by Guest Contributor | Jul 30, 2019 | Opinion
The Dream of a Just Society Found in Basic Income
[Interview] Meeting with Gyeonggi province governor Jae-myung Lee
Interviewed by Jun-ho Oh
Author of Basic Income Can Change Our World (2017, in Korean)
Translated by Hee Su Jung
“The combination of basic income, local currency, and national land holding tax will make the majority of the people happy.”
“It pains me to see people having no land misunderstand the national land holding tax.”
Governor Jae-myung Lee introduced the “Seongnam Youth Dividend” in 2016 during his term as the mayor of Seongnam city. It was a partial basic income, which provides 1 million won per year to 10,000 24-year-olds residing in Seongnam city. At the time, he faced negative reactions from the former Park Geun-hye government of South Korea and was criticized for being a populist, but gained strong support from local businesspeople and the youth.
After being elected as the governor of Gyeonggi province in the local election of 2018, Lee started to provide the Gyeonggi Youth Basic Income to 175,000 24-year-olds residing in Gyeonggi province since April 2019.
The amount of Gyeonggi Youth Basic Income is 1 million won per year, and it has been paid in local currency. The increasingly positive reactions towards the policy after the implementation of the Seongnam Youth Dividend helped to make this policy a reality throughout the province. Lee wants to go further than Gyeonggi Youth Basic Income and create a universal basic income covering all citizens of South Korea, along with the implementation of “basic income funded by national land holding tax” to fund the proposal.
The interview with Jae-myung Lee was held at Gyeonggi Provincial Government Building, at 11 am, June 20th, 2019.
Unlike other politicians, you are a strong advocate of the basic income movement. What aspects of basic income were you drawn to?
On one hand, basic income resonates with my dream of a just society. Also, I think that it is an unavoidable policy in order to preserve our societal system. The decrease in the importance of labor due to the fourth industrial revolution, and the current situation where a few wealthy individuals hold excess profits makes it nearly impossible to prevent society from collapsing. Historically speaking, when social inequality reached a certain point, the system collapsed. This may be what our society is facing, which is the reason why policies should be revisited. In my opinion, basic income may be our only choice. Another problem caused by the excessive concentration of wealth and exaggerated excess profits is that it decreases resource efficiency. Distributing wealth to the people, who have fewer opportunities to work compared to the past, will aid in sustainable economic growth, regime maintenance, ultimately achieving real freedom and equality.
There were a number of basic income experiments held abroad, but they primarily targeted the poor. In contrast, Gyeonggi Youth Basic Income was implemented where it was given to every single 24-year old. What is the significance of the policy?
As you know, basic income aims to provide all people with a minimum amount of livelihood regularly in cash. What we are doing here is limited to a certain age, so it does not completely correspond with basic income. It may be quite insufficient, but the form and principle are similar. I would like to stress that it was an introductory measure. As to the reason why I chose the youth to be the recipients, the youth these days are in the most disadvantageous position in their overall lifespan, but at the same time, they are least protected by the state. In the past, we used to say “The hardships of youth are invaluable,” “There is always a second chance” to young people who had ample opportunities, but the situation is different for the youth nowadays. I thought young people needed special political consideration. I also considered the ripple effect of the policy. It is not yet a perfect system, but a process of throwing a buzz to society. In terms of necessity, the young needed this most, and, I think, there would be an explosive power of a basic income policy for the young in making basic income a social agenda.
One of the unique elements of Seongnam city Youth Dividend and Gyeonggi Youth Basic Income is that they are paid by local currency. On the other hand, there are criticisms of the dividend not being paid by cash. Why did you choose local currency? (Gyeonggi province local currency can be used either in the form of a certificate or a rechargeable debit card. It can be used similarly as cash at affiliate stores in the region. Businesses with large revenue including big retailers are excluded.)
One reason is to overcome resistance. The notion of giving youth cash met criticisms of being populistic, and I had to admit that. New policies always meet resistance, no matter how ‘correct’ the policy is. But resistance decreases when the effect of the policy and the people who gain from it increases. Since it is a policy project funded by public finance, we have designed it to benefit the self-employed and the local economy as a whole, even though it may raise a few inconveniences caused by the local currency for the youth who use it. Another reason is about gaining the support of traditional market merchants and small businesses. This was an effect proven in the case of Seongnam city Youth Dividend. Sales of traditional markets in Seongnam city increased by 26% in the year 2016, when the policy was implemented.
You insist on giving all citizens universal basic income, going further than Gyeonggi Basic Income. At the Gyeonggi province basic income international conference held at April 29th, you have argued to “distribute profit that comes from the commons”, and are consistently arguing for the implementation of basic income funded by a national land holding tax. What is your specific plan in introducing universal basic income?
