by Kate McFarland | Nov 6, 2016 | News
In the last week of September 2016, the website Ideas for India published a symposium on universal basic income, featuring essays by six well-known Indian economists.
The e-symposium was conducted by Parikshit Ghosh, Professor at the Delhi School of Economics. Contributions are as follows:
• Pranab Bardhan (University of California, Berkeley) “Basic income in a poor country“
In his contribution, Bardhan allows that a universal basic income might be unaffordable in rich countries like the US and UK. But he argues that, nevertheless, a UBI is both feasible and desirable in India. Specifically, he considers a basic income set at about 75 percent of the poverty line, which would replace some but not all welfare programs. (Bardhan mentions public education, healthcare, childhood nutrition programs, and public works employment guarantee programs as ones that are important to retain.)
In addition to countering the argument that basic income would not be affordable, Bardhan responds to the objections that the policy would undermine the value of work and that poor individuals would squander their money. He admits, however, that gaining political support poses a struggle.
Bardhan’s article is an updated and extended version of a piece written for Project Syndicate in June.
• Abhijit Banerjee (Massachusetts Institute of Technology and GiveDirectly) “Universal basic income: The best way to welfare“
Banerjee’s essay is a reprint of a piece initially published on the Indian Express in June, framed in the context of the defeat of the Swiss referendum on basic income. Banerjee argues that, despite the failure of the Swiss referendum, the debate on basic income is not over–and, specifically, India should consider UBI as a way to reduce bureaucracy and make the welfare system more efficient.
• Maitreesh Ghatak (London School of Economics) “Is India ready for a universal basic income scheme?“
In his article, originally published on NDTV, Ghatak argues that India can afford a basic income–specifically, one sufficient to bring every Indian above the poverty line–by cutting subsidies, reducing wasteful spending, and reforming the tax code. He maintains, additionally, that a basic income is not a silver bullet to eliminate poverty, and would need to be introduced in addition to (rather than in place of) other anti-poverty programs and strategies.
• Debraj Ray (New York University) “The universal basic share“
Ray develops a proposal for what he calls a universal basic share in India: a policy in which a fixed percentage of the country’s GDP is set aside to distribute to residents in the form of individual cash transfers. He admits that he has “no clue whether we have the political will to pull something like this off” but is hopeful that the ability to start with small shares might make the policy more tractable politically.
• Kalle Moene (University of Oslo) with Debraj Ray “The universal basic share and social incentives“
In a jointly authored piece with Moene, Ray expands upon the projected benefits of a universal basic share (UBS)–for social cohesion, economic growth, and even possibly sustainable development. They argue, moreover, that UBS can accomplish some of these goals more effectively than UBI.
• T.N. Srinivasan (Yale University) “Minimum standard of living for all Indians“
Srinivasan revisits a minimum income policy that was debated in India during the 1960s.
Reviewed by Robert Gordon
Photo CC BY-NC 2.0 Rishi Bandopadhay
by Kate McFarland | Nov 4, 2016 | News
The latest step to Ontario’s basic income pilot occurred on Thursday, November 3, 2016, when the Ministry of Community and Social Services released a call for public input on the design and objectives of the study and published a new comprehensive report from Project Adviser Hugh Segal.
In February 2016, the provincial government of Ontario, Canada announced a budgetary commitment to finance a pilot study of a basic income guarantee. In June, the government appointed former senator Hugh Segal — who has been promoting basic income in Canada for more than a decade — as the project’s Special Adviser. (For some of Segal’s past writings on basic income, see here.)
Segal has now released a detailed and comprehensive discussion paper in which he lays out his recommendations for the design and administration of the pilot. The government is soliciting input from the public before it makes its final decision.
This release of this proposal for Ontario’s basic income study closely follows the publication of details about the upcoming pilots in Finland and the Netherlands, as well as the charity GiveDirectly’s study in Kenya.
A Negative Income Tax Model
If the provincial government of Ontario decides to adopt Segal’s newly announced proposal, it will test a basic income guarantee (BIG) — wherein cash payments are disbursed automatically and unconditionally to individuals whose income falls below a certain threshold — as a replacement to its Ontario Works program and Ontario Disability Support Program.
Segal recommends that participants in the pilot be guaranteed a monthly income of at least $1320, or 75 percent of the province’s Low Income Measure, with an additional $500 supplement to those with disabilities.
In Segal’s proposal, the BIG is to be structured as a negative income tax (NIT), in which the amount of the subsidy is tapered off for higher earners, in contrast to a “demogrant” model wherein all participants would receive a fixed monthly payment regardless of other earnings. That is, the government would “top up” the earnings of pilot participants whose incomes fall beneath $1320 (or other level chosen for the basic income guarantee). Those who earn more than $1320 per month would receive smaller benefits or, depending on earnings, none at all.
