Floyd Marinescu, a Canadian entrepreneur who describes himself as “an angel investor, author, humanitarian, and homosapien”, is featured in this interview, on CBC Radio, which has been condensed into a Whiteboard animation. Floyd has been a long-time defender of basic income, from a business perspective. According to him, the rise in aggregate demand which basic income will generate, is just what business needs to flourish. Paying for a basic income would also be fairly straightforward, Floyd reasons, especially when you realize that it’s net cost that matters, not gross cost. Financing would then come from closing redundant welfare programs, resolving tax loop holes, moderate rises in income tax and a series of other tax revenues (e.g.: carbon emissions, financial transactions, natural resources extraction, intellectual property).
Marinescu talks about “compassionate capitalism”, which builds on innovation and entrepreneurship, but also redistributes corporate gains to the whole of the population, so that “the working poor don’t need to be destitute”. For him, basic income also means freedom, personally and professionally, given the high number of people clearly mismatched with their current jobs, since it would allow them to make the necessary changes in their lives. Basic income would also allow more risk-taking, which is essential for entrepreneurship. Overall, according to Marinescu, basic income would be a great economic stimulus for Canada, putting more money into circulation, benefitting most people and also the government, which would collect more taxes to spend on public goods and services.
After the cancellation of the Ontario basic income experiment, country-wide discussions about the issue continues in Canada as the Federal Government approaches the policy, although a direct intervention in Ontario is unlikely. Prime Minister Trudeau and his Social Development Minister Jean-Yves Duclos have already stated that the Federal Government does not intrude into regional policy programs. However, Duclos has said, this month, that existing benefits will eventually cover more people than those already eligible for state (not universal) guaranteed minimum income. In his words: “At some point, there will be a universal guaranteed minimum income in Canada for all Canadians”.
So, despite all the opposition, rallies and advices against the Ontario axed basic income experiment, apparently it is indeed buried. However, it seems, interest in the concept is higher than ever, which is not surprising since the causing needs are still there (poverty, bureaucratic conditional welfare, precariousness, unemployment). Pundits on television agree over the concept, while looking at it as a tool to reduce the government influence radius (a more conservative approach to basic income), but certain that other basic income pilots will effectively be tried out in Canada (if not by other reasons, for beefing up the liberal agenda). Trudeau, on his end, has expressed sympathy for basic income, as a way to support workers, giving people some stability. That and a myriad of other considered policies, according to him: “I don’t think I’d be speaking out of turn to say that [basic income] it’s still something that is in the universe of all sorts of tools that we’re looking at on how to best help Canadians”.
Even though the Federal parliamentary budget office has calculated that supplying a guaranteed financial floor to all Canadians (up to an average of CAN$ 9421/year) would implicate an expenditure rise on social benefits of around 30%, basic income captures interest even on the Conservative side of the political spectrum. Karen Vecchio, MP for the Conservatives, has favoured the concept, although rising cost implications and questioning eventual long-term benefits for Canadians. That’s exactly why Hugh Segal, one of the Ontario basic income experiment designers (and former Conservative senator), affirms that such pilots are necessary: “to figure out whether the idea works”. Segal, as well as Jagmeet Singh, leader of Canada’s New Democratic Party, argue that the Federal Government should pick up the cancelled Ontario basic income experiment, or at least help in financing further regional pilots.
A new working paper released by Growthpolicy, which disseminates research by Harvard scholars on the topics of economic growth, employment, and inequality, argues that a universal basic income is superior to current low wage subsidies in several ways. The author, Associate Professor of Economics at Harvard, Dr. Maximilian Kasy contends that these subsidies, specifically the Earned Income Tax Credit (EITC) in the United States, comparatively carries several economic, moral, and political disadvantages.
The EITC is a subsidy to low income working families and increases with income to specific thresholds, depending on household size. The credit has been found to incentivize work, reduce welfare dependency, improve child health and educational outcomes, and lifts roughly 6.5 million people above the official poverty line. Kasy argues that a basic income could produce similar outcomes while eliminating several important drawbacks. First, because the demand for labor is finite, especially in times of recession, incentivizing some workers to work more, which ultimately creates fewer jobs overall. In other words, if a service sector employee works overtime hours in order to maximize the EITC credit, her employer will not need to hire an additional employee to cover those hours. Further, multiple researchers have found that subsidizing low wage work via the EITC plus cuts to traditional welfare, in the 1990s, decreased pressure on employers to offer a living wage and ultimately contributed to the declining value of the minimum wage. In essence, Kasy argues, the EITC is a subsidy to employers. Conversely, a UBI would increase the bargaining power of workers and wages would thusly rise.
