal allowance (or basic income) is an often-mentioned way to perform this sharing function in our societies. Maximum wealth has the same goal, but is less present in the public space. As a result, the majority of participants came to the workshop with a better grasp of basic income than maximum wealth. The similarities between the two ideas generated a lot of interest and lively debate with both facilitators, Alexandre Chabot-Bertrand and Christian Jobin. The exchanges continued long after the workshop had ended.

Grand Conference: Basic Income, a Major Social Innovation for the 21st Century?

Watch the conference video: https://youtu.be/tEumE1N1E0Y

The activities were concluded with a grand conference attended by nearly 500 people on the evening of Friday, August 12th. The speakers, each from a different country and approaching the issue of basic income from different perspectives, made quite an impression by their presence, their passion for the issue and their humor.

The conference began with a video from South African partner, Nkateko Chauke, Basic Income Grant Campaign Coordinator for the SADC (South African Development Community, which includes fifteen countries ranging from Tanzania to South Africa)

The conference began with a video from South African partner, Nkateko Chauke, Basic Income Grant Campaign Coordinator for the SADC (South African Development Community, which includes fifteen countries ranging from Tanzania to South Africa)

The conference began with a video from South African partner, Nkateko Chauke, Basic Income Grant Campaign Coordinator for the SADC (South African Development Community, which includes fifteen countries ranging from Tanzania to South Africa), who unfortunately was not able to attend. Watch the video here.

Rutger Bregman, Dutch journalist and author who recently published his book, Utopia for Realists: A Case for a Universal Basic Income, Open Borders, and a 15-hour Workweek, led off the discussion by addressing basic income from a labor perspective

Rutger Bregman, Dutch journalist and author who recently published his book, Utopia for Realists: A Case for a Universal Basic Income, Open Borders, and a 15-hour Workweek, led off the discussion by addressing basic income from a labor perspective

Rutger Bregman, Dutch journalist and author who recently published his book, Utopia for Realists: A Case for a Universal Basic Income, Open Borders, and a 15-hour Workweek, led off the discussion by addressing basic income from a labor perspective. He questioned the moral imperative to work in a world that promotes the creation of what David Graeber calls bullshit jobs, referring to those pointless jobs, both for the people performing them and for society as a whole.

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Karl Widerquist, from the United States and co-chair of the Basic Income Earth Network (BIEN), then spoke about the three successive waves of basic income in our history

Karl Widerquist, from the United States and co-chair of the Basic Income Earth Network (BIEN), then spoke about the three successive waves of basic income in our history. A first wave took root in the twentieth century (although the idea had already been discussed by the likes of Thomas Paine or Thomas More), especially in the Anglo-Saxon countries with advocates such as Bertrand Russell, George Henry and Virginia Woolf. The arguments at the time dealt primarily with principles of social and agrarian justice. The second wave emerged in the 1960s, with basic income being championed mainly by civil rights activists – Martin Luther King being the most eminent example. We are now in the third wave, which calls into question the current system, the conditionality of social welfare and our response to the changing nature of work. These changes have led to a wider acceptance of the idea, with more and more people showing an interest for it, including politicians and journalists.

Marcus Brancaglione, president of the ReCivitas association, presented the project being conducted in the town of Quatinga Velho in Brazil since 2008

Marcus Brancaglione, president of the ReCivitas association, presented the project being conducted in the town of Quatinga Velho in Brazil since 2008

Lastly, to demonstrate the potential of basic income, Marcus Brancaglione, president of the ReCivitas association, presented the project being conducted in the town of Quatinga Velho in Brazil since 2008. Marcus Brancaglione views basic income not just in terms of a pilot project but as a fundamental human right because he believes that poverty exists in society only because we allow it to. Brazil is the first country to have it enshrined in its Constitution as a long-term goal. The time has come to implement it.

The three speakers were very well received by the very engaged and enthusiastic audience. Hundreds of hands were raised throughout the discussion, as a lot of people wanted to ask questions and to share their thoughts on what a basic income would mean for them.

All these wonderful, diversified and varied initiatives helped spread the word about basic income throughout the world, clearly marking this year’s edition of the World Social Forum in Montreal.

Thanks to all those who helped make this event a success for basic income around the world!

