by Guest Contributor | Dec 3, 2018 | Opinion
Review of “21 Lessons for the 21st Century” by Yuval Noah Harari
The third book by Yuval N. Harari, historian and author of the bestselling books “Sapiens, a Brief History of Humankind” and “Homo Deus, a Brief History of Tomorrow”, was published in August this year.
What does the future hold, an unemployment ridden wasteland or a leisure based post-work society?
Whereas Harari’s former works were focused on the past of humankind or toward its future, “21 Lessons for the 21st Century” investigates the most pressing issues of our times. Professor Harari finds 21 topics which embody the plethora of uncertainties surrounding our present and immediate future, and then, with the past history of our specie well in mind, suggests his thought-provoking vision about them. His unique timeliness is due to his unparalleled ability to reframe the past in order to investigate the present.
In the second lesson, “Work,” Harari talks about automation, Artificial Intelligence, machine learning and the impact they will have on the labor market and society as a whole. In order to avoid collapse, deep change is required, a true renovation of our social models.
And Universal Basic Income (UBI) may be one of the answers.
The pace of automation
It is unclear how the labor market will look in the long run. What is certain is that it is undergoing change. The advances in Information Technology (IT), machine learning and robotics will bring on a wave of automation, the author said.
But it is not the first time in human history that society measures itself with automation, as we already faced similar events, most notably with the industrial revolution. And the fear of mass unemployment was proven unjustified. Thus, in Harari opinion, we have to ask whether this time will be different.
Are our concerns about a jobless future legitimate? Or are we exaggerating the magnitude of the phenomena? Do we incur in the risk to act like modern luddites?
The situation of the nineteenth century was different, Harari mantains. When industrialization hit, it is true that many jobs were appropriated by machines, but at the same times many new jobs were created and the quality of life was profoundly improved.
As humans have two kinds of abilities, physical and cognitive, during the industrial revolution machines competed for only one share of the things humans could do, the physical one. When jobs in the industrial or agricultural sectors were automated, they opened the door to jobs requiring a cognitive skill set, the category of jobs we commonly associate with the third sector.
What is happening is due to the fact that the AI revolution is not just embodied by the evolution of computers, becoming faster and more “intelligent,” but it’s closely related to other fields; the momentum of the revolution is shouldered by advances in biology and social sciences, Harari said.
As more is understood of the underlying biological mechanisms controlling the emotive dynamics of humans, the more computers become able to analyze human behavior, foresee human decisions, and take their place in a number of jobs. In addition to delivering results, these AI tools tend to keep other significant processes in mind as well. In many cases, managing IT services effectively and improving them requires more than manpower alone. There are times when IT professionals might take time to learn what is CMDB in ServiceNow or other relevant topics. Nevertheless, an AI-specific tool can decipher complex terms and provide results quickly. .
Advances in neuroscience and behavioral economics revealed that our choices do not depend on free will as much as on the calculations of the neurons in our brains, assessing probabilities at enormous speed, the author writes. Human intuition can be considered “hacked” as it was revealed to consist of pattern recognition, the ability to identify recurring patterns and use them to create models and make predictions. And AI can become very good at pattern recognition. If intuition is no more than assessment of probabilities and creation of predictive models, it should not come as a surprise that machines can take our place, given that our very functioning is imperfect and prone to errors: it relies on circuits created through the evolution of our specie, in contexts far in time and place from those in which we try to apply them –the savannah is nothing like today’s cities.
Automation will not impact the entirety of fields, as some jobs are more susceptible to it than others, Harari writes. Jobs based on repetition will be more prone to automation, so if you want to stand out with your applications, consider working with an executive resume writer. Multifaceted activities and unexpected scenarios are still a no-go zone for machines. Where the jobs of many doctors, requiring diagnostics and prescriptions could be expected to be a no-brainer for AI, the job of nurses would prove more problematic, requiring a mix of personal relationships and physical activity. Caretaking will probably be one of the most difficult task to automate, and could very well be the activity in which most humans will be occupied in the future, Harari suggests.
