Using experimental and quasi-experimental evaluations of large scale UTCs in SSA, conducted in collaboration with the Transfer Project, which sees the participation of UNICEF, FAO, The University of North Carolina, national governments and local research partners, the paper collects evidence regarding six common misconceptions about UTCs and refutes them: 1) UTCs induce higher spending on alcohol or tobacco; 2) UTCs are fully consumed (rather than invested); 3) UTCs create dependency (reduce participation in productive work); 4) UTCs targeted to households with young children increase fertility; 5) UTCs lead to negative community-level economic impacts (including price distortion and inflation); 6) UTCs are fiscally unsustainable.
1) UTCs induce higher spending on alcohol or tobacco
A common argument against UTCs is that they would lead to spending on superfluous goods, as alcohol, tobacco, or drugs, which are sometimes called “compensatory bads”.
The argument is largely based upon anecdotal evidence, spurring from the fear that cash would be administered improperly and wasted, and would lead to the prioritization of in-kind transfers. The paper found that as the household expenditure allocated on food and other items increased, spending on alcohol and tobacco didn’t.
2) UTCs are fully consumed (rather than invested)
Being transfers unconditional, the fear may arise that they are immediately consumed, and that they do not stimulate longer term planning and investment in productive activities and human capital.
Noticing that the cash transfers were administered in locations where the populations is well below the poverty line, it shouldn’t come as a surprise that much of the transfer is used to cover basic needs, which in turns ensures the maintenance and a form of stimulus to human capital development.
Even as the role of direct expenditure is substantial, the paper finds that UTCs have positive effects on the productivity indicators chosen as representative of investments, stimulating crop and livestock activities.
3) UTCs create dependency (reduce participation in productive work)
A common perception that is based upon the longstanding discourse on welfare dependency, fears that gave birth to the concept of workfare in the sixties and that grew under Reaganism and Thatcherism.
The idea is that poor families receiving cash transfers would become lazy and lose the incentive to work, when it isn’t laziness in the first place to create poverty. The allegations of welfare dependency thus stem from a sort of moral high ground, the implication being that poverty is somehow “deserved” and that the poor are not willing to work in order to better their condition once they receive the transfer.
We have seen formerly that UTCs influence investments, it is thus certain that they do affect household decision making in labor allocation, i.e. how receivers participate to the labor market; but labor force participation rate as exemplified by the chosen indicators showed no significant impact of transfers on labor supply.
4) UTCs targeted to households with young children increase fertility
Policymakers often sustain that Cash Transfers conditional to motherhood and having young children will have the unintended effect of increasing fertility rates.
The concern is even more severe for SSA, the last region to start experiencing the demographic transition.
Given that Conditional Cash Transfers (CCT) are the instrument of choice to foster higher fertility rates in OECD countries, the implications for their application look unavoidable; nonetheless the study found no instance in which a government UCTs increased fertility in SSA. Rather, the evidence suggests that UTCs have in some instances increased birth spacing and delayed pregnancies among young women.
5) UTCs lead to negative community-level economic impacts (including price distortion and inflation)
This fear stems from the idea that isolated cash injections would have a one-sided effect and only stimulate the demand side, whilst having no impact on the supply side. This would lead to detrimental effects, namely price distortion and inflation, devaluating the transfer and affecting also non-beneficiaries, which would find themselves facing higher prices.
The study found no evidence of inflationary effects, which can be explained by three factors: the relatively small share of UTCs beneficiaries (20% of the households); the sum of the transfer, which while substantial for the poor recipient it’s just a tiny proportion of the total cash flow of the community; the supply side is elastic, and there is enough market inter-connectivity for production to match increases in demand.
Theory suggests that UTC could be used to overcome market failures, functioning as a stimulus to pro-poor productivity and having net positive impact on local economies. Positive spillovers should manifest and affect non-beneficiaries, as a result of the stimulus to aggregate demand.
Local economy simulations indicate that UTCs generates positive effects on the local economy, with every dollar injected in the economy via the transfer causing nominal multiplier effects ranging from 1.27 in Malawi to 2.52 in Ethiopia.
6) UTCs are fiscally unsustainable
Once UTCs end their experimentation phase and are institutionalized, there is diffused concern that the administrative costs are too high. The fear is that the medium or long-term maintenance of the programs is fiscally unsustainable, and supposedly high administrative costs have been cited as one of the main reasons for not adopting UTCs.
