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.
Basic Income is a radically different and yet elegantly simple notion that has been around for decades: all citizens should have an income and be allowed to maintain their dignity, simply because they are citizens in a society that is prospering. In social policy terms, this idea can be put into action by giving unconditional cash payments to citizens. In the 60s and 70s, there were several long-term Basic Income policy experiments in the USA and Canada. The goal of these experiments at the time was to see if giving people money would be a disincentive to workforce participation. In the end, there was only a very small reduction of work participation among the subjects. In the USA women worked fewer hours per week, an understandable consequence is given that there were on average 4 children per family in the study group. Young men in Canada reduced their work participation, but high school completion rate increased, with stipends enabling the pursuit of higher levels of education. Furthermore, there was an increase in divorce rates, which was the main motivator to take BasicIncome off the table at the time, but looking back seems like it was not such a bad result, Basic Income was shown to empowered women in difficult situations to be able to exit those situations.
BasicIncome has recently returned to vogue, and Canada was, until recently, conducting an experiment in the province of Ontario, led by the of the Liberal government. It was a pilot program guaranteeing an income to 4000recipients in the region an and was supposed to last three years, but it was abruptly canceled in July 31st 2018, by the newly elected Ford administration. There have been many reactions to the cancellationof this pilot program, including a class action suit filed by fourLindsey residents, represented by lawyer Mike Perry. The Basic Incomerecipients in this class action are arguing that they “made plans to improvetheir lives when they signed up for the pilot in April last year, providing thegovernment with detailed personal information to be approved and expecting thepilot to run its three-year term.” It also seems like a breach of basic socialresearch ethics and complaints have been filed to Veritas, the company the previous government hired to ensure ethical standards are metin the conduct of research involving human beings.
On the aftermath of the cancelation, and as a reaction to it, photographer JessieGolem, also a recipient in the experiment, started a portrait series named Humans of Basic Income, depicting photos of Basic Income recipients displaying placards with their stories handwritten on them. We spoke to Jessie about her experience as a recipient of the Ontario Basic Income trial and about her own experience as a recipient and her perspective on the Basic Income pilot that gave rise to her portrait series.
Can you tell me a little bit about your background?
I
grew up in the small town of Hanover, Ontario. I’m quite lucky and privileged
that I’m actually quite close with my family and had a stable childhood. My
parents are still together, and I grew up in the same house and attended the
same elementary school and high school. We were not rich, but we were always
provided for, and my childhood was happy, stable and peaceful. I went to school
at University of Waterloo, majoring in Religious Studies. I was also quite
religious at the time and lived at a bible college in Kitchener, but I don’t consider
myself religious anymore, and actually have an article published on the
Huffington Post on the reasons behind that decision. Later, I moved to
Hamilton, and while in Hamilton I went to school at George Brown College in the
Assaulted Women’s and Children’s Counselling and Advocacy program. I explored a
number of careers, including youth pastor, piano teacher (I’m a classical
pianist) and social worker, but I currently work as the Operations Manager at
Photographers Without Borders, and hoping to expand my career as a
photographer, storyteller, and writer.
What was your work life like before Basic Income?
I’ve had numerous jobs in my life. I have worked as a cleaning lady, I’ve worked in retail, I’ve ran kids programs and day camps and worked as a dog walker. I’ve always worked/volunteered for not-for-profits in different capacities my entire adult life. Prior to receiving Basic Income I was working as a dog walker in the mornings/afternoons, teaching piano in the evenings, and in the time in between, working at Photographers Without Borders, and working to book photography projects and grow my own freelance photography business. I had no free time. I often wouldn’t be able to get home to cook myself dinner, and I’d often find myself up until late in the night working on projects and applications.
What is Photographers Without Borders?
Photographers Without Borders (PWB) is an international non-profit that amplifies the stories of grassroots organizations all over the world by sending volunteer photographers and videographers to document the work they are doing. The organization is able to receive this footage to build their own capacity, while PWB also brings awareness to these issues through a robust social media, a print magazine and online magazine, and a video series. I have volunteered at PWB for two years, and we are on the brink of realizing some tremendous growth which would expand our capacity as an organization, and potentially offer paid positions to staff. BI gave me the time to devote to PWB full-time in order to realize that vision. Losing BI means I will have to reduce my capacity at PWB.
How did your plans get foiled by the cancelation?
