by Claire Bott | Aug 18, 2017 | News
Richard Branson. Credit to: Wikipedia.
Multi-billionaire Richard Branson, founder of Virgin, recently became the latest wealthy entrepreneur to publicly support universal basic income (UBI), following similar public statements by Mark Zuckerberg, the co-founder of Facebook and Stewart Butterfield, the co-founder of Flickr.
Writing on his personal blog on the Virgin website, Branson said: “In the modern world, everybody should have the opportunity to work and to thrive. Most countries can afford to make sure that everybody has their basic needs covered. One idea that could help make this a reality is a universal basic income. This concept should be further explored to see how it can work practically.”
He went on to discuss the UBI experiments currently taking place in Finland, and stated that: “A key point is that the money will be paid even if the people find work. The initiative aims to reduce unemployment and poverty while cutting red tape, allowing people to pursue the dignity and purpose of work without the fear of losing their benefits by taking a low-paid job.”
Branson also indicated that he had discussed this with The Elders, a group he helped to create which aims to be the “village elders” of the new “global village”. The Elders include members such as Desmond Tutu, Nelson Mandela, Jimmy Carter, Kofi Annan and Ban Ki-Moon. He reported: “What I took away from the talks was the sense of self-esteem that universal basic income could provide to people.”
More information at:
Richard Branson, “Experimenting with Universal Basic Income”, Richard Branson’s blog, 14th August 2017
Edited by Genevieve Shanahan
by Guest Contributor | Aug 18, 2017 | Opinion
According to the OECD, basic income (BI) is not an effective tool for reducing poverty. However, the outcome would depend on the model chosen for implementing a BI system, as well as the changes made in other parts of social protection.
The Organisation for Economic Co-operation and Development (OECD) published in May a Policy Brief paper studying the feasibility of a basic income model in four OECD countries, one of which was Finland.
On June 16, Kela organized a seminar in which Herwig Immervoll, a senior economist at the OECD, discussed the findings of his study and analysed the strengths and weaknesses of a BI scheme. After the seminar, the national broadcasting company YLE reported: “Universal basic income might increase poverty and inequality”.
Apart from Finland, the OECD study includes France, Italy and the United Kingdom. The analysis was done with the help of the EUROMOD microsimulation model. In each country, the starting point for the analysis was to take all existing spending on social cash-transfers together and see what level of BI they would amount to. Eventually, the level of BI was set near the existing levels of guaranteed minimum-income benefits for single individuals in each country, adjusted so that it would not increase the public expenditures.
In Finland, this resulted a BI of 527 euros for the working age adults and 316 euros for children and youth under 18 years of age. Those entitled to old-age pensions within the current main statutory retirement age (in Finland over 65-year-olds) were excluded from the BI model.
In the BI model used in the OECD analysis, all existing working-age benefits (including social insurance benefits) apart from cash transfers for housing and disability would be abolished. Also, the zero-rate tax bands of income-tax schedules and equivalent tax-free allowances would be abolished, and all income-tax thresholds would be shifted downwards by a corresponding amount. BI would be made taxable under personal income taxation alongside other taxable incomes.
The OECD model would create many gainers and losers
The most important outcome of the OECD study is that the simulated BI model would strongly impact the income distribution in all studied countries. However, the effects vary greatly among the countries.
In all income groups, the BI model would create many gainers and losers. It would change the net income of most people in one way or another. It would lift some groups out of poverty and thrust others below the poverty line.
The simulated BI model would increase the income level of those small income groups who are currently not receiving any social benefits, or whose benefit level is very low. In turn, those receiving earnings-related benefits or several means-tested benefits would see a decline in their standard of living.
In Finland, those below 65-years-old receiving old-age pensions and single parents with low incomes would be among the losers of the model. The middle-income earners instead would generally benefit from the model.
The conclusion of the OECD is that particularly in countries with a comprehensive social protection BI is not an efficient tool for reducing poverty, since it does not target the benefits effectively. According to the OECD, a budget-neutral BI would not be distributionally neutral. High enough to be socially and politically meaningful and fiscally realistic, a BI would still require tax rises as well as reductions in existing benefits.
A very low basic income, instead, would have little other significance but increase poverty.
The outcomes of BI depend on reforms in taxation and social protection
How the findings of the OECD study are to be interpreted in the Finnish context?
Perhaps the most important issue that the research sheds light on is the fact that there are many institutional challenges in implementing a BI system, and those challenges differ among countries due to their different systems of social security and taxation.
As the OECD report (p. 5) notes, BI as an idea is simple, but the existing social protection systems are not. Therefore, there are grounds to argue that the same model of BI does not fit everywhere. If a reform such as BI were to be carried out, it needs to be adjusted to the existing institutions of social protection and taxation in each country separately. The parameters of the model should be adjusted so that it will not produce excessive changes in people’s incomes.
