by Tyler Prochazka | May 16, 2016 | Opinion
Back in the 1990s, China started experimenting with a minimum income guarantee that topped off incomes to a minimum level set by local governments. China called the program dibao, meaning minimum livelihood guarantee, expanding the program nationwide in 2007.
In Beijing the urban monthly dibao standard is 1050 RMB ($161.50 USD) and the rural standard is 800 RMB ($123.04 USD). For urban residents, this is about five dollars USD a day.
However, even this paltry amount often does not make it to those in poverty.
A report by the World Bank found that for every 10 RMB spent on the dibao, only 1 to 2.4 RMB reached individuals in poverty (cited by the Economist). The World Bank also found the dibao program only lowered the poverty gap by 6.5 percent.
Corruption and inability to determine households’ poverty status have plagued the program. According to Lu Yang in the Indian Journal of Labour Economics, based on 2010 survey data only 21 percent of poor households were able to receive the dibao, while more than half of dibao recipients were above the poverty line.
Many local governments go to great lengths to investigate whether dibao households are secretly hoarding wealth, visiting recipients’ homes and observing whether the household has too many “high quality” products to qualify.
Others are concerned with the dibao’s effect on the poor’s effective marginal tax rate. Higher effective marginal tax rates lower the likelihood that a household member will seek work.
If a household’s average income per person goes above the dibao standard, they could sacrifice the entirety of the benefit. Each household member raises the household’s dibao standard by 100 percent. For example, in Beijing where the standard is 1050 RMB per month, a two-person household would face a 2100 RMB dibao standard. In turn, larger households are more susceptible to the problem of high effective marginal tax rates.
In some instances, it is possible that a household will have a 100 percent effective tax rate due to the dibao benefit. In these cases, the household will have the same income regardless of whether a household member chooses to work or not. Based on data from an essay in Population and Development a family of three in Tianjin with one household member employed would have the same income as an identical family that does not work at all. Clearly this has the potential to undermine labor participation if the drop off is this steep in reality.
China plans to lift 70 million people out of poverty by 2020. Such a massive undertaking requires a robust social welfare system. As it stands, the dibao program is not equipped to do this heavy lifting.
However, the dibao does provide a starting point for China to experiment with universal coverage.
The 2014 World Bank report conducted economic simulations that demonstrated expanding dibao coverage was more effective than increasing the benefit size at lowering the poverty gap.
Like the dibao, the central government of China could initiate pilot programs that universalize the dibao cash transfer, eliminating the income and wealth requirements to qualify for the dibao benefit.
Universalizing the program would potentially address many of the issues plaguing dibao, such as the high effective marginal tax rates and low rate of impoverished individuals that receive the dibao.
China’s economic miracle successfully lifted the most individuals out of poverty in world history. To do so, China undertook some dramatic reforms that completely reshaped Chinese society. Now in order to completely eradicate poverty, China may want to take yet another drastic step with a universal basic income guarantee.
by Andre Coelho | May 11, 2016 | Opinion
So the basic income implementation process in Namibia was halted1. Is that surprising?
After an amazing effort by minister Zephania Kameeta to get a basic income implementation program for Namibia up to the (minister) council, it was just swept away and replaced by a program intended to alleviate poverty through economic growth. The progressive approach was replaced by the traditional economic orthodoxy of endless growth and continued inequality. This program, named “Harambee Prosperity Plan”, also includes the creation of a food bank and grants for young people conditional on participation in this food bank and a few other community activities.
Let’s not forget that Namibia was one the few places on Earth where a basic income experiment was actually carried out (at Otjivero), and with excellent results. Among the positive results were better nutrition, clothing, and transportation, more savings and a rise in entrepreneurship. You could now be thinking: Ok, so they tried basic income in a pilot project with excellent results, and they had a minister who was a champion of the basic income who could take it on to national-level implementation. So what’s stopping them now? The answer seems simple, but it is also hard to deal with.
The answer is this: big corporate interests need poverty. And it so happens that Namibia has plenty of poor people2. In a recent essay, a tentative connection was established between poverty (in economic terms) and the refusal/denial of the South African government to test for basic income, let alone implement it at the national level. Basically, the argument entails that government officials deny the proven advantages of basic income, delaying its development, to protect corporate interests. These interests profit massively from the cheap labour that a mass of helpless poor people can provide.
The economic structure of Namibia, as related to income, is not much different from the South African, as can be seen in Figures 1 and 2. The similarity is striking, hence the same unwillingness of the Namibian political elite to try out the implementation of basic income, despite all the theoretical and proven practical advantages it provides for the people.
