by Andre Coelho | May 20, 2018 | News
Andrew Yang has already made his name known by leading a presidential campaign which defends the implementation of basic income. Now he extends that with an interview for the Merion West journal, a news outlet particularly associated with low biases. In that interview, posted on the 9th of May, Yang affirms his conviction that humanity is going through an unprecedented shift, while the (United States) political class “is completely asleep at the switch”.
Yang, as other influential people in the United States, especially those dealing with technological developments and digital-based companies, is very worried about the job loss wave in the United States, due to automation. According to him, that is already happening, and will deepen in the near future. To counteract the predictable consequences of such job displacement “by software, AI, and machines”, he defends the implementation of a 1000 US$/month per adult basic income, which he calls a “freedom dividend”. That and a “human-centric capitalism”, an economic system which measures things like “childhood success rate, mental health, levels of engagement with work, freedom from substance abuse”, instead of GDP.
Asked about a possible parallel with the Industrial Revolution, where, despite strifes and strikes, displaced people eventually found new work, Yang says that (referring to manufacturing workers in the Midwest) “there was no magical reorganization of work; instead, many workers went home and killed themselves by the numbers”. According to him, anyone thinking this “magical reorganization of work” is possible, is “not paying attention to the real data on the ground rate now”.
As for basic income itself, Yang approaches it with a certain humour, even, when he says “One thing I’m looking forward to asking, when I’m president, which state would like to have universal basic income first?” However, he states it very seriously when putting forth his conviction that “universal basic income would dramatically improve the lives of tens of millions of individuals and families. There might be some tweaks and tailoring, but I’m very bullish on the substance”.
As for financing, Andrew Yang is confident that a basic income of 1000 US$/month per adult is affordable, considering its price tag is around 2 trillion US$ per year, compared with current welfare costs of 6 trillion US$ per year. That doesn’t equate to ending all welfare benefits, but that it is possible to include basic income within the benefits systems, by introducing an unconditional parcel. Even still, he defends, like Phillipe van Parijs has also proposed in the European context, basic income can be mostly financed with a value-added tax around 10%, or about half of what is practiced in Europe, on average. An expectation of further economic growth, due to a rise in aggregated demand by influence of the existence of a basic income, will self-finance the rest, given an equivalent rise in collected taxes.
Yang also believes that the US current system of social security, health and education are essentially broken, categorizing them as “dysfunctional welfare systems”. According to him, these systems generate vast disincentives amongst the population, or benefit traps. Hence, the introduction of basic income could break those economic and social traps, by providing a financial floor cumulative with earnings from a job. As far as economic policy is concerned, he concludes the interview with a deeper, more general call to society: “In America, we won’t trust our people, but the only thing we will trust are systems, and more systems and processes—and it’s immensely counterproductive. We need to start trusting our people again; we have to trust ourselves.”
More information at:
Sara Bizarro, “United States: Andrew Yang is running for President in 2020 on the platform of Universal Basic Income”, Basic Income News, April 8th 2018
Henri Matilla, “Interview with Andrew Yang, 2020 Presidential Candidate”, Merion West, May 9th 2018
by Karl Widerquist | May 9, 2018 | Opinion, The Indepentarian
This essay was originally published on Basic Income News in December 2011.
I can’t believe the news. We are in the midst of the worst global depression in 70 years, and the governments of almost every major industrialized country are talking about austerity. They’re cutting government services; laying off public sector workers; cutting pay, pensions, and benefits for public employees—all in the name of austerity and balanced budgets.
This astounds me because we’ve been through it before. We’ve seen what works, and we know that austerity is not the way out of a major depression. Austerity makes depressions worse. To get out of a depression, the government needs to spend money—and lots of it. The lessons of history are clear, and the reading of history I’m going to discuss to make my point is not terribly controversial among economists. Let me explain.
