by Kate McFarland | Aug 12, 2018 | News
The Chicago Tribune, the most-read newspaper in the Chicago area, has come out in opposition to Alderman Ameya Pawar’s proposal to use the city as a test site for basic income.
Earlier this year, Pawar proposed legislation to create a task force to investigate a pilot study in which 1000 Chicago families would receive an unconditional basic income of $500 per month. Pawar’s resolution is still pending approval from the Chicago City Council and Mayor Rahm Emanuel. The Alderman has not proposed a specific means to finance such a pilot project, and has indicated in interviews that he envisions the project being supported at least in part through private philanthropy.
In an editorial published on August 6, the Tribune foregrounds the issue of cost in rejecting Pawar’s idea for a municipal basic income pilot study — or, all the more, a full-fledged municipal basic income:
“Pawar’s plan suffers from a number of flaws, the most obvious being: How would Chicago pay for it? Chicago has huge unfunded pension obligations, a lousy bond rating and rising property taxes. This pilot program would cost at least $6 million a year. When asked on WTTW’s ‘Chicago Tonight’ where the money would come from, Pawar had no answer.”
“Even if the Chicago City Council could find the money and the project proved a great success, what then? Expanding to include everyone — the term is ‘universal basic income,’ remember — or even a significant share of Chicagoans would be prohibitively expensive.”
In the editorial, the Tribune does not reject the idea of basic income itself, but deems it financially infeasible on the city-level and politically infeasible on the national-level:
“Realistically, given the sums required, a UBI would require a new federal initiative, which is not going to come from this president or this Congress. [Chicago] City Hall would be wiser to look for ways to help raise incomes among working-class and poor residents without taking on commitments it can’t afford.”
With regard to alternative strategies to raise incomes of the poor and working class, the Tribune suggests investment in and deregulation of the private sector (“There is no substitute for a thriving private sector to generate employment and boost incomes”), job-training or apprenticeship programs, and an expansion of affordable housing.
The Editorial Board concludes on a somewhat ambivalent note concerning basic income experimentation, as a poor allocation of money and priorities at present, but as something potentially worth pursuing if and when it becomes affordable:
“If Chicago becomes economically healthy and fiscally sound, it will achieve far more benefits for hard-pressed Chicagoans than Pawar’s pilot possibly could. And who knows? Prosperity-driven increases in city revenue might make ideas like his affordable.”
The Chicago Tribune has no official political alignment. Wikipedia classifies it as “conservative” (right-wing), while websites purported reporting on media bias have placed it as “left-center” (Media Bias/Fact Check), “center” (AllSides), and “leans conservative” (Boston University Libraries). The newspaper endorsed a third-party candidate, Libertarian Gary Johnson, in the 2016 US Presidential Election.
Reference
Editorial Board, “Instead of a Universal Basic Income for Chicagoans…,” Chicago Tribune, 6 August 2018.
***
Reviewed by Dawn Howard
Photo: “Chicago” CC BY-NC-ND 2.0 Peter Miller
by Karl Widerquist | Jul 1, 2018 | News, Opinion, The Indepentarian
[This article is a draft chapter of my book, A Critical Discussion of UBI Experiments, adapted as a blog post]
Like the experiments the 1960s and ’70s, the current round of experiments appears at a time when concern about poverty and inequality is rising and people are rethinking the existing redistributive strategy. The context is otherwise very different. The welfare state has been under attack and greatly pared back in many countries since the 1970s while it has been gradually expanding in many countries from the 1930s to the 1970s. The concern that automation disrupts the labor force that played a small but significant part the 1960s BIG movement, now plays a far larger role in the debate today. The two U.S. experiments are both largely funded by tech entrepreneurs who are particularly concerned this issue. One might think that the increased concern with automation would decrease the concern that UBI might decease work effort, but this does not seem to be the case for all of the experiment. Many still seem tacitly to assume that decreased work effort is necessarily a bad thing.
The current round of experiments is taking place in a much wider context. Including the Namibian and Indian projects that were completed several years ago, the current round involves experiments in four different continents, in very wealthy and much less wealthy countries, and in countries with very strong or with rather weak welfare systems. The different contexts make different testing opportunities possible, but they also bring in new constraints, because researchers have to comply with local laws which can significantly constrain the project. This is particularly important in Europe where experiments have to comply with national and European Union law.
