by Andre Coelho | Jul 23, 2017 | News
John Horgan and Andrew Weaver. Credit to: British Columbia New Democratic Party.
Since the 30th of May 2017 that British Columbia (BC) political parties NDP (New Democratic Party) and Greens have an agreement signed to collaborate in the present regional legislature, which can be read in the NDP webpage. This comes after an historical regional election process which saw the end of the Liberal Party majority in BC, held since 2001.
This event is also relevant because the unprecedented agreement refers basic income as part of its agenda. At the end of its Section 3 – Policy Initiatives, under the subtitle “Making life more affordable”, it can be read: “One aspect of the poverty reduction strategy is to design and implement a basic income pilot to test weather giving people a basic income is an effective way to reduce poverty, improve health, housing and employment.”
Other issues covered by the agreement are the maintenance and improvement of public services (mainly health and education), rolling out of environmental protection policies such as expanding the polluting emissions tax and measures to set better democratic mechanisms in BC. It becomes clear from this general political party agreement that basic income is a part of a broad set of policies which aim at improving British Columbians lives, while protecting the environment and established public services.
More information at:
Rob Shaw, “NDP, Greens take aim at Kinder Morgan, Site C in power-sharing deal”, The Province, May 29th 2017
by Kate McFarland | Jul 19, 2017 | News
India’s Institute for Human Development (IHD), an independent nonprofit research organization, held a roundtable on universal basic income (UBI) on July 10 in New Delhi.
More than 80 politicians, academics, researchers, and other experts participated in the event, which featured keynote addresses from Pranab Bardhan (University of California Berkeley), Vijay Joshi (University of Oxford), Arvind Subramanian (Chief Economic Advisor of the Government of India), and Renana Jhabvala (Self Employed Women’s Association), as well as panel discussions and debates.
UBI has attracted serious attention in India in recent years, due to the success of pilot studies in Madhya Pradesh in the early 2010s, as well as a widespread view that India’s current system of targeted welfare benefits and price subsidies is wasteful and inefficient. Published in January, the 2017 Economic Survey, an annual document prepared by the Ministry of Finance, devoted an entire devoted an entire chapter to UBI, reviewing arguments for the idea, challenges of implementation, and strategies for introducing possible stepping stones to UBI in India. Finance Minister Arun Jaitley has recently stated that UBI is not feasible in the country due to “political limitations.”
The IHD roundtable event began with an inaugural address by Bibek Debroy of National Institution for Transforming India (NITI Aayog), a think tank of the Government of India.
This was followed by four technical sessions organized around the work of Bardhan, Joshi, Subramanian, and Jhabvala, respectively.
Pranab Bardhan, CC BY-NC 2.0 UNU-WIDER
Bardhan maintains that a UBI of about a thousand rupees (about 15.5 USD or 13.5 EUR) per month can be afforded by increases taxes on the rich and ending certain government subsidies that primarily benefit the better-off. He cautions, however, that the UBI should not replace all current welfare programs nor divert funding from public goods and services.
(For an overview of Bardhan’s position, see his blog post “How India can do UBI: Universal Basic Income is a practical solution to poverty and inequality,” published May 3 in Times of India.)
Three panelists–Abhijit Banerjee (Massachusetts Institute of Technology), Abhijit Sen (formerly of India’s Planning Commission), and Ajit Ghose (Visiting Professor at IHD)–discussed Bardhan’s proposal following his presentation.
Vijay Joshi, CC BY 2.0 Chatham House
In the second technical session, Joshi laid out the model of UBI developed in his recent book, India’s Long Road: The Search for Prosperity, which he calls a universal basic income supplement (UBIS). Joshi proposes a UBIS of 3500 rupees per person year (at 2014-15 prices) to replace most price subsidies and targeted welfare programs (“retain[ing] only those of proven worth”). According to his calculation, the UBIS would cost of 3.5 percent of India’s GDP.
(See also Joshi’s blog post for The Economic Times, “Universal Basic Income is worth fighting for, even against the long odds in its implementation.”)
Panelists who discussed Joshi’s ideas included Amarjeet Sinha (Secretary of the Ministry of Rural Development of the Government of India), Dilip Mookherjee (University of Boston), and Swaminathan Aiyer (author and columnist).
