Monday, 23 January 2017

UBI backer tops French socialist primary

Benoit Hamon / Marion Germa / Wikipedia / CC BY-SA 4.0

A vocal supporter of basic income, Benoit Hamon came out first in the first round of the socialist primary, Basic Income reports.

Hamon won Saturday's first round of the French left-wing primary with 36% of the vote, ahead of the former Prime Minister Manuel Valls (31%) and Arnaud Montebourg (18%).

Hamon immediately received the support of his fellow main competitor Montebourg for the second round of the election, which should secure his victory against the former Prime Minister Manuel Valls at the second round.

Sometimes described in the international media as the ‘French Jeremy Corbyn’, Hamon, 49 years old, was Education Minister and Minister for the Solidarity Economy under President François Hollande. He was pushed to resignation after a government reshuffle in August 2014.


Wednesday, 18 January 2017

Guaranteed income or guaranteed job?

Some economists claim a job guarantee program would better address both inflation and unemployment, writes Claire Connelly at the ABC.

This would make the public sector the employer of last resort to provide jobs for the unemployed population in areas of the economy and community where demands are not being met: aged care, child care, education, retail and small business etc. It would also establish the basic minimum standard for a decent job at decent pay in the public sector.

Connelly quotes Pavlina Tcherneva, Associate Professor and Chair of the Department of Economics and Research Scholar at the Levy Economics Institute, who says a basic income program operates on the fantasy that somehow the market will provide things the recipient want or need.

A job guarantee program would connect income with things people - and communities - need and allow them to be part of the social contract, to participate in transforming their communities and their livelihood, Tcherneva argues.

"It would establish the basic minimum standard for a decent job at decent pay in the public sector, a standard which the private sector must match (at a minimum) to attract workers," she said.

Going further, Dr Steven Hail, lecturer at the University of Adelaide's School of Economics, argues it would enhance it by creating a pool of workers that private enterprise could hire from at any time to meet production needs.

Meanwhile, retired economist Ellis Winningham told the ABC a jobs guarantee would put a complete end to all involuntary unemployment while also gaining price stability.


An urgent necessity

Guy Standing argues that "the 20th century income distribution system has broken down irretrievably."

"Globalisation, technological change and the move to flexible labour markets has channelled more and more income to rentiers – those owning financial, physical or so-called intellectual property – while real wages stagnate," he writes in The Guardian.

"The income of the precariat is falling and becoming more volatile. And chronic insecurity will not be overcome by minimum wage laws, tax credits, means-tested benefits or workfare. In short, a basic income is becoming a political imperative," he says.

Noting a range of pilot programs under way around the world, he stresses that "pilots can only test certain behavioural aspects of paying a basic income and seeing what people do differently."

On the other hand, UBI proponents "rest their case on more fundamental justifications – social justice, freedom and economic security" which cannot be tested by pilots.

Nevertheless, he notes that several pilots showed positive effects. "A well-known experiment in the Canadian town of Dauphin in the 1970s showed that recipients of the basic income suffered less from ill-health and mental stress," for example.

Moreover, in the largest Indian pilot, about 6,000 men people in eight villages received a small basic income for 18 months. Four positive effects were observed: benefits to welfare, positive equity effects, positive economic effects, including more work and labour, raised productivity and output, and reduced inequality, and finally, there was a growth in secondary, self-employed work.


Monday, 16 January 2017

Why don't trade unions support UBI?

In an article for Counterpunch, Daniel Raventos and Julie Wark identify six reasons why many trade unions don't support the UBI.

"The chariness being expressed in a lot of trade unions where Basic Income has not been very well received by union bosses or members sheds light on several serious confusions about Basic Income," they write, while recognising that there are significant exceptions like Unite in Great Britain, AFL-CIO leaders in the United States, some groups and militants of the Spanish unions CCOO and CGT, and the Basque Ezker Sindikalaren Konbergentzi.

Here are the six reasons they mention:

First: Basic Income would undermine the power of the unions.

Second: Since the bulk of union membership consists of full-time workers, they could lose out economically because of the tax reforms required.

