“The justification for [basic income] is ethical, not instrumental,” states Guy Standing at the ShapingHorizons conference at Cambridge University, UK, on September 11, 2019. He goes on to assure his audience that basic income studies have revealed that it may reduce poverty and inequality, but that “the real reasons for wanting to support a basic income is a matter of common justice.” See his full speech.
For Guy Standing it is a clear case: everybody’s wealth and income are mainly due to the achievements and efforts of others, especially our ancestors. It is they who have created what we all enjoy in the form of, for example, public knowledge and social services. If we add natural resources to the list, we are looking at the three most important pillars of what people alive today have at most contributed minimally towards: the commons.
As it is common legal practice around the globe allowing “to receive something for nothing” in the case of private inheritance, Standing suggests extending this idea to the social inheritance of the commons. In contrast to private inheritance, the distribution of commonwealth should not be based on, e.g. family bounds. The entitlement to a share of public wealth should instead be based on the simple requirement to be human. However, instead of sharing our rich commons, they are “privatized and plundered […] in the name of rentier capitalism,” as Standing puts it.
In addition to stating ethical reasons for basic income, Guy Standing also took the chance to stress how the global debate about basic income has changed dramatically over the last few years. With participants from as many as 45 countries the BIEN congress 2019 in Hyderabad, India, at the end of August this year demonstrates the global significance of basic income.
The 41 minutes long documentary focuses on Universal Basic Income (UBI), retracing its history, explaining its rationale, and investigating why and how the idea has reached a much larger audience and unprecedented support in the last years.
It does so with though many poignant interviews with prominent exponents of the UBI community, as Van Parijs, Guy Standing, Daniel Raventòs, Scott Santens and many others. “UBI, our right to live” makes a compelling argument for the necessity of the measure, is a manifesto for UBI in the present day, and is an excellent introduction to the subject.
The documentary addresses two of the main drivers that are bringing UBI at the center of the public debate: economic inequality and technological development. The two themes are correlated, as economic inequality has reached unsustainable levels, and automation may make it even worse, if not handled in the proper way. The risk is the increase of unemployment and growing inequalities between high and low skilled workers.
UBI could eradicate poverty altogether, and if it were to be financed through progressive taxation, reduce inequalities. Moreover, it would provide an economic safety net for workers, and thus endorse them with more bargaining power when it comes to choose a job. People could decide how to focus productively their energies in order to contribute to society and give meaning to their live, rather than being forced in unfulfilling jobs just to survive. Nobody would be left alone, as it is bound to happen under the patchwork that present-day welfare is.
The fruits of technological advancement, if distributed via a UBI, rather than accumulated in the hands of the few, may help to shape a more just future, as this is what UBI is about (something that the documentary highlights): UBI is about justice and fairness, not charity.
It’s the instrument meant to redistribute what belongs to each and every person, the natural extensions of human rights in ensuring to everybody a standard of living adequate for a human being.
An early version of the book, Exporting the Alaska Model, is available for download for the first time. This is possible because most academic publishers allow authors and editors to post early versions of their works on their person websites. A preview, written in 2012, is below. If you’d like to cite or quote it, please refer to the published version:
In recognition of every Alaskan’s share of the ownership of the state’s oil reserves, every year, every Alaskan gets a dividend from the returns of the Alaska Permanent Fund (a sovereign wealth fund comprised of a pool of assets collectively owned by the residents of the state). It was created from royalties the state receives from the oil industry. Each year it pays a dividend to every Alaska resident. In 2008, the dividend reached a high of more than $3200 (including a supplement added from that year’s state budget surplus). That dividend amounted to more than $16,000 for a family of five.
Many other resource-exporting regions around the world have sovereign wealth funds, but only the APF pays a regular dividend to citizens. The APF and the accompanying Permanent Fund Dividend (PFD) are actually a combination of resource-management policy and a progressive social policy. As a sovereign wealth fund, it helps to ensure that the state will continue to benefit from its oil long after its reserves are depleted. As a dividend, it helps every single Alaskan make ends meet each year without a bureaucracy to judge them.
The PFD is one of the most popular government programs in the United States. It has helped Alaska attain the highest economic equality of any state in the United States. It has coexisted with, and possibly contributed to, the state’s growing and prosperous economy. Most importantly it has given unconditional cash assistance to needy Alaskans at a time when most states have scaled back aid and increased conditionality.