The future of jobs
Harari sustains that talking about a jobless future is premature, as automation will allow for more time and resources to be invested in study and research, with the potential to develop new treatments, drugs and deepen our understanding of the biological world. There are jobs where machine automation is not desirable, such as many law-related jobs. Furthermore, there will be a place for human-machine cooperation.
Drones require many operators to work them, driverless vehicles require some form of supervision, and cybersecurity and maintenance will be needed. Some of the top cybersecurity threats aren’t simple to defeat – you can’t just set up a firewall, you need to actively fight against any hacks or viruses. With this being said, as we advance in technology the requirement for human intervention will become less stringent.
But the jobs we are talking about are knowledge intensive, which means that even if they were numerically sufficient to limit unemployment (and they are not), we would nonetheless be left with the problem of unemployment due to under-specialization. In Harari’s opinion, one of the main differences of this technological revolution from the precedent is the degree to which professions are interchangeable. When jobs are less specialized, it’s easier to switch from one profession to another, its often the same for machines. What we may find then is that jobs that machines will not be able to do interchangeably are most likely going to require a high degree of specialization from people. This alignment could pose the risk of facing “the worst of both worlds”: mass unemployment and lack of qualified workers.
And professor Harari notices how, even for those who are able to pursue a new career like in the example shown above, the rapid pace of technological advance or societal changes could make it obsolete in the matter of years. Not just professional development, but jumping from a field of study to another will become the norm in a volatile job market, as the ephemeralization of work will make the idea of formation for a career as an one-off effort laughable.
This should also be seen as an emotive cost for workers, the uncertainty causing a great strain in terms of mental health: if the unstable job market of the first decades of the twenty-first century produced an explosion of work-induced stress, mental resilience to change will be among the factors skimming the employment market.
Societal change
Looking back at the history of the industrial revolution, Harari considers how the new social conditions – great industrial metropolis and the dynamic nature of the arising economic markets – could not be accommodated by the existing political, economic and social models. Institutions such as religion, monarchy and feudalism were no longer apt to direct society. A whole century of social unrest followed before an equilibrium was found, with liberal democracies, fascist regimes and communist regimes on the playing field. What automation will bring rests in the realm of speculation, but Harari highlights how there is potential for great societal disruption, and we cannot afford complacency at the risky of bloody revolutions following systemic unemployment, given the great destructive power of modern warfare.
Universal Basic Income
The author then goes on investigating the role governments will have to assume as technology advances, saying that they will necessarily have to intervene, both via the creation of a dedicated structure for permanent formation, and by providing a safety net for people as they face transitions between jobs. The mantra should be the one which Scandinavia is already applying: “protect workers rather than jobs.”
Universal Basic Income (UBI) is one of the potential models that could respond to the technological and economical revolution we are expecting, Harari says. Its focus on the provision of means to satisfy basic needs is aligned with the necessary imperative of protecting people and not jobs, and could help to preserve the social status and self-worth of humans in a work-lacking future.
Financed through progressive taxation, an UBI would act as a redistributive instrument in a world which sees growing polarization between the riches and the poor. An alternative idea, in the author’s opinion, is to rethink the meaning of work by taking into account the education of children and caretaking. Considering caring for others as work which should deserve a monetary compensation would help foster informal safety nets and strengthen communities. Doing so would help preserve the social fabric which could be disrupted by the upcoming AI revolution. Since it would fall upon governments to pay for such activities, this would not ultimately differ from UBI.
Given that UBI could prove itself a valuable instrument to build a model for the society of the future, Harari calls for a better investigation of its possible application; that is, minimum and universal need to be defined.
In a globalized world, where market and industries are interconnected and delocalization is the norm, the meaning of universal need to be ascertained. UBI experiments have always been of reduced geographical extension, and it is usually thought, in its largest declinations, as a country specific measure. But if it was applied at the national level, its locality would create a problem, as its redistributive effects would not affect those who need it the most. As the wealth appropriated through the world is concentrated in a few nations, a progressive taxation used to fund UBI would then redistribute wealth not globally, but to a lucky minority.
