by Kate McFarland | Mar 13, 2017 | News
It has been said that “Basic Income is not left or right but forward.” The policy is alleged to transcend the partisan divide, drawing support from progressives as well as conservatives and libertarians. However, Joe Chrisp, a PhD Candidate in the University of Bath’s Institute for Policy Research (IRP), argues that the reality is more complicated. (Chrisp’s dissertation, supervised by Professors Nick Pearce and Jane Millar, concerns the feasibility of universal basic income.)
First, some of the apparent agreement stems from the fact that some individuals and political parties use the term ‘basic income’ in a different or more expansive way than BIEN’s definition. Although they call them by the same term, the policies they support are actually distinct.
Second, even if individuals across the political spectrum mean the same thing by ‘basic income’, they sometimes have divergent and deeply entrenched views on acceptable funding mechanisms.
Finally, Chrisp points out that some argue that, in general, “right versus left” is no longer the best dimension by which to characterize political divisions. Instead, a “universalist versus particularist“ dimension might be more apt. In this case, even if basic income does draw support from both left and right, this does not entail that it transcends the most important political divisions in today’s society.
Read the full article:
Joe Chrisp, “Basic income: beyond left and right?” IRP Blog; posted by James Harle on January 23, 2017.
Reviewed by Dave Clegg
Photo CC BY-NC-ND Angel Ortega
by Ashley | Mar 11, 2017 | News
Bill Gates. Credit to: The Huffington Post
On a recent Reddit AMA, Bill Gates says countries aren’t rich enough to support a Universal Basic Income (UBI). In the meantime, Gates suggests investing in government programs and increasing the demand of labor.
Bill Gates posted his fifth Reddit AMA on Monday, February 27th, 2017. He responded to questions on a number of topics, ranging from his favorite vacation spot to his viewpoints on whether social media has contributed to divisions in the United States. One Reddit user asked Gates about his thoughts on Universal Basic Income (UBI).
In his response, Gates points to constraints in making this alternative economic system scalable today. He described how countries may not currently have the financial capacity to support a UBI, stating: “Even the US isn’t rich enough to allow people not to work.” Currently, there is a lack of evidence that UBI is linked to decreasing employment or willingness to work. On the contrary, Rutgers Professor James Livingston has shown there is empirical evidence that a subsidy to one’s income has little to no impact on one’s work ethic. Countries around the world are initiating UBI pilots to test feasibility, structure and impacts. In fact, the Finnish UBI pilot is intended to increase employment and reduce poverty.
In the meantime, Gates proposes supporting specific historically marginalized populations, such as seniors and youth with disabilities. He also suggests increasing the amount of “adults helping in education.” One pathway of support he mentions is investment in government programs, like the Earned Income Tax Credit (EITC), that will “help increase the demand for labor.” The Earned Income Tax Credit is a policy initiative that focuses on alleviating poverty for US citizens and has been shown to increase labor-market participation. There are numerous variations of UBI models; some which envision a guaranteed income working in tandem with existing government programs. In contrast to many currently existing government subsidies and programs, UBI assumes a guaranteed income to each individual member regardless of household income.
Gates raises a noteworthy point about the need for an increased demand for labor during a time where there is growing concern about how automation may lead to the loss of jobs. In a recent video interview, he has proposed taxing robots that take humans’ jobs and using that money to finance sectors like education, provide job training, and support government programs. Basic Income News author Tyler Prochazka expands upon Bill Gates’ former comments on taxing robots in his article and how this connects to UBI.
More information at:
Tyler Prochazska, “Bill Gates is Wrong: Don’t Tax Robots”, Basic Income News, February 22th 2017
Mary Hynes, “Jobs are disappearing and to me that’s a good thing: Why We Should Abandon Work”, CBC Radio, March 2nd 2017
John Henley, “Finland Trials Basic Income for Unemployed”, The Guardian, January 3rd 2017
Giacomo Tognini, “Universal Basic Income, 5 Experiments Around The World”, WorldCrunch, February 23rd 2017
On Youtube: “Bill Gates: The Robot That Takes Your Job Should Pay Taxes”, February 16th 2017
On Reddit: “I’m Bill Gates co-chair of the Bill & Melinda Gates Foundation. Ask Me Anything”, February 27th 2017
by Guest Contributor | Mar 10, 2017 | Opinion
Written by: Rahul Basu
It is often argued that the existing system of benefits is riddled with flaws, and a universal basic income would be preferable. Arguments made include the high cost of administration, the errors of exclusion (target group not receiving the benefit), the errors of inclusion (people wrongly receiving the benefit), corruption, and the cost of access for the beneficiary, which includes time, effort, and suffering degradation at the hand of bureaucracy. What this explanation doesn’t specify is under what conditions is targeting preferable, and when is universalization better?