The cost-transfer ratio (CTR) is the indicator generally used to measure the cost-efficiency of the programs. The CTR depends largely on the time at which it is measured; at the beginning of the programs there are large, fixed, start-up costs which weigh heavily on the ratio, representing a large part of the total costs in the first period. The start-up costs combine with the lack of economies of scale, which require times to be attained.
Using estimates of the CTRs for the programs of the Transfer Project, accounting for the scale-up effects and correcting for the start-up, lump sum costs, the study found that cash transfers at scale as a percentage of current spending and GDP are feasible and fully within the cost considerations of any national government. The expenditure for UTCs as a percentage of general government expenditures would have an average of 4.4 percent across countries, but could decrease of the 37% if the program was limited to the rural areas.
“…we have drawn on cross-country evaluation data to summarize evidence on six common perceptions that we believe hold back political acceptance of such programs. While the political context is such that these perceptions will need to be tested in each specific program in order to be fully internalized, we hope that the growing body of evidence, including that presented inthis paper, will permit more evidence-based rather than ideologically-based debates around cash transfers in LMICs”
Picture credit to: Opportunity for All (Government of Canada)
Jean-Yves Duclos, Minister of Families, Children and Social Development for the Canadian Federal Government, has launched a call for applications to assemble a so-called National Advisory Council on Poverty. This council will be comprised of experts in poverty-related issues, and “people who have lived experienced or are currently living in poverty (…) indigenous peoples, women, persons with disabilities, visible minorities and other vulnerable groups”. The purpose is, not only having actual experience of poverty in the group, but also for it to be “representative of Canada’s linguistic, gender and regional diversity.”
This advisory group will be responsible for giving advice about programs and funding strategies which can contribute to poverty reduction, as well as produce a yearly report with detailed information on how poverty reduction goals are being met, according to agreed metrics. On top of that, the group shall also engage the public, including the academic community, several experts, indigenous people and others which experience or have experienced poverty. Applications to work with the group can be done online, until the 29th of January 2019.
The creation of this Council derives from the overarching Program “Opportunity for All”, a Canadian Federal Government initiative which it considers Canada’s first poverty reduction strategy. According to the Program’s website, the purpose of “Opportunity for All is to eradicate poverty because we are all better off when no one is left behind. Opportunity for All supports a human rights-based approach to poverty reduction, reflecting principles that include universality, non-discrimination and equality, participation of those living in poverty, accountability and working together.” It may be worth mentioning that “universality” is only mentioned on this one occasion throughout the explanation of the whole program, but nonetheless it is clearly stated here. Furthermore, the Program states that:
“Opportunity for All is about working together to end poverty so that all Canadians can live with dignity, have real and fair access to opportunities to succeed, and be resilient enough to get through difficult times. Living with dignity means that Canadians would be living without hunger and would have enough income to meet their basic needs (…)”
Jean-Yves Duclos
Although basic income is not mentioned, the reference to a universal “all Canadians” linked with “enough income to meet their needs” might point in the direction of some unconditional cash transfer program as one of the tools for poverty reduction in Canada. That would be aligned with Jean-Yves Duclos recent statements on the subject. Furthermore, the Program is based an a civic approach to problem-solving, since consultation was done to the wider population:
“Opportunity for All is guided by the thousands of voices we have heard and, in particular, the voices of those with lived experience of poverty. Canadians told us that poverty is complex, that different groups experience different risks of poverty and different challenges in getting out of poverty, and that reducing it requires a long-term commitment as well as calls for a coordinated approach with diverse groups—government and non-government alike. Canadians told us that the Strategy must contribute to a national effort to reduce poverty. It must also recognize that when some members of our communities cannot reach their full potential, we are all affected. More specifically, Canadians have said that the Poverty Reduction Strategy should be about:
Dignity – Lifting Canadians out of poverty by ensuring everyone’s basic needs are met;
Opportunity and Inclusion – Helping Canadians join the middle class by promoting full participation in society and equality of opportunity;
Resilience and Security – Supporting the middle class by protecting Canadians from falling into poverty and by supporting income security and resilience.”
Again, focusing on the needs of everyone, ensuring the full participation of all people in society and creating a solid ground so that no one falls into poverty, suggests a basic income type of policy, without explicitly mentioning it. This could mean that the National Advisory Council on Poverty will study or consider basic income somehow within its mandate, although no direct information exists to confirm it, at this moment.
