by Daniele Fabbri | Mar 26, 2019 | News
Picture credit to: Ståle Grut / NRKbeta
Alexandria Ocasio-Cortez (AOC), during a talk at SXSW, was addressed by a tech entrepreneur with a question about automation (how should we act as a society and how will we be able to find a purpose in life as jobs are appropriate by machines).
AOC’s answer placed automation in the broader context of socio-economic inequality: automation is not the problem, and we shouldn’t be haunted by its specter, but rather be excited about it. The problem, AOC states, is that “(…) we live in a society where if you don’t have a job you are left to die (…)”.
The risk is in the reinforcement of the trends that are already occurring with the “automation of injustice”. Automation accelerates economic inequality, she says, and we should be concerned about fixing the current socio-economic system: we are at the most prosperous time in our history, but many are left behind, thus it is imperative for us to figure out new ways to administrate wealth.
While AOC did not address Universal Basic Income (UBI) directly, her view on the matter seems compatible with those seeing it as the necessary answer to the fourth industrial revolution.
Whether the solution is “taxing robots” as proposed by Bill Gates (which AOC considers a clever, acceptable way to suggest taxing corporations), higher tax rates on top income brackets, or some form of wealth redistribution, we need to entertain ideas that would leave us with the possibility to siphon off the benefits brought by automation. It could give us the potential to focus more on studying, inventing and creating art: “Not all creativity should be bound by wage,” she says.
By entering a time in which scarcity is no longer the only reality known to man, and with capitalism being based on scarcity, “our technological advancement as a society has outpaced our system for handling finite resources”, AOC states.
If the system was not broken, people could already be working less, and focus on activities which are currently not considered work, but that would nonetheless benefit individuals and society. But money is appropriated by corporate greed:
“We’re paid on how little we’re desperate enough to accept. And then the rest is skimmed off and given to a billionaire.”
More information at:
Alexandria Ocasio-Cortez | SXSW 2019, YouTube
Adi Robertson, Alexandria Ocasio-Cortez says ‘we should be excited about automation’, The Verge, March 10th 2019.
by Guest Contributor | Mar 13, 2019 | Opinion
Written by: Felix FitzRoy & Jim Jin
School of Economics and Finance
University of St. Andrews
As interest in UBI has exploded in recent years for many positive reasons, including the United Kingdom’s disastrous new “universal credit” policy, three major issues remain that are almost universally neglected. First, a modest ‘affordable’ UBI could not raise non-working individuals or households above poverty, even in addition to existing, means-tested benefits. Second, UBI alone would effectively subsidise low-wage and low-quality jobs, reducing pressure for improvement. Third, meaningful work is essential to well-being for most people, but unattainable for two million discouraged workers who want to work but have given up looking for work, as well as the officially unemployed (and those with inadequate jobs) – a major cause of unhappiness.
As we argue in Prospect, a public sector job offer (JO) at minimum wage, combined with a UBI of £3,000 to £4,000 per year could raise all households above poverty when combined with improved disability and housing benefits. Urgent and growing needs for care of an aging population and improvement of deteriorating infrastructure would ensure meaningful employment for all who took up JOs, with appropriate training when needed.
Such a modest UBI as proposed by Stewart Lansley and Howard Reed for Compass, and many others in the UK, could be partially funded by abolishing the regressive personal tax allowance. It would replace some means-tested welfare measures, though disability and housing benefits should remain and need augmenting. The additional cost of JOs is modest, only about £28 billion, which is around 11 percent of total welfare spending for 2 million full-time JO workers, less than total cuts in welfare spending under austerity measures since 2012. As a result of these cuts, child poverty has risen to 30 percent, and the UK holds the worst record in Western Europe. Child poverty has severe negative consequences for the entire life course of those affected.
By providing good working conditions and career advancement, our JO would set standards for minimum wage employment which could not be undermined by common current practices such as demanding unpaid overtime, since those affected could always credibly threaten to quit. Such a general improvement of working conditions would not greatly disrupt existing labour markets, in contrast to the high–wage job guarantee discussed in the US by prominent Democrats, promising to double the minimum wage. This would likely generate excessive uptake in public employment, causing substantial inflation, followed by restrictive government policies. Such a policy would not compensate for the unpaid work done mainly by women in the home as caretakers for children and the elderly.
