Finnish basic income experiment reveals problems of conditional benefits

Finnish basic income experiment reveals problems of conditional benefits

Minna Ylikännö

Research team leader, Social Insurance Institution of Finland

(minna.ylikanno@kela,fi)

and

Olli Kangas

Professor of Practice, University of Turku

(olli.kangas@utu.fi)

 

The evaluation of the Finnish BI Experiment reveals the problems in the current conditional labour market policies

The first results of the Finnish Basic Income (BI) experiment were published at the beginning of February 2019. According to the results, the benefit mimicking basic income did not have any positive employment effects when compared to the control group, i.e. those not included in the experiment. There are several possible reasons for this result.

Firstly, we must keep in mind the specific characteristics of the target group of the experiment. Both the treatment group and the control group were drawn from the unemployed job seekers receiving unemployment benefits from the Social Insurance Institution of Finland (Kela) in November 2016. In order to understand the specificity of the group, we have to take a cursory look at the Finnish unemployment system.

An unemployed individual who is a member of a voluntary unemployment fund and meets the employment condition of 26 weeks during the previous 28 months is eligible for earnings-related unemployment benefits. At the average wage level, the benefit is about 65 percent of previous earnings. The benefit can be paid up to 300-500 weekdays depending on the work history and the age of the claimant.

An unemployed individual who is not entitled to the earnings-related unemployment benefit (the right to the benefit has expired due to long-term unemployment or the unemployed individual does not yet fulfill the employment condition) can qualify for unemployment benefits paid by Kela [1]. These Kela’s ‘basic security’ benefits (basic unemployment allowance and labour market subsidy) are not income-related. In principle, the labour market subsidy is income-tested and the duration is unlimited.

At the end of the year 2017, 369,058 people received unemployment benefits in Finland. Out of them, 196,452 (53.2%) received labour market subsidy and 31,460 (8.5%) basic unemployment benefits. Hence a minority, i.e. 138,949 (37.6%), were entitled to an earnings-related daily allowance from unemployment funds.

When consulting the above percentages, we can argue that the basic income experiment covered the population group that represents a majority of unemployed job seekers in Finland. However, despite this, the experiment was targeted to the long-term unemployed or those unemployed with a very short working history. Maybe the experiment would have yielded different results if it had included those unemployed individuals receiving earnings-related unemployment benefits, not to mention low-income earners, free-lancers and micro-entrepreneurs [2].

Secondly, at the beginning of 2018, the center-right government implemented a new labour market policy measure, namely ‘the activation model’. The aim of the reform was to increase labour market participation by sanctioning the unemployed by benefit cuts if specific activation criteria are not met [3]. While the activation model contaminated the control group, the results may be distorted.

A third possible explanation is that people do not react on monetary incentives as strongly as is usually supposed e.g. in the economic literature. But once again, we must keep in mind the specific characteristics of the target group. It may be that this group would react more strongly on services than on income transfers.

The fourth explanation to the “zero” result may relate to the possibility that the effects of a basic income counteract each other. In the treatment group, the strong monetary incentive to accept jobs (€560 net a month) might have increased employment, while the less stringent conditionality might have made the BI receivers ‘lazier’. Thus, these opposite effects may have repealed each other resulting in an overall zero outcome.

Too strong an emphasis on labour market behaviour?

The proponents of basic income disagree with the above view of laziness. On the contrary, they argue that by empowering people and giving them the freedom to choose for themselves the outcomes are more positive than what is achieved through sanctioning the unemployed. As desired outcomes of basic income, they emphasize not only the increased activity in the labour market but also increased the wellbeing of the citizens.

In fact, the proponents of basic income hardly consider the activation to employment as the main aim of BI, but rather the wellbeing of its receivers. For the supporters of BI, the economic activity e.g. in the labour markets is not a sin non qua for a functional society even if it was widely considered to be the prerequisite for it, at least if we aim to obtain the present welfare state model that is financed via income tax.

When the Finnish government decided to launch the basic income experiment, its main interest was in the employment effects of BI. The government obviously wanted to see if BI is good for employment. Thus, the government’s goal was rather limited and only when discussed in the parliamentary committees, the interest was laid in the wider wellbeing aspects of BI. However, the main interest still was – and still is – in the labour market behaviour of the BI recipients.

