In May 2017, the Organisation for Economic Co-operation and Development (OECD) released a policy brief on the cost and feasibility of basic income schemes in developed nations, looking in detail at the implementation of such a policy in Finland, France, Italy, and the United Kingdom.
The authors used a EUROMOD microsimulation model to predict the cost of replacing certain existing welfare programs with a universal basic income. The mircosimulation was also applied to forecast the effects of such a reform on personal income and poverty.
On June 16, 2017, one of the authors, Herwig Immervoll, will discuss the OECD study and its conclusions at Kela, the Social Insurance Institution of Finland. Immervoll is a Senior Economist and Head of Employment-Oriented Social Policies at the OECD.
Before Immervoll’s presentation, Olli Kangas, Kela’s Director of Government and Community Relations at Kela, will deliver a short overview of the current status of Finland’s Basic Income Experiment. Kangas is the leader of Kela’s research team responsible for designing and administering the pilot.
Markus Kanerva, Senior Specialist at the Prime Minister’s Office and founder of the independent Finnish think-tank Tänk, will deliver concluding comments.
The event will take place 9-11 AM Finnish time (GMT+3) and will be recorded and live-streamed. Coffee will be provided to attendees at Kela’s auditorium but not to online viewers.
There was once a town in Canada that essentially eliminated poverty, and at the time no one seemed to know. One filmmaker is doing his best to shine a bright light on the research into this town.
Vincent Santiago is producing “The Mincome Experiment” documentary that looks into the Manitoba experiments in the 1970s, which provided a minimum income guarantee to the entire town of Dauphin. Santiago recently spoke with The UBI Podcast about his project.
“The experiment was completed but there was a change in government in Manitoba and federal level so experiment was never analyzed,” Santiago said.
That is until Dr. Evelyn Forget of the University of Manitoba began digging up these old records. Forget found there was a reduction in hospital visits and instances of mental health issues in the area with a minimum income. Despite worries, there was no large reduction in the amount of work being done, Santiago said.
“The only sector that was affected was the mothers who gave birth and the teenagers who stopped working to finish high school,” Santiago said.
Santiago said any new idea like minimum income guarantee will cause backlash, especially if the research is not explained well.
“Just like when they first introduced universal health care in Canada, there was a lot of opposition,” he said.
In order to explain these results, Santiago said it is important for the basic income movement to focus on public relations. He said his documentary is an important way to show the positive results of minimum income systems.
“I would like to make this documentary to dispel a lot of these misconceptions,” he said.
Currently, Santiago is running a crowdfunding campaign to help cover the costs of production for the film.
In the process of cowriting a book about the upcoming Unconditional Basic Income Trials, I’ve been trying to come up with a list of the claims that tend appear in the debate. Below are two lists: first a list of supporters’ claims and then one of opponents’ claims. I gave each claim a name to make it easier to talk about them, but these names do not reflect any standard definition. I tried to order the claims in each list from the relatively more important or more common to the relatively less important or less common.
To say that a claim appears on the supporters’ or opponents’ lists is not to say that all supporters or all opponents agree on it. In fact, some of the claims contradict each other, which is to be expected, because different people support or oppose UBI for diverse reason. They might have little in common but their support or opposition to one policy proposal.
Supporters have claimed:
The freedom claim: UBI gives people greater freedom by giving them more effective power over their own lives.
The poverty claim: UBI (usually in combination with other policies) can eliminate poverty.
The anti-exploitation claim: UBI reduces exploitation in employment by giving all workers the power to refuse exploitive working conditions.
The welfare claim: UBI raises the welfare of net-recipients (by eliminating destitution, reducing poverty, increasing incomes of people near poverty, reducing inequality, and other effects) and many net-contributors (by removing the fear of destitution, improving their bargaining position in the market, and so on). To the welfare claim we could add many supporting claims, that UBI is good for physical and mental health, that it decreases homeless and malnutrition, that it decreases infant mortality, and so on.
The increased-worker-income claim: UBI increases in the income of workers directly by acting as a wage subsidy for lower-income workers and indirectly by creating market conditions likely to increase wages.
The better-working-conditions claim: UBI improves working conditions for many workers both by giving them the flexibility to move more attractive sectors and by creating market conditions likely to give employers incentive to improve working conditions.
The affordability claim: UBI at the desired level is affordable. (Most UBI proposals call for one high enough to eliminate official poverty or to raise incomes to 150% of the officially poverty level. Some call for meeting basic needs or to enable social participation and to secure a life in dignity. Some simply call for the highest sustainable UBI regardless of what that might be.)
The economic equality claim: UBI increases economic equality both by direct redistribution to lower income people and by creating market conditions where workers can command higher wages and better working conditions. (The taxes used to support it can also be formulated to increase equality.)
