by Karl Widerquist | Mar 14, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in May 2009.
The global recession has been spreading and deepening for nearly a year. It could become the worst downturn since the Great Depression of the 1930s, and it has captured nearly all of the attention we, our media, and our leaders pay to economic issues. Perhaps we’re paying too much attention to it. I want to convince you in this editorial that a recession—even a major depression—is not an economic problem of the first magnitude. Our most pressing economic problems are distribution, and they exist whether we are in recession or not. Recessions appear to be a major problem primarily because we allow existing distributional problems to get worse during recessions.
To see my argument, imagine that you lived through the entire Twentieth Century. You were born on January 1st, 1900 and died exactly 100 years later on January 1st, 2000. During all of that time, you were a member of a representative American family of three with an income equal to the average U.S. income for a family of that size.
I have included figures below of average income per person and per family of three for the entire Twentieth Century. The appendix includes a table with the background data for these figures as well as some information about the percentage changes you’re looking it. Don’t fear all these numbers. I’ll just ask you to glance at it and take a closer look at a few important ones. These figures are “adjusted for inflation” meaning that they are reported in 2008 prices. It is notoriously difficult to adjust for inflation in a world in which the prices of different goods are changing at different rates, new products are being introduced, and old products are being discontinued. Adjusting for inflation is much more subjective than most economists let on, but these figures represent our best guess about how to do it.
Financially, your imaginary family did awfully well during the Twentieth Century. A simple glance at the graph shows that your family’s income goes up and down, but mostly up. Your family’s income started at about $20,000 in 1900. It rose sporadically to reach $136,000 in 1999. That an increase of more than 577 percent—almost six times what your family made the day you were born. In the early years you could not have afford a computer, television, and many things we now take for granted, but your family’s $20,000 income would have been more than enough to pay for a home, for food, and for clothing for the whole family. At no time in that 100 year period would your family have had any difficulty securing its basic needs, and you were able to consume many luxuries as well.
Figure 1: GDP per family of three for the Twentieth Century
THIS FIGURE FAILED TO UPLOAD.
Figure 2: GDP per capita for the Twentieth Century
THIS FIGURE FAILED TO UPLOAD.
Your income didn’t rise every year; it fluctuated with the business cycle. Glance down the third column of the appendix table. That shows the percentage change in your income from year to year. The years when your income dropped (shown in bold) are the recession years. In the first half of the Twentieth Century, the business cycle was volatile. Your income could go down 9 percent one year and up 10 percent the next. But if you look at the graph, you see that the only downturn that looks terribly significant was the period of 1930-1933, when over four years your family’s income declined from by nearly 25% from $34,093 to $23,607.
You might be tempted to think that 1945-1947 was worse because your income declined by a greater percentage in a shorter time. To see that this isn’t so, you have to realize that there is a lot this table doesn’t show. I doesn’t show how hard you are working, how much you want to work, and what you’re working for. You had a great increase in your income during the years 1940-1945, but that was largely because you were working extra hard for the goal of winning the Second World War. The decline from 1945 to 1947 mostly reflects that you no longer needed to work so hard because the war was won. Your income in 1947 (after 3-years of decline) was still more than 25% percent higher than 1940 and 85% higher than in 1933. You were actually doing just fine in that year.
The depression was different. You didn’t want to work any less in those years, but as a representative American, you were unemployed 25% of the time in 1933. This would have been difficult for your family. You might have had to sell some of your luxuries or move into a smaller home. But your inflation-adjusted income was still more than 16 percent higher than when you were born. If you could feed, cloth, and house your family in 1900, you could do so in 1933 and you could have spent all of your additional income on luxuries that you couldn’t afford in 1900. As a representative American family, you were not in financial distress even in the depths of the Great Depression. There would have been no reason for a member of your family to stand in a bread line or head to California in search of work as a migrant farm laborer.
After 1950, the business cycle became even less of a problem for you and your family. You experienced the occasional 1 or 2 percent decline, but such a small decline would have been barely noticeable, especially with your income being 300% or 400% higher than a few decades earlier. The worst recessions such as in the mid 70s and early 80s caused less than a 3 percent drop in your income. That might have slowed your accumulation of savings or caused you to put off buying a new luxury for a year or two, but no more than that.
The current recession might well cause national income to drop by 6 percent this year. Suppose it goes on, and we experience a decline similar to the Great Depression, say lowering national income to 20 percent less than it was in 1999. That would bring the income of our representative American family down to $109,509—higher than in the boom year of 1987. That means, even if we suffer the worst depression since the 1930s, we will still have a greater technical capacity to feed, clothe, house, and provide luxuries our people than we did in the boom year of 1987. If we dealt with such a crisis sensibly, it would affect only our consumption of luxuries, not necessities.
These facts illustrate the point that I’m trying to make: if we keep in mind the truly important economic issues, recessions are something we can easily handle. The most important thing about your income is not whether it rises or falls by a few percentage points in a given year, but that’s all a recession is. The most important thing is not even that your income grows over time, although a growing income is always nice. Actually, the most important thing about your income is that it meets your needs.
Our main concern about the national economy should be same the same as each individual’s main concern about his or her own income. Before worrying about the bankers, or about the rise or fall of an abstract figure like GDP, we should ask ourselves: how can we secure food, housing, clothing, medical care, and education for everyone? Whether we are in a recession or not has little to do with our answer to that question. Going back to 1776, there has never been a time when America lacked the economic capacity to secure every citizen’s needs. Nor was there a time when it was even close. This fact is not unique to America. Economist Amartya Sen has found evidence that there has not been a famine in modern history in which any nation actually lacked the economic capacity to feed its citizens. Modern famines have all been caused by mal-distribution of plentiful resources.
