Let’s eliminate negative basic incomes
What is a negative basic income?
“A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” A negative basic income would be one where a periodic cash payment is unconditionally demanded from all on an individual basis, without means-testing or a work requirement. This is nothing but a per-head tax or a poll tax, a payment for existence, an equal amount taken from everyone, unconditionally.
The extreme unfairness is apparent. How can you take the same amount from the billionaire and the beggar? Not surprisingly, there have been very few pure poll taxes in history – most had a number of exclusions, especially for the poor. However, there is a different kind of per-head tax that is large, widespread, and right under our noses. This is when there is loss or diversion of the commons.
Let’s take a toy example to understand this. Imagine a tiny commons, 100 people who own a 1 kg slab of gold in common, inherited from the past. As they are worried about theft, they store it under the protection of the local deity. But it is a continual worry. The community decides to sell the gold, and to invest in a piece of land. They reason that at least the land can grow a crop, whereas the gold generates no income. As long as they maintain the fertility of the land, they can all share the crop. This would be the equivalent of a commons dividend or a cooperative dividend, essentially a Universal Basic Income for the community.
Now imagine that when they go to sell, they find the gold is simply stolen. Clearly it is a loss of 10 grams each (100 persons x 10 grams = 1,000 grams = 1 kg). This is nothing but a per-head imposition of the equivalent of 10 grams of gold. Since it is an inherited asset, the loss is suffered by all future generations as well. In a different sense, the loss is the opportunity to receive the commons dividend, the universal basic income in perpetuity.
We can extend this logic to diversion of either the capital (the value of the gold), or the income stream from the new asset (the land). If the government appropriates the value to finance infrastructure or health or education, it is still effectively financing these investments with a hidden per head tax.
This is even clearer in the instance of the fruit of the land and the commons dividend. If the government appropriates the entire crop, then it is identical to distributing a commons dividend as a basic income, and taxing it simultaneously to the exact same extent – the negative basic income.
This kind of underselling of the commons is widespread, particularly in minerals. To take a couple of examples, it has been estimated that the United Kingdom and Norway have extracted approximately equal amounts of oil from the North Sea. However, the United Kingdom received approximately GBP 400 billion less than Norway[1]. For a population of 64 million, this is a loss or a poll tax of GBP 6,250. Had this amount been saved, it could have financed a Citizen’s Dividend of GBP 250 in perpetuity, assuming a real return of 4%.
Another common problem is that the money received for the minerals is treated by the government as taxation revenue, not as the sale of the commons. Consequently, instead of creating a new asset, such as the land in the toy example, or more seriously, Future Generations Funds or Permanent Funds, the government simply spends the money as income. While this boosts the GDP figures, it is both the consumption of our inherited asset as well as the hidden imposition of a per head wealth tax. . Alaska only deposits 25% of its money from oil in to its Permanent Fund. The remaining 75% is treated as revenue in the state budget. This year, Alaska’s Permanent Fund Dividend was set at US$2,072. By extension, the remaining 75% that was spent through the budget could have financed an additional dividend of $6,216 per annum.
The Norway oil fund presently saves all receipts from minerals in the Norway Government Pension Fund. This is the single largest fund in the world, approximately USD 900 billion. However, instead of paying out a commons dividend or a Citizen’s Dividend, the money is appropriated into the budget. This is clearly equivalent to imposing a per head tax on all Norwegians. The 2016 budget estimates a transfer of NOK 208,994 million to the budget[2]. For a population of 5.084 million[3], that is a negative universal basic income of NOK 41,108, or approximately USD 4,863[4]. It is doubtful that any modern democracy can impose a per head tax of such a staggering amount.
The Goenchi Mati Movement, a people’s movement in Goa has adopted simple principles that they advocate for governing mining of the commons. In short, the principles are:
- We, the people of Goa, own the mineral in common. The state government is merely a trustee of natural resources for the people and especially future generations (Public Trust Doctrine).
- As we have inherited the minerals, we are simply custodians and must pass them on to future generations (Intergenerational Equity).
- Therefore, if we mine and we sell our mineral resources, we must ensure zero loss, ie. capture of the full economic rent (sale price minus cost of extraction, cost including reasonable profit for miner). Any loss is a loss to all of us and our future generations.