The social equality claim: UBI increases social equality by reducing social isolation of people with very low incomes, by reducing the stigmatization of people who benefit from redistributive programs, by reducing housing segregation, and by other means.
The poverty-trap claim: UBI encourages people on benefits to reenter the labor force in greater numbers than a conditional system, by ensuring they are always better off earning more private income than earning less.
The anti-ghettoization claim: UBI reduces (both personal and social) costs linked to high concentrations of poverty both by reducing housing segregation and by significantly raising average incomes in those communities.
The cost-effectiveness claim: UBI is relatively more cost-effective than traditional, conditional welfare policies (in achieving goals such as increasing equality, raising welfare levels of recipients, and so on).
The reduced-capture claim: UBI’s benefits are less likely to be captured by others (such as employers, landlords, and bureaucrats) than conditional welfare state policies.
The bureaucracy claim: UBI reduces the overhead cost associated with income support.
The labor-productivity claim: UBI increases labor productivity both by encouraging employers to substitute skilled for unskilled workers and by improving workers’ ability to enhance their skills and search for higher-productivity jobs.
The productive non-labor claim: UBI allows people to do more unpaid work (such as care work and volunteering), some of which is more productive (or socially valuable) than many forms of paid labor.
The politically-enabled-proletarian claim: UBI—by freeing low-wage workers from long hours and low pay—makes them a greater force for progressive social change on all other issues.
The acceptable-labor-supply-effect claim(s): if UBI causes a reduction in labor supply, it will be within acceptable levels, and/or if UBI causes a greater-than-desirable labor-supply reduction, it can be at least partially counteracted by other policies to increase labor supply or the demand for higher-wage employees.
The macro-stimulus claim: UBI, in combination with the taxes that support it, helps improve economic growth and reduce unemployment by helping to stimulate and stabilize aggregate demand.
The “degrowth” claim: UBI helps economies move away from overconsumption and overexploitation of resources.
Greater respect for people in need: UBI and other universal programs treat everyone with respect while many conditional programs treat virtually all recipients as suspected cheats, even if they fit almost anyone’s definition of the most truly needy.
The increased-overall-redistribution claim: UBI results in greater overall redistribution to the poor, because universal policies foster greater feelings of solidarity and support once in place
Opponents have claimed:
The reciprocity claim: UBI allows people to share in the benefits of social production without contributing their labor.
The exploitation claim: a tax-financed UBI redistributes income from workers to people who do not work, thereby exploiting workers.
The harm-to-workers claim: the taxes needed to support UBI financially harm workers, all things considered.
The unacceptable-labor-supply-effect claim(s): UBI causes an unacceptably large reduction in labor supply that is not easily counteracted by other policies.
The self-destruction claim: UBI increases self-destructive behavior in recipients.
The meaninglessness claim: UBI makes it possible for people to live lives that they will eventually find meaningless because paid labor is a central source life meaning.
The capture claim: many of the benefits of UBI will go to someone other than the recipients, perhaps because employers reduce wages, because landlords increase rents in low-income areas, because bureaucrats create overhead costs, etc.
The inflation claim: UBI causes inflation that is not easily counteracted by other policies.
The migration claim: UBI encourages immigration and/or migration into areas with UBI.
The unaffordability claim: UBI at the proposed level is prohibitively expensive.
The negative, relative cost-effectiveness claim: UBI is more expensive than other programs that can achieve similar goals.
The gender-role reinforcement claim: UBI helps maintain traditional gender roles by making it easier for women to remain out of the paid labor force while performing unpaid care work and other traditional women’s roles.
The macro-deterrent claim: UBI decreases economic growth by enabling reduced labor market participation and increasing costs.
The shut-door claim: UBI creates political pressure to restrict immigration and migration.
The bought-off-proletarian claim: UBI—by providing a minimal level of contentment for workers—reduces their effectiveness as a force to challenge the deeper inequalities and other social inequities in society.
The consumerism claim: UBI leads to even more environmental destruction because of increased consumption.
The decreased-overall-redistribution claim: UBI is (politically and/or economically) feasible only at such a low level and only accompanied by so many other social programs that it will leave low-income people worse off than traditional, conditional social policies.
The strategy-to-cut-redistribution claim: factions in government will use UBI as an excuse to cut other programs, then cut in a strategy that will lead to much less overall redistribution.
I compiled this list from general knowledge accumulated over years of reading about the UBI debate. It is bound to be incomplete. Many more claims (of various levels of relevance, certainty, and testability) are undoubtedly circulating in the academic and nonacademic literature on UBI. But I hope it captures a significant range of what is being said. This list is enough to demonstrate the difficulty of designing a trial and communicating its results in a way that successfully raises the level of debate over these claims. Some are things that can’t be tested. Some are things that can only be tested indirectly, partially, or inconclusively. Few if any of these claims can be directed tested with any accuracy in a trial.