In a depression (or a deep recession or whatever you want to call it), we get stuck at the bottom. People can’t spend as much because they’re not making as much, but they aren’t making as much because people aren’t spending as much. Debt is a related problem, and so, I believe, is the real estate market, but there’s no room in this editorial for a full explanation. If you understand the idea of getting stuck at the bottom because of the feedback between spending and income, you get the essence of it. This kind of unemployment is pure waste. Human resources (not to mention idle shops and factories) are simply going to waste unused. We can wait for all that to work itself out on its own—as Japan has been waiting since 1989—or the government can take action.
Austerity is a reasonable response to—say—finding half of our industrial capacity destroyed by aerial bombardment. If our physical capacity to produce goods has fallen, then we’ll all have to make do with a little less for a while. But austerity is the worst possible response to an economy in a depression, because a depression economy is no less able to produce goods than before; it’s simply letting productive capacity go to waste. And that waste exists because people aren’t spending as much. If the governments of the world respond by spending less as well, they simply exacerbate the problem.
We learned how to take action in a big way at the outset of World War II. I wrote a few years ago about “the economic lesson of 1938” (August 2009). Today’s editorial could as well be called “the economic lesson of 1941.” The accompanying graph (at the bottom) shows U.S. per capita GDP for the years 1929 to 1947—from the stock market crash at the beginning of the Great Depression to the bottom of the post-war recession. Per capita GDP is the income of the average American. The figures are in “inflation-adjusted” 2008 dollars, meaning they’re multiplied by an index to show the purchasing power that the incomes of the time would have at today’s prices. No inflation adjustment is perfect, but they give you a rough idea. In general the graph shows we were much poorer back then, but it shows much more about the times.
The austerity years were 1929 to 1933. In addition to many other mistakes, the government responded to reduced tax revenue caused by declining economic activity by reducing its own activity to match. Average income went down from over $11,000 to less than $8,000—a loss of more than 25 percent. You can think of everybody getting a 25 percent pay cut at the same time or of 75 percent of people keeping their entire income while 25 percent of people lose their entire incomes. What actually happened was somewhere in between, a little bit of both. Unemployment went up to 20 percent, and in that sense the Great Depression was roughly twice as bad as what we’re going through now.
In 1933, Franklin Roosevelt was elected and we started spending money to stimulate the economy. He called it “priming the pump.” Years later Keynesian economists would call it “simulating aggregate demand.” Whatever you call it, Roosevelt took what, at the time, looked like big action, spending money trying to help people, to get the economy moving again. And he had several years of success until he returned to austerity measures in 1937 and 1938, suddenly trying to balance the budget. I wrote about that problem in my earlier editorial. Except for that year progress was slow but steady. Yet, by 1941 unemployment was still at 9.67%. After 12 years of waiting for an end to the depression, more Americans were unemployed in 1941 than they are now in the forth year of our depression.
But in 1941 the Japanese bombed Pearl Harbor. The United States entered World War II. And the depression ended virtually over night. We went from a 10-percent labor surplus to a labor shortage in a matter of months. The demand for labor was so great that women entered the labor force in unprecedented numbers. They found good high-paying jobs waiting for them. Average income shot up to $20,000 per year—two and a half times what it was after four years of austerity in 1933.
The depression disappeared because the government spent money and massive amounts of it. The government hired the idle labor (and more) as soldiers and support workers. The government hired the idle shipyards to build boats, the idle automobile plants to build jeeps and tanks, and so on. It was good for people, and it was good for business. The entire New Deal—it turned out—was far too small.
There are dangers to stimulating the economy in the wrong way, at the wrong time, or in the wrong amounts. You can end up with unacceptable debt, inflation, or a delayed depression. This is why I have never thought of myself as a Keynesian, and I do not think that massive stimulus is the best response to a garden-variety recession like most of the ones experienced between World War II and today. I’ve argued in this series (May 2009) that the most important thing government can do during a downturn is the same as during a boom: make sure everyone’s basic needs are met. If that is done, we can often let recessions work themselves out. I guess I’m a last-resort Keynesian. I think most non-Keynesian economists are, although they probably disagree a lot in how bad things have to get before they’ll take up their last resort.