Cliff Groh
This book argues that the model provided by the combination of the APF and the PFD is worthy of imitation by other states, nations, or regions. Of course, not every country has as much oil as Alaska, but every country has resources. The total value of natural resources (including not only mining, fishing, and forestry but also land value, the broadcast spectrum, the atmosphere, etc.) is surprisingly high even in areas not thought of as being resource rich. The case for taxing natural resources is at least as good, and probably far better than taxing other sources of wealth.
One reason Alaska introduced the APF was that lawmakers realized that oil drilling would give the state a large and temporary revenue windfall. They wanted to extend the period in which that windfall would benefit Alaskans by putting some if it away into a permanent fund. To some extent the PFD was a way to sell ordinary Alaskans on the idea of the APF.
But to some extent the motivation for the APF was to support the PFD. Some of the lawmakers who created the APF, most especially Governor Jay Hammond, were influenced by the movement for what is now known as a “basic income”—a small unconditional income for every citizen to help them meet their basic needs. At the time, the policy was best known as the “guaranteed income” or the “negative income tax.” It was widely discussed by policymakers in the United States in the 1960s and 70s. Hammond had created a similar policy on a local level when he was a mayor of Bristol Bay, and he very much saw the APF as an opportunity to create a guaranteed income. The argument was simple: the oil, by right, belonged to all Alaskans. The PFD was an efficient way to ensure that every Alaskan would benefit from it.
A similar argument can be made for almost any natural resource.
This book takes an interdisciplinary approach to assessing whether the APF is a model to be copied with chapters in the disciplines of economics, philosophy, sociology, history, and social policy studies. It also has chapters written by political activists and practitioners.
Several chapters discuss the history of the APF and similar policies around the world (both resource taxation policies and income support policies). Others chapters discuss the ethics of unconditional cash grants and resource taxes, and how the Alaska mode fits in with recent theoretical models. As mentioned, the PDF is essentially a small basic income—a political proposal that has been widely discussed in political theory literature. Stakeholder grants would replace the yearly basic income with a large, one-time payment when individuals come of age. Resource egalitarianism is the belief that all people should benefit equally from the natural resources of the Earth. Policies like the APF, which link resource taxes to direct redistribution, advance resource egalitarian goals. We discuss what should count as a “resource” for purposes of the standard of “equality of resources,” and how this might be focused on resources that can become the basis of a sovereign wealth fund. A clean atmosphere, for example, is a shared resource that is being depleted by billions of individual polluters.
Several chapters debate whether it is a good idea to link a progressive social policy, such as a cash grant, to an environmental policy, such as a resource tax. One reason to make this link is that resource taxes redistributed as dividends reflect shared ownership claims to the environment. Other reason to do so is that the redistribution of resource tax revenue can compensate people for the cost of moving to less resource-intensive activities. One danger is if the redistribution of resource taxes is seen as a good thing, people might be more willing to accept increased exploitation of natural resources.
The book also discusses possible ways that the model might be altered and improved, including a proposal for Citizens Capital Accounts, which personalize the fund, giving each individual owner, among other things, the power to decide whether to take out regular dividends or let her earnings accrue as a protected investment. Instead of passively receiving a check each year, each citizen have some control over a small portion of the principle and the choice of when and whether to withdraw her available returns.
The book also has country- and region-specific proposals with estimates of what size dividend might be achievable in various places. As criteria for success we consider effects on poverty, effects on inequality, effectiveness in discouraging greenhouse gasses and other forms of pollution (for carbon-based taxes), efficiency, satisfaction of voters, and other factors.
Summary
This book is divided into three parts. Part I discusses employing the Alaska model in circumstances similar to those of Alaska: in wealthy, resource-exporting nations and regions. Part II discusses applications of the model further afield. And Part III discusses a hybrid proposal for an individualized version of Alaska’s fund and dividend.
Michael W. Howard (right) and Karl Widerquist (left) in the rain at the 2017 NABIG Congress in New York
Hamid Tabatabai (chapter 2) begins Part I with a discussion of the second place in the world to introduce a resource dividend: of all places, Iran. Like Alaska, Iran stumbled upon the dividend following a peculiar set of circumstances. For most of its period as a resource-exporting nation, Iran has used its resource wealth to support an inefficient system of commodity subsidies (mostly on gas and oil consumption). Iranian politicians knew that these subsidies had to go, but the policies benefited so many people in such a significant way that the politicians knew they could not eliminate them without a similarly broad-based policy (discussed as the fifth lesson in section 2 above). After lengthy discussions, the policy that emerged was a basic income in the form of a regular resource dividend. The policy is not funded by a permanent resource endowment, but it does employ the other two elements of the Alaska model.
