by Kate McFarland | Sep 3, 2016 | News
The European Forum for New Ideas is a conference that convenes annually in Sopot, Poland, bringing together academics, politicians, entrepreneurs, workers, and others to discuss the direction of the European economy.
This year’s conference will take place from September 28-30 on the theme of “The Future of Work: Realities, Dreams and Delusions”:
The implications of serious challenges currently facing Europe are all reflected in the continent’s labour market. The influx of immigrants, resuscitating EU unity, the technological revolution and the automation of processes will have tangible consequences for every EU citizen who wants to have a good job, decent pay and a stable future. Companies also have to tackle specific questions. Where to recruit new workers? How to retain those already employed? Which business models will be imposed by the automation of work and the possibility of artificial intelligence?
Notably from the standpoint of the Basic Income Earth Network, Guy Standing–BIEN’s cofounder and honorary co-president–will be participating in two sessions on the economic implications of technological change, both of which will be held on Thursday, September 29.
At the first, a morning plenary session, Standing will be one of six panelists. He will be joined by the author Martin Ford, who has promoted basic income as a way to cope with the automation of labor, especially in his popular book The Rise of the Robots (as well as in a recent White House roundtable discussion). Other panelists include Michał Boni (Member of the European Parliament), Michel Khalaf (President of MetLife EMEA), Ade McCormack (digital strategist), and Elżbieta Rafalska (Minister of Family, Labour and Social Policy in Poland). Marek Tejchman, Editor-in-Chief of Dziennik Gazeta Prawna, will moderate the discussion, which seeks to answer such questions as “Is polarization and fragmentation of work along with its attendant rise in inequalities inevitable?” and “What does the future hold in store for us: the end of unemployment, but also the collapse of stable employment?”
Later in the day, Standing will deliver an introductory speech at a debate on the topic “Is a Flexible and Secure Labour Market a Utopia?” (although he is not a participant in the debate itself).
Guy Standing is a Research Professor at SOAS, University of London, well known for his research and writing about the precariat. His latest book, The Corruption of Capitalism: Why Rentiers Thrive and Work Does not Pay, was published in July of this year.
The European Forum for New Ideas is organized by Polish Confederation Lewiatan, in association with BusinessEurope.
For more information, including complete schedules, see the page for “The Future of Work: Realities, Dreams and Delusions” at the website of the European Forum for New Ideas.
Article reviewed by Genevieve Shanahan
Image (Krzywy domek Sopot ul. Bohaterów Monte Cassino) CC BY-SA 3.0 Topory
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by Andre Coelho | Sep 2, 2016 | Opinion
Finland’s Ministry of Social Affairs and Health has just published a press release, announcing an experiment based on a partial basic income (< 800 €/month), instead of a full basic income (> 1000 €/month). Although the latter had also been considered for the experiment, it appears that the government has decided that the experiment should be conducted as a partial basic income, specifically 560 €/month. Here are the reasons for which Kela decided to recommend against running the trial with a full basic income:
- It would imply higher taxes;
- It would result in lower earnings-related contributions to unemployment and pension funds;
- Low income earners might quit contributing to unemployment funds and joining trade unions.
Let’s address each of these points:
- Kela links the higher tax rates with the “incentives for work”. The argument is that the former will lead to a reduction in the latter. Why? Ok, so a person on a job will pay more taxes. Assuming these taxes are maintained under reasonable levels, why is Kela assuming these people will stop working? Kela assumes a purely economic standpoint here – meaning that, according to Kela’s logic, people’s decisions, and particularly those related to work, result exclusively from monetary arithmetic. This logic, ironically, is completely non-economical in nature. Kela is assuming that people’s interests, preferences, and particular drives to do things for reasons other than money are not important, and hence can be discarded. Furthermore, Kela assumes that the possible effects of these preferences and drives on the experiment are not even worth trying to capture or understand. Stripping the argument from its technicalities and white-collar language, it can be reduced to the most common, basic, and prejudice-laden argument against basic income: that with a (full) basic income, people will stop working (“the laziness argument”). Nothing about the nature of the work itself is mentioned – such as whether it is socially useful or not, or whether it is contributing or not to people’s sense of belonging and happiness. The only thing that concerns Kela’s officials, analysts and institutional partners is whether a person stays on the job (whatever that job may be): if he/she does (or if an unemployed person becomes formally employed), that’s great; if not, that’s bad. Let’s not forget this is an experiment. If doubts exist, it’s precisely by undertaking an experiment that we might understand more about the subject being tested – in this case, ourselves. If the experiment is only intended to confirm what we already know, then it’s not an experiment: it’s a purposeless act taken only to gain collective confidence, much closer to public relations than science.