I don’t think we should wait any longer because the possible dangers of a government stimulus can be overblown. None of them manifested themselves during or after the Second World War. Except for the obvious losses to war, the spending was good for people. After the war people got married; they used the money they saved to make down payments on houses, to start families, and to build better lives than they had in the 1930s.
The depression never came back. This is why I end the graph in the recession year of 1947. That year was as bad as the economy got after the war, but yet, per capita income was still nearly $15,000, not quite twice what it was after four years of austerity in 1933 and still 25 percent higher than it was in the boom year of 1929. After 1947 we got good healthy growth punctuated by short, forgettable, recessions. It was one of the best periods of economic growth in American history. The Second Word War spending worked, and there was no post-stimulus hangover, not in the short, not in the long run. The most massive government stimulus we’ve ever had—perhaps the largest in world history—did not cause any significant problems with debt, inflation, or delayed depression.
You can look at the income and unemployment figures for almost every industrialized, capitalist nation at the time, and you will see the same pattern: as soon as they began massive war spending, the depression ended in their country. But we don’t need a war to stimulate the economy. We just need to break the political obsession with austerity and start spending money.
Without the need to spend a stimulus on war, we can spend on schools, bridges, public transits, infrastructure, or on services to help the needy through a basic income guarantee or through something else. What we spend on is less important for stimulating the economy than the need to spend. The basic income guarantee movement now needs to be part of broader movement around the world against the austerity craze. This is one reason I support the Occupy Movement in the United States and the anti-austerity movement in Europe. We must focus the world’s attention on the need for government to spend money to help people. Once we open that door, the possibilities are great. But until then, we practice austerity against the lessons of our history.
-Karl Widerquist (karl@widerquist.com), the Second Cup Café, Doha, Qatar, December 2011
by Andre Coelho | May 8, 2018 | News, Research
Since 2016 that Congresswoman Araceli Damián has supported and “presented an initiative to reform the Mexican Constitution and create the right to [a] universal citizen’s income”. In the latest version of this proposal, it is framed as an intrinsic human right, arguing that no human being’s survival should be dependent on any condition, “not even by the idea that a person should be socially useful”. The purpose has been to deliver basic income as a “central element for social policy, to face this crisis and to check the implications of including it in the Mexican Constitution”.
The problems faced by the Mexican society are generally the same in many other regions afflicted by the capitalist system: unemployment due to automation and globalization, lower economic output (to restore some equality in resource redistribution), rampant labour precarity and failure of present social policies to reduce poverty. Given this grim scenario, which has been aggravating for the last decades, it has already been pointed out by the Mexican Consejo Nacional de Evaluación de la Política de Desarrollo Social (National Council for Social Policy Evaluation), or Coneval, that basic income-like policies should be looked into, in a 2014 document titled “Informe de Evaluación de la Política de Desarrollo Social en México 2014” (2014 Social Policy Evaluation Report).
Reporting back to the 1948 Universal Declaration of Human Rights, this basic income implementation proposal for the United States of Mexico is intended to be based on the basis that “every person shall have a standard of living compatible with their wellbeing”. This, according to Araceli Damián, would allow Mexico to “engage in the construction of a Social Rights Welfare State”, and would align the Mexican constitution with international legal standards on human rights.
As a first stage of implementation, the proposal suggests an individual monetary transfer covering basic (normalized) food necessities. This first step would be implemented in 20 years, and according to four sub-stages (extending coverage every five years), accounting for residency (urban/rural), age and sex. On a second stage, and for another 20 years period, basic income would be gradually distributed until normalized basic needs are met for all people. The purpose being to meeting all Mexicans basic needs by 2050.
Araceli Damián and her partner Norma Colín have calculated both costs and benefits for this kind of gradual basic income implementation in Mexico. Costs are associated with extra fiscal efforts to finance such a policy, while benefits also include avoided costs with public health, safety and social security.
For the first step of the proposal’s implementation, covering basic food necessities, an individual amount of 1765 Mexican Pesos per month (92 US $/month) would be enough. That would also include a 15% margin for affording conservation, preparation and consumption of food. According to the sub-stages referred above, priority would be given to rural population, elderly and children, which are already covered in part by existing social assistance programs. Coverage of (adult) women would also take priority over (adult) men, due to known structural disadvantage gaps and the need to reduce women’s economic dependence from men.
