The Latin American Basic Income Network

The Latin American Basic Income Network

It was late October 2019, when different academics and activists from all over Latin America were preparing to meet in the south of Chile to share our ideas and perspectives on UBI for the first time. The idea of forming a regional basic income network had been present for a long time and people were eager to contribute to it.

Suddenly, Chilean police and army went to the streets to suppress unarmed protestors. What started as high-school students protesting the rising metro fees became the a turning point in Chile’s history. The basic income event was sadly cancelled but the seed of something else was planted.

Fast forward to early March 2020, together with Gabriela Cabaña we decided to kick-start the network. Our first call was on Monday, March 9th, one day after the biggest protest turnout in Chile, on the eve when petrol prices went negative and right before the COVID-19 pandemic spread to most countries. We did not know what to expect next.

After the Corona virus hit, the interest on basic income surged tremendously in Latin America. In a matter of months, UBI in Latin America has gone from being almost no-where in the political radar to being the politics of the future, with events discussing the idea in countries like Argentina, Brasil, Colombia, Ecuador, Guatemala and Uruguay.

The Latin American Basic Income Network meets once a month. Since July and with the help of the Institute of Central American Fiscal Studies (ICEFI), the network has started to organize a series of talks in order to contextualize the importance of basic income in the region. You can watch the first one here, featuring Pablo Yanes (Mexico), Nelson Villarreal Durán (Uruguay) and Alejandra Zúñiga Fajuri (Chile), on the present importance of basic income.

Our goal is to produce a Latin American perspective on Basic Income, situating it in the socio-political context of the region on all it’s different dimensions, such as ecology, indigenous perspectives, welfare, democracy and so on. The next talk will be held on August 4th, 16h CDT, titled “Feminist Perspectives on Basic Income” which can be streamed live and viewed here.

Watch out for more news coming from the region! To get in touch, please contact us at: red-latinoamericana-de-renta-bsica@googlegroups.com

Housing prices are an obstacle to universal income

Housing prices are an obstacle to universal income

By SB

There is a fear that a disproportionate part of Universal Basic Income would be paid to housing. Under current circumstances, a large portion of the income is paid to rent. A person UK in 2019, if receiving benefits only, in many cases is paying over fifty percent of their income for housing. If UBI was to come into effect, it is possible the same problem would occur. On the minimum wage in the UK (currently £8.21 per hour), over 43 percent of the income of a person living in a city will go to renting a single room.

If UBI becomes a transfer of funds from everybody in the economy to the landlords in the economy, then it cannot be progressive. These landlords are not particularly in need or poor. Therefore, the campaign for UBI must be approached keeping in mind where that income ends up.

Looking at rent rises in the last 29 years, one can see that that inflation between 1989 and 2019 makes everything roughly two and half times more expensive. So, anything that is £1 will be £2.50 today. Another way to put it is that £1 in 1989 is equal to £2.50 today. In the same time, the lowest wage rose from about £3.00 to £8.21 and tax on the minimum full-time wage decreases from twelve percent to five percent.

The biggest difference is rent. In terms of rent, £1 is equal to £10.50, or what was a £50 per calendar month is now £550.00 pcm.  In buying terms, the lowest-priced homes cost about £35,000 in 1989 or six times the minimum wage annual income. In 2019, the average price of a two-bedroom flat varies widely. However, it is not uncommon to see a two-bedroom flat priced at £200,000 or twelve times the minimum wage. This would indicate that buying a house takes a similar trajectory as rent. In 1989, a person could have obtained a secure home, and put aside some money that comprises the state pension. If the property prices and rent had not risen and had stayed at about 9 percent of minimum income wages today, then this would be the case too. Even If there was a shortage of housing, they would have been able to initiate a build via a housing association or even through their own income.

