In the current turbulent times, there is a fierce debate emerging how cities should adjust to rapidly changing economic and technological trends. Smart City Education Inside invited two experts to discuss the prospect of cash transfers to enhance sustainability and provide equitable educational opportunities for students.
Smart City Online Education Inside is a joint project between the Digital Education Institute, III, and the Talent Circulation Alliance. Under the supervision of the Bureau of Industrial Development Taiwan, the project launched a series of panel and keynote speaking events for those interested in education technology, sustainable learning, and sustainable society.
On Tuesday (8/11), Mr. Ameya Pawar, who had served two terms on the Chicago City Council and was the first Asian and Indian American elected to major office in Illinois, shared his presentation “Dignity, Decency, and Agency: The Case for Universal Basic Income.” Income inequality, wealth inequality, and decades of policies favoring wealthy corporations and big banks over working people, drew him to the idea of Universal Basic Income (UBI).
Pawar believes that every aspect of society is impacted by inattention to poverty, it is necessary to invest in mitigating it at both the national and local level.
“What leads us to believe that people will do something wrong or bad or do less if we help them a little bit?” Pawar asked. “To achieve sustainability, people need to have built-in resilience,” he said.
In response to the idea that giving cash may make people less willing to work, Pawar said that research has shown that is not the case. “Giving people money does not change the fact that people, as human beings, want to be productive; instead, it gives people more choices and breathing room in their lives,” he said.
On Thursday (8/13), we invited Mr. Sean Kline, who is the Systems Entrepreneur in Residence with RSA Future of Work Center, to share his presentation “Child Focused Development in the Digital Era.”
Kline believes, as services and technology become the dominant drivers of the economy, some segments of the population have been left behind. That’s why, a more modern and robust social safety net is needed to help transition and adapt to this rapid technological change is needed. While the government is putting tremendous conditions on how low-income families use public benefits, it is capable of giving people money in the form of large tax deductions. These unequal requirements demonstrate trust for one group and mistrust for the other. In fact, unconditional cash is administratively easier to deliver especially if it is provided universally.
With children being an important focus of Kline’s work, he suggests that lacking investment in children not only shapes their life’s trajectory, but shapes the trajectory of potential economic growth for society as a whole. Sharing examples of universal children’s saving accounts, baby bonds, and basic income and how they have benefited children, he believes that these are the primary methods to support children universally in the digital age.
During the first Worldwide Meeting of UBI Advocates and UBI Networks, held on 7th of April, 2020, comprising members of BIEN who were interested in advocacy, a proposal resolved to carry out a survey about the economic measures taken by different countries in response to the Coronavirus pandemic.
Our survey has three aims:
1) To discover how many jurisdictions/governments around the world, in response to the COVID-19 pandemic, have claimed to have implemented a basic income, OR have implemented new measures that fulfil some characteristics and functions of a basic income, even if such new measures are not claimed to be basic income.
2) To explore and compare the social service context of each jurisdiction which has introduced a basic or partial-basic income scheme.
3) To find out more about the organizations whose remit is basic income only, and of those whose remit includes basic income among other ideas, and the extent to which these organizations work together.
This survey should be completed by an individual familiar with the defining characteristics of basic income on the Basic Income Earth Network (BIEN) website (basicincome.org/about-basic-income). You may be: – An office holder or another responsible member of an organization interested in basic income; – A Basic Income Earth Network (BIEN) member; – An individual basic income advocate.
The team who produced the following survey includes; Liz Fouksman, Reinhard Huss, Ali Mutlu Köylüoğlu, Julio Linares, Annie Miller, Sheila Regehr, Toni Pickard and Malcolm Torry. We thank others who contributed to this process.
We stand at a crossroads. Our great depression threatens to create a larger and more permanent underclass in the United States, as Congress loots the economic system for over $5 trillion in bailouts for the wealthy. Brave protestors and disaffected rioters have taken to the streets to speak truth to American white supremacy, even in the midst of a pandemic that threatens the lives of Black and working-class Americans the most.
George Floyd’s murder inspires unimaginable pain. We lost a soul, a neighbor, a friend, and for many—a brother—to the hands of injustice. Breonna Taylor and Ahmaud Arbery. Eric Garner, Tamir Rice, Laquan McDonald, and Kalief Browder. Countless people have been stolen from their families. From every city in America. Because they were black.
To say that Black Americans live in a state of terror at the hands of unjust policing, vigilantes, and the criminal justice system is an understatement. To many, it is a militarized occupation of the cities built by their labor, in this century, and the labor of their ancestors dating back almost four hundred years.
If you name a disease in American society, whether it be heart attacks or COVID-19, poverty, or evictions, Black Americans are disproportionately brutalized. The underlying disease is white supremacy, in all its heinous and hidden forms. It hides in white systems. And it hides in white people’s hearts. The United States never achieved freedom for Black Americans. As Fredrick Douglass noted, as wage slavery and disenfranchisement replaced slavery after the Civil War, “Emancipation for the Negro was freedom to hunger, freedom to the winds and rains of heaven, freedom without roofs to cover their heads… it was freedom and famine at the same time.”
