by Kate McFarland | Oct 22, 2017 | News
The Government of Macau has completed the most recent distribution of its annual wealth dividend, providing most residents of the city with an unconditional cash grant of about US$1,200.
The Macau Special Administrative Region (SAR), an autonomous region of the People’s Republic of China, is a resort city with lucrative tourism and gambling industries (described by Lonely Planet as the “Vegas of China” and a “mecca of gambling and glitz”). Macau is a host to many gambling and betting establishments and is said to rival Malasyain online gambling scene as well – such as the popular Kiss918 app. Those who can’t make the trip out to Macau or Vegas may want to see what gaming options they have available to them online – they could look into the afformentioned gambling apps or try something similar with sports betting sites like www.bangthebook.com. That said, the city’s lottery industry has helped to finance its Wealth Partaking Scheme (WPS). Initiated in 2008 and renewed each successive year, the WPS provides a cash dividend to all Macau residents.
All holders of a Macau Resident Identity Card are eligible to receive the WPS payments, including both permanent and non-permanent residents have been, although payments to permanent residents have been higher in each year of the program’s existence. Some people have chosen to take said payments and, instead of going to the local options, go online to www.paybyphonebillcasino.uk and similar options online. Considering the comfort of staying inside from this, it makes sense.
According to the Macau SAR government, the purpose of the scheme is to “share the fruits of economic development with general public”. However, researchers such as Bruce Kam Kwan Kwong argue the underlying motive of the scheme was simply to “stabilize the political atmosphere” in the face of large May Day protest rallies and other civil unrest.
On July 3, Macau SAR announced the 2017 WPS, under which permanent residents were entitled to 9,000 patacas (about US$1,200 or €950) and non-permanent residents to 5,400 patacas (about US$670 or €570). The amount of the payment has remained unchanged since 2014 (when the amount was increased from 8,000 patacas in 2013 and 7,000 patacas in 2012).
Disbursement of the payment was completed on September 15, with a total of 688,079 checks having been distributed (278,558 by direct transfer and 409,521 by mail). As of September 17, 264,758 of the mailed checked had been honored. Between honored checks and direct transfers, over 543,000 residents of Macau have already received the 2017 WPS dividend. (The Macau SAR government’s announcement does not state how many of these checks were sent to permanent versus non-permanent residents.) As of its 2016 census, Macau has a total population of 650,834.
For additional details concerning the disbursement and eligibility of the 2017 WPS, see Furui Cheng’s July 27 report in Basic Income News: “Wealth Partaking Scheme: Macau’s small UBI“.
Is Macau’s Wealth Partaking Scheme a Basic Income?
The answer is contentious, and, in part, a matter of semantics [1]. Certainly, the WPS shares salient characteristics of a basic income: it is paid in cash, universal and unconditional for all residents, and not means-tested. (Unlike, for example, Singapore’s Growth Dividend, the amount of the WPS dividend does not vary according to income level.)
On the other hand, it may be dubious to say that the WPS provides “regular” payments to residents. As a matter of fact, the WPS has been distributed annually since the scheme’s initial enactment in 2008. However, it is not guaranteed, and it might be more accurate to describe the annual payments as successive one-off grants. Karl Widerquist explained Basic Income News report on the 2014 dividend, “The government has now set the president that the Wealth Partaking Scheme will be in effect every year, but each year it has been created with one-time legislation without a promise of renewal. The amount, timing, and existence of the redistribution have to be renegotiated each year.” This continues to hold true in 2017.
Furthermore, while the most “official” definitions of ‘basic income’ (including BIEN’s) do not stipulate that the amount of the payment is stable, it might be argued that this it is implicitly accepted that it must be so (perhaps pegged to inflation on GDP). The amount of the WPS has historically not been stable, and was even cut significantly in the second year of the program’s existence (from 4,000 to 3,000 patacas for permanent residents).
