by Karl Widerquist | Jul 1, 2013 | Opinion, The Indepentarian
Basic income is a regular unconditional cash grant paid to all citizens without any means test or work requirement. It’s often dismissed as a utopian idea.
However, a basic income, or something very close to it, exists today in Alaska. It’s called the Permanent Fund Dividend (PFD) or sometimes “the Alaska Dividend.”
The PFD has been paying annual dividends to Alaskans since 1982 with no conditions except citizenship, residency, and the willingness to fill out a form. After following the Alaska Dividend since 1999, and I want to share six lessons that supporters of progressive economic policy should learn from what I call “the Alaska model,” but first some basic background.
In 1956, Alaska ratified a constitution recognizing joint ownership of unoccupied land and natural resources. In 1967, North America’s largest oil reserve was discovered in state owned areas on Alaska’s North Slope. In 1976, a state referendum created the Alaska Permanent Fund (APF), a portfolio of diversified assets, into which the government would invest a small part of the state’s oil revenue each year as a way to turn the temporary stream of oil money into permanent wealth. Back then, the state had no plan for what to do with the APF. In 1982, the state government finally decided to distribute part of the returns from that fund as a yearly dividend, and the Alaska model was born. The APF continues to rise with yearly deposits from oil revenue, and it goes up and down with the financial markets.
The PFD is derived from the returns of the APF’s investments. With some effort to smooth out the ups and downs, the dividend fluctuates with the markets. In 2008, the dividend (plus a onetime supplement of $1,200) reached a high of $3,269, which comes to $16,345 for a family of five. After the financial meltdown of 2008, the dividend has declined, reaching $878 per year in 2012. That’s still $4,390 for a family of five. Now that world markets have come back, the APF recently reach a new high of $46 billion. Higher dividends are likely to follow in a few years.
The APF and PFD are not perfectly designed, but they are an important and innovative example of democratic wealth existing in the world today. The APF is community-owned wealth invested in the private economy. The PFD converts some of the returns to that wealth into democratically distributed income. Together, the Alaska model is something, from which we can learn, and on which we can improve. An unconditional cash dividend of $4,000 to $16,000 per year for a family of five is significant for everyone except for the wealthiest people, and it is extremely significant for people living at the margins. It has helped Alaska maintain one of the lowest poverty rates in the United States. It has helped Alaska become one of the most economically equal of all 50 states. And during the 1990s and 2000s it helped Alaska become the only US state in which equality rose rather than fell. Alaska is doing something right, and the dividend is a part of it. Here are the six lessons from the Alaska model.
1. Resource dividends work and they’re popular
At a time when conditional social policies are under attack across the industrialized world, the Alaska Dividend continues to be extremely popular. It is sometimes called “the third rail of Alaska politics,” implying any politician who touches it dies. In 1999, a ballot initiative proposed diverting funds from the APF was rejected by more than 80 percent of Alaska voters. Think about that. It’s hard to get 80 percent of people to vote the same way on anything. But here we have 80 percent of Alaskans voting for a policy that fights poverty and promotes equality.
2. You don’t have to be resource rich to have a resource dividend.
It’s easy dismiss anything connected with Alaskan oil is an aberration, something possible only because of Alaska’s enormous windfall. But there are three reasons why nearly any political community can do what Alaska has done:
First, Alaska isn’t unusually rich. Oil transformed it from one of the poorer to one of the wealthier U.S. states, but Alaska is only the tenth richest of the states with a per capita GDP of about $42,000—only $2,500 higher than the national average. Alaska has no greater financial means than many other states and nations.
Second, the entire dividend is financed by only a small fraction of Alaska’s resource wealth. The APF is supported almost exclusively by taxes on a single resource, oil. Alaska’s taxes on oil are very low by international standards. And the state devotes only a small portion of that revenue to the APF. If Alaska devoted, say half of its potential resource revenue to the APF, the PFD could easily be five to ten times what it is now.
