by Karl Widerquist | May 22, 2016 | Research
This article, originally published in 2007, has been re-released on the author’s website because of the increasing likelihood that basic income implementation trials are on their way.
Abstract: A basic income (BI) experiment (or a pilot project or an implementation trial) is worth doing if it focuses on the right question. Some of the problems with the U.S. negative income tax (NIT) experiments of the 1970s stemmed from a focus on the wrong question—focusing on the side effects rather the effects of the policy in question. A European BI experiment should focus on the question of policy effectiveness. The question of policy effectiveness should be formulated follows: What policy (basic income, the current system, or any other alternatives to be tested) produces the greatest increase in welfare for the poor (or the greatest decrease in poverty) per Euro of cost (both in terms of tax cost and efficiency loss)? Effectiveness is not the only important concern, but it is perhaps the most important question that an implementation trail can enlighten.
by Guest Contributor | May 4, 2016 | News
Article originally written in French by Basile Durand (MFRB), translated by Henri Geist (MFRB).
Answering the meteoric surge of interest provoked by the Finnish proposition to experiment with the basic income, the MFRB organized a conference on March third regarding UBI pilot programs and the Finnish Embassy in Paris. This conference was aimed at promoting understanding of the Finnish proposals and its motivations as well as opening the debate about the possibility of starting UBI experiments in France as well.
The conference was organized around four speakers and centered around the basic income and its experiments. The speakers included Olli Kangas, director of the research department of KELA (Finnish Institute of Social Welfare); Martine Alcorta, Aquitaine Limousin Poitou-Charentes regional councilor delegated to social and societal innovation, who aims to test a basic income in her region; Arnauld de l’Épine from Ars Industrialis, an international association for an industrial policy of the spirit technologies (founded by Bernard Stiegler) who said he is in favor of a contributory income; and Jean-Eric Hyafil, co-founder of the MFRB (French Movement for a Basic Income).
This article summarizes the discussions and includes some tweets exchanged during the conference with the hashtag #rdbfinlande.
Finnish experiments will start in 2017
Finland is currently in the process of establishing definitions and studying the feasibility of a basic income experiment. To cope with the complexity of social protection and the risk of poverty traps, a debate on the establishment of a universal income has taken shape in recent years. An intermediate report showing four types of experiments is due to be published in the coming days. Then Finland will choose one of the four experimentation options, which will be presented in the final report this November. The goal is to start the pilots at the beginning of 2017, which will run for a period of two years.
The first proposal offers a basic income distributed to everyone without conditions. The second proposal is a form of unconditional RSA, replacing the current social minima benefit. The third option is creating a basic income through a negative income tax. And the fourth option is left open for now. The questions of the amount of the basic income, the number of participants in the study and the unconditional nature of the benefit are also still under debate. On top of that, there are some additional concerns that must be sorted out, including fear of constitutional litigation or residency requirements. The introduction of the basic income requires a total overhaul of the welfare system, and this generates tension with some groups in society, particularly labor unions, which are major actors in the current system.
In France, a change of paradigm is necessary
Quoting Amartya Sen, who wished that everyone improved their own abilities without being constrained to find a job, Arnauld de l’Epine insisted on the importance of the freedom of choice, referring to the Declaration of Philadelphia or the Community Charter of Fundamental Social Rights of Workers which states that “Every individual shall be free to choose and engage in an occupation according to the regulations governing each occupation.” Building on the report of the French National Council of Digital, introduced in January, which proposed to experiment and study the project of basic income in France, Arnauld de l’Epine then supported the idea of establishing a guaranteed income to deal with automation and the rise of unemployment. The association Ars Industrialis is collaborating with Plaine Commune (agglomerations community of Seine-Saint-Denis) to test a supplemental income targeting young people.
Jean-Éric Hyafil recalled the cross-party nature of the MFRB. In its charter, the MFRB promotes an unconditional basic income without impairing the situation of the helpless or jeopardizing unemployment allowances, retirees or health insurance. Thus, one of the MFRB’s proposals would be to implement a national basic income gradually. The first step could be to implement an allowance like the RSA (French Solidarity Labor Income) for children, then by automation, individualization and finally the universalization of the RSA.
