by Citizens' Income Trust | Jan 25, 2016 | Opinion
Anthony Painter and Chris Thoung, Creative Citizen, Creative State – The principled and pragmatic case for a Universal Basic Income. Report published by the Royal Society of Arts (RSA), December 2015.
This report from the RSA is a most welcome addition to the recent flurry of publications and media interest in Citizen’s Income. It outlines a context – technological change – resulting in
underemployment, unemployment or the need to transition careers with some frequency for many. A Basic Income could provide a foundation to smooth working-life transition; (p. 5)
and an ageing population, requiring more people to spend time on caring for others.
The report notes the growing Citizen’s Income movement; studies a variety of other reform proposals (and particularly a Participation Income and an enhanced contributory system); and argues that polling data that shows that the British public regards ‘making work pay’ as far more important than tackling poverty and inequality provides a powerful argument for Citizen’s Income:
It is Basic Income and Basic Income alone that sends out absolutely clear yet non-coercive signals about the incentive to work. … Basic Income is a foundation for contribution. It incentivizes work but supports other forms of contribution too. In this regard, it is the system of income support that best rewards contribution – albeit contribution defined beyond narrow cash terms. (p. 14-15)
The report describes the UK’s current benefits system, notes that the sanctions regime will increasingly attack the self-employed and the employed once Universal Credit is rolled out, shows how Citizen’s Income would offer the ‘power to create’, and then sets four tests for the idea to pass:
- Does the system accord with a widespread set of moral precepts?
- Is it broadly fiscally achievable within the parameters of existing taxation and expenditure?
- Is it distributionally just when compared to the current system?
- Will greater individual (and civic) freedom and creativity be realized? (p. 18)
The particular scheme that the RSA evaluates in relation to the second and third criteria is based on the scheme published by the Citizen’s Income Trust (CIT) in 2012 but with a few minor variations – you can download the CIT proposal here.
A non-binding contract to encourage contributions to society will run alongside receipt of Citizen’s Income. The fact that it is non-binding, and the recipient’s failure to adhere to an agreed contract would not compromise their receipt of a Citizen’s Income, retains the scheme’s reciprocity – important for its ability to pass the first test – and retains it as one characterized by an initial act of generosity on the part of the state, rather than as one that expects a claimant to prove a contribution before the state reciprocates. There is, though, a danger with such a contract. It would be easy for a future government to make receipt of a Citizen’s Income dependent on adherence to a contract’s conditions, thus turning the Citizen’s Income into a Participation Income, so that it would no longer be a Citizen’s Income and would be loaded with administrative complexity and bureaucratic intrusion in people’s lives – precisely what is not required.
In relation to the levels of Citizen’s Income, the RSA scheme attempts to reduce the losses that poorer families with children might suffer at the point of implementation (which has been recognized as a problem in relation to the Citizen’s Income Trust 2012/13 scheme) by allocating a higher level of Citizen’s Income to the first child in a family, and possibly lower levels to the third and subsequent children. This compromises the definition of a Citizen’s Income, because that requires that every individual of the same age should receive a Citizen’s Income of the same amount: but this is a compromise in theory, and not a new compromise in practice, and so should not overly concern us. This is because in any Citizen’s Income scheme the children’s Citizen’s Income are paid to the main carer: so although in theory every working age adult (or adult over 25 years old, as in the RSA and CIT 2012/13 schemes) receives the same amount, in practice the main carer of children receives their own adult Citizen’s Income and the Citizen’s Incomes of their children. Because allocating different amounts to different children in a family will adjust a total amount paid to an adult that is already variable in relation to the number of the children in the family, no new compromise has in practice been generated. We might hope that if such a Citizen’s Income scheme were to be implemented, then eventually it might prove possible to reduce the compromise by bringing the Citizen’s Income levels allocated to different children nearer to or identical with equality: but as a transitional measure with some useful effects, the RSA’s approach has much to commend it.
