by Citizens' Income Trust | Jul 15, 2016 | Opinion
Author: Frances Hutchinson
The simple question, alluded to in the title of this article, is: ‘How do we end the wages system?’ That raises further questions – ‘Why end the wage system? What is wrong with it?’ or the fundamental question: ‘What is the wages system?’ It is my contention that all social and environmental reforms which ignore the role of money in directing human activity are doomed at best to be palliative, addressing individual causes for concern whilst ignoring the root causes from which the individual problems stem. As Marx and Veblen were well aware, the wages system lies at the heart of social injustice and ecological unsustainability. So long as absentee owners direct the work of waged or salaried employees (whether in private or state corporations), the motivation for reform will be constantly frustrated. Where money is the master motivation, all other values fade into subsidiary considerations. The major debates currently raging about war, famine, agribusiness, debt, environmental/ecological degradation, GM, world trade and poverty all stem from one central cause. People are held into doing what they are doing because they seek to profit financially from their cooperation with others. Whether the ‘profit’ is from speculative sale or sale of labour time becomes immaterial. Both are beholden to the same phenomenon: money is the first consideration in determining a course of action. The money economy is dividing people not only from their work and its product, but also from the land that ultimately sustains all forms of human society. If one cannot live on bread alone, one certainly cannot live on money at all. It is absolutely essential that material goods and services exist, and that the resources necessary for the production of those resources are cultivated and conserved. The money economy has come to obscure the practicalities of everyday life.
The money economy
With industrialisation, we were liberated economically from traditional social ties, only to become enslaved by a money system operating beyond everyday comprehension. Rights and responsibilities associated with respect for the ‘commons’ and social justice are swept aside in favour of economic pressures. Money is enthroned in a place of identifiable individuals whose ability to hold sway over others could be monitored by a system of checks and balances which, however imperfect, nevertheless made the oppressor ultimately accountable. When it comes to money management and distribution, some people struggle to meet ends. Although, it should be noted that the availability of home loans and auction finance do people grapple with the tight market. The present system of income distribution has come to seem as natural – even if as unpredictable – as the weather. Incomes are the reward for participating in the formal economy, regardless of whether the work is constructive or destructive of welfare.
As we have observed (Hutchinson et al., 2002, pp.42- 43), oikonomia, the material economy where tangible and useful wealth is created, is now dominated by chrematistics, the money economy that is parasitical upon oikonomia. The ‘real’ economy is the one that ‘earth has given and human hands have made’. The money economy takes from the God-given earth, and from human society, destroying and not replenishing. In short, we have an insane system of economics that counts waste, devastation, pollution, war and social devastation as ‘wealth’.
Take just a few examples. Perhaps car accidents and legal issues surrounding them. Or even environmental disaster adds to GNP (the over-all measure of total national wealth) because of the increase in economic activity – such as fire services, car replacement, ambulance, medical, insurance, and of course the legal costs for a car accident attorney springfield has to offer, and so on that it causes. With more than 11 million car accidents in the United States itself, there are many that lose their lives in the unfortunate occurrence. A lot of their economic activities, get halted if the deceased was the only earning member of the family. For this reason, they would need a personal injury lawyer to represent them in court to receive compensation, as deemed fit by the judicial system.
Furthermore, in the formal economy, food is manufactured, not by God, but by the ‘food industry’: in 1971 a food industry study found that total food expenditure in 1971 need only have been £1,800 million to provide a varied and healthy menu. It was actually £6,636 million – i.e. the food industry added four and a half thousand million pounds – in processing, preserving, packaging, and so on, with all the attendant waste and pollution. In chrematistic terms, we were all ‘better off’. Today, international rulings force small farmers in poor countries to abandon sustainable and reliable practices for mono-cultural cash crops for export. Across the world, ‘financial services’ and dealings far outweigh trade in actual goods and services, which form a mere 5 per cent of the total. The money economy continues to sweep across the world, devouring land and cheap labour sources, leaving social and ecological devastation in its wake. In Hong Kong firms no longer manufacture goods: they merely trade in goods produced in the cheap labour factories, spreading across China. Already, a decade ago, 85 per cent of China’s rivers were dead. The key players: corporations, academics, and politicians – are mesmerised by the money system. In purely chrematistic terms, we are all ‘better off’ if we work for money, regardless of the social and ecological impacts of that work.