Sen’s observation is true only for modern history, not for all of human history. The Norse in Greenland, the Mayan Empire, the Easter Islanders and other societies all apparently experienced episodes in which they simply could not feed their people. But these were environmental disasters, not financial depressions. Once we solve the important economic problems of how to secure our needs without screwing up our environment, even a severe depression means no more than a fluctuation in our accumulation of luxuries. Distribution of necessities is what is important, not a 10 percent fluctuation in our ability to produce luxuries. A recession is a trivial issue for the nation as a whole; it is a minor fluctuation in output. This could and should cause no more than a pause in our accumulation of luxuries.
Of course, what actually happens during recessions is significant: more people are in poverty; more people are homeless; more people lack their necessities; more people have reason to fear economic security. All of this is true, but it is only true because we allow it to happen. We had the technical capacity to eliminate economic deprivation in the recession years of 1982 and 1992 just as we did in the boom years of 1987 and 1999. We did not do solve these problems in boom years and we let them get worse in recession years. A recession cannot hurt anyone in a significant way unless we let it. The tragedy is that we let it.
-Karl Widerquist, begun in Reykjavik, Iceland, completed in Oxford, UK, May 2009
Appendix: GDP per capita and per family of three in constant 2008 dollars for the Twentieth Century
by Furui Cheng | Oct 14, 2017 | News, Research
Jay Hammond
Jay Sterner Hammond (July 21, 1922 – August 2, 2005) was an American politician of the Republican Party who served as the fourth Governor of Alaska from 1974 to 1982. Hammond was born in Troy, New York and served as a Marine Corps fighter pilot in World War II with the Black Sheep Squadron. In 1946, he moved to Alaska where he worked as a bush pilot. Hammond served as a state representative from 1959 to 1965 and as a state senator from 1967 to 1973. From 1972 until 1974 he was the mayor of the Bristol Bay Borough. In 1974 he was elected governor of Alaska. He oversaw the creation of the Alaska Permanent Fund in 1976, which, since the early 1980s, has paid annual dividends to Alaska residents. From 1985 to 1992 he hosted a television series called Jay Hammond’s Alaska. He wrote three autobiographies. This article is a short introduction of his last book.
Petroleum is the devil’s excrement, warns Juan Pablo Pérez Alfonso, a Venezuelan founder of OPEC. Waste, corruption, consumption, and failing public services are repeated curses in oil rich countries. But Alaska managed to avoid much of the befouling of “devil’s excrement” by actions that served to at least halfway pin on a “diaper.”
Article 8, Section 8, of Alaska’s constitution states: “The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the state, including land and waters, for the maximum benefit of its people.” This clause prompted Hammond to attempt to assure that all Alaskans received a discernible share of those benefits and to avoid the common past practice of selectively benefiting the favored few at the expense of the many. This battle to avoid selective benefit still continues today.
Before the permanent fund dividend, Hammond had tried several ways to comply with the mandate of the aforementioned constitution, but all fell flat. His first attempt was to abolish fish traps in the Bristol Bay Borough in 1965. A whopping 97 percent of the fishing payday made within the boundary went to others and local residents got but a paltry 3 percent! He proposed a use tax to be paid by all fishermen on their catch. To offset the impact on local fishermen already paying high property taxes, he proposed to putting tax money into a conservatively managed investment account, then each year issuing residents one new share of dividend-earning stock. He called the concept “Bristol Bay, Inc.” The word “tax” made most Alaskans oppose it.
With passage of the Alaska Native Claim Settlement Act (ANCSA) in 1971, Alaska’s aboriginal peoples were accorded 44 million acres of land and $900 million by the U.S. Congress. Hammond proposed again to follow the Bristol Bay, Inc. model to manage ANSCA grants: create a conservatively managed investment account and spin off equal dividends to every Alaska Native. This account was proposed to be managed by professionals under counsel supplied from an elected advisory board of Natives representing every Native group in Alaska. People would have the opportunity to lift themselves up by being stockholders, providing themselves with the means (along with the responsibility) to use it for their collective best interests. Hammond’s proposal failed in the face of obstructions by lawyers, financially and politically powerful Natives, and other local forces.
His third attempt was to assure that the more affluent rural areas with a sufficient tax base help fund government services the same way as urban centers are required to do. Under his proposed statewide property tax, affluent municipalities, such as the North Slope Borough with high oil property values, would have to assume more of their local government service costs than would those that were virtually destitute. That proposal also fell flat on its face. Unfortunately, inequitable taxation continues to contribute to Alaska’s urban/rural divide.
In another effort to reduce crippling costs of services to hundreds of economically unviable communities – many of which were not connected by roads and lacked adequate housing, schooling, and basic services – he proposed to provide population centers with the greatest economic potential with topnotch schools and other services as a means to encourage migration from other communities. Once again the proposal fell flat.
After becoming governor in 1974, he proposed that 50 percent of all mineral leases, bonuses, royalties, and severance taxes be deposited into a conservatively managed investment account. Each year one-half of the account’s earnings would be dispersed among Alaskan residents, each of whom would receive, annually, one share of dividend-earning stock. The other half of the earnings could be used for essential government services.
Hammond had many reasons for creating such an investment account to which all Alaskans would be shareholders:
- To encourage contributions into the investment account and to protect against its invasion by politicians.
- To transform oil wells pumping oil for a finite period into money wells pumping money for infinity.
- To pit collective greed against selective greed.