Basic Income is a radically different and yet elegantly simple notion that has been around for decades: all citizens should have an income and be allowed to maintain their dignity, simply because they are citizens in a society that is prospering. In social policy terms, this idea can be put into action by giving unconditional cash payments to citizens. In the 60s and 70s, there were several long-term Basic Income policy experiments in the USA and Canada. The goal of these experiments at the time was to see if giving people money would be a disincentive to workforce participation. In the end, there was only a very small reduction of work participation among the subjects. In the USA women worked fewer hours per week, an understandable consequence is given that there were on average 4 children per family in the study group. Young men in Canada reduced their work participation, but high school completion rate increased, with stipends enabling the pursuit of higher levels of education. Furthermore, there was an increase in divorce rates, which was the main motivator to take BasicIncome off the table at the time, but looking back seems like it was not such a bad result, Basic Income was shown to empowered women in difficult situations to be able to exit those situations.
BasicIncome has recently returned to vogue, and Canada was, until recently, conducting an experiment in the province of Ontario, led by the of the Liberal government. It was a pilot program guaranteeing an income to 4000recipients in the region an and was supposed to last three years, but it was abruptly canceled in July 31st 2018, by the newly elected Ford administration. There have been many reactions to the cancellationof this pilot program, including a class action suit filed by fourLindsey residents, represented by lawyer Mike Perry. The Basic Incomerecipients in this class action are arguing that they “made plans to improvetheir lives when they signed up for the pilot in April last year, providing thegovernment with detailed personal information to be approved and expecting thepilot to run its three-year term.” It also seems like a breach of basic socialresearch ethics and complaints have been filed to Veritas, the company the previous government hired to ensure ethical standards are metin the conduct of research involving human beings.
On the aftermath of the cancelation, and as a reaction to it, photographer JessieGolem, also a recipient in the experiment, started a portrait series named Humans of Basic Income, depicting photos of Basic Income recipients displaying placards with their stories handwritten on them. We spoke to Jessie about her experience as a recipient of the Ontario Basic Income trial and about her own experience as a recipient and her perspective on the Basic Income pilot that gave rise to her portrait series.
Can you tell me a little bit about your background?
I
grew up in the small town of Hanover, Ontario. I’m quite lucky and privileged
that I’m actually quite close with my family and had a stable childhood. My
parents are still together, and I grew up in the same house and attended the
same elementary school and high school. We were not rich, but we were always
provided for, and my childhood was happy, stable and peaceful. I went to school
at University of Waterloo, majoring in Religious Studies. I was also quite
religious at the time and lived at a bible college in Kitchener, but I don’t consider
myself religious anymore, and actually have an article published on the
Huffington Post on the reasons behind that decision. Later, I moved to
Hamilton, and while in Hamilton I went to school at George Brown College in the
Assaulted Women’s and Children’s Counselling and Advocacy program. I explored a
number of careers, including youth pastor, piano teacher (I’m a classical
pianist) and social worker, but I currently work as the Operations Manager at
Photographers Without Borders, and hoping to expand my career as a
photographer, storyteller, and writer.
What was your work life like before Basic Income?
I’ve had numerous jobs in my life. I have worked as a cleaning lady, I’ve worked in retail, I’ve ran kids programs and day camps and worked as a dog walker. I’ve always worked/volunteered for not-for-profits in different capacities my entire adult life. Prior to receiving Basic Income I was working as a dog walker in the mornings/afternoons, teaching piano in the evenings, and in the time in between, working at Photographers Without Borders, and working to book photography projects and grow my own freelance photography business. I had no free time. I often wouldn’t be able to get home to cook myself dinner, and I’d often find myself up until late in the night working on projects and applications.
What is Photographers Without Borders?
Photographers Without Borders (PWB) is an international non-profit that amplifies the stories of grassroots organizations all over the world by sending volunteer photographers and videographers to document the work they are doing. The organization is able to receive this footage to build their own capacity, while PWB also brings awareness to these issues through a robust social media, a print magazine and online magazine, and a video series. I have volunteered at PWB for two years, and we are on the brink of realizing some tremendous growth which would expand our capacity as an organization, and potentially offer paid positions to staff. BI gave me the time to devote to PWB full-time in order to realize that vision. Losing BI means I will have to reduce my capacity at PWB.
How did your plans get foiled by the cancelation?
