Finland / International: BIEN Conference 2018 (part 1)

Finland / International: BIEN Conference 2018 (part 1)

At BIEN Conference main auditorium (at the forefront: Phillipe van Parijs)

 

On the 24th of August 2018, the Basic Income Earth Network (BIEN) Conference at Tampere, Finland, started at full force (after an introductory day on the 23rd of August – Nordic Day).

 

The Opening Session, taking place at a large plenary auditorium, featured Tarja Halonen, former President of Finland, and a firm believer in sustainable development goals. She focused on international affairs, concerning these goals, underlining that these cannot be attained if people don’t feel included. Hence, according to her, sustainability is only possible if and when poverty and migration issues are solved at the base of the social pyramid. These two aspects can be seen as two sides of the same coin, since, according to Rutger Bregman (discussed in his book Utopia for Realists), the existence of borders is one of the main drivers of poverty across the world. However, as Tarja puts it, poverty is a difficult issue to talk about, since it involves a considerable amount of shame.

Philip Alston

Philip Alston

To that introduction followed the first Plenary Session, where Phillip Alston, from the University of New York and Special Rapporteur of the United Nations, talked about human rights and how basic income should fit within its advocacy. Alston first referred to labour and social security rights, which are running thin everywhere in the world, if present at all. The right to an adequate standard of living also sounds reasonable but, in the same vein, is seldom realized in most regions. He also reports on several governments actual cutting on social services, under the banner of “tax changes”, which invariably end up amounting to several human rights violations. Not surprisingly, institutions like the IMF, World Bank and the OECD are “allergic” to human rights language. On the other hand, and despite universal basic income (UBI) is seldom referred in the human rights advocacy circles, Alston is certain these are not incompatible, even the contrary may be the case. According to him, it’s past time of tinkering with failed social security systems, which are getting more cumbersome and controlling by the day, to start and introduce new and radical ways. UBI is one of these ways, which will also help and push back against neo-liberal “giants” that are permanently forcing a full liberalization of the economy, without consideration to human rights. That and governments, stuck in the austerity and privatizations mindset. Alston concludes by saying that rage is actually a feeling necessary for something like a UBI to become a reality, since it requires mass mobilization and the insurgence against deep injustices in society.

 

Louise Haagh

Louise Haagh

The second Plenary Session came after a multitude of parallel sessions, covering aspects of financing basic income, its political aspects, experiments with cash transfers, historical perspectives, its relation with existing social services, current developments in Europe, particular aspects with disability and child grants, BIEN Affiliates reports (as coordinated by Julio Aguire) and Media Workshop (as coordinated by Scott Santens). Here, Louise Haagh, meanwhile re-elected BIEN Chair (along with Sarath Davala as Vice Chair), first argues that giving people a UBI doesn’t equate to bringing them property rights. She also warns that two-year pilot experiments are not basic income, however important these might be to further the UBI agenda. While being a strong advocate for UBI, Haagh highlights the possible dangers of pursuing with it as a policy, since it can be mortgaged to debt, deepen the black market or derive in what she has called “wishful economics”. That would be the case if UBI were to be considered as a panacea. According to her, UBI should never lead to what is called Flexicurity (security with flexible labour), which in present day politics and economics is invariably linked with punitive governance and control. For Louise Haagh, there is a strong case to be held from the combination of a developed welfare state and UBI, which could stimulate institutions to work better together. This can come with the recapture of social development ideals, and a too narrow focus on UBI could defeat that purpose which she considers central to our society, particularly in the context of European Countries.

 

This first day of the Conference was crowned by a reception at Tampere’s City Hall, where participants were given a warm welcome, although the Mayor Lauri Lyly was not present at the event.