Citizen’s Income and the National Dividend
Citizen’s Income seeks to alleviate poverty, particularly family poverty, under capitalism. Arguments for it flow from the observed shortcomings of the welfare system instituted by Beveridge in the aftermath of World War II. The arguments are often accepting of the terms and premises of the capitalist financial system, and sometimes – but not always – assume that full employment and a growing economy are needed to provide the means to pay for Citizen’s Incomes.
The Social Credit movement emerged from a very different stable. Just over one hundred years ago, Europe was plunged into a senseless war. In a brief moment of sanity, young soldiers on the front lines joined hands in singing Christmas carols. People then and since have asked why war is necessary. The Social Credit movement became a worldwide political force working to end war, environmental degradation and economic growth based upon war and built-in obsolescence. Its message was plain and clear. There is enough for everyone’s need, though not for everyone’s greed.
Clifford Hugh Douglas, author of the original Social Credit texts (See Hutchinson and Burkitt, 1997) considered the expenditure of human life and resources in the Great War something to be learned from, rather than something to be repeated for the sake of creating a strong, financially sound, economy. Social Credit was part of a much wider social movement in the so-called ‘inter-war years’ of the twentieth century. Progressive thinkers from all classes and all walks of life questioned the wisdom of basing the formal, finance-driven economy on production for war, waste and consumerism.
Douglas brought his shrewd, common-sense, analytical mind to bear upon the practicalities of the workings of the money economy. As the 1914-18 War raged across the world, factories were working at full capacity. Vast quantities of armaments, uniforms, tanks, machinery, ships and other forms of transport were churned out on all sides. Farmers on the land prospered, supplying food to the armies of military and civilian workers. But the apparent prosperity was ephemeral because it was dependent upon the workings of an unsound financial system. As the war ended, Douglas was an obscure engineer accounting the finances at Farnborough aircraft factory. He predicted the inter-war depression and explained how it would happen and why. He detailed how the finance to run the war was conjured up by the Government as debt, when it could just as easily have been created as credit, in which case the prosperity would continue after the War.
In the immediate aftermath of the War (1918-20) Douglas wrote a series of articles on finance and income distribution. These were closely studied amongst trade unionists, politicians, economists (including Keynes), and a wide spectrum of intellectuals. A vast literature on Social Credit, including weekly newspapers, books, pamphlets, and journal articles, circulated throughout the UK, the Commonwealth, the US, Scandinavia, and Tokyo in multiple editions. Douglas’s predictions were correct, and his work has never been faulted. What is physically possible is always financially possible, because finance is a man-made system of accounting, and can be adjusted to meet the will of the people.
At the heart of Social Credit theorising is the justification for paying a National Dividend to all citizens regardless of work status on grounds of the common cultural inheritance. Douglas argued that labour – paid work – does not create wealth: ‘The simple fact is that production is 95 per cent a matter of tools and process, which tools and process form the cultural inheritance of the community as a whole’, being the result of work done over generations by an army of technologists, the vast majority of whom are now dead (Douglas, 1919, p. 95). Thus claims to a share of the common cultural inheritance, which rightly belongs to the community as a whole, can be justified not by work, and not by private ownership of land and property, but by common right of citizenship. Over a period of three decades Douglas argued consistently that finance is purely a matter of accounting: what is practical and desirable on social grounds is financially possible, because finance is a man-made system. The key to economic democracy is the political will to bring about legal change.
Women and Social Credit
Proposals for a non-means-tested National Dividend, payable by right of citizenship, were of particular interest to women. Although Social Credit was not specifically a women’s movement, women who studied the economics of the social credit movement in the interwar years campaigned on the basis of its potential for improving the socio-economic status of women. Their arguments are echoed in current studies of mothering and home-making:
Mothers in the United Kingdom today are in an impossible situation. Our very title has been erased from Government policy on families [Guidance for Government Departments October 2014] and general political discussion in a pernicious Orwellian language trend. Women who are mothers are expected to engage in the workforce in a liberalist and capitalist tradition of individual interest where market forces reign supreme – there is no room for love and care, let alone awareness of interdependency common to all our lives. There seems to be no place for maternal care. No place for improved, supported services investing in family life.
So writes Vanessa Olorenshaw in her groundbreaking pamphlet, The Politics of Mothering.
