by Kate McFarland | Jun 22, 2016 | News
Eighteen members of the European Parliament have signed an open letter to the Head of the European Central Bank, emphasizing the need to consider “helicopter money” — a proposal to distribute money directly to people as a citizens’ dividend.
Some advocates argue that a basic income should be financed by “helicopter money” — the printing of new money by central banks for direct distribution to individuals. To be sure, the policy is contested, even among basic income supporters. Many suggest redistributive policies to fund a basic income, as opposed to the creation of new money, and some have vocally opposed helicopter money.
However, while basic income advocates might argue about the advisability of printing new money, the European Central Bank (ECB) has pressed on with its decision to do so: under the Quantitative Easing (QE) program, which ECB President Mario Draghi initiated in March 2015, the ECB been creating €60 billion each month. The ECB then uses this money to purchase government bonds, primarily from private institutions.
The question at this point is not whether to print new money, but what to do with it.
Many economists have worried that QE has been ineffective. Although the policy is meant to stimulate the economy (in particular, inflation), detractors contend that it has done little to spur economic growth — while, meanwhile, poverty and inequality have increased, and inflation remains very low.
The Quantitative Easing for the People campaign holds that, rather than being given to banks, “the money created through QE should be spent into the real economy so that it can benefit individuals and society as a whole.” For example, the money could be distributed directly to individuals, as in helicopter money.
On June 17th, QE for the People announced that a group of 18 Members of the European Parliament signed an open letter to Mario Draghi “calling on the ECB to study the viability and implementation of helicopter money.” Signatories include MEPs from the Left, the Greens and Socialists.
The letter puts forward two proposals [as alternative policies to QE], including a ‘green quantitative easing’ plan and the so-called ‘helicopter money’, a mechanism by which central banks would distribute money directly to individuals. It was co-signed by MEPs from 11 countries of the EU, including representatives of the Socialists and Democrats, the Greens, and members of the European United Left/Nordic Green Left groups of the European Parliament.
In March, Draghi called helicopter money a “very interesting concept.” Nonetheless, the ECB was not considering it. The letter from the MEPs urges Draghi and the ECB to reconsider.
You recently cited the potential legal obstacles to the deployment of helicopter money. However, several eminent economists have already outlined how helicopter money could be distributed directly by the ECB, without going through government accounts and remaining in compliance with the EU Treaties. [emphasis in original]
Stan Jourdan, Campaign Manager for QE for the People and former basic income campaigner, has called the letter “a strong signal that an alternative to QE is needed, and that there is political appetite for discussing innovative monetary policy ideas.”
“The letter is an outstretched hand to the ECB to open up the discussion on policy alternatives with the Parliament. We hope that Mr Draghi takes up their offer.”
The complete letter, as well as the list of signatories, can be found on QE for the People’s website.
QE for the People is supported by multiple basic income advocacy groups, including Unconditional Basic Income Europe, Mouvement Français pour un Revenu de base (France), Runder Tisch Grundeinkommen (Austria), and Rendimento Básico Portugal.
Mario Draghi photo (2014) CC European Parliament
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by Guest Contributor | Jun 20, 2016 | Opinion
The level of Basic Income (BI) is a matter of heated debate in discussions of BI for national implementation, investigating the level at which BI would be ‘high enough’. There is also growing dispute regarding ‘partial’ vs. ’full’ BI. This was the central topic of investigation at this year’s BI conference in Maastricht in January. The following calculations, using a common formula and comparing BI levels for 24 European/OECD countries, aim to assist in the resolution of this debate.
We don’t want to make the system worse than it is. It’s logical, then, that the minimal level of BI should reach, at least, the level of current Social Assistance (SA): we could call this ‘partial’ BI. All BI proposals included in this analysis satisfy this condition.
It follows that implementation of a BI close to the level offered by the current social security system (e.g., the SA level) implies budget neutrality in countries with a more universal system.[1] This follows the argument “If we can afford our current welfare system, we can afford basic income” that Max Ghenis has well elaborated. These proposals might be socially more acceptable, given that the change would be ‘minimal’.