Lena Lavinas

Lena Lavinas

The second day of this international event started by a presentation by Lena Lavinas, that although supporting such a policy like basic income, was very clear to highlight its dangers in light of recent financialization tendencies of the economy. This pattern is identified by the divestment of finance institutions from the productive sector, concentrating its investments on the speculative sphere, which however have an impact on the real economy through the reality of interest on loans. In a parallel to what Louise Haagh had presented the day before, Lavinas underlined the danger of welfare state dismantlement disguised under the UBI policy. Since a possible consequence of the implementation of basic income is the rise of global demand (for basic goods and services), she warns that may also enhance the rising of demand for credit, with the associated debt problems. Those problems are already affecting many middle-class and poor families in countries like Brazil and South Africa, as Lavina pointed out with specific numbers. Also, the mass inclusion of these millions of people in the banking system gives banking institutions much larger potential markets for financial instruments (mainly loans and insurance), with the expectable consequence of rising debt. To this apparently grim scenario, as portrayed by Lavinas, she assures that nothing (constructive) can be done without the severe taxation of the financial sector, plus the introduction of strong controls and regulations enforced over it. That, according to the university professor, could even be a path to finance a basic income.

 

The third and last day of the Conference is covered in a second part of the article, to be published soon.

 

 

More information at:

BIEN Conference 2018 website

André Coelho, “Finland / International: Nordic Day at the BIEN Conference 2018”, Basic Income News, August 30th 2018

Finland / International: Nordic Day at the BIEN Conference 2018

Finland / International: Nordic Day at the BIEN Conference 2018

Gerdur Palmadottir (BIEN Iceland)

 

On the 23rd of August 2018, on the eve of the Basic Income Earth Network (BIEN) Conference in Tampere, Finland, yet another Nordic Day was completed, with the participation of speakers from all the European Nordic countries (Sweden, Denmark, Iceland, Norway and Finland).

 

After introductions and acknowledgements by Petti Koistinen, Chair of the Local Organizing Committee (of the Conference), a first module about basic income in Finland was opened. Finnish experts on basic income Pekka Elonheimo (who is also a Lutheran priest) and Jan Otto Anderson, both members of the BIEN affiliate in Finland, explain to the audience how the welfare system in Finland has been decaying in the last 25 to 30 years. That essentially meant loss of benefits, more state control in administrating those benefits, and increased complexity in managing the system. Pekka further introduced his thoughts on the relationship between the Lutheran thought and universal basic income, which for him are fully compatible. That same day he would be furthering that relationship in Tampere’s cathedral, on a dedicated Mass to subject, at 7 pm. Andersen, on his turn, informed the audience that basic income has been a discussion point in Finland since the 1980s, but that only relatively peripherical parties like the Greens and the Left Alliance have overtly endorsed basic income and presented specific mechanisms to introduce it in Finland. He also said that the more dominant political party Social Democrats, through its Youth branch, recently released a basic income proposal of its own, although connecting it with labour participation conditions.

 

From Denmark, Martin Michaelsen, head of the Denmark’s BIEN affiliate, agrees with his counterparts in Finland in that the Nordic welfare state is decaying, obviously including Denmark in such description. As for basic income, he admits the idea has not yet taken root in Denmark, where most relevant institutions of government, social and corporate society are not really attracted to the concept, not only out of ignorance, but also due to the strong hold of the welfare state and a deep-rooted work ethic (objecting the dispense of money with no strings attached). Even still, according to Michaelsen, implementing a basic income in Denmark would be relatively easy, precisely because the welfare state concept and apparatus are so well developed in the country.

 

Iceland has also sent a thinker and a leader to speak about the Icelandic situation about and around basic income. With close connections to the Iceland Pirate Party, which push for just redistribution of dividends from Iceland’s natural resources (according to their political platform), Gerdur Palmadottir delivered on this event a message on prosperity and passion. According to her, humans get a “kick” out of doing things, not necessarily the results from these (ex.: sales, profits, etc.), and also that people are using prosperity “in a suicidal way”. Emphasizing that democracy has been highjacked, in recent decades, by money power, Gerdur underlines that only politicians who understand societal evolution as stemming from honesty and empathy will eventually bring about a real democracy. Following this line of though, she thinks basic income should not be seen as a cost, but rather as an investment for the flourishing of new ideas and businesses.

 

Øyvind Steensen (BIEN Norway)

Øyvind Steensen (BIEN Norway)

Øyvind Steensen, from BIEN Norway, also agrees with his Icelandic counterpart. According to him, prevention is always better than fixing the consequences, and so investing in people pays off. However, since power corrupts human beings – as proven by science and by hundreds of years of political experience – it is a good idea to redistribute power better than today, avoiding concentrating it into very few hands. So, giving a basic income to all people equates to trusting them enough and so allowing them to thrive in life, while distrusting them enough not to concentrate too much power in their hands.