The greatest problems of the OECD’s microsimulation are that the income taxation is not changed to correspond with the BI model, and that the existing systems are demolished by the same means everywhere without examining the structures of social protection in each country separately. Due to this, BI seems to have unpredictable effects to income distribution.
The income distribution produced by a BI model can be influenced by adjusting the parameters of taxation and social security. In his presentation at the Kela seminar, Herwig Immervoll mentioned that tax reforms should be discussed in parallel with BI. Indirect taxes, such as environmental or value added taxes, have often been proposed as a complementary source for financing a BI scheme, combined with income taxation.
However, the OECD report does not mention these alternatives, and the premise seems to be that taxation in any form should not be increased.
In Finland, as well as in many other countries, some organisations and individuals have launched models of BI adjusted to the local context. Their objective has often (yet not always) been to not radically alter the income distribution or cause reductions in people’s after-tax incomes, especially in the lowest income groups. Microsimulation has been employed at least in the models of partial BI by the Green Party and the Left Alliance, and in the preliminary study for the national BI trial conducted by Kela.
In these models, BI is linked with a reform in income taxation that is designed so that radical changes in after-tax incomes will not occur in any income group. The aim is also to make the models budget neutral, that is, to cover the costs of BI by reforms in taxation and replacing the existing benefit systems. In these models, the old system will be abolished only in those parts where the level of benefits is lower than the BI.
One of the problems with the BI trial currently underway is that due to time constraints, the taxation reform proposed by the research team that designed the experiment was not included.
Will Finland implement a BI?
Though there exist BI models in Finland that would technically allow implementation of a BI system without radical changes in income distribution or public financing, the road of BI will probably be rocky even here.
The preparations of the BI experiment scheme revealed many institutional challenges in implementation of a BI model. The greatest obstacles for a BI are, however, ideological.
In Finland, BI has gained interest especially as a possibility to improve the incentives for paid work. The possibility to combine wages with social benefits more smoothly than today is an issue that no party opposes. Yet, many still find it morally wrong to give people money with no obligations. The opponents of BI fear that the “free money” would reduce people’s willingness to work and give a moral legitimacy to not apply for jobs.
If the only, or at least the most important function of BI is to improve work incentives, the great promises of BI may not be fulfilled after all. The preliminary studies for the BI trial revealed that BI models do not always unambiguously remove incentive traps, if parts of the old social security stay intact.
However, it seems likely that in Finland, as well as in other industrialised countries, the social security will be reformed in a direction that may contain some elements of BI, but not necessarily a ‘pure’ BI model.
If the political thinking emphasizing the labour supply and austerity in public economy prevail, the prospects for more generous BI models seem to be low. In the framework of current economic policies, the implementation of a BI would most probably mean at least demolishing large parts or other forms of social security.
BI as a social dividend?
The OECD report (p. 8) ends up recommending some kind of ’partial’ alternative of a BI model. One option mentioned is a possibility to introduce BI as a separate system from the existing social protection, whose function would be to share the benefits of globalisation and technological progress more equally.
This idea of ‘social dividend’ has often appeared in BI discussions. The state of Alaska is already giving an annual share of the permanent fund based on oil revenues to each citizen as a social dividend. There is similar thinking linked also to the idea of “helicopter money”, originally introduced by Milton Friedman, a cash transfer paid by the central bank to people’s accounts to stimulate consumer demand in economic downturns.
Considering BI as a social dividend would locate it in a new frame, where its function would not be to fix the problems of social security systems, but to distribute purchasing power also to those who lose their jobs or end up in low paid precarious jobs in the labour market turmoil caused by digitalization.
If BI were paid on top of other social benefits, its level could even be lower, or for instance connected to macro economy indicators. In that case, it could also be used to stimulate economies in downturns.
Johanna Perkiö
M.Soc.Sc., Doctoral Candidate
University of Tampere
email: johanna.perkio(at)uta.fi
Original article:
Johanna Perkiö, “The OECD and the problems of basic income“, Kela, June 30, 2017.
by Kate McFarland | Aug 17, 2017 | News
Slovenian basic income advocate Dr. Valerija Korošec has announced her bid to run in her country’s presidential election on October 22, 2017.
Basic income is the main pillar of her independent candidacy, which also includes e-direct democracy and gender parity.
Korošec made the announcement at a July meeting of Unconditional Basic Income Europe (UBIE), BIEN’s European affiliate. To officially run in the election, she needs to collect 5,000 signatures before the 26th of September.