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The MFRB-RBQ organizing team: Aurélie Hampel, Carole Fabre, Christian Massault, Damien Vasse, Nicole Teke, Sylvie Denisse, Luc Gosselin, Louise Allaire, Lenny Watson and Sylvia Bissonette.

Article translated from French into English by Didier Di Camillo.

Basic Income, Job Guarantee, and the Non-Monetary Value of Jobs

Basic Income, Job Guarantee, and the Non-Monetary Value of Jobs

Thomas H. Davenport and Julia Kirby, the authors of Only Humans Need Apply, favor a job guarantee (JB) over a universal basic income (UBI). In this first part of a three-part article, I review their main argument, and assess one their central claims: the supposition that joblessness causes people to be less happy (irrespective of income).

Thomas H. Davenport and Julia Kirby, the authors of Only Humans Need Apply (2016, HarperCollins), believe that automation will radically change the structure of work. However, they further maintain that there is no need to fear a robot job apocalypse — in defiance of the picture painted by the popular CGP Grey video Humans Need Not Apply, to which the book’s title alludes. On their assessment, humans and machines will be able to work together in the new economy. Indeed, Only Humans Need Apply consists largely of strategies that workers can pursue to reduce their risk of losing their jobs to machines.

Davenport and Kirby are not proponents of universal basic income (UBI). Instead, as they mention briefly near the end of their book, they favor a job guarantee (JG) program. In this article, I will review their main argument against UBI, and present what I take to be its major shortcomings.

Something, though, should be said upfront: for the purposes of this article, I am happy to grant Davenport and Kirby’s premise that there’s no robot job apocalypse on the horizon. Indeed, I agree that it’s plausible that people will continue to create abundant opportunities for paid employment despite increased automation; after all, they have been doing so for decades already. However, as I’ve stressed elsewhere, there are plenty of reasons to support basic income that have nothing to do with automation; we don’t need to fear the rise of the robots. For one, I believe that a UBI should be demanded in part to free individuals from the need to sell their labor in the marketplace.

It’s on this last point that I markedly disagree with Davenport and Kirby, who hold that jobs are good. More specifically, Davenport and Kirby maintain that jobs are good for those who work at them — and for more than just income. It’s largely for this reason — which I’ll present in more detail below — that they eschew UBI in favor of JG.

1. The ‘Jobs Have Non-Monetary Value’ Argument

Davenport and Kirby devote only one chapter of Only Humans Need Apply to government policy, and only one short section of this chapter to universal basic income (pp. 241-243). (In fact, most of the relevant content was reprinted as an article in Fortune.)

Davenport and Kirby are quick to dismiss UBI — which they believe “misses the point” by neglecting the non-monetary value a jobs. It is worth noting what their complaints against UBI are not. For one, they do not worry that a UBI would be too expensive. Indeed, they assert that “the huge gains in productivity will mean we could afford, as a society, to go in either direction” of a UBI or JG (p. 243). Nor are they convinced that a guaranteed income would encourage laziness. They are clearly skeptical (as we’ll see later on), but at the same time they concede that this question is an empirical one — and go so far as to “applaud” cities like Utrecht for their willingness to experiment (p. 242).

For Davenport and Kirby, the deciding factor seems to be that (on their view) a JG provides benefits to individuals that exceed those provided by a UBI. What benefits? Well, jobs.

Jobs bring many benefits to people’s lives beyond the paycheck, among them the social community they provide through having coworkers, the satisfaction of setting and meeting challenging goals, even the predictable structure and rhythm they bring to the week. In 2005 Gallup began conducting a global opinion survey called World Poll. Analysis of the responses reveals that people with “good jobs” — which Gallup defines as those offering steady work averaging thirty or more hours per week and a paycheck from an employer — are more likely than others to provide positive responses about other aspects of their present and future lives.

Another World Poll question presents “aspects of life that some people say are important to them” and asks respondents to categorize each as to whether it is something essential they could not live without, very important, or useful but something they could live without. Gallup chair Jim Clifton says that by 2011, “having a good quality job” had reseach the top globally — putting it ahead of, for example, having a family, democracy and freedom, religion, or peace (pp. 7-8).