Women activists of the 1930s argued that Social Credit offers every woman and man a birth-right income based on the productive capacity of the community. It would:
… ensure economic independence and freedom, for it will release her from being tied to the home when she wishes to live her own life or bound to some man who ill-treats her. Nor would she be driven to work-wage slavery in competition with men in order to stay alive when she has caring responsibilities within the household. Women would get equal pay for equal work because ‘a Social Credit Government will naturally stand for fair play for all citizens without distinction’. Each individual woman will be able to say ‘If I do this job as well as a man could do it, I shall want the same pay as a man.’ And if the employer says, ‘No’, she will be able to say: ‘Very well, I refuse the job. After all, I can live on my National Dividend.’ This places every woman in a very powerful position. (It will apply equally, of course, to badly-paid male workers.) (Quoted in Hutchinson and Burkitt 1997)
Women were politically active in support of the proposals throughout the UK, Canada, Australia, New Zealand and the United States over the middle decades of the twentieth century.
From master to servant
Central to the Social Credit debate are the core issues of farming, finance, and the household. To date, mainstream economic theory has failed to accommodate itself to the realities of economic life. These include the futility and waste of war, which is officially accounted as a plus, and the need for income security so that good work may be undertaken in the home, in the community, in local businesses, and on the land. Today, concerned individuals and groups are bringing forward the identical issues as those surrounding the massive international debate based upon the writings of C.H. Douglas less than a century ago. Douglas asked the fundamental question – why should it be ‘absolutely necessary’ for the workers to produce weapons of mass destruction in order to put food onto the household table? His question remains as valid today as when he first posed it a hundred years ago.
Frances Hutchinson is the author of Understanding the Financial System: Social Credit Revisited (2010) and of The Economics of Love, forthcoming.
References
Douglas, Clifford Hugh (1919) Economic Democracy
Hutchinson, Frances (2005) If citizen’s income is the answer, what is the question?, European Business Review, Vol. 17, No.2. pp193-200. www.emeraldinsight.com/charter
Hutchinson, Frances and Brian Burkitt (1997) The Political Economy of Social Credit and Guild Socialism, Routledge (Jon Carpenter 2005 reprint).
Hutchinson, Frances, Mary Mellor and Wendy Olsen (2002) The Politics of Money: Towards Sustainability and Economic Democracy, Pluto Press.
Olorenshaw, Vanessa (2015) The Politics of Mothering, available from www.facebook.com/Politics of Mothering.
by Kate McFarland | Jul 11, 2016 | Opinion
An article in the June 4th edition of The Economist, entitled “Basically Flawed,” argues that universal basic income is a radical policy that is just too risky to pursue. The anti-UBI argument itself is flawed, however, largely due to understating the benefit of UBI–if not ignoring its moral necessity.
According to an article in the June 4th edition of The Economist [1], universal basic income (UBI) is a policy of uncertain need but certain costs. A simple risk-benefit analysis, then, would advise us to maintain our current welfare states (perhaps with less radical adjustments) rather than gamble with a UBI.
The argument has two main components: first, establishing that there is no definite need for a UBI; second, establishing that a UBI presents unavoidable costs.
Concerning the first, the author assumes that there is one (and only one) reason why something like a UBI would become necessary: widespread unemployment due to new technologies. Here the author notes that the robot job takeover has not happened yet, and expresses skepticism that it ever will:
Worries that technological advance would mean the end of employment have, thus far, always proved misguided; as jobs on the farm were destroyed, work in the factory was created. Today’s angst over robots and artificial intelligence may well turn out to be another in a long line of such scares.
Having set aside robot-driven angst, the author turns to defend the claim that UBI has sure costs. The first and most obvious of these is financial: a UBI is certain to be expensive to any government that implements it. For example,
An economy as rich as America’s could afford to pay citizens a basic income worth about $10,000 a year if it began collecting about as much tax as a share of GDP as Germany and replaced all other welfare programmes with the basic-income payment.
Moreover, the author complains that a UBI would “destroy the conditionality on which modern welfare states are built” — leading to an “erosion” of the workforce:
During an experiment with a basic-income-like programme in Manitoba, Canada, most people continued to work. But over time, the stigma against leaving the workforce would surely erode: large segments of society could drift into an alienated idleness.
Finally, the author worries that it would be impossible to combine UBI with a reasonable immigration policy; immigrants would have to be barred or else treated as “second-class citizenries without access to state support.”
Thus, the author concludes, the risks of UBI — which are both large and near-certain — greatly outweigh its sole benefit as insurance against technologically-driven job loss (which might or might not occur).