Finally, the most contentious semantic dispute in the basic income community, arguably, is that regarding whether the term implies that the amount of the payments is high enough to secure at least a basic subsistence-level existence. Even if the WPS qualifies as a basic income on all other criteria (although this itself dubious), the dispute renders the final verdict a matter of definition. The amount of 9,000 patacas per year is far too low to meet minimal living expenses. According to Numbeo’s cost of living calculator, for example, the average monthly rent for a one-bedroom apartment is about is well over 7,000 patacas in the city center and about 6,000 patacas outside of the center [2]. For comparison, the average monthly net salary is over 14,000 patacas, and Macau’s only current minimum wage legislation, for cleaners and security guards, establishes a minimum salary of 6,240 patacas per month. Thus, on some definitions of the term (although not BIEN’s), Macau’s WPS would thereby fail to count as a basic income (although it might still be called a “partial basic income”).
At the least, Macau’s WPS, like Alaska’s Permanent Fund Dividend, is an example of a universal dividend program with some salient similarities to a “pure” basic income (the latter of which exists nowhere in present physical reality).
[1] While BIEN has voted to establish a specific definition of basic income, I have recently argued that an inclusive, umbrella organization should abstain from accepting a singular definition of ‘basic income’.
[2] The average price of draught beer is 35 patacas, meaning that the 2017 WPS would not even be sufficient to finance a daily draught beer.
Reviewed by Russell Ingram
Photo: Casino in Macau, CC BY-NC-ND 2.0 Bailey Cheng
by Furui Cheng | Jul 30, 2017 | News
Shenzhen City
Shenzhen is one of the four current first-tier cities in China, and the other three are Beijing, Shanghai and Guangzhou. In February 2017, Shenzhen Innovation and Development Institute, a famous think tank founded in 2013, issued an “Outline of Shared development in Shenzhen”, which calls for a social dividend program in a package of reform measures.
Shenzhen is the first Special Economic Zone in China. In 1980, it was a poor rural area with 30,000 people. But now, more than 30 years later, it has a population of almost 20 million, with 11.9 million local permanent residents. Its total GDP is similar to Hong Kong, one of China’s Special Administration Regions. Shenzhen citizens’ per capita GDP was US $25,400 in 2015, and it is stepping into global middle developed cities. “The Sharing Shenzhen” is a new strategy after the previous “The Speed Shenzhen” and “The Quality Shenzhen”.
Although Shenzhen’s nominal per capita GDP is similar to that of South Korea, its per capita disposal income is only half of the latter’s. At the same time, the housing price in Shenzhen is double that of South Korea. Most people are living in substandard conditions, especially those 8 million non-permanent residents who have been totally excluded from the local social security system. Furthermore, no matter their income levels or social security levels, there are big gaps among even permanent residents. The Gini coefficient in Shenzhen per capita income is almost 0.5.
Shenzhen is thus facing a very big challenge of adjusting income structures to achieve social justice. Twenty Suggestions for “The Sharing Shenzhen Outline” include:
- One billion tax relief program, to help enterprises and people;
- To continue to raise the minimum wage;
- To raise working income and expand the proportion of middle-income workers;
- To improve the salaries and benefits of civil servants, so that the city managers can share the fruit of urban reform and development;
- To establish state-owned capital dividend fund, letting all the people share the results of reform and development of state-owned enterprises;
- To restart the “common prosperity” plan, to reduce the gap between permanent residents and the immigrants;
- To raise and expand the minimum guarantee income system, to cover the whole population;
- To expand the social assistance system to the medium income families including the immigrants;
- To establish a more equitable social security system covering the immigrants;
- To put the non-household residents into the housing security system, to achieve the safe living dream for everyone;
- To establish the welfare and service system for the elderly;
- To establish the universal social welfare and relief policies, so that Shenzhen’s warmth and sunshine can reach all children;
- To develop social charity system;
- To reduce the subway and bus fares;
- To promote equal employment;
- To promote fair education;
- To reform the expensive medical system;
- To relax the conditions of household registration, to make more people permanent residents;
- To control and reduce the high housing prices, to make young people full of hope and dream;
- All residents to enjoy the right of participation in social management and assume the obligations.