Ideally, a global government could work out a functioning form of global UBI, but at the cost of its feasibility: redistributing wealth globally could very well prove impossible, in the opinion of professor Harari.
If a minimum income has to be enough to accommodate one’s basic needs, we have to decide which needs are basic, and this could prove to be a difficult exercise: homo sapiens needs food and water to survive, everything else may be considered superfluous, the author says.
Today we may consider also shelter, healthcare and instruction as basic needs, but there is no certainty about what is going to be included among them in the future. Human needs depend very much on expectations, they are far from being objective, and so the definition of minimum will remain a fluid concept as society changes through time, Harari forecasts. This means that the mere access to an income will not per se suffice in making people happy, but UBI will have to be integrated with activities which makes people satisfied, from civic engagement to sport.
Harari suggests that his country of origin, Israel, could be thought of as a testing field for a satisfying life in a post-work world. There, half of the ultra-Orthodox Jews do not work, but spend their lives praying and studying the sacred tests, while receiving government subsidies and a share of free services. They derive their happiness from the strong ties they develop with the community they live in and from the fulfillment gained via their investment in religion, Harari mantains.
Even as they are looked at with contempt from the laic citizens of Israel, which see them as freeloaders, their example may very well provide a model for the society of the future: life will be spent in the search for purpose, which could be found through the development of a strong sense of community and by investing time studying and in the construction of social relationships. Those activities, combined with the economic safety net provide by UBI, can maybe provide a picture of the society of tomorrow.
Written by:
More information at:
Yuval N. Harari, “21 Lessons For the 21st Century”, Jonathan Cape, 30 August 2018
Yuval N. Harari, “Yuval Noah Harari on whatthe year 2050 has in store for humankind”, Wired, 12 August 2018
by Karl Widerquist | Nov 25, 2018 | Opinion, The Indepentarian
The Midterm elections in the United States were extremely interesting. There was a huge Blue Wave of people coming out to vote against Trump’s party, but unlike most midterm elections, there was also a Counter-Wave of enthusiastic Republicans coming out to support Trump’s party (not to mention strategic voter disenfranchisement and Gerrymandering). The Wave and Counter-Wave made for record-high voter turnout, and the Red Counter-Wave did a great job of preventing a disaster and even gaining seats in the Senate, but the Senate was mostly the result of an extremely favorable mix of what states happened to have seats up for election.
The Blue Wave simply won more votes, enough to overcome the Counter-Wave by about 7% in the House, the only nationwide vote. That’s an amazing result for the opposition party in a midterm year with a great economy. It hasn’t happened since 1966 when Vietnam was heating up and the Democrats had just passed Civil Rights legislation losing a vast majority of the people who were actually allowed to vote in the South.
It would be interesting to see estimates of how many races the Democrats would have won without Trump’s Counter-Wave–if Republican turnout had been more consistent with typical in-party midterm election turnout.
With the President, Senate, and Supreme Court functioning as a Republican block, the election won’t make a huge difference in power right now, but it looks bad for Republicans in the future. Although Trump’s taken over the Republican Party, he has done nothing to increase the size of its coalition. If anything, he’s shrunk it, only making up for that by increasing enthusiasm among his coalition.
To win in 2020, he needs the nearly exact same thing to happen as 2016. A big enthusiasm gap in the right places so he can squeak out an electoral college win in pretty much the same states again.
Trump and the Republicans tenuous hold on a great deal of power rests on his ability to command disproportionate enthusiasm among a minority of voters and on the party’s ability to use voter disenfranchisement and Gerrymandering to translate those votes into election victories.
It seems far more likely that Democratic numbers and enthusiasm will continue to grow, and there will be a big change in 2020.
Will this create an opening for more progressive policies like Basic Income? I’ll discuss that in my next post.
by Daniele Fabbri | Nov 23, 2018 | Research
Photo Credit: CC(Cindy Woods)
The last world development report from the World Bank is out. It investigates the changing nature of work and suggests what governments could and should do to address the phenomenon. Among the proposals there is the enhancement of social protection, to a degree disjoining it from formal wage employment, considering Universal Basic Income (UBI) as one of the options.