Arvind Subramanian CC BY-SA 2.0 PopTech
The third session focused on the proposals in the Economic Survey, written by Subramanian. (Subramanian himself was unable to participate in the event; however, an aide delivered a presentation on this behalf.) Whereas both Bardhan and Joshi argue in favor of universality, the Economic Survey’s proposal is written under the assumption that, in practice, no program can achieve full universality; thus, it ultimately focuses on a “de facto UBI” with a “quasi-universality rate” of 75 percent. In the document, Subramanian considers several methods by which to phase in a (de facto) UBI, such as introducing the program first only for women or members of other vulnerable groups, or only in urban areas, or allowing beneficiaries of current welfare programs to opt instead for unconditional cash transfers.
Panelists on the Economic Survey proposal included Ashwani Saith (Institute of Social Studies, The Hague), Rohini Somnathan (Delhi School of Economics), and Shekhar Shah (National Council of Applied Economic Research, New Delhi).
Renana Jhabvala, CC BY-NC-ND 2.0 ILO in Asia and the Pacific
Finally, Jhabvala presented “perspectives from the field,” reviewing the results of the UBI pilots conducted by SEWA in rural villages in the state of Madhya Pradesh. Contrary to worries that a UBI would lead to higher spending on temptation goods, the pilots revealed no increase in alcohol consumption. Furthermore, the short-term UBI was associated many positive effects, including better nutrition, a decrease in serious health problems, higher rates of school attendance, lower debt, and greater job opportunities, especially for women. A follow-up study conducted earlier in this revealed several lasting effects in the villages in the study, as compared to control villages; these included higher incomes, especially for women, and lower rates of alcohol consumption. Other effects, however, were seen to have ended quickly after the termination of the pilot program, such as increase enrollment of children in private schools.
Panelists on the SEWA pilot study were Jeemol Unni (Ahmedabad University, Institute for Rural Management Anand), S.M. Vijayanand (Former Secretary, Panchayati Raj, Government of India and Former Chief Secretary, Government of Kerala), and P.K. Joshi (International Food Policy Research Institute, New Delhi).
A closing session, chaired by MP Jay Panda, was held after the four technical sessions.
For more information, see the IHD website, which includes a press release summarizing the event, as well as a booklet containing a full schedule, speaker and panelist bios, and background reading for all keynote lectures.
Cover Photo: CC BY-NC-ND 2.0 sandeepachetan.com travel photography
by Dawn Howard | Jul 19, 2017 | Opinion
Topher Brennan is a progressive candidate from the state of California, currently running for US Senate. A self-professed “policy geek”, Brennan holds an undergraduate degree from the University of Wisconsin and a master’s degree in Philosophy from the University of Notre Dame.
Brennan recently put forth a plan for implementing a basic income with his timely essay “The case for a basic income guarantee”. In it, he provides various examples of failures within the current welfare system – specifically the SNAP (food stamps) program – and discusses replacing SNAP, as well as the group of programs known as OASDI, with a basic income.
You can read the full article here.
Dawn Howard: Please give our readers a little background into when and how you first became aware of basic income.
Topher Brennan: I’ve been aware of the concept of basic income for a long time, but I think I may have first heard about it in Robert Heinlein’s novel For Us, The Living, which I would have read back in in college, maybe even high school. I don’t remember what my initial reaction was. I may have thought “sure, that might make sense in the distant future, when everything is automated”—but by high school I was already a big fan of individual autonomy, so it wasn’t long before I figured out you could do something like that right now.
DH: Have you been following any of the current basic income pilot studies happening across the globe? If so, how do the design models and results of these pilots influence your own concept of its potential implementation?
TB: Most of the really exciting research I’m aware of is still ongoing. That said, I’m a huge fan of the charity GiveDirectly. I believe their basic income study hasn’t launched yet, but their research on one-time, no-strings-attached cash transfers provides strong evidence that when you give poor people money it really does lead to big improvements in their lives. It doesn’t all just get wasted on booze or anything like that.
