Minneapolis, MN, US: Workshop on basic income and care-work at Democracy Convention

Minneapolis, MN, US: Workshop on basic income and care-work at Democracy Convention

The third Democracy Convention, a project of the nonprofit Liberty Tree Foundation, will be held August 2-6 in Minneapolis, Minnesota.

This year, the convention will include a workshop on basic income and the caring economy.

The workshop, which will be held on the second day of the convention, “seeks to explore how a re-valuing of care-work can solidify the vision of a new economic and societal system, where caring for self, each other, and the planet is the primary focus.” The organizers of the workshop state that a basic income “has much potential as an element of a post-patriarchal economic system that values contributions to society by everyone.”

Speakers at the 75-minute workshop include Liane Gale (Basic Income Guarantee Minnesota, Basic Income Women Action Group), Ann Manning (Women’s Congress for Future Generations), and Kim McKeage (Professor at Hamline University).

The Democracy Convention comprises eight distinct conferences, encompassing topics from racial justice to voting rights to the free press. The Caring Economy & Basic Income workshop takes place as part of the Community & Economic Democracy Conference, which explores solutions to inequality, poverty, precarity, and other economic ills facing Americans today.  


Photo: “Caring” CC BY-NC-ND International Labour Organization

SPAIN: New book published: “Renta Básica contra la incertidumbre”

SPAIN: New book published: “Renta Básica contra la incertidumbre”

The Spanish publisher RBA has just released a new book by Daniel Raventós, Renta básica contra la incertidumbre (Basic Income against Uncertainty), in its “los retos de la economía” (Economic Challenges) collection. The book updates the most important developments in basic income and discusses recent writings. The collection, in which the book is included, is not academic, but one which presents the basic elements of today’s concerns (inequality, the welfare state, and so on) to non-specialist readers, in such a way as to serve as a basis for further study.

Raventós’ book not only discusses the theoretical issues of basic income, but also gives an account of the social and political situation which has led to this proposal becoming widely known and regularly debated in social movements, the media, political parties and trade unions. Just a few years ago, this was unimaginable. Some people were complacently asserting that basic income could never be openly recommended because it would “shock” or “repel” the population, or at least a good part of it. It would have to be introduced, if at all, through the back door.

Well, we have lived to see the day! Here we offer an extract from the introduction of Renta básica contra la incertidumbre, which will soon appear in an Italian edition. The book has six chapters in which Raventós discusses the normative aspects from the standpoint of political philosophy (with particular reference to property and freedom); how basic income has been received in social movements like feminism and environmentalism, as well as in trade unions; how to finance it; experiments with basic income in various parts of the world; the role of basic income in an increasingly unequal world, in which mechanisation is advancing at a dizzying pace; and the paradox of support from both the right and left.

“Basic income will be paid out to people simply because they exist as citizens or accredited residents, independently of gender, ethnic group, income, sexual orientation, religious affiliation or lack thereof. Hence, like universal democratic suffrage, basic income is a proposal with the formal characteristics of laicism, unconditionality and universality.

Basic income has to confront considerable intellectual, social, philosophical, economic and political resistance, often in the form of questions. Is basic income a just proposal? Do people who disdain a salaried job have the right to an unconditional cash transfer? Will it abolish poverty? Aren’t the usual welfare state conditional cash transfers a better way to combat poverty? Will people get or stay in jobs if they have a basic income? Wouldn’t it be better to aim for full employment? Would workers have better bargaining power if they received a basic income? How would basic income affect migratory flows of impoverished people from poor countries to rich countries? Would everyone, both rich and poor, gain with a basic income? Would or wouldn’t women benefit from a basic income? Given the threat of robotisation in many areas of work, does basic income have something to offer?

Since inequality between a tiny minority of extremely rich people and the rest of the population is constantly increasing—as Joseph Stiglitz, Nobel-Prize-winning economist and others have pointed out and studied—would basic income be a good idea? If basic income has supporters on both the right and left, are they advocating the same thing?

Then there is the most frequently repeated objection, also in the form of a question. Can basic income be financed? In fact, it would be more precise to say that it was “most frequently repeated until recently”. Although there are not many studies which demonstrate in detail and with technical competence how basic income can be financed, those that have been published are compelling. Whatever they might have in common, each region and each country is different in economic terms, but financing a basic income would have to take the form of changes in budgetary priorities and reforming tax systems. For example, there are proposals advocating the introduction of special mechanisms for taxing financial transactions.

These reforms would bring about a substantial reduction in inequality of income distribution and allow for simpler, more coherent tax and welfare benefits systems. Basic income is not a panacea or a quick-fix for all the world’s social and economic problems but, in view of many who study and espouse it, this measure would mean that people would be better equipped to participate in productive activities, social inclusion would improve, communities would be stronger, political and social participation would be revitalised, and there would be a significant reduction of poverty and all the problems that go with it.

Basic income is not a political economy, per se, but would be part of one, as well as a general project aiming to guarantee and underpin the material existence of the whole population. It might also be seen as a kind of indemnity for past and present wrongs since it requires more privileged citizens to contribute towards achieving the right of existence for everyone. And herein lies one of the main political obstacles for basic income.

This is also the point which makes it possible to explain the apparent paradox of left and right support for basic income. The book notes that the difference depends on financing. The left focuses on additional taxes on the rich, while the right wants to trim down existing welfare to pay for basic income.

“In other words, the left-wing position does not entail any cuts to existing social services or social rights, in education, health, support for dependents, housing, etc., all of which are essential in any welfare state worthy of the name.”

Poverty-traps and pay-gaps: why (single) mothers need basic income

Poverty-traps and pay-gaps: why (single) mothers need basic income

Written by: Dr Petra Bueskens

Harper discovered she wasn’t alone when she packed up her house, stopped paying rent and took her four-year-old son, Finn, on a six month “holiday” up north to warmer climes.