Araveli Damián. Credit to: El Colegio de México A.C.
The basic food needs coverage on the first stage would reduce poverty substantially, right from the start. Calculations show that total poverty could be approximately cut in half (72.7% in 2014, compared with 39.5% of the total population, with all four sub-stages of the first implementation step completed). This program would not particularly affect the higher income brackets parts of the population, while reducing extreme poverty almost down to zero (from 36.3% down to 0.7%). This step would represent 13.2% of the gross national product (GDP) if implemented today, which is below the OCDE countries average of 21.9% of GDP spending in social protection. Implementation costs would rise gradually, from 1% of GDP if starting this year (2018), up to 9.4% of GDP after 20 years.
However, according to Araceli and Norma calculations, a full basic income for Mexico, at this moment, would represent around 54.4 % of all state revenue. For the food coverage partial basic income, on the other hand, several financing sources are identified (values per year): savings from restructuring present-day social security (at all levels of government, in about 7000 million Pesos (360 million US$)), cuts in governmental overspending (around 697 000 million Pesos (35 800 million US$)), reduction in fiscal evasion (accounting for more 484 000 million Pesos (24 900 million US$) and progressive fiscal reform (there is room for incrementing fiscal collection, from present-day 19.6% GDP, up to at least 25% GDP).
The study argues that this food coverage basic income would help stabilizing gross demand, particularly among the poorest. This stimulates a better use od existing resources, without rising operation costs for companies, while considerably reducing inequality and poverty. It is also foreseen that implementing basic income in Mexico would increase employment in at least 3%.
Finally, Araceli and Norma propose to rewrite the Mexican Constitution in several articles, highlighting the following addition to article 4th:
“Every person, since birth, has the right to a universal basic income. The State will guarantee this right through monetary transfers, which value shall be enough for all people to reach a dignified minimum quality of life. The Law shall state the amount, periodicity and transfer method, as well as a program for its roll out in a gradual fashion.”
More information at:
(in Spanish)
“Informe de Evaluación de la Política de Desarrollo Social en México 2014 [2014 Social Policy Evaluation Report]”, Consejo Nacional de Evaluación de la Politica de Desarrollo Social (Coneval), February 2015
Araceli Gonzaléz and Norma Colín, “Que reforma y adiciona los artículos 4o. y 73 de la Constitución Política de los Estados Unidos Mexicanos, suscrita por las diputadas Araceli Damián González y Norma Xóchitl Hernández Colín, del Grupo Parlamentario de Morena”, Gaceta Parlamentaria 4864-IV, 12th September 2017
by Andre Coelho | Apr 24, 2018 | News
World Bank building. Picture credit to Financial Express.
The World Bank has released a draft report, published on the 20th of April, titled “The changing nature of work”, in which basic income is suggested as policy to “be read through the lens of ‘progressive universalism’”. This progress to a universal system should depend, according to World Bank analysts, on “basic social insurance” and also on a reliance on “flexible labour markets”, in a relationship that would not do without, though, targeting social assistance schemes.
The reason for maintaining conditional social assistance is, in this context, to “prioritize those at the bottom of the [income] distribution”. This maybe contrary to the (universal) basic income principle, but World Bank analysts consider important to identify those “who are the most vulnerable, where they live, and how vulnerable they are”. To address rising inequality and profound changes in the nature of work in the next few decades, basic income-like schemes are seen in this report as having “pros and cons”, which “may address challenges in coverage and take-up programs”. The advantages referred relate to more coverage and reduced stigmatization, but at the same time warnings are made to new possible challenges in administrative ruling and financing.
The report underlines the need to relax strict work regulations, stating that “stronger social protection systems can go hand in hand with more flexible labour markets”. A particular concern for labour costs to firms is expressed, especially when compared to technology. The World Bank’s view is that labour costs should generally go down (including unemployment benefits and minimum wages), associated with a “reformed social assistance and insurance systems”.
