by Kate McFarland | Oct 26, 2016 | News
The government of India is beginning to seriously consider a universal basic income, as recent remarks by Chief Economic Adviser Arvind Subramanian reveal.
Arvind Subramanian CC BY-SA 2.0 PopTech
As previously reported in Basic Income News, Arvind Subramanian, the Chief Economic Adviser to the Government of India, has revealed that the pros and cons of universal basic income will be studied as part of the next Economic Survey–an annual report on developments in India’s economy which is prepared by the Ministry of Finance and presented to Parliament.
Since this time, Subramanian has reaffirmed his commitment to investigating UBI. In addition, he had divulged further details of the proposed UBI program that might be considered by the government of Prime Minister Narendra Modi.
First, in an interview with Rediff (published on September 29), Subramanian reaffirmed that universal basic income will be a theme of the Economic Survey. Asked what a UBI would entail, he responded, “We are still working on it. These are issues we have to think about. This is an idea that has a lot of promise, but also challenges.”
A few days later, while addressing at audience at prayer meeting at Gandhi Peace Foundation in New Delhi on the occasion of the birth anniversary of Mahatma Gandhi, Subramanian elaborated upon some of the challenges associated with the implementation a UBI. As described in a report in The Indian Express (dated October 3), he laid out several objections that Gandhi might have taken to UBI, before responding with considerations in favor of the policy proposal.
At the same event, Subramanian dropped hints about the type of policy that the national government might be considering, mentioned “a proposed new scheme through which the Narendra Modi government is considering giving unconditional cash transfer of about Rs 10,000-15,000 on an annual basis to each and every citizen in the country” [1].
It is not certain exactly what programs and subsidies the unconditional cash transfer would replace–but it is clear that they would be numerous. The Indian Express quotes Subramanian as saying: “[T]oday the government spends a lot of money on schemes to help the poor. Today there are at least 1000 schemes that the Central government runs for the poor… It is not clear that the money actually reaches the poor. So the question is whether the UBI is a more effective way of reaching the poor that the current schemes that government employs.”
Although India has played a significant role in the basic income movement in recent years–Madhya Pradesh was the setting for two successful pilot studies conducted between 2011 and 2013–the recently expressed interest from Subramanian and the Modi government is a turning point. It should be noted that the government’s interest in UBI was not a response to the pilot studies conducted by Self Employed Women’s Association (SEWA) and UNICEF, but arose independently. Indeed, neither Subramanian nor any other government official has referred to these these pilots or the book they spawned (Basic Income: A Transformative Policy for India) in their public comments on basic income–as sociologist Sarath Davala, founder of the India Network for Basic Income (INBI), reports in comments to Basic Income News.
Before Subramanian shifted attention to UBI, the government had discussed direct benefit transfer (DBT) programs, intended to reduce efficiencies in the distribution of aid by transferring cash subsidies directly to the bank accounts of beneficiaries. To the Indian government, UBI, like DBT, is attractive primarily as a pragmatic means to reduce bureaucracy and administrative costs. For similar reasons, some states of India are already experimenting with replacing India’s largest welfare program, the food security program–widely regarded as inefficient and ineffective–with a cash transfer. Correspondingly, recent political discourse on UBI has remained focused on welfare delivery and efficiency rather than (for example) individual rights or social justice.
INBI, BIEN’s Indian affiliate, has expressed support for the inclusion of UBI in the Economic Survey and offered to assist the government in this project (such as by providing data and qualitative assessments from the earlier pilot studies); however, at the time of this writing, it has received no response. Additionally, INBI is planning a national conference in Delhi to take place in late March 2017, at which it will present its position on UBI to the national government.
According to Davala, Subramanian’s recent remarks are significant because they imply that the UBI is becoming mainstream and “no longer a crazy idea”. Speaking as part of INBI, he says “our job is made easier” by the attention and legitimacy that Subramanian and others are bringing to UBI.