Third, every country, state, and region has resources—extremely valuable resources—but we don’t think of them the way we do of gas and oil because we’re so used to governments giving them away to corporations who sell them back at a profit and pay very little in taxes. Recent estimates by Gary Flomenhoft show that a resource-poor state, Vermont, could support a dividend two- to five-times larger than the PFD, if it made judicious use of resource taxes. The most resource-poor countries in the world are probably Hong Kong and Singapore, where millions of people are crowded together on a little island, and they have to import almost all their consumption goods. But these countries have fabulously valuable real estate. I wouldn’t be surprised if a tax on Singapore’s land could support something much larger than the Alaska Dividend. For the most part, the difference between being “resource rich” and “resource poor” is the difference between having the kind of resources states usually tax and the kind they usually give away for free.
3. Look for opportunities
Alaskans don’t have the dividend because they are resource-rich. They have it because some smart Alaskans took advantage of the opportunity. Common resources are being privatized all the time all over the planet. We could tax privatized resources, but the easiest place to start is at the moment of privatization. Every new well that’s drilled is an opportunity to assert community control of resources. So is every new mine that’s dug, every new reserve that’s discovered, every new smokestack that seeks to use the atmosphere as a garbage dump.
Less obvious opportunities are just as real. The US government recently gave away a huge portion of the broadcast spectrum to private companies for digital television broadcasting. If they had auctioned off leases to the highest bidder, they would have created a stream of income worth billions of dollars every year as long as broadcast exists. That was an enormous lost opportunity. Today, increased awareness about the need to do something about global warming is another opportunity. Two strategies currently being discussed, “tax and dividend” and “cap and dividend,” would make polluters pay for the damage they do to the environment and return the proceeds to everyone as a dividend. Opportunities are all around, if we look for them.
4. Think like an owner. Think like a monopolist. Think like Johnny Carson
There is a danger in the Alaska model. If everybody gets paid when we privatize resources, they might want to privatize more resources and allow more damage to the environment. The solution to this problem is that once the community demands fees for the use of its resources, it asserts ownership of those resources. Once members of the community begin to think of themselves as the owners of their environment, new opportunities open up. The community is the owner; government is the broker; business is the hired help. The owner sets the terms of rental. They can allow private exploitation of their property only with strong environmental protections attached. The right to compensation is only one of the rights of ownership—along with it comes the right to manage, regulate, and restrict access. Receiving payment for resources helps the members of the community think of themselves as joint owners of the environment with the power to insist that tenants be good stewards of the environment.
Once members of the community start to think of themselves as owners of the community’s resources, they need to realize that, as a group, they have a monopoly over those resources. Monopolists don’t sell all they can at bargain prices. They restrict supply, selling less to get higher prices. Once we think about maximizing profit from resources, big corporations can forget about bargain deals.
But we should not think like just any monopolist. We should think like Johnny Carson. Who? In the 1970s, Johnny Carson hosted the most popular talk show on American television. Because he could have gone to any network and brought his audience with him, he demanded and got a salary that made him the highest paid entertainer in the world, but he didn’t stop there. He gradually demanded more vacation time, eventually getting something like four months per year. Then, he decided to reduce his weekly workload by one day. So he worked four days a week, eight months a year, and he was still the highest paid entertainer in the world. Johnny Carson realized that his time was valuable not only when sold, but also when unsold. As monopoly owners of the commons who think of our environment the way Johnny Carson thought of his time, we could have more money coming in while we also secure larger parks, more nature reserves, less pollution, and better resource management.
5. Build a constituency
The feeling of shared ownership is one of the reasons resource dividends tend to be so popular once they’re in place. They build a large constituency who will defend the policy when attacked. Talking to Alaskans reveals a greater sense of ownership of Alaska’s oil reserves than of other state property and a greater sense of ownership of the APF than of the state’s oil reserves.
Another way way to build a constituency is through universal rather than targeted policies. It is easy for politicians to single out the recipients of targeted programs, because they are a relatively small and marginalized group, but a dividend, large enough to make a difference for the majority of the population, is much safer from attack.
