by Guest Contributor | Jan 16, 2017 | Opinion
Written by: John Boik
For many good reasons, the concept of a basic national income is enjoying a surge of interest within academia, civil society, and political sectors. I am proposing a program that, in theory, is a mutually supportive cousin of basic income. Unlike typical basic income programs, this system is implemented at the local (e.g., community or city) level by non-governmental entities. Moreover, it can be implemented in parallel with more traditional basic income programs to help achieve expanded goals.
John Boik
Before describing it, I pose a question: What is the purpose of an economic system? As analogy, the purpose of a tractor is to pull or push farm equipment. Tractors are designed to meet user requirements, and the optimality of a particular design can be assessed by how well it does so relative to alternative designs. What are the user-requirements of an economic system? It is an uncommon question, but if we can answer it with clarity we would be in a better position both to assess alternative designs and monitor progress.
In a recent paper I argue that relative optimality of an economic or governance system is a measure of its capacity to help communities solve problems and organize activities to elevate collective wellbeing. Collective wellbeing refers to social and environmental flourishing, both local and global. Problem solving is the proximal aspect of relative optimality, and elevated wellbeing of the distal aspect, or result, of good problem solving.
Viewed this way, existing economic and governance systems are suboptimal relative to need. Indeed, they might be incapable of addressing today’s complex problems (climate change, pollution, and inequality, for example). In the paper, I call on the science and technology sectors, and the academic community, to play a pivotal role in developing and testing new, more effective systems. Further, I suggest that the prudent approach to do so is at the local level. Once simulations and other preliminary work are completed, new designs can undergo scientific field testing via community-based volunteer clubs. This approach will allow testing by relatively small groups, at relatively low cost and risk, in co-existence with existing systems, and without legislative action.
A prototype for this approach — and a cousin to basic income — is the Local Economic Direct Democracy Association (LEDDA) framework, now in early stage development. This bi-currency system uses money (both a local digital currency and national currency) as a bone fide voting tool in a type of direct economic democracy. An interactive model of currency flows in an idealized system is available at the Principled Societies Project website.
A published agent-based model reveals similarities and differences to basic income proposals. Once a LEDDA has matured, participants receive a very high and equal income (the equivalent to about $110,000 per family, the 90th percentile of US family income). Employees receive income in the form of wages, but any member who is not employed or not in the workforce unconditionally receives this income as well, from the novel crowd-based financial system. Members also use the LEDDA financial system to fund the types of jobs that they desire and deem useful.
John Boik, PhD
Founder, Principled Societies Project
@JohnBoik
About the author:
John Boik received a BS in civil engineering from the University of Colorado, Boulder; a master’s degree in acupuncture and Oriental medicine from Oregon College of Oriental Medicine, Portland, Oregon; and a PhD in biomedical sciences from the University of Texas, Health Sciences Center, Houston. He completed postdoctoral work at Stanford University, in the Department of Statistics. He is the author of Economic Direct Democracy and other books and papers, and founder of the Principled Societies Project.
by BIEN | Jan 16, 2017 | News
Councilors of the small Ontario town of Smiths Falls voted on December 19 last year to reject participation in its province’s basic income pilot, to the objection of residents and the town’s mayor. A petition requesting a re-vote is currently circulating online. The story begins, however, in 2008.
That year The Hershey Company shuttered its Canada operations, at the time based in Smiths Falls, largely for cheaper Mexico-based labor. This exit of the area’s biggest customer precipitated the same by other businesses, and although the ensuing purge of jobs merely reflected a manufacturing decline already underway in the province, the disappearance of five hundred positions at Hershey’s alone, accounting for nearly 6% of the town’s population, catalyzed especially forward-looking pain. That year the town operated at a surplus of C$11.2m, and by the town’s most recent reported fiscal year, its once budget excess had trudged through increasingly tight leverage to a deficit of C$1.3m (albeit improved since 2013). Today the town struggles with unemployment above the national rate, and a third of children live below the poverty line.
Given also an aging population and petering labor force – per census data the town’s median age increased by 2.1 years in the five years leading up to 2011, and the overall population declined by 2% – it could be in the interest of Smiths Falls’ residents to entertain a basic income system. Indeed the petition created by resident Carol Anne Knapp has so far gathered 113 supporters, with a goal of one thousand. This is despite the council’s three-two vote, with two councilors absent, against mayor Shawn Pankow advocating to Ontario’s finance minister for participation in the program. Pankow has meanwhile expressed interest in holding a public meeting on the topic this month, health officials in tow.