A compromise that has nothing to commend it, though, relates to lone parents:
One group that could lose out in the transition to Basic Income in the RSA model are low income, lone parents with children over the age of five. … there may be scope for a transitionary measure whereby lone parents could continue to claim a Child Benefit top-up … introducing an element of household calculation. (p.31)
A lone parent addition would not satisfy the ‘unconditional’ requirement of a Citizen’s Income, and would result in precisely the kind of bureaucratic intrusion into people’s personal relationships that a Citizen’s Income is trying to get away from. If it is felt that lone parents need an additional payment, then an additional and separately administered payment should be made, so that the Citizen’s Income itself is not compromised. We are used to social policies that we can tinker with without destroying them. A Citizen’s Income is different. If we tinker with it, then we destroy it. This lesson has thankfully been learnt in relation to Child Benefit. In 2010 we were told that it would be means-tested. It has not been. Instead, an additional tax charge is imposed on high earning individuals living in households receiving Child Benefit. This is not sensible, because it has resulted in domestic disharmony and in the withdrawal of Child Benefit claims: but at least it does not destroy Child Benefit as a universal benefit. A similar approach could be employed in relation to lone parents in the context of a Citizen’s Income. The Citizen’s Income must never change; but an additional benefit could be established with its own conditionalities and administration.
When the report discusses some alternative Citizen’s Income schemes – such as scheme B in the recent Institute of Social and Economic Research paper, its use of the word ‘modified’ might be somewhat confusing. Scheme B is not a ‘modified’ Citizen’s Income, or a ‘modified’ Citizen’s Income scheme. The Citizen’s Income is a genuine Citizen’s Income. It is simply that scheme B retains more means-tested benefits than some other schemes – it still takes a lot of households off means-tested benefits, or reduces their claims to such low levels that they are likely to come off them. We ought to avoid the use of the word ‘modified’. Either a proposal is for a Citizen’s Income, or it is not; and if it is, then the whole scheme, including changes to means-tested benefits, tax allowances, etc., is a Citizen’s Income scheme. Some schemes, such as scheme B, would be easier to implement than others, such as the RSA scheme. In many ways, the RSA scheme would be preferable to scheme B. So perhaps we ought to regard scheme B as a useful first step, and the RSA scheme as a useful second step.
The RSA report is a long, detailed, well researched, and most useful document, and no short review can do it justice. The minor caveats that I have listed above are precisely that: minor caveats, and areas for continuing research and debate. The RSA is to be highly congratulated on the research project that has led to the report, and on the report itself. There could be no better place to start the next phase of the Citizen’s Income debate than this report.
by Nicole Teke | Jan 13, 2016 | News
Socialist Member of Parliament and former Minister Delphine Batho just tabled an amendment to the National Assembly asking the government to make a report on the feasibility of basic income in the context of digital revolution.
Update 18th January: MP Frédéric Lefebvre and several conservatives colleagues have tabled another amendment with the same wording.
Basic income is slowly but surely entering the political scene. On January 11th 2016, Delphine Batho, MP from the Socialist Party and former Minister of Justice and Ecology, submitted an amendment to a bill on digital technology, asking the government to make a report on different approaches to basic income and its economic feasibility.
This amendment (pdf) calls for a detailed report on this topic by no later than June 2016, which would include “a macro-economic feasibility study, a comparative impact study on different approaches to basic income, as well as an analysis on the experiments on the subject that are currently going on, on a local and an international scale”.
This interesting move happened only few days after an important report submitted to the Ministry for Employment made an important case for basic income. As part of 20 recommendations presented to the Ministry, the report recommended studying the feasibility of basic income in France by carrying out a study, in order to plan pilot-projects in the country. It created a lot of ripples in the media and Ms Batho’s amendment directly refers to it.
The French Movement for a Basic Income (MFRB) supports Delphine Batho’s initiative and calls for broad and cross-party support for it.
Mrs Batho’s support for basic income is not new. In a colloquium organized in the Senate in May 2015, she defended the idea, stating that “our welfare and State-financed system relies on 1945 capitalism and the thirty years of post-war economic growth. We now live in a different era and the system is now subject to changes, due more specifically to this new digital era, but also to the ecological crisis, the depletion of natural resources, etc. We thus need to think about a new organizational and welfare system”.
The Socialist MP emphasized the importance of studying the possibility of a basic income in France, in a context where it could “remunerate ‘unpaid work’ and all tasks that create value, especially through digital tools”. She based her arguments on the “digital revolution and the changes it implies for the labour market”, as new technologies contribute to doing more and more tasks, and consequently replace more and more jobs in France and worldwide.