Making a new policy is important, as is combining necessary policies. One of the biggest problems in our society is the unearned income issue. People do not make creative efforts in a society with excessive unearned income. In such a society, people are trying to take power and take away power from others.
The problem of unearned income must be solved to build a ‘normal’ society where labor is respected and people are assured their share in accordance with their contributions. The biggest issue is a sharp increase in unearned incomes from lands and real estates. And that has significantly worsened compared to the past. One reason is the low real estate holding tax. The way to recapture unearned income from real estate is to increase the tax on it. Currently, real estate holding tax is about 0.3 percent. This is one-sixth of the automobile tax, which is about 1.8~2 percent despite the fact that it is the same type of tax based on property. Why is a tax on cars, usually owned by ordinary people, so high when the tax on land is so low? After fully understanding the situation, there will not be as much resistance towards raising tax rates to 0.5 percent, which is about half of the tax rates in advanced countries. By collecting 15 trillion won more in addition to this, we can pay each citizen 300 thousand won per year.
Is it to combine basic income and policies that aim to recapture unearned income from real estate?
Let us combine the important policy project of overcoming a ‘republic of unearned income from real estate’, and a basic income policy. It is an aim worth pursuing which will make the majority of the people happy. The combination of basic income, local currency, and national land holding tax make sense. This is how to raise support for my policies. You need to change people’s lives, gain support, and minimize opposition. For this, we had to start off with a partial basic income, small amounts of basic income and find a source of revenue that can be agreed upon among people. Land is the most typical type of common wealth and nobody can completely own land in this country, even though s/he has the ownership of that land. The Constitution states a public concept of land. Also, there is no reason for it to require a massive source of revenue at this moment. A child allowance implemented this year by the government is an example of a partial basic income. We can give out child allowance to children under seven, give basic income to 24-year-olds in Gyeonggi province, give basic pension to all the elderly regardless of income level in the future, and fill the gaps as we proceed. In the end, we will be able to build a basic income system even though it may be a low amount at the beginning. The amount can be increased. Implementing a basic income is not about financing sources, but about the authority’s will.
Distrust against the proper use of tax revenue is common in South Korea.
We need to get people to experience that if they pay tax, it would benefit them. 15 trillion won from national land holding tax might only pay 300,000 won per year to all citizens. But people will think “Did I get what I paid for? Would I get more if I pay more?” South Korea is a “low burden, low welfare” society and we need to increase both taxes and welfare. If we only support the poor, the taxpayers would think “Why do I have to pay taxes to help them?” In order to decrease resistance, we have to make the taxpayers think that paying taxes will benefit them. In the Nordic countries, people do not complain that they pay almost half of the GDP to tax, because the majority of the people benefit more than they pay. I want Koreans to have the same experience. After experiencing first-hand, it wouldn’t be difficult to increase basic income from 30,000 won per month to 50,000 won per month, or even more. This will allow for increasing taxation without resistance. At present, there is no taxation power for local government. One possibility is that the National Assembly makes related laws, based on the public concept of land stated in the Constitution, and local governments then enact the municipal ordinance.
Could you comment on the significance of what you’re doing for basic income supporters abroad?
While there were basic income experiments in other countries, we are actually implementing the policy. To be honest, the amount is not enough to result in experimental effects. 1 million won a year is insufficient as a basic income. But I am trying to spread the idea of basic income through this policy. Anyway, it will benefit over 150 thousand people a year, and hundreds of thousands for some years ahead. Even though we started with a small amount of basic income for a particular age group due to financial reasons, but we should expand the recipients and increase the amount in time. A national decision is necessary, which is ultimately made by the people. In order to do so, people need to know about the basic income idea and have a desire for it. I think this policy would help them with that.
Note. This article is a translation of an interview included in the first issue (link: https://basicincomekorea.org/wp-content/uploads/2019/07/BasicIncomeMagazine_Issue001-Summer2019.pdf) of Basic Income Magazine (quarterly published by the Basic Income Korean Network). The magazine is in Korean, and this article is a summarized version of the original article.
by Andre Coelho | Jul 11, 2019 | Research
Leah Hamilton (left) and James P. Mulvale (right)
Leah Hamilton and James P. Mulvale have researched into the implications of the truncated basic income pilot in Ontario, Canada. From a set of controlled, semi-structured interviews, five participants agreed to subject to the procedure. These participants had experienced both conditional welfare programs such as the Ontario Works and the Ontario Disability Support Program, and were beneficiaries of the Ontario basic income pilot until it was terminated by Doug Ford’s cabinet.