At the same time, however, Davala expresses surprise at the “radio silence” from traditional opponents in the face of the announcement of the inclusion UBI in the Economic Survey. In India, many on the Left oppose UBI, which they see as the government “washing its hands” of its responsibility to directly assist those in need (e.g., through transfers in-kind). Opponents from the Right, meanwhile, tend to worry that the policy wastes money on the “undeserving” poor and disincentivizes work. Davala notes, however, that both types of critics have largely remained silent despite the recent upsurge in interest in UBI.
Davala himself sees two major sources of complication that pose challenges to the implementation of a basic income in India. First is the question of universality. In a country of 1.3 billion people, a fully universal basic income is likely to strike many as prohibitively costly, and a more feasible approach might be what Davala describes as “targeted universality”: the distribution of unconditional cash transfers to everyone within a certain sub-population (e.g. a universal income for all children or all seniors, for all individuals within a certain geographical region, or all members of a certain caste or tribe). While Davala agrees that universality is the ideal goal, he believes that it is likely to be most realistic to approach it incrementally, with such targeted universality adopted as an interim strategy. On this point, though, he notes that even complete universality will now seem less “crazy” since India’s Chief Economic Adviser is seriously discussing is it.
The second challenge concerns question of replacement: what existing programs will the UBI replace? Here, Davala is less encouraged–and more concerned–by Subramanian’s recent comments, since it’s unclear which of the “1000 or more schemes” he would propose to replace, and a basic income that replaces too much might leave many of the most vulnerable individuals worse off. According to Davala, INBI’s position is that “the state should combine Unconditional BI with public provisioning of certain basic needs such as education, health, infrastructure, transportation, etc”. He goes on, “A large number welfare schemes that have a well established record of failure should be removed. The crux of the Indian debate will revolve around this. And rightfully so.”
[1] 10,000-15,000 Indian Rupees (Rs) is equivalent to about 134-200 EUR or 150-225 USD. (For comparison: in a 2013 survey, the median per capita income in India was equivalent to about 616 USD.)
References
Indivjal Dhasmana, Sanjeeb Mukherjee and Arup Roychoudhury (September 29, 2016) “With inflation slowing, there is space for monetary easing: Arvind Subramanian” Rediff.com.
Avinash Nair (October 3, 2016) “Implementation of Universal Basic Income has many challenges: Arvind Subramanian” The Indian Express.
Sarath Davala, INBI (personal communication)
Reviewed by Sarath Davala
Cover photo: “India- Gujjars the nomadic tribe” CC BY-NC-ND 2.0 sandeepachetan.com
by Tyler Prochazka | Oct 6, 2016 | News
Iceland is poised to elect the Pirate Party as one of the two largest parties in the new parliament. The Cato Institute recently reported that this could be great news for Basic Income advocates.
The Pirate Party introduced a proposal last year to research the feasibility of a basic income as a replacement to the existing welfare system. This proposal falls in line with the Pirate Party’s overall focus on direct democracy and technology.
However, Halldóra Mogensen, Deputy MP of the Pirate Party of Iceland, said in an email exchange with Basic Income News that the Cato Institute “seems to be taking quite a leap.”
“We (the Pirates) have a proposal in the welfare committee proposing that UBI be looked into as a possible substitute to the current welfare programs but that’s the extent of it. Who knows what will happen in the future, but as of now, there are no concrete plans,” Mogenson said.
The Pirate Party is known for pushing for accountability in government and using technology to engage civic society. Iceland’s move toward the Pirate Party coincides with their growing distrust of institutional parties. A basic income could be a mechanism for Iceland to achieve both of the Pirate Party’s goals by reducing bureaucracy and allowing individuals to more freely participate in civic society.