For the specific suggestion No. 5, the outline suggests Shenzhen should learn from Singapore, Hong Kong and Macau to give citizens a social dividend from the city’s fiscal surplus. In 2015, Shenzhen had 918.1 billion yuan [US $135.9 billion] total assets of state-owned enterprises, 461.6 billion yuan [US $68.3 billion] net assets, and 36 billion yuan [US $5 billion] profit. In addition to the corporate tax, the municipal government should get their net profit of 12.7 billion yuan [US $1.88 billion] per year as shareholders. Based on the average dividend payout ratio of Chinese listed companies, at least one third of the annual net profit could be distributed in cash as social dividend among all the residents. Given present figures, that would be 1,000 yuan [US $148] every two years for every resident. While this dividend might appear small, it is just a very conservative part of the net profit, and we can expect an increase in the future.
In the above description, Shenzhen is basically China’s miniature. The whole country faces similar problems and situations. So this plan captured the national attention after its announcement. Additionally, the director of the Shenzhen Innovation and Development Institute, Zhang Siping, is the former deputy mayor of Shenzhen city itself, and many councilors of the Institute are formerly from government sectors. They know the real crux of the city’s development, and they are making a fair plan out of their offices. This is another reason why “The Sharing Shenzhen Outline” is so striking in China.
In fact, China has not only local but also national state-owned enterprises, and the latter ones have much bigger profits. “The Sharing Shenzhen Outline” mentions only the former. All Chinese people could expect to get a national dividend plus a local one in the future.
More background information at:
Karl Widerquist, “SINGAPORE: Government gives a ‘growth dividend’ to all adult citizens”, Basic Income News, June 8th, 2011
Special thanks to Kate McFarland for reviewing this article.
by Kate McFarland | Dec 3, 2016 | News
A superior court judge has upheld the Governor of Alaska’s decision to halve the amount of the state’s annual social dividend payment in 2016.
Senator Bill Wielechowski
CC BY-SA 4.0 Peter Stein
As previously reported in Basic Income News, Alaskan senator Bill Wielechowski filed a lawsuit in which he contested Governor Bill Walker’s veto of about half of the funding that the state legislature had allocated to the state’s Permanent Fund Dividend (PFD) and asked the courts to require that the Permanent Fund Corporation transfer the full amount originally allocated to the PFD.
Walker vetoed the funds in June 2016, in the face of a mounting budget crisis in the state, and Wielechowski filed his suit in September. On November 17, Superior Court Judge William Morse dismissed the case.
The Alaska Permanent Fund was established in 1976 by an amendment to the Alaska State Constitution that mandated that at least 25% of the money earned from the state’s oil be placed into a permanent fund, enabling the state to share its profits from non-renewable resources with future generations of Alaskans. In 1980, the Permanent Fund Corporation was created to manage the fund. Financed from the investment earnings on the permanent fund, the PFD is a cash payment distributed annually to all permanent residents (including children). The PFD is well-known in basic income circles as a “real world” example of a basic income–a universal and unconditional cash transfer to individuals. The PFD reached its peak amount of $2,072 in 2015, and it would have stood at $2,052 in 2016 had Walker not vetoed the legislature’s budget. Instead, this year’s PFD is $1,022 per Alaskan resident.
In previous years, the transfer of money from Permanent Fund Corporation to the fund for the dividend has been routine and uncontested.
In his suit, Wielechowski charged that Walker violated a law (Alaska Statute 37.13.145) that states that the Permanent Fund Corporation “shall” transfer half of its available income to the fund for the PFD. On Wielechowski’s interpretation, this statute implies that the transfer of funds is “automatic” and thus not subject to veto by the governor.
Morse argued, however, that the amendment setting up the Permanent Fund did not specify that it would affect the governor’s power of veto, saying to Wielechowski, “You’re telling me that what they secretly were trying to do was eliminate the governor’s veto authority, but they never mentioned that?”
Wielechowski has said that he will appeal the decision to the Alaska Supreme Court.
References
Alaska Dispatch News (November 17, 2016) “Judge tosses lawsuit challenging Alaska Gov. Walker’s PFD veto” Alaska Dispatch News.