- To eliminate the magnetic attraction for others from elsewhere who might otherwise be inclined to flock to Alaska in order to get big money in a short term.
- To instill a sense of ownership in all Alaskans that would incline them to support healthy resource development and resist unhealthy versions that would damage the environment or otherwise.
- To eliminate controversial state expenditures for such things as abortions or family planning. Individuals wishing for these services could pay for it from their dividends or utilize free ultrasound or abortion assessment services.
To promote these concepts, fashioned after his failed Bristol Bay, Inc. proposal, Hammond created “The Alaska Public Forum”. Fortunately, this attitude came in the wake of a $900 million windfall in 1970 from leases issued in Prudhoe Bay which had been “blown” in the eyes of many people. To their credit, however, a sufficient number
of legislators were successful in passing legislation creating what they termed “The Alaska Permanent Fund.” This statute at least created a semblance of Alaska, Inc., but fell far short of what Hammond had hoped for.
For more detailed information about the book, please click here.
Many thanks for Russell Ingram’s reviewing and editing.
by Sandro Gobetti | Apr 24, 2017 | Opinion
By: Sandro Gobetti
Basic income began to be debated in Italy from a diverse range of viewpoints about 4-5 years ago, when two law proposals were submitted to the Italian Parliament: one a part of the 5S Movement and the other the outcome of a popular initiative which had more than 50,000 signatures (the necessary threshold according to the Italian Constitution) collected by a pool of political and civil society associations. The role of Bin-Italy, which took part in the judicial extension of the latter text and played a consulting role for the 5S Movement, was particularly important. The two proposals have much in common (for example, that the financing burden falls on collective taxation, that the provision should be individual and not family-based, that the beneficiaries should have, at least at the beginning, an income below the threshold of relative poverty) but also have some differences, especially as to the degree conditionality is concerned.
For the 5S movement the possibility of refusing a job offer is a constrained to a maximum of three times and there is an obligation to work a number of weekly hours in community service. For the law of petition (BIN-Italy law), it introduced the concept of “fairness”, that it is possible to reject any job offer, which is considered “unfair”, since it is in line with the following three parameters: 1. the salary level is lower than previous jobs held or not in line with contractually stipulated pay rates (in the case of the young searching for their first job, without success); 2. the job is not in line with the qualifications and skills of the job-seeker; 3. the workplace is more than 70 km from the job-seekers residence.
Currently, these laws were discussed in the appropriate Labour Committees of the House and Senate but have not yet been put up for voting because the government chose other paths: in March, the new government approved the introduction of Reis (Social Inclusion Income) which presents very different characteristics from basic income and cannot also be considered a minimum income according to the parameters of the EU (PE Resolutions 2009, 2010, Charter of rights, the 1992 Commission Recommendation). Reis is only paid to families that have a total taxable income of less than € 3,000 a year (a ridiculously low amount), have a dependent or a disabled or at least two children and the breadwinner is over 55 years of age. Moreover, Reis includes an obligation to follow a path of integration to work, under penalty of revocation. The available financial resources amount to € 1.1 billion for 2017 and it is expected to increase to € 1,6 billion in 2018. The result is that only ¼ of households in absolute poverty can be helped. It is an expense of 0.1% of the national GDP in a country that already in social spending (net of pension) spends less than half of the average for European countries. The expense to cope with the two proposals for a real minimum income is between € 14 and 16 billion, according to different official statistical sources.
The current debate has given way to some experiments at the local level. Among these, the City of Livorno is testing (for a period of only 6 months), the introduction of a form of income support. To this purpose it has been allocated € 300 thousand. The municipality received 997 applications. Among the requirements was residency in the municipality for at least five years, unemployment status, registration at the employment center and a family income not exceeding € 6530 gross per year. In exchange for € 500 monthly, the municipality invited successful applicants to perform socially useful work.
Some Italian regions such as Puglia, Friuli Venezia Giulia, Lombardy have anticipated the governmental model of income support for those in absolute poverty and dependent children or only for the long-term unemployed and often with the obligation to carry out community service: in any case these are not even remotely sufficient to restore decent living conditions. The governor of Apulia Mr. Emiliano even spoke about the cleanliness of the palm leaves on the Bari seafront!
Acceptance with the condition of performing “community work” has been extended to unemployed and workers temporary outside production because of restructuring. Most minimum income experiments at local level are thus more like workfare programs, if not just poverty benefits still tied to a purely assistance-concept, selective, and on a strictly family-oriented basis; this has little to do with a ‘idea’ of a basic minimum income which is also an instrument of freedom and personal self-determination. Further, they are not in line with the instruments already in place in more European countries of fighting social exclusion.
In conclusion, not only is there no actual testing of basic income in Italy, nor are there even forms of guaranteed minimum income consistent with EU parameters. Finally, there is a generalizing culture of coercive control on beneficiaries and induction to accept any kind of work. This is paradoxical in a country known to be free from the implementation of efficient active policies in the labor market and efficient employment services and training.
Last, but not least, in Italy we suffer from a cultural delay regarding the idea that basic income is mainly a primary income. It is a means of remuneration, and not only passive assistance, of all the lifetime that today is put to labor and to value but not yet certified as productive labor and, hence, paid. It is not even related to the fact that unpaid labor is sharply increasing.
Executive Committee Basic Income Network – Italy
Reviewed by Cameron McLeod
by Guest Contributor | Feb 11, 2017 | Opinion
Written by: Katarzyna Gajewska
The argument that the system of peer production on a wide scale requires securing stable income for peers from the state is promoted, among others, by Michel Bauwens. In this article, I will argue that the reverse is also true. In order to be sustained, unconditional basic income (UBI) needs to be accompanied by changes in the realm of general interest services. This applies particularly to the domain of services of general interest that participate in the subsistence. Money transfer needs to be accompanied by de-commodification of subsistence measures.