Researchers in different political contexts are understandably interested in very different questions, but they should be aware of the experience in other countries for at least three reasons. First, they might learn how to defend their experiments from criticism that they had not expected in their political context. Second, researchers might consider attempting to replicate each other’s findings with different methods and/or in different circumstances. Third, researchers might try to look for things that other experiments have neglected to examine.
Researchers today obviously have access to much more sophisticated computer statistics programs, but the logistical and financial difficulties of distributing cash to hundreds or thousands of people remain. Therefore, the experiments today are, for the most part, comparable in size and scope to the 1970s experiments. Only in less wealthy countries have significantly larger experiments become feasible.
The next several sections give a brief overview of several current or proposed experiments on or closely relating to UBI.
GiveDirectly in Kenya
At the home of recipient Rispa Atieno Okoyo in Koga village on 22 October 2014. Rispa used the cash to build this goat pen, she bought 2 cows, and planted maize and beans. Rispa with her children in front of their house.
GiveDirectly is a U.S. non-profit organization that has recently established the world’s largest UBI experiment in Kenya. The project is motivated largely be the desire for an evidence-based approached to international charity and development aid, and the belief that evidence so far indicates that the poorest people in the world find cash is extremely helpful. The experiment will involve tens of thousands of people across dozens of villages for several years. It will combine the techniques of RCTs and saturation studies with a significant number of control and experimental villages. The project is able to be so large both because GiveDirectly has raised a lot of money and because Kenya has such deep poverty. Some villages will receive a UBI of as little as US$0.50 per day. Others will receive $1 or perhaps more.
The low level of the UBI in the GiveDirectly project is necessary because of the great poverty and inequality in Kenya. Many of the villages where GiveDirectly operates have average incomes less than $1 per day. If GiveDirectly were to give everyone in one village $2 per day, they could easily make that village four-times-richer than the control or non-participating village down the road. This could create animosity and resistance to the program. Until they can afford the give the grant to everyone in Kenya, it has to be small.
But the small size of the grant makes a very large study possible. Researchers for GiveDirectly are able to combine RCT and saturation techniques and to run a fairly long-term study that is like to produce a great deal of valuable data about how UBI affects various quality-of-life indicators. Although the effects of a very small UBI on severely impoverished villages in Kenya might not tell us a lot about low a large UBI will work in wealthier nations, this study promises to provide a great deal of useful information about how UBI will work in lesser developed countries.
Finland
Olli Kangas of Kela
As I write, Finland is in the middle of a small-scale, two-year UBI experiment, which is being conducted by Kela, the Finnish Social Insurance Institution. It involves about 2,000 participants between ages 25 and 58, selected by a nationwide random sample of people receiving unemployment benefits. The experiment replaces unemployment insurance benefits of €560 per month with a UBI of the same size. The Finnish parliament rewrote the law to make participation in the experiment mandatory for unemployment benefit recipients who were selected.
The Finnish effort has been criticized because the UBI is so low and because, being drawn from people receiving unemployment benefits, it incorporates the conditions of eligibility attached to those unemployment benefits. Kela responded that it simply does not have the budget to conduct an experiment across a large selection of low-income individuals.[i]
The make-up of the Finish experiment has at least two advantages as a UBI test. First, the low-level of the grant makes it comparable to the existing program, eliminating problems of distinguishing the effects of the size and type of program under investigation (as discussed in Chapter 4 of my book). Second, even though people had to be eligible for unemployment benefits to be selected for the study, once they were assigned to the experimental group, all or most conditions were eliminated. Therefore, although the study is not designed to examine how a large UBI would affect a large cross-section of the public, it is well designed to examine how a small UBI would affect people currently on unemployment benefits. And that kind of study reveal a great deal of useful information about UBI.
The stated goal of the Finnish experiment is, “To obtain information on the effects of a basic income on employment.”[ii] This concern is very similar to what became the focus of the four U.S. experiments in the 1970s, but the design and focus of the study makes it very different. One of the motivations of the experiment is the fear that Finland’s long-term unemployment insurance eligibility criteria created significant disincentives to work.
