by Guest Contributor | Jul 9, 2012 | Opinion
D.R. Thompson
I have watched with quiet fascination the evolution/resurgence of alternative politics since the financial meltdown of 2008. In my opinion, we have (at least) two broad camps developing: a Ron Paul brand of libertarianism that seeks to return to a prior vision of capitalism lost, and a new brand of Economic Democrat (often reflected in the Occupy Movement and/or Green Party or the ‘New Economy’ movement) that seeks a balance between capitalism as we know it and the people at large, who are more often than not suffering the brunt of capitalism run amok.
Both factions are reacting to an increasing corrupt two-party system that sees Big Business allied with Big Government. The result is an alliance that destroys the middle class, promotes elitist globalism devoid of democratic oversight, increases the power of the security state, enriches the upper one percent of society with corporate welfare, and engenders corporate socialism through unsustainable monetary policies. The result sections society into an increasingly enriched, globally based upper echelon that guts the wealth of whole nations and peoples.
How this has happened we may disagree on, but both factions are in firm unity that we have arrived at this situation and it has been slowly developing the past 30 to 40 years.
The question is, of course, what do to about it. This essay seeks to dissect some of the ideas behind Economic Democracy, and then to suggest how libertarians and other de-centralists actually might see benefit in them.
In my mind, libertarians in general need to grasp the fundamental contradiction that a Ron Paul style of political shift — specifically one that is devoid of actions to directly break up monopolistic, duopolistic or cartel-like aspects of Big Business — could devolve into a neo-feudalistic scenario where large corporations essentially create corporate fiefdoms through which transnational factions evolve and compete. This could mean less, not more, liberty. In other words, some aspects of libertarian policies could have the exact opposite impact than what is intended and actually just hand power over to the big corporate interests they so often rail against. This new level of corporate power would likely not make us any more free and continue — even expand — the cycle of abuse seen today.
On the other side of the equation, the alternative of centrally planned, top down governance, if taken to the extreme, would create a kind of global fascism that stifles innovation, punishes individualism, guts individual wealth and undermines democratic sovereignty. We don’t want that either.
My argument here is that we can avoid these extremes by recognizing that each political pole must understand the logical limits of its own zeitgeist and determine at what level of society a particular philosophy or approach will work best for the overall benefit of people. This often comes down to understanding what is best centralized and/or cooperative in nature, and what is best left to individual choice and freedom.
In my mind, a centrally planned, cooperatively managed government enterprise is best used to develop the infrastructure upon which a free, democratic, innovative and entrepreneurial society flourishes. Examples of how this can work are numerous: the Interstate Highway System, National Airspace System, the Internet (based on the government’s DARPAnet), and the standardized Electric Grid.
We should translate the same thinking to a rethought national financial infrastructure that provides a basic income guarantee (BIG) and sufficient monies to develop new energy technologies and ensure they are put widely into use. All of this could be done through a Cooperative Central Bank that is government sanctioned but subject to democratic input from its citizen members. Ideally, bank policies and programs would be managed by a board that is in turn subject to democratic approval.
Basic Income Guarantee
A universal basic income that provides a simplified social safety net and replaces Social Security, welfare and unemployment benefits, would ideally be provided to all adults with no required means test, even while the upper tier income brackets are still taxed. In point of fact basic income programs exist to a certain degree already with our large-scale pool of veterans (with their benefits), the earned income tax credit, Social Security and ever-extended unemployment benefits. It is a well-known fact that over 50% of Americans already pay no income tax. Templates for a BIG already exist in the Alaska Permanent Fund and the recently enacted basic income guarantee in Brazil. In this country, Social Security is the model we can build on; we could move toward a basic income by expanding that program, or implementing, as suggested by Robert Reich, a reverse income tax.
If you believe the idea of a basic income has no support, I urge you to do a quick Internet search and you will be astounded by the array of individuals that has supported a BIG throughout history, including Martin Luther King Jr., Thomas Paine, Milton Friedman, Daniel Moynihan, and John Kenneth Galbraith, just to name a few.
Rather than perennially watch the upper 1% obtain high earnings in ever more unjust, cynical and/or demeaning ways, it’s time to fight for a BIG and higher minimum wages for everyone. The reason: Americans earned almost 57% more per hour 40 years ago when accounting for inflation, even as productivity has continually increased. The situation continues to deteriorate and must be turned around.