A third way to build a constituency is to make policy significant. Insignificant gimmicky programs might be easier to pass, but they are also easier to cut when a less favorable administration comes into power. If a politician proposed cutting the Alaska Dividend, all Alaskans would face losing $1,000–$2,000 a year for the rest of their lives. Whether that politician was promising a tax cut or some other spending program, they would put a universal constituency of Alaskans in the position where they would sacrifice something very significant for the uncertainty that the replacement will be delivered. Alaskans care about the PFD because it makes a difference in their lives.
6. Avoid creating an opposition
Just as some policies create larger constituencies than others, some create greater opposition than others. Policies, such as the minimum wage and rent control, put most of their burden on one, specific, easily identifiable group who will probably fight the program as long as it exists. Even if financed by broad-based income tax, targeted redistribution can create an opposition if a significant number of taxpayers see it as something they’re unlikely to need.
The APF and PFD have virtually no opposition. No one has reason to feel burdened by their creation and continued existence. It’s just a pile of money that the state happens to own. No one feels infringed by it. Of course, the APF is created and continually enlarged by taxes on the oil industry, and they do try to lower their tax burden as much as they can. But they have much harder time making complaint to the public. Opposing oil royalties is like complaining that they have to pay a price for steel, trucks, or ships. It doesn’t make sense to complain about what is obviously an unavoidable cost of doing business. That’s just the way of the world. In Alaska, Norway, and some other places, the state owns the oil fields. Anyone who wants to drill must pay. And now that’s the way of the world. A good solid policy can change the way the world works.
-Karl Widerquist, Doha, Qatar, April 26, 2013
by Yannick Vanderborght | Jun 10, 2013 | Opinion
Marina P. Nóbrega – for the Municipal Council for the Citizen’s Basic Income, Santo Antonio do Pinhal, SP, Brazil
Humanity has to rescue the human solidarity that used to pervade tribal societies where wealthy was evenly shared. In our days money has to be used to that effect as great social thinkers have been preaching. In Brazil, President Lula´s law 10,835 from 2004 says that “A monthly benefit enough for the basic needs of a person will be paid equally to all. This basic income is to be instated by steps, taking care first of the most in need.” This law is still unregulated but the government, immediately after, created the successful Bolsa Familia (BF) program. Law 10,835 is unique in the world and needs to be regulated as to the steps to be taken to gradually universalize the benefit.
The Municipal Council for the Citizen’s Basic Income in the city of Santo Antonio do Pinhal has such a proposal.
Our initial proposal was to have a municipal pilot project fueled by a percentage of gross earnings from private businesses and private donations plus 6% per year from the city’s revenue. The idea was to create a fund to operate as the Alaska scheme. The Council analyzed carefully this proposal in the light of basic income principles and the practical attempts made to collect funds. We came to the conclusion that the Alaska way is impossible to succeed in our conditions besides we also do not accept that the annual and variable dividends represent the idea we have about a basic income.
Instead, we suggest that the path to Basic Income should go through 3 stages. We do not think this to be the best way for other countries but, considering Brazil’s situation, with almost 50 million under the support of the conditional BF (average of US$ 17.50 per person), we have a stepping stone to approach the final goal of including all in basic income. The steps suggested are:
Step 1 – Start the unconditional and universal basic income with all newborns in Brazil in the near future. The Council suggested that the caring parent receives US$ 35.00 per month and the same amount is deposited monthly in a savings account in name of the child, to be withdraw when he/she reaches legal age. This will be particularly valuable in two ways: it is financially viable, progressive and amenable to planning, will carry a strong symbolic value benefitting the children of the nation and pointing to a better future. This move will have a crucial educational value by giving people of all social classes time to understand the revolutionary value of a minimum income independent of work.