I’m not sure I can claim this influenced my support for basic income—I was pro-basic income long before I knew about GiveDirectly, and the results of their research seem totally unsurprising to me. The reason the free market mostly works well is that (again, for the most part) people are pretty good at looking after their own interests. When politicians talk about creating jobs, no one retorts, “that won’t help, because the people who get the jobs will spend all the money on booze”. But when you talk about anti-poverty programs, suddenly everyone worries about that.
I should also say that when I was writing the article on basic income that I recently publish on Medium, a lot of the specifics were driven by looking at the current state of the social safety net in the United States specifically, and how it sometimes goes wrong. Basic income is a great idea no matter where you are, but I expect the implementation details will be somewhat country-specific.
DH: Given that poverty is typically considered a bi-partisan issue, how feasible would it be to implement a small-scale basic income pilot in California, given the state’s current budget concerns and overall political climate?
TB: You might be able to do it, but it would be tricky. Thanks to proposition 13 (an anti-tax ballot initiative passed when California was a much more conservative state), you’d probably need a ballot initiative to fund it. Also, because most current anti-poverty spending comes from the federal government, and the federal budget as a whole is just bigger (even in terms of percentage of GDP), I think you could shoot for a much bigger basic income right off the bat, working at the federal level.
DH: In your essay ”The case for a basic income guarantee”, you write:
“Being poor means politicians will try to micromanage your life. Politicians like to say they support helping the poor, but only the deserving, and only for things they really need. Whatever you think of that in theory, in practice, the government is bad at telling who’s deserving. It’s also bad at telling what people really need. All that happens is that we make the lives of people we’re trying to help worse, with nothing to show for it.”
Given that you recognize the desire for self-determination and autonomy among individuals living in poverty, do you feel that the government’s role is simply providing a monthly or yearly payment, or do you feel that some recipients would benefit from further education and/or government assistance in order to budget their money wisely?
TB: With education, if we’re talking about adults, people have the option of spending their basic income on education for themselves. A free $8,000 per year, for example, would make college much more affordable. The question of to what extent the government should be subsidizing college education, I think, comes down to somewhat technical issues of how much of the benefit of a college education is captured by college graduates, versus being a positive externality. I don’t actually know the answer to that question.
With K-12 education, there are some additional complications. In the United States, there are states where homeschooling is totally unregulated, and the result is some parents end up educationally neglecting their children. That’s not a win for personal autonomy—those kids didn’t make an informed choice to go without a decent education in their early years; their parents decided that for them. And basic reading and math are important skills no matter what you do with your life, so I’m pretty comfortable with the government insisting children learn them.
Which is not to say our current K-12 is perfect by any means. But when I think about things I’d hope to see fixed in the near future, I think about evening out the disparities in school funding so we don’t have supposedly public schools that are de facto private because you can only go to them if your parents can afford the absurd housing prices in the district. What the right thing to do would be, in an ideal world, if we were designing the system from scratch—I don’t know.
As for helping people with budgeting, I think most people who find themselves financially strained become pretty good at budgeting in a hurry because they have to be. You can add various caveats to this—supported decision making can be very helpful for people with intellectual disabilities, for example—but the idea that what poor people really need is help budgeting, at least the way it’s often meant, is a myth.
DH: Even though libertarians, greens and independents do not make up the lion’s share of registered voters in California, libertarians in particular might find certain aspects of your campaign platform appealing and consider voting for you. However, your stance on basic income might turn them off because of its distribution model – specifically that it puts more power in the hands of the federal government. How would you respond to this type of concern from voters who do not want the government running large-scale social welfare programs?
TB: I’d dispute the premise that it puts more power in the hands of the federal government. If it looks that way, it’s because the federal policies I’d like to replace (in part or in whole) are often designed to look smaller than they actually are. I really try to avoid that, because I think it leads to bad policy, even if it would be politically convenient.
For example, the federal government spends over a trillion dollars a year on so-called “tax expenditures”, where the tax code is written a certain way not because it’s the most sensible way to raise money for things the government wants to do, but in the service of some social policy or other.
Tax expenditures are popular because they let politicians say, “it’s not a spending increase, it’s a tax cut!” But they can have perverse effects relative to more straightforward approaches to the same issues. I’m not always sure these consequences are unintended. Because tax expenditures are confusing, they also make it easier to sell one policy to voters and another policy to donors.
