by Kate McFarland | Oct 8, 2016 | News, Research
The Canadian Centre for Policy Alternatives (CCPA)–a national independent research institute studying issues related to social, economic, and environmental justice–recently released two reports on basic income:
– David Macdonald (October 5, 2016) “A Policymaker’s Guide to Basic Income“
– Alex Himelfarb and Trish Hennessy (eds) (October 6, 2016) “Basic Income: Rethinking Social Policy“
David Macdonald, a senior economist at CCPA, considers two general types of basic income policies (defining a “basic income” as “a ‘no strings attached’ transfer from government to individuals or families”): a universal basic income, in which cash transfers of equal value are distributed to all Canadians regardless of income, and a negative income tax, in which benefits are tapered so that the poorest Canadians receive the full amount while the richest Canadians receive nothing.
For each of these two general approaches, Macdonald simulates four different scenarios, which vary according to the amount of the basic income and which (if any) existing programs are eliminated. He then analyzes, for each scenario, the effect on poverty reduction (for children, adults, and seniors), the consequences for net earnings across income groups, and the cost of the program to the government.
Based on his analyses, Macdonald concludes that basic income programs that replace all current welfare programs in Canada would result in “dramatically higher levels of poverty”. Even at relatively high levels of the basic income, a policy that eliminates Canada’s pension program would require “ethically and politically unsupportable compromises where seniors are pushed into poverty to lift up adults and children” (p. 8). Thus, he believes that the preferred approach, should the Canadian government pursue a basic income, would be to introduce the basic income guarantee in addition to existing programs. Moreover, Macdonald favors the negative income tax approach, as opposed to universal cash transfers, due to NIT’s lower cost and comparative effectiveness in reducing poverty.
Press coverage of Macdonald’s report tended to emphasize his point that basic income is not a “silver bullet” against poverty (see, e.g., reports in The Star, CTV News, and Huffington Post).
Alex Himelfarb and Trish Hennessy provide an edited volume of twelve short essays (not including their own introduction to the volume), which encompass a variety of viewpoints on both the benefits and limitations of basic income.
In a series of essays in the first half of the volume, proponents of basic income lay out several cases in favor of the policy–invoking (in different contributions) such considerations as homelessness, seasonal work and cyclical unemployment, and the social and economic determinants of health. Other contributions are more critical, although rarely opposed to basic income (at least in its progressive variants). For example, Jennefer Laidley critically assesses whether a basic income can really alleviate poverty, and Margot Young discusses limitations of basic income with respect to the difficulties faced by lone mothers. Michael Mendelson points out differences between right and left proposals of “basic income” and urges Canadians not to blindly consent to any program that bears the name, preferring a gradual approach to a progressive basic income. Louis-Philippe Rochon and Toby Sanger, meanwhile, argue that the government should focus its attention on full employment–which, while not incompatible with a basic income guarantee (as they admit), is a goal they believe should take precedence.
The CCPA was founded in Ottawa in 1980 by faculty Carleton University. Since this time, the organization has expanded, now holding branch offices in other cities and provinces, including Vancouver, Winnipeg, Regina, Halifax, and Toronto. While officially nonpartisan, the CCPA has been described as “left-leaning” and describes itself as “one of Canada’s leading progressive voices in public policy debates”.
Reviewed by Dawn Howard
Photo: “Toronto Homeless” CC BY-NC 2.0 Anton Bielousov
by Kate McFarland | Oct 7, 2016 | News
As previously reported in Basic Income News, Finland’s first international basic income seminar (BIST2016) was held in Turku on August 25. BIST2016 was organized by Varsinais-Suomen Piraatit (Southwest Finnish Pirates) in collaboration with BIEN Finland, the Pirate Party of Finland, and Pirate Youth of Finland.
Videos of the some of the lectures are available on YouTube, and copied below.
Ville-Veikko Pulkka: “Notes on the Finnish basic income experiment”
Summary:
In autumn 2015, the Prime Minister’s Office invited bids for a preliminary study (published on 30 March 2016) as part of preparations for a basic income experiment. After evaluation, a consortium led by the Finnish Social Insurance Institution, Kela, was appointed to study the suitability of different basic income models for the experiment.
The assignment outlined four different options to explore and develop:
1) full basic income (the level of BI high enough to replace almost all other benefits, perhaps excluding earnings-related benefits)
2) partial basic income (would replace most of the basic security benefits, but leave some)
3) negative income tax (“basic income” via taxation)
4) other possibilities to test basic income (the research group analysed participation income and the British Universal Credit, but these systems would not enable one to test the effects of basic income due to their conditionality).