Figure 1 – The spread of households within the income distribution in South Africa, 2008
Figure 2 – The spread of households within the income distribution in Namibia, 2015
A clear image starts to appear. In these countries, poverty is an asset for big industry, which has, to a great extent, bought political power. So what can be done about it? Well, two things can happen: poverty-dependent corporations automate up to a great extent3, and/or Namibians put pressure on their elected officials – through democratic processes – to get basic income implemented, despite the corporate grip on regime politicians. The first one is highly probable, and so we will be watching a fading interest of corporations in financing political power, since with mechanical machines and Artificial Intelligence they can get their way even without resorting to poor human labour. The second one, less likely but entirely possible, may grow from the first one, when political leaders get less engaged with corporate power – and although remaining eager to please them, no longer have the same financial incentive, thus becoming more susceptible to democratic pressures.
Anyway, automation may actually not be a deterrent but rather a spark for some sort of basic income implementation. We seem to be facing a win-win situation for basic income: automation and/or democratic pressures will guarantee that basic income becomes a reality in the next few years in Namibia, and elsewhere. At this point, only ruthless autocratic power can dismiss it and keep it away for much longer. The time for change has come.
More information at:
Claudia and Dirk Haarnann, 2015. “Relief through cash: impact assessment of the emergency cash grant in Namibia”, July 2015
Claudia and Dirk Haarnann, 2015. “Piloting basic income in Namibia – critical reflections on the process and possible lessons”, Paper delivered at the 14th Congress of the Basic Income Earth Network (BIEN) Munich – 14-16 th September 2012
André Coelho, “On why basic income has not yet been deployed”, Basic Income News, 17th March 2016
Notes:
1 – At the beginning of April 2016, the Namibian president presented his state of the nation address as well as the “Harambee Prosperity Plan”, which focuses on combating poverty by the creation of jobs through economic growth, plus the introduction of a food bank.
2 – According to the Republic of Namibia National Planning Commission “Poverty and deprivation in Namibia 2015”, the account for poverty is that 26,9 % of the population lives under the official poverty line.
3 – According the report “Technology at work v2.0”, it is estimated that in countries like Ethiopia the risk of job automation covers 85% of all jobs in the coming decades (other examples like China and India rate at 77% and 69% of automation risk, respectively).
by Guest Contributor | May 5, 2016 | News
Sunday #41 March (April 10th), place de la République in Paris. Hundreds of people were present to discuss the basic income and other topics related to employment. The French Movement for Basic Income attended the meeting thanks to the invitation of the #NuitDebout movement. This citizens’ movement was created following demonstrations against the proposed French labour reforms and has since organized several popular gatherings in Paris as well as in dozens of towns in France and abroad.
Employment, housing, refugees, feminism, participatory democracy, constitution. Many subjects, concerns and values were discussed every day at the Place de la République since March 31. These discussions demonstrated the real concerns of citizens without the filter of the media. With the revelations from the Panama Papers, public institutions, particularly political parties, do not seem to inspire much confidence.
#MFRB Debout
On this #41 March (lets accept this new calendar!) two dozens of MFRB members from all over France have met on the Place de la République to take part on the first day of the convergence of struggles. The atmosphere was rather cordial. Questions and answers were exchanged with passers-by all day long. A conference was held with the MFRB, the Réseau Salariat network and the Economist and basic income supporter Baptiste Mylondo.
Workshops, co-facilitated by members of the MFRB and the network Réseau salariat, have enabled hundreds of people to discuss the basic income, living wage and on matters related to work as well as education, equal opportunities, free time, and many other topics. By late afternoon, a debate enabled participants to better understand these topics.
Conference about work, basic income and living wage
At the beginning of the afternoon, Nicole Teke, international coordinator of the MFRB, introduced the conference presenting the French Movement for a Basic Income, the notion of basic income and how the idea is currently progressing in France, Europe and the world. Past experiments in Brazil, Namibia and India were also presented, the results of which in terms of health, schooling, women’s emancipation and economic recovery are very convincing.
Benoît Boritz, member of the CGT trade-union (General Confederation of Labour), journalist and author of the book Coopératives contre capitalism (“Cooperatives against capitalism”) has presented examples of companies that are self-managed by their employees in forms of cooperatives (SCOP). This form of organisation has been gaining ground since 2010, as a number of companies have chosen it for its greater capacity to ability adapt to an evolving economy. The SCOP often aims at integrating ecological issues in their production and daily operations. Since 2013 the SCOPs’ number has grown considerably, and today they employ about 51,000 workers.