I had plans to work full-time at pursuing photography and building my business to a point where it’s self-sustaining, as well as develop my capacity at PWB and help to grow the organization. I will now have to return to having multiple jobs.
Even though it was canceled, do you think that there were positive consequences for you personally from having participated in the program?
Yes. I have now experienced what living and pursuing photography full-time feels like, and I’m very excited about this life, and don’t want to return. I have used the cancellation to pursue a portrait series, and I believe this experience has made me bolder, and less afraid of taking risks in order to succeed. I threw myself into the portrait project without a lot of thought, andI’m lucky for all the miracles along the way that has kept this project alive. I’m less afraid of the consequences, and more passionate about amplifying the stories of the people I have met on this journey, who have become friends.
What do you say to critics who accuse you and others in the project of being “parasites”?
I believe this kind of dehumanizing language is extremely dangerous and opens up the opportunity for violence. With language such as “parasite” it strips a person of their humanity, saying they are only human if they contribute to the economy financially. If they are unable to do so, they aren’t human, they are parasites. In history, when dehumanizing language is used against a group of people, it allows for the justification of violence, because this person is seen as “the other” or “less than human” and therefore less of a person than the one holding the prejudice, and this allows for violence. It’s this dehumanizing language that has, historically, caused genocide and holocausts. Furthermore, this was a pilot project, and even those opposed to BI would benefit from the results of the project, so they can use the facts and data obtained to justify their opposition. And 70%of the people on the pilot project had/have jobs, myself included. Anyone who wasn’t working wasn’t doing so because they were lazy but do to physical and mental disabilities that prevented them from working.
Do you think a pilot that included more income levels and a more gradual take back rate could avoid this accusation?
I’m not sure. I think the stigma against people in poverty is only really growing, especially in this area where political views between the left and right are becoming so far divided. You still see name-calling and dehumanizing language used to describe people of opposing political views, and you see this from both liberal and conservative-minded people. It would be interesting to see what a pilot focused on a wider range of income could do and how it would affect people. I did like that Ontario focused on low-income people, because it was a study attempting to address and come up with a solution to a social service system in Ontario that I now know is deeply broken, and keeps people in poverty. It would be interesting to see a pilot focused on a wider range of incomes, however. A multi-faceted, nuanced approach would be really great to see, where different income levels in different areas, and different types ofpilots are examined. We do see this right now – there are Basic Income studiescurrently taking place in small communities and pockets all over the world.
What do you think is the main purpose of the pilots?
There are so many purposes for the pilots, but one of the bigger ones I see is that we need to examine the future of economics in our society, as the rise of AIand technology changes the future of work, and in many cases, increasingly replaces the need for human work. This is an economic change as big as the Industrial Revolution that will be realized in our lifetimes. Humans don’t need to work in a factory if a robot is doing the work, online banking has replaced the need for bank tellers, self-serve check-outs in grocery stores and kiosks in fast food restaurants have replaced cashiers, thus many industries which were so heavily reliant on human work are increasingly no longer needing humans. The question of how one works, and how one derives an income and contributes to the economy is a tremendous question to ask – it is imagining a new world. Increasingly, the issue of climate change and globalization will also affect the future of economics. A Universal Basic Income is just one idea, but it’s worth examining. Right now we are only in the stages of speculation, but research and pilot projects would be able to drive the conversation forward, answering important questions while unearthing new ones. The pilots can absolutely measure the cost benefits – how much money is saved in healthcare costs if people have access to good healthy food and don’t develop long-term health problems? What is the cost benefit if a person is avoiding committing crimes and the ensuing consequences because they have all of their basic needs taken care of? And I think it’s important to analyze different models of Basic Income because the economic needs of communities all over the world are vastly different from one another. I think what a Basic IncomeProgram in Ontario looks like can’t and shouldn’t look like what a Basic Income Program would look like in another country, or even in another part of Canada. Different areas have different economic needs, which is why I’m glad to see so many projects taking place all over the world that are trying out different models of Universal Basic Income.
In your opinion, was the pilot working in getting people to improve their situations, including your own experience?