Table 1 Wage falls as rent rises

Year Monthly  Annual Rent Annual Disposable Income (after rent, tax and national insurance) % of Minimum Wage for rent (After Tax and NI) % of Minimum Wage paid for tax factoring in tax free allowance
1990  £40.00  £480.00 £4,658.75 9.34% 12.16%
1995  £62.85  £754.26 £5,113.24 12.85% 9%
2000  £98.77  £1,185.21 £5,562.40 17.56% 6%
2005  £155.20  £1,862.40 £7,100.89 20.78% 9%
2010  £243.88  £2,926.51 £7,565.72 27.89% 9%
2015  £383.22  £4,598.62 £7,923.37 36.72% 4%
2019  £550.13  £6,601.60 £8,632.19 43.34% 4%
2020  £602.18  £7,226.11 £8,629.68 45.57% 4%
2021  £659.14  £7,909.70 £8,595.00 47.92% 5%

However, the rent and property price rise that took place meant that each time the minimum wage was raised (in line with inflation) to keep somebody at the same standard of living on minimum wage, the rent rise took a larger and larger portion of their income. In the beginning, the rent rise takes 25 percent of their pay rise, then taking about 50% of their pay rise, and in many years is a 100 percent or near 100 percent. In a few cases, it was more than 100 percent.

Since the minimum wage increase to keep up with inflation and they are handing over above the calculated inflation for rent to their landlords, they are no longer gaining the additional money to stay at the same standard of living. Their wage is dropping and their ability to save and prepare for the future is dropping. For example, in 1989, for every £1 a person gives 9 percent or 9p to rent. In 2019, for every £2.50 roughly equal to £1 then, a person gives £1.07 to their landlord or 43 percent.

If we look at rent increment per year and pay increment per year, taking the actual rises in the minimum wage from government records, and factoring the rent rise equally distributed over the full twenty-nine years. In order to get from a monthly rent of £50pcm to £550pcm. If equally distribute, then from about 1990 to 1999, the pay rise would have been higher than the rent rise. Some years all of the pay rise is transferred to the landlord.

In 1990, about a quarter of the pay rise is a transfer to the landlord. In 1999, 2008, 2011, 2012, 2014 and 2019, the full pay rise is transferred to the landlord. In most other years about 40 percent to 98 percent is transferred to the landlord except for five years.

For rent to rise from 9 percent to 43 percent of the minimum wage, the rent must have risen in some years higher than their pay rises. This would have been reflected differently in different accommodations. However, everybody who was renting would have observed the change at some point. In the following example, the rent rise is assumed to be equally distributed across the years, to show how the rent could have moved from £40pcm to £550pcm.

What about tax, during the same period the tax goes from 12 percent of the minimum wage to about 5 percent. Comparing tax and rent, the tax amount starts out higher than rent. By 1992 tax and rent are about equal outgoings, and then slowly rent increases tenfold, and tax decreases to about half the share it was in 1989. The rent doubles tax in 1998, trebles in the early 2000s and by 2015 it is ten times the rent, as an annual outgoing for a person on the minimum wage.

Disposable income moves in the reverse direction. In 1990, a person on minimum wage has almost ten times the disposable income than they pay on rent. Disposable income after rent, tax, and national insurance contributions are £4,658.75, while rent is £480 per year. In 1996 it is six times, in 2002 it is four times and so on. By 2018 it is less than 1.5 times, and if the trend continues by 2022, rent will be higher than disposable income.

If house prices and all other items had increased in-line with inflation and the minimum wage pay rise was the same, then a person would have the potential of savings to purchase a home or build a home with about half their accumulated life’s income. When they sold that home, they would regain the total value, less depreciation of the same home.

Table 2 shows a scenario of house prices had not risen.

Year  Monthly rent went from £40 to 550pcm in 29 years. Annual Tax for the year  Annual Rent (12 Months) After RENT and Tax, NI per year % of Minimum Wage for Rent (After Tax and NI) % of Minimum Wage paid for tax factoring in tax free allowance
1990  £40.00 £711.25  £480.00 £4,658.75 9.34% 12.16%
2000  £49.35 £440.20  £592.22 £6,155.38 8.78% 6%
2010  £73.34 £1,017.70  £880.13 £9,612.11 8.39% 9%
2019  £101.53 £701.90  £1,218.31 £14,015.47 8.00% 4%

However, they would not have been able to set aside enough money to raise one or two children. The calculation for a child would be half the cost of living between age 0 to age 18, at half the cost of an adult. However, testing of goods and services for children are actually coming to a price of roughly half the cost of living, as they are assumed to have done in the past.

