by Andre Coelho | Nov 11, 2019 | News
John McDonnell. Picture credit to: PoliticsHome.
John McDonnell’s proposes to include a basic income pilot in the next Labour Party’s manifesto, an intent which has been going on since 2016, at least. During 2018 a working group was formed, led by professor Guy Standing, a prominent economic advisor to McDonnell and specialist in basic income and related issues, giving rise to the publication and presentation in May 2019 of a detailed report about its applications within the UK’s context. McDonnell dubs this new manifesto as “more radical” than the previous 2017 manifesto, probably also including the more urgent measures to curb carbon emissions, relating to the impending climate emergency.
McDonnell, a 40-year companion to Jeremy Corbyn in politics, is now sure that “at least one pilot” should be set up in the United Kingdom territory, as soon as the Labour Party gets elected to government and Corbyn sits as Prime Minister. This is still being internally drafted within Labour’s top advisors, but McDonnell remains confident. He has said that “we’ve had [basic income pilot] bids from Liverpool, Sheffield, [and] a couple of other places”. Meanwhile, in Scotland, a basic income feasibility study is being developed, involving the localities of Fife, Edinburgh, Glasgow and North Ayrshire.
More information at:
André Coelho, “United Kingdom: Guy Standing presenting report “Piloting Basic Income as Common Dividends”, Basic Income News, May 6th 2019
Ashley Cowburn, “General election: McDonnell vows to present Labour’s most ‘radical’ manifesto with universal basic income pilot”, Independent, November 11th 2019
Ashley Cowburn, “Labour set to include pilot of radical basic income policy in next manifesto, John McDonnell says”, Independent, July 31st 2018
André Coelho, “Scotland: How the Scottish Citizens Basic Income Feasibility Study has been evolving”, Basic Income News, March 31st 2019
by Guest Contributor | Oct 29, 2019 | Opinion
Groups across the UK are calling for pilots of a radical alternative to the current welfare system.
With more people losing jobs to automation and the Devolution in the North East that’s currently happening, groups are worried that if this continues, the whole of the UK will be facing serious consequences in the future.
A Universal Basic Income (UBI) would see all citizens given a guaranteed income regardless of their eligibility for benefits or their employment status.
Finland, Kenya, India, and cities across the United States have recently piloted the revolutionary idea.
Supporters of a basic income, such as the University of London’s Professor Guy Standing, believe that it would guarantee minimum living standards and basic economic security across the UK.
The movement started in South Yorkshire with the founding of UBI Lab Sheffield in 2017. This is a grassroots group formed of researchers and activists exploring the potential impact of a basic income through calling for pilots in local areas.
In recent months, UBI Labs have launched in Liverpool, Leeds, Kirklees and the North East.
UBI Lab Liverpool was founded by Councillor Patrick Hurley, who introduced a motion supporting a UBI pilot at Liverpool City Council.
Artist Toby P Lloyd, whose work explores the liberating potential of a basic income, is leading UBI Lab Newcastle.
There are also ongoing discussions with groups interested in launching UBI Labs in Belfast, Hull, Birmingham, Derry/Londonderry, Exeter, Lancaster, Portsmouth, Manchester, Norwich, and West Sussex.
The UBI Lab network allows groups to share resources, promotional materials, advice, and experience.
In May, Shadow Chancellor John McDonnell announced that a Labour government would pilot basic income in Sheffield, Liverpool, and the Midlands.
Pilots in Canada, Namibia, and Finland have shown significant health benefits. Researchers found that a basic income reduced stresses associated with economic insecurity.
The pilot proposal produced by UBI Lab Sheffield is designed to measure the impacts on health and wellbeing as a key outcome of any basic income trial.
Members of the UBI Lab network have started conversations about basic income with council leaders, councillors and directly-elected mayors across the country.
The network wants to encourage more local authorities to lobby Westminster for a basic income pilot in their area and people interested in setting up new groups across the UK.
A recent Gallup poll found that 77% of UK adults favour the introduction of a basic income as a way to support workers who lose their jobs to automation.
In Spring 2020, the UBI Lab Network will host the second edition of UBI North in Sheffield. This will be the biggest conference on basic income in the UK.