Step 2 – Next we suggest remove all conditionalities linked to the Bolsa Familia program. This will require that the funds for the almost 50 million involved (about 25% of our population) be doubled. We can predict that the result will be impressive economically and socially. The humiliation of means test, the complexity of the paperwork that opens the opportunity for political manipulation will vanish. The economy will benefit, and the results will be boosted by the possibility of taking regular jobs or opening a small business, both banned under the present conditionalities. These people will be freed from the known “poverty trap” created by the requirements for admission.
Step 3 – The Bolsa Familia bureaucracy can now be directed to monitor people that are still economically vulnerable but outside the government lists or people that fall into the “precariat”. They and their dependents should immediately receive the unconditional basic income.
PS: The Council can be reached by sending mail to maripnobrega@gmail.com
Phones: 55 12 9777 9115 or 55 12 3911 3839
by Citizens' Income Trust | Jun 7, 2013 | Opinion
Richard K. Caputo (ed.) Basic Income Guarantee and Politics: International experiences and perspectives on the viability Income Guarantee, Palgrave Macmillan, 2012, 0 230 11691 7, hbk, ix + 322 pp, £62.50
This volume gathers together a huge of diversity of analysis of national and international political debates over the introduction of a Basic Income.
A big challenge for a survey of the Citizens’ Income debate is to balance breadth with depth. How does one best combine the detail and insight that different authors offer with the need to offer comparative analysis and discussion of themes across countries? Richard Caputo provides a gentle editorial steer through this global journey, helping the reader to pick up specific nuances of debates in individual countries and regions whilst also providing an overview and some connections to international themes. Key topics covered in all of these essays are the historical drivers and opportunities that push forward discussion of Citizen’s Income, the political enablers and barriers to progress in these debates, and the prospect for progress in the future.
The first four chapters offer a helpful overview and comparative approach. Following Richard Caputo’s introduction and overview, De Wispelaere and Noguera outline a potential framework for considering political feasibility of the Basic Income project. De Wispelaere and Nogerua consider feasibility in strategic, institutional and psychological dimensions by mapping two different types of agency against two types of constraints. It feels a bit of a missed opportunity that this framework is offered at the start of the book but not addressed directly by other contributors. However, even without explicitly addressing this framework the reader will find the key barriers and key enablers identified by De Wispelare and Noguera cropping up in the individual chapters. Most notably, the challenges of institutional inflexibility, and the need to convert key political actors and to build coalitions across parties and interests in order to create strategic feasibility for a Citizens Income.
The region and country specific analyses begin on a confident note. In Chapter 3 Suplicy makes a powerful economic and political case for a Basic Income for underdeveloped economies aiming to jumpstart their global competitiveness. In the subsequent chapter, Guy Standing reflects on the first twenty-five years of BIEN and considers that richer nations may turn again to the issue of universal benefits in response to continued economic strife, the depletion of social protection, and the rise of social unrest.
The rest of the book is made up of 11 chapters that draw on social policy and political debates to examine the prospects for Citizen’s Income in a number of different contexts. This reviewer found the most satisfying chapters those that took a thematic approach, which allowed a lay reader to make their own comparisons between the experiences of different countries. Sacha Liebermann’s chapter on the German experience does this masterfully. It is introduced with a quick summary of the current debate and then thematic headings covering the major barriers addressed by discussions over Citizen’s Income in the last thirty or so years. In Germany’s case, this includes: the challenge of unconditionality (or ‘to live at the cost of others without any contribution’) and debates over the link with citizenship and over how to resolve the position of families and childcare within the overall welfare system.
There is a lot of richness in this volume. The authors have reflected widely and fully on social and political discourses, taking in formal actors and policy makers as well as think tanks and more grass roots movements. One of the difficulties and the rewards of a volume like this is the sheer diversity of experiences. Markku Ikkala looks back over twenty years of debates in Finland, identifying and analysing strands of support from the Green Party and some sections of the Press. Malcolm Torry’s analysis of the backdrop to current debates about universality in the United Kingdom examines themes from the process that led to the Family Allowance Act of 1945 and from the Child Benefit debates of the late 1960s. Alongside these we have in depth analyses that focus on the immediate context of contemporary welfare debates. For instance, the chapter on Spain focuses on the deficit reduction package from 2010 onwards and Hamid Tabatabai’s account asks what we can learn from Iran’s 2010 cash subsidy programme.