As the Cato Institute notes, the current welfare system in Iceland deters work and a basic income may “reduce these work disincentives” depending on how it is constructed.
by Florie Barnhoorn | Sep 15, 2016 | Opinion
Last August 21, the Dutch woke to find an interesting article in their morning paper, written by Mrs. Annemarie van Gaal. In her weekly Monday column she suggested abolishing the AOW and all other income schemes for individuals above 60 years of age, with their unworkable obligations, bureaucratic regulations, and fees and punishments. Instead, AOW recipients would receive an unconditional basic income of €1100 to €1200 a month. This would greatly decrease the seriousness in which they need to take these 9 considerations to make before you retire into account, decreasing worries and stress for the elderly.
For many people, the article came as a surprise, because it was published in the daily journal, De Telegraaf (The Telegraph), which is legendary for its right-wing liberal and right-wing populist bias. And a recent poll among right-wing voters revealed that the majority do not approve of the idea of a basic income.
The Dutch abbreviation ‘AOW’ means ‘Algemene Ouderdomswet‘ – the 1956 law installed a state pension for the elderly, above the age of 65. From 2016 onwards, the retirement age is expected to increase quickly: to the age of 66 in 2018, and to 67 in 2021. And as of 2022, entering the AOW scheme will be linked to the average life expectancy. This brings to attention another point, and that’s life insurance. People heading towards retirement should be considering setting up a life insurance policy with help from companies like az money, and they should be doing this well before they are claiming a pension. With the uncertain health effects of a prolonged working life, seniors unfortunately need to start thinking about what will happen to their families when they die.
The plan for the increase of the pension age was agreed upon by the current coalition of VVD (People’s Party for Freedom and Democracy) and PvdA (Labour Party) in order to cut government spending. These austerity measures are expected to save the Treasury €3.6 billion by 2024. De Telegraaf was a vocal supporter of the increase in the retirement age.
Mrs. van Galen is a well-known TV personality and businesswoman. In her television program, she teaches benefit claimants how to get a job. She demonstrates how much money the candidate will earn from accepting certain kinds of work, sends him to intensive job application training, and gives him a full makeover: a new haircut, new clothes, and if necessary, new teeth. Dress for success!
Her suggested basic income plan is very appealing because it would affect two major social problems in Dutch society.
The first problem concerns the growing group of people over 60 who have lost their jobs, often in the crisis of 2008-2009, and during the austerity measures that followed.
As Mrs. van Gaal puts it:
The unemployed above 60 are not to be envied. Unemployment among this group has never been so high. Their whole life they worked hard. Now they have lost their work and as a consequence have to deal with sharply declining living standards, whereas their chances to find a new full-time job is nearly zero, so the years to come will be full of uncertainty before they get the state pension (AOW), and what at that time will be left of their saved pensions?
Despite their dire prospects, the UWV (Employee Insurance Schemes Implementing Body) requires that the unemployed over 60 continues to apply for jobs, whether they can or not. The meager allowances of those who don’t (or can’t) are cut down or withdrawn. In other countries such as America, it can become a lot worse, elderly citizens with no allowances or health care end up forgotten about, without insurance these elderly are very prone to medical emergencies, requiring the aging population to think about insurance early on in their lives. When it comes to dental insurance for seniors, PPOs are the most common insurance plan. They offer a network of preselected dentists that they can choose from. Only if they were to visit one of those dentists will they save money. Otherwise, the elderly population has minimal options when it comes to oral healthcare. Is this how it is looking for the Dutch?
But for businesses to take on an older applicant, the ten different allowances and arrangements assigned to them creates a process so complicated that it’s frequently necessary to hire a third party simply to manage the process. Creating this kind of bureaucracy in the workplace does no one any good, and is certainly no way to encourage employment.
In recent years, the Dutch government has pumped hundreds of millions of euros into job training, networking events, and other arrangements for the older and unemployed. And the effectiveness of these measures is yet unknown, says the Court of Audit, and is hardly expected to dramatically increase employment prospects anytime soon.