- Kela’s second argument goes like this: if people receive a full basic income, then why would they bother saving for unemployment and pension funds? Of course, these savings would be nonsensical at amounts lower than the basic income. But if someone has an average income above the basic income threshold, then a certain amount of unemployment and/or pension saving could be a wise investment, in order to maintain the same level of earnings in case of unemployment and retirement. For sure, this implies that, overall, there would be reduced contributions to unemployment and pension funds. But would that be a bad thing? After all, with the existence of a full basic income, people’s need for unemployment or retirement security would be reduced, so these funds wouldn’t need to be as large as they are today. Anyway, unemployment and pension funds are composed of money belonging to those who have directly contributed to them (or they are supposed to be). So they should only be as large as those people’s need for them. So what if a person stops paying their contribution to unemployment and/or pension funds because now he/she has a basic income? Nothing really happens, other than that the person will have a smaller amount of money to draw from when he/she becomes unemployed or retired. However, that person would never sink below the basic income level, and so a basic safety would always be in place.
- The first part of Kela’s third argument has already been dealt with in our second point. So, the remaining question is just about unionization. Why does Kela assume that joining a union is so important—so important, in fact, that a decrease in union membership could justifying not even testing a full basic income? Trade unions represent a certain kind of vision about work which is declining. In the USA, in the last fifty years, trade union membership has declined from around 33% (of all employees) to about 10% nowadays (Planet Money, 2015). Also in the UK, the number of registered union members has sharply declined in the last 35 years, from 13 million in 1979 down to 6.4 million as of 2014. A moderate to strong reduction in trade union membership has occurred in most other European countries as well, including Finland (Henrique de Sousa, 2015). At the same time, self-employment has been on the rise in several countries (e.g.: Austria, Belgium, Ireland, UK, Netherlands, Czech Republic, Finland)– although, in the European Union overall, it has stabilized around 16.7% since 2008 (World Bank). The vision of work that the trade unions represent includes fixed working periods, clear employer/employee relations, fixed negotiated incomes (collective bargaining), and holiday arrangements. All of these are getting less relevant as the time goes by. This comes with the acute rising of work flexibility, uncertainty over work periods and earnings, and the increase of precarious working conditions (Guy Standing, 2011). Precarity, unions’ number one enemy, does not necessarily represent a problem if a full basic income is in place. Unions were formed to give workers collective bargaining powers over wages and working conditions; in their absence, the threat of destitution was constantly used by employers to retrain and control workers. The employers could push less favourable deals onto workers, who were forced to choose between a bad deal and poverty. But this relationship, based on employees’ fear and employers’ abuse of power, need not exist – and, under a full basic income, would not exist. This makes sense because individual workers would have the personal bargaining power that a full basic income brings. Being part of a trade union would thus cease to be a necessity, and turn into a mere preference. So, reduced unionization is no grounds for rejecting implementing a full basic income, let alone merely experimenting with one.
Kela is rejecting a full basic income out of fear. This is an experiment. Of course there are issues, but that is exactly why the experiment is needed in the first place: to look at the extent of the consequences, within a controlled setup, before any full implementation. And experiment is needed to study the effects, expected or not. And to observe changes in people’s behaviours, when they are able to enjoy (during the experiment’s limited timeframe) a larger degree of freedom that they have never experienced before. I, for one, think that it’s entirely worth it. For the future of Finland – and of humanity.
More information at:
In Finnish:
Olli Kangas & Ville-VeikkoPulkka (eds.), “Preliminary report on a universal basic income”, Prime Minister’s Office, March 30th 2016
In English:
Ministry of Social Affairs and Health, “Ministry of Social Affairs and Health requests opinions on a basic income experiment“, Sosiaali-Ja Terveysministeriö; August 25th 2016
Planet Money, “50 years of shrinking union membership, in one map”, February 23rd 2015
Department for Business Innovation & Skills, “Trade Union Membership 2014 – statistical bulletin”, June 2015
OECD Data, Self-employment rate (% of employment, 1990 – 2015)
World Bank, Self-employed, total (% of total employed)
Guy Standing, “The Precariat: the new dangerous class”, Bloomsburry Open Access / Creative Commons, 2011
In Portuguese:
Henrique de Sousa, “Sindicalização: a vida por detrás das estatísticas [Unionization: thelifebehindthestatistics]”, WorkingPaper, Faculdade de Ciências Sociais e Humanas, September 2011
Article reviewed by Ali Özgür Abalı, Kate McFarland and Tyler Prochazka.
by Roland Duchatelet | Aug 31, 2016 | Opinion
About 80 years ago, academics and policymakers in the US wondered if the country’s wealth was improving every year or not. They decided that the “added value” that was created in a country was the appropriate measure for wealth creation.