So, if the level of SA in a country indicates 1) the socially acceptable level of social aid and 2) the first estimation of the social welfare budget, BI at the same level would likely be the most financially and socially affordable solution, offering the shortest implementation time frame. Proposals for Slovenia[2], Hungary[3] and Finland[4] belong to this category.
On the other hand, the level of BI should be high enough to ensure a material existence and participation in society. We assume this when we argue that BI should be at least at the level of the current Poverty Threshold (PT): we could call this ’full’ BI. BI at such a level would probably fulfill the role of an emancipatory welfare system.[5] Proposals for Switzerland[6] and the Netherlands[7] fit into this second category.
The question is, how costly are lowered aspirations regarding a ‘partial’ BI level (e.g., in Slovenia, Finland and Hungary) in service of affordability and/or social acceptance in the foreseeable future? Will we achieve anything? As the microsimulation in Slovenia demonstrated, however, even a partial BI proposal (budget neutral, well below PT and above SA) proved to be: 1) better for the majority, 2) the same or better for the more vulnerable and 3) better for the lowest deciles. The Hungarian BI proposal seems to draw similar conclusions.
To serve discussion regarding the level of BI in different countries, a common formula (similar to that used for the Slovenian proposal) was used to calculate the levels of BI proposed in various countries.
Formula: BI = an average of three components:
- Social Assistance for a single person with no children: Indicates the currently acceptable minimal level of social aid (and the ‘budget’ of the current social security system).
- 1/2 of the Poverty Threshold at the point of 60% of the median income: Takes into account income distribution and the risk of poverty.
- 1/3 of average net wages: Takes into account the ‘value of work.’
A table with Basic Income calculations for 24 European and OECD countries allows us to draw comparisons across and within countries regarding: the social protection system (e.g., SA), the average wage (AW), the poverty threshold (PT), BI calculations using the same formula (both in national currencies and euro) and different BI proposals. It’s very important to note, however, that in countries where the level of SA is already higher than the BI calculation, the existing SA should be taken as a starting point. BI proposals for Finland and the Netherlands belong to this group.
Such BI calculations (that are above SA & ‘budget neutral’ & below PT) could serve BI discourse as the first benchmark:
- at which we could expect results that would be: a) better for the majority, b) the same or better for the more vulnerable and c) better for the lowest deciles;
- of the BI level calculation for countries that, as yet, have made no BI calculations;
- to evaluate competing national proposals;
- to evaluate proposals across countries;
- to evaluate existing social security systems, investigating by how much they diverge from this preferable solution;
- of common European social welfare solutions made by the people (of 99%) for the people and not from the EU elites.
Valerija Korošec: PhD in Postmodern Sociology, MSc in European Social Policy Analysis. Author of (eng) UBI Proposal in Slovenia (2012) sl. Predlog UTD v Sloveniji: Zakaj in kako?(2010). Co-editor UBI in Slovenia (2011). Member of Sekcija za promocijo UTD. Member of UBIE. Slovenian representative in BIEN. Fields of expertise: poverty, inequality, sastifaction with life, social policy anlaysis, gender equality, ‘beyond GDP’, paradigm shift, postmodernism, UTD, basic income. Slovenian. Born 1966 and raised in Maribor. Lives in Ljubljana. Employed at the Institue of Macroeconomic Analysis and Development (Government Office of Republic Slovenia). Views under my name are my own. @valerijaSlo
Footnotes:
[1] All included countries have a universal SA system, except: 1) Finland, Germany, Belgium, Estonia and Denmark, which have different levels of assistance based on employment status according to OECD statistic – in these cases it was the data for the ‘Employed’ SA level that were included; and 2) the United Kingdom, Greece and Italy, which have no scheme comparable to SA.
[2] https://basicincome.org/bien/pdf/munich2012/Korosec.pdf
[3] https://let.azurewebsites.net/upload/tanulmany.pdf (English version unavailable).
