Category Archives: Basic income

Universal basic income would enhance freedom and cut poverty

In the Financial Times, Dr Guy Standing, SOAS University of London, replies to Ian Goldin, who gave five reasons for dismissing basic income.

In his recent book, summarising 30 years of research, all five are considered. He explains:

First, he says universal basic income (BI) is unaffordable. Many advocates do not use “universal”. What they mean is that all legal residents (and legal migrants after a qualifying period) should qualify. Most believe the BI should be clawed back from the rich in tax. This is administratively easier, more equitable and efficient than targeting by means-testing. The latter has high exclusion and inclusion errors, low take-up and poverty traps, inducing bureaucrats to use intrusive behaviour tests. Mr Goldin claims that a BI is “unaffordable and leads to ballooning deficits”, adding it would be paid by “reallocation of resources from other areas such as health and education”. You cannot have it both ways. Anyhow, BI could be paid by cutting regressive subsidies, including the 1,156 tax reliefs that cost the exchequer £400bn a year.

“Second, he claims it would “lead to higher inequality and poverty”, adding “it typically aims to replace existing unemployment and other benefits”. The latter is untrue. What most advocates want is replacement of means tests, with supplements to BI for those with extra costs of living or lower expected earnings. As for the claim, all pilots/schemes have shown reduced poverty and inequality. In Alaska, when the Permanent Fund was established from which BI was to be made, the poverty rate and Gini were the highest in all US states. Twenty years later, they were the lowest. In India, pilots in nine villages resulted in reduced poverty/inequality, by comparison with beforehand and with other villages. One cannot presume a BI would raise poverty or inequality.

“Third, Mr Goldin claims a BI would “undermine social cohesion” by “rewarding people for staying at home”. All polls show that more than 90 per cent would continue to work if they had a BI. Unlike means-tested benefits, a BI would overcome the poverty trap, whereby many face marginal tax rates of 80 per cent in taking low-wage jobs.

“Mr Goldin’s fourth point is similar to the third, claiming a BI undermines incentives to participate”.

“His fifth point is that BI “offers a panacea to corporations and political leaders, postponing a discussion about the future of jobs”. Why? Most of us want to improve our lives. A BI as anchor of a new distribution system is justifiable for six reasons. It is a matter of social justice, would enhance freedom, produce basic security, cut poverty, promote political stability at a time of rising discontent, and, as India’s government recognised in a parliamentary report, even in a low-income country, a BI is affordable”.

 

 

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Slating Basic Income: a starting point for a WM New Economics discussion?

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Ian Goldin, Professor of Globalisation and Development at the University of Oxford, a former World Bank vice president, gives five reasons in his FT article why UBI is ‘a red herring’.

Extracts:

First, UBI is financially irresponsible. Universal means everyone gets it. Even in the richest societies, if UBI was set at a level to provide a modest but decent standard of living it would be unaffordable and lead to ballooning deficits. To close the UBI budget black hole, much higher taxes or reallocation of resources from other areas such as health and education would be needed.

Second, UBI will lead to higher inequality and poverty. It typically aims to replace existing unemployment and other benefits with a simple universal grant. As the OECD has shown, by reallocating welfare payments from targeted transfers (such as unemployment, disability or housing benefits) to a generalised transfer to everyone, the amount that goes to the most deserving is lower. Billionaires get a little more.

Third, UBI will undermine social cohesion. Individuals gain not only income, but meaning, status, skills, networks and friendships through work. Delinking income and work, while rewarding people for staying at home, causes social decay. Crime, drugs, dysfunctional families and other socially destructive outcomes are more likely in places with high unemployment, as is evident in the drug pandemic in the US.

Fourth, UBI undermines incentives to participate. Stronger safety nets are vital. No decent society should tolerate dire poverty or starvation. But for those who are able, help should be designed to get individuals and families to participate; to help people overcome unemployment and find work, retrain, move cities. Wherever possible, safety nets should be a lifeline towards meaningful work and participation in society, not a guarantee of a lifetime of dependence.