All speakers agreed on the need to experiment with a basic income prior to fully implementing such a policy, mirroring the process in Finland and Netherlands. In France, the experimentation project in Aquitaine is still in its embryonic state. But the agreement signed between EELV (French Ecologists) and the PS (French Socialists) during the last regional elections included the basic income experimentation project. Martine Alcorta stated she needed to study the subject in order to propose an experimentation model. The settings are thus not yet set. Quoting Amartya Sen. “Wealth is the ability to choose your life”, Martine Alcorta showed us her willingness to complete this experimental project.
France could therefore use the Finnish proposal to build its own experimentation, adapting it to the French context. By raising the subject, submitting ideas and reporting the various proposals, this conference gave us the opportunity to highlight the growing debate about the basic income. The MFRB stays at the disposal of all communities that desire to think about this important Twenty First Century idea.
Watch the video of the conference online (with English subtitles): https://youtu.be/mp5h9klZ0gI
by Tyler Prochazka | Apr 27, 2016 | News
In the last two years an “avalanche” of support has descended upon the basic income, according to a recent article by Five Thirty Eight. The article cites either planned experiments or growing support for the idea in Finland, the Netherlands, Canada, France and even the United States.
Basic Income Earth Network’s own Guy Standing is quoted as calling the basic income an “essential” policy, especially in a world of “chronic economic insecurity,” which has propelled “extreme” politicians in both Europe and the United States.
One essential point is that the effects of the basic income are not yet fully understood. However, the Give Directly organization plans to change that with a test of the basic income in Kenya, providing 6,000 individuals with a guaranteed income for up to 15 years.
Over the years, the basic income won support from across the political spectrum, even winning Richard Nixon’s endorsement in the 60s. Currently, the United States is left with a complicated bureaucratic system of dolling out social assistance, creating welfare traps as people fear losing part of their benefits with an increase in income.
A basic income has even won over libertarians at the prospect of increased efficiency and ending the paternalism of the current system.
Negative income tax experiments in the U.S. found that there were only modest negative effects on work hours, and people used that time to go to school, for example. In Canada, data from a minimum income study in the 1970s showed those that received the minimum income were healthier both physically and mentally. Boys were more likely to go to school and young girls were less likely to give birth prior to age 25. There was also no substantial effect on working hours.
Andrew Flowers. “What would happen if we just gave people money?”. Five Thirty Eight.
by Kate McFarland | Apr 5, 2016 | News
Kela, the Social Insurance Institution of Finland, released its preliminary report on a universal basic income on March 30th.
The report details several models of a basic income — including a full unconditional basic income, which would replace existing benefits, a partial basic income, and a negative income tax, among others.
After examining these options, the working group recommends that Finland adopt a partial basic income model for its impending experiments. According to the report, this model would “consolidate many of the existing benefits offering basic economic security, while earnings-related benefits would remain largely unaffected.” The group further recommends that a combination of national and regional samples be used in the trials.
The complete report, in Finnish, is accessible from Kela’s website. A summary is available below:
Suitability of different basic income models for the experiment
The preliminary report looks at a full-fledged unconditional basic income model, a partial basic income model, a negative income tax model as well as possible other models in terms of their suitability for the experiment. An unconditional basic income would take the place of much of the currently existing system of social provision, where eligibility for benefits is tied to specific contingencies. The basic income would therefore have to be substantial, which would make the model quite expensive. A partial basic income model would consolidate many of the existing benefits offering basic economic security, while earnings-related benefits would remain largely unaffected. To study incentive effects, simulations on a partial basic income model are run at a range of different replacement rates and levels of housing costs.
Both nationwide and regional samples
The working group proposes that a two-pronged sampling approach should be used in the actual experiment, consisting of a randomised nationwide sample and a regional, and more intensive, sample to study externalities. A weighted sample can be produced of population groups that are particularly relevant to the experiment. There are a number of constitutional and other legal problems associated with the design of the experiment, which the report examines extensively.