[4] https://basicincome.org/news/2015/12/finland-basic-income-experiment-what-we-know/
[5] https://basicincome-europe.org/ubie/charter-ubie/
[6] https://www.reuters.com/article/us-swiss-pay-idUSBRE9930O620131004
[7] Alexander de Roo, by mail.
by Jessica "Trinley" Rafka | Jun 9, 2016 | News
Original article published in SPREEZEITUNG, January 11th, 2016, written by Ursula Pidun. Translation by Jessica Rafka.
Discussions about an unconditional basic income have been around for a while. But this topic is not picking up steam. What are the reasons for this, and why are unions and political parties still very much against a basic income? We will be discussing these questions, and the many different social, economic, and political advantages of having a UBI (Unconditional Basic Income) with Reimund Acker, who has worked as a council member of the non-party affiliated, 2004 founded, Netzwerk Grundeinkommen (Basic Income Network) in Germany.
The network contributes to the introduction of basic income to Germany and other countries. This organization counts more then 4,000 individual members, and over a hundred member organizations—including the BDKJ (Federation of Catholic Youth), the KAB (Catholic Worker Movement), and the AWO-Jugend (The Workers’ Welfare-Youth), each with more than 100,000 members—it is the largest basic income organization in the world. The Network is the German affiliate of the Basic Income Earth Network (BIEN), and a member of the Unconditional Basic Income Europe (UBIE) network. Together with the Austrian and Swiss Basic Income Networks, they’ve held three conventions, and organized the biannual BIEN-Congress 2012 in Munich, which was attended by 450 scientists, activists, and politicians from all over the world.
Mr. Acker, you are an elected councilor of Netzwerk Grundeinkommen. When did you get involved with this topic and to what extent?
Reimund Acker, Netzwerk Grundeinkommen
Since 2008, I’ve been active as an honorary volunteer of the network council, that acts as an executive committee of the network. Back then only a few experts knew what to make of the concept of “basic income”. Meanwhile, it is so well-known that the media uses it without explanation. The high profile that basic income has gained in Germany is thanks to important players like Götz Werner, Susanne Wiest and Michael Bohmeyer, but particularly the work of the Network that will be 12 years old this fall.
Political parties still hesitate to embrace a basic income, despite the growing approval among renowned experts. What are the causes and what is the current status within the parties?
Basic income had a bad start in leftist circles, because it was initially suspected to be a neoliberal concept. Meanwhile, however, word got around that this assumption would only be true for a partial basic income – a UBI, that’s too low to live on.
In the 80s the Green Party still had the basic income issue in their repertoire. I, for one, learned about it there. It got lost temporarily on their way to power. The Social Democrats are afraid that their golden calf “work”, would be damaged by basic income. As if the value of work would increase by being forced on people! Veteran Greens and Social Democrats often show a certain loyalty to their Hartz Laws: “But we meant well!”
For the Conservatives, the basic income seems to have fallen victim to a skiing accident. It happened earlier to Dieter Althaus, former Prime Minister of Thuringia, who designed his own basic income model which he had examined by the Konrad Adenauer Foundation to tender it to his party for inclusion in the program. Althaus disappeared from the political stage back then and with him his project.
To date, the most tragic blow to basic income happened within the party that carries “Freedom” in its name. Since freedom is still the primary focus of basic income and not free money from the government, which we already have. The former liberals, who today are mere neo-liberals, wanted to jump on the UBI band-wagon with their “citizen’s income”, but it was just a “Hartz-V”. Even the great liberal Ralf Dahrendorf, couldn’t change anything when he wrote in their register on the occasion of an anniversary celebration of the Friedrich Naumann Foundation, convening all the party members including the complete FDP (Free Democratic Party) leadership that a basic income—and not their silly citizens income—belongs on every liberal’s agenda. All applauded well-behaved.
With so much discussion in virtually all relevant parties you would think there would slowly be more of a movement?
