“Wise Cities & the Universal Basic Income: Facing the Challenges of Inequality, the 4th Industrial Revolution and the New Socioeconomic Paradigm” by Josep M. Coll, was published by the Barcelona Centre for International Affairs (CIDOB) in November 2017. CIDOB is an independent think tank in Barcelona; its primary focus is the research and analysis of international issues.
The Wise Cities Model
CIDOB has published other works about a concept it calls “Wise Cities,” a term intended to holistically encompass words like “green city” or “smart city” in popular usage. Wise Cities, as defined by CIDOB and others in the Wise Cities think tank network, are characterized by a joint focus on research and people, using new technologies to improve lives, and creating useful and trusting partnerships between citizens, government, academia, and the private sector.
The 2017 report by Coll opens with a discussion of the future of global economies; it highlights mechanization of labour, potential increases in unemployment, and financial inequality. It next points to cities as centres of both population and economic innovation and experimentation. A Wise City, the paper states, will be a hub of innovation that uses economic predistribution—where assets are equally distributed prior to government taxation and redistribution—to maximize quality of life for its citizens.
Predistribution in Europe: Pilot Projects
Universal Basic Income (UBI) is one example of a predistribution policy. After touching on UBI’s history and current popularity, Coll summarizes European projects in Finland, Utrecht, and Barcelona in order to highlight city-based predistribution experiments. Coll adds that while basic income is defined as unconditional cash payments, none of these pilots fit that definition: they all target participants who are currently, or were at some time, unemployed or low-income.
Finland’s project began in January 2017, and reduces the bureaucracy involved in social security services. It delivers an unconditional (in the sense of non-means-tested and non-work-tested after the program begins) income of 560 €/month for 2,000 randomly selected unemployed persons for two years. Eventual analysis will consist of a comparison with a larger control group of 175,000 people, and the pilot is a public initiative.
The city of Utrecht and Utrecht University designed an experiment which would also last two years, and would provide basic income of 980 €/month to participants already receiving social assistance. The evaluation would assess any change in job seeking, social activity, health and wellness, and an estimate of how much such a program would cost to implement in full. The author comments that the program was suspended by the Netherlands Ministry of Social Affairs, and the pilot is currently under negotiation.
Barcelona has begun an experiment with 1,000 adult participants in a particularly poor region of the city, who must have been social services recipients in the past. “B-Mincome” offers a graduated 400-500 €/month income depending on the household. After two years, the pilot will be assessed by examining labour market reintegration, including self-employment and education, as well as food security, health, wellbeing, social networks, and community participation. Because the income is household-based, and not paid equally to each individual, it is not a Basic Income, but the results could still provide useful evidence for the possible effects of a future Basic Income.
Coll identifies several key takeaways from a comparison of these projects. None of the experiments assess the potential behavioural change in rich or middle class basic income recipients. In addition, multi-level governance may cause problems for basic income pilots, but these issues may be mitigated as more evidence assessing the effectiveness of UBI builds from city-driven programs. Coll also acknowledges that all of the experiments listed in his paper are from affluent regions.
In conclusion, the author argues that UBI is a necessary step to alleviate economic inequality. While cities are experimenting with the best ways to implement UBI, they are often not real UBI trials (as they are not universal), and they do not always take an individual-based approach; however, they are nevertheless useful components of the Wise City model.
More information at:
Josep M. Coll, “Why Wise Cities? Conceptual Framework,” Colección Monografı́as CIDOB, October 2016
Josep M. Coll, “Wise Cities & the Universal Basic Income: Facing the Challenges of Inequality, the 4th Industrial Revolution and the New Socioeconomic Paradigm,” Notes internacionals CIDOB no. 183, November 2017
The municipalities of Groningen, Wageningen, Tilburg, Deventer, and Ten Boer have received permission from the Dutch Ministry of Social Affairs and Employment to proceed with proposed social assistance experiments.
Jetta Klijnsma, CC BY 2.0 Partij van de Arbeid
Jetta Klijnsma, State Secretary of Social Affairs and Employment, signed the authorization of the five municipal experiments on July 3, 2017.
Groningen and Ten Boer will be carrying out their experiments in cooperation with one another.
In each of the experiments, which will run for two years, participants will be randomly selected from a pool of current social assistance beneficiaries (with participation voluntary for those selected), and assigned either to a control group or to one of several treatment groups.