Although UBI certainly would contribute to bettering the situation of the poor, it does not challenge the capitalist power relations. The domain of work and production is only one of the opportunities for the capitalist class to exploit inequalities and accumulate wealth. Other sources of wealth extraction are property rights, real estates, rent, access to natural resources, urban infrastructure, land grabbing. Elsewhere, I elaborate how, despite introducing a UBI, capitalist class domination would continue in the domain of subsistence1 and housing 2 if other elements of the system were preserved.
Technological unemployment due to robotization of production is indicated as one of the reasons for a UBI. Robotization would cause centralization of power in the hands of machine owners and technological elites. Since labor used to exercise influence on their wages through the threat of withdrawing from production, under the condition of technological unemployment it would lose its leverage.3 Therefore, adjusting the basic income to the level that enables a decent living would be increasingly difficult. On the other hand, the capital owning the means of production in the domain of services of general interest such as water, food, electricity, health or housing can demand higher prices once having dominant position, and there may even be additional costs for things like commercial water treatment products for businesses after the initial price is paid. Therefore, neoliberal pressure for privatization of subsistence-related services and goods is particularly dangerous. As a result of privatization, citizens can increasingly less meaningfully participate in the governance of general interest services, being left with the relatively passive roles of voter and client.4 The UBI movement needs to take this into account in formulating proposals for UBI reform, namely advocating for more democratic control over the means of subsistence.
Subsistence services in citizens’ hands: some inspirations
Representative democracy alone does not seem to prevent that services of general interest are privatized. Specific citizen mobilization around this issue is required. Three types of strategies can be pursued to bring more control over essential services: re-municipalization, overtake by citizen cooperatives, and commoning. I will give more space to the latter one because the two former have been described in other publications.
Remunicipalization
There are different models that incorporate the democratic dimension in the provision of services of general interest. For example, in water supply services privatization turned out to be dissatisfying for the customers both in terms of quality and prices. The book “HERE TO STAY: WATER REMUNICIPALISATION AS A GLOBAL TREND”5 analyzes examples of how this trend has been reverted by re-municipalization initiatives. It illustrates how significantly the quality can improve and prices lowered with the involvement of public authorities.
However, involving citizens in the process of decision making does not guarantee their influence on the final output. Incumbents’ initiatives in the realm of political participation do not seem to alleviate the democratic deficit. Participatory elements within the new public management and neo-Weberian state models can be motivated by the instrumental aim of overcoming resistance.6 Participatory and deliberative procedures can be used as ‘public relations’ tools by political elites to give citizens the illusion of engagement,7 so-called ‘participatory window-dressing.’8
Cooperatives
Citizens can organize to buy the infrastructure related to subsistence needs. In a small German town, Schoenau,9activists bought out electricity infrastructure to convert it into a cooperative of which citizens can buy shares. As an act of protest against the nuclear power, they turned to solar energy. Similar attempts have been undertaken by activists in Berlin to prevent the renewal of a contract with a multinational company of Swedish origin. Certainly, in the case of services that are sold on the market, there is a danger of degeneration of cooperative ideals due to the market pressure, which is quite common among worker and consumer cooperatives. Still it may be a better option in comparison to an accumulation of power in capitalist enterprises.
Commoning
The precariat, in the face of unresponsive state institutions, prefers the self-organized provision of services in order to become autonomous of these institutions.10 Heynen11 argues that the realm of social rights and the welfare state has diminished in recent decades in the US, so social movements have invented other forms of pursuing their struggles. Instead of trusting that delegation to the state will ensure the provision of public services and redistribution, activists create services themselves. For instance, Food Not Bombs produces and redistributes food. Furthermore, representatives of the recent generation of social movements believe that creating alternatives rather than reforming the system is a better way to bring about change, which reflects the mistrust of and awareness of the danger of cooptation by elitist politics and institutions.12 Activists focus on the ‘here and now’, practicing alternative forms of production and organization parallel to the state-based and market-based ones as everyday ‘revolutions.’13 For example, the domain of food-producing resources, although now mostly privatized, can be organized in a different way. In ancient times and still nowadays there are various communal arrangements in some parts of the world.14
In articles on People’s Potato, I describe a worker cooperative that coordinates the preparation of partly dumpster-dived food with the help of volunteers. Financed by fee levies, the meals are distributed for free. This type of the organization of food provision can be defined as peer production, which means a voluntary, spontaneous, and inclusive work contribution to produce a good or service in common that serves a broader community. Peers produce use value that is accessible even to those that have not contributed to its production. Initiatives such as Food Not Bombs or Incredible Edible follow similar philosophy. In the article on technological unemployment and work, I describe further initiatives of self-organized services: retirees time bank in Germany and subsistence cooperative in Catalonia.15 One could expect to optimize the costs and use of resources by restructuring production into commons. Las Indias’ Manifesto demonstrates potential gains that can be achieved by escaping the capitalist organization of production. Kibbutz movement managed to increase productivity and reduce the use of water in agriculture.16
Basic Income movement for other causes
“All we can ask of politics is to create the spaces in which the alternative social practices can develop.”17
Joining other movements in demanding the democratization of services, UBI movement could focus on a twofold struggle: mobilization against the privatization of services and for the re-appropriation of spaces for citizen participation and self-organization.