Tchiyiwe Chihana of UBI Lab Sheffield said:
“Piloting a Universal Basic Income is an essential aspect of exploring potentially viable responses to the urgency of ever-expanding social and economic disparities. Consultative in approach, UBI Lab Sheffield ensures that multiple options reflecting the needs and experiences of people at micro and macro levels can be factored into a pilot while being adaptable. This also means that as many people as possible also have insight into the development of a potential UBI pilot in the city. Collectively, the raw data being developed has added to the resources of our city and has contributed to a sustainable knowledge pot for future use. The networking and the spin-off discussions that have developed out of UBI Lab Sheffield cannot be overstated.”
Cllr Erin Hill of UBI Lab Kirklees said:
“At a time when society seems very divided, the one thing most of us can agree on is that the current system isn’t working for anyone. Universal Basic Income – a regular payment made to everyone regardless of income or behaviour – isn’t a magic solution to all our problems, but it is a vital part of creating the better society we so clearly need. UBI doesn’t leave anyone behind. It provides basic security and opportunity for all citizens; protection for working people; a lifeline for those with caring responsibilities; better health and life chances for our children and grandchildren; support for marginalised groups, and so much more.
Right now, we have local people doing six or seven zero-hour contract jobs and still having to claim benefits; nurses and teaching assistants relying on food banks; people caring for relatives and being financially punished for it, and most people in poverty also being in work. Something has got to change. Across the world we have seen UBI transform lives and communities – I want us to be part of that transformation too.
Here in Kirklees we have a rich history of ordinary people standing up and demanding change for themselves, their families, and their communities – from women’s fight for the vote to the recent campaign to save our local hospital. I’m really proud that UBI Lab Kirklees has made a commitment to engage with local people, to make your voices central to the debate about what kind of society we want to be.”
Cllr Patrick Hurley of UBI Lab Liverpool said:
“The Basic Income is an idea whose time has come. Paying a wealth dividend to each citizen in order to help them make the best of their lives could be transformational for our country. People who want to take a chance on a change of career, or want to care for family members, or need a helping hand to smooth out life’s rough edges, would all benefit massively from something like this. At UBI Lab Liverpool, we think a series of demonstrations and pilots across the country could show the benefits to the wider population with limited downsides. That’s why we’re working with colleagues from across the city and across the country to promote Basic Income and see how best to implement it at a national level.”
Toby P Lloyd of UBI Lab Newcastle said:
“Critics of Basic Income say that it would make people lazy and they would all stop working. This argument has a very narrow view of ‘work’, defining it only as paid employment. Society relies on a huge amount of unpaid ‘work’ for it to function, most of this is done by women. Basic Income would not solve this, but it would be a first step in rewarding this unpaid labour and recognising its value. Basic Income would also be a way of investing in people, giving them more control over their lives and how they use their time, enabling them to reach their full potential. This is not possible for many people under the current system, because they are trapped in exploitative jobs which leave them with no time or energy to do anything else.”
Notes for editors:
– UBI Lab Sheffield is a collaboration between multiple organisations and individuals, seeking to explore the potential of a Universal Basic Income and the possibility of a pilot in the city. Organisations involved include Opus Independents, Sheffield Equality Group, The Centre for Welfare Reform and the University of Sheffield. https://www.ubilabsheffield.org/
– A feasibility study launched by the Scottish Government and supported by NHS Scotland is currently looking at the practicalities of a pilot in Scotland.
– Press assets and images are available at: https://www.ubilabsheffield.org/press
by Karl Widerquist | Sep 27, 2019 | News
An early version of a book, Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model, is now available for free download on my personal website. A summary, from the first chapter of the book (2012), is reprinted below. If you want to cite or quote it, please see the published version:
Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model, edited by Karl Widerquist and Michael W. Howard. New York: Palgrave Macmillan, 2012
Every year, every Alaskan gets paid. Every man, woman, and child receives a dividend as a joint owner of Alaska’s oil reserves. Alaskans are free to use this money as they wish with some potentially putting it towards a home improvement project. After all, if your looking for metal buildings Alaska is your place to find them. 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 publicly owned areas on Alaska’s North Slope. In 1976, the state government voted to dedicate a part of its yearly oil revenues to a state investment fund, called the Alaska Permanent Fund (APF). In 1982, the state government voted to distribute part of the returns from that fund as a yearly dividend, called the Permanent Fund Dividend (PFD), sometimes called “the Alaska Dividend.” In 2008, the dividend reached a high of $3269,[1] which comes to $16,345 for a family of five. More often in recent years, the PFD has been between $1000 and $1500 per person, which comes to between $5000 and $7500 for a family of five.
