by Karl Widerquist | Nov 14, 2010 | Research
REYNOLDS, Brigid, HEALY, Sean, COLLINS, Micheal (eds.) (2010), The Future of the Welfare State, Dublin: Social Justice Ireland. September 2010. I.S.B.N. No: 978 1 907501 03 6; 136 pages.
This book contains four chapters: “The future of the welfare state: An overview,” by Tony Fahey; “The welfare state across selected OECD countries: How much does it really cost and how good is it in reducing poverty?” by Willem Adema; “Shaping public policy: Is there a place for values-led debate and discourse in the public sphere?” by Daniel O’Connell; and “Shaping the future of the welfare state: What are the challenges and how might they be addressed?” by Sean Healy and Brigid Reynolds. It discusses moving Ireland’s welfare state toward a basic income model. The entire book can be downloaded as a PDF online at:
https://www.socialjustice.ie/content/future-welfare-state-full-texts
by Yannick Vanderborght | Nov 9, 2010 | News
A report by Hamid Tabatabai
The concept of a Basic or Citizen’s Income is virtually unknown in Iran. In nearly three years of discussion and debate over the government’s new economic reforms, there has been no mention of it at all in political, academic or media circles. And yet, the country has just launched a nationwide cash transfer programme that has the hallmarks of a Basic Income in disguise. Some 60.5 million Iranians, or 81 percent of the population, have just had the first payment of 810,000 rials (about US$80) per person deposited in their bank accounts. The payments will be made every two months, involve no means testing, and are unconditional. They are also likely to double in amount over the next few years as implementation proceeds. The remaining 19 percent of the population opted out of the programme voluntarily, mainly because they do not need the money.
Remarkable as this is, the novelty does not end there. The tens of billions of dollars involved each year will not come from oil exports, or from government coffers. The transfers will be financed entirely through the higher prices the nation will henceforth pay for a variety of basic goods and services — mainly fuel products — that have been massively subsidised for decades. (Until now petrol has cost US$0.10 a litre and diesel fuel under $0.02. The same applies to natural gas, electricity and water charges, and bread.) Such subsidies have benefited the well-off far more than those with modest incomes (70 percent going to 30 percent of the population) and resulted in wasteful consumption of energy and foodstuffs, inadequate investment in new technology, and environmental pollution, not to mention smuggling to neighbouring countries. In order to put an end to this inefficient and unfair system, the “Targeting Subsidies Law” of earlier this year mandates the gradual phase-out, over five years, of nearly all implicit and explicit price subsidies, to be replaced with regular cash transfers to households and various economic and social sectors. The scale of price increases are not yet known (as of mid-November 2010) but they are likely to be huge, in some cases severalfold. Official announcement is expected towards the end of November with new prices coming into effect immediately.
Interestingly enough, the universality and uniformity of cash grants came about without anybody really pushing for them or even wanting them, either from the government side that put forward the original plan, or from those opposed to the plan in the parliament who wanted it modified, if not scrapped. The intention was firmly to target the cash transfers on the less well-off sections of the population, the haggling being over whether the beneficiaries should be the lowest two, or five or seven deciles of the population on the income scale. The idea was also to pay more to those with lower incomes, in the interests of social justice. If in the end it was decided to pay the same amount to everyone who bothered to register, it was only because a massive exercise in means-tested targeting (over 17 million household questionnaires were filled out and analysed) turned into a fiasco as public protests mounted over the results. The principle of equal payment to all forced its way in because it just made sense under the circumstances. There could hardly be a more dramatic vindication of Philippe Van Parijs’s characterisation of Basic Income as a “simple and powerful idea”.
To be sure, Iran’s ‘cash subsidy’ (that’s the official designation) falls short of a fully-fledged Basic Income grant as commonly understood. The entitlements of all household members go to the head of the household alone, not to individual members, even if adult. There is no word on the duration of the programme, although it should in principle continue as long as Iran is able to produce oil for its domestic consumption. Means-tested targeting has not been abandoned altogether and may be resurrected if the government decides at some point that it can do a better job of targeting than its last attempt. The rights-based underpinnings of the Basic Income have no place in the current Iranian discourse on cash grants. The payments are not regarded as ‘income’ to which the citizens are entitled by right, but as another type of subsidy to compensate for the loss of price subsidies (though whether this makes any practical difference is an interesting question). Neither do they come anywhere close to a decent subsistence income (the US$200 of a family of five per month is about two-thirds of the monthly minimum wage). They also exclude more than two million Afghan and Iraqi refugees who have been living in Iran for years, sometimes decades, and will now have to bear the full brunt of price hikes. And last but not least, once price rises go into effect in the days ahead, and if inflation gets out of hand due to mismanagement, there is genuine fear that the whole edifice might come crashing down.