Elinor Ostrom argued in favor of creating institutional arrangements ‘for cooperative housing and neighborhood governance (…) to facilitate co-productive efforts for monitoring and exercising control over public spaces.’18Kooiman presents a model of ‘societal governance,’ a mix of self-governance, co-governance, and hierarchical governance.19
Bovaird predicts that the governance system may evolve into ‘self-organizing policy and service delivery systems – ‘governance without government.”20 The progressive theories of public administration have a vision of public administration that is ‘collaborative, facilitative, or transformational social role in support of citizen emancipation and self-governance.’ This type of re-conceptualization of the role of public administration has a longer tradition in the feminist movement and in the 2000s several authors have postulated this direction of change.21 In an academic article, I propose a change to the tax system. Taxpayers could allocate certain part of the due taxes to the organizations of their choice. In this way, the organizations can plan their yearly budget and produce as much as the collected sum allows.22 Also laws facilitating the access to unused spaces would make it easier for the self-organizing groups to start commons projects.
The example of People’s Potato, which struggles against corporate monopoly in food provision at Concordia University in Montreal, illustrates that the mobilization although it requires true determination, can begin now, case by case. I summarized the relations between People’s Potato, commercial food providers, and the university administration in another article:
“People’s Potato discovered that part of kitchen space previously used by Sodexho/Marriot was vacant, while the major part was overtaken by Chartwells. They started to use this space for their cooking. For another two years, People’s Potato struggled with the administration to get official use of the space. It is equipped with all necessary industrial kitchen facilities. The university charges the Potato for some repairs, like painting or heavy maintenance, but they pay all of their other utilities, such as garbage removal, electricity and hot water. The status of the collective within the university structure is ambiguous and there is always a fear of losing support from other organizations and the kitchen space as no official contract has been signed. “23
Instead of waiting for a more serious debate on UBI among political elites where activists could present a more encompassing reform, the change can arise from single initiatives. Späth and Rohracher point to the power of local experiments, which can mobilize actors. Niches, spaces protected from economic pressures can develop into full-fledged models for change. The local level change is possible in ‘off the radar’ spaces for interests of dominant economic actors. In this way, it is easier to overcome the problem of nested interests preventing change. Furthermore, institutional voids can enable introducing new practices.24
About the author: Katarzyna Gajewska is an independent writer. She has a PhD in Political Science and has published on alternative economy and innovating the work organization since 2013. You can find her non-academic writing on such platforms as Occupy.com, P2P Foundation Blog, Basic Income UK, Bronislaw Magazine and LeftEast. For updates on her publications, you can check her Facebook page or send her an e-mail: k.gajewska_comm@zoho.com. If you would like to support her independent writing, please make a donation to the PayPal account at the same address!
References:
1Gajewska, Katarzyna (2014): Technological Unemployment but Still a Lot of Work: Towards Prosumerist Services of General Interest. Journal of Evolution and Technology 24(1): 104-112.
2Gajewska, Katarzyna (May 2014) : UBI and Housing Problem, https://basicincome.org.uk/2014/05/housing-power-land/
3Gajewska, Katarzyna (2014): Technological Unemployment but Still a Lot of Work: Towards Prosumerist Services of General Interest. Journal of Evolution and Technology 24(1): 104-112.
4 Elinor Ostrom, “A Communitarian Approach to Local Governance,” National Civic Review (Summer 1993): 226-233.
5HERE TO STAY: WATER REMUNICIPALISATION AS A GLOBAL TREND :https://www.tni.org/files/download/heretostay-en.pdf
6 William N. Dunn and David Y. Miller, “A Critique of the New Public Management and the Neo-Weberian State: Advancing a Critical Theory of Administrative Reform,” Public Organization Review 7 (December 2007) 345-358, 355.
7 Léon Blondiaux, “L’idée de démocratie participative: enjeux, impensés et questions récurrentes,” In M.-H. Bacqué et al. (eds), Gestion de proximité et démocratie participative. (Paris: La découverte, 2005). Léon Blondiaux and Yves Sintomer, “L’impératif délibératif,” Politix 15.57 (2002): 17–35.
8 Archon Fung and Erik Olin Wright, “Countervailing Power in Empowered Participatory Governance,” in Deepening Democracy (London/New York: Verso, 2003), 265.
9Elektrizitätswerke Schönau Netze, https://www.ews-schoenau.de/
10 Christophe Trombert, “Expertise professionnelle et contre-expertise militante dans l’accès aux droits sociaux: tension à front renversé autour du général et du singulier,” SociologieS, Théories et recherches, 25 June 2013. URL : https://sociologies.revues.org/4360
11 Nik Heynen, “Cooking Up Non-violent Civil-disobedient Direct Action for the Hungry: ‘Food Not Bombs’ and the Resurgence of Radical Democracy in the US,” Urban Studies 47(6 2010): 1225–1240.
12 cf. Day, “From Hegemony to Affinity.”
13 Marco Silvestro and Pascal Lebrun, “La révolution à l’échelle humaine, une radicalité actuelle concrète,” Argument 12 (Spring-Summer 2010).
14Vivero, Jose Luis (2015) : Transition Towards a Food Commons Regime: Re-Commoning Food to Crowd-Feed the World, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2548928
15Gajewska, Katarzyna (2014): Technological Unemployment but Still a Lot of Work: Towards Prosumerist Services of General Interest, Journal of Evolution and Technology 24(1): 104-112.https://jetpress.org/v24/gajewski.htm
16Las Indias’ Communard Manifesto, https://lasindias.com/the-communard-manifesto-html
17Gorz, A. (1999): Reclaiming Work: Beyond the Wage-based Society. Cambridge: Polity, p. 79.