This new development is the latest in a series of positive signals for basic income in France. Last month in the Aquitaine Region, the left coalition won the election with a proposal for a basic income pilot in their platform, and last November a right-wing MP Frédéric Lefebvre unsuccessfully proposed a similar amendment in another legislative dossier.
Last but not least, MP Lefebvre revealed on twitter this week that he has had a discussion with the Minister of the Economy Emmanuel Macron, and the latter agreed to work on basic income.
On the down side, a new poll shows that only 35% of the French would support basic income. This is a lower score than a previous poll in May 2015 (60% in favour). However this may be explained by the different way of presenting the idea to respondents.
This could thus be a turning point for basic income in France, as more and more decision-makers show an interest in the issue.
Credit picture CC Parti socialiste
by Timothy Roscoe Carter | Jan 9, 2016 | Opinion
Before beginning this essay, let me describe the people about whom I am speaking when I use the term “liberal”. In the American 21st century context, I am essentially describing the people you would likely find in the leadership of the Democratic party. Despite the conservative view of mainstream liberals as radical socialists, they are, at most, cautious reformers. Even that probably goes too far. The way they depict themselves, and probably actually see themselves, is as people who believe in the system, but want it to be fairer, more compassionate, and more efficient. When viewed systematically, the most important of those is efficiency. A look at policy reveals that the primary aim of liberals is using the government to make capitalism work better and more efficiently. This also applies to seemingly non-market concerns like welfare benefits, civil rights, and education.
Let us look at equal pay and anti-discrimination labor laws for women. Some economic theorists on the right argue that such laws are unnecessary. According to them, the market would automatically correct any form of discrimination. If sexist employers refused to hire women or paid them significantly less than their equally skilled male counterparts, other employers would exploit the opportunity to hire the women at higher wages. The productivity gains of the fairer employers would lead to emulation and competition for women workers until parity with men is achieved.
Liberals usually respond by appealing to empirical reality. If this argument were true today, it would have also been true in 1910. We know there was sex discrimination then, as there continues to be today. If markets corrected inefficiencies by themselves, there would never have been any gender discrimination. But liberal arguments do not contradict the claim that sex discrimination is inefficient. Laws preventing gender discrimination may be just and compassionate, but they also make markets work more efficiently. Eventually, laws against gender discrimination turned out to benefit employers as much as they benefited women. In the documentary Inequality For All, Robert Reich showed that employers took advantage of the growing numbers of women in the workforce competing with men for the same jobs, and this was one of the factors that eventually lead to the leveling off of real wage growth that began in the United States in the late 1970s and early 1980s .
This analysis applies across the range of policies pushed by liberals. Consumer protection laws and tort laws may protect and compensate consumers, but they also encourage trade by making it easier to trust strangers in the market. Public health care and education saves and enriches people’s lives, but they also produce a skilled and healthy workforce for employers. Laws that support strong unions help the workers themselves, but they also increase workers’ wages so that they can spend more as consumers. Infrastructure projects provide public goods that are used by all, but they notoriously prioritize the needs of businesses over the needs of the disadvantaged communities where they are inevitably built.
What about same-sex marriage? It is crucial for social justice, but does it help market efficiency to allow people to marry whom they wish? No, it does not, and that is why same-sex marriage provides a useful counter-example. The fact is that same-sex marriage was never really a mainstream liberal goal. Nor was it really a goal of the large mainstream gay rights organizations. The main goal was just for more acceptance of the LGBTQ+ community. If straight people can partake in hookup culture on apps like Tinder then why can’t gay people go on Discreet Gay Dating without being judged for it? If dysfunctional heterosexual couples can have a baby why can’t stable same-sex couples adopt one? Both the politicians and the organizations focused on the acceptances of the community and getting anti-discrimination laws passed, which do serve market efficiency as previously noted. Same-sex marriage as a goal arose from the gay and lesbian grass roots and was pursued more through the courts than through legislation. As late as 2008, all three top contenders for the Democratic nomination for President declared their opposition to same-sex marriage. The speed and enthusiasm with which virtually all of the top Democrats reversed their positions the moment same-sex marriage polled over 50% could certainly cause a person to doubt the sincerity of their previous opposition. But to blame that insincere opposition on political cowardice would be to miss the point. Professional politicians fight uphill battles against initial public opposition a lot. But they also have to pick their battles. And however much powerful liberals may have secretly sympathized with the plight of their gay and lesbian friends who wished to marry, and may have even supported them with donations towards items to help them consumate such a marriage (be it a feeldoe or helping with the ceremony itself), they were simply not going to prioritize a political battle for social justice that would not increase market efficiency, grow the economy, and enrich their campaign donors.