Digital transformation allows firm to grow rapidly, escaping the traditional patterns of production, and the rise of digital platforms make people more susceptible to the effects of technological change. The landscape of work is evolving and the skills required by employers around the world are changing: skills such as complex problem solving, adaptability and teamwork as central requisites. This in turn modifies how and at which terms people work, and short-term work is on the rise, bringing challenges to the existing welfare state, the report says. The World Development Report goes on suggesting three solutions governments should put into practice: investing in human capital, through the guidance provided by the Human Capital Project; enhancing social protection; and increasing revenue mobilization as a mean of financing the two aforementioned solutions.
The changing nature of work
Fears of technological based unemployment have their roots in history, spanning from the introduction of knitting machines in England in the XVI° century, to the Luddites distruction of textile machinery in the 19th century, but the overall effect of industrialization was to stimulate economic growth and to raise the living standards. This fear is also contemporary, supported by the trend of declining industrial employment in high-income economies in the last two decades. The Republic of Korea, Singapore, Spain, and the UK are among the countries in which it dropped by more than 10 percentage points but, on the other hand, millions of industrial jobs have been created in developing countries since the late 1980s.
Technology is disrupting, unevenly, the demand for skills, and its potential for the amelioration of living standards manifests heterogeneously: workers in elected sectors gains from technological progress, whilst others see themselves left facing displacement. The wealth created by the platform economy is huge, but its placed in the hands of a few, and A.I. raises concerns about the advent of a jobless economy following the rapid growth in the number of robots operating worldwide: if they are 1.2 millions in 2018, they will be 2.6 millions in 2019, an increase of 1.4 milion units in just one year. It should be noticed how, in the countries with higher robot density – Germany, Korea, Singapore – employment rates remain high, but in Germany the effect was a reduction in the hiring of new, young entrants; young workers, and economies anticipating larger numbers of entrants, may be more affected than others.
The extent to which robots replace workers remains unclear, with automation of routine work estimated to have also created 23 million jobs across Europe starting in 1999, and evidence suggesting that its overall effect is that of raising demand for labor, specifically in the technology sector, by providing the tools necessary for online work, or for taking part in the gig economy. It’s sure that jobs based upon repetition, which are “codifiable”, are those more endangered by automation, but estimates of the number of jobs at risk varies widely, for the US from 7% to 47%, the latter figure the result of automation probabilities developed by machine learning experts at the University of Oxford, a speculation which cannot account properly for the rates of technology absorption, which have been observed to vary greatly depending on the kind of technology, both internationally and intranationally.
The effect of automation on skills demand and on the production process is somehow more discernable. On the skills side, the demand for cognitive abilities which allow workers to be more adaptable, as critical thinking and socio-behavioural skills, is increasing; on the side of the production process there is the rise of global value chains, the changing nature of the boundaries of firms, and the fluid geography of jobs. The process has favored the more educated, and human capital seems the more effective protection against automation driven unemployment: “A big question is whether workers displaced by automation will have the required skills for new jobs created by innovation”. Innovation has the greatest impact on low and middle-skilled workers, either because they are more suceptible to automation, or because no complementarities with technology (human-machine cooperation) manifest.
The paper identifies how technology has disrupted the demand for skills: firstly, the demand for non-routine skills (i.e. cognitive and socio-behavioural) is increasing both in advanced and emerging economies; secondly, the demand for job specific-skills is declining; thirdly, payoffs to combination of different type of skills, allowing for greater adaptability and easier transfer among different jobs, appear to be increasing. The risk is growing inequality, as the report states:
“In advanced economies, employment has been growing fastest in high-skill cognitive occupations and low-skill occupations that require dexterity. By contrast, employment has shifted away from middle-skill occupations such as machine operators. This is one of the factors that may translate into rising inequality in advanced economies. Both middle- and low-skill workers could see falling wages ⎯ the former because of automation; the latter because of increased competition.”