Even though a budget-neutral partial basic income cannot automatically diminish income and unemployment traps, the model appears to be both economically and politically the most feasible one to test. According to power calculations made by the economists in our group, the sample for the experiment should be approximately 10,000 people in order to observe statistically significant results if the employment rate changes by two percentage points. In an ideal setting, the randomisation of people is compulsory and two-pronged. In addition to the treatment group, there must naturally be a control group.
The crucial factor is to have at least nationwide randomization since local experiments do not produce generalizable results. A representative, nationwide randomisation can be combined with more intensive local experiments to capture externalities. Also, weighted samples of interesting special groups are possible if the budget constraints can be tackled. Our research group recommends focusing on low-income households since the elasticity of labour supply is supposed to be greatest among this group and the budget is limited.
Ville-Veikko Pulkka is a researcher at Kela, the Finnish Social Insurance Institution, where he is a member of the research group that is preparing the country’s basic income experiment. Additionally, Pulkka is a PhD candidate at the University of Helsinki, writing a dissertation on “digital working life”.
Photo by Toru Yamamori
Christian Engström: “Basic income: a concrete and calculated proposal”
Summary:
This talk introduces a concrete proposal for a basic income system for Sweden, including a cost estimate and financing. The basic income would be 8.333 SEK (900 EUR) per month for anybody between 19 and 65 who lives in Sweden and has no other income. When you start earning money the basic income would be reduced, but never by 100%, so there is always an incentive to work if you can. The cost of this system would be covered in full by letting the basic income replace the current systems for social welfare, student aid and unemployment benefits, and removing the VAT discounts that certain industries enjoy. To make the proposal politically realistic, there would be no increase of income taxes, and no reduction of current sickness benefits.
Christian Engström is a member of the Swedish Pirate Party and, from 2009 to 2014, was a Member of the European Parliament.
Photo by Toru Yamamori
Albert Svan: “Basic income possibilities – based on informal studies from Iceland”
Summary:
In Iceland the Pirate Party is preparing a policy for implementing a basic income scheme. The debate started a couple of years ago when congressman Halldóra Mogensen proposed a legislation on basic income at the Icelandic Parliament. Some preliminary calculations show that 1/3 of the Icelandic government budget already goes to direct money transfers to Icelandic individuals and that a modest basic income amount for all persons 18+ years old will cost 2/3 of the budget, while a negative income tax may cost a similar amount as the current social financial aid. Of many prerequisites one initial observation is that basic income criteria should be calculated regularly and that a legislation of lowest allowed salaries must be somewhat higher than the basic income criteria.
Albert S. Sigurdsson currently works for Statistics Iceland. He holds a master’s degree in geography from the University of Helsinki, and has previously worked at the Finnish Environment Institute, Iceland’s Environment Agency, Lionbridge Technologies, and Futuvision Media.
Reviewed by Genevieve Shanahan
Turku photo CC BY-NC 2.0 Mikael Korhonen
by Kate McFarland | Oct 3, 2016 | Research
The Government of Ontario plans to move forward with a pilot study of a basic income guarantee, to begin by April 2017.
On September 20, four researchers — Evelyn L. Forget (Professor of Economics at the University of Manitoba), Dylan Marando (PhD Student at the University of Toronto), Tonya Surman (founding CEO of the Centre for Social Innovation), and Michael Crawford Urban (Policy Associate at the Mowat Centre) — released a report called “Pilot Lessons: How to design a basic income pilot project for Ontario”. “Pilot Lessons” offers recommendations to the Ontario government on the basis of previous trials of basic income guarantee programs. It also calls for a greater focus on the impact of a guaranteed income on innovation and entrepreneurship.
The report begins by glossing the meaning of the term ‘basic income’ as it is used by the authors (“basic income is best conceptualized as a policy whereby a government guarantees, to all of its citizens, a regular predictable income sufficient to live a basic but dignified life”), distinguishing between the “demogrant” and “negative income tax” models.
The authors go on to overview past experiments on basic income, especially those conducted in the United States and Canada during the 1970s.
Based on this review of past experience, they identify four lessons:
1. Vary the parameters (e.g. eligibility conditions, amount of income guarantee, tax-back rates), but don’t vary them too much.