One important theme across the regions analysed is the important role of economic instability as a precursor to the revival or creation of new debates on universal benefits as the fragile consensus on welfare systems and social entitlements comes under ever more pressure. In the analysis of the Spanish experience, by Daniel Raventos, Julie Wark and David Casassas, the authors distil the frustration experienced by supporter of a Citizen’s Income in the wake of the economic crisis. For families and workers, a Basic Income could provide much needed security, a serious anti-poverty policy, and a sustainable way of maintaining family income following the debt-based consumption of the early years of the twenty-first century. And yet precisely when the supporters feel the case is most pressing politicians are under pressure to reduce expenditure and target welfare spending on narrow sections of the population.
While it seems churlish to criticise a volume of essays for BIEN members and supporters for not including contributions of opponents of the Citizen’s Income, one limitation of the chapters is a lack of context for some of the more aspirational comments on the future of pressure from think tanks, student groups and activists. While many authors are able to cite specific publications, events and movements as evidence, several chapters include a general positive endorsement or aspiration which feels less contextualised. This includes the aside at the end of the essay on Spain’s experience. The authors argue that ‘it can only be expected’ that the interest in a Citizen’s Income will keep growing from activists as the economic crisis persists and unemployment grows, but don’t offer more solid grounds for hope than that statement.
Looking across the chapters, one key question this reviewer was left with was how supporters of a Citizen’s Income should view these national and international debates as an indicator of progress and possible next steps. De Wispelaere and Noguera discuss how we might frame public perception of a Citizen’s Income in the context of arguments about reciprocity and deservingness of benefit recipients. This is salutary for those who already support Basic Income. A number of different chapters point to elements of universality as indicators of the progress of the argument for a Citizen’s Income or as building blocks on which to develop a stronger case for universality. Changes in pensions in Australia and to tax credits in the UK and Ireland can be seen either as useful stepping stones on a gradualist and pragmatic journey towards a Citizen’s Income, as diversions from making the full case for universality, or as further confusing already complex systems. Alternatively, should a Citizen’s Income be considered as a separate discourse of its own? More fundamentally, this reviewer was left asking, what can we learn from these experiences about how to frame a theory of change for the future? And what would ambitious but realistic intermediate goals look like for the next ten years?
It is a strength of this book that it provides the depth and breadth of reach not only to prompt this kind of question but also to provide significant evidence for the analysis of these issues. The volume offers a timely stocktake, and an opportunity to reflect on debates in the past, present and future.
by Ian Orton | Jun 3, 2013 | Opinion
In 2011, the United Nations (UN), fronted by Michelle Bachelet, head of UN Women, launched the Social Protection Floor [SPF] initiative (1). This initiative aims to support the development of social protection worldwide. Arguably, this development represents an opportunity for more experimentation with basic income and possibly fully-fledged basic income programmes.
National SPFs aim to extend social security vertically (providing more comprehensive services and benefits) and horizontally (extending coverage to a greater number) to cover all groups. In particular, SPFs can assist the extension of coverage to the unprotected, the poor and the most vulnerable, including workers in the informal economy and their families. Countries should define their floors according to national needs and priorities and progressively build their floors in the most advanced yet achievable manner. The UN states that SPFs should comprise at least the following social security guarantees:
- Access to essential health care, including maternity care;
- Basic income security for children;
- Basic income security for persons in active age who are unable to earn sufficient income;
- Basic income security for older persons (1,2).
The UN’s use of ‘basic income security’ should not be understood in the same way as the Basic Income Earth Networks use of “basic Income.” Basic income security literally means a set of minimum income guarantee that could or could not be arranged as an unconditional, universal payment. These guarantees can be fulfilled in different ways through social insurance, social assistance or effective minimum wage or labour market measures.