On the other hand, basic income – in the report often stated as “guaranteed minimum” – “may also ameliorate possible work disincentives”. That is clearly connected with the usually known as “poverty traps”, where people choose to remain eligible for social assistance, rather than risk going into formal employment and end up with less money (due to taxation). It is also linked to reduced administrative costs. Moreover, the report recognizes the importance of maintaining typical welfare services, like public health and education, and be careful in scrapping existing benefits, as some are not as prone to be immediately replaced by a basic income.
From a definition standpoint, World Bank analysts defend that basic income “is a process that serves the poor first, it recognizes that wider coverage is desirable (…) and allows countries to claw back benefits from the rich.” However, in their view, the progressive system envisioned should be a three-legged stool, as mentioned above: basic income, to cover “against catastrophic losses”, mandated social insurance, to “achieve an adequate level of savings”, and market-based voluntary savings, to complement the previous two.
Historically, the report recognizes, conditional benefits have gone a long way in achieving social security in many regions, both high and low income. That, combined with generally low uptake rates (60% in high-income countries and 20% of the poorest households in low-income countries), shows that there is room for improvement, although it remains unclear how conditional and unconditional social assistance should play out together, given this context, in the near future. Also, for financial reasons, the report advises low income countries to increase coverage (estimates put the elimination of poverty on a double-digit spending percentage relative to GDP, for those countries) of existing programs and enhance delivery platforms, instead of opting right now for a basic income. As far as financing is concerned, a particular emphasis is put on taxing “superstar corporations”, limiting their ability to escape taxation through loop-holes and tax havens, plus levelling the tax grounds between them (e.g.: Google, Facebook and others, which are usually less burdened with taxes than most other companies) and other companies. Eliminating energy subsidies, introducing or expanding carbon taxes and imposing inheritance or estate taxes are also possible routes for funding the “new social contract”, as envisioned by World Bank analysts.
More information at:
World Development Report 2019 Overview, “World Development Report 2019: The Changing Nature of Work”, The World Bank, 20th April 2018
by Tyler Prochazka | Apr 4, 2018 | Opinion
The Basic Income Asia Pacific 2018 conference signaled a feeling of growing momentum of the basic income movement in Asia Pacific, particularly in Taiwan.
Over 100 attendees filled the two day conference in Taipei, along with thousands of viewers of the online livestream and simultaneous translations. The speaker roster this year featured an extensive list of international and Taiwanese scholars and personalities.
Enno Schmidt, the 2016 Swiss referendum leader, and Sarath Davala, the leader researcher for UNICEF’s Indian basic income trial, led the keynote speeches for day one and day two respectively.
Davala said he felt “electricity” during the conference.
“The UBI Asia Pacific Conference is an important milestone in the basic income movement. It is a high voltage moment that we in Asia will talk to our children about. The energy in the conference was amazing, and I was inspired to see young women and men from different universities in Taiwan all fired up about the idea of basic income,” Davala said.
Schmidt said it was clear the Taiwanese group had put in a lot of effort since last year’s conference.
“At this year’s UBI Asia Pacific Conference, it was noticeable that the UBI team had already been working for a full year. Sarath Davala from India gave a rousing speech, and Patrick Havermann from the United Nations Development Program in Asia would like to make the entire UN network available to spread the idea of the Basic Income,” Schmidt said.
Taiwanese media emphasized the conference’s focus on Taiwan’s recent changes to the referendum law, which has opened up the possibility for a basic income referendum in Taiwan.
Taiwan’s Digital Minister Audrey Tang opened the first day of the conference, noting that while she believes more research should be done on basic income in Taiwan, she supported the spirit of discussion at the conference.
“Indeed, to build a sound re-distribution mechanism to improve human welfare and equality — this is a timeless subject that needs continuous review and revisit,” Tang said.
The UN Development Program (UNDP) Asia Pacific Advisor Patrick Haverman, who has been leading an effort to work with regional governments to research basic income, opened the second day of the conference.
Haverman held a series of round-table discussions with Chinese scholars and officials on the possibility for a pilot program in China.