Because the Finnish project tests UBI only on people currently receiving unemployment benefits (that is, people currently not working), and because UBI eliminates eligibility criteria that might inhibit unemployed people from taking jobs, the study might find that UBI increases employment among study participants. The study does not increase marginal tax rates for participants and so it will provide a much higher overall income for low-income workers in the study,[iii] but it will be expensive to replicate that program design on a national scale.
Canada
Issues such as poverty, inequality, and the complexity of the social insurance system have inspired the Canadian experiment. The Ontario government is conducting an experiment at three sites in Ontario: Hamilton, Thunder Bay, and Lindsay, and might later include an additional study at a First Nations community. The study so far involves an experimental group of up to 4,000 low-income people aged 18 to 64. One of sites has been described as a “quasi-saturation site,” but I have been unable to clarify that that means. Researchers hope to examine the NIT’s effects on quality-of-life indicators as well as work behavior, education, and entrepreneurship.[iv]
Evelyn Forget of the University of Manitoba
Although the people conducting the study call it a “basic income,” it is a negative income tax that is conditional not only on household income, but also on household size. Single people receive a maximum of C$16,989 per year while couples receive a maximum of C$24,027 and both face a take-back rate of 50% of earned income.[v]
The 6th Chapter of my book explained that the inclusion of a marginal tax rate is an element of the NIT model, but it is needed to approximate the impact of marginal tax rates on recipients. The fact that the maximum benefit for a couple is not simply double the maximum benefit for an individual is a form of conditionality that departs from the UBI model in a way that is not strictly necessary for the purpose of conducting experiments. That is, unlike the UBI model in which individuals receive the same amount regardless of whether they live in small or large households, in the Ontario study two people living together receive considerably less than two people living separately. The motivation for this conditionality is probably to save money. Two people living together can live more cheaply than two people living apart. By including this condition the program can provide a poverty-level BIG at a lower cost, but they create an incentive for people to live apart, and might create a situation in which recipients pretend to live apart.
Y Combinator in the United States
Y Combinator Research (YCR) the nonprofit arm of Y Combinator—a private venture capital firm in the United States. It is run by tech entrepreneurs who are very motivated by the automation issue. Basic Income has become a major focus of YCR’s research, and it has taken on the effort to fund a large-scale UBI project with purely private funds.
Originally planned for Oakland, California, the organizers decided to move the experiment to two other states not yet announced. The experimental group will involve at least 1,000 people who will receive $1,000 per month for 3-to-5 years. More subjects will be included if funding allows. The experimental group will involve people aged 21 and 40 with total household incomes (in the year before enrollment) below the median income in their local community. Although researchers will gather data on how participants use their time and money, they will focus on the impact of UBI on social and physiological well-being—using both subjective and objective measures. The initial project proposal makes no mention of phasing out the grant as income rises.[vi] Therefore, YCR is testing a true UBI, but like the Finnish study, the YCR study implicitly assumes that recipients will face no higher marginal tax rates under a UBI system than they do now.
The Netherlands
The Netherlands experiment is a bit unusual for the times. While politicians in Greece, Italy, Spain, and several other places today are promoting proposals that are called “basic income” even though they share little with the basic income model, the Netherlands is experimenting with something that they do not call “basic income” even though it takes a significant step in the direction of basic income. The experiment seems to be motived in part by dissatisfaction with so-called “active labor-market policies” that are in place in the Netherlands and several other countries. These policies allow people to keep some benefits while in work, but subject them to harsh sanctions if they fail to search for work or to remain in work if they find it.[vii] These policies have proven to be cost-ineffective and often allow employers to capture some of the benefit intended for low wage workers.[viii]
Although the Dutch experiment is limited to welfare recipients under the current system, it frees people from job requirements of the current system and allows them to keep some of their benefits as they earn. These are two important features of a UBI. Because the cost-effectiveness record of active labor-market policies is so poor, this experiment could show that these steps in the direction of UBI will prove to be a more cost-effective means of achieving some of the ends of active labor-market policies.[ix]
The Dutch experiment is sometimes conceived of as a “trust” experiment because the existing system makes caseworkers responsible for enforcing rather draconian sanctions on recipients fostering distrust on both sides. Yet, this experiment conceptualizes “trust” in terms of fulfilling the obligations of a recipient of conventional social assistance—primarily to take work if they find it. In that sense they are not directly related to UBI, which is often conceived as a rejection of such obligations.