The second issue with AOW, is that it’s almost an unconditional income – the state pension is dependant on your living situation. If you are going to live with another person, whether it is a partner, a family member who provides care, or a lodger, you are financially punished, whereas if you choose assisted living you may receive more. And if you have little or no saved pension, pension benefits as supplements are means-tested, so to earn some extra money is nearly impossible. The healthy and elderly will not move in with their children, for example, to babysit the grandchildren, because their income will only be reduced. Strange, indeed, because it would save the government a great amount spent on medical expenses and childcare allowances.
Mrs. van Gaal:
Ultimately, a basic income is the best route for the future, so let’s introduce it on a limited scale, namely into the group aged 60 years and above, regardless of [if] they work or not, irrespective of their living conditions. [And] if you live with another 60 plus [you would] have twice that amount. Look after your grandchildren, start volunteering, help your neighbors, go traveling or take up a small job for a few hours per week. I’m sure we will [have] a much better society. All seniors will take part in society without restrictions and rules, without being cut and without compromising. How nice.
The reaction to Mrs. van Gaal’s column was overwhelming. Within a few hours she was invited onto several talk shows, and many websites took notice of the column and hundreds of comments appeared online. One site recommended appointing her as the first female Prime Minister of The Netherlands.
However, in stark contrast, some politicians reacted bleakly to the proposal. After all, they had worked hard (and were well paid) to develop and defend the new retirement pension scheme and all other relevant legislation. Coalition partners, VVD and PvdA, consider the plan too radical, too expensive and ‘the wrong solution’ to this particular problem. The VVD even said it ‘abhors’ the idea of a basic income. One of their MP’s pointed out that society should not exclude the elderly, and that according to him, that’s what a basic income does. “Then we say to the elderly: you are no longer needed and that is not true. Their knowledge and experience are highly valued in the workplace.”
Norbert Klein, the leader of the Vrijzinnige Partij (Cultural Liberal Party), a party with one seat [in the Tweede Kamer], is pleased with the ideas of Van Gaal – but the plans do not go far enough for him. He has written a memorandum that calls for an unconditional basic income for every Dutch citizen from the age of 18 onwards. On September 19th this memorandum will be discussed with members for the Committee for Social Affairs and Employment of the Second Chamber of Parliament and the Minister for Social Affairs and Employment, Lodewijk Asscher of the PvdA.
Several organizations as well are not very sympathetic to the idea of an unconditional basic income for the 60 plus. “Mrs. van Gaal acts as an elephant in a China shop,” said a spokeswoman for the Unie-KBO, the union for the elderly, “but we are pleased with all the attention [these urgent matters are receiving].” Nibud, the National Institute for Family Finance Information, considers €1100 or €1200 too low to cover all household costs.
But a huge amount of readers reacted positively and enthusiastically. “An idea which is very close to my heart”, commented someone. “Abolish the bureaucracy for 60 plus,” another responded, “finally, someone who really understands the problems of older unemployed”. Readers, too, hinted at a political career for the Telegraaf columnist. “This is a plan which a sane man cannot ignore. Better and more pleasant than the plans that are figured out by the pundits in The Hague. The government may try to increase job opportunity for this group, but now it is clear that this policy fails.”
Annemarie van Gaal:
Dutch people want a simpler society. No more complicated rules, no hassle with endless discounts or correct taxes. We want it to be simpler, easier to understand and implement for everyone. The introduction of an unconditional basic income is inevitable over time. Utopia? No, it just requires some guts of our government.
Reviewed by Cameron McLeod
by Tyler Prochazka | Aug 29, 2016 | Opinion
Gary Johnson recently told me he is “open” to the Universal Basic Income (UBI). Based on some of the comments on the story (calling me slanderous and Johnson a statist), you might think he just endorsed a socialist takeover of the government.
Understandably, there is hostility among many libertarians toward the idea of the Universal Basic Income. The UBI is not just a pragmatic step to eliminate government bureaucracy. In fact, it is a desirable policy outcome because it will likely help usher in a new era of free markets and civil society.
Much has been said on the pragmatic libertarian case for replacing the current social safety net with a UBI. Primarily, it eliminates government paternalism and enhances the efficiency of welfare delivery.