A prominent councilor, Dawn Quinn, cast one of three “nay” votes. According to Jordan Pearson, writing for Motherboard, her vote was at least partly informed by her credo of frugality, stating that “folks sit around in Tim Hortons all day instead of looking for jobs, and they should consider buying a tin of Tim Hortons coffee to make at home instead of buying a cup.” On that point Pearson continues, “[Quinn added] they could consider shoveling snow to earn some extra money.” Similarly conveying Quinn’s underlying sentiment, Kate Porter quotes her in CBC News: “They need to be able to learn how to take that money and stretch it […] we need more of that kind of thinking.” So it appears the belief that basic income causes squander was, at least for one decision maker, a reason for the council’s vote outcome.
There is, however, some evidence from a bordering province that suggests this perspective is dogmatic, as reflected in Knapp’s petition letter requesting that a “new vote be based on science and evidence.”
Nearly forty years ago, Dauphin, a similarly small town in the Canadian province of Manitoba, underwent a five-year minimum income (dubbed “mincome”) experiment. Mincome was also similarly basic income-lite. Rather than a true guarantee, which is regardless of preexisting income status, mincome subsidized only those poor enough and was reduced for those who earned above a threshold. Likewise, Ontario’s pilot makes whole those earning below a set threshold. Even so, the experiment provides refutation to Quinn’s apprehension of lethargic congregations at Tim Hortons.
Evelyn Forget (credit to: Ecocide Alert)
According to Evelyn Forget, an economist at the University of Manitoba and academic director of the Manitoba Research Data Centre, primary earners in Dauphin worked only marginally less within the five-year study, and much of the other reductions in labor force participation was comprised of women who extended maternity leaves and male high school students who simply stayed in school rather than work. Additionally, hospitalizations, in particular for mental health problems, dropped significantly (nearly 9% across the board) and would alleviate the burden on healthcare programs today.
Quinn acknowledges, though remains unpersuaded by, the Manitoba findings and is further dissuaded by cost – a concern currently aggravated by budget shortfalls. She protests that Smiths Falls became financially saddled after a 1970s investment in low-to-moderate income (LMI) housing, giving rise to her concern about opting into another government-borne program. A ten-year housing plan published in 2014 by Lanark County and Smiths Falls, however, notes that 74% of the county’s dwellings requiring major repairs were constructed prior to 1971. Coupling two observations then – 60% of LMI housing was developed under the program to which Quinn is referring; and renting in lieu of owning has been on the rise since Hershey’s departure – the 1970s investment appears to have provided an arguably necessary safety net.
Expenses, furthermore, reflect precarity when business output, curbed by economic disempowerment of consumers, constrains municipal revenues. In pursuing a conservative bottom line, rejecting basic income has a potentially truncating effect on the top, and budget woes thereby persist. On this, councilor Lorraine Allen, one of two “yea” votes, says the proposal would enable residents to “shop more, buy more groceries, perhaps be more involved in things that they couldn’t before.” Hence her vote for the program.
Still, the short-lived nature of the pilot is consistent with another of Quinn’s concerns: that a pilot implemented, then taken away, could prove negligibly meaningful. In the town’s 2015 operations approximately C$2.4m was spent on social and family services. Tucked inside these costs were, in addition to unspecified uses, assistance to the elderly, childcare and the social housing expenses which Quinn resents of the 1970s. If the Ontario program follows the recommendation by former senator Hugh Segal (a monthly allowance of C$1,320), the combined cost to eligible individuals could perhaps exceed the town’s existing social and family services expenditures. This mainly reinforces the need for cooperation between municipality and province-level governments to realize success from basic income. Eating the full burden, what Ontario offers is more generous than that. But in order for such a program to live past a test phase, the council of Smiths Falls would first have to heed the needs of its residents – and try.
Thanks to Genevieve Shanahan for reviewing this article.
Cover photo by wyliepoon.
More information at:
AreaScore, “Smiths Falls unemployment,” 2016.
Carol Anne Knapp, “Smiths Falls council reverse the decision regarding basic income,” Care2 Petitions, December 21, 2016.
City-Data, “City data of Smiths Falls,” 2011.
Evelyn Harford, “Basic income pilot project a no-go for Smiths Falls town council,” InsideOttawaValley, December 20, 2016.
Jesse Ferreras, “Ontario basic income should be $1,320 per month, adviser says,” The Huffington Post, November 4, 2016.
Jordan Pearson, “Why a struggling town voted against a basic income,” Motherboard, December 22, 2016.
Kate Porter, “Smiths Falls residents fight for guaranteed income pilot project,” CBC News, December 22, 2016.
Lanark County, “Lanark County and the town of Smiths Falls ten year housing and homelessness plan 2014-2024,” 2014.
Sarah Gardner, “On the Canadian prairie, a basic income experiment,” Marketplace, December 20, 2016.
Statistics Canada, “Census subdivision of Smiths Falls, T – Ontario,” 2011.
The Canadian Press, “Ontario floats idea of guaranteed minimum income to ease poverty,” CBC News, March 14, 2016.
Town of Smiths Falls, “2009 consolidated financial statements,” 2009.