So, to reiterate, the minimum wage over a lifetime will not deliver to either a one- or two-income household, the returns for a home, investment in education to give higher wage opportunity, and a pension or putting aside money first to have children, plus the cost of bringing up children. Therefore, there is no choice for people on the minimum wage but to look for further state support. However, the truth of the matter much denied is, who is taking the subsidy, the person on minimum wage or precarious jobs, the end customers that are being given a lower price based on a low wage. The landlord is taking 43 percent of the income in real terms whether sourced in benefits or wage, or the hiring organizations who are saving a larger percentage of their budget for others who are paid more. Finally, that subsidy goes to shareholders whether it ends up mostly in the pocket of a small set of people, or a retirement fund which funds a large set of people. What is clear, people on minimum wage should not be blamed or made to feel guilty because of their poverty.

And the Universal Basic Income is an idea that can only be realized if each of the key areas of expense for a human being to live takes a reasonable proportion of the income. Otherwise, Universal Basic Income is just a guaranteed income for landlords today and maybe another industry tomorrow, and will fail to supply the basic set of goods and services it is designed to guarantee.

Sources of data

1 Minimum Wage 1999 to 2013  Ref [1] https://www.theguardian.com/news/datablog/2013/oct/01/uk-minimum-wage-history-in-numbers
2 National Insurance 1999 to 2019 Ref [2] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/709420/Table-a4.pdf
3 Income Tax – Personal Tax Allowance and Reliefs, 1990 to 2019 [3] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/709412/Table-a1.pdf
Notes
There are data gaps in the Rent to Income Ratio, the most Signiant of which are explained below
The starting rent in 1990 of 40pcm is derived from my own personal experience of renting a double room in a shared house. I remember at the time I chose a room that I could be comfortable in, and did not choose the cheapest room. I was moving from a room with relatives, where I paid £30pcm. The common room price in loot the listings paper which was the main source for finding lettings at the time was 30pcm to 50pcm, I believe that the bills were not included. The rent in 2019 was derived from a search for a double room on a website. There are many rooms that are priced over today’s rent of £550, which seem to be most rooms. However, through many searches of different websites, I can see that it is a common rent for a room in that area. This data could be improved by searching through archived copies of listings papers for the time. There are many rooms advertised at about £200 more than the rent I have quoted in some cities.
From starting rent to today’s rent, I am estimating a % increase year on year, equally distributed. This would end up with today’s rent. For future rent, I am taking the same % increase forward for a further twenty years
Minimum Wage: When referring to minimum wage, I am always assuming the full adult minimum wage and not the minimum wage for young adults
Minimum Wage in 1990 to 1998
I have real data from .gov site and from the guardian site from 1999. This is the year the minimum wage came into effect. Prior to this I have a sketchy memory of my take home pay in 1990. Therefore, the start salary £3.00 per hour is pure guess and would be slightly lower if I calculated using the future trend. Tracing back this goes to about £2.70. I feel that this would not be accurate as my take home pay would have been lower.
Future Minimum Wage 2019 to 2039
If I estimate a year on year % increase to take me from £3 to £8.20. The % increase is about 3.5% year on year. I am then using this for future years.
Minimum Wage 1999 to 2019
Data from tables on .gov websites and guardian websites. This data does not take into account which month the change came into effect and assumes a full year at the minimum wage increment for the year. This data could be improved.
Tax Calculations
If the rent year is 1990. The tax is calculated using figures for 1990, and the calculation is done against the full year from 1990 till today, therefore this data does not use the previous tax year for the last three months of the financial year. This would mean that tax would be slightly lower than shown here.   Tax Personal Allowance, and all other calculations involving tax, including salary after tax also ignore the financial year change over. Therefore, this data could be improved. The overall trend of rent rises outstripping pay rises would not change.
National Insurance NI for 1990 to 1998 has been put at zero, because of confusion about the rules at the time. However, I believe it to be quite low for the minimum wage because of the exemptions for low wage at the time. This data could therefore be improved.
Contact Details
Email: sbptime@yahoo.com 
UBI Calculator ‘powerful’ tool for basic income

UBI Calculator ‘powerful’ tool for basic income

With help from an incredible team of software developers, economists, and supporters, we have created the UBIcalculator. The project has taken over a year to construct.