Work has value in itself as a way to find meaning in life. As we’ve noted, having a good job is the most desired thing in the world in global polls. Freud said that, “Love and work…work and love, that’s all there is.” Many studies have found that unemployed people are less happy, and that compensating them anyway doesn’t make them as happy as putting them back to work (p. 242).

To be sure, Davenport and Kirby are at times a bit flip. The Freud quotation, for instance, merits no more of a rebuttal than “The Beatles said, ‘All you need is love, love; love is all you need.’”

However, the basic worry — that work brings value to life that’s not provided by income alone — is indeed an important concern, and it merits a serious reply. Indeed, as I will concede later, it’s possible that, for some individuals, a JG would provide more benefit than a UBI — due precisely to the fact that jobs provide many people with rewards other than a mere paycheck. But I will argue that, all things considered, this is not a persuasive reason to favor a JG to UBI.

In particular, I want to highlight three main shortcomings of Davenport and Kirby’s argument:

1. It is inappropriate to extrapolate the results of studies like those in question (viz., surveys of unemployment and unhappiness) to a society with UBI. This is because a UBI itself might engender importantly different norms, values, and societal expectations.

2. Such generalizations ignore the fact that many individuals are discontent in their jobs, and that some would be happier (and more productive) if not confined to any traditional job. A UBI, but not a JG, would help such individuals immensely.

3. It’s important not to ignore that a UBI does not compel individuals to stop participating in paid employment; thus, it would not hurt those people who do have jobs and value them.

The decision between a UBI and JG must not construed as a choice between a society in which most individuals lack jobs and one in which they have them. After all, studies of guaranteed income, such as the Mincome experiment in Dauphin, Manitoba, have shown little negative effect on employment. It is a choice between a society in which those individuals choose jobs at their own will and one which the majority are forced to take jobs out of financial necessity.

In this article, I will focus on the first consideration above. Since UBI does not “cause” employment, it might seem that this issue is a red herring; nonetheless, it is illustrative to scrutinize some of the reasons that the extrapolation of results on “unhappiness” is unwarranted.

In a second article (to be published), I will turn to the second and third.

2. The Extrapolation Worry

Go back to one of Davenport and Kirby’s more provocative claims: “Many studies have found that unemployed people are less happy, and that compensating them anyway doesn’t make them as happy as putting them back to work” (p. 242). Let’s grant that this is true, and that there were no fatal flaws in the design of the studies. My claim is that, nonetheless, it’s inappropriate to extrapolate these results to a society in which a UBI has been enacted.

Suppose that, in general, unemployed people are less happy than employed people, and that this difference in happiness cannot be accounted for merely by the loss of income. Can we conclude that a job guarantee should be favored over a universal basic income?

I believe that the answer here is clearly no. This is because, in our actual society, there are other variables that are confounded with the presence or absence of paid employment. For one, to lack a job is to have a stigma (perhaps especially if one is receiving income without working). Secondly, jobs often play a large role providing individuals with a sense of meaning and personal identity. No doubt that bearing a stigmatized identity can contribute to unhappiness, as can the lack of a sense of identity and purpose. But what I want to stress here is that these correlations are present in our actual society — and there is good reason to believe that these connections would be attenuated by the institution of a UBI itself.

Put otherwise: The correlations between unemployment and stigma, and between employment and self-identity, are products of our society and culture. They would not necessarily hold in a society with a UBI. Thus, if it’s really the stigma and/or the loss of identity that causes many unemployed people to be unhappy, we can’t conclude that unemployment would have this same effect were a UBI to be put in place.

2.1 Unemployment and Stigma

Take the fact that unemployment is stigmatized. Some observations do suggest that stigma does play a role in contributing to the unhappiness associated with unemployment — such as the following three. First, retirees are not disproportionately unhappy. Second, in one study designed to test the stigma hypothesis, it was found that unemployed individuals enjoyed a boost in life satisfaction upon reaching retirement age, even though (curiously) employed individuals did not [1]. Third, if unemployment makes individuals unhappy, then the average happiness levels within societies should be expected to decrease when unemployment rates rises; however, this has been found not to happen [2]. Davenport and Kirby would argue that everyone wants a happy retirement, so whether being unemployed before hand or not, wouldn’t or shoudn’t effect this.