Fifth, UBI offers a panacea to corporate and political leaders, postponing an urgent discussion about the future of jobs.

The demographic pressures in rich countries, and the deep challenge artificial intelligence poses to development prospects in poor ones, adds to the need for this conversation.

There must be more part-time work, shorter weeks, and rewards for home work, creative industries and social and individual care.

Forget about UBI; to reverse rising inequality and social dislocation we need to radically change the way we think about income and work

 

 

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Universal Basic Income 9: Scotland

Jonathon Porritt tweeted a link to Libby Brooksarticle in the Guardian about four Scottish councils who will be undertaking the first universal basic income pilot schemes in the UK, supported by a grant announced last month by the Scottish government.

She explains: “The concept of a universal basic income revolves around the idea of offering every individual, regardless of their existing benefit entitlement or earned income, a non-conditional flat-rate payment, with any income earned above that taxed progressively. The intention is to replace the welfare safety net with a platform on which people can build their lives, whether they choose to earn, learn, care or set up a business”.

Grassmarket and Victoria Street in Edinburgh

There is cross-party support across the four areas currently designing basic income pilots – Glasgow, Edinburgh (above), Fife and North Ayrshire – the projects have been championed by Labour, SNP, Green and, in one case, Conservative councillors.

Ms Brooks continues, “A civil service briefing paper on basic income expressed concerns that the “conflicting and confusing” policy could be a disincentive to work and costed its national roll-out at £12.3bn a year. But advocates argue the figures fail to take into account savings the scheme would bring. The independent thinktank Reform Scotland, which published a briefing earlier this month setting out a suggested basic income of £5,200 for every adult, has calculated that much of the cost could be met through a combination of making work-related benefits obsolete and changes to the tax system, including scrapping the personal allowance and merging national insurance and income tax”.

First Minister Nicola Sturgeon told a conference of international economists days after the critical briefing paper: “It might turn out not to be the answer, it might turn out not to be feasible. But as work and employment changes as rapidly as it is doing, I think it’s really important that we are prepared to be open-minded about the different ways that we can support individuals to participate fully in the new economy.”

Urban and rural councils will take part (above, rural Fife).  Joe Cullinane, the Labour leader of North Ayrshire council, said:

“We have high levels of deprivation and high unemployment, so we take the view that the current system is failing us and we need to look at something new to lift people out of poverty.

“Basic income has critics and supporters on the left and right, which tells you there are very different ways of shaping it and we need to state at the outset that this is a progressive change, to remove that fear and allow people to have greater control over their lives, to enter the labour market on their own terms.”

 

 

 

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Universal Basic Income 8 – update

In October, Dylan Matthews (US Occupy website) wrote about a forthcoming Basic Income pilot.

Next year, a random sample of the 300,000 residents of Stockton, California – the largest city in the U.S. to declare bankruptcy during the financial crisis – will get $500 per month with no strings attached. It’s the latest test of basic income, funded by the Economic Security Project, a pro-basic income advocacy and research group co-chaired by Facebook co-founder and former New Republic publisher Chris Hughes and activists Natalie Foster and Dorian Warren; Hughes provided the group’s initial funding.

Many of Silicon Valley’s tech entrepreneurs and investors see basic income, as a necessary way to support Americans if artificial intelligence and other automation advances lead to unemployment for vast swathes of the population, redistributing the wealth that Silicon Valley creates to poorer people and localities left behind.

Ontario, Canada, Finland, and the international charity GiveDirectly in Kenya have all launched basic income experiments of their own and Glasgow, Edinburgh, North Ayrshire and Fife in Scotland are jumping into the ring too. A list of ongoing and announced basic income pilots can be found on the BIEN website.

In 2011, a pilot BI project was launched in rural Madhya Pradesh through the Self Employed Women’s Association (SEWA), in collaboration with UNICEF.

See this excellent video account – well worth twelve minutes of your time. https://www.youtube.com/watch?v=UWW9XY27ocI

For 12 to 18 months, over 6,000 individuals received ‘basic income’. The grants were universal, unconditional, and were given to individuals, not the head of the household, to ensure that there is no harassment and ensuring financial inclusion of women, children and the elderly.