JOs for all who want to work would be part of the framework of a Green New Deal (GND), now proposed by figures in America’s Democratic party, such as Alexandra Octavio-Cortez. This would involve greatly increased investment in the urgently needed transition to a carbon-free economy by 2050, which is essential to avoid catastrophic climate change. Such a GND could generate full employment similar to the mobilization in World War II but would require higher taxes on the rich for long-run funding. Though such tax increases would face strong political opposition, this would in turn help to reduce extreme inequality and all its negative effects.
About the authors:
FF – Emeritus Professor of Economics, and Research Fellow, IZA – Institute of Labor Economics, Bonn;
JJ – Reader in Economics, both in the School of Economics and Finance, University of St. Andrews
by Daniele Fabbri | Mar 11, 2019 | Research
Credit Picture: CC(Billy Wilson)
The International Labour Organization published a paper investigating Universal Basic Income (UBI) proposals in light of ILO standards.
With the ILO Social Protection Floors Recommendation (No. 202) providing relevant guidelines for the discussion on the adoption on UBI, namely:
“(i) adequacy and predictability of Universal Basic Income (UBI) benefits to ensure income security, set at least at the national poverty line; (ii) social inclusion, including of persons in the informal economy; (iii) social dialogue and consultation with stakeholders; (iv) enactment of national laws regulating UBI entitlements, including indexation of benefits; (v) coherence with other social, economic and employment policies, and (vi) sustainable and equitable financing”,
the paper shows how some models of UBI can be in accordance with ILO standards, while others cannot.
The paper consists of five parts:
1) Universal Basic Income: A tool for social justice or a strategy to dismantle social security?
In the complex and variegated scenario of UBI proposals, the paper identifies two main currents, one which sees UBI as a tool for social justice which would grant social security to all, and the other, neo-liberal or right libertarian in its concoction, which seeks to substitute the welfare state with a minimalistic safety net.
The first is designed to reduce poverty and inequality, promoting individual rights and freedom, giving people the opportunity to engage in forms of work not recognized by the market (domestic work, volunteering). It would also reduce the administrative costs of existing social protection systems, and increase workers’ bargaining power providing an exit option. The second is a way to reduce the complexity of the modern welfare state and the degree of involvement it requires from governments. For UBI to be an instrument of social justice, the first current is the one to follow.
UBI impact on poverty and inequality, on growth, on work and employment, and on gender inequality varies depending on how the policy is designed, what its source of financing is, and on which level it set at. It is thus complex to generalize its effects, and even for specific contexts in which experiments have been done it would be an error to imply that local effects would be the same once replicated on a larger scale.
The positive effect attributed to UBI is that of tackling the issues of increased social and economic insecurity, growing inequalities and the existing gaps in social protection coverage. The growing debate surrounding it “reaffirms the necessity and importance to provide every member of the society with at least a minimum level of income security which is essential to the realisation of human dignity”, principles that are at the hearth of the ILO Constitution and the Recommendation No. 202. UBI would thus represent the income component of the recommended social protection floor.
Social protection floors should guarantee “effective access to essential health care and basic income security throughout the life course, to allow life in dignity.” This means that UBI can’t represent the entirety of social protection floor, as a nonmonetary component would nonetheless be required, and that UBI would need to be integrated in the institutional settings of the state.
2) Benefit levels, adequacy and coverage
For UBI to be a solution to inequality and poverty it needs to be set at a level sufficient to meet at least people basic needs, and needs to be financed in a sustainable and equitable way. With Recommendation No. 202 requiring social protection floors to be set at “a sufficiently high level to enable individuals to live in dignity and to ensure effective access to essential goods and services” a possible benchmark is represented by national poverty lines.
UBI proposals vary greatly in the suggested benefit levels, but given that in most of them it would supplant social assistance benefits, following the guidelines set by the aforementioned recommendation, the level should be enough to allow access to a set of necessary goods and services. Proposals built taking this into account are promising, whilst those with benefits level set below the poverty line are not able to fulfill the promises of poverty and inequality reduction.