Let’s take a simple model to examine some scenarios. Assume that a country has 1,000 residents and a per capita income of $50,000. It pays a benefit to 200 people, 20% of its population. The benefit (say free food) for each person is $5,000, 10% of the average income of the country. This would cost 2% of the GDP:
| Population x Average income |
= Total income of country (GDP) |
| 1,000 x $50,000 |
= $50,000,000 or $50 million |
| 20% of Population x 10% of Average income |
= (20% x 10%) of Total income of country = 2% |
| 200 x $5,000 |
= $1,000,000 = $1 million = 2% of $50 million |
For the moment, let’s assume no administration costs or costs of access. Let’s also assume that 80 people (40% of the target group) do not receive the benefits, and instead the same number of people outside the target group wrongly receive the benefit. And everyone receives the full amount or nothing at all. Therefore, the scheme is correctly benefiting only 120 people (12% of the population (40% x 20% or 120/1,000)), and only $600,000 or 60% of the money is well spent (1.2% of GDP (60% x 2% or $0.6 million / $1.0 million)).
Suppose we withdraw this benefit and universalize it. Then each person in the country will receive a benefit of $1,000 or 2% of average income ($1 million / 1,000 or $1 million / $50 million). If we examine individual scenarios, we can draw up the following table:
| |
Benefit |
UBI |
Difference |
Pop |
Total |
| Beneficiaries |
$5,000 |
$1,000 |
-$4,000 |
120 |
-$480,000 |
| Excluded group |
$0 |
$1,000 |
$1,000 |
80 |
$80,000 |
| Wrongly inclusion |
$5,000 |
$1,000 |
-$4,000 |
80 |
-$320,000 |
| Remaining |
$0 |
$1,000 |
$1,000 |
720 |
$720,000 |
| Total |
|
|
|
1,000 |
$0 |
A few things jump out. More beneficiaries have lost (120) compared to those who have gained (80). The total amount going to the beneficiary group is now $200,000, a reduction of $400,000. Further, no beneficiary is receiving the full $5,000. And while 80 individuals correctly suffer a reduction in undeserved benefits, another 720 outside the beneficiary group are receiving $1,000.
The other aspect to consider is political. While everyone is receiving the same amount, 720 of the 800 net beneficiaries of the UBI are probably not strongly concerned by a 2% increase in income. However, the losers, while only 200, are more highly motivated to defend the benefit, as it is proportionately a greater loss. Further, the 120 rightful beneficiaries are likely to have below average income. This is the central political challenge in universalizing existing benefits.
Under what scenario would the errors be large enough for universalization to make sense? One basic threshold could be set at where the total money going to the target beneficiary group does not diminish. Under what circumstances does this occur?
Let the target group be T% of the population and the proportion correctly included under the benefit is C% of the target group. In this situation, when T% = C%, the total amount received by beneficiaries will be the same under the benefit and universalization. In other words, the proportion of the target group to the population is the same as the proportion of those receiving benefits to the target group.
Let’s examine our earlier example of a benefit of 10% of average income to 20% of the population. If only 20% of the target group is receiving the benefit (20% of 200 = 40), then universalization will keep the total amount received by the target group constant.
| |
Benefit |
UBI |
Difference |
Pop |
Total |
| Beneficiaries |
$5,000 |
$1,000 |
-$4,000 |
40 |
-$160,000 |
| Excluded group |
$0 |
$1,000 |
$1,000 |
160 |
$160,000 |
| Wrongly inclusion |
$5,000 |
$1,000 |
-$4,000 |
160 |
-$640,000 |
| Remaining |
$0 |
$1,000 |
$1,000 |
640 |
$640,000 |
| Total |
|
|
|
1,000 |
$0 |
This is a fairly strong condition. If 30% of the population benefits, universalization makes sense if less than 30% of the benefit amount is actually received by the beneficiaries. In other words, 70% is stolen, or the cost of access is high. Such poor implementation is unlikely to be found in any developed economy for a significant benefit. It may be possible to find such benefits in developing countries where the corruption may be high, and cost of access may be significant for some groups.
The essential result doesn’t change even if we assume that beneficiaries receive a part of the benefit (due to corruption or cost of access issues). In order to achieve the same total amount received by beneficiaries under universalization, the ratio of net amount received by beneficiaries to the total entitlement / spend should be equal or less than the ratio of beneficiaries to the population.
To take a simplified real life example, the Economic Survey of the Government of India discusses the desirability and feasibility of a UBI in depth. Appendix 2 of Chapter 9 estimates for the flagship Public Distribution Scheme (PDS), 36% was lost to corruption, 36% to the non-beneficiary group and 28% to the target group. It further estimates that 60% of the target group are receiving benefits, and that the target group is 40% of the population. Only 28% of the budget is being received by the target group of 40% of the population. Clearly, a UBI (which eliminates corruption as well), would ensure that 40% of the budget is received by 40% of the population that needs it most, which would be an improvement on the status quo. This assumes the budget is kept proportionate and numerous other considerations have been set aside (the entire food supply chain for example).