Moreover, a Universal Basic Income removes the poverty trap created by the loss of welfare benefits as individuals move out of poverty. This incentivizes recipients to remain in poverty to retain these benefits. A UBI has no such incentive and allows recipients to choose the course of action that actually provides the greatest real benefit.
Through the basic income, recipients are also fully in control with how to spend the money, eliminating welfare’s distortions on the marketplace.
Most libertarian UBI advocates take Milton Friedman’s view of the basic income, approving of it as a substitute given that government welfare already exists (and is unlikely to go away). Instead, libertarians should consider wholeheartedly endorsing the UBI as a way to expand free markets.
The last century has shown us that free markets and free trade have been the greatest source for prosperity and peace the world has ever seen. However, the free market consensus seems to be eroding at a frightening pace, even in the Western world.
Free market’s savior? The basic income.
If libertarians are being honest, free markets are the best source for lowering poverty, but they alone are not sufficient. For example, Hong Kong has the freest economy in the world, but also a good amount of debilitating poverty. While visiting McDonalds throughout Hong Kong, it was hard not to notice the McRefugees (as they are called in local media) that were sleeping at tables.
There is good evidence that conditions outside of one’s control, such as whether one’s parents are wealthy or married, have a substantial influence on one’s success.
Socialism is not the answer to the poor’s woes, as we saw with devastating consequences in the human trials of socialism in the Soviet Union, Mao’s China and still today in North Korea and Venezuela.
Instead, the answer is to open up the free market to everyone through the basic income.
Pilot programs have shown that the basic income increased entrepreneurial and market activity (among other positive social benefits, such as improved health). Individuals previously locked out of the free market can now be active participants. The understandable worry that people would stop working is not only overblown, but the opposite was actually shown to be true in Namibia, as business activity dramatically picked up.
The largest meta-analysis of cash-transfers ever further illustrated that the risk of reduced work is nil and in fact it has the potential to increase work hours and intensity. Some parents reduced work hours to care for their children, but this likely brings a positive long-term outcome to society.
Work brings dignity and the basic income does not eliminate the basic desire to contribute to society. When polled, most Americans say they would still work even with a financial windfall.
Basic income gives recipients free choice, unlocking the market’s full potential. People do remarkable things when given freedom and opportunity.
Additionally, poverty is one of the biggest factors when determining a child’s likelihood to succeed in education. Just giving parents money substantially improved their child’s educational outcomes and behavior. The same was shown under the basic income.
The basic income is not a pragmatic giveaway to socialists. It is precisely the opposite: it is the essential element for sustaining the durability and expansion of free markets.
Beyond opening up the market to new participants, it is likely that a basic income would allow society to reevaluate the necessity of a whole host of government policies.
Human beings are born with a natural inclination to be empathetic toward others. And there are individuals that are also inclined (perhaps hardwired) toward government solutions for society’s ills. No matter how effectively free markets lower poverty, there will always be calls for a government backstop.
As libertarians know, these calls for government “solutions” often do more harm than good and end up impeding the very forces that allow the free market to lift individuals out of poverty (e.g. the minimum wage).
As jobs are increasingly automated, it is especially crucial that libertarians guide political discourse toward a light-touch approach to resolve the disruption robots will cause in the marketplace. There needs to be a permanent method to alleviate the fears of the market place, rather than relying on the eternal vigilance of Congress to do the right thing.
A robust basic income would mute many of the calls for government intervention because it gives employees greater freedom to choose their employment situation, rather than being forced into employment by the threat of poverty.
The fears felt by those inclined toward government intervention would be lowered and libertarians would have a far more persuasive case to make for allowing individuals to shape the market instead of the government. Indeed, it would allow libertarians to push for removing many of the excesses of government intervention.