Meanwhile, there are at least strong minorities for the basic income in the Leftist Party and the Green Party. The Pirates, as the only not so small party, have it on their program. All three parties respectively promised in their last election programs the establishment of a committee of enquiry for a basic income. Sadly, the Green Party has meanwhile backed out. The public reluctance of politicians when it comes to basic income does not necessarily reflect the true majorities among them, as long as the endorsement of a basic income could harm their career.
The nature of UBI is to separate income from work. In other words, basic income could significantly strengthen the position of workers. Isn’t it long overdue in the 21st Century?
Yes, whereby the separation of work and income is limited at the poverty line. Thus, there remains an incentive for gainful employment, even more so than under Hartz IV. The prospect to turn down a job offer because of a basic income, should lead to more power for workers, reinforced by unionization. A very important effect that I see, that basic income could have, is the weakening potential to ransom job security. Today, someone just needs to yell “jobs” and all our good intentions are forgotten. To the extent that existential fears would decrease with the basic income, workers, politicians and ultimately the whole of society would be less vulnerable to extortion.
Parts of the economy fear a striking competitive disadvantage. Is this concern justified in your view?
No, on the contrary I believe that the introduction of basic income would increase competition between countries. However, the effect also depends on the method of financing the UBI. If people were better able to follow their career interests and abilities with a basic income, not every third worker would be dissatisfied as is the case today. An employee occupying a job that he hates keeps the other person, who would love that job from having it. What a waste of talent and life!
Wouldn’t it be much more efficient, if people worked a job they liked, instead of working precariously to survive economically in the first place?
Of course, it would be more efficient if people would work because they want to instead of having to: Better quality, less waste, more commitment to improve working conditions and operational processes, fewer sick-days. A motivated workforce is priceless. It’s conceivable that many workers would be happy with less pay, as long as at the end of the day it’s supplemented with a basic income. On the other hand, some UBI models want to prevent further wage cuts in Germany by maintaining at a legal minimum wage in spite of a basic income.
What other economic benefits might result from a reasonably well-invested UBI?
At any rate, a basic income would lead to savings in pension and unemployment insurance, since only the difference between the present level and the basic income must be insured. So, whoever would want a retirement income of 500 Euros above the basic income would only have to pay premiums for an income of 500 Euros, since he receives the basic income without making contributions. But there are other economic benefits of having a UBI that would also produce competitive advantages. It would allow for more innovations and business start-ups, since basic income constitutes non-refundable venture-capital. Many business ideas, research and development projects or art projects fail already in the planning phase because they don’t pay the rent upfront. By contrast, whoever gets a basic income, knows his rent and cost of living are safe, and he can develop, test and implement his ideas in peace.
We keep rationalizing, but remain stuck on the same to old structures, like the 8-hour workday, just like it was 100 years ago. How important is a UBI in regards to an earned income in our modern times?
Entrepreneurs may see the advantages of basic income, in that they’d no longer have the unbeloved role as employers who are expected to create and preserve jobs, but could focus on their main objective: To produce goods and services as efficiently as possible, i.e., with a minimum of resources. And human life is a precious resource. Götz Werner doesn’t tire of saying that no one starts a business to create jobs. The basic income could, therefore, also lead to social policy again, made by those who we elect for it, and entrepreneurs won’t have to apologize, if they cut jobs.
Basic income diminishes the importance of gainful employment. I hope we successfully distance ourselves from the perverted notion of work as end in itself and source of income and return to the original meaning of work: The investment of effort to produce something essential or meaningful. Then we’ll be able again to see it as progress, when it succeeds, to produce the same things with less work: Machines are taking our jobs? Finally!
The economy would be forced to make precarious jobs more attractive. A demand that leads to more income equality and thereby more value for society?
Yes, if job seekers no longer have to accept just any job, employers will have to consider how to convince them to work for them; especially, if the proposed activity is unpopular, for example, so-called “dirty work”. So that such work is even done, there are exactly four possibilities: Force, automation, better pay, or do it yourself. When UBI eliminates force, the other three remain. No doubt, I’ll experience my remuneration as equitable, if I’m able to negotiate it freely, without the threats in my ear from an employment agency of who will cut my benefits. This does not mean that the resulting income will be considered fair by society as a whole. What remains will be the scandalous inequality of income and wealth. Even a basic income cannot change that much at first.