- All receipts from minerals must be saved in the Goenchi Mati Permanent Fund, as already implemented all over the globe. Like the minerals, the Permanent Fund will also be part of the commons. The Supreme Court has ordered the creation of a Permanent Fund for Goan iron ore and already Rs. 94 crores is deposited.
- Any real income (after inflation) from the Goenchi Mati Permanent Fund must only be distributed to all as a right of ownership, a Citizen’s Dividend. This is like the comunidade zonn, but paid to everyone.
We argue quite simply that any other structure would impose per head taxes, which is fundamentally regressive and obviously unfair. The principle of zero loss mining was clearly violated in the UK receiving GBP 400 billion less than Norway. The principle of saving all receipts from minerals is widely violated, largely due to the way governments account and report for this – windfall revenues instead of it being a capital receipt. And where permanent funds do exist, in most cases the government appropriates the income instead of distributing it as a commons dividend.
This problem is not confined to minerals. All over the world, the commons are being destroyed at a rapid rate. For example, the “Mickey Mouse extension” of copyright is also nothing but a transfer from the commons to the private sector, an imposition of a negative basic income.
It is time that activists for basic income seriously hunt out instances of negative basic income. Simply eliminating them could achieve many of the desired benefits of basic income, with a moral argument in favour, rather than the uphill battle of helicopter money.
About the author: Rahul Basu
[1] Did the UK Miss Out on £400 Billion Worth of Oil Revenue?, David Manley & Keith Myers, Natural Resource Governance Institute, 5 October 2015
[2] https://www.statsbudsjettet.no/Upload/Statsbudsjett_2016/dokumenter/pdf/budget2016.pdf
[3] https://www.google.co.in/search?q=population+of+norway&oq=population+of+no
[4] Google. 1 NOK = 0.12 USD, 41,108 NOK = 4,863.76 USD. 13 Dec 2016, 12 noon GMT
Interview: Basic income can ‘mend the net’
In his new Kindle book Mending the Net, author Chis Oestereich describes how a basic income can address some of the “wicked problems” facing humanity.
For Oestereich, the basic income can help society rethink its consumption patterns and possibly upend the “treadmill of subsistence.”
In the book, Oestereich predicts that the economy could be headed toward a recession. In the interview he said that basic income can be a “shock absorber” of economic downturns. Without a basic income, Oestereich said he worries that the next recession will be much worse than the last for many people.
One of the most unique effects of the basic income is its potential to change how we view careers and allow “self-determination,” Oestereich said.
“By standing individuals up on an income floor, we could open the door for many to create unique, fulfilling lives that might not otherwise be possible,” he said.
The full interview can be found below.
You said in the book: “A universal program removes the opportunity for politicians to erode benefits in a death by a thousand cuts scenario”. Can you explain why you think universal basic income evades austerity?
I don’t think it evades austerity in general as there are other programs to cut that could still greatly impact lives, but rather that it evades austerity because since it is universal, any cut must be done to everyone. Means testing programs are a game of continually shifting goal posts wherein a small adjustment to a qualifying measure can mean the difference between families having enough to sustain themselves, and coming up short. By shifting to a universal program the goalpost moves could no longer trim away at those on the margins.
I’ve heard some say providing a greater array of people more money through basic income would exacerbate environmental degradation with their new consumption? Considering lower income individuals spend a higher percentage of their income. What do you think the overall effect on the environment would be from basic income?
I think environmental impacts are one of several valid concerns around basic incomes. That’s why I advocate for significant testing to see what we can learn. Some people may be enabled to purchase and consume more goods and services as the direct result of a UBI, but I think that’s an argument for finding an appropriate level of UBI that’s not so large that it allows people to go from living lives of unfulfilled needs, to being enabled to live destructive lifestyles. But I think some of us might cut back on some work and consumption that are part of today’s treadmill of subsistence. Take away the need for a full-time job to get by and some of us might only work three or four days a week and consume less resources through commuting and other related efforts. We need to gain a better understanding of the effects of a widely-implemented UBI, and then we might need to update social norms to align with systemic needs. And it’s possible that we could gain unexpected positive effects like those experienced in Utah where giving homeless people places to live resulted in reduced use of medical care.
You mentioned that we are probably counting down to a recession. How would a basic income address the issues of economic recession?