The conclusions show that the basic income pilot had effects that contrasted with those experienced by the participants in the traditional social security programs. So, while in the latter, participants felt trapped in “a cycle of precarity and dependence”, the former made them feel “human again”, since “they had always desired to be members of the workforce and gain financial independence”. The study’s conclusions also match other research efforts comparing traditional welfare with basic income type of experiments, which reinforces those same conclusions. It also refers the need to consider potential hidden savings in health costs, and additional economic activity brought by basic income policies. Those cost savings and potentially larger tax collection must then be a part of any serious effort to finance basic income, particularly in high-income countries.
The following abstract accompanies the article:
Neoliberal social assistance programs are broadly seen as inadequate and intrusive. This phenomenological analysis compares social assistance in Ontario, Canada, and a recent pilot project to test basic income as an alternative method of enabling economic security and social participation via qualitative interviews with pilot recipients who had previously received traditional assistance. Results indicate a desire to be financially independent, but that the conditionality of traditional programs had negative repercussions including work disincentives and deleterious bureaucratic hurdles. Respondents reported that basic income has improved their nutrition, health, housing stability, and social connections; and better facilitated long-term financial planning.
More information at:
Leah Hamilton & James P. Mulvale (2019) “Human Again”: The (Unrealized) Promise of Basic Income in Ontario, Journal of Poverty
Leah Hamilton, “Why Welfare Doesn’t Work: And What We Should Do Instead”, Basic Income News, June 29th 20128
by Andre Coelho | Jun 7, 2019 | News, Research
Apart from experimental designs testing basic income-like policies, in small scales, theoretical evidence keeps mounting, showing that basic income is not a pipe dream, but a practical reality within our reach. Published earlier this year, a new report issued by the Compass think tank demonstrates just that. It proposes two models for change in the British social security system, one that installs a partial basic income for a cost of 28 billion £/year (approximately the benefits cut per year since 2010), and another that would rise the unconditional transfer of the first model through the operation of a “citizens’ wealth fund”.
As a summary, it can be read in the report’s conclusions:
The to models presented satisfy the feasibility tests set out earlier. Both models:
- Are progressive: they raise the incomes of low-income households at the expense of those on the highest incomes, cut poverty and reduce inequality; the greatest benefits go to the poorest;
- Provide a basic income for all, while reducing the level of sanctions; Britain would finally have a secure income floor set to rise over time;
- Become more progressive and more powerful anti-poverty instruments as basic income payments rise;
- Help to correct the gender imbalance of the present system;
- Ensure that there are almost no losers among the poorest households
- Apply a new 15% rate of income tax, an additional 3% on each rate of income tax, and an extension of national insurance payments.
It is still worthy to say that the 28 million £/year figure cited above can be collected in a variety of ways, for instance reversing the freezing of diesel and petrol excise duties since 2010 (9 billion £/year), reversing cuts in corporate tax rates from 18 to 28% (26-28 billion £/year), reduce the number and value of tax reliefs (ex.: eliminating the “entrepreneur’s relief”, saving 2,7 billion £/year), phasing out financial support to home owners and private landlords (which mainly benefit property developers) (8 billion £/year), among other possibilities. All these imply reversing tax cuts and attributed benefits to the relatively wealthier members of British society, which makes them quite progressive measures.
More information at:
Stewart Lansley and Howard Reed, “Basic Income for All: From Desirability to Feasibility”, Compass, January 2019
by Andre Coelho | Jun 3, 2019 | News
Just before the latest European Parliament (EP) elections, held on the 23-26th of May 2019, the Unconditional Basic Income Europe (UBIE) activist group sent out a questionnaire to be answered by candidates, on the subject of basic income. The questions asked for their position on the European social policies, whether they would support European Union (EU) basic income experiments, and if they would vote in favour of a Eurodividend. That questionnaire was inserted in an introductory letter, to be sent to all EP candidates, written by Daniel Kruse.
Only a fraction of EP candidates actually responded, but those that did can find their answers posted here. These views, reflecting the opinions of these candidates from Belgium, Germany, Greece and Ireland, are mostly in favour of experimenting and implementing an EU-wide basic income, with a few variations. For instance, Olivier De Schutter argues that basic income should start for the youngsters, namely those between 18 and 25 years-old, fixed at 60% of the median income of their country. On the other hand, however, Olivier Maingain points out that paying a monthly basic dividend to all EU citizens is not within EU’s powers, at the moment.
Willie O’Dea, from the Fianna Fáil party in Ireland (which had also setup a candidate for the EP elections, Brendan Smith), had written, not long before these EP elections, an opinion article expressing his views on basic income, within a European perspective. In that article, O’Dea also takes the opportunity to clarify a few important aspects about the Finnish (basic income) experiment, linking its design features to its published results until now. According to him, these results are not surprising, given the way the experiment was setup, but are still encouraging, since he considers the social well-being of people to be “real and measurable tangible benefits”.