According to the report, a universal basic income would eliminate some bureaucratic roadblocks and gaps in coverage, but would not by itself solve all problems related to disincentives. The elimination of disincentives requires reforms in several different areas of social and tax policy. One problematic group in terms of social policy consists of single parents, particularly those paying a high rent and living in the greater Helsinki area. It is difficult to eliminate the disincentives they face without a wholesale readjustment of the social security system. Lowering the minimum level of welfare provision would be an easy way to produce better incentive outcomes. However, doing so would increase poverty and create more financial hardship.
Partial basic income as starting point
The report points out that trying out a negative income tax would require access to a comprehensive registry of incomes. Studies in the United States show that experiments with self-reported data do not produce reliable results. A basic income model strongly based on conditional reciprocity runs into problems of supervision and control, i.e., how to define the level of participation required by reciprocity and who will supervise and document that the requirements are met. Such an experiment would necessarily be of limited scope.
The working group believes that consolidation of the current system of basic economic security into a partial basic income would produce valuable results. Since a universal basic income and a negative income tax are, from the individual’s perspective, functionally equivalent, trying out a partial basic income would generate useful information also about the negative income tax. Such an experiment could be implemented without a registry of incomes by leveraging the existing welfare payments system operated by the Social Insurance Institution. Since it would also be possible to use the welfare benefits provided by the Social Insurance Institution as a basis for the experiment, the sample size could be increased substantially, which would make the results more reliable and make it possible to focus on specific population groups.
The Finnish government will now decide, based on the report, how to design the experiments, and what new legislation will necessary. Kela’s working group will release its final report on basic income on November 15th.
Finland announced its plans to test a basic income last November, to resounding international publicity. For more information, see the following Basic Income News reports:
Stanislas Jourdan, “FINLAND: Government Forms Research Team to Design Basic Income Pilots,” 15 October 2015.
Vito Laterza, “FINLAND: Basic income experiment – what we know,” 9 December 2015.
Tyler Prochazka, “Dylan Matthews, ‘Finland’s hugely exciting experiment in basic income, explained,” 13 December 2015.
Thanks, as always, to my supporters on Patreon.
by Andre Coelho | Apr 1, 2016 | News
Andrew Little at WelTec. Credit to: Stuff.co.nz.
Following the lead of countries like Finland, Netherlands and Canada, New Zealand is now making its first steps towards a basic income. In a recent Stuff news article, Andrew Little, leader of the Labour Party, the second largest party in the New Zealand’s parliament, says Labour is considering a basic income. This interest is mainly motivated by the rise in structural unemployment, which guarantees profound changes in how New Zealanders work. Automation and precariousness of employment, self-employment and new business models are all affecting the way people work, and these structural changes occupy a central place in present day Labour Party concerns.
Indeed, the Party made these concerns – as well as the possibility of a basic income to address them – central to its Labour’s Future of Work Conference, which took place earlier this week, on the 23rd and 24th of March. The Future of Work Commission has released two background papers on universal basic income, one of which can be found here. This paper, by researchers Max Harries and Sebastiaan Bierema, analyses basic income in general and in the New Zealand context, also mentioning that a pilot programme could be an important first step into a future fully-fledged basic income implementation.
What Labour Party leaders in New Zealand will do, it’s hard to say. However, Keith Rankin, a New Zealander author who has written about basic income, highlights some possibilities in a recent article. These possibilities are similar to other basic income tax reform ideas presented, based on income tax redistribution. Keith proposes taxing income from both labour (work wages) and land (property) at a rate between 33 and 37%, and redistributing that money to all adult residents.
More information at:
Blake Caryton-Brown, “Labour leader Andrew Little promises debate on universal basic income”, Stuff.co.nz Politics, March 14th 2016
Chris Weller, “New Zealand is debating a plan to give people unconditional free money”, Tech Insider, March 14th 2016
Keith Rankin, “Universal Basic Income and income tax reform”, Briefing Papers, March 22nd 2016
André Coelho, “Miguel Horta: “Negative Income Tax in Portugal [Negative Income Tax em Portugal]””, Basic Income News, June 3rd 2015
New Zealand Labour Party, “The Future of Work” website.
Max Harris and Sebastiaan Bierema, 2016, “A Universal Basic Income for New Zealand”, Proceedings of the Conference The Future of Work, New Zealand