These three observations can’t be explained merely by the hypothesis that people are unhappy when they lack a job. They can, however, be explained by the “stigma hypothesis”. Take the first two observations: although our society expects that able-bodied, non-elderly adults are employed full-time, this expectation does not hold for individuals past retirement age; “retirees” is a socially-acceptable, non-stigmatized category. Additionally, the third observation could be explained by noting that, when the unemployment rate is higher in a region, unemployment becomes more familiar, and thus ceases to bear as much of a stigma.

And we should add that there is also stigma associated with the receipt of “handouts”. Thus, if stigma is a large factor in the mechanism by which unhappiness contributes to unemployment, we should not expect that merely giving money to unemployed individuals would restore their happiness. If the money is perceived as a “handout” — a symbol of personal unfitness or inadequacy — then to accept it is to assume a stigmatized identity on top of a stigmatized identity.

That is our present world. Now, consider a world with UBI. In this world, a basic income is awarded to everyone. There is no need for anyone to prove their neediness in order to receive enough money to live, nor must anyone demonstrate that they are physically or mentally unable to work, or that they seeking employment but unable to find it. Because of the universality, there would be no stigma attached to individuals’ receipt of this form of cash assistance. Receiving the benefit could not in itself be construed as evidence of personal inadequacy.

Of course, it’s possible that individuals who did not work, living upon the basic income alone, would still be stigmatized in UBI-world. Perhaps they would still be branded as lazy, freeloaders, or incompetent to find work. However, in a society in which all individuals are guaranteed an income sufficient to meet their basic needs, some highly driven individuals might voluntarily opt out of the paid workforce in order to concentrate solely on their passions — artists and writers, independent researchers and open-source programmers, political activists and volunteers for humanitarian projects, and so on. If such individuals are numerous, successful, and productive, then unemployment might cease to be stigmatized, and could instead come to be regarded as a socially acceptable life-choice.

The final point relates directly to the second “confounder”: as a matter of fact, paid jobs provide a sense of meaning and identity to many people; however, this is not necessarily the case.

2.2 Employment versus Meaningful Work

Davenport and Kirby are surely correct that jobs function as an important “a way to find meaning in life”: for many people, having a job is a way to feel like one is providing some sort of important social contribution. And even those who find their jobs unfulfilling, perhaps even meaningless, might find in their job and career a source of self-identity. In American culture, a customary question to ask upon meaning a new acquaintance is “What do you do for a living?” Relatedly, a customary question to ask a child is “What do you do want to be when you grow up?”

In our current culture, job-centrism starts young — and persists. You might be interested in temporary work such as Interim Director Jobs. Maybe it is unsurprising that our culture should be this way: if jobs that consume most of our adult years are inevitable for us (given its financial necessity), then perhaps we might as well accept our jobs as core features — often the core features — of our personal identities.

But there seems to be nothing intrinsic about paid employment such that it should be more central to our self-identities than, say, unpaid work. Indeed, later in their section on UBI, Davenport and Kirby themselves state that volunteer service also “leads to greater happiness” (p. 243). Unemployed individuals seldom turn to volunteer service as a way to replace the lost non-monetary rewards of paid employment (I assume); however, this itself is plausibly an effect of society’s job-centrism. In our society, it is assumed that an unemployed, able-bodied person ought to devote as much effort as they can into searching for a new job; exclusive dedication to volunteer work, unless it is clearly a possible path to paid employment, is likely to be seen as imprudent and a waste of time.

Once again, however, a UBI might engender an entirely new culture — one which in more people, freed from the inevitability of full-time employment, turn to non-paid work to make their lives meaningful and valuable. This, I believe, is by no means an improbable effect of a UBI. After all, even in our present society, some individuals don’t turn to jobs for meaning and purpose — or would prefer not to. (I will return to this point in Part 2 as well.)

To take just one example, Zipcar CEO Robin Chase spoke of her research on “passion jobs” a recent White House roundtable discussion on automation an UBI. She has interviewed individuals from a cab driver who wrote music that made autistic children happy (but could not afford to pursue this passion full-time) to a computer programmer who slept on friends’ couches while writing open source software for 3D printers. In her informal research, she has encountered many people who are unable to pursue socially valuable and personally gratifying projects, simply because these projects are not financially lucrative; instead, these people are stuck in “crummy jobs”, detached from their passions. Chase herself supports a UBI as a way to allow individuals to pursue vocations that would give their lives much more meaning than the jobs to which they must resort for income.