The preliminary results for the first year do not display any employment effects, making the opponents of the BI claim that the BI does not solve a low labour supply. However, we can turn the focus upside down. The zero result is an interesting one. According to the proponents of mainstream labour market policies in Finland, we should have witnessed a clear decrease in the labour supply among the basic income recipients compared to the control group. However, we did not observe anything like that. Neither was the employment rate better in the control group that remained in the current, conditional and punitive benefits system.

Hence, in regard to the long-term unemployed (which was the case for most of the recipients in Finland’s basic income experiment), the mechanism improving their labour market status is much more complex and perhaps more attention should be paid in the wellbeing effects of the experiment than on the employment effects. This is done in many other experiments outside Finland – in the evaluation of the experiments the focus in on the sine non qua for activity, namely wellbeing.

What should then the political decision makers do based on the results? Shall they abandon basic income, if it does not increase employment, even if it improves people’s well-being? Or shall they abandon basic income, while strengthening the conditionality of the existing system in order to more effectively “activate” labour, even if it decreases people’s wellbeing? Considering the recent developments in Finland’s labour market policies, one should perhaps bet on the latter option.

 

 

 

[1] If the unemployed person violates the Unemployment Security Act, he/she may lose the right to the unemployment benefits and he/she may to apply for last resort social assistance of in need for financial support.

[2] Explanations why the unemployed were the target group of the experiment are given at https://tutkimusblogi.kela.fi/arkisto/3316.

[3] The activity is monitored in periods of 65 days of payment. The activity requirement are met if an unemployed person, over the course of a single payment period, has been in salaried employment for at least 18 hours, or have earned an income of at least EUR 245.64 from self-employment, or if he/she has participated in five days of employment-promoting services or some other employment-promoting activity arranged by the Employment Services.

Canada: Alberta Liberals propose transversal tax breaks, a basic income pilot, and investments fueled by oil revenues

Canada: Alberta Liberals propose transversal tax breaks, a basic income pilot, and investments fueled by oil revenues

David Khan. Picture credit to: Sylvan Lake News

This Monday, April 12th 2019, David Khan, leader of the Alberta Liberals, announced a series of fundamental changes to the way social policies are practiced in this Canadian province, if elected next Tuesday (Alberta Votes 2019). These changes include large investments in oil-related infrastructure, public and health services, eliminating or considerably reducing income tax, and setting up a basic income pilot test.

The party’s platform ranges a large number of issues, from finance, employment, poverty, energy, democratic reform, down to indigenous relations and drug possession. However, the Alberta Liberals are clear in their overall message: if elected, they are here to put the economy growing. That pervading principle of contemporary economics has been contested extensively, but (economic) growth still attracts strongly, and David Khan is focused on achieving it.

Khan boldly states: “I encourage all Albertans to read our policies because we have the best pro-growth fiscal strategies of any party in this election.” In this case, it means to move from a tax policy based on income tax, to another resting on an 8% Value Added Tax. Even though that number is 60% below the standard VAT rate of many European countries (generally above 20%), Khan is certain “it’s the least harmful way of collecting tax”. That would cumulate with a generalized income tax break, effectively exempting 70% of the Albertian population from paying income tax.

Revenues, then, for governmental investments such as mental health services, social health care, affordable housing and, the basic income pilot test, would mainly come from energy-related commerce, particularly oil, which if an expansion does happen, might lead to more professionals with experience in the oil industry, looking to Find Work in Canada or possibly find work in other similar projects. There might however be some possible backlash. That is professed at the same time as strictly defending the environment, where “we will not tolerate industry damaging our future and our children’s future” can be read on the party’s platform first text page. However, it seems to go unnoticed that the oil industry’s record on environmental protection has not been admirable, to say the least. The idea is to restart the Trans Mountain and the East pipeline projects, both stalled for a long time due to constitutional and environmental reasons. For some reason these projects have been kept waiting, or stored in place for later elimination, because, at put by Jon Biger Skjærseth and Tora Skodvin in their book on climate change and the oil industry, “these companies share the same core aim of selling as much oil and gas as possible at the highest possible price and the lowest possible cost within the same global market”. And, of course, eventually all that oil and gas gets burned, adding up to the already alarming CO2 levels in the atmosphere.

As for the basic income test pilot, the Alberta Liberals are invested in rolling it out, since they “support the creation of a Basic Income.” The arguments for such a belief come from reduced bureaucracy, financial security for all and the elimination of jobs through automation.