Town of Smiths Falls, “2015 consolidated financial statements,” 2015.
by Stanislas Jourdan | Jan 16, 2017 | News
The European Parliament will vote on a report calling on the European Commission and all EU member states to “seriously consider” basic income in order to address the economic consequences of automation and artificial intelligence.
On Thursday 12 January, European Parliament’s committee on Legal affairs (JURI) adopted a report on “Civil law rules on robotics” which considers the legal and economic consequences of the rise of robots and artificial intelligence devices.
According to the report, since “robots, bots, androids and other manifestations of artificial intelligence (“AI”) seem poised to unleash a new industrial revolution, which is likely to leave no stratum of society untouched, it is vitally important for the legislature to consider all its implications. There are many tools claiming to be the best tool for machine learning and if these keep developing can artificial intelligence become a real threat to human job roles?
It reads further: “the development of robotics and AI may result in a large part of the work now done by humans being taken over by robots, so raising concerns about the future of employment and the viability of social security systems if the current basis of taxation is maintained, creating the potential for increased inequality in the distribution of wealth and influence”
To cope with those consequences, the report makes a strong call for basic income. “A general basic income should be seriously considered, and (the European Parliament) invites all Member States to do so.”
The resolution is based on a report prepared by the Working Group on Legal Questions Related to the Development of Robotics and Artificial Intelligence, established in January 2015.
This legislative initiative is however not legally binding. If adopted in February by the European Parliament’s full house, the EU Commission would be invited to present a legislative proposal but it can also refuse to do so.
The Commission is not entirely unaware about basic income. Last year, Social Affairs Commissioner Marianne Thyssen said she would follow with great interest the outcomes of the basic income experiments currently underway in Finland.
The rapporteur of the report, Socialist MEP Mady Delvaux, said she was satisfied that basic income was included by the JURI Committee at this stage.
However she expressed doubt that the idea would survive the plenary vote. In a statement published on the website of the Socialist and Democrats group at the European Parliament, the MEP explained:
“As social democrats, it is urgent that we look at new models to manage society in a world where robots do more and more of the work. One idea adopted in this report is to look at a universal basic income – where everyone would receive a wage from the government whether they are in work or not.”
Mady Delvaux MEP
Barb Jacobson, Chair of Unconditional Basic Income Europe said, “We are very pleased Mme Delvaux mentioned basic income in this report, and we hope that Parliament and the Commission will give it serious consideration along with rules about the use of robots. The benefits of automation should be enjoyed by all members of society, not just those companies which directly benefit from it.”
UBI-Europe urges European basic income supporters to get in touch with their MEPs to make sure this aspect of the report reaches the Commission.”
“Whether automation ends up destroying a larger proportion of jobs or not, however, incomes are already increasingly insecure, and in most parts of Europe wages have stagnated or fallen. While many member states are starting to take basic income seriously, the need is urgent. The EU could help lead the way with its own Eurodividend,” added Nicole Teke, Secretary of UBI-Europe.
The European Parliament is expected to vote on the final report on the week of February 13.
Pictures CC European Parliament
by Genevieve Shanahan | Jan 15, 2017 | News
Kate McFarland, a News Editor for BIEN, has been awarded a $24,000 grant by the Economic Security Project to focus on this work throughout 2017.
Of the grant, McFarland has the following to say: “As a reporter on the basic income movement, my primary task is to present accurate information in a clear and objective manner. With the movement gaining incredible momentum in world plagued by clickbait headlines and sensationalized reporting, this task is more important than ever. It’s a challenging and demanding job, and increasing my knowledge, building new connections, and perfecting my skills as a reporter has been an ongoing process for me since I took the plunge into writing for Basic Income News in early 2016. With the Economic Security Project grant, I’ll be able to further expand the scope and depth of my reporting, and hopefully help to bring other lasting improvements to the important work being done by Basic Income News and BIEN.”
In addition to McFarland’s role as a writer and editor for Basic Income News, she is a member of the Executive Committee of the Basic Income Earth Network, and the Secretary of the US Basic Income Guarantee Network .
The Economic Security Project describes itself as “a two year fund to support exploration and experimentation with unconditional cash stipends.” The project uses donations to fund academic research, basic income campaigns at both state and local levels, and cultural projects related to economic security.
The Economic Security Project is co-chaired by Natalie Foster, an expert on the future of work with the Institute for the Future, Chris Hughes, co-founder of Facebook, and Dorian Warren, a Fellow at the Roosevelt Institute and President of the Center for Community Change Action. Notable founding signatories include Sam Altman, President of Y Combinator (whose proposed basic income research we have covered here), Scott Santens, a well-known writer and advocate for basic income, and Andy Stern, President Emeritus of the Service Employees International Union (whose recent book on basic income we have covered here), among many others.