18Ostrom, Elinor (1993): A Communitarian Approach to Local Governance, National Civic Review Summer, 226-233, 232.
19Kooiman, J. (2000): Societal Governance: Levels, Modes, and Orders of Social-political Governance. In Jon Pierre (ed.) Debating Governance: Authority, Steering and Democracy, (pp. 138–64). Oxford: Oxford University Press.
20Bovaird, Tony (2005): Public governance: balancing stakeholder power in a network society. International Review of Administrative Sciences, 71(2), 217–228, p. 226.
21Stout, Margaret (2010): Back to the Future: Toward a Political Economy of Love and Abundance, Administration & Society 42(1): 3–37.
22Gajewska, Katarzyna (2014): Peer production and prosummerism as a model for the future organization of general interest services provision in developed countries: examples of food services collectives. World Future Review 6(1): 29-39.
23Gajewska, Katarzyna (30 June 2014): There is such a thing as a free lunch: Montreal Students Commoning and Peering food services. P2P Foundation Blog, https://blog.p2pfoundation.net/there-is-such-a-thing-as-a-free-lunch-montreal-students-commoning-and-peering-food-services/2014/06/30
24P. Späth, H. Rohracher (2012): Local demonstrations for global transitions – Dynamics across governance levels fostering regime change. In: European Planning Studies 20(3), pp. 461-479.
by Guest Contributor | Jan 27, 2017 | Opinion
Written by: Pierre Madden
Basic Income, it is argued, provides an effective and efficient means of conquering poverty. What, exactly, is the problem that we are trying to solve? Mention poverty to someone and they are likely to immediately think of the Third World. Bringing the focus back to poverty in developed countries is fraught with preconceptions. People have predispositions to think about issues in certain ways. They share these predispositions with all other members of society regardless of specific opinions on social questions. Various models are utilized rather than others based upon how we frame the issue.[1] And so we feel that we have an intuitive grasp of the subject.
Courts will accept eyewitness testimony that someone was drunk. If a person were to get in an accident while driving and damage another’s car, then during the time of car accident settlements, the defense lawyer can bring in an eyewitness who can testify to the fact that the driver was intoxicated. The witness is not an expert. No Breathalyzer test was done; no blood sample was taken. They can just tell from a person’s demeanor and the nature of the accident whether or not it could have been a DUI case. It is considered common knowledge. The same can be argued for poverty. Broad definitions of poverty exist, such as: “the condition of a human being who is deprived of the resources, means, choices and power necessary to acquire and maintain economic self-sufficiency or to facilitate integration and participation in society.”[2] “In 1958, John Kenneth Galbraith argued, ‘People are poverty-stricken when their income, even if adequate for survival, falls markedly behind that of their community.'”[3]
The problem is translating this qualitative information into numbers so that policies can be implemented and progress tracked.
Some people accept that poverty is undefinable because it is a personal experience. This complexity is highlighted in the expression ‘poverty and social exclusion.’ A concept that you can’t define is difficult to measure. We may be evaluating actions taken to reduce poverty by a method which measures something completely different. Just counting the poor turns out to be a daunting task.
Many approaches are taken to arrive at a threshold value that defines poverty. I will present examples from Canada, Europe in general, the United States and the United Kingdom. Debates surrounding the various metrics are discussed as they come up. Some work incomes and welfare benefit numbers provide context.
In Canada, no official definition of poverty exists. Statistics Canada has been making this point for almost 45 years[4]. What is measured is low-income. Some countries like the United States have an official definition of poverty even if ‘there is still no internationally accepted definition of poverty-unlike measures such as employment, unemployment, gross domestic product, consumer prices, international trade and so on.’[5]
Statistics Canada tracks three low income statistics.
- The Low Income Measure (LIM) is 50% of the adjusted mean income of Canadians[6]
- The Low Income Cut-Off (LICO) starts with the spending of the average Canadian family on shelter, food and clothing (43% of after tax income).[7] The threshold is set at 20% more.[8] Any family earning less is below this Low Income Line.[9]
- The Market Basket Measure (MBM) ‘is a measure of low income based on the cost of a specific basket of goods and services representing a modest, basic standard of living.’[10] It takes into account the ability to reasonably participate in community activities as well as physical health. It varies by geographical location.
This last metric developed in the late 1990s by Human Resource and Skill Development Canada is different from the other two, introduced by Statistics Canada. The first two statistics are unambiguously relative. Strictly speaking they measure income inequality. While the Conference Board of Canada does not hesitate to refer to the MBM as absolute[11], the specialist I spoke to at Statistics Canada was not so sure.[12] However, he felt that the basic-needs poverty line (BNPL) proposed by Professor Chris Sarlo of the Fraser Institute might qualify as absolute. Sarlo himself nuances this view:
This basic-needs approach to poverty is often referred to as an ‘absolute’ measure. This label is misleading insofar as it suggests that the list can never change and is therefore completely out of place in our rapidly changing society. While the basic needs line does propose a broad list of necessities that remains in place over time, the nature, standard of quality, and the quantity of each of the components will vary across societies and will vary over time in a given society. In other words, the basic-needs approach is partly absolute (the list is limited to items required for long-term physical well-being) and partly relative, reflecting the standards that apply in the individual’s own society at the present time.[13]
Stepping back a bit, you can often use absolute poverty as a synonym for extreme poverty, a term applicable to deprivation in very poor countries. Even so, relative elements remain: you can’t compare the situation of someone with no heating in the Arctic to that of someone with no heating in the Tropics. Moreover, Sarlo’s BNPL is approximately 30% lower than the MBM using a similar approach. Clearly, relative and absolute measures overlap and both involve a degree of judgment and arbitrariness.