Technology changes the way in which people works and the term under which they work. The gig-economy and jobs based on on-demand services, arising in an environment created by the advance of technology, don’t rely on long-term contracts but rather on extreme flexibility. There is a minimum productivity level at which firm find it optimal to employ workers formally before resorting to globalization, this means that informality is prefereable for everyone exept for the most productive workers.
If globalization and automation were to act simultaneusly, increasing the productivity of workers, the number of informal workers may decline, but if more requirements –minimum wage, required benefits – are imposed on firms, the positive “formal employment effect” may be reversed, and informality actually rise. The management of risk through employers doesn’t fit well with the new nature of jobs, and the use of payroll taxes to finance pensions and social insurance may no longer be sustainable, even for advanced economies, as the percentage of the workforce taking part into the formal economy decreases. Indeed, the changing nature of work stimulates informality, as taxation, ragulation, and social protection schemes don’t provide businesses with incentives to grow, particularly in developing economies. The issue is present in both emerging and advanced economies, and convergence is occurring among them, with increased informality in the advanced ones, leaving workers without access to benefits or protections and making the case for direct intervention of the government through benefit provision. “If automation pushes up the cost of distorting labor markets, and development improves the efficacy of the public sector, government should move away from regulation-based redistribution to direct social welfare support.”
Lifelong Learning
“Skill acquisition is a continuum, not a finite, unchangeable path”.
The advance of automation increases the demand for high-order cognitive skills, while simultaneously decreasing the demand for repetitive, job-specific skills. At the same time, the retooling of existing jobs make adaptability a fundamental requisite: the idea of a career for life seems no longer plausible, and shifts between jobs will be the norm. Thus, the profile of the ideal employee changes, as a single job may require the combination of skills from multiple disciplines: jacks of all trades will surclass the masters of one. How well countries respond to the changing demand for skills depends on how fast the supply of skills can shift, but the education system is traditionally adverse to change, and adjustment occurs predominantly out of compulsory education. Tertiary education, given its flexibility, allows for enrollment whilst participating in the workforce, and so will be the main provider of the cognitive skill-set required. Government should take action in enhancing instruction during youth, the period in which the learning capabilities are higher, and simultaneously helping to shape a better framework for adult learning as a complement to schooling, in order to “inoculate against job uncertainty.”
A new social contract
Old and new pressures calls for a renovation of the social contract, which the report defines as “a policy package that aims to contribute to a fairer society.” The changing nature of work is costly for workers and adjustments are needed: a global new deal is necessary. This new deal should be different from the one adopted in the US after the Great Depression, as the Depression was a transitory shock, whilst the advance and automation and informality are here to stay. Any social contract should be tailored to the specific country context, but some core elements remain: following the indications of Amartya Sen in “Development as Freedom”, the instruments for equality of opportunity are political freedoms, freedom of opportunity, and economic protection from abject poverty.
“The labor market is increasingly valuing advanced cognitive and socio-behavioral skills that complement technology and make workers more adaptable. This means that inequality will increase unless everyone has a fair shot at acquiring these skills.”
Strengthening social protection
Social protection should be enhanced through the improvement of its three main components: a guaranteed social minimum, social insurance and market regulation.
A guaranteed social minimum, with social assistance at its core, should be based on the concept of progressive universalism, with programs providing financial support to the largest possible share of the population, in order to account for the risks in the labour market. Social assistance needs to be reformed, as the Bismarckian model is no longer satisfying, and should be coupled with subsidized social sinsurance, not strictly based on participation in formal wage employment, financed through mandatory earning based contributions limited, at least initially, to the formal market. In order to provide equal opportunities, a social contract should also include means to provide education and upskilling, necessary for navigating the job market, starting from early childhood development, as knowledge is cumulative and pays more the earlier it starts.
“As social contracts are reimagined, subsidizing a basic level of social insurance — especially for the poor — could be considered. Such a reform could also equalize the costs borne by different factors of production, such as capital and labor, as the financing of the system is at least partly shifted away from labor taxes toward general taxation.”