So where does this leave us with basic income? To answer this, we need to examine how liberals approach welfare in general. It is certainly true that they support much more generous benefits than conservatives, they also tend to be even more concerned with separating the deserving poor from the undeserving poor than conservatives, whose main concern is turning whatever welfare spending that does exist into a way to funnel that money into corporate coffers. Liberals usually support robust Earned Income Credits, a kind of negative income tax limited to low wage earners, dropping off quickly above the poverty line. They support benefits for children and the elderly as well as the disabled, although they can be extremely strict about whom they consider disabled. They will give welfare benefits to unemployed single parents sparingly, on a temporary basis, and require education or employment search conditions designed to get the parents back to work as soon as possible. Drug and alcohol abuse are seen as reasons to cut off benefits. For unemployed working age adults, liberals sponsor “Care Not Cash” initiatives, which replace cash benefits with direct services, in the few localities that offer any benefits at all.
The pattern is clear: liberals believe that humans have value primarily as engines of production and consumption. Within this view, welfare is a legitimate tool to push people into the labor market. This ensures that goods and services can be produced. Those who do work and those incapable of working are to be given a sufficient income to take them slightly above the poverty line. This appears compassionate, but the systemic reason is to ensure that they have just enough money that they spend all of it. This way there is sufficient demand for goods and services to be produced, but people can not save enough money to become capitalists or be able to leave the workforce. Indeed, virtually all public assistance programs cut off recipients with any significant savings. While conservatives fight for the direct interests of the capitalist class, liberals fight for the interests of the capitalist system.
I understand that few liberals consciously believe and support the goals and beliefs which I ascribe to them here. They believe they are compassionate people who want to make the system work better for the unfortunate. That is probably true. But it does not matter. Like with institutional racism, the conscious intent of the participants does not matter; it is their actions and the results that matter. And the fact is, if you assume that the primary concern of liberals is market efficiency, you will predict their actions better than if you assume that their primary concern is uplifting the downtrodden or achieving economic and social justice.
Let us look at one more example before we turn to basic income: the minimum wage. One obvious way that the minimum wage fits the pattern I have described is that you have to be employed to benefit from it. A less obvious way is that it looks free, but it is actually a tax that is passed on to consumers, so it is the middle class that pays for it, not the capitalist class.
But the most striking way that the minimum wage fits this pattern is when you look at its amount. Democrats pick a new number every seven to twelve years. They refuse to index it to inflation so they can have at least one winning issue against Republicans every decade. Opponents of raising the minimum wage always mock the arbitrary nature of the new number picked and ask something like, “Why not $100 per hour?” Liberals typically dismiss this mockery with empirical evidence, pointing out that raising the minimum wage has almost never resulted in a loss of jobs, and sometimes results in increased employment due to increased demand.
But as with anti-discrimination laws, just because right-wing critics are empirically wrong does not mean that they do not have a point. What criteria do liberals use to determine how much the minimum wage should be? $100 per hour likely would wreck the economy. But if $10.10 per hour, the current consensus goal of the Democratic Party, would have no ill effects, why not fight for $15, or $20, or $25? Why not commission a study to determine the maximum sustainable minimum wage? Applying the principle that liberals are working to support the capitalist system, we can see where they get their numbers. Liberals pick a minimum wage that puts workers near the edge of the poverty line, where they can be good consumers but never save enough to exit the workforce.
So what can we expect from liberals in the fight for a basic income?
We can start with two broadly optimistic points. First, since liberals are concerned with efficiency, evidence can sway them, and the scientific and empirical evidence is strong that a basic income is cheaper to administer, raises health and education outcomes, and does not cause people to quit working and live an idle life. Masses of healthy and educated people working and spending money churns the economy, and this is good for the capitalist system.
Second, liberals will join the basic income cause with little hesitation when the technological unemployment crisis starts receiving mainstream media attention. While liberals will tolerate significant unemployment because it keeps down labor costs, they will see too large a number of unemployed as wasted potential consumers. This will be especially true if more workers are not actually needed to produce the goods and services that the unemployed could otherwise buy.