Following this, Baptiste Mylondo, member of Utopia and teacher in economy and political philosophy presented his counterproposal to the labour reforms, in five articles:
Article 1: Recognize everyone’s work by giving everyone the status of producers and contributors, whether one is unemployed or employed, active or considered inactive.
Article 2: Free work from the constraint of employment. “We all work every day as volunteers in a large organisation called society” said Baptiste Mylondo.
Article 3: Establish a sufficient citizen’s income to a level equivalent to the poverty line calculated at 60% of median income, i.e. 1,000€.
Article 4: Set up a cooperative working model to free us from the grip of capitalism and exploitation.
Article 5: Free our lives of work’s temporal control by a reduction of working time and the creation of an unconditional right to chosen part-time work.
In conclusion, Baptiste Mylondo specified his thoughts and suggested what could be the first reform to be associated with the introduction of a basic income:
“I speak about a sufficient income, not a minimum income. About a space of acceptable inequalities. To escape poverty and exploitation, to create a society where everyone can participate in democratic life. I am in favor of a ratio of 1: 4 between the lowest income and the highest one.”
Finally, Stéphane Simard, member of the network Réseau Salariat, presented the living wage project – different from basic income, even though some similarities can be noticed. Starting from 18 years old, this life-long living wage is based primarily on the evolution of labour in the twentieth century, mainly through the creation of the general scheme of Social Security in 1945. The amount could increase by validation of qualifications – in regard to the individual’s contribution to the society in the previous years. This living wage would be financed through an overhaul of the contributions’ system. Each company would contribute with 60% of its added value to the salary fund, meaning the same 1250 billion now paid for salaries, and another part would be paid into an investments office that would be dedicated to financing projects as an alternative to bank loans.
Convergence of struggles
Dissociation of labour and income, the need to change subordination to work, the willingness to recognize everyone’s contribution to the common good, the recognition of social utility, the interest to the SCOP initiatives… The convergence of struggles supported by the #NuitDebout from the very beginning of the movement has definitely enabled basic income to take a prominent place in the public debate.
To see the photos of the event: https://www.flickr.com/photos/revenudebase/
Collectively written by the MFRB – translated by Celine Le Carpentier
by Guest Contributor | Mar 29, 2016 | Opinion
By Clive Lord
Almost everyone I know of who supports the Basic Income (BI) does so on the grounds of social justice. I agree of course, but for me less inequality is only the second most important of three reasons to support the Basic, or as we call it in Britain, the Citizen’s Income.
When I joined the embryonic PEOPLE, now the UK Green Party, in 1973, I listened as an enquirer to a spiel based on the threats to the global environment caused by indiscriminate economic growth, which had been exposed by the Massachusetts Institute of Technology report Limits to Growth in 1972. I agreed with every word, but I had a question:
“What is your social policy? You are proposing a deep recession. I agree it will be necessary, but every recession to date has caused widespread hardship. What will you do when desperate people start looting?”
The answer was: “If we have to, we shall shoot them in the street. Social breakdown is hardly the best way to alleviate poverty.”
It is all very well readers being as appalled as I was, because the basic premise was right. The speaker then challenged me:
“Do you have a better social policy in mind?”
I didn’t. I spent the journey home wrestling with my own question. Guess what I came up with. I discovered later that the Basic Income had already been invented several times, for different reasons, starting with Thomas Paine in 1798. But even now, 43 years later, limiting economic activity to the ability of the ecosphere to cope was not part of the “successful” Paris climate agreement in December 2015. It will fail without that. A Basic Income will allow a steady state economy to be acceptable to whole populations, and so become a policy option, but it will have to be world-wide.
It will be dismissed as “unaffordable” – this would only be true if the economy has collapsed beyond the ability to provide basic necessities for all, but if linked to ecological realities it will entail drastic redistribution. This brings us to the more common justification for a BI of reducing inequality, but if all the Basic Income does is allow the poor to spend money confiscated from the rich, the Paris agreement is doomed.
However, I am continually perplexed by the widespread failure to grasp the malevolence of means testing – taking benefits away as soon as the claimant has any other income.