I’m interested to know how comprehensive people think it is. Did I include all the relevant claims you can think of? Did I overblow any claims that don’t deserve to be on the list?
A stock image used to evoke a mental connect with the word “experiment”
Vito Laterza and Jurgen de Wispelaere. Credit to: O Observador.
An event focused on the discussion about social policy in Portugal, and particularly about basic income (in Portugal mostly called unconditional basic income), took place at the Lisbon School of Law (University of Lisbon) on the past day 15th of May 2017.
The first part of the event featured Pierre Guibentif and Paulo Pedroso, both professors at ISCTE, University Institute of Lisbon. The former spoke favorably about basic income in a general sense, while the latter was clearly against it. Guibentif defended it was important to compare basic income to other forms of (conditional) income support, although he did not suggest the setup of an experimental pilot to test it. He, although highlighting basic income’s originality over other social policies, defended that it doesn’t per se defend social inclusion. He went on to say that its originality stems from an intent to generate social evolution, contrasting with minimum income schemes, that aim at alleviating most pressing inequalities but not to change the capitalist mode at its core. In his final remarks, Guibentif doubted basic income’s power to emancipate people, who may lack the capacity and/or knowledge to really pursue virtuous life paths. For that he suggested that the State should maintain and even strengthen specific programs to support citizen’s continuous learning in core areas as science, the arts and other humanities.
On the other hand, Paulo Pedroso questioned the relevance of basic income from the onset. Although he concedes that basic income is intended to be a correction of inequalities at birth (structural inequalitites), he remains skeptic about the capacity of the poorest segment of the population to structure their own lives and make a meaningful contribution to society. According to him, basic income will just keep them (the poor) marginalized and unfulfilled. Pedroso firmly stands that work is fundamental for a healthy society, and so basic income will just erase work’s importance as an identity driving force. Supporting a view of full employment, he views work as essentially related to paid employment, more commonly held as jobs. In an increasingly emotional exposition, Pedroso affirms that basic income is sure to be a vehicle for the destruction of the welfare state as we know it, in a reference to common right-wing views on the applications of basic income. He concludes stating that basic income “amounts to suicide”.
The presentation panel also included Olli Kangas, PhD and responsible for the basic income pilot project being run in Finland at the moment, while working for Kela, the social insurance institution of Finland. He essentially presented and justified the pilot project, which aims at avoiding social traps of several kinds – mainly bureaucratic, poverty and unemployment traps. He referred to some internal challenges, for instance unions in Finland, which are categorically against basic income in fear of losing affiliates in the near future. These unions congregate around 70% of the work force in Finland. Kangas explained that the value used in the experiment (560 €/month) was set in order to match the average amount recipients were already receiving from Kela. He also said that, other than employment, this first experiment would also measure the use of prescriptions, medical treatment and income registration. This would be done without interviews or questionnaires, in order not to influence the experiment’s output. To conclude, Olli Kangas announced that Kela was already planning a larger, more profound experiment in Finland. This time it would be national in range, with a larger sample taken from all people on low incomes and experimenting with more tax models.
Olli Kangas. Credit to: Observador.
Vito Laterza was also a panelist, and enthusiastically defended the basic income concept, while clearly highlighting some of its challenges. He approached the issue in a “back-to-basics” fashion, recalling the “original idea” of basic income: to liberate people. Laterza went on to describe the present-day labor market as “very segmented” and in which several lines of separation are drawn – sexual, racial, disability, etc. To counteract that unfair and segmented labor market he spoke of “cooperative security”, which intends to build on the welfare state in a non-discriminatory way. He also alerted that basic income must not be seen as “just cash”. That monetization of life tendency is, according to him, extremely dangerous, and so the implementation of basic income must be guided by a freedom-for-all mindset, without destroying the beneficial aspects of the welfare state.
To close this event’s first part, Jurgen De Wispelaere spoke about the necessity of basic income being part of a landscape of policies, most of them already in place within the context of the welfare state. According to him, a policy like basic income can be a generator of other policies, and he made a case for a possible integration between “active” and “passive” social measures. Typically, “active” policies like social investment try to prepare people for the marketplace (where commodification occurs), and “passive” ones like basic income are about de-commodification. Jurgen considers that these policies may be complementary, rather than opposites. He defends that basic income can also be an activation tool, helping in removing social traps – unemployment, bureaucratic and poverty traps – so liberating citizens to pursue education and/or other qualifications. In the same vein, basic income can also provide better conditions for young age learning, which will further the potential for a productive adulthood. He goes on to sustain that basic income also “activates” people to move from “crappy jobs” to better, more meaningful activities. As a final remark, Jurgen’s activation argument also involves gender equality issues, assuring that a basic income can particularly help women to get activated.