I had plans to work full-time at pursuing photography and building my business to a point where it’s self-sustaining, as well as develop my capacity at PWB and help to grow the organization. I will now have to return to having multiple jobs.
Even though it was canceled, do you think that there were positive consequences for you personally from having participated in the program?
Yes. I have now experienced what living and pursuing photography full-time feels like, and I’m very excited about this life, and don’t want to return. I have used the cancellation to pursue a portrait series, and I believe this experience has made me bolder, and less afraid of taking risks in order to succeed. I threw myself into the portrait project without a lot of thought, andI’m lucky for all the miracles along the way that has kept this project alive. I’m less afraid of the consequences, and more passionate about amplifying the stories of the people I have met on this journey, who have become friends.
What do you say to critics who accuse you and others in the project of being “parasites”?
I believe this kind of dehumanizing language is extremely dangerous and opens up the opportunity for violence. With language such as “parasite” it strips a person of their humanity, saying they are only human if they contribute to the economy financially. If they are unable to do so, they aren’t human, they are parasites. In history, when dehumanizing language is used against a group of people, it allows for the justification of violence, because this person is seen as “the other” or “less than human” and therefore less of a person than the one holding the prejudice, and this allows for violence. It’s this dehumanizing language that has, historically, caused genocide and holocausts. Furthermore, this was a pilot project, and even those opposed to BI would benefit from the results of the project, so they can use the facts and data obtained to justify their opposition. And 70%of the people on the pilot project had/have jobs, myself included. Anyone who wasn’t working wasn’t doing so because they were lazy but do to physical and mental disabilities that prevented them from working.
Do you think a pilot that included more income levels and a more gradual take back rate could avoid this accusation?
I’m not sure. I think the stigma against people in poverty is only really growing, especially in this area where political views between the left and right are becoming so far divided. You still see name-calling and dehumanizing language used to describe people of opposing political views, and you see this from both liberal and conservative-minded people. It would be interesting to see what a pilot focused on a wider range of income could do and how it would affect people. I did like that Ontario focused on low-income people, because it was a study attempting to address and come up with a solution to a social service system in Ontario that I now know is deeply broken, and keeps people in poverty. It would be interesting to see a pilot focused on a wider range of incomes, however. A multi-faceted, nuanced approach would be really great to see, where different income levels in different areas, and different types ofpilots are examined. We do see this right now – there are Basic Income studiescurrently taking place in small communities and pockets all over the world.
What do you think is the main purpose of the pilots?
There are so many purposes for the pilots, but one of the bigger ones I see is that we need to examine the future of economics in our society, as the rise of AIand technology changes the future of work, and in many cases, increasingly replaces the need for human work. This is an economic change as big as the Industrial Revolution that will be realized in our lifetimes. Humans don’t need to work in a factory if a robot is doing the work, online banking has replaced the need for bank tellers, self-serve check-outs in grocery stores and kiosks in fast food restaurants have replaced cashiers, thus many industries which were so heavily reliant on human work are increasingly no longer needing humans. The question of how one works, and how one derives an income and contributes to the economy is a tremendous question to ask – it is imagining a new world. Increasingly, the issue of climate change and globalization will also affect the future of economics. A Universal Basic Income is just one idea, but it’s worth examining. Right now we are only in the stages of speculation, but research and pilot projects would be able to drive the conversation forward, answering important questions while unearthing new ones. The pilots can absolutely measure the cost benefits – how much money is saved in healthcare costs if people have access to good healthy food and don’t develop long-term health problems? What is the cost benefit if a person is avoiding committing crimes and the ensuing consequences because they have all of their basic needs taken care of? And I think it’s important to analyze different models of Basic Income because the economic needs of communities all over the world are vastly different from one another. I think what a Basic IncomeProgram in Ontario looks like can’t and shouldn’t look like what a Basic Income Program would look like in another country, or even in another part of Canada. Different areas have different economic needs, which is why I’m glad to see so many projects taking place all over the world that are trying out different models of Universal Basic Income.
In your opinion, was the pilot working in getting people to improve their situations, including your own experience?