Each experiment has at least three treatment groups, testing the following types of interventions: (1) removing reintegration requirements (e.g. job applications and training programs) on welfare benefits; (2) providing a more intensive form of reintegration service; (3) permitting participants to earn additional income on top of their welfare benefits. Subjects assigned to the third treatment groups will be permitted to retain 50% of additional earned income, up to a maximum of €199 per month, for the duration of the two-year experiment. In contrast, under current policy, welfare recipients are permitted to keep only 25% of additional income, and only for up to six months.
The Groningen / Ten Boer experiment includes a fourth treatment group, in which participants are permitted to choose to join any one of the three preceding groups.
Although international media have referred to these experiments as “basic income experiments”, the description is a bit of a misnomer. In all treatment groups, benefits remain means-tested and household-based, and participation is limited to current welfare recipients. Moreover, legal constraints create an effective demand on participants to seek work (on pain of removal from the experiment); this effective conditionality, unique to the Dutch experiments, is discussed below.
Sjir Hoeijmakers, an econometrician who consulted municipalities in their design of the experiments, prefers to speak of “experiments in the context of the Participation Act” (cf. this Basic Income News article), while others refer to “social assistance experiments”.
The experiments are expected to begin around October 1 of this year.
The Ministry of Social Affairs and Employment is currently reviewing applications from three additional municipalities who also wish to conduct experiments on social benefits: Amsterdam, Nijmegen, and Utrecht. Decisions on these proposals are expected later in the summer.
Update: Shortly after the publication of this article, Nijmegen was granted permission to carry out its experiment, which will commence on December 1. A full report on Nijmegen’s experiment will follow.
The municipalities of Groningen, Tilburg, Wageningen, and Utrecht have been planning social assistance experiments since 2015, following the enactment of the Dutch Participation Act. Originally, these experiments were conceived as trials of unconditional basic income (or at least policy moving in this direction), although political pressures encouraged their proponents not to use the term “basic income” (which is popularly associated in the Netherlands with utopian thinking and celebration of laziness). Under the Participation Act, municipal officials are required to implement obligations and sanctions to encourage recipients of social assistance benefits to seek employment. For example, beneficiaries are generally expected to complete a set number of job applications per week, participate in training programs, and attend group meetings as conditions on receiving their benefits. Skepticism regarding the effectiveness of these conditions was a main motivation of the experiments.
In September 2016, Klijnsma authorized municipalities to perform experiments, up to two years in duration, testing the effects of altering the conditions of the nation’s social assistance benefits. This authorization was granted, however, only under strict terms of compliance with the nation’s Participation Act, which effectively prevent the municipalities from testing an unconditional basic income (despite interest in the idea from researchers and promoters of the experiments). For example, in the case in which an experiment treatment involves the removal of work reintegration requirements, the Ministry mandates that officials assess test subjects after six and twelve months to verify that they have made adequate effort to find employment; those who have not done so are subject to dismissal from the experiment.
The Ministry also capped the amount of earned income that participants are permitted to retain on top of their benefits, and required that any experiment including a treatment group with relaxed conditions on social assistance also include a treatment group with stricter conditions.
In the face of these constraints, researchers were forced to design experiments farther from “basic income experiments” than originally desired.
After announcement of a start date of May 1, 2017, Utrecht saw its proposed experiment put on-hold due to a failure to comply with the terms of the Participation Act. The city has since submitted a revised proposal to the Ministry of Social Affairs and Employment, which is pending evaluation.
Another municipality, Terneuzen, proposed a small-scale study of basic income–providing unconditional cash payments of €933 to 20 test subjects–which was axed by Klijnsma earlier in the year. Terneuzen has not submitted a new proposal to the Ministry of Social Affairs and Employment.
In a recent presentation to the Dutch branch of BIEN, Sjir Hoeijmakers stated that 45 municipalities are considering social assistance experiments.
“Eerste vijf gemeenten krijgen toestemming voor bijstandsexperimenten” (July 3, 2017). Official press release of the Dutch government.
Charlotte Huisman, “Vier steden mogen experimenteren met soepelere bijstand,” Trouw, July 3, 2017.
“Should the Netherlands test the basic income,” EuroTopics, July 4, 2017.