Having a Basic Income improved my life. Everyone I’ve talked to were improving their lives, and these improvements were small, but noteworthy steps to living better lives out of poverty – lives with dignity. Small things like the ability to afford to buy new clothes, or buy healthier food at a nicer grocery store, or be able to pay bills on time. The amount was small – if someone wanted to use Basic Income as a disincentive to work, they could, however, they would not be living a nice life. It was enough to get a leg up out of poverty – move into safer housing, get a better job, and live better lives, contributing to the economy. The cost of poverty on a person’s mental wellbeing is staggering – the amount of mental energy it takes to survive will actually reduce a person’s IQ. If all their mental energy is concerned with how they will pay the next bills, where they will find food, how they will pay for health care, etc. there is no time for one to dream of bigger pursuits. I saw Basic Income buying people that precious time. To give that to someone, and then take it away with no warning, and little information, and no reason based in fact, is simply reprehensible.
*
The Basic Income movement is still going strong, despite the Ontario Pilot’s cancelation. In Canada, activists are fighting to take the pilot to a Federal level, and to finish the research that was started. At the time of the cancelation, there was no data analysed by the pilot, all we have are the stories of the recipients as told in Jessie’s portrait series and on a website called Basic Income Voices. These stories are powerful and provide a window into how Basic Income can bear positive, life-changing benefits for its beneficiaries. The future is here and the time to explore policy solutions is now.
What does the future hold, an unemployment ridden wasteland or a leisure based post-work society?
Whereas Harari’s former works were focused on the past of humankind or toward its future, “21 Lessons for the 21st Century” investigates the most pressing issues of our times. Professor Harari finds 21 topics which embody the plethora of uncertainties surrounding our present and immediate future, and then, with the past history of our specie well in mind, suggests his thought-provoking vision about them. His unique timeliness is due to his unparalleled ability to reframe the past in order to investigate the present.
In the second lesson, “Work,” Harari talks about automation, Artificial Intelligence, machine learning and the impact they will have on the labor market and society as a whole. In order to avoid collapse, deep change is required, a true renovation of our social models.
And Universal Basic Income (UBI) may be one of the answers.
The pace of automation
It is unclear how the labor market will look in the long run. What is certain is that it is undergoing change. The advances in Information Technology (IT), machine learning and robotics will bring on a wave of automation, the author said.
But it is not the first time in human history that society measures itself with automation, as we already faced similar events, most notably with the industrial revolution. And the fear of mass unemployment was proven unjustified. Thus, in Harari opinion, we have to ask whether this time will be different.
Are our concerns about a jobless future legitimate? Or are we exaggerating the magnitude of the phenomena? Do we incur in the risk to act like modern luddites?
The situation of the nineteenth century was different, Harari mantains. When industrialization hit, it is true that many jobs were appropriated by machines, but at the same times many new jobs were created and the quality of life was profoundly improved.
As humans have two kinds of abilities, physical and cognitive, during the industrial revolution machines competed for only one share of the things humans could do, the physical one. When jobs in the industrial or agricultural sectors were automated, they opened the door to jobs requiring a cognitive skill set, the category of jobs we commonly associate with the third sector.
What is happening is due to the fact that the AI revolution is not just embodied by the evolution of computers, becoming faster and more “intelligent,” but it’s closely related to other fields; the momentum of the revolution is shouldered by advances in biology and social sciences, Harari said.
As more is understood of the underlying biological mechanisms controlling the emotive dynamics of humans, the more computers become able to analyze human behavior, foresee human decisions, and take their place in a number of jobs. In addition to delivering results, these AI tools tend to keep other significant processes in mind as well. In many cases, managing IT services effectively and improving them requires more than manpower alone. There are times when IT professionals might take time to learn what is CMDB in ServiceNow or other relevant topics. Nevertheless, an AI-specific tool can decipher complex terms and provide results quickly. .
Advances in neuroscience and behavioral economics revealed that our choices do not depend on free will as much as on the calculations of the neurons in our brains, assessing probabilities at enormous speed, the author writes. Human intuition can be considered “hacked” as it was revealed to consist of pattern recognition, the ability to identify recurring patterns and use them to create models and make predictions. And AI can become very good at pattern recognition. If intuition is no more than assessment of probabilities and creation of predictive models, it should not come as a surprise that machines can take our place, given that our very functioning is imperfect and prone to errors: it relies on circuits created through the evolution of our specie, in contexts far in time and place from those in which we try to apply them –the savannah is nothing like today’s cities.