We all agree that the reason for wage stagnation is not that people are lazy. It is that trade and labor policies of the last 40 years have allowed it to occur even as overall productivity has increased substantially, based primarily on automation. A BIG simply recognizes these productivity gains are at least in part an overriding social benefit rather than solely a corporate benefit channeled toward investors.
Put another way, a BIG allows us to simplify what we have and admit that we need a universal requirement that will provide a sound foundation for social stability and income equity within an efficient, technologically based society. We need to fully grasp that while a modern society should always offer the opportunity to work, automation makes it possible — even desirable — that all do not need to work (in the traditional sense), even among those groups we have historically felt should work. Simply put, we need to redefine the term ‘productive.’ ‘Productive’ can mean doing something that one loves and has a passion for, rather than working for an employer. A basic income can allow this to happen on a wide scale. As robotics and software continue to evolve and eliminate a plethora of even more jobs, the end result need not need to be chronic unemployment; with a BIG we can empower people to choose to work or not, thus leveling the playing field in the relationship between labor and capital.
While some would argue this is a statist utopia at its worst, as such a program would be run by the Federal Government, I beg to differ. My first question is: why does it need to be a Federal Program? Is the Federal Reserve ‘federal’? Most understand it isn’t: it is privately owned.
What we can do therefore is to turn the Fed on its head by creating a completely transparent, citizen-owned, Internet-ran, Cooperative Central Bank that is separate from (although approved by) the Federal Government and can print money into existence for two primary reasons: a BIG, and infrastructure (discussed below). All adult citizens could be a member of the cooperative. What can back such money? The physical infrastructure itself, including public lands and assets. In other words, we either have or can build the assets and provide liquidity as we go. This new form of debt-free money would be an alternative to Federal Reserve Notes and could complement other forms of new currency (i.e., Treasury Notes) that would be backed by other forms of assets (i.e. Gold). While some would argue that Cooperative Banking should remain only at the local community, the Internet has re-shaped our concept of what ‘community’ is. In short, globalization and technology has made ‘national’ the new local.
The template for a Cooperative Central Bank already exists in the National Cooperative Bank established in 1978 under President Carter. Perhaps that bank’s mission just needs to be rethought and expanded. Also, while different in their mandate, some states have already implemented Cooperative Central Banks that become the ‘bank of banks’ to cooperative banks throughout that state. Countries that have implemented Cooperative Central Banking can also be looked to as models. Moreover, some writers, such as Richard Cook, even lobby for an international bank with a similar mandate as stipulated in this essay, based on a reformed International Monetary Fund.
A key mandate of Central Banks during the economic crisis has been to provide ‘liquidity.’ But rather than provide liquidity through quantitative easing (where the Federal Reserve purchases Government Debt directly, often from ‘too big to fail’ banks), that inevitably channels any wealth to the top while driving inflation at the bottom, non-debt money generated through a new Cooperative Central Bank could provide another flavor of liquidity in a way that benefits the general population instead of primarily channeling those gains toward the elites.
A Wider Net of Social Security
If we are honest, most Americans, even staunch conservatives, appreciate the modest guarantees of Social Security for elderly Americans and would grow to appreciate a BIG that would empower the individual and, ironically to some, create more independence in the same way that Social Security allows for many seniors today to be more independent. While we may idealize some agrarian form of the independent ‘gentleman farmer’ as envisioned by Thomas Jefferson or a survivalist as envisioned by Thoreau, in our modern age any lack of income (whether urban or rural) simply generates suffering, ill-health, malnutrition, and a variety of other socially negative outcomes. A basic income, particularly when complemented by a well-thought out Healthcare system and other incentives toward positive outcomes, could alleviate such problems. If we steer education intelligently, and human inventiveness and entrepreneurship are promoted, bottom up endeavors can be nurtured in a variety of altruistic and productive ways, using a BIG as the foundation.