Universal basic income, an unconditional payment to all rooted in the belief that everyone has a right to natural resources and the economic fruits of our labor, represents a way to make economic freedom a reality. For Black and brown Americans, it will help counter many of the innumerable barriers to voting: the cost of voting documents, forced relocation, the inability to take off work to vote, intergenerational nihilism, and the economic insecurity that makes it impossible for poor Americans to run for office themselves. Universal Basic Income posits that an individual’s right to life, particularly in a world scourged by a pandemic, should not depend on the profit-driven interest of a corporate employer. Its philosophy contends that the more conditions put on accessing economic relief, the harder it is for people to use and access it — as any person who has received welfare or applied for unemployment benefits will tell you.
In his address to Stanford in 1967, Martin Luther King Jr. famously said that riots “are the language of the unheard” for those denied suffrage or recourse through the political system. Less appreciated is what he said immediately after: “Now one of the answers it seems to me, is a guaranteed annual income, a guaranteed minimum income for all people, and for all families of our country.”
Rooting his philosophy in a politics of hope, King called on us to implement policies that fundamentally transform government. Because millions have taken to the streets, the elite finally listens in fear, making this transformation possible. Universal Basic Income is fundamental for restoring democracy, a social contract that lays the groundwork for peace and justice. We need this compromise more than ever as inequality reaches record levels, authoritarian regimes strip ordinary people of their rights, and the destruction of our planet continues unabated. With more climate and pandemic crises on the horizon, how long will it take elites to realize that this economic system threatens the rise of violent populism?
As authoritarianism reasserts itself in the United States, Brazil, India, China, and Russia with mass surveillance and information warfare, the window for a peaceful resolution is fast departing. Now more than ever, Black and brown Americans and their allies have shown us that our only hope is taking action to demand our rights be protected. And we must be willing to risk our lives to ensure those rights are backed by transformational policies like Universal Basic Income.
Let us use this moment to demand comprehensive racial and economic justice for our nations. We owe George Floyd no less.
Article By James Davis
Picture Creator: Jesse Costa
Picture Copyright: Jesse Costa/WBUR
Reports are emerging that Spain is hoping to deploy a “permanent” basic income type program in the near future. The program comes as Spain aims to respond to the economic crisis from the global coronavirus pandemic.
Spain has one of the worst coronavirus outbreaks in the world with over 13,000 deaths.
Spain’s push for establishing basic income as a “permanent instrument” that “stays forever” will help reduce financial anxieties for many families worried about their jobs. Sending cash to families rather than corporations will better ensure economic security for the most vulnerable.
However, questions remain about the nature of the program and whether it will be truly universal and unconditional.
If Spain successfully implements basic income, it will become the first European country to implement the program on a national scale and one of the only places in the world to do so.
Finland famously experimented with a basic income pilot program. The experiment made recipients happier and healthier. Nonetheless, some government officials were upset the basic income pilot did not significantly affect employment status within a year for recipients.
Nadia Calviño, Spain’s minister for economic affairs, said the payments will be targeted to families and will differentiate based on their “circumstances.” In practice, differentiating based on circumstances will result in means tests that fall on the poor. If there are strict criteria, then some families who need assistance may be unnecessarily excluded or have their assistance delayed.
A better system is presuming each individual qualifies and allowing wealthier individuals to opt-out. If an individual who received basic income has a large income by the end of 2020, the government can phase out their basic income through the income tax system the following year.
Universality helps the poor, not the rich. It ensures all those who need assistance can receive it immediately. The true costs of universality are lower because it requires less administration and bureaucracy to implement the program.
As US presidential candidate Andrew Yang continues to outperform expectations, his signature policy proposal, the Freedom Dividend or Universal Basic Income (UBI), is receiving increased scrutiny. Some of the criticisms are well warranted, while others are misconceptions based on a flawed understanding of how basic income would operate.
The following addresses some of the primary misconceptions regarding Yang’s plan.
UBI is too expensive
The cost issue is one of the most persistent misconceptions about basic income.
A basic income system would have a built-in clawback through the tax system. In Yang’s case, a portion of the clawback comes through the opt-in system that would substitute cash-like welfare programs for the Freedom Dividend, such as food assistance. However, most of the burden of the clawback would be on the wealthiest families who would pay more in taxes than they could receive from basic income
As I have noted previously, the UBI clawback can be both direct and indirect. For example, the Affordable Care Act (ACA) requires families to pay back some or all of their healthcare subsidies at the end of the year if their yearly income exceeds a certain amount. A UBI system can similarly create a phase-out in the income tax system.
Considering Yang’s Freedom Dividend is opt-in, it is likely that many wealthy families would not opt to receive the dividend anyway.
Indirect clawback mechanisms could include Yang’s proposed Value Added Tax (VAT). The VAT is effectively a national sales tax, meaning even lower-income people would pay back a portion of their basic income depending on how much they spend their dividend on taxed goods.
Yang has said he would exclude many essential items from the VAT, though. Calculations show the VAT combined with UBI would have a net positive effect on purchasing power for low-income individuals.