Reply by Basic Income News editor Kate McFarland
The basic income proponent could, if she wished, directly attack any one of the author’s premises. She might be tempted to argue that a universal basic income could be afforded and that it could be reconciled with a fair immigration policy, contest the claim that it would cause people to stop working, or produce evidence that mass technological unemployment is indeed very likely.
For my own part, I am not particularly interested in quibbling over any of these points, however important they might be independently. Instead, I will concentrate on two overarching problems with the author’s argument:
1. The argument understates the potential benefits of a universal basic income, which far exceed security against a robot job apocalypse.
2. The argument assumes that risk-benefit analysis is an appropriate method by which to answer the question of whether to adopt a universal basic income. But this would not be the case if, for example, a basic income is required as a matter of individual rights or social justice.
Why do we need UBI?
In an article published last April, Rutger Bregman writes, “Forget about robots. The reasons why we need basic income are infinitely better.” This is a crucial viewpoint–and one common in basic income discourse, the media’s apparent fondness for “the robot issue” notwithstanding–which must be taken into account when addressing potential benefits of UBI.
Take, for instance, the elimination of poverty. When scholars and researchers like Pranab Bardhan, Nkateko Chauke, and the team at GiveDirectly–to name only a few–argue that developing nations should adopt a basic income, they are not worrying about robots; they are thinking about poverty and inequality.
But, of course, poverty is also a pressing and immediate concern in high-tech countries like the United States. Indeed, a recent article in the New York Times sparked a debate about whether a UBI could abolish poverty in the US. When Scott Santens and Vox’s Matthew Yglesias joined the fray to argue that it indeed could, they remained focused on the issue of present poverty–not future automation.
Perhaps the author of The Economist article believes that a UBI is unnecessary to fight poverty, because existing welfare programs could just as well be tweaked to accomplish this goal. But, if so, the author would overlook many known problems with means-testing, which a UBI might eliminate.
The abolition of poverty–along with all the hurdles, stigmatization, and poverty traps created by means-tested programs–is a potential benefit of UBI that is clearly quite profound, yet one the author fails to mention.
Furthermore, a benefit unique to UBI is that, if high enough, it would enable workers to refuse employment. This too promises many positive results in the here and now, without waiting for robots to arrive at the door.
A UBI could be an enormous boon to workers who need or desire to leave full-time employment, if only temporarily, in order to raise a child, care for an ailing family member, return to school, start a small business, participate in voluntary community services, contribute to the arts, or pursue any other unpaid project. UBI is often said to recognize the value of unpaid labor in all of its forms; current systems of social welfare do not.
Moreover, it is often argued that this ability to refuse work benefits even those workers who do wish to retain full-time employment, insofar as it increases their bargaining power: if a worker cannot be replaced by someone desperate to take any job just to survive, it is easier for that worker to demand higher wages, better working conditions, or shorter or more flexible hours. It is UBI, not existing welfare systems, that would generate this type of bargaining power.
None of these advantages of UBI are mentioned in the risk-benefit analysis in The Economist, despite the fact that they are arguably as near-to-certain as any of the alleged risks–robots or no robots–and would be positive impacts of very high magnitude. A UBI might well be expensive, but one should to consider its full range of benefits in order to properly assess whether it is worth its high price tag. The author does not.
Of course, this is all to grant that the use of risk/benefit analysis is a fitting approach to the decision of whether to pursue UBI–but I believe that even this assumption can, and should, be questioned.
Is UBI “just just”?
As evidenced by the various articles linked above, it is popular to argue in favor of basic income on the basis of its predicted effects: pro-UBI authors of cite empirical evidence of effectiveness cash-transfer to establish the claim that a UBI “will work”. That is, many authors argue that UBI will achieve certain desired outcomes (or not cause certain outcomes generally deemed undesirable, such as decreased workforce participation, laziness, or higher spending on alcohol or other temptation goods).
But what if a basic income is not merely an effective means to attain socially desirable ends? What if universal and unconditional basic income is mandated as a matter of social justice?
This is, in fact, far from an uncommon view within the basic income movement.
For example, Guy Standing and Yanis Varoufakis have recently described UBI as a form of social inheritance (cf. their linked lectures). The idea here is this: the money distributed in a UBI is money that rightfully belongs to all of us, equally, as inheritors of the wealth generated through the collective activities of our forebears.