The Dutch experiment is actually several experiments that will take place in several different municipalities across the country—made possible by a 2015 law allowing experimentation at the municipal level. The experiments, launched in late 2017 and expected to last for two years, will study the effects on labor market and social participation, health and well-being of allowing social assistance claimants to maintain at least some of their benefits as their income rises while exempting them from the legal duties of seeking work and/or participating in training activities. The experiments involve several different experimental groups eligible for slightly different policies. Recipients are randomly assigned to the control group or one of the experimental groups in their municipality.[x]
Stockton, California
The city of Stockton, California has secured funding from private non-profits to launch a small-scale UBI project with about 100 participants receiving $500 a month for approximately 18 months. Like Y Combinator, major funders of the Stockton project are also largely involved in the tech industry and motivated by the automation issue.
Although the project has received a great deal of media attention, it is in the early planning stages and few details have been announced. The project is not called “the Stockton experiment” but “the Stockton Economic Empowerment Demonstration” (SEED). The organizers do not claim to be planning a “scientific experiment,” but a “a guaranteed income demonstration,” which could be taken as indication that it is aimed not to gather rigorous data but to present useful but possibly anecdotal evidence to further UBI politically.[xi] There is nothing wrong with conducting a smaller-scale and/or a less-rigorous study, and all the difficulties of clearly communicating what it does and does not say about the implementation of a full, nationwide UBI still apply.
Other experiments
Jamie Cooke of RSA, Scotland
The Scottish government has committed funds to conduct a full-scale UBI experiment, and is working with the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) and other institutions to design the project, but it is currently in the planning stages and few if any details about the experiment have been announced yet.[xii]
Barcelona, the principle city in the Catalonia region of Spain is conducting an experiment it calls “B-Mincome” in honor of the 1970s experiment in Canada. The projects literature draws inspiration from the UBI movement. The experiment involves about 1000 people group into ten small experimental groups and a control group of 1000 people. The various experimental groups will receive a NIT, some unconditionally and others attaching various conditional programs designed to encourage labor, entrepreneurship, community service, and so on.[xiii]
The government of British Columbia, Canada recently announced that it will conduct a UBI experiment, but it is only in the planning stages, and few details have been announced yet.[xiv]
There are many small UBI projects that aren’t necessarily intended as experiments. Small-scale charities, such as “ReCivitas” in Brazil and “Eight” in Uganda have been using the UBI model to help people for some time.[xv] A group of filmmakers have raised enough money to give a UBI of $231 per adult and $77 per child to about 20 people across eight states. The filmmakers will follow the recipients for two years, eventually producing a feature film or a television series, entitled “Bootstraps,” to document how the grant affects their lives.[xvi] Because these projects are so small and because they are not primarily focused on data gathering, they seldom make the list of experiments.
Other experiments of varying size and connectedness to UBI are being discussed or at least rumored around the world, in places such as France, Korea, and Iceland. Some of these initiatives might well come to fruition, but I have little definitive information about them at this time.
Will we re-fight the last war?
Earlier chapters of my book showed, in the 1970s, BIG opponents focused on two findings of the UBI experiments: the relative decline in hours worked and possible but controversial finding of a correlation with increased divorce rate. Opponents framed those issues in very extreme ways to make the findings appear definitive against BIG: any decline in work effort, no matter how small and no matter that it might be counteracted by other policies was taken not only as a “bad” thing, but bad enough to be a definitive reason to consider the policy a failure. Any decrease in the divorce rate was considered “good,” even if divorce was inhibited by keeping unhappy women financially dependent on men.
Will something like this happen again when these seven experiments start releasing their findings? It will probably not happen in the exact same way. Much of the discussion of the 1970s experiments was particular to the time and place: supply-side economics was on the rise within academia; the War on Poverty had decline in popularity politically; and politicians who vilified the poor were on the rise. But it is almost certain that less conscientious supporters and opponents will attempt to seize on whatever findings they can, framing them in whatever way necessary to spin the discussion in their favor. More conscientious participants of the discussion—whether directly involved in the experiments or not—with the benefit of past experience need to be ready this time.