Any taxes paid on the UBI would be used for the following year’s dividend, meaning much of the money is repeatedly recycled through the system. The additional amount that is redistributed to lower-income families is called the “net cost” or real cost of basic income. The net cost is the amount the government would actually redistribute every year under UBI.
Factoring the clawback, the real cost of basic income to the government would be approximately $539 billion annually, according to Georgetown Professor Karl Widerquist. This is less than 25 percent of existing entitlement spending.
UBI would have the same cost as a Negative Income Tax (NIT) when factoring the clawback, but the sticker price of the gross cost creates a false impression of a higher cost for UBI. NIT is not universal — it only provides the subsidy to those who qualify, making the cost appear lower than UBI. When I asked Yang whether he would support NIT to avoid the cost misconception, he said NIT would be a step in the right direction.
UBI would cause inflation
The inflation misconception has been around for many years, but it has become more convincingly debunked since I first wrote about it nearly three years ago.
It is essential to note that Yang’s plan is redistributing existing cash, not printing new cash. For every dollar spent, there must be a dollar taxed first, which would offset inflationary pressures.
As Karl Widerquist noted, basic income is no different than other welfare programs in terms of increasing demand for goods. Denmark has one of the most generous welfare states in the world, but they also consistently experience a low and stable inflation rate below two percent.
In the United States, food assistance, which can be freely spent like cash on most food items, has not produced inflation in food prices. On the contrary, research from the London School of Economics shows in states with higher take-up of food stamp assistance, prices have dropped and there is greater product variety relative to those areas with lower food assistance take-up. This is because suppliers respond to increased demand with more competition entering the market.
Thus, the guaranteed demand from basic income could generate higher levels of competition that brings down costs for low-income people.
In Alaska, which has a small Universal Basic Income funded by oil revenues, inflation has been lower than the U.S. average since the program started. Other research in Mexico demonstrates that directly giving cash does not produce inflation.
Since the United States is a globalized market, any short term demand spike creates an economic profit that is resolved by increased production, bringing the price down in the long-run.
In fact, the United States is experiencing unusually low levels of inflation. Contributing factors could include the Amazon.com effect, automation, immigration, and global trade. Basic income would not change these underlying factors keeping a hold on inflation.
The main area where there could be meaningful inflation in the medium term is the cost of rent because there is a fixed supply of land.
Basic income could empower more people to move and find other options. Renters would have a better bargaining position with their landlord if they had a guaranteed dividend than if they are desperately clinging to their job.
In the long-run, greater purchasing power from low-income people should induce more homebuilding and open up a greater share of unoccupied housing. That said, the high cost of rent exists now in many areas and should be addressed as a separate policy issue.
Nonetheless, it is unlikely that any inflation from UBI could completely wipe out the improved purchasing power from the dividend, let alone make people worse off.
UBI would cause laziness
The problem of laziness is one of the most thoroughly debunked misconceptions about UBI. Among those who closely study cash transfers, many no longer consider labor participation an interesting research question because the results consistently show no effect. Those who have read the relevant research and are still convinced that basic income causes laziness will likely never be persuaded otherwise.
As I reported in 2016, “The Overseas Development Institute just released the largest meta-analysis of cash transfer programs ever, spanning 15 years of data and 165 studies. The main takeaway is that studies show a consistent reduction in poverty measures. Perhaps an even more important conclusion is that most evidence showed an increase in work participation after receiving the basic income.”
Many specific examples from across the developmental spectrum corroborate the conclusion that basic income would not meaningfully reduce work. In Finland’s basic income experiment, there was no negative effect on work. Iran’s generous basic income did not reduce overall work but did cause some young people to substitute their time for more schooling. In Alaska, their partial basic income did not reduce overall work. On the contrary, Alaska’s basic income increased part-time work due to the increased demand generated by a basic income.
With a permanent basic income, there is reason to believe that a healthier and more productive labor market will emerge. For example, the Finland experiment showed basic income recipients were happier and more trusting overall. Many polls indicate that individuals would use the basic income to gain additional skills, spend time with family, volunteer, and engage in freelancing.
If the poor are no longer clinging to a job for survival, they can more freely find a job where they can be the most productive. They will also have more bargaining power to demand better working environments.
Most importantly, basic income would allow greater time and mental energy to be focused on the most important job in society: caregiving. Volunteering and caregiving provide enormous economic and societal benefits that are not recorded in GDP because they are typically unpaid.
Basic income gives people the right to say no to exploitation. But the most revolutionary aspect of UBI is that it finally gives everyone the opportunity to yes to their passions.
The 2020 BIEN Congress was to be held in Brisbane in Australia from the 28th to the 30th September 2020. Due to the coronavirus outbreak, the event has been cancelled. BIEN’s Executive Committee and the Scottish and Australian congress Local Organising Committees have agreed the following statement: ‘The Scottish and Australian Congress Local Organisation Committees have agreed that the current plan is to hold the 2021 BIEN congress in Scotland and the 2022 BIEN congress in Australia.’
A Basic Income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement. Read more
A series of conversations from around the world that explore the relationship between the Covid-19 pandemic and Basic Income. Read more