2. Communicate the results of experiments through scientific, not political, channels. The authors state that “science and politics don’t mix well”. For example, they point to the politically-driven promulgation of the alleged correlation between receipt of a basic income and increased divorce rates following the United States experiments in the 1970s. This contributed to the deterioration of interest in the policy, especially among Republicans.
3. Don’t overlook indirect benefits of basic income that might be observed in experiments. For example, the authors note Evelyn Forget’s investigation of Manitoba’s “Mincome” experiment: Forget demonstrated that the basic income guarantee in Dauphine corresponded to lower hospitalization rates and increased high school graduation rates.
4. Don’t assume that a decline in the time spent in paid employment implies a decline in the time spent in socially valuable work (e.g. consider whether the time is spent instead in childcare, continued education, volunteer work, etc).
In the next chapter, the authors describe major changes in the labor market that pose important differences between the present context and that of the past experiments, such as the increase in precarious labor and rise of automation. They also argue that, by decreasing the risk associated with leaving a job or starting a business, a basic income could facilitate entrepreneurship and innovation.
The report concludes with 14 recommendations for the design of a pilot study.
The full report is available for download.
Reviewed by Dawn Howard
Photo: Vancouver Science World CC BY 2.0 Franco Ng
by Hilde Latour | Sep 22, 2016 | News
On the first day of International Basic Income week and just six months before the election of a new House of Representatives (“tweede kamer”) in March of next year, a debate on unconditional Basic Income was held in the Dutch parliament on September 19th. This debate was initiated by Member of Parliament Norbert Klein of the Cultural Liberal Party (Vrijzinnige Partij), who wrote a ‘note of initiative’ (“initiatiefnota”) in January this year, called “Certainly Flexible: about thinking differently about work and social security with an unconditional basic income”
Klein asked for three things:
1. The government’s reaction
The Minister of Social Affairs and Employment, Lodewijk Assher (Labour Party, PvdA), answered in writing on May 31st, that introducing a basic income is simply too expensive as the number of people paying taxes will decrease dramatically.
In addition to the economic arguments against a Basic Income, the Minister states: Having a job is more than having an income. (…) A job offers people a social network, structure in life, self esteem and personal development.” That participation in (paid) labour is good for everyone, is the broadly supported position of the Dutch government. This is what Klein refers to as a “one size fits all” policy.
In this context it is worth noting that in the current Dutch participation legislation (“participatiewet”), people are not allowed to choose the job or activities they like. The government decides which work is suitable, prohibiting many kinds and types of participation with extremely high penalties for people who participate in other activities without specific permission of the (local) government. There is very little freedom of choice and many people report to be forced into meaningless jobs. The Minister refers to this policy as “support with an activating character”.
Apparently the characterization “one size fits all” for the current policy hurts, because the minister bounces it back at Klein, by saying that a basic income is a “one size fits all” idea. He states that in case of an unconditional basic income, every citizen would receive the same income support, even if they don’t need it. He ignores the fact that the richer part of the population would be paying back most of it through taxes as was indicated by Klein in his note of initiative.
He also ignores the fact that people will regain their freedom of choice to either participate in (paid or non-paid) labour, education, caring roles or anything else that helps them create structure in their lives, build social networks, and nurture self esteem or personal development.
Furthermore, the Minister argues that European legislation might be a roadblock on the way to implementing a Basic Income in the Netherlands. However, no definite answer is given about this possible hurdle, nor is the minister referring to any specific European legislation that might stand in the way of implementing a Basic Income in The Netherlands.
During the meeting the Minister confirms he is not in favour of new research, as enough research has been done. He indicates the possibility that the House of Representatives would have to order an investigation by itself.
2. More extended research on the effect of a basic income on the state’s budget
Klein states, the research on the impact on the state’s budget done so far, has been incomplete regarding the domains in which the effect of basic income can be expected. He questions the conclusions of previous research on the effect of a Basic Income on the state’s budget and formulates a list of examples of positive side effects that were not included in the calculations (i.e. effect on health, housing market, executional costs, increased entrepreneurship and participation in labour). He asks for new research where these effects will be included.
3. A debate in the House of Representatives
During the meeting of the Committee of Social Affairs and Employment on September 19th, seven political parties of the House of Representatives of the Dutch Parliament were represented: Socialist Party (SP), Green Left (GL), Christian Democratic Appeal (CDA), People’s Party for Freedom and Democracy (VVD), Democrats 66 (D66), Labour Party (PvdA) and of course Klein / Cultural Liberal Party (Vrijzinnige Partij).