The amount provided via UBI cannot be uniform through the populations, as it wouldn’t be able to account for those in special need, and if the amount was to be uniform UBI would be required to coexist with other forms of social security benefits safeguarding those with specific needs. UBI would thus need to be integrated in the existing systems, in order not to leave individuals worse off, the paper states.
The paper also recommends that, in order to ensure adequacy over time, attention should be given to adjustments to changes in purchasing power and overall standards of living, as to ensure the adequacy of benefits over time. For UBI to maintain its effects over time, it would need to be indexed to inflation and wages.
UBI, a cash benefit, would nonetheless need to be complemented by effective access to services (e.g.: health, education). If UBI was to be financed via the reallocation of the budget dedicated to such services, it would have detrimental effects.
Even with universalism being often presented as one of the key features of UBI, some proposals restrict its coverage in two ways: 1) depending on the age of the recipient (children wouldn’t receive benefits in some instances, whilst older persons would be subject to different rules); 2) depending on the requisite of nationality, or that of residency after a minimum duration, in order to prevent migration.
With ILO standards requiring states to provide “all members of society with adequate social protection” and with the principle of universality of protection being “at the core of the social protection floor concept, stipulating that everyone should enjoy at least a basic level of social security throughout their life course”, a UBI restricted to only nationals, or not granting sufficient benefits to meet children’s needs, would be insufficient to provide the required protection.
3) Costs, Affordability and Financing
The paper presents two scenarios for the cost estimates of UBI:
- A basic income transfer at 100 per cent of the national poverty line for all adults and children;
- A basic income transfer at 100 per cent of the national poverty line for adults and 50 per cent to children up to 15 years old.
Under scenario I. the global average cost as a percentage of GDP would be around 39.4%, with a cost of 79.1% of GDP for low income countries, 28% for lower middle-income countries, 22.8% for upper middle-income countries and 29.9% for high income countries.
Under Scenario II. the global average cost as a percentage of GDP would be 32.7%, with a cost of 62.3%of GDP for low income countries, 23.1% for lower middle-income countries, 19.8% for upper middle-income countries and 27.4% for high income countries.
One possible benchmark for adequacy of the benefit level supported by Recommendation No.202 is that of national poverty lines, but many UBI proposal are far below them. Even so, an UBI set at 25% of equivalent disposable income is nonetheless deemed unfeasible under the existing fiscal context. In order to provide benefit levels capable of reducing poverty and inequality, new financing sources need to be explored, among them the paper briefly explores:
- The reallocation of public expenditures
- Increasing tax revenues
- Lobbying for aid and transfers
- Eliminating illicit financial flows
- Using fiscal and central bank foreign exchange reserves
- Restructuring existing debt
A mix of the aforementioned would be needed, with an increase in tax revenues being central in order to assure progressivity to the policy. For low income countries, lobbying for aid and transfers may be a feasible method, as the estimate cost for the introduction of an UBI is just 0.68% of the global GDP, 3% of what has been spent by the G20 to rescue the financial sector in 2009.
Regressive proposals are not in line with ILO standards as they would further inequalities. Budget neutral proposals, which rely on cutting existing social benefits in order to provide a modest UBI coupled with social insurance, result in a social net loss which would exacerbate income and gender inequalities.
4) Who would benefit from UBI? Different implementation scenarios
The paper investigates three different scenarios for the implementation of an UBI, in order to find out which one could be beneficial to society to investigate winners and losers.
Only under scenario 1, which assumes the introduction of a UBI set at the level of the poverty line, the majority of the population is found to be net winner, thus reducing inequality.
Under scenario 2 a UBI is introduced in exchange for cuts in employers’ contributions to social security systems. This setting would reduce the capacity for social insurance to redistribute wealth across society. With net losers being among the lower and middle classes, and the net winners being corporations, this scenario is not in line with ILO standards.