For the nostalgic among us who wish to return to some ideal world of very limited government and no intrusive Powers that Be, we need to remember something about the history of life prior to the advent of our current (albeit admittedly corrupted) modern societies. Life was short, and it was brutish. To the extent human beings can cooperate together to alleviate overall suffering, they should. And technology makes that possible. Why shouldn’t we use the benefits of that technology for the overall good? What is the alternative? An atomized society of iPad-toting survivalists dodging the bullets of those that choose to organize, probably via transnational large-scale businesses? I don’t believe such a neo-feudal world is desirable. We joke today that Apple is as large as a country. If we move down a libertarian path it won’t be a joke: Apple will make internal laws and provide security for its people if nation states cannot.
Green Energy Infrastructure
Another potential use of non-debt money generated through a Cooperative Central Bank is to create a green energy infrastructure, where the Central Bank could work with local cooperative banks to fund a multitude of sustainable energy projects. Regardless of where you stand on ‘climate change,’ a sustainable, clean, long-term energy infrastructure is a good thing. And again, the idea would be to ‘back’ the money with the asset created, i.e., the green infrastructure that creates the sustainable energy environment that could be the foundation on which long-term prosperity and entrepreneurial activity are built. The infrastructure would be publicly owned (perhaps by State) and corporations charged fees to use it. These use fees could then be channeled back into maintenance and any ‘profits’ toward a basic income in the form of a citizen’s dividend, just as in Alaska oil revenues are channeled back into the Permanent Fund.
Some of you are probably laughing that all of this is absolutely unaffordable and inflationary. But if we significantly downsized the military (something both Economic Democrats and Libertarians certainly agree on) and aggressively sought ways to create global treaties to outlaw open aggression, the energy and resources expended on maintaining the security state and Global US empire could be effectively channeled into more productive long-term objectives through a Cooperative Central Bank and a green infrastructure initiative geared toward fully integrating efficient, non-polluting energy technologies into our economies. Moreover, the Bank could be managed soundly through a systems approach so that expenditures would be monitored carefully and inflation kept in check. Certain levels of income could still be taxed, and fees for corporate resource utilization could be expanded.
We can look back to the New Deal infrastructure projects of the WPA, many of which are still used today by millions of people, as examples of intelligently channeled social energy into long-term infrastructure.
Simplification and Common Ground
The proposals above, including a new Cooperative Central Bank, Basic Income Guarantee, and Green Infrastructure development could be done in tandem with simplifying Federal Government as we know it. Agencies could be eliminated or downsized. Regulations that stifle innovation could be thrown out or rethought.
As a rule, the overriding mission statement of promoting the general welfare of the people should be revisited and integrated into every facet of government.
But can Economic Democrats find common ground with libertarians?
I believe Libertarians and Economic Democrats can agree to the following:
- Empower entrepreneurs
- Simplify government and make it more effective
- Downsize the military, repeal the Patriot Act and roll back Homeland Security
- Allow for alternative currencies to Federal Reserve Notes that are backed by Gold and/or Infrastructure
- Rethink the role of the Federal Reserve in monetary policy
- Simplify, not eliminate, the social safety net
- Support infrastructure with an eye toward sustainable business growth and prosperity, using resources such as https://m247.com/ to achieve this
- Support BIGness when it’s Goodness
By focusing proposals for Economic Democracy on the level of financial and energy infrastructure, we reconcile the two camps by allowing on one hand a cooperative, aggressive and activist stance that allows for a fair and sustainable economic system that promotes the general welfare, but on the other hand maintains a free and entrepreneurial business environment that can make use of that infrastructure in a fashion that is relatively unencumbered and free.
All of these shared stances I believe could be the basis for common ground where Economic Democrats and Libertarians come to agreement regarding a future America we can all feel good about.
About the author: D.R. Thompson is an award-winning film producer, playwright and essayist. He has also ‘done time’ on Wall Street. A compilation of his essays, A WORLD WITHOUT WAR, is available from Del Sol Press.
by Yannick Vanderborght | Sep 19, 2011 | Opinion
Japan’s social security system until now has been dependent on support from corporations and employers. Due to Japan’s present economic circumstances, however, they have become unable to endure such burdens any more. Basically, the aim of private corporations is to earn profits from their businesses and pay taxes from the profits. They are not intended to play the role of financiers for community welfare systems. Such expectations to them are, by the nature, unreasonable. Alternatively, I would argue that it may be reasonable for the government to directly secure people’s lives.