On the other hand, it might be argued that the hardest obstacles towards a national Basic Income have already been overcome. The programme is enshrined in law. The payments are universal (except for those rich enough to forfeit their right by simply not signing up). Funding is assured and looks destined to continue in the medium term. And if the reforms succeed even partially in achieving their stated objectives of rationalising consumption patterns, boosting investment and efficiency, redistributing incomes in favour of the have-nots and reducing poverty, their future should be fairly secure. The continuation of the programme will also allow its shortcomings to be identified and put right, particularly if this enormously important shift in social policy is subjected to rigorous, comprehensive and continuing impact evaluation as it unfolds and progresses in the months and years ahead.
The replacement of price subsidies by a cash transfer system of unprecedented scope and scale has placed Iran in the forefront of all countries in advancing towards a nationwide Basic Income. The fact that such a transition takes place first in a developing, Middle Eastern, Islamic state, not in a developed country in Northern Europe as many had presumed, underlines the relevance of the concept of Basic Income for a broad range of countries. The specificities of the Iranian experience should of course not be ignored. It is in large part the combined availability of domestic fuel resources and an exceptionally distorted pricing policy that has made it possible, indeed almost inevitable, for a de facto Basic Income to emerge as part of the solution. But the model may still have some relevance for other countries, in particular mineral producing nations. There may also be scope in some countries with large subsidy bills to explore the feasibility and wisdom of rerouting subsidies to fund a Basic Income, without additional taxation. Iran’s experience may hold some lessons of wider applicability, if they are properly drawn and are convincing.
For more on the subject, see Hamid Tabatabai, “The ‘Basic Income’ road to reforming Iran’s subsidy system”, in Basic Income Studies, forthcoming, or contact hamtab@gmail.com.
by Philippe van Parijs | Oct 23, 2010 | Opinion
The Basic Income Earth Network (BIEN) held its thirteenth biennial congress in Sao Paulo, Brazil, June 30 through July 2, 2010. USBIG has been a national affiliate of BIEN since 2006. Philippe Van Parijs, director of the Hoover Chair of economic and social ethics at the Catholic University of Louvain and Chair of BIEN’s International Advisory Board, wrote the following account of the Congress for the BIEN NewsFlash (reprinted in its entirety):
There are at least three reasons why holding a BIEN congress in Brazil made a lot of sense. Firstly, Brazil’s cash transfer system is one of the most comprehensive in the so-called developing world and is sometimes presented as one of the closest real-life approximations to a genuine basic income. Secondly, Brazil adopted, in January 2004, a law that explicitly asserts as an objective the introduction of an unconditional and individual basic income for all its permanent residents. This is something no other country ever did. And thirdly, it is on the suggestion and insistence of Senator Eduardo Matarazzo Suplicy that BIEN was turned, in September 2004, from the Basic Income European Network into the Basic Income Earth Network. Eduardo Suplicy was the first senator for Lula’s PT and has been representing the state of São Paulo in the Brazilian Senate for nearly 20 years.
So, the choice of São Paulo for this 13th Congress was more than justified, and it proved excellent. Thanks to the hard and intelligent work of an energetic organizing team led by Lena Lavinas, Fabio Waltenberg and Celia Kerstenetsky, the congress was yet another fantastic occasion for sharing information, exchanging arguments, taking new initiatives and rekindling fraternal contacts. The organization was even so good that the congress was able to smoothly accommodate the plenary viewing of the Brazil-Holland World Cup football match and happily get back to full swing straight away despite Brazil’s painful defeat.
The congress took place in the Faculty of Economics of the University of São Paulo on 1 and 2 July 2010 and was preceded by a Brazilian pre-congress day on 30 June. Over the three days, the meeting attracted over 500 participants from over 30 countries and hosted close to 200 presentations that can still be downloaded from the congress site (www.bien2010brasil.com). This meant many parallel sessions that allowed for some in-depth discussion, combined with a number of plenary sessions. The closing one, chaired by Senator Suplicy, provided an opportunity to look back and think ahead with four of those who founded BIEN in Louvain-la-Neuve in 1986 (Clause Offe, Guy Standing, Robert van der Veen, Philippe Van Parijs). On afternoon preceding the congress, BIEN’s Executive Committee was received at length by President Lula, who explained how BIEN’s objectives were already partly met by the programmes that exist in Brazil.