I called UBI an economic shock absorber because it would be there to blunt the negative impacts anytime the economy went south. (If we had a UBI in 2007, how many of the millions of people who lost their homes to foreclosure might have squeaked by without falling into those dire circumstances?) With a little something coming in each month comes a modicum of hope, rather than the steady drumbeat of a straight-line declining balance in your checking account. But if we don’t have a UBI in time for the next recession, I think we can expect that the outcome of the next one will be worse than the last one—at least for some segments of the population—as losses from the Great Recession “were disproportionally concentrated among lower income, less educated, and minority households.”
Why do you think the profit motive is destructive? And how does basic income help address the profit motive force?
I don’t think the profit motive is inherently destructive. But when it’s the sole focus of an organization, the profit motive allows businesses to hold extractive relationships over their employees. When a person has no other means of subsistence, the terms of employment are often highly-unfavorable. Give an unemployed person a decent monthly payment via a UBI and the choice is no longer one of zero income or an extractive employment relationship, so the calculus around the decision changes tremendously. Instead of being in a take-it-or-leave-it scenario with only savings (if that) to fall back on, you have a choice of tightening your belt and squeezing by on any savings you have along with your monthly UBI check. It would give workers a little bit of leverage in scenarios where they often have none.
You mentioned “If you hear someone talking about Milton Friedman and basic incomes in the same breath, it’s probably safe to assume that they’re looking for overall cost savings to reduce their personal tax burden.” Do you think libertarians that support basic income are primarily concerned with bringing down costs? And along those lines, do you think a coalition including fiscal conservatives and libertarians on basic income is possible?
My sense is that libertarians are primarily concerned with optimizing their personal tax effects. If a UBI could reduce administrative costs, and they would end up with a net financial benefit, you’d probably have their ears. But if they ended up paying more into the system, I think you’d quickly stop hearing about how great it was. So, I think they could be willing partners up to a point, but that they’d likely drop off from the cause at some point, and that they would eventually oppose efforts to increase the amount of UBI payments. My thought is that we could probably work together to get the proof of concept testing done, but that in working to make an initial UBI happen libertarians might become a drag on the effort as they would likely be aiming for systemic savings, rather than an outcome that would be measured in improved lives.
What inspired you to write this book?
Mending the Net wasn’t planned. I was invited to write chapters for a couple of different books, the ItsBasicIncome project that will be published out of the UK soon, and another anthology around environmental issues. I wrote them both independently and then realized that they would fit together nicely in a Kindle single format as the essays offer two different perspectives on “why” we ought to consider trying UBIs. (Readers will have to look elsewhere for the “how” argument as that’s not my bailiwick.)
As for the topics of the essays, I’ve never been a big fan of the rat race, and I’m a huge proponent of self-determination. Basic incomes help along both of those lines. By standing individuals up on an income floor, we could open the door for many to create unique, fulfilling lives that might not otherwise be possible.
What is your involvement in the basic income movement?
I guess I’m sort of a passionate advocate, but I certainly don’t see myself as a movement leader. There are others (like Guy Standing and Scott Santens) whose work I regularly look to for ideas and updates on the topic. For my part, I’m working to systematically address all wicked problems. To that end, I’m currently working on a book on the UK’s Brexit issue, as well as the second anthology from the Wicked Problems Collaborative (my publishing company), that will look at the promise and peril of our rapidly advancing technological environment.
BIEN is 30: Interview with Philippe Van Parijs
This year, BIEN celebrated its 30th anniversary. An event commemorating the occasion was held at the Université catholique de Louvain (UCL) in Belgium on October 1, in connection also with the 25th anniversary of UCLouvain’s Hoover Chair of economic and social ethics and the retirement of BIEN cofounder Philippe van Parijs as its director.
Earlier this month, I had the opportunity to conduct an email interview with Philippe Van Parijs about the past, present, and future of BIEN.
What’s the most striking difference between BIEN’s earlier years and now?
