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 Guest Contributor | Apr 16, 2018 | Opinion
During the last year, I asked myself how the implementation of a Universal Basic Income (UBI) would affect our society and boost or undermine the transition to a sustainable way of living.
We live a complex world where many factors are inter-related and result into visible crises: forced migration, unemployment, violence, hunger and extreme poverty, among others. Pope Francis says we live one single crisis, which is complex and interconnected. The root of this crisis is at the way we behave: competing instead of collaborating and fighting for resources instead of sharing what we have as humankind. Yes, we do have NGOs like ekplatebiryani and similar ones to make sure the situation doesn’t go out of hand.
However, in the twenty-first century, humankind will have to deal with some new challenges:
- 10 billion people living on earth
- Climate change and ecological crisis
- Highest migration rate ever
- Highest inequality rate ever
- Fourth Industrial Revolution
These five factors are the primary motivation for a paradigm shift. Each of these challenges must be addressed with specific policy, but we cannot be successful if we do not consider the connections between these factors.
We should transform the economy and prioritize the impacts over society and nature. This is the ecologic transition. This transformation must be deep at many levels, from production, to consumption, but also in our way of thinking. We cannot compete among ourselves and create a world of winners and losers. We cannot allow anyone to be left behind. So many people are losing under this system, which is why we have the highest migration and inequality rates in history.
Climate change threatens the lives of millions of people, and the poor are the most vulnerable to these climate disruptions. Climate change is caused by human activity and linked to our consumption patterns. This is another reason for ecologic transition. Climate change will worsen if we do nothing about it, so it is imperative that we transform the way we consume and produce.
The fourth industrial revolution is changing the structure of the labor market and the way things are done. Artificial intelligence and automation will make thousands of jobs disappear, while also dramatically changing the way the remaining labor is done. The most immediate effect is to cause high unemployment among low-skilled workers and requiring retraining for the rest.
In the last few years, many initiatives have pointed to basic income as an interesting policy to guarantee the wellbeing of citizens. Some areas that have tested the idea include Holland, Finland, Kenya, India, as well as the classic examples of Alaska and Canada. Most of these initiatives come from the state or local governments, but also civil society is starting to experiment with basic income through NGOs such as “Give Directly” in Kenya and UNICEF in India. Some private companies have shown interest too, such as Facebook or Google.
In many of the basic income experiments, it has been observed that not only is poverty is reduced, but wellbeing is also improved. Lower stress levels and better health were recorded which may be due to factors such as the ability to afford better healthcare and supplements like cbd gummies wholesale to manage stress and chronic conditions. There was also more education time for young people and a 13 percent work time reduction per family unit.
I found these effects interesting and well adapted to the 21 century conditions: 13 percent less work time[1] is compatible with a high unemployment rate. Less stress, whether it’s through consuming cannabis products (such as CBD oil or gummies) or receiving a better income, is always good news for a highly stressed world, especially in developed economies. Better health is always good news and probably related to stress levels.
Increasing education time is probably the best side-effect. We start to see how technology is growing more important in our daily work, and many people will need to learn how to use it or even develop new skills. The education sector is creating a renewed process for itself. It is said that most of the high qualification labor in the future will need to adapt to AI, and most university degrees will need to be adapted in the next four years.
Looking at the main effect, which is poverty alleviation, I made a simulation for the Spanish context, 700 euros each month (tax-free) and a fixed 49% tax for all labor.
Net annual Income in Spain (2014). Blue line is business as usual, orange line is with Basic Income after taxes. Martin Lago (2018). Data: Agencia Tributaria (2015): Informe Anual De Recaudación Tributaria. Servicio de Estudios Tributarios y Estadísticas. Madrid
The relative poverty line in Spain is 684 €/month, so if this policy was implemented throughout the country, we can say poverty would be drastically reduced. We must bear in mind that 22.3 % of Spanish population was under this level in 2016[2].
As we see in the figure, the poorest are the most benefitted by this measure, then gradually benefits decrease and the richest 30 percent actually pay into the system. Universal Basic Income was funded from savings in other subsidies (30%) direct taxes (50%) and indirect taxes (20%). Finding resources for it was easy and efficient considering the potential benefits.