Having a Basic Income improved my life. Everyone I’ve talked to were improving their lives, and these improvements were small, but noteworthy steps to living better lives out of poverty – lives with dignity. Small things like the ability to afford to buy new clothes, or buy healthier food at a nicer grocery store, or be able to pay bills on time. The amount was small – if someone wanted to use Basic Income as a disincentive to work, they could, however, they would not be living a nice life. It was enough to get a leg up out of poverty – move into safer housing, get a better job, and live better lives, contributing to the economy. The cost of poverty on a person’s mental wellbeing is staggering – the amount of mental energy it takes to survive will actually reduce a person’s IQ. If all their mental energy is concerned with how they will pay the next bills, where they will find food, how they will pay for health care, etc. there is no time for one to dream of bigger pursuits. I saw Basic Income buying people that precious time. To give that to someone, and then take it away with no warning, and little information, and no reason based in fact, is simply reprehensible.
*
The Basic Income movement is still going strong, despite the Ontario Pilot’s cancelation. In Canada, activists are fighting to take the pilot to a Federal level, and to finish the research that was started. At the time of the cancelation, there was no data analysed by the pilot, all we have are the stories of the recipients as told in Jessie’s portrait series and on a website called Basic Income Voices. These stories are powerful and provide a window into how Basic Income can bear positive, life-changing benefits for its beneficiaries. The future is here and the time to explore policy solutions is now.
It started on Tuesday, 13th of November 2018, with a 200 large committee of environmental activists (Sunrise Movement) crowding Nancy Pelosi‘s office premises at the Capitol Building. The activists called upon Pelosi, the Democrats House speaker, to push for a real, ambitious and wide-reaching plan to curb climate change. That alone would probably amount to little as far as media coverage was concerned. However, the event was mediatized by recently elected Democrat MP and young political leader Alexandria Ocasio-Cortez, who stepped in and weighted her support, attracting lots of media attention.
What first seemed to be the aftermath of yet another Democrat internal dispute over climate change issues, turned out to be a positive reinforcement between Democratic leaders to start pushing for a deep strategy which can eventually set real policy to solve the climate crisis. Recent Pelosi efforts to revive energy independence and global warming related issues in the Househad turned out inconsequential, which only made the new Resolution presented by Alexandria stand out even more.
This Resolution aims to have a so called “Plan for a Green New Deal” ready by no later than January 1st 2019, and a final draft legislation by April 1st 2019 (with a proviso that it should not be extended, under any circumstance, further than March 1st 2020). This plan, supported by both the Sunrise Movement activist group and the Justice Democrats (a pioneering partnership), ambitiously aims to completely decarbonize the US economy, ramp up renewables to 100% and eliminate poverty in all United States within a 10 year timespan.
The ending poverty part of the plan starts with the provision of a job guarantee, coupled with training and education opportunities for all Americans, to assist in the transition to abetter (for most people), decarbonized economy. The concept of a job guarantee had already been given attention by Democrat “heavy-weights” like former President Obama and his Vice Joe Biden, putting an emphasis on its (alleged) non-monetary advantages (at least in the United States context) – e.g.: dignity, sense of purpose, recognition. However, basic income has appealed to Democrats in the last few years (adding Bernie Sanders and even Hillary Clinton into the pot), and so it appears under number four of Alexandria’s plan, after the taking care of disadvantaged communities affected by climate change, and reducing deep inequalities – racial, regional, gender-based, income and access to infrastructure – within the territory. With climate change impacting the world’s poorest much more than the world’s richest, it’s no wonder that people are turning to social justice lawyers for compensation. Lawtx.com already offers these services, and as climate change becomes more acute, it’s likely that we’ll be seeing more lawsuits in the future.
However, and according to basic income activists such as Guy Standing, Scott Santens and Annie Miller, basic income could have an important role precisely in addressing the issues faced by those who are impacted the most.
The Resolution clearly states that environmental issues cannot be separated from social/economic problems, hence the focus on both. Such deep connection has already been considered and analysed by several thinkers of our time, such as Phillipe van Parijs, André Gorz and Charles Eisenstein. Therefore, the moment in time, the nature of the document and its content seems to be aligned with the demands of today’s crisis, particularly in the United States. Finally, on the financial side of the Resolution, the idea is to use Federal Reserve funds, the foundation of a new public bank and/or theuse of public venture funds to cover for the Plan’s expenses, hence focusing on public finances and asset management. That certainly appeals more to a Commons-oriented solution to environmental and social issues, rather than a private-donor type of approach such as a few coming from Silicon Valley recently.