The causes of poverty are joblessness, inability to work due to illness or other conditions, low wages even in employment, and other reasons. Although Japan’s unemployment rate has been increasing during the recent economic stagnation, it has stayed at around 5 %, low when compared with those of other developed countries whose unemployment rates are around 10 %. Meanwhile, Japan’s poverty rate, as often pointed out, is close to that of the United States among the developed countries. This means that there are many “working poor” (low-paid employees) in Japan. This phenomenon has been supposedly impermissible in developed countries, because evidence of capitalism’s advantage when compared with socialism is that people willing to work are employed and paid enough to enjoy decent lives. One may be poor because he/she is lazy or ill. The former is deemed as an example of self-responsibility. The latter can be easily remedied with measures by the government. Thus capitalism functions well. This has been the basic justification for capitalism.
Costs of useless works
Let’s think the matter through simply. To be poor is to have little or no income. If so, the government should directly provide cash aid to the poor, i.e. the government pays basic incomes at a certain level to everyone. This is the most assured way to eliminate poverty in a country.
One may argue against this by saying that everyone would quit working to earn money, or that because working creates one’s self-respect and discipline, such a scheme would ruin the mechanism forming society.
Such abstract discussions are not useful. Let’s look at what the government has been doing. It has been promoting public works projects in order to maintain local employment. Let’s take the Yamba Dam project for example. When one looks at the huge bridge footings built near to the dam-building site, one may suppose that a large number of jobs have been created during the building of the bridge. As a matter of fact, the total amount of budget for this project is 460 billion JPY [around 5.4 billion USD](*), expended appropriation of 320 billion JPY [around 3.8 billion USD] and backlogged of 140 billion JPY [around 1.7 billion USD]. Further more, additional budget of 100 billion JPY [around 1.2 billion USD] is needed to continue its construction. In reality, however, almost all of the budgets have been spent on steel and concrete. In spite of this huge amount of budget, the dam’s utility or necessity is still a focus of discussion. Even in such a large construction project, local construction businesses have little involvement. Complex jobs can only be performed by talented persons. Such talents should have been utilized for other more necessary projects. The costs of useless projects performed by talented persons are much higher than not having them work at all.
(*) Translator Note: The conversion rate is set at 1 USD=85 JPY.
Or, let’s track back to China during the Great Cultural Revolution. It took superior capability for people on both sides: people who survived the rough time in the fear of being purged as anti-revolutionaries; and on the other hand, people who tried to move up the ladders in the oppressing force. Their talents were spent on useless activities and contributed to nothing to increase the wealth of the country. It becomes clear by comparison between the poverty of China during the Cultural Revolution and the great increase in wealth produced after the Cultural Revolution. Useless works are more sinful than doing nothing.
One may argue against me, saying that I am trying to convince readers of a general issue by presenting extreme examples. When you examine the public works projects throughout the nation, however, you will admit that I am not presenting the case of the Yamba dam project as an extreme example. The state would be much better off directly providing people with incomes rather than designing and implementing useless works projects expending excessive budgets.
In my view, because the Japanese constitution in its article 25, in fact, provides that “All people shall have the right to maintain the minimum standards of wholesome and cultured living”, people’s incomes should be ensured unconditionally. Although article 25 requires ensuring a subsistent level of life, it does not require doing so by increasing other people’s burdens.
Japan Has Sufficient Revenue for Direct Payment of Basic Incomes.
Whether for or against Basic Income idea, it is natural for people to question if we at present have the revenues to directly provide basic incomes. Therefore, I will answer this question first. The Japanese government used use to try to ensure people’s living by forcibly creating public works programs, providing aid for agriculture and small businesses and so on. There are, of course, policies to ensure the right to a living, such as welfare public assistance and others. How much budget is allocated to these policies? If such budget were allocated to direct provision of incomes to people, how much could we benefit? (My following estimation is based on the budget for the FY 2009 unless otherwise noted.)