Another example is means testing of government programs. It sounds like common sense—government programs should help only those who really need it. And it’s politically convenient, since it can make a program look much cheaper on paper. But means testing is functionally equivalent to combining a much larger program with a large income tax—the tax is just hidden. And because it’s hidden, it’s more likely to be designed in a stupid way where some people wind up with a 95% effective marginal tax rate, and have little reason to, say, try to get a promotion or take on more hours.
So I try, as much as possible, to avoid these policy mistakes—even if it means more work explaining a proposal to people.
DH: Many activists within the basic income community posit that our current economic system (capitalism) is inefficient and unsustainable, and that eventually we must transition out of it. Do you see basic income as a type of incremental step toward this transition – a kind of temporary “band aid”?
TB: That’s a big question! It depends both on what you mean by “capitalism” and what happens with future technological development. The former we can argue about endlessly, and the latter I don’t think anybody knows for certain. I will say this, though—I think most people underestimate how many features of our current economic system are not the natural order of things, or even “what happens under capitalism unless someone reigns the corporations in”, but are the feature of specific government policies, which are often not well-thought-out, or which are designed to benefit the powerful rather than the average person.
Take prescription drugs, for example. I recently heard someone put this very succinctly: if prescription drugs were a free market, you’d be able to order them from Canada. High prescription drug prices are sometimes justified on the grounds that they’re necessary to fund drug research, but I think it’s pretty obvious we could find better ways to fund drug R&D than what we currently have.
And there are lots of things that are like that. So I think we could have a better, fairer economic system that would look quite a bit different than what we have right now, whether you’d end up classifying it as a variety of capitalism or not.
If you would like to learn more about Topher Brennan, you can visit his web site: www.topherbrennan.com
or
Follow him on social media:
@TopherTBrennan
facebook.com/topher.t.brennan
by Guest Contributor | Jul 17, 2017 | Opinion
Written by: Frank Kamanga
INTRODUCTION
This article is inspired by the article titled “Helicopter money and basic income: Friends or foes” authored by Stanislas Jourdan (2017). He made a very important attempt to clear up confusion between two similar and conflicting yet important terms in the global economy at this moment. Hıs article has opened doors for another attempt to compare basic income scheme and cash transfer schemes. This article will explain the definitions of cash transfers (CTs) and universal basic income (UBI), as well as institutional frameworks under which the programmes are implemented. It will also address financing arrangements for the programmes, and linkages between UBI, CT and Sustainable Development Goals, in an attempt to explain the justification of UBIs in the current state of the global economy. Policy issues related to both CTs and UBIs will also be highlighted.
Basic income and cash transfers are not novel ideas for poverty alleviation. A basic income scheme was initiated in North America in the 1970’s and 1980’s with support from prominent economists of that time. Following the successful implementation of such programmes, governments and the World Bank began implementing cash transfers in emerging and developing countries. With the rising discontent toward the neoliberal economic system and austerity measures, poverty alleviation measures such as Universal Basic Income (UBI) have been resuscitated back to life in developed economies. Gradually, governments in emerging and developing countries are carrying out pilot projects to assess the efficacy of basic income projects.
Emerging and developing countries like India and South Africa, which are implementing cash transfers, are also contemplating introducing basic income projects. This demonstrates that there are differences between these two concepts. Indeed, these two programs are similar regarding their purpose of alleviating poverty and their nature of implementation. However, the analysis below will show why UBI stands out as a different programme from cash transfers, and why our current economic circumstances means a basic income scheme should be implemented globally even in developing and emerging economies.
DEFINITION OF BASIC INCOME AND CASH TRANSFERS
CASH TRANSFERS
Cash Transfer Programmes are founded on social inclusion theory in the context of economic development. The social inclusion theory posits that governments should integrate the poor into the general economy by supporting them with a basic amount of cash. Cash transfer programmes fall into two categories: conditional cash transfers and unconditional cash transfers. Under conditional cash transfers, recipients receive cash only if they can demonstrate that their behavior meets certain stated requirements. Under unconditional cash transfer programmes, the payout does not depend on individual behaviour (Forget E.L et al., 2013).