Universal Basic Income
Universal Basic Income is being hotly debated as a mean to expand the guaranteed social minimum, the report says. It wouldn’t be a substitute for health, education, or other social services, but a supplement to existing social programs, and could end up replacing some programs with income support functions, increasing efficiency by reducing programs fragmentation. It’s monetary nature is an advantage: analysis of cash transfer programs showed advances in school enrollment rates, test scores, and cognitive development, food security and use of health care facilities, especially when combined with forms of intervention. The available evidence seems to disprove one of the main concerns related to UBI, that of work disincentives, as the Alaska dividend program shows no impact on employment (if not for the increase in part-time employment), and a study on the Iranian basic income program found that it did no harm to employment. The regular provision of welfare benefits granted by UBI would contrast with the arbitrarity of means-tested anti-poverty measures, which facing the dynamism of poverty ends up generating winners and losers.
The costs of UBI would depend on the level at which it is set, and its effects would depend on how it is financed. Simulations setting UBI at the level of existing cash transfer programs show that it would have significant fiscal impact, costing an additional 13.8 percent of GDP in Finland, 10.1 percent in France, 8.9 percent in the United Kingdom, and 3.3 percent in Italy. The taxation of UBI alongside regular income and the elimination of tax allowances were then used as sources of revenues for covering the additional costs: “in Finland and Italy, these measures were more than adequate to cover the additional costs of a UBI. In France, those revenues almost offset the cost of such a program. In the United Kingdom, taxing cash benefits and eliminating tax allowances were not enough to cover the UBI.” Simulations for developing countries found significant distributional effects: in Nepal most people would gain, in Indonesia 40% of the poor would be worse off and in South Africa most of the elderly and the poor would be worse off. This is due the structure and performance of the existing schemes, UBI being set at their level. A debate remains around whether some of the “cousins” of UBI, as a Job Guarantee or a Participation Income, conditional to the fulfillment of public jobs, or to volunteering, could be more beneficial, the report states.
Financing social inclusion
A basic social minimum package which uses UBI, set at the average poverty level, and aimed at adults would cost 9.6% GDP in low-income countries, 5.1% in medium-income countries and 3.5% in upper middle income countries. If the UBI was to be for everyone, the figures would be in the double digits in the poorest countries, 9% of GDP for middle income countries and 5.2% in upper-middle income countries. And the invesment for UBI should be coupled with investments in the creation of human capital, the report mantains. A significant mobilization of capital becomes necessary. Taxation patterns diverge from low income countries to high income ones; if the former rely mostly on indirect taxation –consumption and trade taxes – the latter rely on direct taxation. The paper analyzes sources of potential revenues to finance the global new deal, as excises taxes on tobacco and alcool, that even if considered regressive, have usually a long term positive impact on health. Value added tax could have a significant role in developing economies, whilst they are already diffused among advanced ones. A carbon tax may have strong impact, with a study finding that for the top 20 carbon emitting countries, optimal taxation could rise almost 2% of GDP, and be paired with the elimination of energy subsidies, which globally amouts to $333 billion. Personal and corporate income taxation may be aided by technology in avoiding tax avoidance.
“The virtual nature of digital businesses makes it even easier to locate activities in low-tax jurisdictions. The provision of goods and services from abroad without a physical presence in countries where consumers are located escapes the traditional corporate tax.”
Digitizing property registration systems will improve the collection of property taxes, and withholding taxes on payments of services will become more important in economies with strong digital presence and a prevalence of intangibles. Social protection should be enhanced keeping in mind financial costraints, and expanded as more resources are mobilized through improved taxation.
More information at:
World Bank. 2019. World Development Report 2019: The Changing Nature of Work. Washington, DC: World Bank.
Human Capital Project: https://www.worldbank.org/en/publication/human-capital
This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by the World Bank
by Faun Rice | Nov 13, 2018 | Research
Photo by Stefan Kühn, CC BY-SA 3.0
The CESifo Group of Munich is a European research group that seeks to employ both high-quality economic theory and the methods of an empirical institute. Operating since 1999, CESifo is a collaboration between the Center for Economic Studies (CES), the ifo Institute (“Information and Forschung” or research), and the CESifo GmbH (Munich Society for the Promotion of Economic Research).