McFarland covered the launch of the Economic Security Project for Basic Income News here. As a founding signatory herself, she was also invited to participate in a special series of blog posts honoring the launch. Her “call to fellow supporters” (available here) makes the case for a multifaceted approach to investigating basic income, as well as clarity of understanding of what empirical studies can tell us and what values they imply.
McFarland graduated from the Ohio State University in 2015 with a PhD in Philosophy and a master’s degree in Statistics. She taught philosophy for a year before leaving to concentrate on her work for BIEN. McFarland started writing for Basic Income News in March of 2016, before her election to the Executive Committee of BIEN in July.
Photo: Kate McFarland
by Guest Contributor | Jan 13, 2017 | Opinion
Imagine entering a website for your country which after answering a few questions would inform you how much money you would receive from a basic income. This is net of any increased taxes from each of the financing models proposed to finance the UBI. This site will also tell you how the country would be affected overall. Each of the variables are listed and are changeable, which gives those interested the ability to measure results from all possible outcomes.
We have this now in a Google Docs spreadsheet form, and it has been forwarded to all the members of the international BIEN outreach group of which I am a member. The original Excel version can be found here.
The outreach group has several objectives. My primary focus in this group is the collaboration, communication, connection, and mutual support of the international groups who are working on modelling, financing and forwarding a universal basic income.
At the congress earlier this year, I presented a paper on a European wide basic income financed by a collective goods and services or value added tax. This was a costed model which indicated that an increase of the European VAT rate of 16 percent to 22 percent would be sufficient to finance a basic income of 150 to 200 Euros for everyone in the European union over the age 18. The expected results for Europe was people had more money to spend, there was increasing employment, no need for austerity measures, big savings in bureaucracy and healthy economies in Europe with the measures they need to cope in a changing world.
While 96 percent of people in Europe would be better off with this UBI, a higher percentage could have been achieved by having a tax-free income allowance as well with a slightly higher GST rate. I was not able to model this, as it impacts individual member budgets while I was seeking a collective UBI agreement keeping with the existing aligned VAT rates across Europe. However, this is the suggestion that I made to the New Zealand government last year.
The Labour party here, along with all the left-leaning parties, have indicated an interest in or directly support UBI. I find that reading other people’s spreadsheets brings on a headache so I have designed an interactive model that hides away the calculations and simply delivers the results of each financial model in a dollar value for your individual circumstance.
I have made this template available to the BIEN international community. They would need to enter their own existing welfare budget, the country tax and VAT incomes. It also asks for the population income and taxation per income band. Doable from web sources in some countries, but needing real work and government assistance in others. It does offer a way to map financial results given different financing models.
While we could disperse this information through our own networks, I have an additional objective in that there are six questions that the website would require you to answer, most of which relate directly to the calculation of your personal UBI net advantage. While the other asks whether you would leave your job if you received a UBI. I will consult with the parties here as to whether they need anything further answered as there were hints of a UBI financed by a capital gains tax which would be interesting to compare.
The four models currently considered are:
- Tax free earnings to $100,000 and UBI of a higher amount financed by a raise in GST.
- A moderate UBI financed by a raise in GST.
- A lower UBI financed by the top tax rate.
- A lower UBI financed by increasing the income tax by the same percentage.
My conclusions are as follows:
- The bottom earners of less than $16,000 are best off with the model (1) as are the people earning more than $70,000.
- The middle earners from $16,000 to $70,000 (the majority) are better off with model (3) however the top tax rate would need to be more than 100 percent and therefore it is not possible.
- Model (2) has the second best overall result of $10,187 average extra money per person yearly. Model (1) has the best of $13,376.
- Model (4) has a similar overall result to model three of an $8,604 average additional income per person annually.
The spreadsheet also adds the total cash benefit for the entire population, and I hope that if this was put to a vote that this would be given due attention, as the extra cash received by many from the top tax being increased is not much more than from the tax-free GST model. The country total is $47 billion for the GST model compared to $26 billion for the top tax. This gap widens as the variables are changed.
My conclusion is that the tax-free GST model is the best method of financing UBI for New Zealand.
My hope is that someone will first audit these findings and bring about this information being shared on a website. This way, people get a chance to view what a UBI means to them and their country. The questions answered will help developers with the data they need to see what the likely outcomes for their country would be.
A final note – A tax on spending enables people to save with the extra UBI they receive, seek employment without a punishing higher tax rate, get a entry-level job without paying any tax on it and still receive the full UBI.
UPDATE: Added new spreadsheet version.
About the Author:
Peter Brake is a self-employed accountant in a busy public practice and a part time organically certified olive farmer. A member of the BIEN outreach task-force, one of four members charged with creating a space in the next congress for Bien affiliates and international developers of UBIs to share their progress, discuss common problems and brainstorm common solutions. He is actively involved with the British, European, Indian and New Zealand UBIs.