Conditional Cash Transfers (CCT) are used to encourage the behaviour of utilizing public services such as education and health services which lead to a reduction of poverty in the long run. For instance, in Mexico the conditional cash transfer programme provided cash to households on the condition that their children regularly attend schools and also access health services at clinics[1]. Proponents of conditional cash transfers argue that the scheme leads to better investments in human capital through access to social services that improve people’s knowledge and skills. The World Bank is a major supporter of the conditional cash transfer programme.
Meanwhile, advocates of the Unconditional Cash Transfer (UCT) programme look at the situation from a different perspective. They argue that poverty is cyclic and hard to break out of when there are conditions imposed on your spending. For instance, with restrictions on peoples’ spending, some basic needs are left out of the spending equation. To meet these basic needs, people may engage in other risky income generating activities such as sex work. When people are in poverty and desperate for money, we should not condition help on changing their behavior. Therefore, advocates of UCT argue cash should not be given according to certain behaviors. Rather, these resources should be made available to poor families so that they can make spending decisions consistent with their socio-economic priorities regardless of the work or job they are engaged in. UCT programmes are supported by human rights advocates and are consistent with a human rights based approach to development.
Unconditional cash transfers are not only premised on certain behavioural requirements, they also have lower administrative costs than conditional transfers (Capriati 2016). In addition, in countries like Malawi unconditional cash transfers have also been merged with other social services like agricultural farm cooperatives and access to health services, hence improving their effectiveness. In this case, UCTs are more consistent with meeting a broader aspect of sustainable development goals.
This notwithstanding, with regards to impact, lessons from CCT and UCT programmes in Zomba city in Malawi have shown that both programmes have had positive results in terms of reducing child marriages, improving educational attendance, and avoiding early pregnancies. However, it has shown that UCT is relatively more effective in solving several challenges met by the families. This is because based on tastes, preferences, and priorities, families could decide how to spend money without constraints so that intended objectives can be met (Forget E.L et al., 2013).
BASIC INCOME
The concept of basic income is a relatively new phenomenon in the developing world as opposed to the developed world. In Canada, a basic income experiment called MINCOME was carried out as a means-tested negative income tax[2] in the 1970s. Meanwhile, a notable experiment was conducted in Namibia and currently two countries are carrying out pilot projects – Kenya and Uganda. Basic income guarantee or Unconditional Basic Income (UBI) is considered as a UCT income large enough to guarantee everyone in an economy or in the world a minimum level of financial resources on an individual basis without imposed conditions.
Basic Income mainly works on the principles of unconditionality and universality. Proponents of basic income also argue that the programme is based on the intrinsic value of human beings in an economy. This value is generated from their contribution to the creation of the general wealth of the society and also from the inherited value of our ancestors who created the wealth we are enjoying today (Jourdan S. 2017). Just like cash transfers, basic income plays quite an array of roles from poverty alleviation, school attendance promotion, work emancipation, gender balance incentivization, social protection, modernization and early child marriage prevention.
INSTITUTIONAL FRAMEWORK FOR BASIC INCOME AND CASH TRANSFER PROGRAMME
The institutional framework of these programmes can be analyzed in terms of implementation, sources of funding, policies and financial infrastructure. Firstly, given the diverse nature of objectives of both cash transfer and basic income projects, different non-governmental organizations and line ministries of central government can implement these projects. The government normally implements both basic income and cash transfer projects in the context of fiscal policies.
Financial sector tools such as mobile payment technology and policies also play a huge role in implementation of both basic income and cash transfer projects. GiveDirectly, a US based NGO, is able to implement a basic income project in Kenya and Uganda due to robust mobile technology payment systems established in these two economies.
FINANCING OF BASIC INCOME AND CASH TRANSFER PROGRAMME
Cash transfer programmes and UBI programmes share some differences in terms of how resources are to be mobilized. There is readily available information in terms of how cash transfer programmes are being implemented and funded in developing countries like Malawi. As for UBI, the information is scant but constantly flowing, as different suggestions on how the scheme should be financed are being put forward by proponents.