Andrew Kitchenman (November 17, 2016) “Judge upholds Walker’s veto halving Permanent Fund dividends” KTOO Public Media.
Alaska pipeline photo CC BY 2.0 Maureen
by Furui Cheng | Nov 10, 2016 | News
Written by Cheng Furui
In the process of Chinese industrialization and urbanization, more and more rural villagers have been transformed into urban citizens. Decades of industrialization have left China with a typical dual economic structure: people who make wages live in the cities, and peasants make a living on the land in villages around them. With the rapid expansion of city suburbs, there are always some villagers in the transition zones. As they change from crop growers to wage earners, villagers will lose their land and be accustomed to a totally new way of life. An important question is how to make these large-scale unnatural transitions as smooth and successful as possible.
China provides many examples. One of the most common and successful strategies has been the establishment of cooperatives. Huaidi, one of the many successful cooperatives in China, demonstrates the effectiveness of this approach to the challenges of urbanization.
Huaidi [1] is one of the urban villages in Shijiazhuang, the capital of Hebei province in China. It has a population of around 6000. Unlike most villages around the city, Huaidi villagers initiated a deep “one-villager-one-share” cooperative from the beginning of the urbanization process. In China’s countryside, land is collective owned and privately used by villagers, in an equal fashion, as long as their households are registered in that village. In the process of urbanization, local government compensates villagers for the land which has been taken from them, paying them a single value and a specific transition fee for several years. The value partly depends on the market, and partly on the bargaining power of villagers. Under the leadership of Chen Yuxin [2], Huaidi villagers received very good compensations for their lost land in 1996, 1998 and 1999.
The success of the cooperative has come from these big compensations. In a weak organization, as is common in surrounding villages, villagers will get their money individually and make their living in the city on their own, abandoning the collective at that point. But Chen Yuxin persuaded the villagers to give up the first cash compensation, and bought back the land development rights in the future. In 1996, the Huaidi villagers collected a total of 10 million yuan [US $1,475,797] [3] compensation to build a new shopping mall. In 1998 and 1999, according to the urban plan, Huaidi land was taken by the government to build a road and a big park, respectively. In 1998, they got future development rights on both sides of the road. In 1999, they gave up a land compensation of 200,000 yuan [US $29,516] per mu (equivalent to US $44.3/m2, which is much lower than current land price) and bargained for a 33,350 m2 land patch, for their own future development. Most local governments are happy to accept this kind of exchange because of fiscal implications.
In this way, Huaidi villagers pursue their own urbanization pattern: self-demolition, self-transformation, and self-development. Under this process, villagers get more autonomy and create their own future city life, not becoming the sorrowful victims of social policy. Their core ideal is serving the city, influencing its development, and assuring a smooth transition between city and countryside. With these development rights, Huaidi villagers have amassed billions in assets, including famous and prosperous shopping centers, a decorative empire, food street, private schools, a cultural center, and other attractions. The current annual profit is about 100 million yuan [US $14.76 million]. As shareholders, Huaidi citizens now benefit from a very good welfare system.
First, every family gets identical, well decorated houses. In rural China, besides the arable land each person tends, every family has a house on a separate patch of land. In remote areas, there is also forest land per person. After the land is taken away, families get the transition fee [4] for several years, which is mainly used to rent the house they just lost, before moving into the new one. But many people have no ability to buy their own houses in the city in their lifetime. So after the transition period, every Huaidi family is placed into three or four houses, with a total area of 330 m2. They are given two choices. Under the first choice, they have three houses of 140 m2, 110 m2, and 80 m2 respectively. Under the second, they have four houses of 82.5 m2 each. All the 6000 citizens are very happy to own new houses in the city. These houses are more than enough for the whole family to live, and most can rent one apartment for several thousand yuan [more than US $400] per month. [5]
Second, every child is free to enjoy education. Huaidi villagers have built a famous private school [6], which has facilities from kindergarten to high school. The high quality of this school attracts students from outside of Huaidi, who are accepted in exchange for high fees. Every year, the school organizes various kinds of activities and interaction with other famous schools throughout the world. Teachers are proud of working there. Across the country, China has nine years of compulsory education, from primary to middle school, but Huaidi offers 15 years of free, high-quality education. This private school is one part of the villagers’ collective assets, and all their own children are exempt from tuition fees.