If she is right, then a UBI might create an environment in which individuals routinely turn to voluntary work or other unpaid activities for meaning, fulfillment, and self-identity.

Similar points apply to other non-monetary benefits that many individuals derive from traditional jobs, such as those mentioned by Davenport and Kirby earlier in the book: “the social community [jobs] provide through having coworkers, the satisfaction of setting and meeting challenging goals, even the predictable structure and rhythm they bring to the week.” (I will return to similar points in Part II of this multi-part editorial.)

Presumably, most people are less happy when they lack engagement in projects, causes, and communities. In our present society, where jobs are (of necessity!) central to most people’s lives, lacking a job can mean lacking such a project, cause, or community. Again, however, this link is contingent — and could be severed through the institution of UBI itself. Thus, we can’t conclude that unemployment would have the same effect on unhappiness given UBI.

TL;DR –

Even though unemployment is correlated with unhappiness in modern developed societies (even when controlling for monetary factors), this result is plausibly a reflection of the job culture itself: it’s not that our culture values jobs because jobs intrinsically make us happy; it’s that being employed tends to make us happier because we are stuck in a culture that values jobs [3].

While the relationship between unemployment and unhappiness is no doubt highly complex — involving the interplay of more factors than we can reasonably discuss in a short response piece — the acknowledgement of the factors described above should at least lead us to question the appropriateness of invoking such studies in an argument for the superiority of a JG to UBI.


[1] Clemens Hetschko, Andreas Knabe, Ronnie Schöb (May 4, 2012) “Identity and wellbeing: How retiring makes the unemployed happier”, CEPR VOX.

[2] Cf. Petri Böckerman and Pekka Ilmakunnas (2006) “Elusive Effective of Unemployment on Happiness”, Social Indicators Research 79: 159-169.

[3] For more discussion of the non-naturalness of our modern notion of “work”, see this recent article: Ilana E. Strauss (Jun 8, 2016) “Would a Work-Free World Be So Bad?The Atlantic.

Davenport and Kirby: Full Bibliographical Entries

Thomas H. Davenport and Julia Kirby (2016) Only Humans Need Apply: Winners & Losers in the Age of Smart Machines, HarperCollins Publishers.

Tom Davenport and Julia Kirby (May 26, 2016) “What Governments Can Do When Robots Take Our Jobs“, Fortune Magazine (and reprinted in Yahoo Finance).


Reviewed by Tyler Prochazka

Photo (“Workers”) CC BY 2.0 Daily Sunny

Kate would like to thank her supporters on Patreon

Finnish basic income experiment: Fear of the consequences

Finnish basic income experiment: Fear of the consequences

 

Finland’s Ministry of Social Affairs and Health has just published a press release, announcing an experiment based on a partial basic income (< 800 €/month), instead of a full basic income (> 1000 €/month). Although the latter had also been considered for the experiment, it appears that the government has decided that the experiment should be conducted as a partial basic income, specifically 560 €/month. Here are the reasons for which Kela decided to recommend against running the trial with a full basic income:

  1. It would imply higher taxes;
  2. It would result in lower earnings-related contributions to unemployment and pension funds;
  3. Low income earners might quit contributing to unemployment funds and joining trade unions.

Let’s address each of these points:

  1. Kela links the higher tax rates with the “incentives for work”. The argument is that the former will lead to a reduction in the latter. Why? Ok, so a person on a job will pay more taxes. Assuming these taxes are maintained under reasonable levels, why is Kela assuming these people will stop working? Kela assumes a purely economic standpoint here – meaning that, according to Kela’s logic, people’s decisions, and particularly those related to work, result exclusively from monetary arithmetic. This logic, ironically, is completely non-economical in nature. Kela is assuming that people’s interests, preferences, and particular drives to do things for reasons other than money are not important, and hence can be discarded. Furthermore, Kela assumes that the possible effects of these preferences and drives on the experiment are not even worth trying to capture or understand. Stripping the argument from its technicalities and white-collar language, it can be reduced to the most common, basic, and prejudice-laden argument against basic income: that with a (full) basic income, people will stop working (“the laziness argument”). Nothing about the nature of the work itself is mentioned – such as whether it is socially useful or not, or whether it is contributing or not to people’s sense of belonging and happiness. The only thing that concerns Kela’s officials, analysts and institutional partners is whether a person stays on the job (whatever that job may be): if he/she does (or if an unemployed person becomes formally employed), that’s great; if not, that’s bad. Let’s not forget this is an experiment. If doubts exist, it’s precisely by undertaking an experiment that we might understand more about the subject being tested – in this case, ourselves. If the experiment is only intended to confirm what we already know, then it’s not an experiment: it’s a purposeless act taken only to gain collective confidence, much closer to public relations than science.
  1. Kela’s second argument goes like this: if people receive a full basic income, then why would they bother saving for unemployment and pension funds? Of course, these savings would be nonsensical at amounts lower than the basic income. But if someone has an average income above the basic income threshold, then a certain amount of unemployment and/or pension saving could be a wise investment, in order to maintain the same level of earnings in case of unemployment and retirement. For sure, this implies that, overall, there would be reduced contributions to unemployment and pension funds. But would that be a bad thing? After all, with the existence of a full basic income, people’s need for unemployment or retirement security would be reduced, so these funds wouldn’t need to be as large as they are today. Anyway, unemployment and pension funds are composed of money belonging to those who have directly contributed to them (or they are supposed to be). So they should only be as large as those people’s need for them. So what if a person stops paying their contribution to unemployment and/or pension funds because now he/she has a basic income? Nothing really happens, other than that the person will have a smaller amount of money to draw from when he/she becomes unemployed or retired. However, that person would never sink below the basic income level, and so a basic safety would always be in place.
  1. The first part of Kela’s third argument has already been dealt with in our second point. So, the remaining question is just about unionization. Why does Kela assume that joining a union is so important—so important, in fact, that a decrease in union membership could justifying not even testing a full basic income? Trade unions represent a certain kind of vision about work which is declining. In the USA, in the last fifty years, trade union membership has declined from around 33% (of all employees) to about 10% nowadays (Planet Money, 2015). Also in the UK, the number of registered union members has sharply declined in the last 35 years, from 13 million in 1979 down to 6.4 million as of 2014. A moderate to strong reduction in trade union membership has occurred in most other European countries as well, including Finland (Henrique de Sousa, 2015). At the same time, self-employment has been on the rise in several countries (e.g.: Austria, Belgium, Ireland, UK, Netherlands, Czech Republic, Finland)– although, in the European Union overall, it has stabilized around 16.7% since 2008 (World Bank). The vision of work that the trade unions represent includes fixed working periods, clear employer/employee relations, fixed negotiated incomes (collective bargaining), and holiday arrangements. All of these are getting less relevant as the time goes by. This comes with the acute rising of work flexibility, uncertainty over work periods and earnings, and the increase of precarious working conditions (Guy Standing, 2011). Precarity, unions’ number one enemy, does not necessarily represent a problem if a full basic income is in place. Unions were formed to give workers collective bargaining powers over wages and working conditions; in their absence, the threat of destitution was constantly used by employers to retrain and control workers. The employers could push less favourable deals onto workers, who were forced to choose between a bad deal and poverty. But this relationship, based on employees’ fear and employers’ abuse of power, need not exist – and, under a full basic income, would not exist. This makes sense because individual workers would have the personal bargaining power that a full basic income brings. Being part of a trade union would thus cease to be a necessity, and turn into a mere preference. So, reduced unionization is no grounds for rejecting implementing a full basic income, let alone merely experimenting with one.

Kela is rejecting a full basic income out of fear. This is an experiment. Of course there are issues, but that is exactly why the experiment is needed in the first place: to look at the extent of the consequences, within a controlled setup, before any full implementation. And experiment is needed to study the effects, expected or not. And to observe changes in people’s behaviours, when they are able to enjoy (during the experiment’s limited timeframe) a larger degree of freedom that they have never experienced before. I, for one, think that it’s entirely worth it. For the future of Finland – and of humanity.