From an experience of cash transfer schemes in Malawi, these Conditional Cash Transfers are mainly funded by the World Bank and implemented by the government of Malawi. Meanwhile, Unconditional Cash Transfer schemes are implemented by Unicef, Oxfam, Government of Malawi and several non-governmental organizations. These programmes are financed by various donors including the Government of Germany, EU, World Bank, Irish Aid and the Government of Malawi. At the same time, the government of Netherlands is funding the design of a linkage and referral system of the Social Cash transfer programme.
As for the financing of the UBI programme, the topic is currently being addressed in different circles at policy and academic levels. Some of the topics being discussed include how the resources should be mobilized, what kind of tools should be used and who should fund the programme. Understanding this aspect of the UBI programme can assist in providing information on how to strategize campaigning and advocacy programmes for UBI in different countries.
It is claimed that there are currently no established, in-country funding mechanism for UBI in developing nations, except for external funds, as in the cases of Uganda and Kenya. However, in selected developed countries that are piloting the schemes, governments are implementing the projects through their fiscal space. Given the need for longevity of the schemes, some authors such as Young (2017), Stern (2017) and Santens (2017) have suggested sustainable ways for mobilizing resources for UBI in the United Kingdom and United States of America. Some of the methods may apply to both developing and developed countries, while others are restricted to developed countries. Here we will dwell on Young’s proposal for financing UBI and this can be can be categorized into three main groups: 1. Recalibrating existing tax and benefit systems 2. Replacing CCT 3. Communalizing common assets 4. Direct grants from the private sector can also be utilized.
Advocates for proposal one argue that for UBI to be politically feasible, it must be achieved using the existing infrastructure of taxation and spending. The idea is that UBI is currently at a conceptual stage. To materialize this scheme, governments must begin with existing resources (on a trial basis) and there is neither a need for radical and rapid changes to the system nor additional taxes. In this approach, the UBI scheme can be small in scale, targeting the most vulnerable people across the board. As in the case of developed nations such as the UK, resources can be mobilized through restructuring the existing, inefficient and unfair benefit systems. Under this proposition, UBI can be used as a subsistence or sub-subsistence level of income to be supplemented by earnings from employment and/or disability, housing, or child benefits.
One of the ways in which savings for UBI can be generated is through restructuring existing benefits, as explained by Malcom Torry of the Citizen’s Income Trust. He states that the administrative savings from dismantling the means-tested benefits system are in the range of £8-10 billion. In other words, it is very expensive to decipher who is and isn’t deserving of government support, especially when recipients must prove their worthiness. Restructuring the benefits to look more like a UBI scheme can not only help save money but would also be fairer.
The second proposal for financing UBI is simply replacing the CCT scheme with a UBI scheme in developing and emerging economies. India is already on the way to do this. UBI is more closely related to a UCT scheme, hence all the benefits of a UCT scheme over CCT also accrue to UBI.
The third proposition involves communalizing common assets. Some proponents state this UBI financing mechanism takes a more radical and systematic overhaul approach. These proponents look at financing UBI in its universality context and hence propose financing solutions that span across geographical boundaries of both developed and developing countries. These proponents argue for the abolishment of private ownership of resources – be it physical, cultural, biological, or economic. They argue that resources such as the biosphere, atmospheric carbon, fisheries and forests, and unearned income of technological change should be respected as the common property for all, rather than be the source of exploitative disparities from unequal access and power. The implementation of such a systematic and transformative change requires establishment of new policies, institutions and a new economic paradigm at a global level.
There are several prominent advocates who have come up with several ideas on how resources can be mobilized under the proposal of communalizing common assets. First, Barnes Boyce and James Boyce put forward that charges should be put in place by governments on access and use of ‘communally inherited assets’ and that revenues must be redistributed. They argue that charges could be placed, for example, on polluting the scarce resource that is the carrying capacity of our atmosphere, or on trades of stocks, bonds, and derivatives (the latter of which could raise $300 billion per year). Barnes and Boyce claim that charges on a portfolio of universal assets could grant a US citizen a UBI of $200 a month.