CESifo publishes a quarterly journal, the latest issue of which is devoted to Unconditional Basic Income (UBI). Five of seven pieces within this 48-page publication present a variety of perspectives on UBI research and theory, predominantly addressing the European context.
- Straubhaar, Thomas, “Universal Basic Income – New Answer to New Questions for the German Welfare State in the 21st Century”, CESifo Forum 19 (3), 2018, 03–09 | Details| PDF Download
The focus: Transforming social support in Germany by replacing Bismarckian welfare state ideals
Straubhaar describes a series of proximate social and economic changes due to globalization, aging societies, income polarization, and dissolution of traditional economic safety nets. He comments that the contemporary version of the welfare state is founded upon 19th century Bismarckian principles that rely on a classic population pyramid (weighted by youth at the bottom), a male-breadwinner model, a fast-growing economy, and a labor-focused Protestant work ethic, none of which will continue to be relevant indefinitely. He proposes UBI as a welfare state model that would completely replace all other publicly financed social support and provide a 21st century solution to the aforementioned changes, particularly in Germany, but as a model for the rest of the world.
- Torry, Malcolm, “Some Lessons from the Recent UK Debate about Universal Basic Income”, CESifo Forum 19 (3), 2018, 10–14 | Details| PDF Download
The focus: Enhancing UBI data distribution and ensuring that discussions maintain a clear definition of the difference between UBI and other related economic policies
Torry highlights a number of key events and issues from the UK that have broader relevance for the global community interested in UBI. The first discusses the important use of microsimulation to predict the impact of economic policies on households of varying incomes (for example, to estimate the loss of disposable income to low-income families if means-tested benefits remain or are removed). The second relates a story in which a public organization cherry-picked UBI data, to which Torry simply says that high-quality research ought to be better distributed. The third and fourth call the reader’s attention to the importance of using specific definitions of UBI schemes and not allowing the term to be misused.
- De Wispelaere, Jurgen, Antti Halmetoja and Ville-Veikko Pulkka, “The Rise (and Fall) of the Basic Income Experiment in Finland”, CESifo Forum 19 (3), 2018, 15–19 | Details| PDF Download
The focus: Improving the international understanding of Finland’s basic income experiment, its origins, and its limitations
The Finnish basic income experiment began as a one-line commitment in the national Government Programme in 2015. Kela, the Finnish Social Insurance Institution, proposed several experiment design options, and a two-year control trial began in January 2017. Kela will evaluate the results and present them to Parliament in 2019.
Basic income stakeholders have become increasingly critical of the trial parameters, raising concerns about the limits of the sample and the pilot’s restricted scope and goals. The authors argue that proponents of UBI initially overstated the extent of the Finnish government’s commitment and capabilities, heralding the commitment as a “watershed” moment for European basic income, when in fact the Finnish experiment and others have been limited from the outset by policy inertia, existing budgetary and taxation systems, and other institutional limitations. The pilot program is designed to assess basic income as a means of activating the labour market, a politically safe goal, and was never likely to result in policy changes of the kind UBI advocates desire to see.
- Colombino, Ugo and Nizamul Islam, “Basic Income and Flat Tax: The Italian Scenario”, CESifo Forum 19 (3), 2018, 20–29 | Details| PDF Download
The focus: Evaluating proposed basic income-related policy packages in Italy and comparing their political origins
Like other European countries, Italy has seen several basic income proposals that have yet to be implemented. Several current potential models are rooted in different political ideologies and thus provide an interesting comparison. The first, “Reddito di Inclusione,” (RdI) is a basic income scheme that targets the most impoverished segment of the population in practice but is intended to be universal. The second, “Reddito di Cittadinanza” (RdC) is means-tested and only covers the population “below the relative poverty threshold” (20). Another model, proposed by Istituo Bruno Leoni (a think tank), involves both basic income and a flat tax.