These policymakers looked at the quantity and price of goods sold by agriculture, deducted the value of goods acquired, like chemicals, tractors and fuel, to define the added value of agriculture in the economy. They did the same for the manufacturing and building industries and for services provided by bankers, hair dressers, restaurants and shops.
True, the wealth provided by a restaurant is short-lived, but industrial products do not last forever either. What you pay for a product or service is probably the best possible practical measure of its value. It all made sense.
Then they wondered what to do with services consumers didn’t pay for, like police and public administration. Those services were added to the “wealth of the country” at cost, since they were definitely contributing to our welfare by avoiding chaos. In 1930, public employment in the US was only seven percent of the total work force. That has most definitely increased, with more and more people entering public administration through universities similar to Norwich University.
The Gross Domestic Product, GDP, became a faith of the “Labour Church”. That it is faith and not reason was illustrated the last years by the huge impact on financial markets by statistically irrelevant changes of China’s growing GDP, like 0.5 percent, while its measuring inaccuracy is around 2.5 percent (see publications of Harry Wu, economics professor at Hitotsubashi University in Tokyo).
Since 1970 machines, robots and computers have massively reduced the work force in agriculture and industry, considerably reducing the “added value” in those sectors.
I will now give examples of why GDP is not a good measure of wealth anymore.
- During the seventies, many European countries tried to solve rising unemployment following productivity gains in industry by creating new jobs in public service. Whether the newly appointed public servant did useful things or not, it supposedly increased the wealth of the country, since its cost, not its value, was counted in the GDP,
- Imagine that parents living in a village of the US have organised themselves to collectively watch their young kids and organise festivities for the community. That sort of work is not a part of the GDP. In Sweden, it is. Towns there enroll parents to take care of kids and organise parties and other events. This way, voluntary work is converted into paid work and thus GDP.
- If a country, for example Greece, drastically increases the number of its public servants and increases their salaries, they boost their GDP and make the IMF, the EU and creditors happy until the deadline comes to pay the loans used to fund the fantasy-growth of their GDP.
The examples show the same root cause of the problem, being the belief that unpaid labour has no value and paid labour has value even if the work is useless.
The approximation to count public services at cost is a design error in the GDP. It induces some countries to implement wrong policies to get a “better” GDP, at least for a short time, the time to get re-elected.
A nation is wealthy if it takes care of its people. For example, Belgium distributes an average of €550 in cash and another €420 pay-in-kind (free education and health care) per month per citizen. Many countries are now distributing a lot of money to the population (see this Economist graph). All of them do that in an incredibly complex way because the system grew over decades without being re-engineered. It is very likely that most wealthy countries will streamline their social security systems to make them more efficient and fair, like Finland is currently doing. No doubt that version 2.0 of our social security systems will contain a “basic income” core.
Shortly, my friends, within a few decades, the purchasing power distributed by a country to its citizens will replace the GDP as the measure of their wealth.
by Kate McFarland | Aug 30, 2016 | News, Testimonies
Victor Lau is a former leader of the Green Party of Saskatchewan, Canada, and a member of BIEN and Basic Income Canada Network.
How did you find out about basic income?
I watched a 1990s video called Sex, Drugs and Democracy that mentions a Guaranteed Income in the Netherlands.
Why do you support basic income?
To eradicate poverty. My parents came to Canada with very little and worked very very hard to succeed and gain a better life.
I believe everyone has a Right to Live and Thrive!
How else would a basic income help people in Canada?
A basic income would also eliminate the stigmatism of Welfare and allow everyone a dignified standard of living irregardless of if they have a job or not.
Photo used by permission of Victor Lau.
Basic Income Interviews is a special recurring segment of Basic Income News, introduced in July 2016 by Jason Murphy and Kate McFarland. Through a series of short interviews, we aspire to display the diversity of support that basic income receives throughout the world.
Have your own thoughts to contribute? Want to see yourself in a future Basic Income Interview? Visit our interview form.
by Tyler Prochazka | Aug 29, 2016 | Opinion
Gary Johnson recently told me he is “open” to the Universal Basic Income (UBI). Based on some of the comments on the story (calling me slanderous and Johnson a statist), you might think he just endorsed a socialist takeover of the government.