The central government’s budget for public works within the general account was 7 trillion JPY [around 82.6 billion USD]. When including budgets for the same purpose within the special account and municipal governments, i.e. on the basis of National Economic Accounting, the total budget amounts to 19.6 trillion [around 231 billion USD] (FY 2008). The budget for agriculture aid within the general account amounts to 2.6 trillion JPY [around 30.7 billion USD]. Municipal governments had agriculture expenditure of 3.9 trillion JPY [around 46 billion USD], according to a survey by the Ministry of Internal Affairs and Communications published in 2007 (the budgets referred to hereafter are derived from the same source). Because most of the central government’s agriculture budget is allocated to subsidies for municipal governments’ agriculture aid, it is natural to assume that the total budget for agricultural aid in Japan amounts to around 3.9 trillion JPY [around 46 billion USD]. The budget within the general account for small business sheltering amounted to 200 billion JPY [around 2.36 billion USD], along with the municipal governments’ budgets for the same purpose of 4.9 trillion JPY [around 57.8 billion USD]. The welfare-public-assistance budget of the central government amounted to 2.1 trillion JPY [around 24.8 billion USD] along with 18.7 trillion JPY [around 220.7 billion USD] for social welfare expenses. These budgets of 47.1 trillion JPY [around 555.8 billion USD] were expended, in effect, to help the poor. Let’s suppose that we cut the budget by half and allocate the half, 23.6 trillion JPY [around 27.8 billion USD] for financing basic incomes for people. Furthermore, 2.4 trillion JPY [around 28.3 billion USD] of the public expenditure for unemployment insurance can be added to the revenue. Thus, 26 trillion JPY [around 306.8 billion USD] in total, could be used to directly ensure basic incomes for people.
Setting the level of a basic income and its grounds
According to the Comprehensive Survey of Living Conditions (2007), the number of households with annual incomes under 1 million JPY [around 11,800 USD] is 2,980 thousand; 5,620 thousand under 2 million JPY [around 23,600 USD]. The per capita income in average of the households under 1 million JPY was 380,000 JPY per month; 870,000 JPY [around 10,300 USD] under 2 million JPY [around 23,600 USD]. Based on an estimated average head-count in a household, there were 3.9 million people with an annual income of 380,000 JPY [around 4,484 USD]; 9.65 million people with 870,000 JPY [around 10,266 USD]. When we assume that a half of 9.65 million people had an annual income less than 870,000 JPY, the number of people with an annual income under 870,000 JPY was 8.73 millions. (9.65 million/2 + 3.9 millions = 8.73 millions).
The 8.73 million people might have an annual income over 380,000 JPY [around 4,484 USD]. Therefore, we need to pay 8.73 million people 490,000 JPY [around 5,782 USD]. It is the gap between 870,000 JPY and 380,000 JPY. Its total cost is only 4.3 million JPY [around 50.7 billion USD].
To counter the criticism that any basic income would damage people’s work incentive, we would be better to design a system in which people who are paid subsistence basic incomes may earn additional income through their jobs. In my sample system, if a person who is paid a basic income of 70,000 JPY [around 826 USD] a month earns 50,000 JPY [around 590 USD] a month through his/her job, he/she is taxed on only the earning of 50,000 JPY [around 590 USD] at the rate of 30 %, leaving 35,000 JPY [around 413 USD] other than 70,000 JPY [around 826 USD] at their hand as a net income. Let me proceed to a more detailed design of the system and an estimation of the cost.
Basically, the annual income of every person will be {(his/her earning×0.7) + (given basic income of 840,000 JPY)} a year. People without their own earnings will be paid a basic income of 840,000 JPY. Every one will be taxed on their own earnings at the rate of 30 %. If their own earnings reach 2.8 million JPY [around 33,000 USD], they will have to pay a tax of 840,000 JPY. This equals the amount of their given basic income of 840,000 JPY [around 99,100 USD].
Here, I set the level of the basic income at 70,000 JPY [around 826 USD] a month (840,000 JPY a year [around 9,900 USD]). Let’s compare this amount with the existing cash payment for welfare. Under the present public assistance system, a married couple living in Tokyo receives 190,000 JPY [around 2,220 USD] a month including housing allowance. Wiping out this benefit to substitute it with a basic income will greatly reduce the amount of their benefits.