I doubt the divorce issue will come back, but because the vilification of any non-wealthy person who balks and long hours for low pay is such a perennial favorite of the opponents of virtually any redistributive measure, people need to be ready for this sort of framing of the work-effort issue even if they do not expect it in their political context. It was not a major issue in India or Namibia because in those areas UBI was associated with increase work time. Similar results are expected in Kenya. The Finnish and Dutch experiments draw their samples in a way that is less likely to show a negative correlation between UBI and labor effort and may even show a positive correlation. This is so because conditional programs have a poverty trap that discourages people who don’t meet the conditions from leaving the labor force but encourages those who do meet the conditions to remain out of the labor force. By relieving the conditions, UBI is likely to be correlated with less work for those who had not been eligible and more work for those who had been eligible for redistribution under the conditional system. Most U.S. NIT experiments of the 1970s focused on people who had not been eligible for the largest redistributive programs, and so they were correlated with decreases in labor effort. The Finnish and Dutch experiments focus on people who are eligible for redistributive programs and so they might be correlated with increased work effort.
The other four experiments might now negative correlations and people involved should be consider ways to preempt or counteract any spin based on that correlation. Later chapters of my book consider how.
Of course, there are many other issues that people might use to spin the results of new UBI experiments. The issues will vary significantly by time and place. Knowing the specific political context and the international experience will help people preempt and/or counteract spin.
Dauphin, Manitoba: “the town without poverty”
Notes: contact me for full references:
[i] {Kangas, 2017 #1424}; {Kangas, 2016 #1425}
[ii] {Kangas, 2017 #1426}
[iii] {Kangas, 2017 #1426}
[iv] {Ministry-of-Community-and-Social-Services, 2018 #1433}; {Forget, 2016 #1427}
[v] {Ministry-of-Community-and-Social-Services, 2018 #1433}; {Forget, 2016 #1427}
[vi] {Y-Combinator-Research, 2017 #1428}
[vii] Loek Groot and Robert van der Veen, remarks made and the workshop on Basic Income experiments held at the Center for International and Regional Studies, Georgetown-University Qatar, March 26, 2018
[viii] {Bouquin, 2005 #303}
[ix] Loek Groot and Robert van der Veen, remarks made and the workshop on Basic Income experiments held at the Center for International and Regional Studies, Georgetown-University Qatar, March 26, 2018
[x]{McFarland, 2017 #1431}; {Groot, 2016 #1429};
[xi] {SEED, 2018 #1432}
[xii] {McFarland, 2017 #1431}
[xiii] {Colini, 2017 #1435}
[xiv] {British-Columbia-Government, 2018 #1438}
[xv] Recivitas.org; Eight.world
[xvi] Bootstrapsfilm.com
by Sandro Gobetti | Jun 14, 2018 | News
Since the new government led by Movimento 5 Stelle (M5S) and Lega (the Italian extreme right-wing party) was formed, the proposal of a so-called “citizen income” in Italy has had much echo. First proposals go back to 2013, having been reported at the time.
This proposal is among the first programmatic points of the M5S and has been included in the “government contract“, among the goals to be achieved in this legislature. It has reverberated widely, and some confusion has been established. It has been suggested that basic income is in the pipe for Italy’s social policy, an idea inflated by some media reports. To that also contributed the reporting on the Livorno case, a small coastal town in Italy, in which a conditional to work type of basic income experiment has been conducted, having even been listed among the basic income experiments in the world at this time (year 2016).
To be clear, the M5S, even conceding the use of the term “citizen’s income” (a term coined in the 90s, by social movements and precarious workers, signifying “basic income”), is proposing a targeted to the poor minimum income scheme, conditional to work. This kind of policy has already been adopted, for many years, in the majority of European countries. The fact is that Italy is still one of the few European countries which doesn’t have experience with social support for those living below the poverty line. Moreover, European institutions have been asking for the introduction of at least economic support for the poor in Italy, which is one of the countries with the highest poverty rates in Europe.
The only social support for the poor up to this moment, in Italy, was introduced by the previous Gentiloni government, which has introduced a “minimum income for inclusion” intended for poor families. This support, however, is very conditional, and includes obligations for the whole family to accept any proposed work and a benefit that averages 130 € per month per person. In addition, only € 1.8 billion have been assigned to fund this social benefit, which covers only a small fraction of the families in need of assistance. The M5S proposal is similar, only the value is increased to around to 780 € per month per person.