More information at:

Sarah Rieger, “Alberta Liberal platform promises basic income pilot project, no income taxes for most“, CBC News April 8th 2019

Damian Carrington, “‘Worrying’ rise in global CO2 forecast for 2019“, The Guardian, January 25th 2019

South Africa: The “Purple Cow” party is proposing a Negative Income Tax form of basic income

South Africa: The “Purple Cow” party is proposing a Negative Income Tax form of basic income

“Innovation. Disruption. No BS – because we love our country.” That is the “Purple Cow” party power tag. The party is officially called “Capitalist Party of South Africa”, and is defending the basic income policy, particularly in the Negative Income Tax (NIT) form.

The party is proposing an income top-up for all those earning less than the tax threshold in South Africa, which is adjusted for inflation and age. Below this level, working citizens do not pay (income) tax. If, for a given citizen, the tax paying threshold is 78000 Rands/year (5536 US$/year), the party is proposing to tax the difference between the person’s income and the threshold at a 50% rate, offering the rest as a top-up (NIT). In a numerical example, a person earning the minimum wage of 3500 Rand/month (248 US$/month), or 42000 Rand/year (2981 US$/year), would get an extra amount of 1500 Rands/month (106 US$/month) (the difference between 78000 Rands/year and 42000 Rand/year, divided by two, monthly). That amounts to a 43% increase in monthly income. The policy extends to all people below the threshold, including unemployed, in or out of social benefits. That means, in practice, that no one ever gets less than 3250 Rands/month (231 US$/month), which is close to the South African official minimum wage. To contextualize, social retirement grants from the South African government, presently goes only as far as 1700 Rand/month (121 US$/month) (around half the minimum wage).

In a short explicative video, the Capitalist Party refers that, due to the tax system rules, fewer and fewer people are paying taxes, since unemployment is growing faster than employment. This, of course, places great pressure on social security, in order to disburse social grants to around 17 million people (out of a 55 million country population). So, the way in which the NIT is financed gets to be crucially important.

To that end, and over the 78000 Rands/year income threshold, however, taxes would have to increase significantly. In the “Purple Cow” proposal, individuals earning 125000 Rand/month (8872 US$/month) or more would be taxed around 47%, or a 31% increase from what they are paying at the moment. Although this final tax value is not unprecedent, not even uncommon among, for example, north European countries, it may be hard to go for such an increase in one single step, within the South African context. To moderate the expected tax hike for the better off, the party’s coordinator Kanthan Pillay speaks of applying the NIT scheme to only those in paid employment. That, however, is contrary to the spirit of universality (professed in the proposition itself), and overlooks the fact that unemployment and near-unemployment rates as high as 40% in the country.

Pillay also explains that the party’s proposal aims at improving the labour force competitiveness with other countries, such as China. The question remaining might be to know if the “Purple Cow” party is proposing to give financial safety to all South Africans, or to help degrading the labour force’s human rights (both might not be possible).

Admittedly, as professed by Kanthan Pillay, the NIT proposal “is our riposte to the constant clamour for the Basic Income Grant”. However, and according to him, it should be a policy to “conquer unemployment”, given the path of jobs destruction created by automation, and to abolish the minimum wage, welfare, social security and government assisted programs. The “Capitalist Party of South Africa”, therefore, seems to adhere closely to the original principles set forth by Milton Friedman, when he first introduced the NIT concept in the United States.

More information at:

Reg Rumney, “The Purple Cow’s basic income plan is either genius or a bovine patty”, Business Maverick, 25th March 2019

The “Purple Cow” website

United States: Green New Deal – the environmental and social revolutions are linked

United States: Green New Deal – the environmental and social revolutions are linked

Picture credit: CC (Giuseppe Milo)

With an article on The Conversation, Fabian Shuppeter investigates how Universal Basic Income may be the key to make the green transition possible.

A letter demanding to take swift action to address the threat of climate change, with over 600 signatories, was proposed earlier this year (on the tenth of January) to the American Congress.

Afterwards, a resolution was proposed on February 7 by Alexandria Ocasio-Cortez (AOC), outlining the ambitious Green New Deal, which calls for the federal government to have a pivotal role in the green transition.

The Green New Deal (GND) sets out to reach a reduction in greenhouse gases emission from human sources of 40 to 60 percent from 2010 levels in 2030, and net zero emissions by 2050, in order to tackle climate change.

These ambitious targets would be met via expansionary economic policies (the opposite of austerity): the GND requires a great involvement of the federal government,, which would be required to pump large amounts of money into the economy in order to support the transition, even more so as one of the milestone of the proposals is the promise of employment for everybody. In order to do so while decarbonizing the economy, governments and central banks would need to use state expenditure, incurring in an increase in national debt.