Two pilot studies were conducted under this project: in one, 8 villages received the basic income, while 12 similar villages didn’t. In the other, one tribal village received the income while another tribal village was taken as control group. The studies covered over 15,000 individuals in all.

The results of these pilots, published in the book Basic Income: A Transformative Policy for India. (2014, London: Bloomsbury, by Professor Guy Standing of BIEN who speaks in the video), showed many encouraging developments, debunking the myths that basic cash transfers in rural India would inevitably lead to a decrease in work or that money would be wasted in alcohol consumption and other pursuits:

o   Basic living conditions, starting with sanitation, better access to clean drinking water, improvements in cooking and lighting energy sources, improved significantly.

o   There was a major increase in food sufficiency, improved diets, better nutrition and reduction in seasonal illnesses.

o   Better health of children led to higher school attendance and improved performance. The basic income also facilitated spending on school uniforms, books and stationery.

o   The cash transfer facilitated small scale investments such as buying better raw materials and equipment, which resulted in a higher income.

o   There was also a shift, especially in the tribal village, from wage labour and bonded labour to owning farms and to other forms of self-employment.

o   Women’s empowerment was another outcome of the pilot studies: their participation in economic decision making in the household improved.

The basic income also enabled indebted villagers to pay back the money lenders and borrow less from them.

Readers who wish to know more about the Indian pilot may do so by using the links at the foot of this blog.

The Times reports that Nobel Prize-winning economist Professor Joseph Stiglitz, a member of the Scottish government’s council of economic advisers, had reservations about Basic Income, saying that it would be better to focus on targeting those who have particularly strong needs and on creating jobs while ensuring the most vulnerable were supported. But Nicola Sturgeon, the First Minister of Scotland, has vowed to press ahead with plans to explore such a policy, where welfare payments are replaced with a guaranteed income for everybody, and has offered government funding for research schemes.

https://www.guystanding.com/files/documents/Basic_Income_Pilots_in_India_note_for_inaugural.pdf

https://www.degrowth.info/en/2016/05/universal-basic-income-in-india-a-promising-experience/

https://www.theguardian.com/business/economics-blog/2014/dec/18/incomes-scheme-transforms-lives-poor

 

 

 

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Ben Griffin comments on Universal Basic Income

Approved!

 

 

 

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Universal basic income (UBI): a more cheering perspective

Amazon has revealed its latest plan to automate American workers out of existence with its futuristic machine controlled grocery store.

According to a study by Ball State University’s Center for Business and Economic Research, the use of robots and other manufacturing efficiencies was responsible for 88% of the 7 million factory jobs lost in the United States since peak employment in 1979.

The Economic Security Project (ESP) – a coalition of over 100 technologists, investors, and activists – has announced that it is committing $10 million over the next two years to explore how a “universal basic income” (UBI) could ensure economic opportunities for all. Elon Musk, the iconic Silicon Valley futurist, predicts “There is a pretty good chance we end up with a universal basic income or something like that, due to automation.”

With political uncertainty across the Western world highlighting rising levels of economic inequality, many others across the political spectrum are considering adopting UBI in the future, giving everyone a guaranteed minimum payment. In the 21st century to date there have been pilot projects in America, Canada, Namibia, Uganda, Kenya, Brazil, Holland, Finland, Italy and Scotland, described briefly in Wikipedia.

UBI – one of three main economic reforms?

James Robertson shared news (scroll down to 4.The Practical Reforms) about a meeting of the North American Basic Income Guarantee Congress at which there was co-operation between supporters of two of the three main reforms in total money system reform – land value taxation and basic income. Alanna Hartzok, General Secretary of the International Union for Land Value Taxation, expressed a hope for future meetings at which supporters of all three policy proposals could discuss the relationship between reform of the money supply, introduction of land value taxation and the replacement of welfare payments by a citizen’s income.

UBI – life enhancing?