Angela Cummine (chapter 3) looks at the very opposite issue. There are many SWFs in the world today. Some of them are many times larger than the APF. Yet, only the APF pays a dividend. Given the enormous popularity of the PFD, why have no other resource-exporting nations imitated it? Employing information gained from interviews and other sources, Cummine assesses the reasons SWF managers around the world are skeptical about dividends.
Alanna Hartzok (chapter 4) looks back at the Alaska model itself in advance of export. She argues that the APF and PFD embody the idea of socializing the rent of assets that rightfully belong to the people as a whole, but to do this, managers at the Alaska Permanent Fund Corporation (APFC) should take on a strong responsibility toward social investing, and they are not yet living up to that responsibility. Any nation or region wishing to socialize rent on a large or small scale should, therefore, take a look at what the APFC has done right and what it has done wrong.
Rather than looking at employing the Alaska model in other places, Cliff Groh (chapter 5) looks at the future of the Alaska model in Alaska. Although the PFD has a sound permanent endowment in the APF, it is the only part of the Alaska government that has such safe financial footing. Most of Alaska’s state budget is based on current oil export revenues. The volume of Alaskan oil exports has been declining for more than 20 years. So far, increases in the price of oil have more than made up for the decline in the volume of oil exports, but they will not always do so. When oil revenue begins to dry up, there will be enormous pressure on the state government budget, which will also put pressure on the APF and PFD. Groh discusses when this might happen, what it will mean, and what can be done about it.
Gary Flomenhoft begins Part II with a chapter (chapter 6) estimating the potential for a common-asset-based dividend in the “resource-poor” state of Vermont. He shows that even Vermont has many resources that are being given away for free by government to corporations who sell those resources back to the people at higher prices. Flomenhoft estimates how much revenue the state could generate by treating those assets the way Alaska treats its oil. In his low estimate, he finds that Vermont could support a dividend at least as large as Alaska’s; and in his high estimate, he finds that Vermont could support a dividend many times larger—perhaps more than $10,000 a year for every Vermonter. If a resource-poor state such as Vermont can do it, any state or nation can too.
Paul Segal (chapter 7) discusses employing the Alaska model in the poorer nations of the world and discusses the impact on poverty of doing so. He finds that a resource dividend could cut world poverty by more than half, as measured by the World Bank’s poverty rate of US$1.25 per day at purchasing-power-parity.
Jason Hickel (chapter 8) examines the potential impact of the Alaska model on a less developed nation—the newly independent state of South Sudan. Although South Sudan has large oil reserves to draw on, the potential impact of the Alaska model on it is hard to estimate because the state is so new and few good data are available. However, he finds that oil exports have the potential to finance both a substantial dividend and significant infrastructure improvements.
Governor Jay Hammond, “Father of Alaska’s Permanent Fund Dividend”
Jay Hammond’s contribution (chapter 9) applies the Alaska model to Iraq. Hammond was the fourth governor of the state of Alaska and is justly described as the father of the PFD. He campaigned for the idea long after he left office. His posthumous contribution to this book is a piece he wrote near the end of his life suggesting that a permanent fund and dividend would help ensure that Iraq’s oil revenues were shared by members of all of its diverse communities. This chapter includes a brief introduction by Larry Smith.
Michael W. Howard’s chapter (chapter 10) discusses the cap-and-dividend approach to global warming as a politically viable way of applying the Alaska model at the federal level in the United States. The idea of cap-and-dividend is simple. The government limits the amount of carbon emissions allowed (the cap). It sells the rights to make those emissions to the highest bidder and redistributes the proceeds as a dividend for all citizens.
Widerquist closes Part II with two chapters (chapters 11 and 12). The first examines the possibility for, and potential size of, a permanent common-asset-based endowment for the United States. The second examines the prospects of exporting the Alaska model back home to Alaska to widen and deepen the use of the strategy we call the Alaska model in Alaska itself. Widerquist argues that a fuller use of the Alaska model will strengthen Alaska against the likely eventual decline in resource revenues.