Karl Widerquist (left) Michael W. Howard (right)
The Alaska Dividend is one of the most popular government programs in the United States. It has helped Alaska attain the highest economic equality of any state in the United States. It has coexisted with, and possibly contributed to, the state’s growing and prosperous economy. And, seemingly unnoticed, it has provided unconditional cash assistance to needy Alaskans at a time when most states have scaled back aid and increased conditionality.
The Alaska fund and accompanying dividend seems to be a model worthy of imitation and adaptation. This book examines whether and how the Alaska Dividend is a model that can and should be imitated and adapted for circumstances elsewhere. It is an “edited volume” with authors who differ in their level of enthusiasm for (or skepticism of) the Alaska model. But we believe that the evidence provided by this book shows that the combination of policies we call the Alaska model is worthy of examination by other states, nations, and regions.
What is the Alaska model?
The “Alaska model,” as we use the term here, does not refer to the whole of Alaskan state government policy, nor to even to the whole of its oil revenue policy. It refers only to elements in the combination of APF and PFD. Although the APF is the source of revenue for the PFD, the two are different programs created at different times by different kinds of legislation. The APF is a Sovereign Wealth Fund (SWF)-a pool of assets collectively owned by the members of a political community usually invested into interest-generating assets. It was established by a constitutional amendment that did not specify what was to be done with the returns to the fund. The PFD is the policy of devoting the APF’s returns to a dividend for all Alaskan citizen residents. It was created by a simple act of the state legislature. Many nations and regions have SWFs, but only Alaska’s SWF pays a regular dividend to citizens. Many nations and regions provide some form of cash benefits, but so far, only Alaska pays a regular cash dividend to all of its residents.[2] The APF and the accompanying PFD link a resource-revenue-management policy with a progressive social policy. As an SWF, the APF helps to ensure that the state will continue to benefit from its oil after its reserves are depleted. As a dividend, the PFD helps every single Alaskan make ends meet each year without a bureaucracy to judge them.
We call this unique combination the Alaska model. It consists of three elements: (1) resource-based revenue (2) put into an SWF or some other permanent endowment, (3) the returns of which are distributed as a cash payment to all citizens or all residents. The extent to which a policy has to contain all three of these elements to qualify as following the Alaska model is not so important. But we will discuss the importance of each of these elements separately.
(1) Resource revenue.
The argument for the Alaska Dividend is simple and powerful: the oil, by right, belongs to all Alaskans. The PFD is an efficient and effective way to ensure that every single Alaskan benefits from it. If that argument works for Alaska’s oil, why not Maine’s fisheries, South Africa’s diamonds, Hong Kong’s real estate, Oregon’s forests, America’s broadcast spectrum, or the world’s atmosphere? Governments have allowed private, for-profit exploitation of these and many more resources, claiming that we will all benefit from the jobs and economic activity they create. But do we? Does a homeless person in Denver benefit from the gold being mined in Colorado? Does a shanty dweller in Johannesburg benefit from the diamonds being mined in South Africa?
The PFD has made sure that every single Alaskan has benefited from the state’s oil industry. Whatever benefit they might or might not get from more jobs or increased economic activity, every Alaskan can point to the dividends they’ve received since 1982 and say, I got this benefit from the state’s decision to exploit its oil reserves. Not many other programs do that, but many more could.