Valerija Korosec
Korošec, a sociologist and social policy analyst at Slovenia’s Institute of Macroeconomic Analysis and Development, is the author of “Predlog UTD v Sloveniji: Zakaj in kako” (“UBI Proposal in Slovenia: Why and How”), which she presented in English at BIEN’s 2012 Congress in Munich, and the co-editor of the book UTD v Sloveniji (UBI in Slovenia).
She is also Slovenia’s representative in BIEN, and a member of both UBIE and BIEN’s Slovenian affiliate, Sekcija za promocijo UTD.
Basic income has enjoyed a surge of interest in Slovenia in recent years.
In 2013, Slovenia was the second EU nation to attain the required level of support the European Citizen’s Initiative (ECI) for Unconditional Basic Income. Ultimately, the ECI failed to obtain the number of signatures required across Europe for the EU to consider UBI. However, it helped to cultivate lasting awareness of UBI among Slovenians.
In 2016, UBI received a further boost in interest in the country due to international headline events such as Switzerland’s vote on a referendum to establish a nationwide basic income, and the Finnish government’s launch of an experiment to test the effects of an unconditional basic income for the unemployed.
One particularly notable event occurred on October 17, 2016–the International Day for the Eradication of Poverty–when Sekcija za promocijo UTD joined the Slovenian Red Cross and Slovenian Philanthropy, an organization encompassing many charities, in signing the Coalition Against Poverty, accepting the idea that only a basic income can fight poverty efficiently.
In June 2017, Alenka Bratušek, a former Prime Minister now serving as a Member of Parliament, convened a meeting on basic income in Slovenia’s National Assembly.
The occasion marked the second time debate about the idea has been held in a national representative body in Slovenia, with the first having been held in the National Council in 2011. At the National Assembly meeting, three basic income advocates–including Korošec, Dr. Igor Pribac, and Sebastjan Pikl–presented arguments in favor of the implementation of the policy.
Those present voted unanimously to request the government to produce a feasibility analysis of basic income by the end of the year.
At this time, new candidates are still declaring their bids for the Slovenian presidential race.
Polls show incumbent president Borut Pahor as a clear frontrunner, unbeatable by any major political party. In Korošec’s view, joining the election as a basic income candidate has the potential not only to spread the idea to more Slovenians but also to show politicians that the idea can have a substantial impact on the election–which might affect not only this year’s presidential election but also next year’s parliamentary race.
Draft of article reviewed by Valerija Korošec; additional copyediting by Russell Ingram.
Top photo: Ljubljana, Slovenia CC BY-NC 2.0 Gilad Rom
by Kate McFarland | Aug 13, 2017 | News
On August 31, the New Zealand Fabian Society will host a panel discussion on basic income, led by BIEN cofounder Guy Standing, as part of its seminar series in Auckland.
Standing, who has recently published Basic Income: And How We Can Make it Happen, will be delivering a lecture titled “Basic Income: the case for a significant new policy.”
Two commentators will respond to Standing’s talk: Sue Bradford, a former Green MP, political activist, and founding member and former coordinator of Auckland Action Against Poverty, and Keith Rankin, an economic historian who has written extensively on basic income.
The event will conclude with a 20-minute debate on the issue of whether an income guarantee policy should be targeted or universal.
Details and registration are available on the NZ Fabian Society website here.
The New Zealand Fabian Society, a policy forum devoted to exploring progressive policy and economic reforms, has been active in promoting discussion of basic income.
In February 2016, the organization initiated its 2016 series of events with a presentation titled “A UBI for New Zealand: on the cards, but is it the answer?” by Rankin and economist Susan Guthrie. (Guthrie is the coauthor of The Big Kahuna and other work with Gareth Morgan–the economist and businessman whose new political party, The Opportunity Party, has recently made a basic income for elders and young children part of its campaign platform.)
The NZ Fabian Society has also collaborated with BIEN’s affiliate Basic Income New Zealand (BINZ) by helping to organize some of events held in connection with BINZ’s basic income roadshow for Basic Income Week 2016, and supported past lectures by Guy Standing in Auckland. In March 2016, the NZ Fabian Society hosted Standing at an event in Christchurch, where he spoke on the theme of his previous book, “rentier capitalism and the coming precariat revolt” (video below).
Phil Harington, an active member of NZ Fabian Society and lecturer in sociology and social policy at the University of Auckland, explains that a key object of the Fabians is strengthen public confidence in progressive reforms. The arguments for basic income, he states, “make a plausible argument for rethinking the very principles we need to apply in core policy and economic creativity alongside a concern to rethink the tax side of the income pool to increase social equity and participation.”
Thanks to Phil Harington for information about the upcoming event as well as past efforts of the New Zealand Fabians.