Eligibility is to extend to all residents of the selected communities between the ages of 18 and 65, regardless of current income. All participants will be guaranteed a minimum income, as per the NIT model summarized above. However, depending on their initial and subsequent earned income, some participants may not receive any payment during the course of the experiment. As Segal’s discussion paper notes, “even though the program is based on a principle of universal access, not all participants will receive symmetric payments or any payment at all.”
Segal offers two reasons for his recommendation that the pilot test a negative income tax rather than a universal demogrant. First, this makes the design unique: no other planned trial of a basic income guarantee will employ the NIT model; thus, outside of Ontario’s pilot, no data on the impact of this specific model will be collected. Second, Segal believes that a demogrant, unlike an NIT, is not realistically affordable in Canada (nor in other developed nations).
Experimental Design
Segal recommends two types of studies:
(1) A randomized control trial, to be conducted in an urban center, in which different treatment groups receive different levels of guaranteed income and/or pay different rates of taxes on additional earned income. Subjects will be randomly sampled from all residents (of at least one year) between the ages of 18 to 65, with participation in the experiment being voluntary. Participants would then be randomly assigned to one of four groups, including a control.
(2) “Saturation sites” in which all members of a community receive the basic income guarantee (and are subject to corresponding changes in the tax schedule). Ideally, according to Segal’s report, “one saturation site would be located in southern Ontario, one in northern Ontario, and one would be chosen and planned in close collaboration with First Nations communities.”
In each case, the study is to last a minimum of three years.
Measured Outcomes
According to the discussion paper, the “core question” that Ontario’s pilot endeavors to answer is, in Segal’s words, “Is there a more humane and efficient way to reduce poverty, a way that better respects the rights of those in poverty to make their own life choices, reduces stigma and growth in bureaucracy, yet produces improved outcomes in terms of work and life prospects?”
In order to answer this question, Segal lays out many variables that he urges researchers to monitor and analyze in the pilot, including the following:
- Administrative costs or savings to the government.
- Health outcomes, as measured by (for example) prescription drug use or number of visits to primary care physicians, emergency departments, and hospitals.
- “Life choices” such as career decisions, education decisions, family decisions, and choices in living arrangements.
- Education outcomes of participants and their children, including completion, attendance, and standardized test scores.
- Work behavior, including employment status, hours worked, number of jobs, and participation in job-search activities. The report mentions participation in the underground economy as another outcome of interest.
- “Food security” status as assessed through the Canadian Community Health Survey and the researchers’ own surveys or interviews.
- Subjects’ “perceptions of their place in society, their capacity to contribute, their social environment’s capacity to protect them” as collected through interviews.
- Interactions between the basic income guarantee and other welfare programs (e.g. the Canada Child Benefit).
- In saturation sites, community-level impacts such as changes in rent and prices of goods and services, crime and incarceration rates, civic participation, and the use of public services.
Thus, the Ontario pilot is likely to examine a much wider and more diverse range of outcomes than the impending basic income pilots in Finland and the Netherlands, which focus more narrowly on assessing the impact of a basic income guarantee on employment.
This difference follows in part from a deliberate decision not merely to reproduce these studies. Segal states Ontario should not duplicate research being conducted elsewhere, for the sake of “maximiz[ing] the diversity of various different data sets generated by such endeavours.”
National Context
Segal recommends that Canada’s federal government “consider partnering with any willing province on any Basic Income pilots now being considered or contemplated.”
As Segal describes in the report (links added), Ontario is not alone in Canada in its interest in pursuing a basic income pilot:
“[T]he federal government introduced an enhanced child benefit in July 2016, with the objective of constructively increasing the income of low and middle-income Canadian families with children. Moreover, the House of Commons Finance Committee recommended in its pre-budget report that the government of Canada move forward with a pilot project on Basic Income.
“In its most recent ministerial mandate letter, the government of Quebec instructed the Minister of Employment and Social Solidarity to modernize income support programs and embrace better ways of reducing poverty, including a Basic Income guarantee. The Quebec Liberal Party Youth Wing, in August 2016, summoned the government to implement a Basic Income guarantee in lieu of the province’s current welfare system. The government of Nova Scotia has initiated a comprehensive social support review looking for better ways to eliminate the welfare wall and to better support the working poor. The mayors of Calgary and Edmonton have welcomed the idea of a Basic Income guarantee and associated pilot projects, as has Alberta’s Minister of Finance. In August 2015, the Government of Saskatchewan Advisory Group on Poverty Reduction also recommended a Basic Income pilot.”