Dr. Kasey also asserts that a basic income would reduce the coercive power that employers, abusive partners, and a paternalistic welfare system hold over economically marginalized populations. Low wage workers, survivors of domestic violence, and mothers at the mercy of intrusive welfare policy would have an increased ability to walk away from exploitative situations. Furthermore, a basic income would fairly compensate child and elder care work, which is largely done by women and goes unrewarded in our current wage-based system.
Finally, as many have argued, Dr. Kasey finds that a universal basic income carries potentially greater political stability than means-tested benefits. For example, while the passage of Social Security in the 1930s and Medicare in the 1960s was met with cries of “Socialism!,”, these were soon widely popular across the political spectrum and are rarely considered as potential areas for federal budget cuts.
Rebecka Le Moine. Picture credit to: SLU (Swedish University of Agricultural Sciences)
The Member of the Swedish Parliament (MP), and Green Party representative Rebecka Le Moine has submitted, on the 30th of November 2018, a motion for the deep investigation of basic income in Sweden. Rebecka, a 28 years old ecologist particularly dedicated to natural conservation issues, is a member of both the committees on Taxation and Environment and Agriculture.
The motion itself doesn’t go into a large detail about basic income itself, although it does provide a firm justification to pursue with deeper studies related to it. For instance, it refers to John Maynard Keynes’s predictions of a 15-hour working week, and the generalized usage of automation to replace most repetitive and/or too demanding (or dangerous) jobs. It also names Martin Luther King, particularly his voicing on eradicating poverty through the introduction of unconditional cash transfers. The most notorious basic income experiments around the world – Namibia, Finland, Canada, India – are also mentioned, as a way to contextualize the motion and show-reel some of the advantages of basic income (on an experimental setup).
The motion also draws on a human-rights approach to basic income, by referring to the United Nations Charter of Human Rights. Concretely, it appeals to article 22, where it says that all members of society shall have the right to a dignified life, according to each country’s capacity. The United Nations Sustainable Development Goals are also referred to, since these call for poverty eradication and equal rights to financial resources for all people.
On a more personal level, the motion justifies studying basic income deeper on the experimental fact that people get more creative and less risk-aversive when given unconditional money. It also testifies for the relation between freedom and civility, democracy and conscious environmentalism. More secure and less needy people are also more amenable and generous. It goes on to add that unconditional money equates to a power shift from society’s main institutions – governments, corporations, churches, ONG’s – to the individual, who gets a higher ability to say no to oppressive work and life conditions, or yes to tasks or life paths which are not sufficiently valued nowadays. That, of course, leads to major disruptions in the labour market and generalized social constructs.
As for financing, the motion swiftly mentions international prized economists who affirm basic income is affordable. That affordability can come from cost savings, with the reduction or elimination of certain conditional social benefits, together with increased taxes on the extraction of natural resources, carbon emissions, fortunes and on the financial sector.
More information at:
[in Swedish]
Rebecka Le Moine, “Basinkomst”, Motion till riksdagen, Sveriges Riksdag, November 2018
Basic income is going to be tested in Germany. The setup of the experiment will be similar to the one now ending in Finland, which means there will be an unconditional cash transfer to 250 randomly selected people among those already receiving benefits (250 others will act as the control group), and evaluate the impact in terms of labor market behavior, health and social relations.
Behind this initiative, to be initiated in May 2019, is the Sanktionsfrei organization, a non-profit managed by volunteer professionals from administration, IT-tech, communications and law. Sanktionsfrei (meaning “free from sanctions”), with headquarters in Berlin, specializes in helping sanctioned citizens by the Hartz IV social security system in Germany. It will conduct this experiment in Berlin, for a 3-year period, accepting volunteers who may apply for it through their website.
The basic income pilot, named HartzPlus, will be conducted as a scientific experiment, led by professor Rainer Wieland, from the Bergische Universität Wuppertal. The Sanktionsfrei team and professor Wieland are about to test a different approach to social security than the one applied in Germany at the moment (Hartz IV system), which has been reported as intrusive, bureaucratic and aggressive (sanctions). Those characteristics, contrary to what is considered by the system’s defenders, do not lead to increased willingness to pickup paid work (the objective of the program), but to resistance, decreased motivation and a generalized discredit in the social security system. Throughout the experiment, people will be checked for variations in mental health, life control, self-efficiency, sociopolitical values, among other indicators. No initial hypothesis will be considered; the experiment aims to offer scientifically informed insights to future social policy in Germany.
As for financing, Sanktionfrei is relying on private donors as the sole financing mechanism. Participants will receive unconditionally the amount from whatever sanctions they will be subject to by job centers (e.g.: by not responding to certain job offers or refusing to get suggested training actions); Sanktionsfrei will always try to recover the sanction money through legal action, and if it does, the participant will transfer the contested amount back to Sanktionsfrei. Otherwise, each participant gets, for the whole time period of the experiment, the full amount of their social security benefits, no questions asked.