Part III of the book is entirely devoted to the discussion of a proposal by Karl Widerquist to create an individualized version of the permanent fund and dividend approach. Widerquist’s proposal, called Citizens’ Capital Accounts (CCAs) (chapter 13), assigns a portion of the principal of the fund to each individual at birth. They can decide when and whether to draw dividends, but the principal must remain in the fund for future generations. Widerquist argues that CCAs provide more economic security for the money than basic income or other similar proposals, because they allow individuals to keep the returns in their safe investment account until they are needed. Subsequent chapters by Michael W. Howard, Jason Berntsen, Ayelet Banai, and Christopher L. Griffin, Jr. (chapters 14–17) evaluate, criticize, and consider variations of the CCA proposal. In the final chapter of part III (chapter 18), Widerquist responds to criticism.
Talk of a universal basic income has been in the news a lot recently, but what does it all mean? First off, it’s important to make the distinction between free money and services that comes from your taxes – the money for a universal basic income has to come from somewhere, so it’s not free money but rather a useful return for your tax payments. The idea is to level the playing field as much as possible in an effort to eliminate poverty and give families a fighting chance in a world where the cost of living has long since surpassed any positive movement in wage growth. What’s more, the idea of a universal basic income is not a new one at all.
As far back as 1516, Thomas More wrote about the idea of a basic income in Utopia. More surmised that this type of social program would prevent people from becoming desperate enough to steal to feed themselves and their families, eventually becoming swept up in a criminal life that would turn them into corpses.
Later in 1796, Thomas Paine suggested in Agrarian Justice that providing a basic monetary endowment for every adult over the age of 21 would lessen the burden of transitioning from a landed gentry economy to a more egalitarian economy.
In 1967, the Reverend Dr. Martin Luther King, Jr. proposed a universal basic income by which poverty could be eliminated, thus giving African Americans the ability to achieve their potential as well as economic stability.
Rather than making these payments in vouchers, goods, or services, the main idea is that in order to give people the most benefit in terms of freedom of choice in work, lifestyle, and education these payments would have to be made in the form of cash payments. The ultimate goal is to end poverty and lessen violence, crime, and addiction thought the elimination of hopelessness. But can it actually work?
There are several ways that have been proposed to pay for this system. A flat tax would basically take a percentage of everyone’s money and then give them back the same flat rate – a basic redistribution of wealth. A VAT, or value-added tax, would be a high tax on certain goods and services, usually those that are considered to be vices or luxuries, which would go into a fun to make these payments.
Already there are several places around the world that are testing this idea with varied results. Throughout this year in Stockton, California, 100 randomly selected people are receiving stipends, while over the last two years in The Netherlands test groups are receiving varying levels of stipends and benefits. While these programs are still ongoing, Finland found great success with its own pilot programs, including increased confidence in recipients’ financial situations, greater optimism for the future, and better health, but declined to continue the program after the test due to a lack of impact on employment.
Regardless of the inconclusiveness of these tests, a universal basic income may be the only thing that prevents mass poverty as artificial intelligence and automation take over jobs in the next industrial revolution. Jobs will be both created and eliminated, but it will take time to get the right people into the right jobs just as it was during the last major industrial revolution. While it’s not a perfect solution, a universal basic income might be the best tool we have to make the transition smoother.
Learn more about the pros and cons of universal basic income here.
Author Brian Wallace Bio: Brian Wallace is the Founder and President of NowSourcing, an industry leading infographic design agency based in Louisville, KY and Cincinnati, OH which works with companies that range from startups to Fortune 500s. Brian also runs #LinkedInLocal events nationwide, and hosts the Next Action Podcast. Brian has been named a Google Small Business Advisor for 2016-present and joined the SXSW Advisory Board in 2019.
In July 2016, the Liberal government of Justin Trudeau introduced Unconditional Basic Income to Canada and never mentioned it to anyone.
6.4 million Canadians can count on benefiting from about $500, tax-free, every month, no questions asked. It contributes $46 billion per year to GDP and adds $4 to GDP for every dollar it costs.
It’s called the Canada Child Benefit (CCB).
Why have we not heard that this program is, in fact, a Basic Income? When the Ontario government announced the abrupt cancellation of the Basic Income Pilot Project involving 4,000 low-income people after a few short months, it was all over the news. A permanent nationwide Basic Income involving 6.4 million Canadians and their parents (19 million people in total) runs for three years with stunning success and not one word in the press.