The authors provide a basic overview of the differences between UBI, means-tested guaranteed income, and negative income tax. They then simulate and evaluate the various government-proposed combinations of policies, concluding that while it is possible to design a fiscally neutral policy package, current government proposals have not yet done so.
- Widerquist, Karl, “The Devil’s in the Caveats: A Brief Discussion of the Difficulties of Basic Income Experiments”, CESifo Forum 19 (3), 2018, 30–35 | Details| PDF Download
The focus: Making UBI research accessible and understandable, particularly with regard to its limitations
Widerquist’s basic thesis is that, contrary to popular representations of policy research, all UBI experiments contain a significant list of caveats. He argues that science journalism has not done an adequate job of communicating the limitations of UBI studies, or indeed any social sciences research, to the public. Furthermore, specialist researchers’ lists of caveats are inadequate for communicating a study’s limitations. Widerquist has an upcoming book that will address both best practices in UBI research given its inherent difficulties and best practices in communication the results of said research to the public and policymakers. In this article, he identifies four broad strategies: (1) iteratively designing studies with public feedback, so that research directly addresses the questions relevant to local stakeholders; (2) highlighting UBI’s impact in publications, rather than its side-effects (even though the latter might be more interesting to researchers); (3) attempting to define a “bottom line” or generalizable conclusion from research; and (4) addressing and discussing ethical controversies.
- Clauss, Michael and Stefan Remhof, “A Euro Area Finance Ministry – Recipe for Improved Governance?”, CESifo Forum 19 (3), 2018, 36–43 | Details| PDF Download
The authors discuss the possibility and potential function of a euro-area finance ministry. Such an organization could either martial Europe’s national fiscal policies to align them throughout the region, or it could be one more “layer” of fiscal authority in each European nation. This paper does not explicitly address UBI.
- Nam, Chang Woon and Peter Steinhoff, “The ‘Make in India’ Initiative”, CESifo Forum 19 (3), 2018, 44–45 | Details| PDF Download
The authors discuss a 2014 federal initiative to promote industrial manufacturing in India. This paper does not explicitly address UBI.
More information at:
“CESifo Forum 03/2018 (Autumn): Unconditional Basic Income”, 01-48, ifo Institute, Munich, 2018
by Daniele Fabbri | Nov 9, 2018 | News
Picture credit: David Pacey
In an article on Left Foot Forward, Karen Buck MP and Declan Gaffney argue for a partial Basic Income as a more practical option than Universal Basic Income (UBI).
With all the different expectations pinned to UBI, arising from its promise to address a wide range of problems going from technological drive unemployment to the income instability typical of precarious jobs, UBI risks to become a divisive topic. Sceptics argue that it ignores the problems of rising tax rates to unprecedented rates and ask if those most in need are the actual beneficiaries.
The idea of an unconditional, universal flat-rate payment could have wide appeal, the authors say: child benefit was not far from it before being taken away from high earners, and also the income personal allowance and the threshold for national insurance can be thought of as universal flat rate payments for those earning enough to benefit from them in full –“So we have UBI-like elements in the tax and benefit system already”.
The problem in the feasibility of UBI, the authors argue, arises when it is pitched at a too high level, has the ambition to replace existing social security and to provide enough to live on. But a less ambitious partial basic income could have a role in the reformation of the tax and benefit system.
The authors suggest as an option to replace income tax allowance with a flat-rate payment (of the same value) of a bit less than £50 per week going to everybody regardless of the income level, this way also those with no earnings would benefit from it.
This kind of partial basic income would not have the same scope of more generous UBI proposals, but it could nonetheless help getting more people off means-testing benefits, addressing the gender imbalance in the benefit system and in dampening income fluctuations.
“… as there continues to be disagreement on ultimate aims and objectives, we need to move the debate on to practicalities. A partial basic income, working with rather than replacing the social security system, is a good place to start”.
More information at:
Declan Gaffney and Karen Buck, “The practical response to our society’s widening inequality? A partial basic income”, Left Foot Forward, September 3rd 2018