Roberto Merrill and Sara Bizarro, also present, shortly listed their version of the advantages and disadvantages of introducing a basic income, opening the session for questions and answers with the audience. The debate that followed revolved around the usual arguments against basic income: disincentives to work, difficulty in financing and the capture of the idea by the far-right.
José António Vieira da Silva. Credit to: Observador.
Apart from known defenders of basic income in Portugal, as André Barata and Renato do Carmo, all others showed reserves, in several degrees. Among these there was an overall sentiment that it may still be better to improve on existing conditional social assistance, than to risk a free-from-obligation cash transfer program and end up with a largely idle population. Basic income implementation at the European level was referred several times, in what could be a signal of reluctance in spearheading the concept, leaving that responsibility to supranational entities like the European Community. That is also the opinion of the minister Vieira da Silva, who is concerned about how to communicate the basic income concept to the population at large, and about the risk of creating a cleavage in society between those who work (have jobs) and those who do not (do not have jobs). He has also expressed his belief that there will be no shortage of work (intended as jobs) due to technological innovation, referring to past “revolutions”. However, Vieira da Silva has agreed, along with others, that a wider, more profound discussion about work is necessary in our society.
André Barata summed up the feelings in the air with the following sentence: “There were many reticent speeches, but I haven’t seen any downright opposition”.
Help provided by Eduardo Currito.
More information at:
Event information at the Lisbon School of Law website
Three communities across Ontario have been selected for the Province’s guaranteed minimum income pilot. Ontario will be rolling out a three-year study in late spring and fall 2017. Premier Kathleen Wynne made the announcement with details of the project in Hamilton on April 24th.
The stated goal of the pilot on the official website of the Ontario Government is to ”test whether a basic income can better support vulnerable workers, improve health and education outcomes for people on low incomes, and help ensure that everyone shares in Ontario’s economic growth.”
The mayors of each community – Lindsay, Thunder Bay, and Brantford/Hamilton/Brant County, expressed hopeful to positive reactions at the announcement that their cities had been chosen to pilot in the project.
Kawartha Lakes Mayor Andy Letham, which is home to the community of Lindsay, describes precarious work as a cause for concern in his community and admits that the status quo of society isn’t functioning well. “The cost of poverty on people’s mental health is real,” said Letham. “So how to we break these cycles?” Lindsay will host 2,000 of the total 4,000 participants.
Thunder Bay Mayor Keith Hobbs, a 34-year veteran of the local police force, described his experience with some members of the community: “I saw the same people all the time, like a revolving door.” Hobbs expressed excitement at the possibility of this project positively impacting the lives of those he had consistently interacted with. Workers and citizens of Thunder Bay have had to reinvent themselves as the region transitioned from industries like pulp and paper to health research institutes, law, and genomics.
Pulp and Paper Mills in Thunder Bay, Ontario
Brantford Mayor Chris Friel expressed excitement to take part in a project that will reduce poverty and improve health and educational outcomes. Ron Eddy, the Mayor of Brant Country, stated that he looks forward to observing the results of the project. “The only way you’ll know the outcome is to try it out. So, let’s see what happens,” Mayor Eddy said.
Details on the Pilot
The basic income pilot will randomly select 4,000 individuals between ages 18 to 64 that meet certain criteria, and provide them with a minimum income despite their employment status. The plan will target populations who are in precarious work positions, those already on social assistance, and the homeless. The program will, however, target mostly the “working poor” according to Ontario’s Minister of Community and Social Services Helena Jaczek. Those receiving a minimum income will be compared to a control group, which will not receive payments. The project will look for outcomes using metrics like food security, health and health care usage, education and training, and labor market participation among others.
Recipients of the guaranteed minimum income will receive:
$16,989 per year for a single person (75 percent of the Canadian poverty line), less 50 percent of the recipient’s earnings from work;
$24,027 for a couple, less 50 percent of their earnings from work;
An additional $6,000 for those with disabilities.
In addition to this, recipients will continue to receive other provincial and child benefit payments.
With this version of a guaranteed minimum income, a person earning $12,000 a year would still receive a basic income of $10,989 (subtract $6,000, or half their earnings, from the base amount of $16,989) and therefore receive a total of $22,989. A recipient’s net income will still increase, with the minimum income still active, as earnings from work increase up until around a wage of $34,000, where the payments would disappear. The total cost of the project is expected at $50 million per year.
Hugh Segal, a former senator who was consulted for the project, noted in Manitoba’s “Mincome” experiment in the 1970’s that the community saw improvements in health with no drop in employment, and that the potential exists for the government to save money if it replaced the traditional social assistance programs like Ontario Works with a basic income. The Provincial government is also in the early stages of planning a fourth basic income pilot for the First Nations community.