To be able to grant full employment, the state will need to act as an employer of last resort, as many job will be lost in the green transition, both in the industries that operates directly in the extraction of fossil fuels and in those which are dependent on them, the article states.

While it is true that many jobs will be created in the new green industries, Shuppeter maintains that two main issues remain: whether workers will be able to retrain in order to enter the new jobs created, and whether those new jobs will last in time, rather than just peak in the immediate, remains to be seen.

Given that full employment in the short-medium term appears quite unrealistic, what the author suggests is, rather than state created jobs, the introduction of Universal Basic Income (UBI).

UBI would not only be a more efficient way to administer benefits (rather than the plethora of existing means-tested social welfare payments), but would also protect workers in a time of transition.

Shuppeter writes that the workers harmed by the green new deal may find more support in UBI than in a job guarantee, which would inevitably force somebody in jobs they don’t want, created for the sake of creating employment: on the other hand, UBI would allow people to reinstate themselves in the new green economy. Moreover, UBI would stimulate the economy and empower people  to engage in a more sustainable lifestyle.  

“To win popular support for the Green New Deal its benefits must be truly universal. What better way to guarantee a just, green transition and ensure no one is left behind than universal basic income?”

More Information at:

Shuppeter, Fabian, “Green New Deal: universal basic income could make green transition feasible“, The Conversation, March 21st 2019.

A Critical Poverty Eradication Experiment in Kenya

A Critical Poverty Eradication Experiment in Kenya

Written by: Eduardo Matarazzo Suplicy and Mônica Dallari

This January, we discovered an extraordinary pioneer effort towards poverty eradication in poor rural villages in Kenya: the transfer of Universal Basic Income (UBI). Through the initiative of GiveDirectly, an institution created by four graduates of Harvard University and MIT, Silicon Valley institutions and other organizations contributed to the formation of a US$30 million fund to benefit about 20,000 Kenyans in the most important and thorough study about UBI in history. In the visits to rural villages in the Kisumu and Siaya areas, reports were unanimous in stating that with UBI contributed to a significant improvement in the quality of life of all the beneficiaries.

Lula da Silva on the far left; Eduardo Suplicy on the far right

Upon learning that GiveDirectly was carrying out this experiment in Kenya, we decided to write a letter to them, in which I (Eduardo) introduced myself as the author of the Brazilian Law 10.835 / 2004, which establishes the implementation, in stages, the UBI for all people in Brazil, including foreigners residing here for five years or more. As honorary co-chair of BIEN (Basic Income Earth Network), I said I would like to know about the experiment. This request was accepted by Caroline Teti, GiveDirectly’s external relations director in Nairobi.

Eduardo Suplicy visits Grameen Bank with Muhammad Yunus, in Dhaka Bangladesh. July 2007

How the UBI program works

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GiveDirectly´s office in Nairobi. January 2019

As soon as we arrived in Nairobi, we met with her and started a dialogue with the coordinator of a team of 34 people who work in the call center. The call center is responsible for the quarterly contacts with each one of the 21,000 adult beneficiaries of the UBI experiment. In 2016, GiveDirectly started the pilot to provide a UBI payment in Kisumu, Siaya and Bomet counties. More than 630,000 people in these counties live below the poverty line, defined by the Kenyan government as less than US$15 a month per household member, in rural areas, and $28 a month per household member in urban areas.

For the execution of the experiment, 295 villages (14,474 residences) were randomly selected, divided into four groups:

  1. Control Group: 100 villages that do not receive payments;
  2. Long-Term UBI: 44 villages in which adults (over 18 years old) receive sufficient income for basic needs, about US$0.75 per day, or $22 per month for 12 years;
  3. Short Term UBI: 80 villages where adults receive sufficient income for basic needs, about $0.75 per day or $22 per month for 2 years;
  4. Lump Sum UBI (or UBI Cash Payment): In 71 villages, families receive UBI in the fixed amount of US$1,000 divided into two payments of $500.

The transfers are made through M-Pesa, a mobile money service created in 2007 by Safaricom, a Vodafone telephone company in Kenya. The platform enables financial transactions that are safe, fast and cheap through a cell phone, such as deposits, transfers, and savings. The platform does not need a bank account.