This is what UBIcalculator looks like

UBIcalculator is a very simple yet powerful tool for understanding and communicating how various American basic income plans would likely pan out for…

  1. Your bottom line: Will your household gain or lose money after implementing different versions of UBI?
  2. The American public’s bottom line: How many people would be lifted above the poverty line, what percentage of Americans would gain income versus paying in, how would it be funded, and how much, if any, deficit spending would be utilized and why?

How to Use UBIcalculator

  1. Enter your household income, family dynamic, and, if applicable, Social Security and government assistance (welfare) income into the calculator.
  2. Peruse the plan list to compare the headline numbers (how it affects your income, the number of Americans who gain income, and deficit spending utilized). Sort by any of these factors to see which plan ranks highest in each category.
  3. Click on any individual plan to learn more details about its effects, how it is funded, and why the plan author designed their basic income this way.
  4. Adjust the income scroll bar or change your household inputs at any time to see the numbers react in real-time.
  5. If you want to display a widget of any specific plan on your website, there is an embed code down at the bottom of each one that will let people use the calculator on your site.
  6. Go as surface level or deep as you want. You can discover the highest potential return for you and your family.
  7. Now you have a great idea of how UBI could impact you and the rest of the United States, and you have a convenient tool you can share to avoid getting into drawn-out economic debates. Just share the knowledge with this link.

What is Next for UBIcalculator?

This is Version 1.0. It is very powerful, but there are plans to keep improving.

Version 2 goals:

  1. Include more UBI funding mechanism options (wealth tax, land value tax, corporate tax, etc.)
  2. Policy-Maker Mode: A platform where anyone can create and submit a UBI plan of their own (limited by specific “Do No Harm” principles that would not allow for anything draconian or irresponsible to be proposed)
  3. Create a database of plans with improved searching/sorting/upvoting mechanisms to allow the best and most popular plans and ideas to rise to the top.

Things to Keep in Mind

  1. All calculations are estimates.
  2. We strove to do all of the calculations as conservatively as possible, so the results you are seeing are theoretically the worst-case scenarios.
  3. In order to retain maximum credibility, no plans get special treatment in any way.

Why I Made UBIcalculator

  1. TRANSPARENCY: To cut through misinformation. I am tired of seeing pundits, politicians, and other people with various agendas both for or against UBI telling people what to believe. I want the American public to be able to know about the actual proposals and what is possible directly from the mathematical source, with no spin or propaganda.
  2. VIRALITY: I believe in the grassroots. For that, the public needs to be informed and empowered to act, so I made UBIcalculator as simple to use and shareable as possible.
  3. UNITY: To help the UBI movement coalesce around the best plans and opportunities, to hold everybody (yes, even Andrew Yang) accountable and push them to improve their plans where possible, and to create an avenue for other candidates and political figures to quickly study and propose their own versions of UBI if they so choose.

 

Author: Conrad Shaw

United States: Interview with Jonathan Herzog, Democratic Candidate for Congress in New York’s 10th District

by Dawn Howard 

Jonathan Herzog is a Democratic candidate currently running for US Congress in New York’s 10th District. He is attempting to unseat Rep. Jerrold Nadler, chairman of the House Judiciary Committee, in next year’s election. 

Herzog is a former Iowa campaign staffer for US Presidential candidate Andrew Yang, who is currently polling in sixth place according to the polling average by RealClearPolitics. 

Herzog has adopted many of Andrew Yang’s policy positions, including Yang’s central campaign pillar – The Freedom Dividend – where all Americans above the age of 18 would receive $1000 each month, regardless of their income or employment status. 

Jonathan Herzog holds an undergraduate degree from Harvard, an MBA from NYU Stern, and a JD degree from Harvard Law.

Dawn Howard: When did you first become aware of basic income?