Alternatively, one might argue for a right to a livable basic income in other commonly recognized individual rights–such as, perhaps most straightforwardly, a right to a certain minimal standard of living, just for being alive. Furthermore, a well-entrenched view in philosophical work on basic income–canonically presented by Philippe van Parijs and later developed in a somewhat different form by Karl Widerquist [2]–holds that the protection of freedom mandates an unconditional basic income.
If a universal basic income is a universal human right, then there is no question of whether the benefits are worth the risks; thus, arguments of the form given in The Economist don’t get off the ground. There is simply no question as to whether a UBI should be adopted: it should. The only question is how to manage whatever risks the policy would create, or perhaps how to tweak and fine-tune the policy to minimize risk.
If a basic income is a right–if it’s necessary as a matter of social justice–then we must find a way to fund it, even if it requires hefty tax increases on the rich (or even German levels of government spending!). And we must be willing to assume risks, including the possibility that some individuals will leave the workforce (some of them, perhaps, to simply smoke weed and watch Netflix).
This is not to suggest that we should ignore the potential risky outcomes. On the contrary, it is crucial to understand what the risks are, so that we might build safeguards against them. But, under the present supposition that basic income is simply a right, they should be viewed as potential problems that can–and must–be surmounted for the sake of what is owed to individuals and society.
[1] “Basically flawed,” The Economist, June 4, 2016.
[2] Such arguments are made in the books mentioned in the embedded links. N.B. All chapters from Widerquist’s work are available for free download from his website.
Thanks to Genevieve Shanahan and André Coelho for reviewing a draft of this article, and thanks to my supporters on Patreon.
“MET II Robot Lab” photo CC Georgina Rose.
by Kate McFarland | Jul 8, 2016 | News
From July 8-10, hundreds of progressive activists will convene in Buffalo, NY, for CommonBound, an international conference organized by the New Economy Coalition (NEC).
Among its many workshops, the conference will include one on basic income: Basic Income as a First Step Toward a Care-Centered Economy, led by Liane Gale and Ann Withorn, coordinators of the Basic Income Women Action Group.
The organizers describe the basic income workshop, which will be held on the morning of Sunday, July 10, as follows:
The concept of Basic Income has much potential as an element of a feminist and post-patriarchal economic system that values contributions to society by everyone. This workshop seeks to explore the various dimensions of how bringing together the concepts of a Basic Income and a Care-Centered Economy solidifies the vision of a new economic system, where caring for self, each other, and the planet is the primary focus. We are also committed to providing space for spontaneous relationship-building and horizontal decision-making processes as means of arriving at grassroots-formulated strategies and solutions to global issues and problems.
The workshop will incorporate the views of scholars and researchers such as Riane Eisler, Ina Praetorius, Elfriede Harth, and Ann Callie Manning, who were interviewed in the video Basic Income and the Care-Centered Economy, originally presented by Liane Gale at the 2016 North American Basic Income Guarantee (NABIG) Congress.
The NEC is a network of more than 100 organizations in the United States and Canada that share a commitment to building a better world through democratic governance, community ownership, and racial, economic, and climate justice (as paraphrased from the NEC’s vision statement).
Thanks to my supporters on Patreon. (To see how you too can support my work for Basic Income News, click the link.)
by Tyler Prochazka | Jul 8, 2016 | News
This past month, United Kingdom’s Compass advocacy and publication website published an analysis of the basic income. The report discussed how the basic income could be introduced in the UK, and how it would interact with other social service programs.
One of the authors, Stewart Lansley, a Compass associate and visiting fellow in the School of Policy Studies at the University of Bristol, discussed how “income support is being weakened while secure work is becoming less available,” and how the basic income would address the impending “robotic revolution.”
The Compass report mentions the sanctions that have been introduced in UK’s entitlement system and how that was leading some to fall through the cracks. What do you think the biggest challenge of the UK’s current entitlement system is and how does the UBI address it?
Britain’s system of social security – complex and unpopular – needs a fundamental rethink. With much greater reliance on means-testing, and the erosion of the role of universal benefits, it has moved sharply away from the original Beveridge blueprint. Further, the level of conditionality has been raised, with governments exercising greater and greater control over the lives of claimants, making the system much more punitive and intrusive. Since 2013, more than one million claimants have been sanctioned, leading to a loss of benefits for between one month and three years for some of the most vulnerable of claimants.