Indeed, several sessions of the congress, including a plenary addressed by the director of the programme, Lucia Modesto, were devoted to the achievements of the Bolsa Familia and to how the challenges it faces may pave the way to a basic citizen’s income. Means-tested programmes such as the Bolsa Familia unavoidably generate a major problem of fair implementation in the context of a largely informal economy. As the programme matures, there will be more and more people who will rightly say: “this is unfair, my neighbour is earning more than me and is receiving a Bolsa Famila whereas I am not”.
Brazilian scholars who study the operation of the scheme do observe that there are comparatively very few households removed from the programme because their assessed income exceeds the (low) threshold, and they acknowledge that many more would need to be removed if the means test were rigorously implemented. But it would be very harsh, expensive, conflict-ridden and unpopular to monitor closely families that are still very poor and punish them with the withdrawal of the Bolsa Familia as soon as their monthly earnings are suspected of exceeding the threshold of 140 reals per person (less than 80 dollars). So far, the risk of clientelism and straight corruption intrinsic in such a system has not eroded its popularity. The public discussion about the Bolsa Familia has been focusing mostly on a different issue, namely whether one should strengthen or weaken the condition of school attendance currently imposed on households with children in the appropriate range: 85% of the classes for children between 6 and 15, 75% for adolescents. But in case the legitimacy of the whole scheme were to be threatened by the unsustainability of the means test, Senator Suplicy and other Brazilian basic income supporters are ready with a structural solution: just do what the 2004 law promises to do, i.e. get rid of hundreds of thousands cases of unfairness in one go by simply extending the benefit to all.
The congress was, as usual, an opportunity to hear about what is happening in very different places in the world. For example, it provided a nice opportunity to compare the local basic income experiments currently conducted in Namibia and in Brazil or soon to be started in India. After the end of the conference, two groups of participants even went to visit the two Brazilian experiments currently underway (in São Antonio do Piñal and Quatinga Velho). It is important to keep the order of magnitude of these experiments firmly in mind. In São Antonio do Piñal, for example, an attractive municipality located in a hilly part of São Paulo state and supporting itself largely from tourism, we visited the room in which the municipal council made an unprecedented decision. It decided to allocate 6% of all municipal revenues collected from local taxes (as opposed to state or federal grants) to the funding of a basic income for all inhabitants. However the total of these local taxes amount to 1.240.000 reals per year. 6% of this amount divided by the 7000 inhabitants gives each of them less than one real per month (about half a dollar). This is a neat symbolic gesture, that its initiators try to supplement in various ingenious ways, but so far it does not weigh much next to the colossal bolsa familia programme, which provides an average per-family monthly benefit of about 50 dollars (95 reals) to over 12.5 million Brazilian families.
This is to be compared with what many of us saw as the most surprising news of the whole congress. It came from Iran. In January 2010, the Iranian parliament approved by a narrow majority the so-called “targeted subsidy law”, which combines two measures. Firstly, it scraps a large implicit subsidy to oil consumption by both Iranian households and firms. It does so by bringing the comparatively very low domestic price of oil in line with the international price. Secondly, it compensates the impact of the general price increase on the standard of living of the population by introducing a monthly uniform cash subsidy for over 70 million Iranian citizens to be paid to the heads of households. The amount is expected to reach initially about 20 dollars per person per month and to gradually rise to 60 dollars. The rich, who consume directly and indirectly more oil than average will not be fully compensated for the price increase, but the poor will automatically be more than compensated. The law, which is due to come into effect on September 21, is therefore expected both to foster a more efficient use of scarce natural resources and to reduce the level of social inequality. For more information, see the section “national debates” below (or Hamid Tabatabai, hamtab@gmail.com, “The ‘Basic Income’ Road to Reforming Iran’s Subsidy System”, slides downloadable from the website of the congress, updated paper forthcoming in Basic Income Studies). If this scheme is actually introduced and expanded as planned in Iran, it promises to be a very interesting initiative to study, and it may inspire other countries. Wherever one is seeking a “sustainable new deal” that combines ecological and social concerns, making resource consumption far more expensive and distributing the large revenues from the price increase equally to all is an obvious option to consider.