Under scenario 3 UBI is introduced in exchange for the complete abolition of public social insurance:
“In this scenario virtually everybody is a net loser; the poorest will not receive anymore social assistance at the poverty line level; the low and middle classes, before covered by a better social protection system, now they will lose their accumulated social protection benefits. Eliminating public social insurance systems by a modest UBI, and promoting individual savings and private provision for those who can afford it, would reduce the potential for both vertical and horizontal redistribution, thereby exacerbating income inequality.”
5) Conclusion: Universal Basic Income in light of ILO standards
While UBI cannot be considered as a solution to all the problems of society, it can potentially act as a useful tool for closing coverage gaps and provide basic income security.
The benefit level should be set at a level sufficient to provide income security to everybody, particularly to those without other sources of income. The benefit should avoid discrimination towards those in special needs.
UBI by itself wouldn’t be enough to provide access to basic services, and it should be coupled with policies granting universal education, health care and social services. At the same time, contributory mechanism will have to remain in place, with public social insurance continuing to provide a level of social protection.
Progressive means of financing are essential in guaranteeing equity, sustainability and that UBI satisfies ILO standards. UBI implementation will need to follow a progressive realization, by setting standards and time frames: this calls for the creation of an ad hoc legal framework and effective governance and administration.
Moreover, “systematically assessing implications for the broader policy context is essential for a UBI to positively contribute to social justice and inclusive development”. UBI cannot be a stand-alone policy, but needs to work in concert with labour market institutions, and the potential interactions that could arise call for further studies.
“The momentum gathering behind the idea of a UBI can help to spur a discussion on how to respond to existing economic and social changes in a more effective and empowering way based on social solidarity and while ensuring social justice outcomes for all.”
Final remarks
The paper is clear in defining Basic Income and in discussing its potential advantages, clarifying that different UBI designs would bring very different end results.
The paper also provides a comprehensive list of experiments, proposals, and pilots, and does a service by calculating the proportions of national poverty lines that their Basic Incomes represent. This is done calculating the gross cost of UBI, which however says little about its net costs.
Much attention is devoted to proposals that eliminate current benefits, a practice that, as the authors of the paper themselves suggest, is not in line with ILO standards.
Rather than investigating a particular mean of financing and its potential effects, the paper follows a more general approach, and highlights that further studies are needed in order the understand the practical implications of UBI, nonetheless being clear about its potential to be a powerful instrument for the enhancement of social security and the reduction of poverty and inequality.
More information at:
Isabel Ortiz, Christina Behrendt, Andrés Acuña-Ulate, and Quynh Anh Nguyen, “Universal Basic Income proposals in light of ILO standards: Key issues and global costing“, Social Protection Department, International Labour Organization, Geneva, 2018
Citizens Basic Income Trust, “ILO paper on Citizen’s Basic Income and ILO social protection floors” 7th December 2018
by Andre Coelho | Mar 9, 2019 | News
Rutger Bregman at Davos (2019). Picture credit to: World Economic Forum
Rutger Bregman has been hitting the numbers the past few weeks. After a controversial participation at Davos, at the end of January, he went on for a controversial interview on Fox News that never got aired – but got “aired” on Twitter, and watched by more than eleven thousand people, and retwitted over sixty thousand times – and is, most probably, getting the spotlight out of a simple fact: he’s saying out loud what most people are thinking.
At Davos, on a shared panel, Bregman decided to touch the open wound, a particularly sensitive issue for all the millionaires and billionaires that fly over to this global elite event once every year: taxes. According to him, no private philanthropy can solve the real issue of tax avoidance, and that high taxes on the wealthy are an urgency in these troubled days (as well as terminating with tax havens). And he is not alone on this quest: most Americans support this general trend in tax policy – higher marginal tax rates, wealth taxes, inherence taxes and so on – and, if that’s the situation in the USA, then most possibly in the rest of the world that tendency is also real.
As an example, also cited by Bregman, Alexandria Ocasio-Cortez has been pushing for taxes on the wealthy as high as 70%. He adds that this is no coincidence, but a part of what he sees as an uprising on a “new generation waking up”. He believes this generation, in which he includes himself (a young 30 years-old Dutch historian), simply doesn’t believe anymore that inequality is some kind of fatality, and that (ordinary) people just have to deal with it. Bregman also voiced at Davos’s shared panel what he called “a moral equivalent of a war”, particularly when in reference to inequality (and also on environmental protection). Although imbued of a strong potency, it remains to be seen if warfare – real or a moral equivalent of it – has actually brought anything else to the world than heartbreak, death and destruction.
