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
by Tyler Prochazka | Nov 5, 2018 | News
If there is one presidential candidate who is the complete opposite of Donald Trump, it is Andrew Yang.
Yang is the son of two immigrant parents from Taiwan, graduating from Columbia University with his Juris Doctorate and Brown University with a degree in economics. In 2011, Yang started the non-profit Venture for America to help college graduates connect with startups throughout the United States.
Now Yang has thrown his hat in the ring for the Democratic nomination for president. What makes Yang stand out is his candidacy largely revolves around one issue: Universal Basic Income (UBI).
In fact, Yang has the opportunity to make UBI a serious issue in a US presidential campaign for the first time since George McGovern proposed a basic income style program as the Democratic nominee against Richard Nixon in 1972.
Nixon attacked the cost of McGovern’s basic income policy. Under scrutiny, McGovern abandoned the idea and still ultimately lost to Nixon. Basic income’s latest chapter in American political history is now being written, but it is up to Yang to prove he is politically savvy enough to write a different ending.
Yang’s campaign will try to win over skeptical voters with a mini basic income trial for one resident of both Iowa and New Hampshire. Yang said they are currently choosing the recipient from New Hampshire.
“The purpose is to have a demonstration of the fact that people’s lives improve and people do positive things with a thousand dollars a month,” Yang said.
When average voters hear about UBI for the first time, they treat the idea with skepticism, Yang said.
“We are programmed for scarcity particularly where money is concerned, and so most people have trouble conceiving of the fact that we can provide a basic income to all adults in America,” Yang said.
So far, Yang said he has not seen mainstream Democrats moving toward basic income. Instead, some Democrats are embracing the idea of a jobs guarantee program. Yang said a jobs guarantee would be a “bad idea,” because past government employment programs have low success in transitioning employees to the private sector.
His opposition to the jobs guarantee does not mean Yang will refuse to compromise. He said a Negative Income Tax (NIT) would be an “outstanding step in the right direction.”
NIT would provide a minimum guaranteed income but the government would phase out the stipend based on one’s market income. UBI would achieve a phase-out indirectly, since some recipients will be net receivers, and others will pay back more in taxes than they receive from a basic income. A negative income tax “would be a massive game changer for millions of Americans here and now,” Yang said.
Those familiar with Yang probably already know his views about basic income. In my interview with him, I wanted to know more about how he would formulate policies as president.
On the other issues in his campaign, Yang said he supports gun control, renewable energy, a carbon tax, and abortion rights. Gun control especially has taken a big stand among the candidates.
Before becoming president, though, Yang will have to fight a crowded field in the Democratic primary. With big hitters such as Bernie Sanders and Elizabeth Warren, Yang may get lost in the field.
Bernie Sanders, who has flirted with basic income, holds similar views to Yang. For his part, Yang said he is “aligned” with Sanders on most policy issues, and he said some have called him the “younger Asian Bernie Sanders.”
However, Yang said how Sanders view of the modern economic system is “a little out of date.”
“(Sanders) believes that if we coerce companies into treating workers better then that will solve the problem. I believe that the relationship between corporate success and workers has fundamentally changed forever, where 94 percent of the new jobs created from 2005 to 2015 were temporary gig contract jobs which did not have healthcare benefits,” Yang said.
“The plain truth is that companies can now grow and succeed without hiring lots of people or treating them well,” he said. “So we need to build a new social contract that does not assume that work is going to look the same way it has over the last number of decades.
One of the criticisms of Sanders during the 2016 presidential campaign was his lack of clarity on foreign policy. Yang said he has a “number” of advisors who are helping to form his platform for foreign affairs.
On Yang’s diplomatic principles, he said that he would be “restrained” in his foreign policy.
“America has gotten itself into trouble by imagining it’s capable of doing things it may not be capable of and we need to be much more restrained and not succumb to grandiose visions for other societies,” Yang said.
Previously, Yang has stated he supports “status quo” policies toward China and Taiwan, which recognizes the People’s Republic of China (PRC) as the legal representative of China, and acknowledges the PRC’s position that Taiwan is part of China.
Yang points out the “extraordinary” relationships between the US and Taiwan, Japan, and South Korea. He said America should avoid the dynamic that China and America are inevitably going to be in opposition, and that our relationship with China is also critical since they are America’s largest trading partner.
On the trade war with China, Yang said the current environment with constant changes in tariffs has made it “impossible” for businesses to plan and operate. While he acknowledges trade imbalances with China, he said a trade war is not “constructive.”
And then there is the elephant in the room, how exactly does Yang plan to take on the master of media Donald Trump?
“The opposite of Donald Trump is an Asian man who likes numbers,” Yang said. “There is a natural dynamic in American politics where the pendulum will swing in the other direction. From Donald Trump the pendulum is going to swing in my direction.”
by Sandro Gobetti | Nov 4, 2018 | News
Roberto Ciccarelli (journalist, writer and member of the Basic Income Italy) has published an article on the proposal of the Italian government’s citizenship income.