“I found in every camp site, especially the show grounds as they’re the cheapest ones that still have facilities, there were a couple of other single mums and their kids. I was also travelling with a friend and her son, so there were often five or six of us and a bunch of kids at each campsite. Up north there’s even more. Over time we became familiar with each other.”

Harper gave up her home because she couldn’t afford the rent and have any quality of life. Paid work put her in a double bind: if she worked, she lost most of her Centrelink payments; if she didn’t work there wasn’t quite enough to make ends meet. So, she worked and stayed poor. These are the poverty-traps that keep many single mothers working-poor and unable to dig out.

When she stopped paying rent, her landlord was very understanding, Harper said. But at the end of the day, he had a business to run and Harper understood that. He issued her with a notice to pay rent or quit (learn more about that here) and she made the decision to pack up and leave.

In Australia now, there is a clandestine group of mobile single parents, mostly mothers, who have found they cannot, on Centrelink benefits and low-paid casual work, meet the cost of living. They have chosen instead to travel and live with their children in camping grounds and caravan parks around Australia, particularly in Northern NSW and Queensland, where living outdoors is relatively easy. For as little as $10 a night at national parks and showgrounds and up to $25 at caravan parks that have showers, washing machines and other facilities, they live on the move. Harper and Finn travelled between both-a few days roughing it in national parks followed by a return to “civilisation”, taking showers, washing clothes and sharing dinners with friends at caravan parks. Here Finn could play with other children, some of whom were becoming familiar as they met in parks across Victoria and NSW. The vibe at the caravan parks sounds convivial-better than yelling at your kids to get ready for childcare and school, so you can go to a low-paying job and never see them-but also a little Orwellian: this is not a holiday; it’s homelessness with benefits. For some, getting a caravan and living in a caravan park might be a worthy alternative until they can find something else. However, these women are a little worried about whether they would be able to get a caravan of their own. While there are a wealth of tips available for buying a caravan, you can see this buying guide for an example. It is different when you don’t have an income.

Harper announced her “holiday” to friends and family on social media. Here they could follow her adventure in photos and status updates. “I had to call it that; I couldn’t admit to myself it was anything else”. The 6-month, 12-month or indefinite camping “holiday” is a functional, adaptable and resourceful response to the poverty traps single mothers so often find themselves in, and since the “welfare reforms” of the Howard years and Gillard’s removal of the sole parent pension for those with children over eight (ironically on the historic day of her misogyny speech), it is no surprise that this practice is growing. The truth is, some single parents can no longer work within the system; it is simply too hard. So, like other vulnerable mobile populations, they’re outside of it.

Harper told me there is a Facebook group dedicated to this practice but asked I didn’t share the name as it’s currently illegal to have no fixed address-or in other words, be homeless-and in receipt of Centrelink benefits, arguably when you need it most! People who have given up their home for long term camping and travel, often mixed with sleeping in their cars, provide the addresses of family and friends to meet eligibility criteria; in reality, paying rent has become too expensive.

With the turn to surveillance of welfare recipients-take the 2015 case of Tania Sharp whose Facebook status update of her pregnancy was used against her in court as evidence of welfare fraud-we move to a new kind of welfare state: the surveillance state. This is a net, but, far from a safety net catching people who fall, the analogy is closer to a fishing trawl where the recipients-disproportionately poor women and children-are being hunted and caught. The infamous robo-debt scheme also disproportionately catches single mothers in its “net”. There’s no safety in this net; rather there’s punishment, gender specific punishment, for not being “safely” ensconced in patriarchal marriages or well-paid jobs. Most so-called “welfare cheats” are single mothers.

Universal Basic Income (UBI) is a radically different concept-nobody has to apply, prove their worth, pretend they have or do not have a home, justify their sex-life or living arrangements, or fill out 20 page complicated and often contradictory forms. There are no deserving and undeserving poor, no recipients cast as “cheats”. The underlying philosophy is completely different: everyone has a right to a share in the collective wealth; they don’t need to bear a stigma or struggle for recognition, and unpaid care work is socially valued.

With the massive rise in the cost of living, particularly the cost of housing over the last decade, but also energy and telecommunication bills, many can no longer afford to meet their monthly payments or, like Harper, if they can, there is absolutely nothing left over and the stress involved in achieving this end makes daily life a struggle. Harper found she was cutting corners everywhere: meals were less nutritious, she didn’t have time to cultivate social relationships, and her mothering was compromised. When she gave up her house (a share house), sold almost all of her belongings and hit the road, she felt a freedom and control over her life she hadn’t had since Finn was born. Travelling for six months lifted the burden she felt around managing dual roles and her payments were not automatically chewed up on rent and bills. Harper had time with her son-literally all day long-which she cherished and claims healed their relationship.

“It felt like Finn was always between me and what I needed to do [go to work]. I had to rush and he wanted time; I had to put him in childcare and he wanted to be with me; he was always clingy and demanding and had begun acting out; I found him difficult to be around. I could never afford holidays so we never got a break from this stress and pressure. This is why I called it a holiday because it was a break from this cycle of exhaustion and poverty and stress.”

Travelling meant Harper was able to reconnect with her son. He also had playmates in the caravan park with their communal yet contained play areas. Harper had friends to share dinners with. There is now a small but growing population of homeless single parents who live this way; they’re home-schooling their kids or still have pre-schoolers. They’re on the move-but not in any socially sanctioned way. They’re not travelling like young people, or middle-income families or retired baby-boomers. Not quite refugees, but certainly rendered so vulnerable that they are unable to take root and live in society, or at least not permanently. They are on its “flexible” fringes recast as mobile passengers; not quite in and not quite out. While I laud the innovative adaptation to circumstances, which not only gets out of the iron triangle (working to pay the rent and paying the rent to work; paying for the car to drive to work to pay for the car) but solves a number of other problems of modern living: highly regulated schedules, less and less time for children and relationships, leisure based on meaningless consumption. Nonetheless, there is still a remainder: “chosen” homelessness is not an answer, at least not at the structural level, to the problem of (single) mothers’ poverty. It is an idiosyncratic not an institutional solution.