There are many other variations on these themes. I will cover just a few.
In Europe, they use a measure called the at-risk-of-poverty threshold to define poverty. It represents a ‘percentage of the median or mean value of the Equivalised disposable Income after social transfers.’[14] ‘A threshold of 60% is the most commonly used.’[15] EU countries simply referred to the 60% level as ‘generally accepted.’ [16] Tables sometimes show statistics calculated at 40%, 50%, 60% and 70%, without comment.
The official United States poverty threshold has a fascinating history.[17] Based on the work the Social Security Administration economist Mollie Orshansky, it is often referred to as absolute. However its creator labelled it ‘arbitrary but not unreasonable.’[18] As early as 1959, Orshansky was aware of the pitfalls and limitations of the standard budget (usually called market basket today) approach to defining poverty. At the time, and even today, only with food, because of its nutritional value, can we reach some consensus about what minimal requirements are. Orshansky used the two lowest budgets devised by the Department of Agriculture: the low-cost food plan and the even less expensive economy plan. For the non-food portion, she used Engel’s Law (named for the statistician Ernst Engel not Marx’s collaborator Friedrich Engels), a normative principle establishing that a family spends one third of its total income on food. Using a multiplier of three for food costs under both plans, with adjustments for childless couples and single people, 124 thresholds were developed for farm and non-farm families of various compositions. With a few minor modifications and yearly inflation updates, this measure, based on the economy plan, is still in use today to count the poor in the United States.
A novel variant of the market basket approach, the Minimum Income Standard for the United Kingdom (MIS) is maintained by the Centre for Research in Social Policy at Loughborough University in Leicestershire, UK. [19]
MIS is based on detailed research with groups of members of the public specifying what items need to be included in a minimum household budget. The groups are informed by expert knowledge where needed, for example on nutritional standards. The results show how much households need in a weekly budget and how much they need to earn in order to achieve this disposable income.’ [20]
MIS is not an absolute measure like the US poverty line nor is it entirely relative.[21] ‘MIS also seeks to ensure that minimum income is looked at in the context of contemporary society, but does so in an evidenced way.’[22] Rather than make assumptions about societal standards, public input is used. Also, the UK’s Joseph Rowntree Foundation, which created the MIS, does not consider it to be a measure of poverty[23] and uses the 60% of mean measure in reports it publishes such as Monitoring poverty and social exclusion 2016.
To understand how different the figures are and to visualize the impact they have on the number of poor that are counted, I have converted all the metrics discussed into dollar amounts, in the table below. I make no claim that these numbers are comparable, only that they are reasonably accurate and up-to-date. The last three numbers are actual welfare payments rather than poverty statistics. They are strikingly lower than the rest and this fact does not speak for itself. It does, however, tell a story, if I may digress. The usual reaction when seeing these numbers is: how can someone live on such little income? I would ask: how does one get out of poverty under such straitened conditions? 5 In Quebec, a welfare recipient is allowed to earn $200 per month without penalty. Over that amount, for every extra dollar made their benefits are cut by a dollar (a 100% marginal tax rate). In France, every Euro earned is deducted. This is what is known as the poverty trap. The system is structured so as to remove any incentive to get out of poverty.[24] When governments set payment schedules so far below poverty lines and also discourage the poor from improving their situation, what message does that send?[25] And in case you were thinking that the answer is ‘Get back to work’, item 11 shows what those who cannot work receive about 50% more, still nowhere near any threshold, except Sarlo’s BNPL (item 4), which has been ‘criticized as being too stringent and even “mean-spirited”.’13 More on that later.
Items 8 and 9 are incomes for a 40-hour workweek. These numbers indicate that poverty is not an issue confined to the unemployed. For example, in 2014, ‘Walmart’s low-wage workers cost US taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing.’[26]
| |
Annual thresholds for a single person in 2016[27] |
CDN$ |
US$ |
| 1 |
Canadian Low Income Measure (LIM) [28] |
$22,652 |
$16,904 |
| 2 |
Canadian Low Income Cut-off (LICO) [29] |
$20,788 |
$15,513 |
| 3 |
Canadian Market Basket Measure (MBM) for Montreal [30] |
$17,944 |
$13,391 |
| 4 |
Sarlo of the Fraser Institute: Basic-Needs Poverty Line (BNPL) (Canada) 13 [31] |
$12,205 |
$9,108 |
| 5 |
European low-income measure (60% of mean income) applied to Canada. |
$26,941 |
$20,105 |
| 6 |
US poverty threshold [32] |
$16,202 |
$12,091 |
| 7 |
Minimum Income Standard MIS (UK)[33] [34] [35] |
$28,533 |
$21,293 |
| 8 |
Pre-tax full-time earnings at minimum wage in Quebec [36] |
$22,360 |
$16,687 |
| 9 |
Pre-tax full-time earnings at US federal minimum wage [37] |
$20,207 |
$15,080 |
| 10 |
Actual welfare payment in Quebec for those deemed fit for work. [38] |
$7,476 |
$5,579 |
| 11 |
Actual welfare payment in Quebec for those deemed unfit for work. [39] |
$11,340 |
$8,462 |
| 12 |
French Revenu de Solidarité Active (RSA) [40] |
$8,752 |
$6,531 |
As mentioned previously, the most striking pattern in the table is how the last three entries are low, compared to the rest. The others cluster together with the notable exception of item 4 (Sarlo’s Basic-Needs Poverty Line) and Item 10 (the US poverty threshold). Both of these statistics tend towards absolute measures, which are meant to focus on deprivation rather than income inequality. Which measure is appropriate in a developed country? If all you have achieved is to avoid destitution, are you no longer living in poverty? Not if integration and participation in society is beyond your reach. This is why relative measures of poverty are deemed more appropriate choices, especially in developed countries: they account for social inclusion.