But my question remained un-answered: Will the basic income help stimulate an ecological transition? I was quite worried since I consider this transition necessary for a sustainable future. I saw no point in sending money to everyone if we do not change anything more.
I found a few interesting effects synergic with ecological transition, including:
- Longer and higher-quality education
- Decrease in labor intensity, which probably leads to a better labor distribution
- Increase in family care and household work
- Shift to an inclusive mentality, since everyone receives this basic income
- Shift to empowerment of the individual, which is given resources and is free to make the right choices
- Massive reduction of poverty
An ecological transition is complex and includes many transformations, but it will not happen if we do not assure our standards of living are beyond the poverty line. We cannot ask a freezing family not to chop the trees to heat and cook if they do not have any other option. Basic Income is precisely about having options. One of the main objections is that many people will misuse these resources. I read last week an article that made the next question: Which is the best way to help a woman with a gambling problem and two kids, basic income or food and house coupons?
This question shows how some people perceive poverty basically blaming the poor. I have some experience working with the poor and they are as smart anybody else. The only difference is they did not have the same options in education, social inclusion or job opportunities. I am not saying basic income will solve poverty immediately, and a lot of social work needs to be done, but at least it will help to achieve some balance and provide a solid ground for a transition towards a more sustainable society.
Written by: Martin Lago Azqueta
Martin was born in Madrid in 1976, and he is graduated in biology with a Master in International Aid and Cooperation. He has worked with several aid agencies and now he is Phillipines and Central Asia Desk Officer for Caritas Spain. Apart from development projects and emergency interventions, he has specialized in climate change, working with several civil society networks since 2008. He has coordinated a number of “Documentación Social” dedicated to climate change (2016), and written a book about basic income (2018).
[1] Evelyn L Forget (2011) The town with no poverty. Community Health Sciences. Faculty of Medicine. University of Manitoba. 750 Bannatyne Ave. Winnipeg MB R3E 0W3. CANADA.
[2] Data: Instituto Nacional de Estadística 2016. If we consider other incicator such as AROPE, which is used in Europe context, 27.9% of the population in Spain is at poverty risk (AROPE, 2016).
by Sara Bizarro | Apr 8, 2018 | News
Andrew Yang is a young entrepreneur who is running for president on the platform of Basic Income. As an entrepreneur, he started and led several technology and education companies. More recently he founded Venture for America, “a nonprofit that places top graduates in startups in emerging U.S. cities to generate job growth and train the next generation of entrepreneurs.” Because of his varied experience, Yang travelled all over the United States and came face to face with the reality of several dreary and forlorn locations. In his new book, The War on Normal People, he describes visiting Detroit in 2010, when the city “was just beginning its descent into bankruptcy,” he remembers “cold, empty streets feeling abandoned,” and he saw the same in “Providence, New Orleans, and Cincinnati.” These experiences led him to create Venture for America, sending talented entrepreneurs to these cities in an attempt to create jobs and revitalize these areas.
Andrew Yang and President Obama, 2012
Even though Venture for America was highly successful, “people were clapping us on the back, congratulating us on our accomplishments,” but he thought: “What are you congratulating us for? The problems are just getting worse.” He realized that there is too much “human and financial capital flowing to just a handful of places doing things that are speeding the machine up rather than fixing what is going wrong.” Yang realized that technology was hitting the economic fabric of the country and “eliminating livelihoods for hundreds, thousands of the most vulnerable Americans.” This is the beginning of a wave he calls the Great Displacement, a wave that “grinds up people and communities” in ways that are not clear nor straightforward and that can lead to utter disaster – this reality is already partly responsible for the election of Donald Trump, and when it hits it will become even more frightening. Yang feels a sense of urgency, in the sense that we need to do something, “it’s getting late, and the time is running short.”