This is one story of poverty and homeless that is emerging on the fringes of our society. I have another …

Naomi rents her beautiful four-bedroom home on Airbnb every weekend for around $800. She has three teenage kids who stay at their friends’ houses or accompany her to her parents’ houses, one and two hours away respectively. On occasion they have driven further afield for a bed. As a wife and mother who took “a long time”1 to complete her studies while caring for her three children, Naomi doesn’t have great employment prospects. Into her mid-40s now and currently going through a divorce, she has very few avenues for earning an income and can no longer rely on her breadwinner spouse. She doesn’t have the track record for professional employment despite now having multiple degrees. She applies for many jobs, has been shortlisted for two and has been given none. The gig economy provides an instant if unstable solution to the immediate problem of income. She doesn’t need an uninterrupted CV, a talent for bullshit and three professional referees to list her home on Airbnb, but neither does Airbnb give her any job security or superannuation. This is why she needs to think about superannuation planning because if she doesn’t think about this now, it may affect her finances in the future. Although she’s a long way off retiring, it still needs to be considered. She’s thinking about Uber too; she has a people mover-good for mums with large families and, as it happens, trips to the airport from her regional home. The gig economy is not and never will be a substitute, but it has certainly stepped in to fill a yawning economic gap. Living in a trendy tourist town and thanks to marriage to a high earning spouse, Naomi owns-at least for now-a beautiful home. She’s no doubt spent money on homely touches like poster artwork to add some personality to the rooms, among other things. She enjoys hosting and also rents rooms during the week. However, after eight hours of laundry, making beds and cleaning to hotel standards, she has to clear out of her own home for the weekend, every weekend. Everyone she and her children stay with has the sense that this is not an independent visit but a need, which puts a strain on relationships.

Naomi’s weekend homelessness is also a novel and adaptive solution to the crisis of income in her system, but it comes at a cost: the children are disrupted in their routines. “The kids and I find it really disruptive, but how else can I make $800 to pay the mortgage and bills? How? The bank would reclaim the house if I didn’t do this”.

Naomi only receives a small Centrelink benefit since her kids are all teenagers and she’s supposed to get a job. The problem is she’s both over and under qualified-she has several degrees, including a postgraduate research degree, but almost no work experience. There isn’t a lot of casual work in regional Victoria and she is still actively mothering; or, as is the case with older kids, ferrying them around. “I still need to pick the kids up from the bus stop, take them to their friends’ places and after school activities, cook them dinner, make sure they’re doing their homework”. For Naomi, being away at a job and adding an hour each way for commuting isn’t an option as a lone primary carer. Then there’s the emotional fall-out of the divorce. The children need her to facilitate and foster their lives. What job realistically accommodates this?

“I don’t have the years of experience and so without Bob paying the mortgage and bills and not being eligible for single parent support, this is how I’m living. Running a BnB suits me and at least I can be there for the kids.”

Naomi would prefer a job but this is her novel solution for now. The gig-economy is stepping in to fill the gap, albeit poorly.

Mothers and basic income

UBI offers an alternative to these poverty traps that are increasingly ensnaring women in the space between low-income waged work, declining welfare and unstable, abusive or non-existent marriages. It makes a new gender contract possible and facilitates women’s economic independence. Women have gained this independence as individuals-the individuals of the liberal social contract-but they have not done so as mothers. As we shall see, on almost every index mothers earn less, have less time to earn more, undertake the great majority of unpaid care work, and suffer the highest pay and promotion gaps and, here’s the rub: most would prefer to care for their children, especially when they’re young. As Catherine Hakim’s large-scale research shows, most mothers prefer to combine paid work with care work, while up to 20% prefer to stay at home full-time (2000). Basic income offers mothers, especially single mothers, a means to achieve economic independence at a modest standard while disentangling this from the interlocking and mutually reinforcing institutions of marriage, employment and welfare. In a modern liberal-democratic society, this is the proper foundation of liberty, of mothers’ liberty.

Women’s unpaid care work used to be “paid for” through the institution of marriage (as it often still is, albeit in modified form). That is, through the distribution of the husband’s wage to the whole family. This was the basis of the family wage that sanctioned men being paid at a higher rate than women. However, with men’s declining employment rates and stagnating wages, rising rates of divorce and more children born out of wedlock, poorer mothers’ access to a share of our collective wealth has declined. Women have always had lower wages and a radically compromised capacity to earn an income if they are the primary carers of their children (as most women are); this is not new. What is new is that under neoliberalism all people are required to maintain a full-time secure attachment to the labour force over a lifetime, regardless of their capacity to do so. Now that marriage is both an optional and a soluble institution, this situation has become acute for separated, divorced or never married mothers and we see it showing up in the feminisation of both poverty and homelessness.

From the opposite perspective, what I find interesting, immersing myself in the focus on automation and precarity in the broad basic income literature, including academic and journalistic articles alike, is the assumption that precarious access to employment is something new. Certainly, on a mass scale it is for most (though not all) men and the spectre of middle class professionals losing their jobs-something already happening in fields like journalism and academia and likely in the health sector next-is a very significant social and economic change; but for all but the most privileged women this economic precarity is the historical and contemporaneous norm. Thus, while a full-time, well-paid job over a lifetime is the route to economic security, notwithstanding the rhetoric of gender equality, very few women have ever had such jobs. So, my argument isn’t just that basic income is the only viable macro-economic answer to increasing economic inequality-specifically, the decline of full-time, secure jobs-but that it is a crucial answer to the as yet unresolved issue of gender justice under capitalism.