Jonathan Herzog: I learned about Universal Basic Income a long while ago, but first committed myself seriously to fighting to make it a reality when Andrew Yang launched his bid for President. 

DH: Have you been in touch with the Yang campaign or Andrew Yang himself since you announced? If so, what has the response been?

JH: Andrew and the entire Yang campaign have been so awesome and supportive! 

DH: Do you believe that others will follow your lead in running for office on a platform of Universal Basic Income because they were inspired by Andrew Yang’s campaign? 

JH: A number of folks in New York and across the country have already announced their runs for Congress on Universal Basic Income, such as James Felton Keith and Chivona Newsome in NY, as well as David Kim in Los Angeles. It’s incredible to see the momentum – 2020 is the year to bring it across the finish line. 

DH: Given that poverty is typically considered a bipartisan issue, how feasible would it be to implement a small-scale basic income pilot in one of the boroughs of New York City, given the state’s current budget concerns and overall political climate?

JH: We’re seeing a number of local basic income pilots arise in cities across the country, but they’re mainly privately financed. No single entity has the requisite scale or scope to pass basic income other than the U.S. federal government. It’s why I’m running for Congress. The goal is to implement Universal Basic Income nationwide in 2021.

DH: One of the things that has been so fascinating to watch as Andrew Yang’s campaign grows is the way that many Trump supporters and conservatives gravitate towards his message and ideas – particularly The Freedom Dividend of $1000 every month. Have you been receiving a similar response from conservative voters in your district? 

JH: The message truly is “not left, not right, but forward.” My district is heavily Democratic, but even so, the bipartisan appeal of the Freedom Dividend is resoundingly clear. 

DH: Many activists within the basic income community posit that our current economic system (capitalism) is inefficient and unsustainable and that eventually, we must transition to a system that better addresses the core needs of humanity and the planet’s ecosystem. Do you see basic income as a type of incremental step toward this transition?

JH: I think Andrew Yang offers us a meaningful way forward with what he calls “Human-Centered Capitalism,” which essentially refers to a more inclusive set of measurements to measure economic progress and growth, including environmental sustainability, mental health, and freedom from substance abuse, and other quality of life metrics. Basic income is part and parcel of this transition to a more sustainable, healthy, human-centered economy. 

If you would like to learn more about Jonathan Herzog, you can visit his web site: www.herzog2020.com

Follow him on social media:

Twitter/Instagram @jonathanherzog5

Facebook: facebook.com/Herzog2020

International: New basic income information hub, on the Internet

International: New basic income information hub, on the Internet

A new website was created, and just launched, to provide updated news and information about UBI (Unconditional Basic Income), with the goal of furthering the discussion about how UBI impacts purpose, identity, and dignity. It will convey content from general news and include original material from the editor-in-chief and UBI activist, Scott Santens. The website is called Basic Income Today.

 

Editorially, Basic Income Today will focus on seven broad themes:

 

  1. Workforce Automation: How technology and artificial intelligence (AI) built to accelerate economies can displace human workers and how individuals and economies cope and evolve.

 

  1. Social Justice: Centered around the relationship between UBI and those affected by the results of workforce automation, mitigating a new vision for society to re-imagine this social contract for the 21st century.

 

  1. Income Inequality: Today, many people must work several jobs they do not enjoy, just to keep a roof over their heads. We discuss the ramifications of wealth distributed so unevenly, and its effects on those not sure that they will be able to meet their families’ basic needs.

 

  1. The Basics of UBI: Not familiar with the concept? This type of content is designed to demystify the noise and false information surrounding the idea of UBI, bringing you a clearer, less biased picture.

 

  1. Success Stories: Evaluating the results where UBI is instituted and how people, paid and unpaid work, business, and the economy benefits.

 

  1. The Social Debate: There is certainly no lack of opinions on this as yet unimplemented policy. A balanced view of the arguments, pro and con, is shown. Also, the journal is open to all reader’s ideas, as an interactive platform.

 

  1. Pilots & Experiments: Who’s adopting UBI, where it’s happening, and how it’s progressing.

 

More information at:

Basic Income Today website

Basic Income Today Twitter account

Basic Income Today Facebook account