While these are examples, they bring out clearly the extreme inefficiency and corruption required to make substituting a benefit for a UBI a net positive for the target beneficiaries. There are other considerations of course.
Iran replaced its enormous fuel subsidy, which was largely benefiting the rich and industry, with a UBI of a lower aggregate amount. Similar subsidies that have been captured by the rich can be a fertile ground for such structures. The carbon tax + dividend proposal is one on similar lines. By not pricing carbon emissions, the rich are being provided a benefit by the state. A carbon tax eliminates the benefit, while the dividend universalizes it.
Advocates for replacing targeted benefits with a UBI have a high standard to meet, and must demonstrate that there is a net benefit from universalization of existing benefits.
About the author: Rahul Basu is a member of the Goenchi Mati Movement, which asks for minerals to be treated as a shared inheritance. Mining is the sale of the family gold. For fair mining, there must be zero loss mining, saving all mineral money in a permanent fund, and distribute the real income only as Citizens’ Dividend.
by BIEN | Mar 9, 2017 | News
The issue of the basic income, its pros and cons and the feasibility of its implementation have occupied space in media outlets in recent years, mainly due to the visibility it gained after the referendum in Switzerland and the experiment started this year by the Finnish government. However, this discussion has not reached all corners of the planet. Or at least not until recently.
On February 1st of this year, the Argentine conservative-leaning newspaper La Nación published an opinion piece entitled “An universal income that compensates for poverty and unemployment”. The author of the article, Eduardo Levy Yeyati, is an economist, writer, and civil engineer, with a PhD in Economics from the University of Pennsylvania. Yeyati introduces the concept of universal income and describes the historical dimensions of this idea, as its discussion has spanned the centuries, from Thomas More, to Martin Luther King, to its contemporary promoters such as the British Labour leader Jeremy Corbyn and the French presidential candidate Benoît Hamon.
However, the text mainly discusses three fundamental complications surrounding the idea of basic income. First, despite having multiple detractors and defenders, the basic income is still an idea in search of a design. According to Yeyati, there is a rather classic proposal such as an unconditional basic income (the model advocated by the most ardent supporters of the initiative), a conservative proposal that would be represented by the negative income tax defended by Milton Friedman and a compromise third-way between these more extreme positions that seeks to guarantee a basic salary floor for those who already receive some type of income.
Second, the author identifies two moral dilemmas that must be addressed and answered by any definition and operationalization of the basic income. First, should it be paid only to those who have a registered job, in the style of an addendum and prize to effort, or should it be paid to everybody, even to those who have no intention of working? Second, should the person who has a lower income receive more money, should everybody receive the same amount or should the person who works the most receive more? For many advocates of this initiative, a basic income basically implies answering these dilemmas in the most “generous” way: it should be paid to everybody and everyone should receive the same. In this sense, it seems that Yeyati uses the term more broadly than a lot of speakers in other countries, not compromising to any of the possibilities.
Finally, the author ventures one last idea in which he discusses the feasibility of thinking and discussing the implementation of a basic income in Argentina today. And despite some pessimism on his behalf and considering that it would take several years of political maturation to reach the appropriate level of discussion, Yeyati does believe that it is possible to move towards the realization of a basic income today through the design and implementation of a Finnish-style pilot in Argentina. Basically, the author argues that this would not be very costly, that the twin challenges of poverty and unemployment will dominate the development agenda in the coming years and that, in order to move forward, this debate needs information that we do not currently have. In this sense, despite the fact that this issue it not yet in the agenda in the Latin American and Argentine context, at least there are people who are encouraged to discuss its implications and there are media outlets, however conservative they may be, willing to publish them.
Featured Image CC Mike Ramsey (via flickr, Scott Santens)
by Kate McFarland | Feb 21, 2017 | News
VIDEO: “Basic income – real social security”
Citizen’s Basic Income Network Scotland (CBINS), BIEN’s Scottish affiliate, was launched in Glasgow in November 2016. It held its second public event in Kelty, Fife, on January 28, 2017.
Videos of all presentations and Q&A sessions are available online.
Background
Public officials in Fife are currently working to establish a pilot study of basic income in the region, which is likely to be designed as a saturation study in a town (in which all residents of the chosen site are eligible to receive the basic income for the duration of the pilot). In November 2015, the Fairer Fife Commission (an independent commission created by the Fife Council) released a report that called for a basic income pilot as one of 40 recommendations to achieve a “fairer Fife”. Specifically, the commission encouraged the community planning board, the Fife Partnership, to select a town in Fife in which to run a pilot informed by “leading practice around the world” (with the planned study in Utrecht cited as an example of global leading practice at the time). In November 2016, the Fife Council voted to convene a group to carry out an initial feasibility study in early 2017.