Call for Input
As announced on November 3, 2016, Ontario’s Ministry of Community and Social Services will be conducting consultations to solicit public input on the basic income trial, guided by Segal’s discussion paper. Consultations will run through January 2017.
Those who want to provide input may contribute in one of two ways: attend an in-person meeting (see the schedule here) or share feedback online (until January 31, 2017).
The first stage of the pilot study — selecting the sites, obtaining access to data sources, and selecting and obtaining consent from participants — is slated to commence before the end of March 2017.
More Information
News release from the Ontario government (Ministry of Community and Social Services): “Ontario Seeking Input on Basic Income Pilot”
Discussion paper: “Finding a Better Way: A Basic Income Pilot Project for Ontario” by Hugh Segal.
Thanks to Jenna van Draanen for proofreading a draft of this article.
Cover photo: “Terminally Invisible” CC BY-NC 2.0 Kat Northern Lights Man (taken in Toronto, Ontario).
by Florie Barnhoorn | Nov 2, 2016 | News
A citizens’ initiative for the introduction of a basic income in the Netherlands in 2018 recently handed over a petition containing 58,800 signatures calling for a debate in the Parliament. The signatories are advocates of a guaranteed income of approximately 1000 EUR per month for all adults, plus basic health insurance and an extra payment for children under the age of 18 years. The supporters say that a basic income will allow everyone more freedom to decide whether to work, study, start a company or, for example, take care of elderly family members, instead of being stuck in a hated job to provide for their families. The citizens’ initiative has collected 58,800 signatures, significantly more than the 40,000 needed to place a controversial issue on the agenda of the Parliament.
The paper invitation to sign the petition was spread as a ‘Civil Relief Assessment Notice’, similar to an assessment notice directed to all Dutch taxpayers. According to Johan Luijendijk, one of the initiators of the citizens’ initiative and co-organizer of Basicincome2018, an informal digital platform for sharing information on basic income and the exchange of experiences, the threshold of 40,000 signatures was already met in April: “This happened so fast that we adjusted our ambitions to 100,000. But the growth slowed down, so if we continue at this rate, we will not achieve our goal soon.” He believes that the general public is still unfamiliar with the subject and that the relatively small circle of proponents has been reached: “I suppose that many people still have ’cold feet’ to endorse the rather radical idea of a unconditional basic income”, he says. Hence, it was decided to submit the initiative this week.
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Civil Relief Assessment Notice
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After the presentation of the petition to Members of Parliament, the signatures will be counted and validated. The whole process can be completed in about a month, according to RTL. It is also checked whether this is a topic parliament hasn’t dealt with recently. Last September, members of the Second Chamber of Parliament (House of Representatives) discussed with the Minister for Social Affairs and Employment, Lodewijk Asscher (Partij van de Arbeid / PvdA / Labour Party) a memorandum initiated by Norbert Klein, leader of the Vrijzinnige Partij (Cultural Liberal Party) wherein he advocates the introduction of a basic income. However, the MPs have postponed the voting procedure, so there is a chance that Parliament is obliged to consider the current initiative. If a majority is in favor of the proposal, the responsible minister will be asked to change his or her policy towards a basic income.
At present, the basic income movement has to transfer its focus to the upcoming elections for new members of the House of Representatives in March 2017. Political parties are now making their programmes. So far, only a few of them (Party for the Animals with 2 seats in Parliament; Cultural Liberal Party with 1 seat; Pirate Party no seats) have explicitly included a guaranteed income in their programmes for the next four year. Intensive debates will take place with GroenLinks (GreenLeft), PvdA (Labour Party), D66 (Democrats 66), SP (Socialist Party) and the minority of proponents in VVD (People’s Party for Freedom and Democracy) and CDA (Christian Democratic Appeal) in order to persuade these political parties to adopt an unconditional basic income as an indispensable part of their political ambitions (according to an email communication with Alexander de Roo, the chairman of the Dutch branch of BIEN). “We are also planning to intensify our lobby towards entrepreneurs. We want them to speak openly about the benefits and necessity of the introduction of a universal basic income.”
Thanks to Ali Özgür Abalı for reviewing a draft of this article.
Credit Picture ‘Public debate on basic income‘ CC Zeptonn
Credit Pictures’ Civil Relief Assessment Notice‘ Verlichtingsdienst
by Hilde Latour | Nov 1, 2016 | Research
In a recent review, the World Bank estimates that around 150 countries in the ‘developing world’ have implemented cash assistance programmes, which together reach approximately 800 million people.
The impact of such programmes in sub-Saharan Africa was thoroughly evaluated, using experimental data from two Unconditional Cash Transfer (UCT) programmes implemented by the Government of Zambia, where each programme is accompanied by a randomized controlled trial (RCT).
