Category Archives: Basic income

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!

 

 

 

 

Reform of the monetary system

The subject of reform of the monetary system has been raised and discussed from time to time over the years at WMNEG meetings. Just as the subject of basic income has come to the fore, there is growing interest in working for beneficial change in several countries. A summary of an article on another site follows.

iceland-mr-graphic

The consulting group KPMG has published a new report commissioned the prime minister of Iceland. The report outlines the main benefits of a sovereign money system and relates on the various political developments that have been made possible by IMMR members. The launch in Reykjavik featured a supportive speech from the Financial Times’ chief economics commentator Martin Wolf and drew comments from the Governor of the Central Bank of Iceland

The report was commissioned by the Prime Minister’s office. It provides an overview of the sovereign money proposal, including a summary of the latest political developments and the academic debate. While the report is quite accessible to read, it does not provide any recommendations on whether sovereign money should be implemented or not. Download the full report here.

Már Guðmundsson, the Governor of the Central Bank of Iceland expressed concerns about sovereign money- see http://internationalmoneyreform.org/blog/2016/09/kpmg-iceland-report-sovereign-money/ to which economist Martin Wolf replied. Some points made:

  • “There is a very very powerful set of reasons for believing that the status quo is intolerable” he concluded, before emphasizing the merits of sovereign money:
  • Reclaim seigniorage (the proceeds of creating money) for the public benefit
  • Create a more stable financial system
  • Limit the ability of banks to ‘extract rent’ (i.e. extract wealth from the economy rather than generating it)
  • Stop pushing up house price bubbles
  • Have a much stronger impact on stimulating the economy than current measures like QE.

The Governor joked that whilst Iceland could not experiment with a sovereign money system due to its membership of the European Economic Area [although we think this point is incorrect], the UK has just voted to leave the EU and so should be the first to experiment! MP Frosti Sigurjonsso, who authored a first report to the Icelandic PM in 2014, disagreed with the Governor: “We [Iceland] are one of the most democratic nations. We can take initiative, we can change the system.” he claimed.

 

 

 

Basic income (2)

ubi planet

In the Canadian Globe and Mail’s March article, Eric Reguly described basic income as:

“. . . a concept that has been around since Thomas More’s Utopia was published in the early 16th century. It was proposed by Thomas Paine, one of the founding fathers of the United States, in his pamphlet Agrarian Justice, and tested during the 20th century in a few unlikely spots, including the town of Dauphin, Man. Martin Luther King, Jr., extolled the virtues of basic income, as did Milton Friedman, the American economist respected by Ronald Reagan and Maggie Thatcher.

“Basic income is being contemplated, or about to be launched in experimental forms. It would streamline bureaucracy if it replaced a tangle of means-tested welfare and support programs. It would, in theory, boost demand in the economy and give people the flexibility to hold out for, or train for, high-paying jobs instead being forced into menial labour to put food on the table. And for those unable, or unwilling, to train for a better job, it could make it worthwhile to take a low-paying one because any additional earnings would not be clawed back. It just might even trigger the development of a young entrepreneurial class”.

On August 25th, the Globe and Mail republished a Bloomberg news report that Finland is pushing ahead with a plan to test the effects of paying a basic income as it seeks to protect state finances and move more people into the labour market. Kela, the Social Insurance Institution of Finland, will carry out the experiment starting in 2017 and including 2,000 randomly selected welfare recipients. The level of basic income would be €560 a month ($816 Canadian), tax free and mandatory for those picked.

“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,” the Social Affairs and Health Ministry said. The effect of a basic income will be assessed by comparing the participating group with a carefully matched control group.

However, Eric Reguly fears that basic income could become the equivalent of a monstrous form of quantitative easing aimed not at the financial markets, but at unskilled and semi-skilled workers: “Don’t worry about the robots, young man and young woman, here’s your guaranteed gruel ticket; now leave the privileged alone”.

He added that the right sees it as way to allow job destruction due to robotisation to happen more easily; the left sees it as protection ‘beefing up’ the welfare state and a tool to protect unskilled workers from automation-obsessed, job-killing corporations.

ubi-degrowth-1024x278

Environmentalists, on the other hand, will warm to news sent in June by WMNEG member Jeremy Heighway, after attending a UBI Hamburg conference which saw unconditional basic income as a route to a ‘degrowth society’.

The idea of a basic income is gaining ground, for a variety of reasons. In June BI was the subject of a national referendum in Switzerland and there is serious interest in the proposal in several other places, including Ontario, Denmark, Portugal, Spain and the Netherlands. There will be great interest in the findings of the Finnish pilot project.

Note: The first ever Nordic conference on Basic Income Pilots, will take place in Christiansborg, the Danish parliament building in the centre of Copenhagen, on September 22-23, 2016

 

 

UBI: WMNEG member Jeremy Heighway writes from Leipzig

Conference: Universal Basic Income Network in Hamburg

UBI logo 16

Pathways of thought: common and uncommon ground, aims and direction when it comes to the environmentJeremy Heighway

Looking at the aims of the conference page, it says very clearly: “A basic income is therefore a route to a degrowth society, however, a basic income does not necessarily start the ecological transformation that is so urgently needed,” and continues, “… addressing this … needs to be thoroughly incorporated into any implementation of a basic income and its accompanying measures.”

The tracks appear to go cold right there, however, as a shift is made towards four other areas of discussion, none of which intrinsically address ecological transformation. It is perfectly possible for a supporter of a basic income to ignore ecological transformation; to some extent it is even possible to be in favour of increased consumption.

The degrowth movement is a mindset; the basic income is a mechanism. This provides a possible clash from the outset, based on the question of what you hope to achieve and how.

On the societal side I think there is quite a good overlap and it is a great idea to get the movements working together. But opportunities can be missed if two groups do not also look hard at what is not automatically going to be addressed if you work together.

One huge area is, as stated above, ecological transformation. My proposal looks at eco-taxation and suggests that all increased revenue be returned to everyone evenly in the form of a basic income. However, I do not believe it would be able to help finance the true basic living-cost foundation much. It is certainly much more of an easy attachment to a basic income than a direct source of finance. Strangely, it is almost something which degrowth supporters need to be vigorous about from an environmental benefit perspective and argue for with basic income supporters.

The semi-sideline nature is maybe one reason why basic income supporters have not been very supportive of this idea so far: if it doesn’t do much to actually finance the true basic income, why complicate matters and potentially alienate people along the way with an unpopular taxation device?

Now it’s your time dear degrowth supporters: why do environmental concerns need to be considered again? And, dear basic income supporters, you can actually gain some firm supporters and new friends if you take up this idea – “… addressing this … needs to be thoroughly incorporated into any implementation of a basic income and its accompanying measures”, remember these stated aims of the conference?

Jeremy Heighway currently lives in Leipzig, was an active participant at the degrowth conference in 2014, and took part in the basic income GAP sessions. He also wrote a stirring paper on infrastructures for a parallel GAP. In his day job, Jeremy mostly does translations from German to English in the field of renewable energy.