Could UBI bridge the gap between the rich and the poor, at least a little?
Basic income isn’t about redistribution in the first place, even though it could end up that way with the right financing. The redistributive effect increases, not only on the revenue (taxes) side, but also on the expenditure (UBI) side. Indirectly, a less intimidated society could enforce more equitable distribution. For this, something would also have to be done in education, though. After all, basic income is not a panacea: It doesn’t solve all problems, but often expedites solutions.
Key is less red tape: Payment of a general UBI could do away with numerous welfare benefits including complex application processes and means-testing. Does the public sector fear job losses?
Sure there are employees in the social sector with concerns, that basic income could make their jobs obsolete. On the other hand, many of our members are engaged in this area, and know of the problems of the current system and therefore understand the necessity of changing the system. Insofar as these jobs have to do with the calculation and payment of benefits, they will not disappear because of a UBI, but rather steamrolled under the gigantic wave of automation coming at us. On the other hand, we will still want to afford debt counselling, youth services, and job placement agencies even after the introduction of basic income. And who ever earns their living conducting research on people who conceal their income to abuse public assistance benefits today, in the future, could be more profitably employed in the chronically understaffed tax fraud evasion department. In any case there will be plenty of time for re-trainings, as no one wants to roll out basic income over night in all its glory, but rather we can count on a lengthy transitional period.
Let’s talk about the unions, that are in the least ruffled by a universal basic income, or as the case may be, speak out vehemently against it. What reasons could they have?
In the unions, it appears that support for a basic income is less at the top—just like in political parties—than at the base. Again, the reason I suspect is fear that basic income could damage the value of work (what ever that means exactly). On the other hand, with regard to basic income there seems to be a shift in thinking in the unions. Meanwhile, Verdi and IG Metall have decided to talk about basic income. UBI-friendly unionists maintain a website for basic income. Overall, however, I can not quite understand unions’ resistance to basic income. Hasn’t anyone there ever considered, what UBI would mean solely for their strike fund?
How great is the probability that, in the near future—say within a few years— Germany will introduce a basic income?
In the last general election, basic income was brought up as a subject matter for the first time, which is illustrated, for example, by the fact of being adopted for the first time as a question of the Wahl-O-Mat of the Federal Agency for Civic Education. At the next election the basic income will be an important issue. Netzwerk Grundeinkommen will see to it, and I hope for considerable tailwind for our work from the referendum on the basic income in June in Switzerland and the debates triggered by it. At the latest, for the federal election, basic income will be a decisive issue, and from then on we can expect a majority in the Bundestag for the basic income at any time.
What criteria must be met to make significant strides in this area?
Above all, I think that we need a serious, nonpartisan, nationwide organization with good media presence that spreads the word about basic income, persistently and with increasing intensity. And I hope we are able to expand the network into such an organization. Today it’s already the world’s largest basic income organization with over 4,000 members.
Furthermore, we must prevent basic income from becoming publicly identified with a particular political party. Because then, it would become a pawn of politicians and that would mean the end of the majority support for this idea. That’s what happened to climate change in the USA, for example, that meanwhile, conservative voters think is a trick construed by Democrats to foist their political goals. Therefore, it’s more favorable if support for a basic income is simultaneously broadcast in as many parties as possible.
Finally, what’s most important for the spreading of the basic income idea is that it does not lead to strong resistance from the industry. Unfortunately, yes, the state of our democratic system today is so lousy that the economy can enforce their will readily against the will of the people. That is why it is so important that business leaders like Götz Werner, or more recently the Telekom CEO argue in favor of basic income. Because then there is hope that a massive rejection of UBI in the economy could at least be weakened. But perhaps there will be a shift in thinking among business leaders, similar to the unions.