 

Finishing the round of presentations from the Nordic countries, Lena Stark, representing the Swedish basic income party, warns that Swedish politics is devoid of visions at this moment in time. According to her, people have lost trust in each other, since there is no place for trust when most of them are just trying to survive. She also confirms, in line with her predecessors in the session, that the Swedish welfare state is falling apart, and that people are being reduced to numbers. This only adds to the general distrust and so, to break the “vicious cycle of distrust”, a generous basic income should be implemented.

 

Rutger Bregman. Picture credit to: Forbes.

Rutger Bregman. Picture credit to: Forbes.

Finally, and to close the day dedicated to basic income in the European Nordic countries context, Rutger Bregman talked about political frameworks, specifically relating to the basic income concept and how it has been developing in recent years. His talk came as an event linked to the translation into Finish of his now famous book “Utopia for realists”. According to him, mainstream news does not bring a factual perception about human nature, being usually far too negative. He thinks most people are agreeable and peaceful beings, mainly moved by stories appealing to emotions, rather than hard scientific facts. As an experienced speaker, he also explains that people listen, or are more open to certain types of language, and so the latter should be adapted to each audience, for maximum effect. Bregman added still that, in these times of unprecedent change, people tend to overestimate transformation in the short term (2/3 years) while underestimating what might happen in the long term (20/30 years). That is why he recommends that those concerned with such ideas as basic income or promoting them actively, be receptive to even the smallest of steps in that direction, instead of only be satisfied with large developments in society.

 

More information at:

BIEN Conference 2018 website

International: McKinsey report identifies basic income as a potential response to automation

International: McKinsey report identifies basic income as a potential response to automation

As many as 375 million people may have to switch jobs as a result of automation by 2030. This is according to a new report published by the McKinsey Global Institute (MGI), a private sector think tank and the business and economics research arm of McKinsey & Company.

According to MGI researchers, “the transitions will be very challenging – matching or even exceeding the scale of shifts of agriculture and manufacturing we have seen in the past.” Such dramatic shifts in the global labor market will demand proportionately dramatic responses from governments, businesses, and individuals. Specifically, the MGI report emphasizes the importance of providing transition and income support to workers.

The report, entitled “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation”, builds on previous MGI research suggesting that 50% of global work activities could theoretically be automated by modifying existing technologies. While only 5% of jobs are at risk of disappearing entirely, 6 in 10 of jobs have 30% of constituent work activities that could be automated. According to MGI researchers, the question is not whether or not automation will alter the nature of work, but how long it will take.

Their analysis model potential net employment changes over 12 years for more than 800 occupations in 46 countries, focusing particularly on China, Germany, India, Japan, Mexico, and the USA. The report also accounts for several factors that could affect the pace of automation including technological and financial feasibility, demographic changes to labor markets, wage dynamics, regulatory responses, and social acceptance.

The report finds that 75 million to 375 million workers, or 3 – 14% of the global workforce, may be displaced by automation by 2030. These effects will be particularly felt in high income countries. In the most extreme scenario, 32% of American workers (166 million people), 33% of German workers (59 million people), and 46% of Japanese workers (37 million people) will be forced out of their jobs by 2030.

However, there may not be any shortage of new jobs available. MGI’s researchers note that new jobs will need to be created to care for aging societies, raise energy efficiency, address challenges posed by climate change, provide goods and services to the growing global middle class, and build new infrastructure.

Automation itself may also have the potential to create at least as many jobs as it destroys. Historically, transformative technological advancements have often led to significant jobs growth across industries.

The real challenge will be to ensure a smooth and stable transition between jobs. According to MGI research, automation is likely to disproportionately affect workers over 40, and sustained investments in retraining programs will be necessary to prepare midcareer workers for new employment opportunities. The report notes that this will require “an initiative on the scale of the Marshall Plan…involving collaboration between the public and private sectors.”