The case for taxing natural resources is at least as good, and probably far better than the case for taxing any other source of wealth. Resource taxes have the benefit of discouraging overuse of scarce resources. If properly employed, they can be an important part of a green environmental management strategy, giving people the incentive to reduce their consumption of scarce resources to sustainable levels. Yet, few if any countries in the world employ resource taxes in this way. Resources are often given away by governments to individuals and corporations who sell them back to the public with value added, but the sellers capture not only the value they add but also the natural resource value along with it.
A resource tax is literally a user fee. Anyone who takes possession of a resource makes it unavailable for others. The tax represents a payment for the burden imposed on others. This justification for resource taxation is more closely associated with “left-libertarianism,” discussed in chapters of this volume by Ian Carter, Alanna Hartzok, and Gary Flomenhoff. But as we will argue in a later chapter resource taxes are also consistent with liberal-egalitarian, utilitarian, and other theories of justice.
Of course, not every country has as much oil as Alaska, but one of the key lessons of this book is that a country does not have to be “resource rich” to have a resource dividend based on the Alaska model. We make this argument fully in the final chapter of this book. Here we preview only a small part of that argument.
One reason we know that a country does not have to be resource rich to have a resource dividend is that every country and every region has valuable resources. Later chapters of this book will show that the total value of natural resources (including not only mining, fishing, and forestry but also land value, the broadcast spectrum, the atmosphere, etc.) is surprisingly high even in areas not thought of as being resource rich. Gary Flomenhoft (this volume) shows that even “resource poor” states, such as Vermont, can create a substantial resource dividend.
Another reason we know that a country does not have to be resource rich to have a resource dividend can be seen from what a small part of Alaska’s resource wealth actually goes to supporting the fund. Alaska has many valuable natural resources, but the APF is supported almost entirely by taxes on oil. These taxes are extremely low by international standards, and only about one-eighth of the state’s total oil revenue goes to supporting the APF. Thus only a tiny fraction of Alaska’s resource wealth is used to support the PFD.
(2) A permanent endowment
Alaska introduced the APF largely because Alaskans knew that oil drilling would provide a very large but temporary windfall. They wanted to extend the period in which that windfall would benefit Alaskans by putting some of it away into a permanent fund. The APF was one of the first SWFs. Today many resource-exporting nations have them. Some nations have funds more than 10 times the size of the APF.
We see the essence of the Alaska model as a strategy to make sure that the system functions as a permanent endowment, but an SWF is not the only mechanism that can do so. To some extent treating resource taxes as user frees does so on its own. Some resources are capable of producing a permanent stream of revenue from user fees. These include land, the broadcast spectrum, and renewable resources. Such resources do not need to put revenue into a fund to function as a permanent endowment, and the Alaska model can be employed with only the first and second elements. Other resources produce only temporary resource streams. No nation can produce oil forever. Pollution taxes will hopefully discourage pollution. For revenue from sources like these to produce a permanent endowment, a mechanism such as an SWF is necessary.
(3) A cash payment to all citizens
To some extent the dividend was a way to sell ordinary Alaskans on the idea of a permanent fund. But to some extent the motivation for the fund was to support the dividend. Some of the lawmakers who created these programs, particularly Governor Jay Hammond, were influenced by the movement for what is now known as a “basic income”-a small unconditional income for every citizen to help them meet their basic needs. At the time, the policy was best known as the “guaranteed income” or the “negative income tax.” It was widely discussed by policymakers in the United States in the 1960s and 1970s. Hammond had unsuccessfully proposed a similar policy on a local level when he was a mayor of Bristol Bay Borough, and he very much saw the APF as an opportunity to create a basic income.
Basic income is a widely discussed topic in the academic literature in social science and philosophy. Researchers have examined the political and economic feasibility of the idea, its likely effects, and the ethical arguments for and against it. The United States and Canadian governments have conducted five social science experiments to see how a very similar policy would work. The Indian government will soon begin its own experiment. Basic income comes and goes in political popularity. It has recently appeared on the political agenda in Germany. It has considerable grassroots support in southern Africa today, and the Brazilian government is officially committed to phasing it in, although no timetable for moving beyond the first stage of the phase-in has been set. It is currently popular with Green and left-leaning parties in Europe, but its support (much like the support of the Alaska Dividend) often cuts across party and left-right divides.