This reduction can be justified by the following reasons. First one is the relatively high level of current Japanese welfare public assistance. It is higher than the equivalent benefits in UK, France and Germany by 20 % to 30 %. (See my “Why is Japan poor?” Tokyo, Shinchosha Publishing, 2009, p.92). The present level of welfare public assistance is 120,000 JPY [around 2,160 USD] for a single person, 190,000 [around 2,242 USD] for a married couple. If these benefits are replaced with basic incomes of 70,000 JPY a month, single persons’ income will be reduce to 60%, married couples to 70 %, of the present level. The reduced levels of benefits are almost the same as the above exemplified countries. Secondly, the real coverage rate of the welfare public assistance scheme in Japan is much lower to stay at only 0.7 % of the total population. Professor Toshiaki TACHIBANAKI at the Doshisha University estimates that 13 % of the Japanese population lives with incomes below the criteria of the welfare public assistance system. (See his “The Gap Society,” Tokyo, Iwanami Shoten Publishers, 2006, p.18.) Even at the modest level, it is an urgent task to institute a basic income scheme to cover as many people as possible in need. Thirdly, it is evidence of the high level of Japan’s welfare public assistance that the so-called “Hinkon [povery] Business” is now thriving in Japan, in which criminal groups provide small rooms for poor people, mostly homeless people, and facilitate them to apply to and obtain welfare public assistance, and then poach large portion of the benefit as a commission and room rent.
A Concrete Framework of a Basic Income scheme
Here, I present a basic income scheme which the government would directly deposit 840,000 JPY [around 9,912 USD] as a basic income every year in the account of every adult regardless of marital status or number of nonworking dependents. In return, almost all tax credits under the present income tax systems, including basic allowance, and others for spouses and dependents would be cancelled. The existing “Children Allowance” scheme would continue, however the Dependent Children Allowance would be cancelled. As for those over 65, the existing pension systems would continue to cover them. (The basic proportions of the existing pension systems, the integration of which is now being debated, should be financed by tax revenues. But this issue is to be discussed elsewhere.) Thus, all Japanese adults between 20 and 64 (74.76 millions of the Japanese population of 127.5 millions as of 2009) would be given basic incomes and it would resolve the poverty problem of Japan. The total budget for this scheme to rescue people from poverty would be 63 trillion JPY [around 743.4 billion USD]. Next we will look at a national income survey.
According to the “National Economic Accounting 2008” published by the Cabinet Office, the total employment income in 2008 was 262 trillion JPY [around 3.09 trillion USD], and the total mixed income was 17 trillion JPY [around 200 billion USD]. (Mixed incomes consist of fruits from self-employed workers’ assets and their own work.) If the government taxes on this 262 trillion JPY at the rate of 30 %, 79 trillion JPY [around 932.2 billion USD] will come into its revenue. The gap between 79 trillion JPY and 63 trillion JPY needed for the basic income provision is 16 trillion JPY [around 188 billion USD]. This 16 trillion JPY equals the total revenue of the government from the individual income taxes at the present level. In the case of a household formed by a husband with an annual income of 5.6 million JPY [around 66,080 USD] and a wife with no earnings, they would be paid 1.68 million JPY [around 19,800 USD] in total per year as a basic income, and would pay the same amount of income tax (at the rate of 30 %). Their income tax would be zero in effect. Under the present tax system, however, the same husband is entitled to a deduction for employment income, spouse, dependents, and a basic deduction. Thus, his tax burden is only 100,000 JPY [around 118 USD] or more. As I mentioned earlier, we already have 26 trillion JPY [around 307 billion USD] coming from cutting expenditures for the public works projects and subsidies for agriculture and small businesses, welfare public assistance, and the public burden for unemployment insurance. With this revenue, a basic income scheme is affordable enough in today’s Japan.
The estimated financial costs for each income class are shown in the table below. The indicated incomes are not those of households but individuals. Under my proposed basic income scheme, everyone from the age of 20 to 64 would be paid 70,000 JPY per month or 840,000 JPY per year in their bank account regardless of their marital status. There would be no dependents exception in the tax system any more. 12.6 trillion JPY [around 148.7 billion USD] would be paid to 14.97 million persons with no income. 5.8 trillion JPY [around 68.4 billion USD] would be overpaid to the class with incomes under 1 million JPY. This amount is the difference between the basic income (840,000 JPY) they will get and their tax duty at the rate of 30 %.