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View of the National Park at Nairobi. January 2019

Small retailers in rural villages across the country were trained and became agents of M-Pesa services. Beneficiaries can withdraw money or shop at accredited establishments in all villages in Kenya. Those who did not have cell phones were able to purchase a low-cost GiveDirectly device. Today, 80 percent of the country’s adult population has a cell phone.

From the visits to the beneficiaries of the Kenyan experiment of UBI, we can say that the improvement in the well-being of the people is very significant. This was what we were able to witness in all the residences we visited and in the dialogue with beneficiaries of UBI. Mothers and fathers spoke of the concern to prioritize the education of children and adolescents, ensuring attendance and completion of school. This became possible due to UBI, which even helped in the hiring of auxiliary teachers. In general, our respondents stated that they were better fed and had access to a greater variety of foods.

The benefit of the UBI resulted in people being able to work more intensely and productively, especially because they were able to acquire better working equipment, such as tools, motorcycles to transport people or make deliveries, livestock (goat and cattle) to supply meat and milk, fishing equipment to get more fish in the lake to sell them, land purchasing for vegetable and fruit trees planting. These activities directly increased their income. Some families have invested in systems to better capture rainwater or solar energy collectors in order to have electricity. Households purchased better furniture, such as mattresses, sofas, tables, chairs and small electrical appliances, such as a stereo or radio. Straw roofs have been replaced with steel that contains gutters.

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Sunset at Lake Victoria. January 2019

It is important to note that we do not perceive any use of alcohol or other drugs. A study by Innovation Poverty Action1, IPA, corroborates our observation since there was no increase in spending on tobacco, alcohol or gambling. The impression we have goes in the opposite direction; behaviors based on solidarity and cooperation between individuals have been reinforced.

Perhaps most remarkable was the redefinition of gender roles. Because women also receive the benefit, we hear from them how they feel freer in deciding where to spend their money, and we record reports of how couples have come to the table on UBI payday to talk about the household budget. Households frequently organize groups to pool money for a larger purchase or to assume a higher value expenditure. In Kenya, polygamy is allowed. We sometimes see that the UBI contributed to greater solidarity between the wives of one husband, and even between his widows and children.

The agility and speed provided by the digital income transfer system were also fundamental. Each beneficiary is notified by SMS when the transfer is made, being able to make purchases in the M-Pesa accredited establishments, or if she prefers, to exchange the credit for money.

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City of Kisumu. January 2019

Another important development was numerous reports demonstrating a noticeable decrease in violence against women and other criminal acts, such as theft in the villages. The direct income transfer done in this way has avoided incorrect procedures and corruption.

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M-Pesa Agency. January 2019

For those who want to know more about this Universal Basic Income (UBI) experiment in Kenya and other countries, please access the website. The website provides testimonials from beneficiaries of the UBI collected by the people who work in the call center, available to everyone. You will have confirmed the positive impression of this remarkable pioneering experiment on Universal Basic Income. In addition, you will have the opportunity for this remarkable and important experiment. If you would like more information, write to info@givedirectly.org.

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Call Center at the GiveDirectly´s Office. January 2019

Visiting Barack Obama’s Grandmother Sarah Obama

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Eduardo Suplicy visits Mama Sarah Obama, in Kogelo. January 2019

On our last day in Kenya, we visited Mama Sarah Obama, Barack Obama’s grandmother, at her farm in Kogelo, another rural village. At first, we would have only three minutes to be with her because of her age, 98 years, but we talked with Mama Sarah and Obama’s aunt, Marsat Oniango, for almost 30 minutes. Enthusiastic about the conversation, they assured me they would send President Obama a letter that I had with me, the same one I had handed to him on October 5, 2017, during a lecture in Sao Paulo.

I spoke of my enthusiasm when I watched on TV the homage Obama paid to South African President Nelson Mandela on his 100th birthday in the packed stadium of Johannesburg. In that speech, the former US president made an important statement, expressing concern about “artificial intelligence that is accelerating. Now we will have automobiles without drivers, more and more automated services, which will mean the need to provide work for all. We will have to be more imaginative because the impact of change will require us to rethink our political and social arrangements to protect the economic security and dignity that comes with work. It’s not just money that a job provides. It provides dignity, structure, a sense of place and purpose. And we will have to consider new ways of thinking about these problems, such as universal income, review of working hours, how to train our young people in this new scenario, how to make each person an entrepreneur of some level.”

I concluded by expressing my certainty that this positive experiment in the Universal Basic Income in the country of Obama’s father and grandfather, whose graves we visited on the grounds of Mama Sarah’s house, will resonate very favorably throughout the world.