Just as Green parties everywhere have said for many years, Elon Musk expects that UBI will enhance life with ‘ownwork’: “People will have time to do other things, more complex things, more interesting things and certainly have more leisure time.” Others, however, believe that without the need to pay for rent and basic necessities, people will not be motivated to work and will not make good use of their basic income and free time. Cynics will – and do – dismiss ‘the happiness agenda’ (Layard, Norberg-Hodge) and the recent Landmark study which found that most human misery in the Western world is due to failed relationships or ill-health rather than money problems and poverty.

If accompanied by a more comprehensive education?

The findings indicate the need for a broader education, giving some concept of good marital and parental relationships, an understanding of the country’s social and taxation systems and the development of expertise (until the Plain English Campaign succeeds) in interpreting official forms and negotiating online applications.

Increasing apprenticeships and retraining for those who become redundant is worthwhile but far more input is needed. The Sure Start focus involving parents and children from the earliest days was working very well until funding was cut by the coalition government in 2011, instead of building on its success.

Harrow mothers campaigning after 4 Sure Start centres had been given notice to quit

There are now 1,240 fewer designated Sure Start centres than when David Cameron took office – a fall of 34 % according to figures obtained by the Labour Party in a Freedom of Information request. The North East and London have seen the biggest fall in numbers, with over 40% of centres closing. The closure rate is increasing countrywide and councils have listed other centres which may well have to go this year.

Compensating for the cost of UBI

A total audit would balance the expense of an enhanced Sure Start programme and the cost of UBI over time, by quantifying:

  • reduced expenditure on the NHS and prison service due to the improvement in mental and physical health
  • and lower expenditure on policing and social services due to less stressful household and neighbourhoods, diminishing the intake of legal and illegal drugs and reducing crime.

So, in the foreseeable future, will 3D printers and robots take care of the necessities? And will basic income lead people to begin to improve relationships with each other and the rest of the natural world?

 

 

 

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Universal Basic Income: “a bedtime story Elon Musk tells himself to help the super-wealthy sleep”

Billionaires’ commitment to lifting a growing underclass out of poverty is just a bedtime story that helps the super-wealthy sleep. These champion a scheme whose prime result will be their profit.

After reflections on automation, Helen Razer says sarcastically: “UBI is a policy gift that Musk and so many others in the C-suites of Silicon Valley offer us as part of their vision of a sustainable economic future.

UBI, says Facebook’s Zuckerberg and eBay’s Omidyar, is the patch for the economic problems of everyday people”.

Some points made in her article:

“It’s just peachy for him and his businesses, as it means his consumers will have more income to spend on his goods. (Not that he cares about money, of course. It’s all about innovation!) . . .” – the mildest of the snide expressions punctuating the article

UBI is ‘something they wish to impose on states and nations – on us . . . a hack that may well benefit its Silicon Valley advocates in the short-term, but compound income and social inequality for the rest of us for decades”.

The idea that an identical sum is paid by the state to all citizens as a right and not as a form of welfare or reward is one, we’re told, whose time has come: “This thing stands a real chance of being passed into national economic policy”.

Helen points out that UBI now has fans from the left, the right, and, in the form of Canadian prime minister (‘and poster-boy for photogenic progressivism’) Justin Trudeau, the absolute center . . . The fact that this prescription can come from both former George W. Bush speechwriter David Frum and former Greek finance minister Yanis Varoufakis stands to some as proof of its inherent theoretical strength. If an “erratic Marxist,” a neoconservative, and the guy who wants to send us all to Mars can agree, then partisan consensus for policy enactment is likely. It looks like a centrist solution.

She believes that UBI inserted into our current economic software is likely to raise prices on many everyday goods: “There is no way to guarantee that landlords or merchants will not raise prices to reflect the moderate gain in income. If you’re already well-to-do, a price increase in the residential rental market or at the supermarket is of no great consequence to you. On low earners, it’s likely to have a significant effect”. And ends:

“UBI evokes a sort of realist utopia. It is certain, for a time, to safeguard the interests of a powerful few. But in the long-term, it is likely to diminish the purchasing power of the many. A true social dividend would not be a small state stipend whose terms are set by the billionaires of Silicon Valley”.