The internet. It is hard for young people today to imagine what it meant to run an international network when all communication between its members had to happen through the post. The newsletter needed to be typed, then printed, then photocopied, then stapled. Each copy of the newsletter then had to be inserted in a big envelope, with a stamp stuck on it, and the whole lot had to be taken to the nearest post box. All this cost money. So, annual fees had to be collected. But bank charges were high for international transfers and would have absorbed half of these fees. We therefore asked people to send the money to Louvain-la-Neuve in an envelope in pesetas, deutsche Mark, French Francs, lire, etc. and I changed them at the bank before paying equivalent amounts in Belgian Francs into BIEN’s bank account. We more or less managed three issues per year, but given the time this cost to a tiny number of busy people, this was a recurrent miracle. To lighten the thankless burden of fee collection, we wisely switched in the late nineties to a life membership formula. And from 2000, thanks to increasing access to internet among BIEN’s members, we allowed ourselves to gradually switch from the tri-annual printed newsletter to more frequent e-mailed news flashes.
What were BIEN’s most memorable successes in its first 30 years?
The greatest success — and the first virtue of a good network — is simply to have kept going, with a newsletter sharing intelligible and trustworthy information every few months and with a congress unfailingly organized every two years. These congresses enabled a core of highly committed people to get to know each other personally, to inform, encourage and inspire each other, but proved also a powerful instrument for making more people aware of the idea of basic income and ready to take it seriously. The first two conferences (in Louvain-la-Neuve in 1986 and Antwerp 1988) were very modest, low-budget events. The first grand congress was organized by Edwin Morley-Fletcher, with the support of Italy’s Lega Nazionale delle Cooperative e Mutue at the European University Institute (Florence) in September 1990. I thought at the time that organizing such big and expensive events would be unsustainable. But I was proved wrong by a long and so far uninterrupted succession of enthusiastic conference organizers.
The second greatest success — and the second virtue of a good network — is to have kept expanding. As time went on, more and more people from outside Europe attended BIEN’s congresses. Among them, Brazilian Senator Eduardo Suplicy, who started suggesting, from 1998 onwards, that the Basic Income European Network should become the Basic Income Earth Network. Guy Standing was sympathetic to the suggestion from the start. I was very skeptical at first, partly because I knew too well how hard it had been to keep our little European network going, and partly because I thought that a broad interest in basic income could only arise in countries that experienced for a sufficiently long time the perverse effects of conditional income schemes. But by 2004, 25 percent of BIEN’s life members were from outside Europe. Moreover, in January 2004, Eduardo managed to get President Lula to sign his “basic income law”. And the internet was conquering the world. My resistance evaporated. At the Barcelona congress, in September 2004, the General Assembly approved our proposal to make BIEN a worldwide network.
Can these greatest successes be called memorable? Not really. A network acts discreetly in the background. It empowers its components, thereby helping them do a number of things, including memorable ones. Would there have been a basic income law in Brazil or a basic income referendum in Switzerland in the absence of the slow maturing and dissemination of the idea made possible by the existence of a lasting and expanding network? And would they stick as firmly in many people’s memories without an efficient and influential network that confers them a memorable rather than anecdotal status?
Can these greatest successes be called memorable? Not really. A network acts discreetly in the background.
What have been the biggest challenges?
Apart from the material concerns already mentioned, I can think of two main challenges. One is linguistic. Opting for English as the sole language of a European network was far less obvious thirty years ago than it has now become. There were voices rightly pointing out the elitism involved in this choice. In most countries, only bilinguals (or more) could be involved. Yet, given the resources available, only the monolingual formula was realistic. Consequently, a constant effort was required, far from fully successful, to correct the imbalance thereby created along many dimensions: from the overrepresentation of news and publications from Anglophone countries to the overrepresentation of Anglophones among active participants in our congresses or assemblies.
The other challenge is sectarianism. When people sharing the same conviction form an association, there is a danger that their meetings and publications will largely reduce to a rehearsal of the common faith and a denunciation of the stupidity or wickedness of those who don’t share it. It has been crucial to the vitality and impact of BIEN that it has resisted such sectarian degeneration. It has kept inviting to its congresses speakers who spoke against basic income. It has kept reporting in a fair way on criticisms and setbacks. And it has kept insisting that its membership is open to people “committed to or interested in” an unconditional basic income in a precise yet broad sense that does not stipulate a specific funding method, rationale, level or set of accompanying measures.
Has BIEN ever run the risk of dying?
Twice, I think. First, it could have been still-born. Driven by the pioneers’ enthusiasm, the initial plan, at the September 1986 founding conference, was to hold a conference every year, and someone offered to hold the next one in Maastricht in September 1987. But the proposal fell through and instead there followed a long silence. It is only in February 1988 that BIEN’s first newsletter was sent out, announcing a second conference, which Walter Van Trier, BIEN’s first secretary, managed to put together in Antwerp, in September 1988.