The MGI researchers also emphasize the need for increased financial support during transitions. Workers will need unemployment insurance to compensate for lost wages, as well as supplemental income to offset wage depressions typical in transitioning economies. A universal basic income (UBI) may be capable of satisfying both needs.

The report points to completed UBI trials in Canada and India, which showed no significant reduction in work hours and demonstrated increases in quality of life, healthcare, parental leave, entrepreneurialism, education, and female empowerment. The report also references ongoing and planned UBI experiments in the United States, Uganda, Kenya, Spain, the United Kingdom, and the Netherlands as programs to watch in the years to come.

The worldwide spread of automation may be inevitable, but according to researchers at the McKinsey Global Institute, the demise of human labor is not. Whether or not we can respond effectively to the needs of a changing economy will depend largely on our ability to ensure a secure and stable transition for displaced workers.

 

More information at:

James ManyikaSusan LundMichael ChuiJacques BughinJonathan Woetzel, Parul Batra, Ryan Ko, and Saurabh Sanghvi, “What the future of work will mean for jobs, skills, and wages”, McKinsey Global Institute, November 2017

 

International: The International Monetary Fund offers analysis of UBI as part of its ‘Fiscal Monitor: Tackling Inequality’ report

International: The International Monetary Fund offers analysis of UBI as part of its ‘Fiscal Monitor: Tackling Inequality’ report

In a paper released in October 2017, the International Monetary Fund (IMF) has analysed the feasibility and effects of introducing a Universal Basic Income (UBI) in various economies, looking at how it might help ease destructive levels of inequality present in many societies around the globe.

 

The ‘IMF Fiscal Monitor: Tackling Inequality’ focused on how fiscal policy can help governments address high levels of income inequality (from here simply ‘inequality’) while minimizing potential trade-offs between efficiency and equity. As part of the second half of the discussion, the UBI was considered as a mechanism of fiscal redistribution currently being widely debated.

 

Underpinning the analysis of UBI were a number of premises. The first of these was the assumption that some inequality was inevitable within a market-based economic system. Even though data reveals a decline in the global levels of inequality over the last three decades, the increased inequality within certain economies has had adverse effects, not only in terms of social corrosion and political polarisation but also in terms of economic prosperity. As such, the inequality the report sought to address was the type that was specifically having a negative impact.

 

The second premise clarified that measures aiming to alleviate inequality should not come at the expense of achieving economic GDP growth. Supporting this, data was presented showing that between 1988 and 2008, across all types of economies, there had been an average growth of real income per capita across every income bracket, even if the increases had been greater for those earning more. It was also shown that an increase in overall growth between 1985 and 2015, in particular in East and South Asia and the Pacific Region, had coincided with huge reductions in relative poverty and absolute poverty, and, therefore, with increases in social welfare. With no clear trend between increased inequality and growth, and with various studies suggesting, contrarily, either that redistributive policies may slow growth or that redistributive policies may help growth (given that the marginal propensity to consume among the poor is higher), it was determined that, on balance, growth should not be unduly undermined.

 

The third condition stipulated that, given the limited fiscal space most economies operate within, simulations measuring the impact of a UBI should be performed under the assumption of budget neutrality. The vast drop in progressivity among the tax systems of the OECD member states, in particular the drop in the average top rate of personal income tax (PIT) from 62% to 35% between 1980 and 2015, does not seem to have been economically motivated, since during this period there was no evidence of: increased income tax elasticity; proportionally less income going to the top earners (the opposite was the case); increased support for the social welfare of the rich; decreased support for redistribution (the opposite was the case); or, a more progressive tax system being harmful to growth (there was some evidence to suggest the opposite could be the case). It was therefore accepted that this lower progressivity must be the consequence of political preference. As such, in order to control for various political perspectives, the funding for a UBI would have to come from a combination of spending cuts and increased taxes.

 

Following the establishment of such conditions, the central examination of the UBI was based around simulations of implementation within eight economies: Brazil, Egypt, France, Mexico, Poland, South Africa, the UK and the US. The choice of countries controlled for heterogeneity in geographical area, developmental stage (emerging market and advanced economies), and the generosity and progressivity of the countries’ current noncontributory transfers. The analysis of a UBI was then judged on whether it could increase coverage (the number of beneficiaries) and progressivity (those most in need benefiting proportionally more) of current redistributive programs, without impeding growth.