Steps after the trip

Eduardo Matarazzo Suplicy

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Steel Roof to capture rainwater

The fact of having experienced a real immersion in the subject of Basic Income in such a short space of time and in two very different dimensions, that is, the theoretical academic approach of the conference in Cambridge and the opportunity to make field observations during our visits to Kenya, provoked a series of reflections, which made me desire to act.

The trip was made throughout the month of January 2019, coinciding with the inauguration and first month of the government of Jair Bolsonaro. The campaign of the victorious candidate in the 2018 election, his statements after confirmation of his election and the movements of the transition process between the Temer government and the new occupants of the Planalto indicate that the new government has an economic agenda that is based on intentions to resume growth and development of the country, generate jobs and guarantee some stability in public accounts. Despite the fact that I belong to the party that opposed the Bolsonaro candidacy, I believe that certain principles of equity, income distribution, and assistance to the most excluded are values of democracy that are not exclusive to this or that political aspect. So I decided that it was time to warn President Jair Bolsonaro, Minister of Economy Paulo Guedes and the Special Secretary of the Federal Revenue of Brazil Marcos Cintra Cavalcante de Albuquerque about the pertinence to take the steps towards the Citizenship Basic Income.

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Philippe Van Parijs and Eduardo Suplicy at the University of Cambridge. January 14th, 2019

Soon after coming back to Brazil, I wrote a letter to these three government officials who had just taken their first steps and offered two copies of works that I believe are fundamental to understanding the concept of basic income: My book “Citizen’s Income: The Exit is Through the Door,” and “Basic Income – A Radical Proposal for a Free Society and a Sane Economy” by Philippe Van Parijs and Yannick Vanderborght, which contains a foreword by myself.

In my argument, I stress the fact that Law 10.835 / 2004, which establishes the Citizen Basic Income, Universal and Unconditional, was approved by all the parties in both houses of the National Congress, including by the then deputy Jair Bolsonaro. I reminded the President “in case the President of the Republic wishes to comply with Article 3 of the Constitution on the fundamental objectives of the Republic of Brazil, in a manner compatible with what is expressed in its program of government, to guarantee a minimum income for all Brazilian families, as liberal thinkers like Milton Friedman argue, the most effective way to do so will be through the implementation of the Citizenship Basic Income, a concept that Friedman considered another way to apply the Negative Income Tax.”

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Beneficiary receives credit by SMS. January 2019

In the letter, I also summarized some up-to-date information on the subject, such as the fact that today “more than 40 countries are debating, conducting experiments and considering the implementation of Unconditional Basic Income.” I briefly reported on the visit I had just made: “The results so far are highly promising, as I found out in person. Brazil would have all the conditions to carry out local experiments, as indeed has been the desire of several municipalities like Santo Antônio do Pinhal, Apiaí and Maricá. In the City Council of São Paulo, a Law Project of Mayor Fernando Haddad is in process, already approved in the Commissions of Constitution and Justice and Public Administration, to establish, in stages, UBI in cooperation with the state and federal governments.” Finally, I suggested that a Working Group, possibly coordinated by IPEA, to study the steps towards the Citizenship Basic Income. I stated that I had already spoken with both the Perseu Abramo Foundation of the Workers Party and the Fernando Henrique Cardoso Foundation, linked to the PSDB, who have already been willing to discuss basic income with the newly elected government.

The letter, as well as the volumes, were delivered to Marcos Cintra Cavalcante de Albuquerque, current Special Secretary of the Federal Revenue of Brazil, with whom I had a hearing on February 1, 2019. At the same time, I delivered a letter to the then president and future president of IPEA, Ernesto Lozardo, and Carlos Von Doellinger, detailing how this Working Group could be constituted and reporting my dialogue with former President Fernando Henrique Cardoso during the electoral process. “Given that a number of Presidential candidates were in agreement with this objective, we could very possibly meet the various economic teams of the various candidates to work on this subject.” Sérgio Fausto, the working coordinator of the FHC Foundation, suggested that this meeting should be held after the elections in the first half of 2019.

On the other hand, Márcio Pochmann, President of the Perseu Abramo Foundation, accepted the proposal to create a Working Group for this purpose, and two meetings of this group have already been held. I believe it will be common sense for IPEA to coordinate the efforts of these various institutions linked to the parties whose candidates have made proposals to do this.

It is up to the Government to take the suggested steps.