The main decision to be made during the debate: Is the House of Representatives willing to order an investigation by the Central Planning Agency (CPB) and the Socio-Cultural Planning Agency (SCP) for an explorative study on the financial / socio-economic as well as the behavioral aspects of an unconditional basic income?
The VVD is firmly against a basic income, where in the past the option was openly supported by the VVD-Minister of Economic Affairs, Gerrit Zalm. An unconditional Basic Income is an unfair solution according to the right wing-party nowadays, arguing as follows: the working part of the population pays for the people sitting at home. It is senseless, anti social and unaffordable. What if everyone chooses to do fun things instead of going to work? The effect of an unconditional Basic Income will be less participation in labour, resulting in a decrease in tax-income. We already have too many regulations that discourage people to go to work. Freedom of choice for people that is paid by others is not a dream but a nightmare. No further research is needed according to the VVD.
All other parties first have questions about the note of initiative and ask for further information. What will happen to the current social security system, what will be the cost of a basic income and how will it be financed?
In response to these questions, Klein hands out an estimate of the cost (130 billion euros) of implementing an unconditional Basic Income of 800 euros per person and a proposal of how this could be financed. He also alters his initial inclusion criterion for a basic income (living 10 years in the Netherlands) towards people with a Dutch residence permit. He emphasizes the starting point is a positive image of citizens, where most people want to participate in society in a good way. A basic Income should be seen as a springboard, not a safety net. He states that unpaid work can be as beneficial for society as paid work.
Green Left is the party most positive towards researching the effects of a Basic Income, but does not support the idea of an income guaranteed for everyone. Green Left is in favour of a looser link between work and income but wants different options to be investigated, e.g. Basic Income, negative income tax and dividend on robotics.
All parties, except the VVD, asked for a suspension of the meeting to another date to be able to study Kleins’ financial proposal. A date will be chosen during the next meeting of the committee.
To be continued…
Info and links
A report of the meeting can be found here (in Dutch)
Both letters (Klein’s note of initiative and Assher’s response) can be found here (in Dutch).
Related Basic Income News articles:
NETHERLANDS: Basic Income debated for first time in Parliament
[Hilde Latour]
THE HAGUE, NETHERLANDS: Expert Meeting on “Sense (and Nonsense) of a Basic Income”
[Florie Barnhoorn]
Special thanks to Josh Martin, and Cameron McLeod for reviewing this article.
Cover photo:
Meeting of Committee of Social Affairs and Employment – Hilde Latour 19 sep 2016
by Kate McFarland | Aug 30, 2016 | News
The Australian Fabians — Australia’s oldest left-leaning political think tank — will host a discussion and debate about universal basic income in Haymarket, NSW on September 9.
Speakers include Ben Spies Butcher (Senior Lecturer at Macquarie University), Peter Whiteford (Professor at ANU Crawford School of Public Policy), and Louise Tarrant (former National Secretary of United Voice).
Luke Whitington, Deputy Chair of the NSW Labor Party Economic Policy Committee, reports that interest and discussion surrounding has UBI has been on the rise within Australia’s Labor Party. Whitington sees the Fabians’ event as exemplifying this new trend.
The labour movement in Australia is getting serious about basic income. It’s great to see the Fabians facilitating this debate. The motion calling on the ALP to investigate a basic income is gathering momentum in the Labor Party branches. The next NSW and National Conferences will see a strong push for the ALP to investigate a basic income.
Douglas Maclaine-Cross, a Sydney-based software engineer who will be attending the meeting, remarks:
I’m just looking forward to the meeting, and getting an idea for how much support there is for it. Finding out if there are any concerns from people I’m not yet aware of. The prospect of finally having a way of solving out-of-control inequality, that people can rally behind has given me hope.
There are some additional signs that interest in UBI is increasing throughout Australia. In June, for instance, a Productivity Commission of the Australian Government released a research paper on “digital disruption” in which UBI was brought up as a potential solution to economic disruption caused by technological change. The Australian Pirate Party has endorsed a basic income (in the form of a negative income tax), also in June of this year, and one of the newest books in Palgrave Macmillan’s Exploring the Basic Income Guarantee series contains essays concerning the implementation of a UBI in Australia.
For more information about the event on September 9, see the website of the Australian Fabians.
Photo CC BY-NC 2.0 Emmett Anderson
This basic income news made possible in part by Kate’s patrons on Patreon