In spite of a possible divergence with BIEN’s conception of a basic income, it is likely that these policies would represent a significant step toward basic income by legitimising the idea of basic income security as an essential ingredient for human development. Arguably, these would create a social policy culture more conducive or receptive to BIEN-type notions of basic income. In fact, many of the income security programmes championed by the SPF are those often touted by the BIEN community as precursors to fully-fledged basic incomes, such as the Bolsa Familia in Brazil. Clearly, there is some convergence.
In June 2012, this initiative was bolstered further when the International Labour Conference of the International Labour Organization voted on an historic Recommendation for a SPF, which supports the extension of social protection coverage and the progressive building of national social security systems. The adoption of this new international labour standard, the Recommendation concerning national floors of social protection (No. 202) (3), marks a major milestone for social security, as it reaffirms the human right to social security and renews national commitments to extend coverage.
The current momentum gathering behind the SPF and the actual proliferation and strengthening of existing SPFs throughout middle- and low-income countries already provides the basic income with an entry point as well legitimising basic income discourse in general. In fact many social pensions and family benefits (as advanced by the SPF) are essentially a basic income for the elderly and for children. Moreover, they have proven their impressive positive economic and social impacts (4) However, extending a rights-based discourse to basic income (in the BIEN sense of the world) still remains plagued by an array of difficulties where active population (i.e. the working population) groups are concerned. In other words, the SPF has a more ‘workfare’ view of income guarantees for the working poor, and that this group should not get unconditional income guarantees. Rather they should have to participate in some kind of public works’ programme.
Perhaps even more interesting still, is the emergence of a new hot topic within development discourse of the SPF: the idea of a specific ‘global fund’ to finance SPFs globally (5). If new financing sources do become available this may open up new financing sources for basic income-type programmes to be introduced for specific population groups. Thus, all those interested in the basic income would be well advised to keep an eye on the emergence of a global fund.
Naturally, many have well founded reservations about a yet another vertical fund earmarked for a specific use. It may add to an already confounded and highly fragmented international development assistance architecture, and result in top down prescriptions of how countries should develop their SPFs. Nonetheless, in spite of these concerns there is a discernable groundswell of political support for the idea of global fund for SPFs. It is perhaps conceivable that the idea of basic income will find ripe opportunities here. Watch this space.
For more information on this issues see:
1. ILO. 2011. The Bachelet report: Social Protection Floor for a fair globalization, Report of the Advisory Group chaired by Michelle Bachelet Convened by the ILO with the collaboration of the WHO (Geneva).
www.ilo.org/global/publications/ilo-bookstore/order-online/books/WCMS_165750/lang–en/index.htm
2. Ian Orton. 2012. The ILO Recommendation on Social Protection Floors: A milestone in the extension of social security coverage. ISSA, Geneva.
www.issa.int/News-Events/News2/The-ILO-Recommendation-on-Social-Protection-Floors-A-milestone-in-the-extension-of-social-security-coverage
3. ILO. 2012. Social security for all: The ILO Social Protection Floors Recommendation (Briefing note). Geneva, International Labour Office.
www.social-protection.org/gimi/gess/RessFileDownload.do?ressourceId=31089
4. Ian Orton. June 2010. Reasons to be cheerful: How ILO analysis of social transfers worldwide augurs well for a basic income (with some caveats). Submitted for the 13th International Congress of the Basic Income Earth Network, Sao Paulo, Brazil, basic income as an instrument for justice and peace.
www.bien2010brasil.com
5. Magdalena Sepúlveda & Oliver de Schutter, 2012. Underwriting the Poor: A Global Fund for Social Protection. Briefing Note 7. United Nations SpecialRapporteur on the Right to Food.
www.srfood.org/images/stories/pdf/otherdocuments/20121009_gfsp_en.pdf
Disclaimer:
The responsibility for opinions expressed in this article rests solely with the author and dissemination does not constitute an endorsement by the International Labour Organization of the opinions expressed in it.