Previous Basic Income News Coverage
Florie Barnhoorn, “The Netherlands: All that’s left is the action. Where do we stand with the experiments?” (June 2, 2017).
Kate McFarland, “THE NETHERLANDS: Social Assistance Experiments Under Review” (May 9, 2017).
Florie Barnhoorn, “NETHERLANDS: Design of BI Experiments Proposed” (October 26, 2016).
Information provided by Florie Barnhoorn, Hilde Latour, and Ruud Muffels.
Photo (Tilburg) CC BY-NC-ND 2.0 Stephan Ohlsen
Kathleen Wynne. Credit to: CBS Hamilton.
Three communities across Ontario have been selected for the Province’s guaranteed minimum income pilot. Ontario will be rolling out a three-year study in late spring and fall 2017. Premier Kathleen Wynne made the announcement with details of the project in Hamilton on April 24th.
The stated goal of the pilot on the official website of the Ontario Government is to ”test whether a basic income can better support vulnerable workers, improve health and education outcomes for people on low incomes, and help ensure that everyone shares in Ontario’s economic growth.”
The mayors of each community – Lindsay, Thunder Bay, and Brantford/Hamilton/Brant County, expressed hopeful to positive reactions at the announcement that their cities had been chosen to pilot in the project.
Kawartha Lakes Mayor Andy Letham, which is home to the community of Lindsay, describes precarious work as a cause for concern in his community and admits that the status quo of society isn’t functioning well. “The cost of poverty on people’s mental health is real,” said Letham. “So how to we break these cycles?” Lindsay will host 2,000 of the total 4,000 participants.
Thunder Bay Mayor Keith Hobbs, a 34-year veteran of the local police force, described his experience with some members of the community: “I saw the same people all the time, like a revolving door.” Hobbs expressed excitement at the possibility of this project positively impacting the lives of those he had consistently interacted with. Workers and citizens of Thunder Bay have had to reinvent themselves as the region transitioned from industries like pulp and paper to health research institutes, law, and genomics.
Pulp and Paper Mills in Thunder Bay, Ontario
Brantford Mayor Chris Friel expressed excitement to take part in a project that will reduce poverty and improve health and educational outcomes. Ron Eddy, the Mayor of Brant Country, stated that he looks forward to observing the results of the project. “The only way you’ll know the outcome is to try it out. So, let’s see what happens,” Mayor Eddy said.
Details on the Pilot
The basic income pilot will randomly select 4,000 individuals between ages 18 to 64 that meet certain criteria, and provide them with a minimum income despite their employment status. The plan will target populations who are in precarious work positions, those already on social assistance, and the homeless. The program will, however, target mostly the “working poor” according to Ontario’s Minister of Community and Social Services Helena Jaczek. Those receiving a minimum income will be compared to a control group, which will not receive payments. The project will look for outcomes using metrics like food security, health and health care usage, education and training, and labor market participation among others.
Recipients of the guaranteed minimum income will receive:
- $16,989 per year for a single person (75 percent of the Canadian poverty line), less 50 percent of the recipient’s earnings from work;
- $24,027 for a couple, less 50 percent of their earnings from work;
- An additional $6,000 for those with disabilities.
In addition to this, recipients will continue to receive other provincial and child benefit payments.
With this version of a guaranteed minimum income, a person earning $12,000 a year would still receive a basic income of $10,989 (subtract $6,000, or half their earnings, from the base amount of $16,989) and therefore receive a total of $22,989. A recipient’s net income will still increase, with the minimum income still active, as earnings from work increase up until around a wage of $34,000, where the payments would disappear. The total cost of the project is expected at $50 million per year.
Hugh Segal, a former senator who was consulted for the project, noted in Manitoba’s “Mincome” experiment in the 1970’s that the community saw improvements in health with no drop in employment, and that the potential exists for the government to save money if it replaced the traditional social assistance programs like Ontario Works with a basic income. The Provincial government is also in the early stages of planning a fourth basic income pilot for the First Nations community.
More information at:
Kate McFarland, “Government Announces Detail of Minimum Income Pilot.” Basic Income News, 25th April 2017
“Ontario Basic Income Pilot.” Government of Ontario, 24th April 2017
Roderick Benns, “City of Kawartha Lakes mayor welcomes basic income pilot in Lindsay.” Precarious Work Chronicle, 25th April 2017
Roderick Benns, “Thunder Bay mayor says basic needs must be met as his city chosen for basic income pilot.” Precarious Work Chronicle, 26th April 2017. Web.