While I support a basic income for everyone, I think it is important to identify the specificity of mothers in this debate, given both the tendency to ignore the centrality of gender justice and the extent to which, when gender is centred, motherhood is glossed over. In fact we need to make the socio-economic impact of becoming a mother and of mothering work explicit.

Women who are not mothers, not-yet mothers, or long past actively mothering dependent children are all in quite different socio-economic positions (although of course the structural effects of mothering last a lifetime). It’s not that gender doesn’t matter; it’s just that motherhood matters more.

We can look at this demographically variegated landscape by looking at the gender pay gap and then looking at how motherhood impacts this.

In Australia, women’s full-time wages were 82.8% of men’s, with a wage gap of 17.2%. The gender pay gap has grown over the last decade from 14.9% in 2004, to a record high of 18.8% in February 2015 before falling slightly again in 2016. As a result women are earning less on average compared to men than they were 20 years ago!

However, this figure is calculated without including overtime and bonuses, which substantially increase men’s wages, or part-time, which substantially decreases women’s wages. In other words, “83 cents in the dollar” substantially overstates wage parity. When this difference is factored in, the pay gap widens to just over 30%. And in the “prime childrearing years” between ages 35–44, this gap widens to nearly 40%.

A more realistic figure is gained by looking at full-time versus part-time earnings as well as average male and female earnings directly. Here we see the pay gap more clearly. For example, in 2016, average weekly earnings were $1,727.40 for male employees and $1,010.20 for female employees (a difference of close to $720 per week). However, most mothers work part-time which exacerbates this pay gap yet again.

If we consider full-time and part-time work, the wage disparity widens further. Compare the $1,727.40 for full-time male employees with $633.60 for part-time female employees; now we have a gap of over $1100 per week! Close to half of all Australian women worked part-time in 2015–16-44% (double the OECD average). However, this figure rises to 62% for mothers with a child under five and almost 84% for those with a child under two. Close to 40% of all mothers work part-time regardless of the age of the child, while only 25% worked full-time.

The remainder, it needs to be remembered, were out of the workforce altogether. As the ABS put it, “Reflecting the age when women are likely to be having children (and taking a major role in child care), women aged 25–44 years are more than two and a half times as likely as men their age to be out of the labour force.”

Age of youngest child is a key predictor of women’s labour force participation although it has almost no bearing on men’s labour force participation and when it does it is in the opposite direction: fathers of younger children typically undertake more paid work. Moreover, a quarter of all female employees work casually and their average weekly earnings were just $471.40. Think about that-a quarter of all working women earn less than $500 a week! These days that barely covers the rent let alone food, bills, and educational and commuting costs.

Occupational segregation and motherhood wage penalties also kick in to this mix. If we look at labour force participation, we see that coupled mothers have higher rates of participation than single mothers given the additional support they receive with childcare and income.

Given the average full-time male wage is significantly higher than the average female wage and, moreover, that women carry the overwhelming share of unpaid care and domestic work and thus typically work parttime in their key childrearing years-and, we should remember, fully a quarter do not work at all!-this is not simply a matter of two incomes being better than one, which is of course true, it is that access to a share of male monopolised wealth-that is, to put it in stark terms, access to a husband-is essential for mothers to avoid poverty.

In broad terms, the closer we are to mothering dependent children, including especially infants and preschoolers, and the further we are from access to a male wage, the poorer we are as women.

Never married single mothers with dependent children are the worst off and it moves progressively from there, with young, educated, urban, never-married, childless women earning very close to, and in certain cases in the US, outstripping average male wages. This contrast gives us a sense of the variegated nature of women’s socio-economic position and again highlights that mothers are a distinct group and, more fundamentally, that the life course transitions of marriage and motherhood continue to negatively affect women’s (independent) socio-economic status.

Often when we’re talking about women’s lower labour force participation and lower earnings, then, we’re actually talking about mothers’ lower labour force participation and lower earnings and, more specifically again, we’re talking about mothers with dependent children; although the lasting effects of care labour means women across the spectrum have reduced earnings, assets and retirement savings if they have mothered.

To highlight this point, Australian sociologist and time use scholar Professor Lyn Craig has shown that many of the socio-economic disadvantages affecting women are, in fact, specific to mothers.

As she says,

“… the marker of the most extreme difference in life opportunities between men and women may not be gender itself, but gender combined with parenthood. That is, childless women may experience less inequity than women who become mothers.”

Another important reason we need to differentiate mothers from women is that over the last 40 years the standard female biography has changed significantly. Whereas once adulthood was by and large synonymous with marriage and motherhood for women, on average women now have a long stretch of adulthood-from the late teens to around age 30-before they have a first child.

For educated and/or unpartnered women, the birth of a first child is often later again into the 30s and sometimes up to 40. Moreover, while only around 10% of women did not become mothers in the mid and later twentieth century, this has now risen to 24%. So, not all women are mothers and many women experience a large chunk of adulthood before they become mothers and after they are actively mothering dependent children.

So there are structural and individual injustices that are specific to mothering dependent children, including an unequal division of domestic labour, unequal access to jobs given the unpaid work load at home, employment built on an implicit breadwinner model that is incompatible with parenting (including school hours, school holidays, sick children and so on), discrimination in the workplace and, in the event of unemployment and/or divorce, an increasingly punitive welfare state and a high risk of poverty. Single mothers and their children make up the bulk of those under the poverty line in the western world. In Australia, of all family groups, single parents constitute the largest single group of those living in poverty (proportionally).

Marriage is no longer the safety net (or gilded cage) it once was with just over 30% of marriages ending in divorce in Australia and predicted to rise to 45% in the coming decades. Additionally, fewer people are entering into marriages and cohabiting relationships have even higher rate of relational breakdown than marriages.