The potential Fife pilot is still being designed. When asked about its details at the Kelty event, Paul Vaughn, Head of Community and Corporate Development at the Fife Council, relayed that the Council wishes to select a town of 2,000 to 5,000 people for the study, and that the pilot would run for at least two years. Otherwise, the details of the study’s design (including the amount of the basic income) are still “up for grabs”.
Meeting in Kelty
At CBINS’s Kelty meeting (titled “Basic income – real social security”), participants addressed broad issues concerning the motivation to pursue a basic income in Fife, the promises and potential pitfalls of pilot studies, and political support for a basic income in Fife and Scotland.
After introductory remarks by CBINS’s Willie Sullivan and Maddy Halliday, guest speaker Karl Widerquist (BIEN co-chair and associate professor of philosophy at University of Georgetown-Qatar) presented a justification of basic income as compensation for individuals’ deprivation of access to natural resources due the institution of private property. Widerquist argued no person should be forced to work for others out of necessity, and that a basic income would provide an incentive for employers to provide better wages.
After Widerquist spoke on the general question of “why basic income”, Vaughn turned to the question of “why Fife”. Vaughn provided an overview of the challenges currently faced by the council area, especially with respect to poverty and deprivation, noting that Fife tends to be representative of Scotland as a whole on measures such as health, employment, community safety, and other indicators used by government and community planners. Further, Vaughn presented the work of the Fairer Fife Commission that instigated the investigation into the pilot. Although the commission report made dozens of recommendations, the suggestion of a basic income pilot has generated the most interest among local authorities, according to Vaughn. However, as Vaughn described, a great deal remains to be completed, from awareness raising to gaining political and financial support to working out the implementation details and other preparatory work.
During the afternoon CBINS’s Annie Miller chaired a session in which Mike Danson (CBINS trustee and Professor of Enterprise Policy at Heriot-Watt University) and Widerquist offered two different perspectives on basic income experiments. Danson encouraged the audience to begin thinking through the myriad challenges related to implementing a basic income and even a pilot study thereof — raising many examples himself. Should students receive the benefit? Who counts as a “citizen” for the purpose of the basic income? Will the databases used to track recipients miss some of the most vulnerable (e.g. the homeless)? Given that a pilot would ideally be conducted at the national level (since the central government exerts control over taxation and other welfare benefits), how can local and regional pilots be useful?
Widerquist then spoke about limitations and potential dangers of pilot studies. For example, any pilot study, even a saturation study, cannot discern all impacts of a basic income on the labor market, given that the labor market is national (even global). Moreover, he cautioned that those who conduct pilot studies have a tendency to focus on whatever outcomes are easiest to record and measure (the “streetlight effect”), such as effects on work hours, rather than thinking broadly about the possible effects of a basic income. And he warned that policymakers are others are likely to try to spin results of any study to their advantage; for example, policymakers are likely to portray any decrease in work hours as a bad outcome.
Finally, public officials representing positions across the political spectrum briefly presented their views on the idea of a basic income for Scotland. Member of Scottish Parliament (MSP) Alex Rowley (Labour) enjoined Scotland to be ambitious and bold in tackling poverty. Fife Councillor Dave Dempsey (Conservative), a former student of mathematics, described basic income as an “elegant” solution, and revealed that the Fife Conservatives support the idea (although he could not speak for Scottish Conservatives in general). Maggie Chapman, co-convener of the Scottish Green Party, emphasized the ability of basic income to transform the nature of society and the economy. Chapman noted that, as well as ameliorating many problems with the welfare system, a basic income would support work that is currently unpaid or underpaid, such as care work. Another Fife Councillor, Lesley Lewis (Labour), addressed some of the issues and challenges in winning public support. Finally, Member of Parliament (MP) Ronnie Cowan (Scottish National Party), a long-standing supporter of basic income, also spoke about the uphill battle faced by proponents of the idea — especially given that money is highly valued in society as a mark of success. Cowan encouraged everyone to write a personal letter to their MPs and MSPs in support of basic income, stressing that letters do influence policymakers.
More information on the event
Gerry Mulvenna, “Basic income – real social security,” The Independence Live Blog, January 30, 2017.
“Flashback to Kelty: Maddy’s opening address at our Pilot event,” Citizen’s Basic Income Network Scotland blog, February 6, 2017.
Liam Turbett, “The Scottish Town Planning to Give Everyone Free Money,” Vice, February 1, 2017.
Reviewed by Genevieve Shanahan
Photo: Fife’s Roome Bay, CC BY-NC-ND 2.0 Tom Parnell