A UCT is similar to an Unconditional Basic Income (UBI) in that beneficiaries are paid directly in cash with no requirements on their actions. The main difference between the types of programmes concerns the inclusion criteria for participation. A UBI is targeted at every citizen, regardless of (for instance) socioeconomic status, whereas the UCT’s are often available for the poor population only, often with specific inclusion criteria, such as the presence of children of a specific age in a household or geographical criteria.
In 2010, the Zambian government began testing two different UCT-programmes. The programmes are still on-going. One of them is targeted at households with a child under age 3, while the other is targeted at households with various types of vulnerabilities (female or elderly headed households taking care of orphans or disabled children). Neither of the programmes is explicitly poverty targeted at the household level, but the (geographical) inclusion criteria resulted in 90% of beneficiaries below the Zambian poverty line. The outcome-parameters are identical in the two programmes. In each case, the annual amount transferred to a household is $144 ($24 every two months).
The effects after 2 and 3 years were compared to baseline. Far-reaching effects were reported in both groups, not only on the primary objective, food security and consumption, but also on a range of productive and economic outcomes.
A relatively simple flat cash transfer, unconditional and paid every two months, is shown to have wide-ranging effects on ultra-poor households in rural Zambia, significantly raising consumption and increasing food security, children’s schooling and material well-being, while at the same time strengthening economic capacity and assets.
After three years, household spending was -on average- 59% larger than the value of the transfer received.
These results are presented in a paper published by UNICEF: “Can Unconditional Cash Transfers Lead to Sustainable Poverty Reduction? Evidence from two government-led programmes in Zambia.”
Additional info:
A Basic Income News article by Tyler Prochazka about a recent meta-analysis (of 165 studies) on the effects of Cash Transfers can be found here.
cover photo (published with permission) and full citation of the paper:
Handa, Sudhanshu; Natali, Luisa; Seidenfeld, David; Tembo, Gelson; Davis, Benjamin. Can Unconditional Cash Transfers Lead to Sustainable Poverty Reduction? Evidence from two government-led programmes in Zambia, Innocenti Working Papers no. IWP_2016_21, UNICEF Office of Research – Innocenti, Florence
Special thanks to Josh Martin and Kate McFarland for reviewing this article.
by Dave Clegg | Oct 25, 2016 | News
CTV news, Sept 22/16 reports Vancouver BC city council will implement a “living wage” policy deemed to be a minimum of $20.64 an hour for its municipal employees. In the Fraser valley just a few miles east of the Vancouver boundaries that living wage is pegged at $16.28.
This could easily be characterized as an opening salvo for the Basic Income by highlighting the huge discrepancies between the wages being offered to our most vulnerable citizens and the soaring costs of living today. Sadly, these civic employees are but a small fraction of the workers in the Vancouver area, more and more of whom, are in need of a real, honest ‘living wage’. Conversely, the Vancouver “living wage” is a long way from the minimum wage of $10.85 an hour recently set by its own BC government for everyone else in the province unfortunate enough not to be in a civic union or to have a full work week.
The Living Wage for Families Campaign – initiated by the Vancouver non-profit First Call: BC Child and Youth Advocacy Coalition – is focused primarily on a fair and compensatory exchanges of labour for wages. They “define a living wage as an hourly amount a two-parent family with two children needs to earn to cover basic expenses, including food, clothing, rental housing, child care, transportation and a small savings to cover illness or emergencies”. This idea also assumes that a person is able to acquire enough working hours to equal 35 hours a week or more.
However, a truly functional BI does not discriminate or target any particular group or individual or hours worked. A BI has to be universal in its application to be truly equitable and fair. Of course there have to be some limiting parameters such as citizenship and/or residency for enfranchisement. Most importantly, a BI helps resolve the marginalizing and stigmatizing of our most vulnerable citizens as witnessed with the managing, policing and monitoring of so many of our social programs today.
That said, championing a living wage is a good start, but it is far too limited in scope. Of course, a voluntary application of it amongst all employers would surely result in even more inequities within the labour market, while mandating it would surely ignite an employers revolt.
A Basic Income is the most certain avenue to achieving the goal of the “… amount a two-parent family with two children needs to earn to cover basic expenses, including food, clothing, rental housing, child care, transportation and a small savings to cover illness or emergencies”. In fact, a BI might very well motivate employers to offer far more than a living wage in terms of competitive salaries and benefits when prospective employees are able to bargain without the spectre of homelessness and destitution lurking in the background.
Image: Vancouver CC BY-NC-ND 2.0 Neil Roger