In the article Ciccarelli talks about the poverty benefit misleadingly called a “citizenship income”, proposed by M5Star government. “What has been included in the soon-to-be-approved budget law” he says “is nothing but a sham and a deliberate misuse of words”. A real “citizenship income” is not tied to an obligation to work and has nothing to do with the “disciplining and punishment of beneficiaries which prominently feature in this M5S-Lega version of “workfare,” which apes the worst features of the Hartz IV German system”. “This benefit”, Ciccarelli writes, “doesn’t have any of the traits of universality, justice, equitability and unconditionality. It is neither a “universal income” nor a “citizenship income.” It is a workforce reintegration benefit of last resort for the unemployed, temporary workers and the poor, part of the authoritarian turn of the welfare state aimed at the creation of one or more parallel labor markets”. Ciccarelli also recalls that “They are talking about a new category of so-called “citizenship crime,” with up to six years in prison in case of fraud. The benefit will be tied to eight hours of unpaid work per week, to compulsory training. The duration of the benefit is also unclear and uncertain. It was said at first that after the first twelve months, the so-called “income” would gradually diminish to zero”.
Ciccarelli also writes that “The idea of this “income”— as repeatedly explained by Pasquale Tridico, an advisor to Di Maio — in just a short time, the person in “absolute poverty” will start buying “Italian products,” will get employed (in a permanent position, Tridico seems to imagine—not in small temporary jobs, as is most likely), and will contribute to the “wealth of the nation.””
The many problems of the M5S proposal, however, should not divert the attention from the political fight that has been waged over the past five years, a confrontation which has naturally intensified during the election campaign ahead of the latest 4th of March elections.
Ciccarelli also speaks about “the Democratic Party fighting against the proposal that has been (grossly misleadingly) called a “universal income.” Disingenuously pretending to believe the dishonest characterization of their own proposal by the Five Stars themselves, Renzi and his followers have spent at least four years attacking the very principle of an income that would be provided to all without asking them to do any work in return”.
What the M5S was actually proposing was not a universal income at all, but a significant extension of the “social inclusion income” (REI), a flagship proposal of the Democratic Party, approved during the 2013-2018 legislature.
Ciccarelli concludes that “A universal income is truly needed—this fact is absolutely clear. This so-called “citizenship income,” and other schemes such as the French “universal working income,” are marred by the tension between giving people the possibility to choose how they live their own life and an authoritarian discourse of penalties and obligations. Welfarism clashes with dirigism: one is not allowed to sit on the couch all day, nor to take any break between unpaid community work and a training course. This project shows clearly the present tendency to demand a lot from those who have little in order to justify granting them a benefit of last resort that will not work towards overcoming poverty, but towards making the regime of full precarious employment a reality.”
More information at:
Roberto Ciccarelli, “The linguistic scam of Italy’s ‘citizenship income’”, Basic Income Network Italia, October 24th 2018
(In Italian)
Roberto Ciccarelli, “La società della piena occupazione precaria: il “reddito” secondo Macron e Di Maio“, il manifesto, September 14th 2018
Reviewed by André Coelho
by Andre Coelho | Oct 27, 2018 | News
Guy Standing has just posted an article on the Great Transition Initiative website. Titled “The Precariat: Today’s Transformative Class?”, the essay describes social evolution in the last few centuries and present-day neoliberal “rentier economy”, which has created the conditions to the rise of a new social class for which Standing has named the “precariat”.
Guy Standing defends that it will be through this new “precariat” that profound changes to humanity’s social organization will come about. First, because by not knowing stable employment, it does not believe jobs are the answer to insecurity, like many politicians on the Left tend to think. Jobs are, in this framework, representatives of an already falling hierarchical way of organization, which he considers contrary to human nature. Ancient societies – ex.: Greeks – for all their problems and prejudices, valued much more leisure than work, and so, nowadays, would make more sense to pursue knowledge and meaning, rather than endless consumption.
For this to come about, however, a new economic system must flourish. One that recognizes ecological limits and insures basic security for all. A profound philosophical shift lies at the heart of this process, and that’s one that ceases to consider each person as a separate individual – who to have something must own it, depriving others from it – to another where interdependency and sharing are the utmost values. From there, Standing recalls that the Commons are shared prosperity between humans and should be strengthened as a way to reverse decades of neoliberal enclosure, commodification, privatization and colonization.
He then devises a general idea on how the Commons should generate revenue for redistribution among all people, in a similar process adopted by some Social Funds around the world (ex.: Norwegian Pension Fund Global, the Alaskan Permanent Fund). That revenue would be derived, then, by taxing all those exploring Commons resources, such as land, the atmosphere, the rivers and oceans, even intellectual work. Since the Commons are, in principle, shared equally by all the commoners, it only makes sense to redistribute the Social Funds setup this way as an equal share to all of them, unconditionally. That’s where basic income ste ps in, as a crucial and structural piece of social policy, within this new kind of social contract. This will, according to Guy Standing, provide basic security for all, strengthen social solidarity and shift work time and energy towards reproductive, sharing and resource-conserving activities (away from resource-depleting ones).
More information at:
Guy Standing, “The Precariat: Today’s Transformative Class?”, Great Transition Initiative, October 2018