This means a large and growing number of women who are mothering children are caught in this literal economic no-man’s land without adequate access to waged employment, a breadwinner husband, or welfare. I am not suggesting that access to a husband is a right; I am suggesting that the liberal dissolution of the institution of marriage has not been followed with any viable economic alternatives for mothers. Basic income is the obvious choice to stop a large and growing number of women sliding into poverty.

Mothers undertake the bulk of unpaid care work, without which our society would cease to function. To turn this around, we need to ask: is it acceptable that as a society we free-load on this care?

Mothers’ economic autonomy-that is the very foundation of their citizenship and their liberty- is undermined by the extant intersection of the institutions of marriage, employment and welfare. It is on this basis that I am identifying mothers, and more still single mothers, as a specific socio-economic and political group in urgent need of basic income. This is a human rights crisis given that lone parent families are one of the fastest growing family forms in western societies and, moreover, that women head 80-90% of these families.

Unlike the contemporary issues put forward for basic income-namely, mass unemployment from automation and digitisation-the issues facing mothers are not new. Indeed they have been with us since the very inception of capitalism and the waged-labour system. Moreover, they are among the most compelling, given that women and their dependents comprise the majority of the poor. With the liberalisation of markets and marriage, a large and growing body of women and children, such as Harper and Naomi, are being left out of the social contract. Basic income is the critical policy answer to this problem.

Dr Petra Bueskens is an Honorary Fellow in Social and Political Sciences at the
University of Melbourne, a psychotherapist in private practice at PPMD Therapy and
a columnist at news media site New Matilda. She is the author of Mothering and
Psychoanalysis: Clinical, Sociological and Feminist Perspectives

See the original Green Institute PDF here.

INDIA: Institute for Human Development holds roundtable on UBI

INDIA: Institute for Human Development holds roundtable on UBI

India’s Institute for Human Development (IHD), an independent nonprofit research organization, held a roundtable on universal basic income (UBI) on July 10 in New Delhi.

More than 80 politicians, academics, researchers, and other experts participated in the event, which featured keynote addresses from Pranab Bardhan (University of California Berkeley), Vijay Joshi (University of Oxford), Arvind Subramanian (Chief Economic Advisor of the Government of India), and Renana Jhabvala (Self Employed Women’s Association), as well as panel discussions and debates.

UBI has attracted serious attention in India in recent years, due to the success of pilot studies in Madhya Pradesh in the early 2010s, as well as a widespread view that India’s current system of targeted welfare benefits and price subsidies is wasteful and inefficient. Published in January, the 2017 Economic Survey, an annual document prepared by the Ministry of Finance, devoted an entire devoted an entire chapter to UBI, reviewing arguments for the idea, challenges of implementation, and strategies for introducing possible stepping stones to UBI in India. Finance Minister Arun Jaitley has recently stated that UBI is not feasible in the country due to “political limitations.”

The IHD roundtable event began with an inaugural address by Bibek Debroy of National Institution for Transforming India (NITI Aayog), a think tank of the Government of India.  

This was followed by four technical sessions organized around the work of Bardhan, Joshi, Subramanian, and Jhabvala, respectively.

Pranab Bardhan, CC BY-NC 2.0 UNU-WIDER

Bardhan maintains that a UBI of about a thousand rupees (about 15.5 USD or 13.5 EUR) per month can be afforded by increases taxes on the rich and ending certain government subsidies that primarily benefit the better-off. He cautions, however, that the UBI should not replace all current welfare programs nor divert funding from public goods and services.

(For an overview of Bardhan’s position, see his blog post “How India can do UBI: Universal Basic Income is a practical solution to poverty and inequality,” published May 3 in Times of India.)

Three panelists–Abhijit Banerjee (Massachusetts Institute of Technology), Abhijit Sen (formerly of India’s Planning Commission), and Ajit Ghose (Visiting Professor at IHD)–discussed Bardhan’s proposal following his presentation.

Vijay Joshi, CC BY 2.0 Chatham House

In the second technical session, Joshi laid out the model of UBI developed in his recent book, India’s Long Road: The Search for Prosperity, which he calls a universal basic income supplement (UBIS). Joshi proposes a UBIS of 3500 rupees per person year (at 2014-15 prices) to replace most price subsidies and targeted welfare programs (“retain[ing] only those of proven worth”). According to his calculation, the UBIS would cost of 3.5 percent of India’s GDP.

(See also Joshi’s blog post for The Economic Times, “Universal Basic Income is worth fighting for, even against the long odds in its implementation.”)

Panelists who discussed Joshi’s ideas included Amarjeet Sinha (Secretary of the Ministry of Rural Development of the Government of India), Dilip Mookherjee (University of Boston), and Swaminathan Aiyer (author and columnist).

Arvind Subramanian CC BY-SA 2.0 PopTech

The third session focused on the proposals in the Economic Survey, written by Subramanian. (Subramanian himself was unable to participate in the event; however, an aide delivered a presentation on this behalf.) Whereas both Bardhan and Joshi argue in favor of universality, the Economic Survey’s proposal is written under the assumption that, in practice, no program can achieve full universality; thus, it ultimately focuses on a “de facto UBI” with a “quasi-universality rate” of 75 percent. In the document, Subramanian considers several methods by which to phase in a (de facto) UBI, such as introducing the program first only for women or members of other vulnerable groups, or only in urban areas, or allowing beneficiaries of current welfare programs to opt instead for unconditional cash transfers.

Panelists on the Economic Survey proposal included Ashwani Saith (Institute of Social Studies, The Hague), Rohini Somnathan (Delhi School of Economics), and Shekhar Shah (National Council of Applied Economic Research, New Delhi).