Now the caveats.
Let me start off with a particularly American concern. Despite the significant libertarian origins of and current support for a basic income, many people hear the idea of the government giving everyone free money and they think, “socialism”. And in America, this is a problem. Despite the good arguments that could be made that the United States in the 1950s and 1960s had the most socialist economy that has ever existed in human history, America during the Cold War defined itself in opposition to “socialism”. For many, fear of the label has stuck. Conservatives still use “socialism” as an epithet for economic policies they oppose, and many liberals will do or say whatever is necessary to avoid being associated with socialism. If you ask prominent liberals, they will point to surveys showing the unpopularity of socialism in America. This could be a chicken and egg problem: why should most Americans not be afraid of socialism if even liberal leaders oppose it? Fortunately, this also appears to be a generational problem that is going away. Recent surveys of Americans under 30 show support for socialism to be equal to support for capitalism, and the Presidential campaign of Bernie Sanders may be showing that fear of the label “socialism” is overblown.
The next problem with liberals will be to educate them. The facts being on our side will not help if establishment liberals do not know them. The specific problem here is that the misrepresentations of the work participation and family stability effects of the Negative Income Tax experiments that were spread in the mid 1970s are still believed by many establishment liberals. We will have to work hard to correct those misbeliefs.
Another problem will be that if technological unemployment does not reach a crisis point, liberals will simply not prioritize basic income on their own. They will have to be dragged into taking action by political pressure. This will be similar to the example of same-sex marriage, except that instead of claiming opposition up until the public changes its mind, look for liberals to vocalize general support for the concept of a basic income, but not do anything about it. An example of this strategy was how, in the years following the U.S. invasion of Iraq, a lot of politicians of all stripes, including President Bush, voiced support for setting up an Alaska style trust fund to pay oil dividends to all Iraqis, but it never happened. This will be because, even if liberals come to agree that a basic income would be a better policy than the current welfare system, the efficiency benefits to the capitalist system are not great enough to put it on their priority list. Just as the suffering of gays and lesbians who wanted to marry was not sufficient cause to make same-sex marriage a priority, neither is the suffering of the poor. It never has been in the past. Again, this will change when technological unemployment becomes a crisis, and there will not be enough consumers to buy goods and services without a basic income.
The final, and biggest challenge with liberals as allies will be their attempts to dilute the idea of a basic income. While they may become far more generous with the cash amounts, it will be difficult for them not to attach strings and conditions. The reason is that it will be difficult to change their belief that they know how to run the lives of the poor better than the poor themselves. But a bigger danger is that they will try to insist on means-testing. They will try to make the middle-class believe that means-testing will make it cheaper for them. The reality is that means-testing will make the financial burden of a minimum income fall on the middle-classes. This, again, is because the goal for liberals is not economic justice, but making the current capitalist system run better.
In order to relieve the immediate suffering of the poor and establish the principle that poverty is not tolerated in our society, it may be necessary to agree to means-testing to pass an initial guaranteed minimum income. Liberals will trumpet that the job is done. Those of us who count justice as one of our goals need to be prepared to continue the fight.
by Vito Laterza | Dec 10, 2015 | News
At the end of November, a coalition of eurozone campaigners, civil society organizations and economists launched the campaign Quantitative Easing for People, calling for the European Central Bank (ECB) to radically change its approach to the current Quantitative Easing (QE) program. At the time of writing, 75 economists have endorsed the campaign.
The initiative brings together groups including Social Justice Ireland, Collectif Roosevelt (France), World Future Council (Germany), FairFin (Belgium), European Alternatives, and Basic Income Europe. The campaign is also supported by organizations from Italy, Greece, Spain, Austria, and the Netherlands; see the full list here.
QE is an unconventional monetary policy used by central banks to stimulate the economy. It usually consists of buying government bonds or other securities in order to lower interest rates and increase the money supply. QE began in the eurozone earlier this year, and the ECB is currently creating 60 billion Euros each month. Matthias Kroll from the World Future Council said: “So far the ECB’s QE program has proven to be ineffective in raising inflation back to its 2% target.”
“Flooding financial markets inflates share and bond prices, which makes the rich richer, but does little to help households and business. In fact, QE is helping fuel a new financial bubble, laying the foundation for another financial crisis. The eurozone needs a more direct and efficient stimulus.”