A wealth tax could also provide an alternative for resources for UBI ın some countries. Researchers such as Thomas Piketty suggest measures such as progressive capital taxation. Martin Faley suggests the Georgist land value tax (LVT) in the context of the UK. Faley claims that land taxes coupled with common licenses could fund a £4,500 annual UBI. A globalization fund could also strike a deal. Globalization has had some negative consequences as we can see from recent increased in nationalism and unemployment in developed and emerging economies. Multinational companies exploiting labor and cheap natural resources in developing countries whilst making billions of US dollars should be charged a globalization tax to be fed into the globalization fund. This fund can be used to support a global UBI dividend or grant.
The fourth industrial revolution is mainly characterized by automation of jobs and technological unemployment. Some economists and futurists have found leeway to press for resource mobilization to finance UBI. For instance, Economist Yannis Varoufakis and futurist Kartik Gada have each suggested that the labor savings from automation could (and should) pay for UBI. According to Varoufakis, the proposal is that one-part should be wealth tax and one-part should be ownership restructuring. That is, a small tax is levied on shares from every initial public offering put into a commons capital depository that in effect grants citizens property rights over new technologies that yield financial returns. The Commons Capital Depository would then pay out a UBI to all citizens.
The last proposal that is also being applied already is the financing of UBI activities with funds from the private sector. eBay is financing pilot projects in both Kenya and Uganda. More and more private companies can come in to support such projects in developing countries.
LINKAGES BETWEEN CASH TRANSFER AND UNIVERSAL BASIC INCOME AND SUSTAINABLE DEVELOPMENT GOALS
Cash transfer and basic income share the same theories of how they change people’s behavior or improve living conditions of people in the context of Sustainable Development Goals.
- CT programmes reduce poverty and increase income. As income increases, people spend money to solve diverse needs of their families and they also spend on luxury goods. SDG 1, 2, 3, 4, 5 and 9
- CTs and Basic income reduce risk. A CT or a Basic income is a form of social insurance that increases the planning horizon and allows one to take calculated risks. SDG 2,3,4
- CTs and Basic income reduce income inequality. SDG 10
- CTs and Basic income enhance social values of dignity and integrity, hence build communities through interaction. SDG 11, 16, 17
WHY UNIVERSAL BASIC INCOME NOW
There are quite a number of reasons to justify the policy shift in favour of basic income in both developing and developed countries. The first reason is that the basic income is guaranteed over a long period, thereby enabling people to make plans for major life decisions ahead of time. The longevity of UBI can also stimulate demand in the global economy, hence leading to increased production and employment in the production sector.
Additionally, just as with unconditional cash transfers, basic income schemes could be cheaper than providing in-kind transfers and conditional cash transfers. In-kind transfers take the form of goods and services like cattle, books, schools, and hospitals. It is claimed that projects involving the provision of such projects have huge administrative, implementation and logistics costs. Besides this, they constrain people on their freedom to spend money on the goods and services of their choice. However, thanks to mobile technologies, basic income programmes are implemented with ease and offer economic freedom on expenditure of the money.
Basic income is also conventionally universal and is regarded as a human right. Basic income programmes target people across the board in an economy. The cash is provided irrespective of your employment status, gender, region, physical ability. Rather, it is based on one’s inability to meet basic needs in a society. Therefore, beneficiaries in a basic income project are diverse and the impact on poverty reduction as well as the multiplier effect on the economy are likely to be huge.
Finally, just as with conditional cash transfers, basic income offers an opportunity for long term investment in human capital. From the recent evaluation survey of GiveDirectly’s basic income project in Kenya, 20 percent of respondents said that they were using the money for payments of school fees for either themselves or their children. As the project is expected to last for some years, recipients of the cash can make long term and secured plans to finance their studies, hence building human capital in the economy.
POLICY ISSUES FOR CTs AND UBI
- Basic Income is more closely related to UCT. Therefore, in terms of cost structure, the cost per unit of outcome will be lower with a UCT and UBI scheme compared to conditional cash transfer scheme.
- UBI has a greater potential for political advocacy and long-term stability despite its perceived greater cost, due to its universality.
- Financial Modelling of UBI in Malawi must be conducted to assess the possibility of carrying UBI and UCT concurrently.