Mass sanctioning has led to an increase in destitution and has been one of the principal drivers of the great surge in dependency on food banks. By guaranteeing a weekly income, even at a modest rate, a universal basic income (UBI) would boost the universal element of income support, reduce dependency on means-testing and bring an end to sanctioning.
What are the economic and societal risks that the UBI schemes outlined in the Compass report address?
A UBI would help tackle two key economic and social risks. First, the widespread insecurity and growing risk of poverty associated with work. Today, more than 60 percent of those in relative poverty in the UK are in work, a significant rise compared with the immediate post-war decades. By providing a guaranteed, if modest income, a UBI offers a more robust safety net in a much more insecure, low paid and fragile working environment and will help reduce the risk of poverty amongst those in work.
Secondly, whatever its ultimate impact, the impending technological and robotic revolution is set to bring further disruption and upheaval to jobs and pay. Crucially, a UBI offers an effective way of providing income protection from the wider repercussions of accelerated automation. Further, the robotic revolution may eventually bring significant productivity gains, though to what extent and when remains uncertain. Although these are yet to be realized, these could offer potentially new and significant social and economic opportunities. There is a very real risk, however, that the gains – if they are realized – will be colonized by a small powerful elite, leading to a further jump in inequality and a surge in joblessness. A UBI would play a key role in ensuring that such gains are more evenly shared.
Do you think the alignment between the left and the right over the UBI is sustainable once the specific policy details for implementation are worked out? For example, the report makes clear the UBI would not be revenue neutral nor would it eliminate all means-tested benefits, which might alienate some supporters on the right.
The right and left see a UBI from very different standpoints. The right favours a basic income as a way of achieving a smaller state, and would see its introduction as an opportunity to sweep away a range of other forms of social protection. This is undoubtedly the motive behind the support coming from some Silicon Valley enthusiasts.
The left, on the other hand, views such a scheme as part of a strong state, as a way of securing a robust income floor, of tackling poverty and as a means of promoting equal citizenship. For the left, it is a profoundly democratic and egalitarian concept that promotes both security and greater personal freedom, and a recognition that all citizens have the right to some minimal claim on national income.
These views are clearly incompatible and it is inconceivable that a scheme could be devised that satisfied both sides. Left supporters are clear that a UBI scheme must be seen as a supplement to the wider public provision of services and not as a substitute. A continuing and strengthened role for the public provision of key public services and other forms of state intervention including a generous living wage remain essential as a way of creating further platforms for a more equal and just society.
What other benefits might a UBI offer?
Integral to the concept of a UBI is the promotion of greater freedom and choice, progressive changes with transformative potential. By providing basic security, it would give people more time and more bargaining power in the labour market. With a growing debate about how to balance work-life commitments in an era of much more insecure work, a UBI would offer people greater flexibility between work, leisure and education, and over the type and length of employment while providing greater opportunity for caring and wider community responsibilities. Some might choose to work less or take longer breaks between jobs. Others would be incentivized to start businesses. Some might drop out of work entirely to care or retrain while others might devote more time to leisure, personal care or community support and less to paid work. But implicit to a UBI is that all lifestyle choices would be equally valued.
Importantly, a UBI would both acknowledge and provide financial support for the mass of unpaid work, disproportionately undertaken by women, in childcare, care for the elderly and voluntary help in the wider community.
It would value but not over-value work. The solution to working age poverty has traditionally been through a mix of decently paid employment and state income support. But income support is being weakened while secure work is becoming less available. One of the great strengths of a basic income is that it separates survival from employment and production. Tackling poverty would become less dependent on the ‘work guarantee`.
In the various schemes outlined in the report, it is noted that some form of disability benefits and others would be preserved with the UBI. How would these benefits likely operate with a UBI and how would they change?
Because a flat rate payment makes no allowance for those with additional needs, some types of means-testing would need to stay, even as we moved over time to a fuller and more generous scheme. A feasible UBI system would, for example, need to be supplemented with, at least, the continuation of disability benefits and additional help to cope with high and variable essential living costs, especially housing and childcare.
To deal with the additional costs of disability, existing benefits for disabled people would remain and run alongside the UBI. In the simulations of different UBI schemes in the report, we have retained the Personal Independence Payment and Employment and Support Allowance.
What would be the benefits of creating a Social Wealth Fund to finance the UBI?