The second time agony seemed close was in the mid-nineties. With my four children, Louvain’s Hoover Chair to run and my Real Freedom for All nearing completion, I was struggling to combine the jobs of BIEN secretary and newsletter editor. To my great relief, at the London 1994 congress, a founding member who was hardly involved until then agreed to become the newsletter editor. I still dealt with the first issue following the congress, but thereafter, despite many reminders and repeated promises, nothing happened for many months. I took back the editor job and laboriously published a treble Christmas 1995 issue, after a full year gap. It made me realize both how crucial a newsletter is to the very existence of a network and how important it is for the sustainability of a network that people should only commit to what they are really able to do.
What do you see as BIEN’s biggest challenges moving forward?
One big challenge is to keep track of the countless fast swelling stream of relevant developments worldwide and to make their nature and significance intelligible to people across the world. Internet is no doubt a fabulous asset for a worldwide network. But working out the right hierarchy, in terms of relevance, significance and reliability, among the mass of information to which we now have easy access is both essential and difficult. BIEN’s current team is doing a terrific job in this respect.
Another challenge is to constantly find the right balance between utopianism and pragmatism, between on the one hand an attractive, stirring vision of a better world that can boost our hopes and stimulate our actions and on the other an acute, clear-headed awareness of difficulties, obstacles, defeats and disappointments.
What do you see as most exciting?
The fact that so many different people in such different countries discover, discuss and appropriate the idea and that this helps them regain the hope they had lost in a better future for themselves and for their children.
Philippe Van Parijs has been chair of BIEN’s international board since 2004. He was the organizer of BIEN’s founding conference (Louvain-la-Neuve, 1986), BIEN’s newsletter editor from 1988 to 2004, BIEN’s secretary from 1994 to 2004. He is the author (with Yannick Vanderborght) of Basic Income: A radical proposal for a free society and a sane economy, Harvard University Press, Spring 2017.
Cover Photo: Van Parijs at BIEN’s 30th Anniversary event (credit: Enno Schmidt).
VIDEO: BIEN’s 30th Anniversary Reunion
This fall, BIEN celebrated 30th anniversary of its founding. Video recordings of its founders’ reunion are available online.
On October 1, several founding members and other past and present BIEN leaders — comprising three generations of basic income advocates — united at the Université catholique de Louvain (UCL) in Belgium for a conference held in commemoration of the occasion in conjunction with the 25th anniversary of UCLouvain’s Hoover Chair of economic and social ethics and the retirement of BIEN cofounder Philippe van Parijs as its director. (See also a Basic Income News interview in which Philippe discusses the past, present, and future of BIEN.)
Reflecting on the event and the history of BIEN, Belgian entrepreneur and long-time basic income advocate Roland Duchâtelet said:
What impresses me most is that during the 30 years of BIEN many different personalities expressed many different views regarding UBI models, implementation, and the way the organisation should behave… and yet, I do not believe there have been any defectors. Moreover, despite the highly diverse background of the members and their desire to succeed, the organisation managed to keep its harmony.
To me this was the prevailing feeling of the 30th anniversary event: we are a (strong) group of friends.
For Jose Luis Rey Pérez (Adjunct Professor of Philosophy of Law at Universidad Pontificia Comillas in Madrid), BIEN’s 30th anniversary event rekindled memories of studying with van Parijs and others at UCL years earlier:
I was in Chair Hoover [in UCL] two months in April and May 2003, while I was writing my PhD. I learnt a lot from Philippe van Parijs during that time, and I had the opportunity to read everything that was published about basic income in that time. (In those years where books and articles were not on internet like now.) I had also the opportunity to share coffees, time and discussions with Axel Gosseries, Hervois Portouis, Yannick Vanderborght, Jurgen De Wispelaere and Myron Frankman who were in the Chair at that time.
It was nice, 13 years later, to listen and learn again from some authors that I have studied deeply. I wish Philippe a very rich retirement. I know that he will continue through his conferences, books and articles to enrich the philosophical thought. We have a lot of things to learn from him yet. Because he is one of the best philosophers of this XXI century.