Automation will not impact the entirety of fields, as some jobs are more susceptible to it than others, Harari writes. Jobs based on repetition will be more prone to automation, so if you want to stand out with your applications, consider working with an executive resume writer. Multifaceted activities and unexpected scenarios are still a no-go zone for machines. Where the jobs of many doctors, requiring diagnostics and prescriptions could be expected to be a no-brainer for AI, the job of nurses would prove more problematic, requiring a mix of personal relationships and physical activity. Caretaking will probably be one of the most difficult task to automate, and could very well be the activity in which most humans will be occupied in the future, Harari suggests.
The future of jobs
Harari sustains that talking about a jobless future is premature, as automation will allow for more time and resources to be invested in study and research, with the potential to develop new treatments, drugs and deepen our understanding of the biological world. There are jobs where machine automation is not desirable, such as many law-related jobs. Furthermore, there will be a place for human-machine cooperation.
Drones require many operators to work them, driverless vehicles require some form of supervision, and cybersecurity and maintenance will be needed. Some of the top cybersecurity threats aren’t simple to defeat – you can’t just set up a firewall, you need to actively fight against any hacks or viruses. With this being said, as we advance in technology the requirement for human intervention will become less stringent.
But the jobs we are talking about are knowledge intensive, which means that even if they were numerically sufficient to limit unemployment (and they are not), we would nonetheless be left with the problem of unemployment due to under-specialization. In Harari’s opinion, one of the main differences of this technological revolution from the precedent is the degree to which professions are interchangeable. When jobs are less specialized, it’s easier to switch from one profession to another, its often the same for machines. What we may find then is that jobs that machines will not be able to do interchangeably are most likely going to require a high degree of specialization from people. This alignment could pose the risk of facing “the worst of both worlds”: mass unemployment and lack of qualified workers.
And professor Harari notices how, even for those who are able to pursue a new career like in the example shown above, the rapid pace of technological advance or societal changes could make it obsolete in the matter of years. Not just professional development, but jumping from a field of study to another will become the norm in a volatile job market, as the ephemeralization of work will make the idea of formation for a career as an one-off effort laughable.
This should also be seen as an emotive cost for workers, the uncertainty causing a great strain in terms of mental health: if the unstable job market of the first decades of the twenty-first centuryproduced an explosion of work-induced stress, mental resilience to change will be among the factors skimming the employment market.
Societal change
Looking back at the history of the industrial revolution, Harari considers how the new social conditions – great industrial metropolis and the dynamic nature of the arising economic markets – could not be accommodated by the existing political, economic and social models. Institutions such as religion, monarchy and feudalism were no longer apt to direct society. A whole century of social unrest followed before an equilibrium was found, with liberal democracies, fascist regimes and communist regimes on the playing field. What automation will bring rests in the realm of speculation, but Harari highlights how there is potential for great societal disruption, and we cannot afford complacency at the risky of bloody revolutions following systemic unemployment, given the great destructive power of modern warfare.
Universal Basic Income
The author then goes on investigating the role governments will have to assume as technology advances, saying that they will necessarily have to intervene, both via the creation of a dedicated structure for permanent formation, and by providing a safety net for people as they face transitions between jobs. The mantra should be the one which Scandinavia is already applying: “protect workers rather than jobs.”
Universal Basic Income (UBI) is one of the potential models that could respond to the technological and economical revolution we are expecting, Harari says. Its focus on the provision of means to satisfy basic needs is aligned with the necessary imperative of protecting people and not jobs, and could help to preserve the social status and self-worth of humans in a work-lacking future.
Financed through progressive taxation, an UBI would act as a redistributive instrument in a world which sees growing polarization between the riches and the poor. An alternative idea, in the author’s opinion, is to rethink the meaning of work by taking into account the education of children and caretaking. Considering caring for others as work which should deserve a monetary compensation would help foster informal safety nets and strengthen communities. Doing so would help preserve the social fabric which could be disrupted by the upcoming AI revolution. Since it would fall upon governments to pay for such activities, this would not ultimately differ from UBI.
Given that UBI could prove itself a valuable instrument to build a model for the society of the future, Harari calls for a better investigation of its possible application; that is, minimum and universal need to be defined.
In a globalized world, where market and industries are interconnected and delocalization is the norm, the meaning of universal need to be ascertained. UBI experiments have always been of reduced geographical extension, and it is usually thought, in its largest declinations, as a country specific measure. But if it was applied at the national level, its locality would create a problem, as its redistributive effects would not affect those who need it the most. As the wealth appropriated through the world is concentrated in a few nations, a progressive taxation used to fund UBI would then redistribute wealth not globally, but to a lucky minority.