Creating a UBI-linked social wealth fund would be one way of securing an independent source of funding outside of the general tax pool. Social wealth funds are a potentially powerful tool in the progressive policy armoury. They are collectively held financial funds, publicly owned, and used for the wider social benefit of society. Such funds have been widely used across a range of countries and would ensure that a higher proportion of the national wealth is held in common and used for public benefit and not for the interests of the few. They are a way of ensuring that at least part of the benefits of some economic activity are pooled and shared amongst all citizens and across generations.
There is already one example of a fund dedicated to a citizen’s payment, one operating in Alaska since 1982. Here, the returns from a sovereign wealth fund, funded by oil revenue, are used to pay an annual citizen’s dividend. There is an important principle involved in such an arrangement: that citizens are the proper owners of the environment and have the right to share equally in its benefits. The benefits from a common asset should not be hived off to a small number of private owners.
Although the UK has already spent most of its oil revenue, there is no reason why such a social wealth fund could not be established using other sources of income. These could include the dividends from a range of other assets – including other natural resources – and the occasional one-off taxes on windfall profits. As in Alaska, such a fund could be allowed to grow over time, with part of the proceeds from its management paid back into the fund, and part used each year to partially fund a UBI scheme. Over time, such a fund could grow significantly, sufficient to help top up any shortfall necessary to pay for a workable UBI scheme.
An alternative, and more radical way of paying for a dedicated UBI fund would be by the dilution of the heavy concentration of capital ownership, achieved through a small annual charge on the owners of shares. Such a proposal was originally made by the distinguished economist and Nobel Laureate James Meade in the 1960s, as a direct way of tackling the risk of ever-growing inequality. Such an idea was widely debated and discussed in the UK, and in some European nations, in the 1970s and 1980s, while one version of such a scheme – the wage-earner fund – was introduced in Sweden in 1981 and lasted for 10 years, though it was not used to fund a UBI or citizen’s payment.
The report notes the growing support across Europe and the UK for the UBI. What are some steps UBI advocates can take to make it a reality?
The pilot schemes being planned for Canada, Finland, the Netherlands and France are having a profound effect on the wider debate about UBI. These forthcoming experiments are helping to build momentum in support of an idea that, until recently was confined mostly to a few think tanks, commentators and academics. Crucially, they will help provide some evidence of the dynamic effects – including on the incentive to work, employment patterns, changes in participants’ well-being and the reaction of employers.
The pilots have helped build interest in the UK, and it is now time to start building on that to promote a much wider national debate on the issue.
Ultimately, a real test of how such a scheme would work depends on the application of a proper, lengthy and adequately sized pilot with a control group. To take advantage of these developments, the UK campaign should follow the lead taken by others and work to build to case for its own pilot scheme.
by Kate McFarland | Jun 28, 2016 | News
On Saturday, June 25, the left-centrist Nova Scotia New Democratic Party (NDP) passed a resolution to “implement a guaranteed basic income for all Nova Scotians” at the party’s annual convention, according to an article in CBC News. The convention was attended by about 200 party delegates.
While no further details of the proposed provincial guaranteed basic income have been released, CBC News cites caucus chair Lenore Zann as explaining that “the idea of a basic minimum income is one she saw first hand while living in Sweden.” (Granted, this leaves unclear exactly what Zann has in mind; views on basic income in Sweden have been mixed, with the idea taken seriously by the Green Party but not in the mainstream.)
“‘This kind of idea, some people may still be in the old ages and think something like this is a radical, left-wing idea, but in fact, I would say they’re behind the times,’ she said.”
The Nova Scotia NDP is aligned with the federal NDP — the third largest party in the Canadian Parliament, holding 44 seats in the House of Commons. It also the third largest party in Nova Scotia’s provincial legislature
This is not the first time that a provincial New Democratic Party announced support for basic income. In November 2013, the Prince Edward Island NDP endorse a call for a guaranteed income pilot project, as did the Saskatchewan NDP in December 2015.
Other new resolutions passed at Saturday’s convention include free tuition for community college students and the reinstatement of Nova Scotia’s tax credits for the film industry.
News Reference:
Lisa Blackburn, “Nova Scotia New Democratic Party holds annual convention,” CBC News, June 26, 2016.
Image: Peggy’s Cove, Nova Scotia; CC0 Public Domain
Thanks to my supporters on Patreon. (To see how you too can support my work for Basic Income News, click the link.)