Vincent Ball, “Brantford, Brant part of basic income pilot.” Brantford Expositor, 24th April 2017
Liisa Siika-aho (provided by herself)
As we’ve already reported here, Finland’s Ministry of Social Affairs and Health has announced their most recent move in a plan to launch a basic income experiment. On 25th August the Ministry canvassed for the Finnish public’s opinion on a bill regarding a basic income experiment. Here is a follow up with the Ministry’s comments and experts’ responses.
Liisa Siika-aho, director, Ministry of Social Affairs and Health responded to BIEN on 26th August as follows:
Q: What is the basic income experiment and what is its aim?
A: The basic income experiment is included in Prime Minister Juha Sipilä’s Government Programme. The experiment is one of the activities aiming to reform social security so that it better encourages participation and employment.
Q: Why is the basic income experiment carried out?
A: The objective of the legislative proposal is to carry out a basic income experiment in order to assess whether basic income can be used to reform social security, specifically to reduce incentive traps relating to working.
Q: How are the participants selected?
A: Persons receiving Kela’s unemployment-related benefits, under certain limitations, would be included in the experiment. From the target group, a test group of 2 000 persons would be selected by means of random sampling.
Q: Is it mandatory to participate in the experiment?
A: Participation in the experiment would be mandatory for those selected.
Q: When will the experiment start?
A: It is suggested in the legislative proposal that a basic income experiment will be carried out in 2017–2018.
Q: What would be the level of basic income in the experiment?
A: The level of basic income would be EUR 560 per month. Basic income would be tax free for the receivers.
Q: How is the experiment financed?
A: A total of EUR 20 million has been reserved in the budget for the basic income experiment.
In addition to this, the benefits that Kela is paying at the moment would be used as an addition for those persons who are receiving basic security benefits at the beginning of the experiment.
Q: Who is responsible for carrying out the experiment?
A: The Social Insurance Institution of Finland (Kela) would be responsible for carrying out the experiment.
Finland has a long history of advocating UBI (for a brief summery, see here). Here are those advocates’ Comments.
Jan Otto Andersson with an article in the Helsingin Sanomat (taken by Toru Yamamori)
Jan Otto Andersson, Emeritus associate professor at Åbo Akademi, has been advocating UBI since around 1980 and is a founding member of the BIEN (European Network at that time). On 26th August, he had this to say:
It is not a test for what a basic income for all in the society would mean, but for just to see how it affects those who have been unemployed. …. So it is limited but interesting. It will improve the discussion which has been here for a long time….It [my feeling on the experiment] is positive because this makes the idea more well known.
Osmo Soininvaara, a former minister of Social Services with the Finish Green League and another long term advocate of UBI in Finland, posted a harsh criticism on his blog on 26th August, where he calls the experiment as ‘such a stupid model’. His reasons were as follows:
In a proper BI model, the received basic income does not, indeed, get smaller when your income level rises, but taxation starts from the very first euro earned. That’s why a proper basic income does not bring net income gains to people in mid-income jobs.
In this experiment taxation is left untouched. If you get into a 4000 euro per month job, you will earn 560 euros more than the person doing the exact same job next to you. We cannot afford to increase the income level of every job earner by 560 euros per month.
In this regard, the model is guilty of the accusations levelled against BI by those people who do not understand who basic income is supposed to work.
(translated by Otto Lehto)
Otto Lehto, the former president of the BIEN Finland, gave us his comments, which seems to have a more nuanced tone:
Feelings, as an individual and academic, formerly of BIEN Finland, can be summed up as follows: The research parameters are about exactly the sort of compromise that one would expect to emerge as a result of the recommendations of an expert coalition commissioned by a wide-ranging coalition government spurred to action by a vague and compelling sense that something needs to be done, but equally held back by the realization that many toes will inevitably be stepped on, and many special interests will need to be reconciled, before anything can be done. Change breeds fear, and fear breeds paralysis. To allay skepticism, the parameters are designed to be the least offensive to, and the smallest possible departure from, the established norms and expectations of the Finnish workfare/welfare-state. In particular, excluding young people and students is, in my opinion, a moralistic choice of little merit and little justification, but it makes sense as a compromise within the status quo, and as a precaution against the critics of “free money to lazy students.”