Ideally, a global government could work out a functioning form of global UBI, but at the cost of its feasibility: redistributing wealth globally could very well prove impossible, in the opinion of professor Harari.
If a minimum income has to be enough to accommodate one’s basic needs, we have to decide which needs are basic, and this could prove to be a difficult exercise: homo sapiens needs food and water to survive, everything else may be considered superfluous, the author says.
Today we may consider also shelter, healthcare and instruction as basic needs, but there is no certainty about what is going to be included among them in the future. Human needs depend very much on expectations, they are far from being objective, and so the definition of minimum will remain a fluid concept as society changes through time, Harari forecasts. This means that the mere access to an income will not per se suffice in making people happy, but UBI will have to be integrated with activities which makes people satisfied, from civic engagement to sport.
Harari suggests that his country of origin, Israel, could be thought of as a testing field for a satisfying life in a post-work world. There, half of the ultra-Orthodox Jews do not work, but spend their lives praying and studying the sacred tests, while receiving government subsidies and a share of free services. They derive their happiness from the strong ties they develop with the community they live in and from the fulfillment gained via their investment in religion, Harari mantains.
Even as they are looked at with contempt from the laic citizens of Israel, which see them as freeloaders, their example may very well provide a model for the society of the future: life will be spent in the search for purpose, which could be found through the development of a strong sense of community and by investing time studying and in the construction of social relationships. Those activities, combined with the economic safety net provide by UBI, can maybe provide a picture of the society of tomorrow.
Written by: Daniele Fabbri
More information at:
Yuval N. Harari, “21 Lessons For the 21stCentury”, Jonathan Cape, 30 August 2018
Yuval N. Harari, “Yuval Noah Harari on whatthe year 2050 has in store for humankind”, Wired, 12 August 2018
Tribal groups, in which all men and women on Earth have lived since humanity emerged, have functioned through cooperation and solidarity among their members in tasks such as obtaining and distributing food, building shelters, and family dwellings or taking care of community assets; tasks that today we would call ‘economic’. In fact, over hundreds of thousands of years of human presence on Earth the whole economy was cooperative and supportive. And at the time it was sustainable. About 6,000 years ago things began to change when the first sophisticated civilizations arose and put into practice a variety of new forms of economic organization; from the range of traditional systems based on agriculture or trade to, subsequently, feudalism, mercantilism and everything else after that. Today, however, all the economic diversity that existed over those 6,000 years is virtually nullified, and an (almost) unique model has once again consolidated. It is called capitalism, and it has been going on for about 200 years.
Ancestral economies were based on solidarity and cooperation among people, on a harmony between them and nature and on an orientation towards the mere satisfaction of their needs. Capitalism is characterized by competition among peers, by the predation of the Earth and by an orientation of its agents aiming at unlimited material accumulation. Both modes are hegemonic, each in its own time, but that is about as much as these modes have in common.
Can, like its ancestral homologous form, the present ‘state of the art’ in economic organization – capitalism – last for hundreds of thousands of years? It does not seem possible, given the condition in which it left the planet and humans, after only 200 years. Earth’s soils, rivers, oceans, and atmosphere are now filled with the poisons left over from our economic activity; the climate is changing, the elements unsettled and life as we know it may be doomed, if we do not make deep and rapid changes. As for us humans, materialistic as we have become, we too often forget who we really are and can do: our nature as creators; our ability to generate art, mathematics or philosophy; our potential for freedom, for choosing paths, for changing ourselves and the world as we decide, and the lack of any natural bound between us and what we can achieve or be. By forgetting so much, we reduce ourselves to economic roles, going now so far as to even discuss whether artificial intelligence and robots will make us pointless and expendable one day. The culprit is our current economic culture and system.
However, despite its pitfalls, an important merit can be attributed to capitalism: with the demand for accumulation and profit, it has given us machinery, techniques, and knowledge that can now allow us to access the resources necessary for the material comfort of all. This is only a possibility though since these machines, techniques, and knowledge only provide the capacity, not the guarantee of its use.