Frank Kamanga is a former Economist of the Central Bank of Malawi. He is a co-founder of Global Hope Mobilization and Centre for Child Development of Research, two local NGOs in Malawi. He is member of the Basic Income Earth Network Outreach Committee and also Global Unification International UBI Africa Committee.
BIBLIOGRAPHY
Capriati M. (2016) https://www.givingwhatwecan.org/post/2016/07/whats-so-special-about-give-directlys-basic-income-pilot/ Accessed in April 2017
Forget, E.L, Peden A.D., and Strobel, S.B (2013). Cash Transfers, Basic Income and Community Building. Social Inclusion, 1(2), 84-91.
Jourdan S. (2017) helicopter money and basic income: friends or foes?
Santens S. (2017) How to Reform Welfare and Taxes to Provide Every American Citizen with a Basic Income. Accessed on 6th June 2017.
SDG knowledge platform. https://sustainabledevelopment.un.org/?menu=1300. Accessed in April 2017
Stern, A. (2017) Raising the floor. Accessed in June 2017
Young Charlie (2017). Conversation about Basic Income is a Mess. Here’s How to Make Sense of it. https://evonomics.com/basic-income-conversation-make-sense-charlie-young/. Accessed in April 2017.
[1]https://web.worldbank.org/archive/website00819C/WEB/PDF/CASE_-62.PDF
[2]A negative income tax is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government.
by Hilde Latour | Jul 17, 2017 | News
Investopedia published an article in May this year, “The Long, Weird History of Basic Income – And Why It’s Back”
In this article, written by David Floyd, the history of support of UBI is described from the period of hunter-gatherer societies and how the networks in those societies took care of people who could not provide themselves with a basic standard of living. The article then describes how agriculture and urbanization made an end to such networks and how problems were not handled well by the institutions that took the place of the original networks, referring to Charles Eastman who described this problem in 1915.
Thomas Paine was one of the famous people who noticed the creation of poverty, caused by cultivation, which did not exist before. He was the first to propose a UBI (Paine called it a “groundrent”) in the late 18th century, as a compensation for the dispossession of the majority of inhabitants of their natural inheritance. Cole first used the term Basic Income in 1953.
From Paine, via Henry George, Huey Long, G.D.H. Cole, Martin Luther King, Mc Govern and Nixon, the current boost of support for UBI in the 21st century is explained as a reaction to poverty and inequality, predominantly used as an argument by proponents on the left political spectrum, and inefficiency of the welfare state, used as an argument on the right wing.
In addition to the political perspective, a distinction between “reformers” and “futurists”, which cross-cuts left and right, is described in further depth.
The group of “reformers” is described as a group of basic income supporters who is mostly concerned with addressing problems in society as it is now, mostly caused by the broken welfare system, such as:
- “Employment traps” (where people are kept form leaving their job out of fear and bad employers are supported as a result of that)
- “Unemployment traps” (“earn a dollar from work, lose a dollar in benefits”)
- “Welfare cliffs” (where the effect tax on additional income even exceeds 100%)
- Stigma associated with public benefits
- Bureaucratic inefficiency
The group of “futurists” is described as supporters who see technological unemployment as a main threat in the future and offer basic income as a solution or who see a basic income as a cornerstone of an eventual utopia.
The two main criticisms of a universal basic income are its cost and the expectation that it would reduce or eliminate incentives to work.
This discussion is described with calculations of “The Economist” and views of Bill Gates, Karl Widerquist, Guy Standing, Philippe van Parijs and others. Brief attention is given to Alaska’s “Permanent Fund Dividend” and the outcome of experiments, such as Manitoba and India. Furthermore, the definition of ‘work’ is discussed, the effects of UBI on poverty and even the experiments in Finland, Oakland and Ontario get attention.
Floyd summarizes his article with a question: “Could doing away with poverty, sweeping away patronizing bureaucracy, neutralizing the threat of mass unemployment and increasing the value society places on worthwhile, but unprofitable, pursuits really be as simple as handing everyone cash?” He then uses Confusius’ quote to guide us towards the answer:
“The way out is through the door.”
Info and links
Full article at investopedia.com
Photo: Money! by Hans Splinter, CC-BY-SA 2.0
Special thanks to Dave Clegg for reviewing this article