Third, every person benefits from healthcare. Huaidi has had a universal healthcare system since 1996. China, on the other hand, has employee healthcare only since 1998, and universal healthcare just since 2008. Nowadays, Huaidi citizens have double protection. All people are expected to participate in the national healthcare system, and the community pays the medical insurance premium for all collectively. Additionally, everybody can benefit from community healthcare if they choose. It only costs 10 yuan [US $1.48] per year, and supports the beneficiary with another 60% compensation for the money paid by oneself above 1000 yuan [US $148], up to 60,000 yuan [US $8,855], after national medical insurance reimbursement.
Huaidi citizens discussing their new apartments
Fourth, every person of age has a pension. Since 1996, every woman in Huaidi older than 50, and every man older than 60 years, have benefitted from pensions of at least 2000 yuan [US $296] per month—with larger pensions for older people. Currently, the Chinese pension system requires a minimum 15 years of contribution, whether a person is employed or not. Huaidi integrated its own pension system with the national one in 2010. People who are employed participate in the pension system via their employers. For those who are not employed, the community pays three quarters of the total annual contribution, and citizens only pay one quarter. The minimum contribution is 20% of the local per capita income in the previous year.
Fifth, every person gets a whole set of benefits in kind. Everything from rice, flour, edible oil, beans, salt, eggs, beef, pork, vinegar, soy sauce, chicken powder, milk, mineral water, to all kinds of vegetables, tooth paste, toothbrush, tea, sugar, washing powder, soap, toilet paper, cleanser, towel, etc. are distributed regularly in specific quantities, enough for everybody’s consumption, all with good quality.
Finally, all Huaidi citizens have had a basic income of 1500 yuan [US $221] per year since 1995, which is directly transferred to their bank accounts in shares of 125 yuan [US $18.5] per month. For children under 18, this money is kept in parents’ accounts. This amount money was significant in 1995 (Chinese cities’ nominal per capita annual income was about 5000 yuan [US $738] in 1995), but not as much now, due to the rapid rise of GDP in the last 20 years (in 2015, the nominal per capita annual income in Chinese cities was about 50,000 yuan [US $7,379]).
One might wonder why the people of Huaidi get some cash regularly, and unconditionally, after receiving so many benefits in kind. The answer is that the basic income gives people more freedom, especially for those who are unemployed, even though they get enough distributed food and very good social security system. Additionally, this basic income acts as prevention of social ills, reducing crimes, fights and other hurtful behaviors.
Huaidi’s welfare system is much higher than Chinese average social security level, so nobody in the community applies for social assistance. Moreover, there are a lot of other benefits, such as free newspaper, free cable, public utility subsidy, university subsidy, and so on. These welfare benefits come from their original rural collective assets, especially land. Land reform is the biggest achievement from the Mao era. This kind of basic income–often called a social dividend–comes from assets, not tax. It is more likely to be universal for a highly populous country like China.
Notes:
[1] Baidu map, “Location of Huaidi“, 2016
[2] Chen Yuxin, “Leader of Hebei Huaite Group“, 2016
[3] At October 2016 exchange rates.
[4] The transition fee and the compensation for the land, are both paid by the government to the villagers, but the real land taker (future developer) should pay to the government first. Huaidi only keeps one part of this land development rights, and the other part is sold to the developer, who is the real payer of the compensation and transition fee. It is very difficult for single individuals to make good bargains during the land taking process.
[5] It is not very common for urban families to own multiple houses. So Huaidi citizens are richer than most of their neighbours.
[6] The Private School, “Shijiazhuang Foreign Language Education Group“, 2016
More information at:
(in Chinese)
Ge Jizhong, “People’s trust“, YanZhao Evening News, February 6th, 2015
Jiang Hongjie, “An interview with Chen Yuxin“, Hall of Fame Home Online, August 14th, 2012
Other information in this article comes from the author’s field research.
Article reviewed by André Coelho and Kate McFarland