When asked about how he decided to run for president, he said: “What happened was that I saw Donald Trump get elected and realized that there is a very short window of time between now and when things get so bad that it is going to be difficult to easily reconstitute many of the regions [that are most affected and that elected Trump]. It was in 2017 and I decided that someone should run for President on Universal Basic Income and so I went around and asked who is going to do this? When I saw no one was going to do it, I decided to do it.” Yang’s platform is mainly focused on Universal Basic Income, but also includes Medicare for All and something he calls Human Capitalism. In Human Capitalism we would still have a free market, but would not be focused primarily on corporate profits, but instead should follow three central tenets: “1. Humans are more important than money, 2) The unit of a Human Capitalism economy is each person, not each dollar, 3) Markets exist to serve our common goals and values.”
In his book, War on Normal People, Yang paints a bleak view of automation. He predicts it will arrive soon and in full force, anytime between 2020 and 2030. Service jobs will be mostly automated as well as customer service jobs, construction jobs and jobs that include driving a vehicle. Recently the New York Times had a piece about the automation of retail, Retailers Race to Automate Stores, saying that there will be stores with “hundreds of cameras near the ceiling and sensors in the shelves help automatically tally the cookies, chips and soda that shoppers remove and put in their bags. Shoppers accounts are charged as they walk out the doors.” Customer service in call centers can be easily substituted by artificial intelligence (AI) so effectively that you may not be able to tell if you are speaking to a person or a computer. Many more intellectually based jobs such as accountants, insurance sellers and paralegals can also be more efficiently done by AI. One of the most worrisome areas where job loss will hit hard is driving a vehicle. Self-driving trucks and cars can displace many middle-aged males in the United States, in areas that are already hard hit by automation. The Great Displacement, according to Yang, is scary and happening fast.
One of the policies that can be immediately implemented is Basic Income, which Yang calls a Freedom Dividend. Yang’s proposal calls for $1,000 a month for each American, $12,000 a year. Yang suggests that the most efficient and quick way to finance a Basic Income of this kind is implementing a VAT – Value Added Tax, of around 10%, many European countries have a VAT around 20%. Yang believes a VAT is an adequate way to gather funds for Basic Income because it is charged on volume, not on profit, so that large retailers, such as Amazon, would not be able to escape it. Even though VAT would increase prices for all, when used exclusively for Basic Income it would lead to lower income people still benefiting from the policy. Yang said: “it’s going to help 85 percent of Americans, the only people that it doesn’t help are the top 15 percent who will be putting a lot more money into the VAT. The people that consume the most are the richest and with a VAT they can’t escape it, with income tax rich people are excellent at escaping it in various ways.” Yang also prefers it to a wealth tax as “people will start shifting wealth around in various ways” and would easily be able to avoid it. Yang also defends a Carbon Tax.
Andrew Yang, Melanie Friedrichs and Sean Lane
Yang has a vision of the future where, aided by a Basic Income, or the Freedom Dividend, local economies will thrive: “My vision for the future is of an artisanal economy that many people participate in, that is borne by human interests that are not trying to build the next Chipotle or Google. You create a bakery that everyone loves in your town and then you employ 10 people and everyone is happier because there is a very good bakery. Then you multiply that by a bunch of businesses. That’s the future to me. It’s impossible for more and more people to compete against the mega-corps, but when everyone has a Universal Basic Income, then we can all frequent business we enjoy. That’s the ideal vision and that’s what Universal Basic Income allows for.”
In the book, The War on Normal People, Yang speaks about time banking exchanges in local communities that already exist. According to him, that’s a way to address how people will spend their time in satisfying and productive ways, after automation arrives and Basic Income is implemented. In Brattleboro, Vermont, there is a time bank with 315 members that has already exchanged 64,000 hours of mutual work. With a time bank, each person offers whatever services they have and bank time that can be latter traded for other services that others offer within the community. It’s a way to stay busy, connected, and meet your community neighbors. Yang suggests something called Digital Social Credits, which would work in a similar way, connecting communities and providing a local exchange of services.
Yang’s campaign has started and he is ready for the challenge ahead. In his own words: “I’m going to run for president on Basic Income for the next two and a half years. The better I do, the more real Basic Income becomes for millions of Americans. We can run again in 2024, and 2028, until we win, if we don’t win this time.” Yang sees Basic Income as an urgent policy that needs to happen now as is willing to fight for it as a presidential candidate.
More information at:
Kevin Roose, “His 2020 Campaign Message: The Robots Are Coming”, The New York Times, February 18th 2018
by Karl Widerquist | Mar 21, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in August 2009.