The next few paragraphs refer to the UK but will apply anywhere means tested benefits are used. For the person losing a means tested benefit, the effect is identical to a massive marginal tax. The clearest demonstration of this can be found in an unexpected source: the 2009 report Dynamic Benefits: towards welfare that works, released by the Centre for Social Justice. The Centre was set up by Iain Duncan Smith, who has been Work and Pensions secretary in the UK Coalition, now Conservative government since 2010 – and has recently resigned in protest against announced cuts to disability benefits. Dynamic Benefits was the foundation for the government’s welfare ‘reform’ policies. Its key recommendation was the Universal Credit (UC), whereby on finding employment a claimant would retain 45% of their former benefits. The former Work and Pensions secretary reduced this to 35% on taking office. This means that the former claimant is faced with a tax rate equivalent of 65%. Bankers on the highest tax rate lose 45% of their income.
In Dynamic Benefits, there are several graphs showing benefit withdrawal rates as though they were taxes. In fact, the first part of the report, outlining the problem, is an excellent statement of the case for a Basic income. The UC is an emaciated BI which attempts to remove the work disincentive of means testing, but still penalises beneficiaries disproportionately vis-à-vis high-income earners.
While Iain Duncan Smith’s stated reason for resigning was cuts to disability benefits, I believe the real reason is the imminent scrapping of the UC. In four years since being announced, the UC has only reached 5% of the 4.5 million who should be eligible. The Department of Work and Pensions is claiming that the UC will be fully rolled out by May 2021. The track record of slippage to date makes that improbable. That the initiator of benefit sanctions, the bedroom tax, and Work Capability Assessments presents himself as the defender of the weak and vulnerable is sickening, but Dynamic Benefits remains a useful document for basic income debates.
But my third reason is much more fundamental. A Basic income can begin a shift to a totally new culture. Instead of haves vs have nots, or bosses vs workers , the new fault line will be those who want to preserve natural systems versus those who believe there will always be a technological answer. This will enable a low growth economy to protect the ecosphere.
Milton Friedman, an archetypal neo-liberal, was in favour of the Basic income. Market forces are a basic pillar of neo-liberalism, but instead of the current system whereby the strong can exploit the weak, persuasion will replace work compulsion. The would-be employee will have equal bargaining power with the boss. Needless to say, Employee Benefits such as healthcare cover will also need to be negotiable. Experiences in India and Namibia show that far from encouraging idleness, a BI facilitates entrepreneurship. But it will also allow people generally to heed eco-constraints, notably climate change, where competitive capitalism does not.
Anyone curious to know more, my Book, Citizens’ Income and Green Economics (2011) is available from the Green Economic Institute. My blog www.clivelord.wordpress.com which is more up to date, but 
inevitably less coherent, discusses the Tragedy of the Commons, population, the Greek crisis, migration and fracking.
We may yet save “Paris” (and the planet), and feed everyone. There is even something in it for the capitalists.
Clive Lord is a founding member of the British Green Party, a major contributor to the party’s first “Manifesto for a Sustainable Society” and a basic income advocate.
by Andre Coelho | Feb 22, 2016 | News
Credit to: Jornal Tornado Online
In the two articles below, André Julião writes a thorough summary of the Basic Income (BI) on the international scene as well as in Portugal. Based on an interview with Roberto Merrill, André Coelho, Ana Cristina Cunha and Pedro Teixeira, Julião unravels BI’s historical record, from Thomas More to Phillipe Van Parijs, and briefly reviews the evolution of Portuguese social security policies. He then outlines the present day BI implementation pilot plans in several countries, such as Finland, the Netherlands, India, Namibia and Canada, and presents Pedro Teixeira’s reasoning and justification for a probable decoupling between BI and rising prices. André Coelho presents further arguments for BI, and Ana Cristina Cunha elaborates upon current BI activism in Portugal. Finally, Julião presents a brief discussion of options for financing a BI, concluding that an income redistributive policy seems more attractive than a “Quantitative Easing” approach, at least for the people of Portugal.
Those that are interested in reading more articles in this area may want to use such resources as the article translation services from websites like espressotranslations.com so they can read a wider range of international articles on ours, and others websites. This will come in handy if you do not want to wait for the English translation, or wait for it to be translated into your own language.
More information is available at:
Language: Portuguese
André Julião, “Rendimento Básico Incondicional: utopia do século XXI ou base de um novo modelo social? [Basic Income: a XXI century Utopia or the basis of a new social model?]“, Jornal Tornado online, 24th January 2016
André Julião, “Davos: suspiro ou semente de uma nova ordem económica e social? [Davos: a shrug or seed for a new social and economic order?]“, Jornal Tornado online, 23th January 2016