WMNEG’s Jeremy Heighway, on receiving this link, commented on Helen Razer’s approach, ‘belittling‘ Musk and ends: “As it stands, I would much rather talk to Musk than Razer about issues of what I once coined “perishable work and lasting work”, in which the effects of work are at very different timescales for different professions. Bus drivers and builders may both be under threat from deep AI and 3-D robotic printing, respectively, snatching away jobs but presumably still leaving profitable companies and owners in place, but it seems to me that we haven’t even looked at how differently these jobs could be viewed in current concepts of sustainability, the structuring of societies, etc”.

 

 

 

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Land taxation could fund basic income

Last month readers from 20 countries (listed below) were attracted to the site, many reading Richard Murphy’s review of Colin Hines’ book about Progressive Protectionism but even more focussed on basic income, as John McDonnell announced that Labour has set up a ‘working group’ to investigate universal basic income, with Guy Standing (SOAS) as one of its economic advisers, a co-founder of the Basic Income Earth Network (BIEN).

For some years, America’s Nicholas D Rosen, a Patent Examiner at the Patent and Trademark Office, has advocated land taxation. In a 2012 forum entry he cites a book by economist Joseph Stiglitz, ” The Price of Inequality: How Today’s Divided Society Endangers our Future”.

Though Joseph Stiglitz expresses concern about America becoming less egalitarian and mentions reducing rent-seeking as a solution, Rosen points out that he does not mention the ultimate form of rent-seeking: collecting the ground rents of land.

He continues: “If an increasing share of gross national product is going to the top 1%, it is at least in part because they are the people who own most of the valuable land, and the rents of land are absorbing a larger share of production”.

The revered laws of the market do not apply: Rosen (2008) points out that no one is making more land to keep the price down by competition. 

Rosen’s solution: tax the value of land, and cut taxes on earned income, sales and so on, making the tax system more progressive. He comments: “Unlike most schemes for doing so, it would not cause the productive to quit work, turn their efforts to finding loopholes in the tax code, or take their skills and capital elsewhere”.

Nine years later he has written a letter to the Financial Times’ editor:

Your editorial “Robot tax, odd as it sounds, has some logic” (February 21).

Regarding the possibility of taxing robots to preserve jobs, calls to mind Henry George’s Progress and Poverty. Writing in 1879, George noted that if labour-saving technology reached perfection, labourers would get nothing and capitalists would get nothing; all production would go to the owners of land, as land would still be needed despite automation.

Rather than proposing to tax robots, the great economist advocated a single tax on the value of land.

If we should ever achieve complete automation, this would enable people to be supported out of citizens’ dividends.

Short of complete automation, land value taxation still has important advantages, such as letting people keep what they earn by their own efforts, and putting the burden of taxes on those who enjoy the privilege of holding land that they did nothing to create.

He ends: “It would also help to make housing affordable and prevent the speculative bubbles in land prices that currently contribute to the boom and bust cycle”.

 

 

 

 

A new deal for self-employed workers and small businesses – the ‘precariat’ ?

 

There was an outcry when the Chancellor Philip Hammond unveiled a National Insurance hike for self-employed workers in the Budget – now postponed. Some 4.6 million people, around 15% of the workforce, are now self-employed and data from the Office for National Statistics show that two thirds of new jobs in the UK created in recent years are down to self-employment.  

Self employment, often insecure, low-paid, with no access to holidays, sick pay, maternity and paternity leave

Now sometimes known as ‘the precariat’, the self-employed, often work in service industries such as fast food, for security firms on temporary, even zero-hours contracts, or in the so-called ‘gig economy’. The precariat includes many workers who used to have skilled or semi-skilled but relatively well-paid and secure jobs, under-employed graduates, often working in insecure jobs requiring a much lower education level, migrant workers, and people from ethnic minority communities. As long as they have a contribution record established, they get the standard state retirement pension and older self-employed workers attaining pension age today have, in many cases, some pension accrued as employees for a number of years of their life which the present generation will not have. Benefits the self-employed cannot access relate to holidays, sick pay, maternity and paternity leave.