More information at:

In Finnish:

Olli Kangas & Ville-VeikkoPulkka (eds.), “Preliminary report on a universal basic income”, Prime Minister’s Office, March 30th 2016

In English:

Ministry of Social Affairs and Health, “Ministry of Social Affairs and Health requests opinions on a basic income experiment“, Sosiaali-Ja Terveysministeriö; August 25th 2016

Planet Money, “50 years of shrinking union membership, in one map”, February 23rd 2015

Department for Business Innovation & Skills, “Trade Union Membership 2014 – statistical bulletin”, June 2015

OECD Data, Self-employment rate (% of employment, 1990 – 2015)

World Bank, Self-employed, total (% of total employed)

Guy Standing, “The Precariat: the new dangerous class”, Bloomsburry Open Access / Creative Commons, 2011

In Portuguese:

Henrique de Sousa, “Sindicalização: a vida por detrás das estatísticas [Unionization: thelifebehindthestatistics]”, WorkingPaper, Faculdade de Ciências Sociais e Humanas, September 2011

 

Article reviewed by Ali Özgür Abalı, Kate McFarland and Tyler Prochazka.

Wealth of a country: We need to rethink GDP

Wealth of a country: We need to rethink GDP

About 80 years ago, academics and policymakers in the US wondered if the country’s wealth was improving every year or not. They decided that the “added value” that was created in a country was the appropriate measure for wealth creation.

These policymakers looked at the quantity and price of goods sold by agriculture, deducted the value of goods acquired, like chemicals, tractors and fuel, to define the added value of agriculture in the economy. They did the same for the manufacturing and building industries and for services provided by bankers, hair dressers, restaurants and shops.

True, the wealth provided by a restaurant is short-lived, but industrial products do not last forever either. What you pay for a product or service is probably the best possible practical measure of its value. It all made sense.

Then they wondered what to do with services consumers didn’t pay for, like police and public administration. Those services were added to the “wealth of the country” at cost, since they were definitely contributing to our welfare by avoiding chaos. In 1930, public employment in the US was only seven percent of the total work force. That has most definitely increased, with more and more people entering public administration through universities similar to Norwich University.

The Gross Domestic Product, GDP, became a faith of the “Labour Church”. That it is faith and not reason was illustrated the last years by the huge impact on financial markets by statistically irrelevant changes of China’s growing GDP, like 0.5 percent, while its measuring inaccuracy is around 2.5 percent (see publications of Harry Wu, economics professor at Hitotsubashi University in Tokyo).

Since 1970 machines, robots and computers have massively reduced the work force in agriculture and industry, considerably reducing the “added value” in those sectors.

I will now give examples of why GDP is not a good measure of wealth anymore.

  • During the seventies, many European countries tried to solve rising unemployment following productivity gains in industry by creating new jobs in public service. Whether the newly appointed public servant did useful things or not, it supposedly increased the wealth of the country, since its cost, not its value, was counted in the GDP,
  • Imagine that parents living in a village of the US have organised themselves to collectively watch their young kids and organise festivities for the community. That sort of work is not a part of the GDP. In Sweden, it is. Towns there enroll parents to take care of kids and organise parties and other events. This way, voluntary work is converted into paid work and thus GDP.
  • If a country, for example Greece, drastically increases the number of its public servants and increases their salaries, they boost their GDP and make the IMF, the EU and creditors happy until the deadline comes to pay the loans used to fund the fantasy-growth of their GDP.

The examples show the same root cause of the problem, being the belief that unpaid labour has no value and paid labour has value even if the work is useless.

The approximation to count public services at cost is a design error in the GDP. It induces some countries to implement wrong policies to get a “better” GDP, at least for a short time, the time to get re-elected.

A nation is wealthy if it takes care of its people. For example, Belgium distributes an average of €550 in cash and another €420 pay-in-kind (free education and health care) per month per citizen. Many countries are now distributing a lot of money to the population (see this Economist graph). All of them do that in an incredibly complex way because the system grew over decades without being re-engineered. It is very likely that most wealthy countries will streamline their social security systems to make them more efficient and fair, like Finland is currently doing. No doubt that version 2.0 of our social security systems will contain a “basic income” core.

Shortly, my friends, within a few decades, the purchasing power distributed by a country to its citizens will replace the GDP as the measure of their wealth.