Understandably, there is hostility among many libertarians toward the idea of the Universal Basic Income. The UBI is not just a pragmatic step to eliminate government bureaucracy. In fact, it is a desirable policy outcome because it will likely help usher in a new era of free markets and civil society.
Much has been said on the pragmatic libertarian case for replacing the current social safety net with a UBI. Primarily, it eliminates government paternalism and enhances the efficiency of welfare delivery.
Moreover, a Universal Basic Income removes the poverty trap created by the loss of welfare benefits as individuals move out of poverty. This incentivizes recipients to remain in poverty to retain these benefits. A UBI has no such incentive and allows recipients to choose the course of action that actually provides the greatest real benefit.
Through the basic income, recipients are also fully in control with how to spend the money, eliminating welfare’s distortions on the marketplace.
Most libertarian UBI advocates take Milton Friedman’s view of the basic income, approving of it as a substitute given that government welfare already exists (and is unlikely to go away). Instead, libertarians should consider wholeheartedly endorsing the UBI as a way to expand free markets.
The last century has shown us that free markets and free trade have been the greatest source for prosperity and peace the world has ever seen. However, the free market consensus seems to be eroding at a frightening pace, even in the Western world.
Free market’s savior? The basic income.
If libertarians are being honest, free markets are the best source for lowering poverty, but they alone are not sufficient. For example, Hong Kong has the freest economy in the world, but also a good amount of debilitating poverty. While visiting McDonalds throughout Hong Kong, it was hard not to notice the McRefugees (as they are called in local media) that were sleeping at tables.
There is good evidence that conditions outside of one’s control, such as whether one’s parents are wealthy or married, have a substantial influence on one’s success.
Socialism is not the answer to the poor’s woes, as we saw with devastating consequences in the human trials of socialism in the Soviet Union, Mao’s China and still today in North Korea and Venezuela.
Instead, the answer is to open up the free market to everyone through the basic income.
Pilot programs have shown that the basic income increased entrepreneurial and market activity (among other positive social benefits, such as improved health). Individuals previously locked out of the free market can now be active participants. The understandable worry that people would stop working is not only overblown, but the opposite was actually shown to be true in Namibia, as business activity dramatically picked up.
The largest meta-analysis of cash-transfers ever further illustrated that the risk of reduced work is nil and in fact it has the potential to increase work hours and intensity. Some parents reduced work hours to care for their children, but this likely brings a positive long-term outcome to society.
Work brings dignity and the basic income does not eliminate the basic desire to contribute to society. When polled, most Americans say they would still work even with a financial windfall.
Basic income gives recipients free choice, unlocking the market’s full potential. People do remarkable things when given freedom and opportunity.
Additionally, poverty is one of the biggest factors when determining a child’s likelihood to succeed in education. Just giving parents money substantially improved their child’s educational outcomes and behavior. The same was shown under the basic income.
The basic income is not a pragmatic giveaway to socialists. It is precisely the opposite: it is the essential element for sustaining the durability and expansion of free markets.
Beyond opening up the market to new participants, it is likely that a basic income would allow society to reevaluate the necessity of a whole host of government policies.
Human beings are born with a natural inclination to be empathetic toward others. And there are individuals that are also inclined (perhaps hardwired) toward government solutions for society’s ills. No matter how effectively free markets lower poverty, there will always be calls for a government backstop.
As libertarians know, these calls for government “solutions” often do more harm than good and end up impeding the very forces that allow the free market to lift individuals out of poverty (e.g. the minimum wage).
As jobs are increasingly automated, it is especially crucial that libertarians guide political discourse toward a light-touch approach to resolve the disruption robots will cause in the marketplace. There needs to be a permanent method to alleviate the fears of the market place, rather than relying on the eternal vigilance of Congress to do the right thing.
A robust basic income would mute many of the calls for government intervention because it gives employees greater freedom to choose their employment situation, rather than being forced into employment by the threat of poverty.
The fears felt by those inclined toward government intervention would be lowered and libertarians would have a far more persuasive case to make for allowing individuals to shape the market instead of the government. Indeed, it would allow libertarians to push for removing many of the excesses of government intervention.
The Universal Basic Income is not just a pragmatic compromise to lower welfare bureaucracy. It is the essential prerequisite to usher in a new era of free markets. And libertarians would be well suited to be at the forefront of this movement.