Our collective future is unforeseeable. It will be the result of an infinity of both conscious choices and involuntary actions, taken by billions of individuals and groups, in a chaotic general movement that no one can control or anticipate. And yet, it can be felt that capitalism would make no sense in human history unless it was fated to eventually free us from the shackles of material scarcity. Hence, the great economic question of our time must be: how to accomplish the potential that capitalism offers us? The simple ‘progress’, as currently evolving, does not seem to be the way. Reality shows us, everywhere, that the mere growth of the present economy, without any change or innovation in its logic and processes, will never free us. Neither will the strengthening of the so-called welfare state, in its traditional, bureaucratic, expensive and life-controlling form. It can do no more than mitigate poverty, but at a high cost in dignity to its beneficiaries, and a cost in humanity to all the others. The more unnecessary this becomes the more intolerable it gets.
Each one of us, rich or poor, directly or indirectly is suffering from the lack of a process which guarantees the essentials for all. Clearly, this is no longer a problem of production capacity, but one of economic organization. The satisfaction of the basic needs of all people is not inherent to capitalism, nor has it ever been added to it. However, without such process, we will not rid ourselves from the specter of material poverty, and therefore from this never-enough culture in which we find ourselves in. Mainly reduced to producers and consumers, we are exhausting the energy that could alternatively be spent in higher occupations which our potential allows and claims for us.
And yet, we can immediately introduce such process of guaranteeing the essentials for all: let us recover from our ancestral economic way its core element of solidarity among people.
A Future – the UBI-AA
Solidarity among people is the essential idea behind the alternative resource distribution model here described: the Unconditional Basic Income of All for All, or ‘UBI-AA’.
UBI-AA is a revenue redistribution process, generically designed to operate monthly, providing automatic and unconditional transfers among citizens, from those who have higher incomes to those with lower or no income at all. Built, supported and leveraged by them alone, the process will invite participants to take responsibility and engage in their communities, which will reinforce these.
It works in two stages:
1) As it is acquired, each member of the community discounts to a common fund – a ‘UBI Fund’ – a proportion of their income, at a single and universal rate;
2) At the end of each month, the Fund’s accumulated total is equally and unconditionally distributed among all members of the same community.
This simple process, which demands the same effort from all participants while offering them the same benefit, treats everyone equally. It turns those who, at each moment in time, have above-average incomes into net payers to the UBI Fund, and those who have below-average incomes into net receivers. Thus, the process operates a joint distribution among participants of part of their individual incomes. In addition to reducing inequalities, this solidarity among peers creates an unconditional guarantee of income for all, that is, an Unconditional Basic Income.
It follows from the UBI-AA process that the loss of available income by some will be the gain of others. Importantly, for the scheme to be accepted by the former and really useful to the latter, the losses involved should be moderate and the gains significant. This should not, however, lead to a devaluation in the possibilities of the mutability of all individual positions. As time goes by and while exercising the options which the process itself opens to participants, individual situations of income ‘winners’ or ‘losers’ should always be seen as circumstantial.
To achieve its intended effects, the implementation of the UBI-AA should be accompanied by the release of its participants from the burden of personal income tax. Such tax relief will compensate them for the contributory effort required by the UBI-AA process. However, for those above a certain level of income, such compensation may turn out to be merely partial.
Once the personal income tax is abolished, the moderation of losses for citizens with above-average incomes and, simultaneously, the material significance of gains to those with under-average incomes, will be possible if the rate of contributions to the UBI Fund is set at an optimal level, balancing the two outcomes.
A more complete description of the UBI-AA process, as well as a simulation of the financial effects it would have produced, both in individual citizen spheres and in the State budget, hypothesizing it in force in Portugal in 2012, can be reached here.
UBI-AA differs from most current traditional redistributive processes because it is unconditional. It also differs from most unconditional alternative processes since it is a construct of common citizens, instead of a government, a central bank or any other ‘power’ policy. We see it as a humane alternative to organizing the economy on its distributive side. Operating through the income distribution process described above, it will favor the rehabilitation of values such as solidarity and voluntary cooperation among people, and the creation of an unconditional guarantee of income for all will be a corollary.
We cherish the hope that this may contribute to the flourishing of a new and less materialistic culture. Who knows, if making everybody’s access to essential material resources as simple as breathing, will not end up instilling in people the same attitude towards those resources – money and the things it buys – as the one we have towards the air we breathe: no matter how valuable it may be to us, we do not quarrel with each other for it; we only use it in the quantities we need; accumulating it does not even occur to us. Such a cultural shift would certainly be a great human civilizational progress and a much-needed step towards a reconciliation between us and our environment.