As we will see in later chapters, not everyone agrees about the extent to which the Alaska Dividend fits the definition of a basic income. Usually, a full basic income is defined as an unconditional income, large and regular enough to meet a person’s basic needs. The Alaska Dividend is neither regular in size nor large enough to meet a person’s basic needs. But it is regular in timing and unconditional. So, it constitutes only a partial, irregular basic income. But it is the only version of basic income currently in practice in the Western industrialized world.
We (the editors of this book and the authors of this chapter) became interested in the Alaska model because of our interest in basic income. We’re excited to see an idea-so controversial in theory-has proven to be effective and extremely popular in the one place it has been tried. The Alaska model shows not only how basic income works, but also how the unique attributes of the Alaska model can be designed to work well elsewhere. The Alaska model is not perfect, but it is a successful strategy on which to build something better.
Employing the Alaska Model
By endorsing the Alaska model, we do not mean that governments should replace everything they do with the combination of a resource taxes, fund and dividend. We mean only that they should examine it as a possible addition to their toolkit. It’s only being used by one government, but it has proven to be more popular and more effective than many things that governments all around the world are doing. Certainly, it’s a policy that other governments should take a look at.
A preview of the book
The three parts of this book evaluate the Alaska model and discuss whether and how it can be adapted for other areas.
Chapters in Part One provide the background necessary to evaluate the Alaska model. Cliff Groh and Greg Erickson examine the unlikely history of the APF and the PFD and explain how the two programs work in practice. Scott Goldsmith discusses the impact of the dividend on Alaska’s society and economy.
Chapters in Part Two examine the ethical and political case for using the Alaska model as a tool for social justice. Jim Bryan and Sarah Lamarche discuss the political consequences of linking natural resource wealth and basic income, and how this policy combination can serve justice for future generations. Ian Carter presents the resource dividend as a left-libertarian economic policy. Christopher Griffin discusses the PFD as a practical application of the theoretical idea of Stakeholding. Stakeholding is a variation of the universal, unconditional grant idea. It differs from basic income in being delivered as a large lump sum grant rather than as a steady flow of smaller payments. Almaz Zelleke criticizes the extent to which the Alaska model, structured as a resource dividend, can be thought of as the practical implementation of basic income or even a step toward it. Jurgen de Wispelaere and David Casassas argue that the Alaska model, as it stands, is of limited value in promoting Civic Republican objectives. Steve Winter criticizes the Alaska Dividend for making recipients complicit with the oil industry. In the final chapter of Part One, we (Widerquist and Howard) respond with a chapter addressing the concerns of the authors in this section, and a discussion of why the link between resource taxation and basic income is important for different theories of social justice.
Chapters in Part Three discuss empirical questions about how the Alaska model can be adapted to be used most effectively in other states, nations, and regions. Gary Flomenhoff provides a detailed empirical investigation of the resource tax revenue available in the state of Vermont. He finds that even the resource-poor state of Vermont can raise $2000 (and possibly much more) for each resident each year. Michael Howard looks at the cap-and-dividend approach to global warming as a version of the Alaska model applied to pollution control. Karl Widerquist proposes personalizing the Alaska model into what he calls “Citizens’ Capital Accounts.” Alanna Hartzok argues that any dividend program based on an SWF has a strong responsibility for socially responsible investing, and presents evidence the APF currently fails to live up to that goal. Michael A. Lewis addresses the issues of fund and risk management, which will be important if the Alaska model is to further economic security of recipients. Angela Cummine discusses whether other existing Sovereign Wealth Funds (particularly in the Middle East) should move toward an Alaska-style dividend. Greg Erickson and Cliff Groh discuss the challenges to the APF and PFD in Alaska today and the extent to which the model can be expanded and improved within Alaska.
In the concluding chapter, Howard and Widerquist respond to the concerns of authors in Part Three and discuss six lessons they take away from the Alaska experience.
[1] Including a one-time supplement of $1200 from that year’s state government budget surplus.
[2] Iran is currently in the process of phasing in a regular dividend.
Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model, edited by Karl Widerquist and Michael W. Howard. New York: Palgrave Macmillan, 2012
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