I have tried to frame the question of poverty in such a way as to provide a better understanding of the numbers that inevitably come to define it at some point. Many judgments and choices are involved in calculating these numbers. Agreeing on a number requires social consensus. Unfortunately, focusing on the numbers is not conducive to building such a consensus and is even counterproductive, in that it immediately evokes highly emotional questions of cost and fairness. The whole debate sidesteps issues of social exclusion and lack of opportunities, to which people can better identify in their own lives.
Getting back to the original question, we need a definition of poverty to implement Basic Income. However, labeling it with a threshold number is both necessary and self-defeating. It is not possible to implement Basic Income without pinning down the benefit and cost numbers, yet focusing on these numbers distracts from the positive principles that would muster support for them. Framing the question of what poverty is in such a way that principles are explored before we formulate a numerical definition is more important than the number itself. This reframing is thus a prerequisite to Basic Income.
Author biography: Pierre Madden is a zealous dilettante based in Montreal. He has been a linguist, a chemist, a purchasing coordinator, a production planner and a lawyer. His interest in Basic Income, he says, is personal. He sure could use it now!
Sources:
[1] Volmert, A., Gerstein Pineau, M., & Kendall-Taylor, N. (2016). Talking about poverty: How experts and the public understand poverty in the United Kingdom. Washington, DC: FrameWorks Institute.
[2] An Act to Combat Poverty and Social Exclusion, CQLR c L-7 Quebec, Canada, art. 2
[3] Galbraith, J. K. (1958). The Affluent Society. Boston: Houghton Mifflin. Quoted in Wikipedia: Poverty threshold
[4] On poverty and low income by Ivan P. Fellegi, Chief Statistician of Canada September 1997
[5] Ibid.
[6] Statistics Canada Table 206-0091 Low income measures (LIMs) by income source and household size in current dollars and 2014 constant dollars.
[7] Statistics Canada Low-income cut-offs
[8] “Twenty percentage points are used based on the rationale that a family spending 20 percentage points more than the average would be in ‘straitened circumstances.'” Ibid.
[9] LICO for a single person in a metropolitan area in 2012 = $19597
[10] Market Basket Measure (2011 base)
[11] https://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx#ftn12
[12] Andrew Heisz, assistant director of the Income Statistics Division of Statistics Canada, personal communication, October 19 2016
[13] Sarlo, C. (2006). Poverty in Canada: 2006 Update. The Fraser Institute.
[14] E-mail from Geoffroy Fisher, Eurostat User Support, Eurostat helpdesk December 28, 2016.
[15] Ibid.
[16] Institut national de la statistique et des études économiques (Insee)
[17] All of the information in this paragraph and much more, as well as a wealth of references to primary sources can be found in Gordon M. Fisher, The Development of the Orshansky Poverty Thresholds and Their Subsequent History as the Official US Poverty Measure, May 1992-partially revised September 1997
[18] Orshansky, “Counting the Poor: Another Look at the Poverty Profile,” Social Security Bulletin, Vol. 28, No. 1, January 1965, p.4. Quoted in Fisher (see previous note)
[19] https://www.lboro.ac.uk/research/crsp/mis/
[20] https://www.lboro.ac.uk/research/crsp/mis/whatismis/
[21] “…We would not expect the content of a MIS basket to stand still. But we also don’t think that changes in the average AUTOMATICALLY trigger proportionate changes in the minimum, and in this sense it is not a relative measure.” Donald Hirsch, Director of Centre for Research in Social Policy, personal communication, Nov 1 2016
[22] Donald Hirsch, Director of Centre for Research in Social Policy, personal communication, Nov 1 2016
[23] Joseph Rowntree Fondation Press Office, personal communication, January 11, 2017
[24] John Stapleton Why is it so tough to get ahead? How our tangled social programs pathologize the transition to self- reliance. Metcalf Foundation November 2007
[25] There is no question that low welfare payments are a political choice. In 1969, when Quebec introduced its first welfare legislation, benefits for people under 30 were set at 70% of the amount provided to everyone else. Accounting for inflation, this still represents more than what someone unfit for work receives today.
[26] Forbes April 15 2014
[27] Throughout, $US1 = CDN$1.34
[28] Statistics Canada Table 206-0091 Low income measures (LIMs) by income source and household size in current dollars and 2014 constant dollars.
[29] Statistics Canada Table 1 Low-income cut-offs (1992 base) after tax. 2014 figures for large metropolitan areas adjusted for inflation.
[30] Statistics Canada Market Basket Measure thresholds (2011-base) for reference family of two adults and two children, by MBM region Data for Montreal converted to single person (see note 1 in table)
[31] $10314 X 129.1/109.1 = $12,205
[32] US Census bureau Poverty Thresholds for 2015 by Size of Family and Number of Related Children Under 18 years $12082 adjusted for US inflation (0.1%), 1 US$ = 1.34 CDN$
[33] https://www.lboro.ac.uk/research/crsp/mis/
[34] Minimum Income Calculator
[35] £1 = US$1,23
[36] Minimum wage in Quebec = CDN$10.75
[37] US$7.25 per hour as of July 2016
[38] Emploi Quebec How benefits are calculated
[39] Ibid.
[40] Le revenu de solidarité active (RSA)