The Universal Basic Income is not just a pragmatic compromise to lower welfare bureaucracy. It is the essential prerequisite to usher in a new era of free markets. And libertarians would be well suited to be at the forefront of this movement.
by Kate McFarland | Aug 25, 2016 | News
Finland’s Ministry of Social Affairs and Health has drafted a bill proposing a basic income experiment to test the effects of unconditional cash payments on work incentives.
According to a press release dated August 25, the bill recommends that a basic income experiment be conducted in Finland from 2017-2018, under the guidance and direction of the Social Insurance Institution of Finland (Kela). This is consistent with previously announced plans [1].
Under the proposed experiment, Kela will provide a basic income of 560 EUR per month (equivalent to about 630 USD), exempt from taxation, to 2000 individuals who are currently receiving unemployment benefits. The sample will be randomly selected from a pool of current beneficiaries of unemployment-related aid. To prevent selection bias, participation in the basic income scheme will be mandatory for those selected.
A control group will also be drawn from this population; individuals in the control group will continue to receive their typical unemployment benefits.
According to the press release, the primary objective of the experiment is “to obtain information on the effects of basic income on the employment of persons”. In particular, the government is interested in determining whether basic income effectively reduces the incentive traps associated with means-tested benefits (e.g., unemployment benefits that are lost once the recipient finds a job). The government’s hope is that basic income will encourage more individuals to accept jobs.
Given the primary concern with employment effects, students and elderly persons are to be excluded from both the experimental and control groups.
Although the experiment is designed to test the effect of basic income on work incentives, the Finnish government is also interested in basic income as a way to “reduce bureaucracy” and to “simplify the complicated benefits system in a [financially] sustainable way”.
The amount of 560 EUR per month was chosen to ensure that no individuals would endure a net loss in support under the basic income trial. According to an article in Yle, “A full basic income that would replace existing earnings-related benefits would not be politically or economically feasible” [1].
Jurgen De Wispelaere, a basic income researcher at the University of Tampere, has provided the following commentary on the announcement:
The draft bill released today by the Ministry of Social Affairs and Health signifies a crucial next step in the development of the Finnish basic income experiment. We now not only have a clear commitment from Juha Sipilä’s government that they are proceeding with piloting the first nation-wide basic income scheme. The proposed legislation also clearly sets out the parameters of the proposed pilot scheme, which was the topic of quite a lot of speculation in the media. Assuming the bill is approved by the Finnish Parliament and it passes the scrutiny of the constitutional committee, Olli Kangas and his research consortium will spend the next months working out many practical issues to ensure the experiment can kick off as planned in 2017. For basic income advocates, however, continued engagement with key political stakeholders in Finland remains a must. This is merely the start of a political process towards a universal and unconditional basic income in Finland.
The Ministry of Social Affairs and Health will hear opinions on the proposed legislation until September 9. After this date, it will submit the proposal to Parliament. If passed, the act authorizing the experiment will go into force on January 1, 2017.
The official press release (in English) is available online:
Ministry of Social Affairs and Health, “Ministry of Social Affairs and Health requests opinions on a basic income experiment“, Sosiaali-Ja Terveysministeriö; August 25, 2016.
Olli Kangas, Research Director at Kela, has also written a blog post covering the announcement (in Finnish). In the post, Kangas explains that a partial basic income, as selected for the experiment, was the only feasible model given budgetary and time constraints.
“Kokeilulaki osittaisesta perustulosta lausunnoille“, Kela; August 25, 2016.
[1] See, for example, these previous Basic Income News stories:
Vito Laterza, “FINLAND: Basic income experiment – what we know” (December 9, 2015)
Will Wachtmeister, “FINLAND: The world’s first country with truly experimental governance” (December 18, 2015)
Kate McFarland, “FINLAND: KELA has sent preliminary report to Prime Minister” (April 5, 2016)
[2] “Basic income pilot takes shape – mandatory participation for 2,000 unemployed“, Yle; August 25, 2016.
Reviewed by Robert Gordon
Photo (“Three Smiths” statue in Helsinki) CC BY-SA 2.0 Rob Hurson
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