More information at:
Willie O’Dea, “Universal income pilot could point to a fairer future”, Independent.IE, April 7th 2019
by Andre Coelho | May 31, 2019 | News
Maricá at a distance.
Original article by Eduardo Suplicy
Last Saturday, May 25th 2019, an event took place in Maricá, a city on the coast of the state of Rio de Janeiro, where the mayor Fabiano Horta (representant from PT, Partido dos Trabalhadores), vice mayor Marcos Ribeiro and the secretary of Solidarity Economy, Diego Zeidan, announced that, from July 2019 onward, 50000 citizens, a third of its 150000 inhabitants, will receive a Citizen’s Basic Income of 130 Mumbucas, a local electronic currency, equivalent to 130 reais, or US$ 32,5 per month. The plan is to have all Maricá’s citizens receiving this unconditional cash, at least until the end of the present city government legislature.
Longtime politician (presently councilman in the City of São Paulo) and basic income activist Eduardo Suplicy had already explained the advantages of implementing basic income in Brazil, as a part of a general upgrade of social policy in the country. That policy, actually, has been written into Brazilian law since 2004 (Law 10.835/2004), but sanctioned by president Lula on January 8th 2004. There, it says that a basic income shall be rolled out in Brazil, step by step, starting with those most in need, until one day it benefits all citizens.
After an important Conference on Human Rights, held in Brazil in December 2015, where Suplicy reinforced his views, Maricá’s mayor at the time, Washington Quaquá, manifested his intention of implementing the Citizen’s Basic Income in his city. That same month, he was able to pass his purpose into municipal law, which would be introduced in phases: 95 Mumbucas per month in 2016 (85 Mumbucas from a Minimum Income program, plus 10 Mumbucas/month), 130 Mumbucas per month in 2017 (110 Mumbucas from the Minimum Income program, plus 20 Mumbucas/month), disbursed to 14000 families, and now in 2019, starting in July, that same amount will be enlarged to cover 50000 individuals. This payment will be now limited to citizens who belong to families enrolled in the Unique Register, having monthly incomes lower than three minimum wages (1 minimum wage is equal to around 1000 reais/month), but expected to cover all citizens in the village by 2021.
So, the ongoing cash transfer in Maricá is done in a non-transferable social local currency (Mumbuca), is set to cover one third of the population (although projected to cover the whole population by 2021), and amounts to the equivalent of 67% of the individual official poverty line in Brazil (1). Although far from ideal, this is a very significant step when in comparison to some recent basic income test trials such as in Finland (2000 unemployed citizens receiving 560 €/month for two years), Stockton California (125 citizens receiving 500 US$/month for 18 months), Namibia (1000 people in Otijivero receiving the equivalent to 12 US$/month, for 12 months) and India (6000 people in Madhya Pradesh receiving 300 (adults) and 150 (children) rupees/month, for 36 months).
Even though the Mumbuca is a local currency, most commercial stores in Maricá accept it. Also, a Communitary Bank Mumbuca was created in order to provide microcredit at zero interest rates, in Mumbucas, which can also fund housing projects. Maricá mayors (Quaquá and Horta) have, on the other hand, introduced social security measures / programs alongside with this more general basic income approach. For instance, a minimum income program has been created for pregnant mothers and youngsters. Additionally, starting in 2019, another specific program was initiated, dispensing 300 Mumbucas/month to 200 indigenous people that live in small villages near Maricá. There is also a Future Mumbuca program for young people, that are currently enrolled in high school courses involving solidary economy and entrepreneurship, which will pay 1200 Mumbucas per year. In that program, the valued is transferred once the youngster completes high school, starts a firm, a cooperative or becomes an undergraduate student.
Other social support programs have been created in Maricá, over the years, such as free transportation (14 lines in Maricá’s urban area), and special conditions for university students (around 4000), in and out of Maricá. Plenty other public investments were made in education, health, and even organic farming. This unusual plentiful municipal budget (16665 reais/inhabitant, compared to São Paulo’s 5041 reais/inhabitant) is the product of oil exploration royalties along Maricá’s coast. Despite the inherent pollutant nature of this municipal revenue stream, past and present city mayors have been investing in providing better living conditions for the population within their administration’s borders. This way, Maricá has become a bright example for all municipalities in Brazil, as well as for the federal government.
Note (1) – The official poverty line in Brazil stands at 387 reais/month per family. Considering a two-adult composition in each family, this equates to 194 reais/month per (adult) individual.
Article reviewed by André Coelho