“In my work with UNDP, I have helped establish round-table meetings on basic income across the Asia Pacific with other UN agencies, academics, and government officials to start a discussion about UBI and explore the possibility of piloting an basic income project,” Haverman said. “The Basic Income Asia Pacific conference is good way to exchange information and to discuss how potentially UBI can address some of the most pressing challenges of our time, like inequality and automatization potentially taking over some of the current jobs.”
UBI Taiwan also presented the current state of their research on both days. The research group said their main focus is creating a framework for a universal Partial Basic Income (PBI) that would gradually phase into a full basic income over a decade. The English overview of their research can be found here.
The proposal would increase taxes by five percent of Taiwan’s GDP and could provide 3,000 NTD ($102 USD) to every Taiwanese citizen.
Jiaguan Su, UBI Taiwan’s Research Director, said the scholars who had met with the research team to discuss the national proposal were “impressed,” and that their main takeaway is that the proposal must emphasize the values of UBI.
“The most important lesson we took from the conference is we must promote the core values of UBI Taiwan through the national proposal. Namely, UBI is for everyone, not just a specific group of people. Our research should focus on this value in order to demonstrate UBI’s ability to promote democracy and human rights in Taiwan,” Su said.
Jason Hsu, a KMT (Nationalist Party) legislator in Taiwan’s Legislative Yuan, spoke at the first day of the conference. Taiwan media reported that Hsu is considering raising the subject of basic income with large Taiwanese companies.
James Davis, a Columbia University student and UBI Taiwan Field Research Director, interviewed Andrew Yang, the 2020 US presidential candidate running on a basic income platform for the conference. Yang is ethnically Taiwanese and said he was excited by the discussion of basic income in Taiwan.
“UBI Taiwan is fighting the good fight. I was honored to contribute to the BIAP conference because job automation has the potential to seriously hurt Taiwanese workers – and American workers – if universal basic income doesn’t become a reality soon,” Yang said.
Davis also interviewed Qin Gao for the conference, the Columbia University professor who has written a book on China’s cash transfer program, dibao. Gao is the director of China Center for Social Policy at Columbia. Gao noted the problems and stigmatization that arise from some of the means-testing conditions on China’s cash program.
Andy Stern, the former President of the Service Employees International Union (SEIU) and former advisor to President Barack Obama, has been a consistent advocate of basic income in the United States and has provided advice and support to UBI Taiwan over the last several months.
“The clarity of UBI Taiwan’s vision and the tremendous work of its fellows is astounding. The time for universal basic income policies is now, not later. And the world is lucky to have UBI Taiwan on the vanguard of the global debate, designing UBI policy in practical, politically feasible ways,” Stern said.
National Chengchi University (NCCU) and National Taiwan University were the locations for the event this year. NCCU’s International Master’s Program in Asia Pacific Studies (IMAS) was the main organizer for the event. UBI Taiwan provided the volunteer team.
The U.S. State Department’s Critical Language Scholarship program provided a grant through its Alumni Development Fund to support the event to Prochazka, Elyse Mark, and Davis.
Tyler Prochazka, UBI Taiwan’s co-founder, was the director for the conference along with Dongyan Wu, UBI Taiwan’s Public Relations Director. Prochazka and Wu will appear on Taiwan television in April and May.
Ping Xu, UBI Taiwan’s co-founder, said she was excited by the results of the conference, particularly the connections made between different opinion leaders from around the region and within Taiwan.
“It was great success to have many influential opinion leaders from political, medical and social fields participate in the conference. This was a brand new milestone to help build the UBI movement in Taiwan,” Xu said.
Davala said the conference was a positive sign for the future of Taiwan’s UBI movement.
“UBI Taiwan, within a short period has been able to inspire and mobilize hundreds of students to stand up for an idea that is often dismissed as Utopian and impractical. Taiwan could very well be the first Asian country to go for a referendum on Unconditional Basic Income,” Davala siad.
The livestreams and simultaneous translation broadcasts can be found on UBI Taiwan’s Facebook. For the conference’s Twitter stream, go here.