                                             Via: https://twitter.com/trishgreenhalgh/media 

Earlier this month it was reported that Labour is to convene a summit to develop a new deal for self-employed workers and small businesses to develop Labour’s policy on self-employment. – recognising “that the world of work itself is changing”. John McDonnell, the shadow chancellor, said. “The labour movement has risen to challenges like this in the past. It was born out of the struggle for decent pay and conditions when new technologies were ripping up existing ways of working . . . We need that same spirit and vision again. So I’ll be convening a summit next month of unions, the self-employed, and small businesses to develop Labour’s policy on self-employment”.

Some have been in the forefront, pressing for such action, including Pat Conaty, David Hookes and – for many years – Guy Standing, a leading proponent of Basic Income. Pat writes: “The work of Professor Guy Standing at UCL SOAS and formerly at the ILO for 36 years on the Precariat Charter is superb”. See the links at the foot which include Standing’s 2011 Policy Network article. 

Pat Conaty, Alex Bird and Philip Ross produced the Not Alone report that Co-operatives UK and the Wales Co-operative Centre have published with Unity Trust Bank – the trade union bank. It focusses on the needs of people in self-employment who face low income and social and economic insecurity – the ‘self-employed precariat’.

The executive summary records that there are now more self-employed workers than at any time since modern records began. Some 4.6 million people, around 15% of the workforce, are now self-employed and data from the Office for National Statistics show that two thirds of new jobs in the UK created in recent years are down to self-employment.

Many of the self-employed are among the lowest-paid workers in the country; their potential income is eroded by other costs such as agency fees and additional challenges relate to difficulties in not being paid on time and not having the right to a contract.

The report calls for the ‘cousins of the labour movement’ – co-operatives, trade unions and mutual organisations – to come together and help form cohesive institutions to unite the self-employed precariat, as illustrated in the model of a ‘solidarity economy’ partnership. 

As Conaty says in correspondence: “God knows something has to be done for zero hour workers, growing ranks of exploited self-employed and those working all hours of the week in the gig economy to make ends meet”.  

Read more?

Guy Standing: http://www.policy-network.net/pno_detail.aspx?ID=4004&title=+The+Precariat+%E2%80%93+The+new+dangerous+class

David Hookes: http://www.uk.coop/sites/default/files/uploads/attachments/not_alone_-_trade_union_and_co-operative_solutions_for_self-employed_workers_3.pdf

http://pcwww.liv.ac.uk/~dhookes/IWFA.pdf

Pat Conaty: https://www.opendemocracy.net/uk/pat-conaty/not-alone-what-uk-can-learn-from-union-co-ops

 

 

 

 

Update on correspondence and new section on website

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George Morran emailed re the WMCA: wmneg2-stats

“My starting point has to be what future we see for Westminster, Whitehall and the shape of local government. These issues can only be seen in a wider English and UK context.

“The WMCA is a vehicle for Westminster and Local Government as it is.

“If you take my view that strengthening civic society and moving to a more sustainable economy are needed this requires a real downsizing of Westminster and Whitehall, the transfer of power and resources to the English Regions, a much more localised system of local Government and voting reform to give a wider range of interests a stake in new arrangements.

“Focusing on WMCA diverts scarce resources. We have to challenge the status quo and work up a real alternative to the Westminster and big LA conspiracy to maintain their stranglehold over Government, economic development and public service delivery”.

Despite George’s comment it seemed good to open a new WMCA section on the website after receiving a 50+ paper by Richard Hatcher.  There is also a link to the WMCA Mayoral Election slides presented at the last meeting.

To see it, go to https://goodmorningamericaword.wordpress.com and hover over the WMCA headline to find these two entries/links.

Supporters of John McDonnell and/or UBI will be interested to know that random visitors flocked to that article – over 150 people in a few days – from many countries – see left.

And 18 people found the WMCA section only 15 minutes after posting!