Indeed, I have spoken with many Liberal Members of Parliament who all express dismay and disappointment at the lack of visibility the CCB has among their constituents. Yet Canadians know how Basic Income works because one has existed for close to 70 years.
“In 1951, following an amendment to the British North America Act to permit the federal government to operate a pension plan, the Canadian Parliament passed the Old Age Security Act, which provided a universal pension, or demogrant, of $40 per month financed and administered by the federal government. All Canadians aged 70 and over who could meet the more liberal residence requirements were eligible, regardless of their other income or assets. Pension payments began in 1952 and were taxable.”[emphasis added]
Who was in power in 1951? Louis St. Laurent’s Liberals!
Why focus, in this discussion, on only one Party? Is that partisan politics? Some background:
The October 21st election is the perfect crucible in which to forge a new narrative about Basic Income in Canada. The centre-left Liberals of Justin Trudeau, whose father was prime minister from 1968 to 1984, swept into power in 2015 after a decade of Conservative rule. The progressive New Democratic Party is thinking about Basic Income on a 30-year timescale. The Green party is demanding more tests. Only the Liberals can point to action, although they refuse to admit it.
So, while Liberals can legitimately claim both a long history and recent accomplishments in implementing permanent Unconditional Basic Income programs (UBI), the public has no idea that here are two examples of highly successful implementations, hiding in plain sight! Both were introduced by Liberal governments and no one knows about it.
There is no mainstream recognition that Basic Income is a fait accompli in Canada. Sadly, many of the cognoscenti also resist this paradigm shift.
Yet a recent independent report sponsored by UBIWorks, shows that the CCB is not only an Unconditional Basic Income, but it is also a highly successful one for families and the economy. The report makes the following key points:
Canada has demonstrated the effectiveness of a national-scale Basic Income
6.4 million Canadians benefit from about $500, tax-free, each month
The CCB directly touches approximately 19 million people. This not a test.
The CCB is an ongoing national program that has been running successfully for over 3 years
The CCB contributes $46B annually to the Canadian economy – exceeding the economy of Nova Scotia
CCB-related spending drives $85B / year in revenues and $18B in gross profits to businesses
453,000 full-time equivalent jobs are contributed by the CCB, 2.5% of the Canadian labour force
Every dollar invested drives $2 of GDP and more than 55 cents of is recouped in taxes from economic activity
Therefore the CCB drives $4 of GDP for every net dollar it costs
The CCB has generated $27B in private capital investment and $77B in wage growth since its inception
The CCB has contributed to 3 years of economic growth, low inflation, and unemployment levels at record 40-year lows
Clearly, the Canada Child Benefit is a Canadian flavoured Basic Income which is as close as it gets to a UBI in the real world. It is a huge success hiding in plain sight. it is individual because strictly based on headcount and it is unconditional because you do not have to do anything special to deserve it, and you can do with it as you please, no questions asked. Furthermore, it is a regular, predictable, cash transfer paid monthly, for which you can sign up before you are even born. It is not means-tested. However, it is income-tested, which means wealthier families are phased out from the benefit. Does it deviate in some ways from the ideal, orthodox form of Basic Income? Of course! Where do we find ideal forms in the real world?
A similar demonstration can be made for Old Age Security. Since the facts show the economic impact of Basic Income for ages 0-17 and 65+, why not expand the programs to all those in between? Why not start right away with ages 18-19, who need the money to stay in school or get a good start in life, some other way?
As the incumbent Liberals struggle in the polls and are headed toward a minority government status in the October 21st elections, according to the latest projections, Basic Income advocates around the world can only look on in dismay at this missed opportunity to benefit from changing the narrative about Basic Income in Canada.
Although the nomenclature of Unconditional Basic Income (UBI) is notoriously anarchic, clearly the federal Liberal Party of Canada was considering such a plan. In the article, the Canadian Press reports:
“Prime Minister Justin Trudeau and Social Development Minister Jean-Yves Duclos have argued that the Liberal-created Canada Child Benefit, among other measures, amounts to a guaranteed minimum income already.”
Yet not a word about this, 28 days into the campaign, as I have reported above.
Unconditional Basic Income was never mentioned even if there is no question that it helps reduce poverty. This is just not the best argument to support it when powerful economic data is available.
Why the Trudeau Liberals have chosen not to play the UBI card, I couldn’t say. They may come to regret the mistake.