The budgetary constraints and time constraints are beyond Kela’s control, so the main fault lies within the government. They also set the original goals and parameters within which the labour market participation focus has been raised as the main criteria, with the predictable result that human right, liberty. equality and other considerations of social justice bent have been largely set aside, to the chagrin of many (myself included). This. however, is the state of things, and can only be changed in the next general election of 2019.
2000 participants is a small sample, but if the budget does not change, this cannot be helped. Limiting the sample to people on the government unemployment benefits makes nominal sense as a result of the government’s single minded focus. But it skews the experiment by excluding a number of potential beneficiary groups, including people on low-paying jobs, students, the self-employed, etc. This does not even make sense from the government’s own (limited) perspective, since labour market participation is a more complex notion than the old-fashioned distinction, reflected in the official unemployment statistics, between people who are “in” and “out of” work.
The taxation aspect is another potential disaster. If taxation cannot be changed to reflect the new benefit structure, this will inevitably make SOME recipients of basic income better off than their peers, while some of them will be worse off than their peers. Such a model, with its creation of a massive budget-deficit, cannot be generalized for the whole national economy, as Osmo Soininvaara, the father of the Greens’ basic income model, has written in his recent blog, very critical of the government’s/Kela’s proposal.
I am very skeptical this experiment will produce any really interesting scientific results, but it serves the function of satisfying the nominal requirements of the government’s plan, and the pressures from the various interest groups. It does not appear too radical, too left-wing, nor too right-wing. It might serve a useful purpose in propelling the basic income discussion forward. At the same time, many instances will probably try and use to it squelch any further discussion, too.
Beyond my own views, I will now say something about how this proposal has been received more generally. The overwhelming consensus among my own group of friends, representing multiple parties, left-wing and right-wing, those opposed to basic income as well as those in favour, is that the experiment seems disappointing in many respects, and perhaps even doomed to fail. (Some will conspiratorially add: consciously?) Many people, including opponents and skeptics, would like a more thorough, larger-scale and better designed experiment. The lukewarm success, bordering on failure, of the experiment, before it has even gotten off the ground, is a good indication of the difficulty of institutional change in our country. Good ideas become OK ideas, bad ideas become OK ideas, until we are left with nothing but OK ideas. So, yes, this experiment seems… OK.
Reviewed by Cameron McLeod.
The Government of Ontario is moving to undertake a basic income pilot project. In recent weeks it has been receiving expert information and advice, for example from Jurgen De Wispelaere (formerly on the Board of Basic Income Canada Network and now a member of its new Advisory Council). On May 26th De Wispelaere presented to the government’s Deputy Ministers Social Policy Committee.
Two of the most knowledgeable experts concerning the Manitoba Mincome experiment of the 1970s are its former executive director, Dr. Ron Hikel, and University of Manitoba economist and researcher Dr. Evelyn Forget. At the recent North American Basic Income Congress in Winnipeg, Dr. Hikel spoke about Mincome and lessons learned that could be applied to the Ontario pilot. I also recommend watching Dr. Forget’s appearance on June 13th on Steve Paikin’s program, The Agenda: the 17 minute video reflects Evelyn’s sweeping knowledge of the history and results of Mincome.
Another encouraging sign of the Ontario government’s seriousness behind giving basic income a try was its appointment last month of the Hon. Hugh Segal as the pilot’s special advisor. A trailblazer for basic income in Canada over the past 40 years, Mr. Segal will now “deliver a discussion paper to the province by the fall to help inform the design and implementation of the pilot….The discussion paper will include advice about potential criteria for selecting target populations and/or locations, delivery models and advice about how the province could evaluate the results of the basic income pilot” (source).
Ontario’s Premier, the Hon. Kathleen Wynne, has publicly recognized that Ontario needs to investigate basic income as an alternative to welfare. Among welfare’s many problems: its profound stigmatization of “clients” of the system. And on that, I recommend David Calnitsky’s fine academic paper exploring the non-stigmatizing effects of Manitoba Mincome.
by Rob Rainer
Basic Income Advocate and Member, Advisory Council of Basic Income Canada Network