Although it entails a budgetary cost of 15.6 trillion JPY [around 184.1 billion USD], this basic income scheme would wipe out the welfare public assistance and greatly curtail the budgets for public works projects, and aid for small businesses and agriculture. The basic income scheme is affordable with expenditure of 15.6 trillion JPY, significantly lower than current 26 trillion JPY [around 306.8 billion USD] for these existing schemes and works. The basic income scheme would also prevent intervening in the labor market such as extreme increases of the minimum wage and prohibition of labor dispatch services. This is because workers’ income would be secured by the basic income scheme.
The difference of 10.4 trillion JPY [around 122.7 billion USD] between 26 trillion [around 306.8 billion USD] and 15.6 trillion JPY [182.9 billion USD] would be available for many other objectives: support for the aging population, financial rehabilitation, income tax reduction, national economic stimulus and so on.
by Yannick Vanderborght | May 18, 2011 | Research
ITO, Makoto (2011), ‘Verifying the Basic Income Concept: Its Potency and Extent’ (‘Basic Income-ron wo kensho-suru: sono kanosei to genkai’), in Sekai [The World], Vol. 814, March 2011, published by Iwanami Shoten.
Due to growing financial deterioration of the government and weakened family ties and company welfarism, “new poverty” (such as an increasing number of “working poor”, single mothers and the elderly with low or no pension, etc., unable to respond to with existing social security schemes) is spreading in Japan. Against this situation, the Basic Income (BI) vision is drawing increasing attention. The interest in it, as for now, stays mainly in the academic circles specializing in social security studies. Though, tomes and answer books on BI have been published one after another. Basic Income Japan Network (BIJN) was launched in April 2010.
The definition of BI by Van Parijs is commonly referred to in Japan, and BI variants including proposals of ones at the supranational level have been brought to the knowledge. The background of the rise of the BI vision in the West consists of the blank wall of social welfare schemes developed during the high economic growth after the World-War 2 and employment policies based on the Keynesianism as well as the disappointment and antipathy to socialism of the Soviet-type. Meanwhile, neo-liberalism aspiring revitalization of individual liberty in free market has swept through the society. Under the circumstance, BI with individual payment, no means test and no work condition aspiring liberation of individuals from bureaucratic control attracts even libertarians. On the other hand, thinkers aiming at revitalization of socialism, feminists, ecologists, and so on support BI combining their own ideal with BI. In Japan, however, being introduced to BI about two decades later from the West, it is conceived as only an alternative to existing social security schemes, and few people discuss it in the aspect of social reformation thinking. Marxists have little contribution to the BI discussions.
As for the feasibility of BI in Japan, Shuji Ozawa first estimated in 2002. He conceived of a BI scheme at the level of 80, 000 JPY per person a month taking the levels of existing money grant schemes into account relying on a new revenue from raised income tax rate at the level of 50 % (maximum rate at that time was 37 %). When it is applied to a standard household with two parents and two children, their net income will decrease by 940 thousand JPY per year. But if the household has one more child, the loss will be almost cancelled. He later redesigned his BI scheme (at the level of 50,000 JPY per person a month) maintaining ongoing tax rate and integrating pension schemes with the BI. In the days ahead, design and discussions of BI schemes are expected. In any case, they may be gradual introduction of partial BI schemes. The newly born administration of the Democratic Party of Japan introduced a child benefit scheme without income test alternating the similar scheme at a far lower level with income test in 2010. The monthly amount per child is 13,000 JPY, a half of the amount the party promised in their manifesto for the lower-house election the party won. In the continuing budgetary distress, however, the administration is now giving up doubling the amount for over four-year-old children and is even bringing back income test. Thus, the partial BI scheme at entry level is still halfway in Japan.
BI can be conveniently used by neo-liberalists to further increase irregular employment, restrain wage and alternate company welfarrism with government expenditures. Therefore, one should not be in an autotelic approach toward BI but in unity with worker/citizen campaigns demanding upraise of wage level, employment security and improvement of public care services, and one should emphasize that BI is to complement public functions of a social-democratic welfare state and promote BI pursuance as part of social movement to realize such state.
Ito Makoto is Emeritus Professor at the University of Tokyo, and a Member of the Japan Academy. The above summary was written by Takeshi Suzuki.