Renana Jhabvala, CC BY-NC-ND 2.0 ILO in Asia and the Pacific

Finally, Jhabvala presented “perspectives from the field,” reviewing the results of the UBI pilots conducted by SEWA in rural villages in the state of Madhya Pradesh. Contrary to worries that a UBI would lead to higher spending on temptation goods, the pilots revealed no increase in alcohol consumption. Furthermore, the short-term UBI was associated many positive effects, including better nutrition, a decrease in serious health problems, higher rates of school attendance, lower debt, and greater job opportunities, especially for women. A follow-up study conducted earlier in this revealed several lasting effects in the villages in the study, as compared to control villages; these included higher incomes, especially for women, and lower rates of alcohol consumption. Other effects, however, were seen to have ended quickly after the termination of the pilot program, such as increase enrollment of children in private schools.  

Panelists on the SEWA pilot study were Jeemol Unni (Ahmedabad University, Institute for Rural Management Anand), S.M. Vijayanand (Former Secretary, Panchayati Raj, Government of India and Former Chief Secretary, Government of Kerala), and P.K. Joshi (International Food Policy Research Institute, New Delhi).

A closing session, chaired by MP Jay Panda, was held after the four technical sessions.

 

For more information, see the IHD website, which includes a press release summarizing the event, as well as a booklet containing a full schedule, speaker and panelist bios, and background reading for all keynote lectures.


Cover Photo: CC BY-NC-ND 2.0 sandeepachetan.com travel photography

Comparing a Universal Basic Income to Cash Transfers

Comparing a Universal Basic Income to Cash Transfers

Written by: Frank Kamanga

INTRODUCTION

This article is inspired by the article titled “Helicopter money and basic income: Friends or foes” authored by Stanislas Jourdan (2017). He made a very important attempt to clear up confusion between two similar and conflicting yet important terms in the global economy at this moment. Hıs article has opened doors for another attempt to compare basic income scheme and cash transfer schemes. This article will explain the definitions of cash transfers (CTs) and universal basic income (UBI), as well as institutional frameworks under which the programmes are implemented. It will also address financing arrangements for the programmes, and linkages between UBI, CT and Sustainable Development Goals, in an attempt to explain the justification of UBIs in the current state of the global economy. Policy issues related to both CTs and UBIs will also be highlighted.

Basic income and cash transfers are not novel ideas for poverty alleviation. A basic income scheme was initiated in North America in the 1970’s and 1980’s with support from prominent economists of that time. Following the successful implementation of such programmes, governments and the World Bank began implementing cash transfers in emerging and developing countries. With the rising discontent toward the neoliberal economic system and austerity measures, poverty alleviation measures such as Universal Basic Income (UBI) have been resuscitated back to life in developed economies. Gradually, governments in emerging and developing countries are carrying out pilot projects to assess the efficacy of basic income projects.

Emerging and developing countries like India and South Africa, which are implementing cash transfers, are also contemplating introducing basic income projects. This demonstrates that there are differences between these two concepts. Indeed, these two programs are similar regarding their purpose of alleviating poverty and their nature of implementation. However, the analysis below will show why UBI stands out as a different programme from cash transfers, and why our current economic circumstances means a basic income scheme should be implemented globally even in developing and emerging economies.

DEFINITION OF BASIC INCOME AND CASH TRANSFERS

CASH TRANSFERS

Cash Transfer Programmes are founded on social inclusion theory in the context of economic development. The social inclusion theory posits that governments should integrate the poor into the general economy by supporting them with a basic amount of cash.  Cash transfer programmes fall into two categories: conditional cash transfers and unconditional cash transfers. Under conditional cash transfers, recipients receive cash only if they can demonstrate that their behavior meets certain stated requirements. Under unconditional cash transfer programmes, the payout does not depend on individual behaviour (Forget E.L et al., 2013).

Conditional Cash Transfers (CCT) are used to encourage the behaviour of utilizing public services such as education and health services which lead to a reduction of poverty in the long run. For instance, in Mexico the conditional cash transfer programme provided cash to households on the condition that their children regularly attend schools and also access health services at clinics[1]. Proponents of conditional cash transfers argue that the scheme leads to better investments in human capital through access to social services that improve people’s knowledge and skills. The World Bank is a major supporter of the conditional cash transfer programme.

Meanwhile, advocates of the Unconditional Cash Transfer (UCT) programme look at the situation from a different perspective. They argue that poverty is cyclic and hard to break out of when there are conditions imposed on your spending. For instance, with restrictions on peoples’ spending, some basic needs are left out of the spending equation. To meet these basic needs, people may engage in other risky income generating activities such as sex work. When people are in poverty and desperate for money, we should not condition help on changing their behavior. Therefore, advocates of UCT argue cash should not be given according to certain behaviors. Rather, these resources should be made available to poor families so that they can make spending decisions consistent with their socio-economic priorities regardless of the work or job they are engaged in. UCT programmes are supported by human rights advocates and are consistent with a human rights based approach to development.

Unconditional cash transfers are not only premised on certain behavioural requirements, they also have lower administrative costs than conditional transfers (Capriati 2016).  In addition, in countries like Malawi unconditional cash transfers have also been merged with other social services like agricultural farm cooperatives and access to health services, hence improving their effectiveness. In this case, UCTs are more consistent with meeting a broader aspect of sustainable development goals.

This notwithstanding, with regards to impact, lessons from CCT and UCT programmes in Zomba city in Malawi have shown that both programmes have had positive results in terms of reducing child marriages, improving educational attendance, and avoiding early pregnancies. However, it has shown that UCT is relatively more effective in solving several challenges met by the families. This is because based on tastes, preferences, and priorities, families could decide how to spend money without constraints so that intended objectives can be met (Forget E.L et al., 2013).