Cover photo: Auckland Skyline
by Kate McFarland | Aug 12, 2017 | News
In October 2017, the city of Barcelona, Spain, will launch a two-year experiment testing several variants of a guaranteed income and active policies to reduce poverty rates.
The project has been called B-MINCOME in reference to the Canadian province of Manitoba’s Mincome experiment, a guaranteed annual income trial conducted in the late 1970s.
The design of B-MINCOME, which was first discussed in Basic Income News in February, has recently been finalized. It will be conducted in the Besòs area, the city’s poorest region, and include 2000 households. These households will comprise a stratified random sample from Besòs area households which have at least one member between ages 25 and 60 and which are current beneficiaries of the city’s Municipal Social Services. (Participation in the experiment is voluntary for the households selected, in contrast to Finland’s basic income experiment in which participation was made mandatory to avoid self-selection bias.)
Of the selected households, 1000 will be assigned to a control group, while the other 1000 will be assigned (at random) to one of ten treatment groups, all of which will receive cash income supplements (Municipal Inclusion Support or SMI). Treatment groups differ according to whether the SMI is accompanied by an additional program and whether the SMI is means tested.
The amount of the SMI will depend upon household composition and financial status, but will range from 100 to 1676 euros per month per household. For example, a four-member household with no assets and a total monthly income of 900 euros would receive an SMI of about 400 euros per month. Participants will continue to receive Municipal Social Services, but these will be deduced from the SMI.
For 450 households in the study, the SMI will be delivered without any additional associated policies. For this group, the benefit will carry no terms or conditions beyond those made necessary by the constraints of the experiment: participants must continue to reside in the Besòs area until the conclusion of the trial on September 30, 2019, and they must agree to the terms of the experiment (e.g. consent to be anonymously monitored for research purposes, communicate changes in income or household status to those administering the experiment, and install a mobile app to communicate with experimenters). Importantly, receipt of the SMI is not conditional on a willingness to work or fulfill any other participation requirement.
These 450 households will be further divided into two treatment groups: one in which the SMI is means tested (the amount of the payments will be reduced according to the amount of additional household earnings), and one in which participants will receive the full amount of the SMI for the duration of the experiment, regardless of additional income.
Thus, the latter treatment group will receive a benefit extremely similar to a basic income–a guaranteed monthly cash payment with no work requirement or means test–with the slight difference that its amount depends on household composition.
The remaining 550 households will not only receive the SMI but also be subject to an associated social policy. These households will be distributed among eight treatment groups, according to (a) the associated policy and, in the first three groups, (b) whether participation in the policy is mandatory or voluntary. The policies include (1) an occupation and education program (150 households), (2) a social and cooperative economy program (100 households), (3) a guaranteed housing program, and (4) a community participation program (200 households).
Within the fourth group, half of the households will be assigned to a treatment group in which the SMI is means tested, half to one in which it is not.
The researchers conducting B-MINCOME are interested in the extent to which the SMI reduces poverty and social exclusion, and which particular models of SMI are most effective for this purpose. For instance, is the SMI more effective when combined with any particular associated policy, or with none at all? And is the SMI more or less effective if it is means tested?
To examine the impact on poverty and social exclusion, researchers will examine, more specifically, changes in labor market participation, food security, housing security, energy access, economic situation, education participation and attainment, community networks and participation, and health, happiness, and well-being.
Researchers will additionally examine whether the SMI reduces the administrative and bureaucratic responsibilities of social workers.
B-MINCOME is supported by a grant from Urban Innovative Actions (UIA), an initiative of the European Commission that supports projects investigating “innovative and creative solutions” in urban areas. The Barcelona City Council partnered with five research organizations and institutions to design and conduct the experiment: the Young Foundation, the Institute of Governance and Public Policy at the Autonomous University of Barcelona, the Polytechnic University of Catalonia, the Catalan Institution for Evaluation of Public Policies, and NOVACT-International Institute for Non-Violent Action.
B-MINCOME has maintained connections to global basic income movements throughout its design phase. The designers of B-MINCOME consulted with representatives from the governments of Finland, the Canadian province of Ontario, and the Dutch municipality of Utrecht, who have been involved with the design of guaranteed income experiments in their own areas. In addition, the project team contains several members of BIEN’s Spanish affiliate, Red Renta Básica.
The leading political party in Barcelona’s City Council, the left-wing Barcelona en Comú, hopes to implement a municipal cash transfer program following the results of the B-MINCOME pilot, in part with the goal of reducing the bureaucracy associated with the administration of Municipal Social Services and reducing total expenditures on social policies.
Thanks to Bru Laín for details of the design of B-MINCOME, and Genevieve Shanahan for copyediting this article.
Photo: Barcelona, CC BY 2.0 Bert Kaufmann