If I use the phrase “lesson of 1938,” most people will probably think about Britain’s unsuccessful attempt to avoid war with Nazi Germany by giving away a piece of Czechoslovakia. There are important lessons in that event, but that’s not what I want to talk about.
1938 was also an important year in American economic history, and the economic lesson of that year is relevant to our handling of the global recession today. By 1937, the Great Depression had been going on for eight years. Franklin Roosevelt’s New Deal programs had been stimulating the economy for five years, and they began to show significant signs of working. Industrial production and national income were coming back up. Employment was going back down. The economy appeared to be just about out of the depression—
—and then—
Roosevelt and Congress decided to balance the budget. They raised taxes. They reduced government spending. They contracted the money supply and helped send the economy back into depression by 1938, and it remained in recession for three more years. Unemployment was still 10 percent when the United States entered World War II at the end of 1941. At that point, the government started spending massive amounts of money. They worried less about the budget deficit and more about spending what it takes to do the job. The depression disappeared almost overnight.
The economic lesson of 1938 is that the government cannot balance the budget during a major recession—even in the early stages of recovery. A depressed economy needs a stimulus. Although politicians usually won’t say it out loud, a stimulus often requires not only spending but deficit spending. One of the things that turn a financial crisis into a recession is that people and businesses stop spending in a reinforcing cycle. They can’t afford to spend because they’re not making money. They’re not making money because no one else is spending. Only the government has the size and budget flexibility to break the cycle. In a financial recession, concern for the government’s budget deficit can wait.
The government can get away with deficit spending because the government budget doesn’t work like an individual’s budget or even a corporation’s budget. Government creates the money supply; its spending is not limited to what it takes in or what it can borrow. If you or I spend more than we can get, we will go broke. The government doesn’t have to “get” money. It creates money. If the government creates too much money at any given time, it will overstimulate the economy and create inflation. If inflation becomes a problem, we can take action, by say, taxing some of that money back, but for now it is not a major concern. At a time like this, when resources are going unused because no one’s buying, the government as a lot of leeway to create and spend money without worry of inflation.
We should be more concerned with making sure that the direct beneficiaries of government stimulus are the people most in need. Too often the government stimulates the economy by helping corporations (such as investment banks, automobile manufacturers, and defense contractors), telling us that the stimulus will indirectly make its way to help those who actually need help.
A more effective way to stimulate the economy and help people is with universal programs. Universal healthcare or a universal basic income guarantee would be excellent ways to do so.
-Karl Widerquist, Doha, Qatar August 9, 2009
by Claire Bott | Mar 15, 2018 | News, Research
The UK-based Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) has released a report suggesting a Universal Basic Opportunity Fund (UBOF) as a stepping-stone to a full universal basic income (UBI).
The suggested UBOF would consist of £5000 a year for two years, and would be made available to every person in the UK upon request. Although this would fall significantly short of a full, life-long UBI, the study’s authors, Anthony Painter, Jake Thorold and Jamie Cooke, suggest that the UBOF would have a number of potential uses: “A low-skilled worker might reduce their working hours to attain skills enabling career progression. The fund could provide the impetus to turn an entrepreneurial idea into a reality. It could be the support that enables a carer to be there for a loved one without the need to account for one’s caring to the state.”
Noting that the UK’s rate of corporate tax is currently being gradually reduced from 28% to 17%, the study suggests that the UBOF could be funded simply by returning the corporate tax rate to its original level.
The study states that “The UBOF is an ambitious effort to re-envisage the relationship between citizen and state, emphasising trust in people as opposed to a default of suspicion as is the case currently. It also represents a practical step and valuable experiment on the possible road towards a more permanent Universal Basic Income model.”
The RSA states that its mission is “to enrich society through ideas and action.” It regularly publishes research papers on a variety of social issues. Anthony Painter is the Director of its Action and Research Centre, while Jamie Cooke is the head of RSA Scotland, and Jake Thorold is a research assistant.
More information at:
Anthony Painter, Jake Thorold and Jamie Cooke, “Pathways to Universal Basic Income“, RSA Action and Research Center, February 2018