BASIC INCOME

The concept of basic income is a relatively new phenomenon in the developing world as opposed to the developed world. In Canada, a basic income experiment called MINCOME was carried out as a means-tested negative income tax[2] in the 1970s. Meanwhile, a notable experiment was conducted in Namibia and currently two countries are carrying out pilot projects – Kenya and Uganda. Basic income guarantee or Unconditional Basic Income (UBI) is considered as a UCT income large enough to guarantee everyone in an economy or in the world a minimum level of financial resources on an individual basis without imposed conditions.

Basic Income mainly works on the principles of unconditionality and universality. Proponents of basic income also argue that the programme is based on the intrinsic value of human beings in an economy. This value is generated from their contribution to the creation of the general wealth of the society and also from the inherited value of our ancestors who created the wealth we are enjoying today (Jourdan S. 2017). Just like cash transfers, basic income plays quite an array of roles from poverty alleviation, school attendance promotion, work emancipation, gender balance incentivization, social protection, modernization and early child marriage prevention.

INSTITUTIONAL FRAMEWORK FOR BASIC INCOME AND CASH TRANSFER PROGRAMME

The institutional framework of these programmes can be analyzed in terms of implementation, sources of funding, policies and financial infrastructure. Firstly, given the diverse nature of objectives of both cash transfer and basic income projects, different non-governmental organizations and line ministries of central government can implement these projects. The government normally implements both basic income and cash transfer projects in the context of fiscal policies.

Financial sector tools such as mobile payment technology and policies also play a huge role in implementation of both basic income and cash transfer projects. GiveDirectly, a US based NGO, is able to implement a basic income project in Kenya and Uganda due to robust mobile technology payment systems established in these two economies.

FINANCING OF BASIC INCOME AND CASH TRANSFER PROGRAMME

Cash transfer programmes and UBI programmes share some differences in terms of how resources are to be mobilized. There is readily available information in terms of how cash transfer programmes are being implemented and funded in developing countries like Malawi. As for UBI, the information is scant but constantly flowing, as different suggestions on how the scheme should be financed are being put forward by proponents.

From an experience of cash transfer schemes in Malawi, these Conditional Cash Transfers are mainly funded by the World Bank and implemented by the government of Malawi. Meanwhile, Unconditional Cash Transfer schemes are implemented by Unicef, Oxfam, Government of Malawi and several non-governmental organizations. These programmes are financed by various donors including the Government of Germany, EU, World Bank, Irish Aid and the Government of Malawi. At the same time, the government of Netherlands is funding the design of a linkage and referral system of the Social Cash transfer programme.

As for the financing of the UBI programme, the topic is currently being addressed in different circles at policy and academic levels. Some of the topics being discussed include how the resources should be mobilized, what kind of tools should be used and who should fund the programme. Understanding this aspect of the UBI programme can assist in providing information on how to strategize campaigning and advocacy programmes for UBI in different countries.

It is claimed that there are currently no established, in-country funding mechanism for UBI in developing nations, except for external funds, as in the cases of Uganda and Kenya. However, in selected developed countries that are piloting the schemes, governments are implementing the projects through their fiscal space. Given the need for longevity of the schemes, some authors such as Young (2017), Stern (2017) and Santens (2017) have suggested sustainable ways for mobilizing resources for UBI in the United Kingdom and United States of America. Some of the methods may apply to both developing and developed countries, while others are restricted to developed countries. Here we will dwell on Young’s proposal for financing UBI and this can be can be categorized into three main groups: 1. Recalibrating existing tax and benefit systems 2. Replacing CCT 3. Communalizing common assets 4. Direct grants from the private sector can also be utilized.

Advocates for proposal one argue that for UBI to be politically feasible, it must be achieved using the existing infrastructure of taxation and spending. The idea is that UBI is currently at a conceptual stage. To materialize this scheme, governments must begin with existing resources (on a trial basis) and there is neither a need for radical and rapid changes to the system nor additional taxes. In this approach, the UBI scheme can be small in scale, targeting the most vulnerable people across the board. As in the case of developed nations such as the UK, resources can be mobilized through restructuring the existing, inefficient and unfair benefit systems. Under this proposition, UBI can be used as a subsistence or sub-subsistence level of income to be supplemented by earnings from employment and/or disability, housing, or child benefits.

One of the ways in which savings for UBI can be generated is through restructuring existing benefits, as explained by Malcom Torry of the Citizen’s Income Trust. He states that the administrative savings from dismantling the means-tested benefits system are in the range of £8-10 billion. In other words, it is very expensive to decipher who is and isn’t deserving of government support, especially when recipients must prove their worthiness. Restructuring the benefits to look more like a UBI scheme can not only help save money but would also be fairer.

The second proposal for financing UBI is simply replacing the CCT scheme with a UBI scheme in developing and emerging economies. India is already on the way to do this. UBI is more closely related to a UCT scheme, hence all the benefits of a UCT scheme over CCT also accrue to UBI.

The third proposition involves communalizing common assets. Some proponents state this UBI financing mechanism takes a more radical and systematic overhaul approach. These proponents look at financing UBI in its universality context and hence propose financing solutions that span across geographical boundaries of both developed and developing countries. These proponents argue for the abolishment of private ownership of resources – be it physical, cultural, biological, or economic. They argue that resources such as the biosphere, atmospheric carbon, fisheries and forests, and unearned income of technological change should be respected as the common property for all, rather than be the source of exploitative disparities from unequal access and power. The implementation of such a systematic and transformative change requires establishment of new policies, institutions and a new economic paradigm at a global level.

There are several prominent advocates who have come up with several ideas on how resources can be mobilized under the proposal of communalizing common assets. First, Barnes Boyce and James Boyce put forward that charges should be put in place by governments on access and use of ‘communally inherited assets’ and that revenues must be redistributed. They argue that charges could be placed, for example, on polluting the scarce resource that is the carrying capacity of our atmosphere, or on trades of stocks, bonds, and derivatives (the latter of which could raise $300 billion per year). Barnes and Boyce claim that charges on a portfolio of universal assets could grant a US citizen a UBI of $200 a month.