In many places, this is a far more realistic option than an Alaska-type permanent fund programme (discussed at the congress by two of its best specialists, Scott Goldsmith and Karl Widerquist). This programme distributes dividends to all Alaskan residents — in 2009, somewhat above 100 dollars per person and per month. As income per capita is about 13 times higher in Alaska than it is in Iran, this dividend obviously makes far less of a difference to the local income distribution than the Iranian scheme will, despite the latter being lower (per capita) in dollar equivalents. But the main difference is that the Alaska scheme is funded out of the interest collected from investments made worldwide with revenues generated by the production of oil at some point in the past, whereas the Iranian scheme should be understood to be funded out of a tax on the current consumption of oil. The Alaska-type scheme is therefore restricted to resource-rich (sub-) countries that manage at some point to exercise sufficient political self-restraint to create and develop a substantial fund. The Iranian-type scheme, by contrast, is available to any country that wants to price the consumption of oil in an ecologically responsible way and to buffer the effect on people’s standard of living in a socially responsible way. For this road to basic income to be a real option there is no need to first accumulate a large fund, nor indeed to be an oil-producing or resource-rich country. Yet, there are also disadvantages. In the long run, one can expect the return on the Alaskan fund to keep fluctuating quite wildly but not to converge to zero. Our consumption of oil, by contrast, will not continue forever.
This surprising Iranian story is only one of the many that were discovered and discussed at the São Paulo congress. It neatly illustrates the role a network such as BIEN can play to spread useful information, to make it intelligible, to broaden our imagination, to boost our confidence and to empower our struggle for greater justice all over the world.
-Philippe Van Parijs, Chair of BIEN’s International Advisory Board
by Karl Widerquist | Aug 12, 2010 | News
The National Union for Namibian Workers (NUNW) announced in early July that it would withdraw from the Basic Income Grant Coalition. The Union’s Secretary General said that NUNW did not see income distribution, as per the BIG model, as a viable way to address poverty in the country. Many editorials followed with renewed support for BIG. For example, the Windhoek Observer, a Namibian Weekly, devoted a recent editorial to the current BIG debate in Namibia. It compares President Pohamba’s remarks that BIG would encourage laziness to the famous apocryphal saying of the French Queen Marie Antoinette, “Let them eat cake.” Evidence from the recent BIG pilot project in Namibia is consistent with the contrary hypothesis that in places with deep poverty, cash grants stimulate people to work more by relieving them from the immediate needs that often keep them from engaging in productive activity.
Links to recent articles about BIG in Namibia are below.
“NUNW withdraws from BIG Coalition,” Richard Swartbooi, Namibian Broadcasting Company:
https://www.nbc.com.na/article.php?id=2404
“Let them Eat Cake,” Editorial, The Windhoek Observer:
https://basisinkomen.nl/wp/buitenlands-nieuws/president-namibia-laat-ze-maar-cake-eten/
“The NUNW and the Basic Income Grant,” Herbert Jauch, the Namibian:
https://www.namibian.com.na/news/full-story/archive/2010/july/article/labour-in-crisis-the-nunw-and-the-basic-income-grant/
“BIG: Time to separate fact from fiction,” by Lucy Edwards, May 28, New Era Online, 2010:
https://www.newera.com.na/article.php?articleid=11177
“Namibia: Social justice and solidarity – think ‘BIG,’” Henning Melber, Pambazuka News, Issue 485, June 10, 2010:
https://www.pambazuka.org/en/category/features/65081
“Academic justifies BIG,” Irene !Hoaës, New Era Online, June 4, 2010:
https://www.newera.com.na/article.php?articleid=11293
by Karl Widerquist | Aug 12, 2010 | News
The Irish Liberal Party is a small, new political party in the Republic of Ireland. According to the party’s website. “The party stands for the principles of individual freedom, respect for human rights, the rule of law, equality of opportunity, free and fair elections and multiparty-democracy, social justice, tolerance, free market economy, free trade, environmental sustainability and a strong sense of international solidarity.” Also according to the party’s website, “Our most important policies are our Social Justice policies of basic income for all and the introduction of the Land Valuation Tax.” The website’s elaboration of its basic income provision uses BIEN’s definition of basic income and includes a link to the BIEN website.
The party’s website is: irishliberalparty.org
The party’s endorsement of BIG is at the following page: https://irishliberalparty.org/page_1277298297057.html