 

In almost all cases coverage increased, given the universality of UBI, however improvements in progressivity very much depended on the financing method and the existing level of progressivity within a particular economy. Where UBI was seen as a replacement for current benefit systems, countries with low progressivity but high coverage, such as South Africa, saw larger swathes of their lower earners suffer at the expense of a smaller percentage of beneficiaries within the same income category. In this circumstance, where consumption inequality is higher as a consequence of income inequality, progressivity as well as coverage could be improved if a UBI was financed by increased indirect taxation (consumption tax) rather than through cuts to the current system. In economies where both coverage and progressivity are already relatively high, such as the UK and France, replacing the current system with a UBI would be regressive. Similarly, even in a country where progressivity is high but coverage low, such as Brazil, the introduction of a UBI as a replacement would likely trade one off against the other, ultimately negatively affecting lower income households. In the situation where PIT among the top-earners is increased as a way of financing a UBI (altering the economic behaviour of these payers), the model calibrated to the US economy (moderate coverage and progressivity) found that, although efficiency, in terms of output forgone, was lower than against a system with indirect taxes, the PIT increase yielded greater overall welfare, especially where aversion to inequality was high. The final scenario, where simulations focused on comparing a UBI funded either directly, indirectly or through cuts, against the expansion of a benefit – the Earned Income Tax Credit (EITC) in the US – at the same fiscal cost, found that, due to the targeted nature of the EITC subsidy, welfare improvements were higher than would experienced under the implementation of a UBI.

 

In summary, The Fiscal Monitor concluded that a perfectly implemented means-tested system would always be superior to a UBI, since it would ensure the necessary coverage and provide the greatest level of progressivity within the bounds, constraints and conditions assumed. Therefore, in countries where there is a ‘good’ transfer program, the finance necessary to fund a UBI would be better used on improving the current system. That said, in reality, given the existence of imperfections in such systems, a UBI could be a powerful means of combating poverty and extreme poverty, especially in countries where both progressivity and coverage is poor. It was also noted that a UBI could be implemented for other reasons, such as in combatting job market disruptions associated with technological progress.

 

More information at:

IMF Publications, ‘IMF Fiscal Monitor: Tackling Inequality, October 2017’, International Monetary Fund website, October 2017

AT Kearney: “Best Things in Life Are Free?”

AT Kearney: “Best Things in Life Are Free?”

Credit to: AT Kearney.

 

Courtney McCaffrey and others from AT Kearney published an article on the debate around Universal Basic Income (UBI) in markets throughout the world. Politicians, in both Europe and North America, are winning on campaign trails with talk about returning control to the common people from the economic system in the globe.

But one of the big worker displacers is automation and new technologies. Oxford University reported 47% of US jobs will be taken over by automation in the next two decades. A UBI is being offered as an economic buffer for such workplace and technology transitions.

Such a UBI would be universal and unconditional in the application. Past UBI experiments such as Mincome in Canada, projects in Seattle and Denver (USA), and Namibia produced real, positive results empowering those politicians. McCaffrey and her collegues also mention recent major endorsements for UBI, for instance from such luminaries as Elon Musk, Tim O’Reilly, and Marc Andreessen.

Two books are recommended: 1) Utopia for Realists by Rutger Bregman, and 2) Basic Income: A Radical Proposal for a Free Society and a Sane Economy by Philippe Van Parijs and Yannick Vanderborght. Other notable cases reported on were Finland, India, and Ontario.

The article discusses pros and cons of UBI, in a general sense. It was noted that citizens with a UBI will spend more time on family and school. The sources of funding for the UBI could be revenues from natural resources and/or more taxes. Some views of critics are following their own political lines, but the major concern revolves around people’s availability to work when they get a UBI covering their basic needs.

Finally, the article summarizes views agains UBI on the political Right and Left. On the Right, the main argument is cost. On the political Left, detractors view UBI as “regressive” because it could dismantle current welfare systems, and that it may not capture different living costs in different areas.

 

More information at:

McCaffrey, C.R., Toland, T. & Peterson, E.R., “The Best Things in Life Are Free?“, AT Kearney, March 2017