The 5 Star Movement has developed, however, the hability to bring forth, in the Italian political debate, a theme that in many other European countries has already been settled with income support for the unemployed or the poor.
Social support in the shape of minimum income has suffered funding cuts across Europe, given the austerity measures of the past few years, with the introduction of severe restrictions which reduce accessibility and introduce more work conditions. The Hartz IV reforms in Germany and the Universal Credit in the United Kingdom are examples of this. Neverthleless, this is the kind of social support the 5 Star Movement is putting forth at the moment, with the “citizen’s income” proposal.
Luigi Di Maio (Photo credit: Andreas Solaro/AFP/Getty Images)
Luigi Di Maio, the current vice-prime minister and minister of labour, is quick to clarify what he means by “citizen’s income”: “those receiving this income will not stay on the couch doing nothing, but will be called on to accept any kind of work, and will be forced to work for the State for at least eight hours per week in the meanwhile”. This adds to a very common mindset of conditional support, based on the belief that people will remain inactive if they are given that chance. A belief grounded on a firm reciprocity work ethic (workfare), particularly remote from the idea of basic income.
The proposal, which provides an arguable light condition to work (a possibility to refuse work if it doesn’t align with the minimum income recipient expectations), has never been discussed in Parliament, even though it was brought into parliamentary committees.
The Movement of which Luigi Di Maio is a part of has made a legislative proposal for this conditional minimum income, but the actual parliamentary debate has not yet started. Part of this proposal is the financing of the policy with a quick-start of 2 billion € in two years, to setup a system of employment certers for ensuring that receipients are controlled in their way to find employment. Simultaneously, a proposal of an income Flat Tax of 15% has also been made, which has been associated with tax cuts, given the present day tax landscape in Italy.
However, there have been other proposals already delivered for Parliamentary discussion, such as the popular bill for the introduction of a guaranteed minimum income, presented in 2013. This bill was backed by over 170 associations, after a six-month social campaign, 250 public initiatives and more than 50 000 signatures collected.
There is no doubt that all this political activity has awakened the debate about guaranteed income, or a right to an income, and also about unconditional basic income. In fact, a series of political campaigns have begun in Italy, particularly thanks to movements of precarious workers, who demand a “guaranteed income immediately” and who took the streets with demonstrations in front of the institutional offices. They lined up in front of job centers, asking for a guaranteed income to be given to them “now”. Citizens movements concerning the right to proper housing and several labour unions, have also demonstrated their request for a guaranteed basic income in several events, while other groups such as the femininst movement “non una di meno” propose ideas such as the self-determination income, which is similar to an unconditional basic income.
More information at:
Sabrina Del Pico, “Italy: 5 Star Movement and the confusing proposal of a citizen’s income“, Basic Income News, March 14th 2013
Brian Wang, “Italian government talks 780 € per month basic income and tax cuts dispite Greece like debt levels“, Next Big Future, June 2nd 2018
Andrew Kaplan, “Italy: Basic Income Pilot launched in Italian coastal city“, Basic Income News, December 28th 2016
Chris Weller, “8 basic income experiments to watch out for in 2017“, Business Insider, January 24th 2017
Chris Pleasance, “Italy will soon have a flat 15 per cent tax rate and universal income scheme if president agrees coalition deal between anti-establishment and far-right parties“, MailOnline, May 18th 2018
Sandro Gobetti, “The bitter Italian situation: no basic income and false protection for the poor“, Basic Income News, April 24th 2017
[in Italian]
Chiara Brusini, “Reddito di cittadinanza? Prima 50mila assunti. Centri per l’impiego senza risorse e banche dati [Citizens income? Only for the first 50 000 hired. Employment centers with resources or databases]“, Il Fatto Quotidiano, March 27th 2018
Basic Income Network Italy, “50mila firme per proposta di legge sul reddito minimo garantito [50 thousand signatures for a proposed law on guaranteed minimum income]“, February 28th 2018
Sandro Gobetti, “Roma 5 giugno: in assemblea per un reddito subito! [Rome, June 5th: assembly for an income immediately!]“, Basic Income Network Italy, June 4th 2018
Article reviewed by André Coelho