Two other attendees, Bonno Pel and Julia Backhaus of the TRANsformative Social Innovation Theory (TRANSIT) research project, have written an extended feature article on the event (“BIEN Celebrates Thirty Years: Basic income, a utopia for our times?“), looking at the 2016 UCL event as a reflection of (a photo of) the founding meeting in 1986.
Video Footage
Belgian filmmaker Steven Janssens videotaped six conference sessions: (1) BIEN’s improvised birth, (2) Basic income implemented in the short and the long run (note: a parallel session on the history of basic income was not recorded), (3) Lessons from the Swiss referendum, (4) Promises and limits of past and future experiments, (5) Moving forward, (6) Final reflections.
(Janssens is also the driving force behind the documentary about a basic income pilot in a Ugandan village, with a planned launch date of October 2018.)
1. BIEN’s Improvised Birth: Testimonies by Some Co-founders
Featuring Philippe van Parijs, Paul-Marie Boulanger, Annie Miller, Guy Standing, Claus Offe, and Robert van der Veen.
https://vimeo.com/eight8/bienconference1
2. Basic Income Implemented in the Short and the Long Run
Featuring Philippe Defeyt (“An income-tax-funded basic income of EUR 600”), David Rosseels (“A micro-tax on electronic payments”), and Karl Widerquist (“Sovereign funds and basic income”).
https://vimeo.com/eight8/bienconference2
3. Lessons from the Swiss Referendum
Featuring Nenad Stojanovic and Enno Schmidt.
https://vimeo.com/eight8/bienconference3
4. Promises and Limits of Past and Future Experiments
Featuring Yannick Vanderborght (overview), Guy Standing (on India), Jurgen De Wispelaere (on Finland), Alexander de Roo (on The Netherlands).
https://vimeo.com/eight8/bienconference4
5. Moving Forward
Featuring Louise Haagh, Stanislas Jourdan, Roland Duchatelet, Yasmine Kherbache.
https://vimeo.com/eight8/bienconference5
6. Final Reflections
Featuring Claus Offe, Gérard Roland, Joshua Cohen, Erik O. Wright.
https://vimeo.com/eight8/bienconference6
Reviewed by Tyler Prochazka.
Cover Photo: BIEN’s 30th anniversary renunion , credit Enno Schmidt.
Will basic income lower crime?
This week, I had the opportunity to be a guest on New York University’s Students for Criminal Justice Reform podcast. I spoke with Thurston Powers about the positive effects a basic income may have on American society.
One overlooked potential benefit is the effect of basic income on crime rates. I noted that a basic income could create more stable households and increase the likelihood of parents spending time with their children. Unstable and low-income households are linked with creating long-term issues for children that grow up in these situations. The fact that crime could be higher due to these circumstances speaks volumes about how important it is for families to have access to an income that can help them provide for their children without them having to consistently work to keep a roof over their heads. Crime happens all the time, and the use of firms such as Salwin Law Group, as well as similar other legal representation, may be used to show evidence on how financial issues have provided this base for criminal activity, not as an excuse but as a show of how the system needs to change to help people in these situations.
Those that critically point out single mothers work slightly less under a basic income do not understand this is probably a good thing. Considering it is single mothers in the data that show reduced work hours, it is likely they are spending their extra time raising their child. In the long-run, raising a well-adjusted adult will produce social and economic dividends.
In fact, research shows that basic income experiments have resulted in increased social cohesion. Studies have shown increased school attendance after the introduction of a basic income-type grant. In Namibia, there was about a 40 percent drop in crime in areas where the basic income was introduced.
While it is highly probable the basic income would improve some of the factors that lead to crime, I said in the podcast there is virtually no chance a basic income could increase crime. Frankly, the conservative narrative surrounding welfare is just not true.
The problem is not that welfare recipients become lazy, it is that the structure of welfare can discourage work. This is because welfare benefits diminish sharply as low-income individuals improve their wages — which is precisely why a basic income is more effective.
I also noted that most research demonstrates that overall people will not work less, and in some cases may work more if it benefits them, under a basic income. For libertarians that are interested in creating an effective solution to deal with the upcoming wave of automation, a basic income is the most efficient answer.
Listen to the full podcast below:
https://www.youtube.com/watch?v=iW6KgITEdT0&feature=share