European stock markets plunged on December 3, when Draghi announced that the current QE program would be extended by six months to March 2017. This is a sign that even large corporations and financial markets do not believe in Draghi’s QE and expect more.
The aim of the QE for People campaign is to push the ECB to spend the money differently, by focusing on public investment, key social services or redistributive mechanisms like a citizens’ dividend – the last idea resonating well with basic income activists.
The proposal was first put forward in a letter signed by 19 economists and published in the Financial Times in March this year:
Rather than being injected into the financial markets, the new money created by eurozone central banks could be used to finance government spending (such as investing in much needed infrastructure projects); alternatively each eurozone citizen could be given €175 per month, for 19 months, which they could use to pay down existing debts or spend as they please.
Cash transfers under QE for People and basic income have common features. Both are directed to all citizens, with no strings attached. The time dimension differs though, as QE measures are by definition temporary, while basic income is a permanent scheme.
The 75 experts who support the campaign include several pioneers of the idea, such as Professor Steve Keen, Professor David Graeber and fund manager Eric Lonergan, as well as other influential economists and financial analysts like Ann Pettifor and Frances Coppola. These experts signed a statement of support that lays out the reasons behind the campaign:
1. Conventional QE does not work
Since it started in March, the eurozone QE program has not helped to rescue the eurozone economies from stagnation.
2. Conventional QE is risky and harmful
Flooding financial markets inflates share and bond prices, which makes the rich richer but does little to help ordinary people and businesses. In fact, QE is helping fuel a new financial bubble, laying the foundation for another financial crisis.
3. A more direct approach is needed
Countries in the eurozone need to stimulate their economies without increasing public and private debt, without increasing inequality, and without creating bubbles.
4. QE for People is possible
Instead of flooding financial markets, money created through QE should be spent into the real economy, on essential public investment such as green infrastructure, affordable housing and/or distributed as a citizens’ dividend to all residents.
5. QE for People is urgently needed
Given the challenges facing the eurozone, we urge economists, civil society organizations, and people from across the eurozone to join us in calling on the ECB to implement QE for People as soon as possible.
The campaign will focus on raising awareness of the failures of the current QE program, building political momentum around alternative monetary policies and fostering further research. “Having more than 70 economists endorsing the idea is a huge milestone, but this is only the beginning. Our goal is to create a much bigger coalition with citizens, academics and civil society organizations,” said Stan Jourdan, campaign coordinator.
If you want to know more about the campaign, visit the campaign website.
You can join the movement QE for People by signing up here.
Economists can endorse the campaign here.
See also: Stanislas Jourdan, “Europe: 19 economists call on the ECB to make ‘QE for the people’ in a letter to the Financial Times,” Basic Income News, March 27, 2015.
by Vito Laterza | Dec 8, 2015 | News
Guy Standing, renowned economist, noted author and honorary president of BIEN, was recently interviewed by the Equal Times, a global media platform that focuses on work and social justice.
Guy Standing makes a forceful case for basic income that takes into account the current global conditions of the labor market and the economy. He draws on his vast wealth of knowledge and presents complex concepts in a clear and synthetic manner.
Standing argues that:
– Basic income is key to get people out of the poverty trap, as people experience few gains merely by moving from unemployment benefits to low-paying jobs.
– Trade unions’ opposition to basic income is misguided, as unions and workers would actually benefit from a basic income.
– The struggles for a minimum wage are a positive development, but a minimum wage does not guarantee the welfare of the growing number of people who are not formally employed.
– Evidence from projects in Africa and India indicates that people are more cooperative and more productive when given a basic income, contrary to fears that a basic income would reduce productivity.
– An unconditional basic income would be an effective tool to fight poverty in developing countries, whereas conditional forms of social assistance drive down wages and increase dependency and exploitation.
– Basic income is affordable. One way to finance it is to overhaul the existing benefit system, while also cutting subsidies and tax breaks to big corporations and rich people.
– Basic income is not a panacea, but an essential measure to improve the worsening conditions of the “precariat”, the growing class of people who have little or no prospects of finding a full-time permanent job in their lifetime.
Chris Burns interviews Guy Standing, “Most unions have failed to respond to the needs and aspirations of the precariat,” Equal Times, November 26, 2015.