On Fox News, Bregman was interviewed by Tucker Carlson, a prominent Fox News anchor who, somehow, felt the need to affront him with harsh words. Apparently, the reason for that was Bregman’s boldness in saying that (about Carlson) “You are a millionaire, funded by billionaires, that’s what you are (…) and that’s why you’re not talking about certain things”. One of those things being, in particular, tax avoidance. Naturally, this word exchange didn’t come to any meaningful conclusion, but it may just be that Bregman went over to Fox News to speak for millions of people, who already suspect the collusion between big money and big media.
An edited eight-minute segment of the famous never aired interview can be watched over the link below (from Now This).
More information at:
Patrick King, “He took down the elite at Davos. Then he came for Fox News”, The New York Times, March 1st 2019
André Coelho, “United States: Alexandria Ocasio-Cortez: uncompromising, intelligent and courageously, she is driving progressive values in the US like we haven’t seen in a long time”, Basic Income News, January 23rd 2019
by Tyler Prochazka | Mar 7, 2019 | News
The third annual UBI Taiwan international summit will be held in Taipei on March 16, 2019. This year’s theme is “Key Trends of the Next Generation,” focusing on technological development as well as growing income inequality and how these trends intersect with basic income.
Asia has progressed rapidly in the global basic income movement, led by India which has shown intense political interest in implementing policies containing aspects of basic income.
Sarath Davala, Basic Income Earth Network’s Vice Chair, will join the conference to discuss these developments and more in his keynote speech “Basic Income is the Foundation of A Caring Society.”
“This is the third consecutive year that UBI Taiwan is organizing a regional Basic Income Conference. UBI Taiwan is perhaps the only national level basic income group that organizes annual conferences. That is a demonstration of a robust movement, the strength of its leadership and their commitment to the idea of basic income,” Davala said.
Ryan Engen, an Economic Officer at the American Institute in Taiwan, America’s unofficial representative entity in Taiwan, will deliver the opening remarks discussing how digital transformations should make global economies consider updates to our social security systems.
Guy Standing, the co-founder of BIEN, Andrew Yang, the U.S. Democratic presidential candidate, and Peter Knight, the former World Bank economist, will join via pre-recorded messages.
This year, there will be a focus on bringing in academics and opinion makers from across Taiwan. Professors from Taiwan’s premier universities, National Taiwan University and National Chengchi University, as well as influential Taiwanese media figures, will address the conference.
The Critical Language Scholarship’s (CLS) Alumni Development Fund (ADF) provided a grant to help fund the conference and related events. CLS is a language program under the U.S. State Department.
James Davis, the former Field Research Director for UBI Taiwan and one of the project recipients for the ADF grant, said the conference demonstrates UBI Taiwan’s commitment to pushing this discussion in Asia and around the world.
“UBI Taiwan is here to change everything. We are not content with a society where wealth is concentrated in the hands of a few, as the wages of the working class fall year after year,” Davis said.
Davala has participated in every conference since it began in 2017.
“I am proud to be a regular participant of these conferences. I wish UBI Taiwan team success for this conference. With their kind of energy and dedication to basic income, I am sure one-day UBI will be a reality in Taiwan,” Davala said.
Brian Anderson, a senior at Western Kentucky University and also a recipient of the ADF grant, said this conference will help create academic connections between Taiwan and the United States.
“The push for UBI deserves international support and my project seeks to promote mutual understanding of shared interests between Taiwanese and American citizens,” Anderson said.
For Davis, society’s “inadequate” support for parents and caregivers as well as the financial difficulties faced by students illustrate the reasons why Taiwan should consider a basic income.
“UBI is the future. And UBI Taiwan is here to deliver,” Davis said.
The full conference information can be found on the UBI Taiwan website and on the Facebook event (Chinese).