A wealth tax could also provide an alternative for resources for UBI ın some countries. Researchers such as Thomas Piketty suggest measures such as progressive capital taxation. Martin Faley suggests the Georgist land value tax (LVT) in the context of the UK. Faley claims that land taxes coupled with common licenses could fund a £4,500 annual UBI. A globalization fund could also strike a deal. Globalization has had some negative consequences as we can see from recent increased in nationalism and unemployment in developed and emerging economies. Multinational companies exploiting labor and cheap natural resources in developing countries whilst making billions of US dollars should be charged a globalization tax to be fed into the globalization fund. This fund can be used to support a global UBI dividend or grant.

The fourth industrial revolution is mainly characterized by automation of jobs and technological unemployment. Some economists and futurists have found leeway to press for resource mobilization to finance UBI. For instance, Economist Yannis Varoufakis and futurist Kartik Gada have each suggested that the labor savings from automation could (and should) pay for UBI. According to Varoufakis, the proposal is that one-part should be wealth tax and one-part should be ownership restructuring. That is, a small tax is levied on shares from every initial public offering put into a commons capital depository that in effect grants citizens property rights over new technologies that yield financial returns. The Commons Capital Depository would then pay out a UBI to all citizens.

The last proposal that is also being applied already is the financing of UBI activities with funds from the private sector. eBay is financing pilot projects in both Kenya and Uganda. More and more private companies can come in to support such projects in developing countries.

LINKAGES BETWEEN CASH TRANSFER AND UNIVERSAL BASIC INCOME AND SUSTAINABLE DEVELOPMENT GOALS

Cash transfer and basic income share the same theories of how they change people’s behavior or improve living conditions of people in the context of Sustainable Development Goals.

  1. CT programmes reduce poverty and increase income. As income increases, people spend money to solve diverse needs of their families and they also spend on luxury goods. SDG 1, 2, 3, 4, 5 and 9
  2. CTs and Basic income reduce risk. A CT or a Basic income is a form of social insurance that increases the planning horizon and allows one to take calculated risks. SDG 2,3,4
  3. CTs and Basic income reduce income inequality. SDG 10
  4. CTs and Basic income enhance social values of dignity and integrity, hence build communities through interaction. SDG 11, 16, 17

WHY UNIVERSAL BASIC INCOME NOW

There are quite a number of reasons to justify the policy shift in favour of basic income in both developing and developed countries. The first reason is that the basic income is guaranteed over a long period, thereby enabling people to make plans for major life decisions ahead of time. The longevity of UBI can also stimulate demand in the global economy, hence leading to increased production and employment in the production sector.

Additionally, just as with unconditional cash transfers, basic income schemes could be cheaper than providing in-kind transfers and conditional cash transfers. In-kind transfers take the form of goods and services like cattle, books, schools, and hospitals. It is claimed that projects involving the provision of such projects have huge administrative, implementation and logistics costs. Besides this, they constrain people on their freedom to spend money on the goods and services of their choice. However, thanks to mobile technologies, basic income programmes are implemented with ease and offer economic freedom on expenditure of the money.

Basic income is also conventionally universal and is regarded as a human right. Basic income programmes target people across the board in an economy. The cash is provided irrespective of your employment status, gender, region, physical ability. Rather, it is based on one’s inability to meet basic needs in a society. Therefore, beneficiaries in a basic income project are diverse and the impact on poverty reduction as well as the multiplier effect on the economy are likely to be huge.

Finally, just as with conditional cash transfers, basic income offers an opportunity for long term investment in human capital. From the recent evaluation survey of GiveDirectly’s basic income project in Kenya, 20 percent of respondents said that they were using the money for payments of school fees for either themselves or their children. As the project is expected to last for some years, recipients of the cash can make long term and secured plans to finance their studies, hence building human capital in the economy.

POLICY ISSUES FOR CTs AND UBI

  • Basic Income is more closely related to UCT. Therefore, in terms of cost structure, the cost per unit of outcome will be lower with a UCT and UBI scheme compared to conditional cash transfer scheme.
  • UBI has a greater potential for political advocacy and long-term stability despite its perceived greater cost, due to its universality.
  • Financial Modelling of UBI in Malawi must be conducted to assess the possibility of carrying UBI and UCT concurrently.

Frank Kamanga is a former Economist of the Central Bank of Malawi.  He is a co-founder of Global Hope Mobilization and Centre for Child Development of Research, two local NGOs in Malawi. He is member of the Basic Income Earth Network Outreach Committee and also Global Unification International UBI Africa Committee.

BIBLIOGRAPHY

Capriati M. (2016) https://www.givingwhatwecan.org/post/2016/07/whats-so-special-about-give-directlys-basic-income-pilot/ Accessed in April 2017

Forget, E.L, Peden A.D., and Strobel, S.B (2013). Cash Transfers, Basic Income and Community Building. Social Inclusion, 1(2), 84-91.

Jourdan S. (2017) helicopter money and basic income: friends or foes?

Santens S. (2017) How to Reform Welfare and Taxes to Provide Every American Citizen with a Basic Income. Accessed on 6th June 2017.

SDG knowledge platform.  https://sustainabledevelopment.un.org/?menu=1300.  Accessed in April 2017

Stern, A. (2017) Raising the floor. Accessed in June 2017

Young Charlie (2017). Conversation about Basic Income is a Mess. Here’s How to Make Sense of it. https://evonomics.com/basic-income-conversation-make-sense-charlie-young/. Accessed in April 2017.

[1]https://web.worldbank.org/archive/website00819C/WEB/PDF/CASE_-62.PDF

[2]A negative income tax is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government.