Third: Basic Income is only a pretext for dismantling the hard-earned welfare state.

Fourth: The bosses will use Basic Income as an excuse for lowering wages.

Fifth: Basic Income challenges the trade union culture of work because it dissociates material existence from work and the rights arising from it.

Sixth: with their existence guaranteed, workers would lose their fighting spirit.

Here are a couple of points Raventos and Wark make in reply:

"The question of basic income and work is much more complex and interesting than the union argument suggests. It is true that, with a Basic Income, material existence would no longer depend on having a job but this doesn’t mean that it’s antithetical to employment. Rather, it would offer a more resourceful way of sharing tasks in different domains of work.

"The unions’ concerns about remunerated work totally overlook two other essential kinds, viz. voluntary work and domestic (reproductive) work, a standpoint which makes it impossible to understand the effects a Basic Income would have for most people. Our definition of work would be much more open: “a set of remunerated or unremunerated activities whose results procure goods or services for members of our species.”


Why Don’t Trade Unions Support an Unconditional Basic Income (Precisely When They Should)?

Boosting the freelance economy

Michael Grothaus at Fast Company argues that a universal basic income could help make the freelance economy more possible and realistic.

He cites Marjukka Turunen, the head of the legal unit in benefit services at KELA, the Finnish government social security institution that is overseeing the project.

"Studies have shown one of the top reasons more people don’t become entrepreneurs is because they don’t have the capital to both support themselves and start a business at the same time. This means they can’t afford to leave their current job to start their own small business," argues Marjukka Turunen. "UBI would give them a solid financial foundation to do this."

He also draws on Guy Standing from the School of Oriental and African Studies, University of London, and co-president of the Basic Income Earth Network, who also believes that the UBI could boost the freelance economy in five ways.

1. It could help people retrain for in-demand jobs.

2. It could inspire people to take risks and start their own businesses.

3. It could help freelancers maintain health insurance coverage.

4. It could help freelancers say "no" to abusive clients.

5. It could help compensate freelancers for the unpaid work they do.


Sunday, 15 January 2017

UBI as an (affordable) net transfer

"What tends to go unrealized about the idea of basic income, and this is true even of many economists – but not all – is that it represents a net transfer," argues Scott Santens, a founding member of the Economic Security Project, an adviser to the Universal Income Project, in a paper for the World Economic Forum.

"In the same way it does not cost $20 to give someone $20 in exchange for $10, it does not cost $3 trillion to give every adult citizen $12,000 and every child $4,000, when every household will be paying varying amounts of taxes in exchange for their UBI," Santens argues.

"Instead it will cost around 30% of that, or about $900 billion, and that’s before the full or partial consolidation of other programmes and tax credits immediately made redundant by the new transfer. In other words, for someone whose taxes go up $4,000 to pay for $12,000 in UBI, the cost to give that person UBI is $8,000, not $12,000, and it’s coming from someone else whose taxes went up $20,000 to pay for their own $12,000. However, even that’s not entirely accurate, because the consolidation of the safety net and tax code UBI allows could drive the total price even lower.

"The true net cost of UBI in the US is therefore closer to an additional tax revenue requirement of a few hundred billion dollars – or less – depending on the many design choices made, and there exists a variety of ideas out there for crossing such a funding gap in a way that many people might prefer, that would also treat citizens like the shareholders they are (virtually all basic research is taxpayer funded), and that could even reduce taxes on labour by focusing more on capital, consumption, and externalities instead of wages and salaries. Additionally, we could eliminate the $540 billion in tax expenditures currently being provided disproportionately to the wealthiest, and also some of the $850 billion spent on defence.

"Universal basic income is thus entirely affordable and essentially Milton Friedman’s negative income tax in net outcome (and he himself knew this), where those earning below a certain point are given additional income, and those earning above a certain point are taxed additional income. UBI does not exist outside the tax system unless it’s provided through pure monetary expansion or extra-governmental means. In other words, yes, Bill Gates will get $12,000 too but as one of the world’s wealthiest billionaires he will pay far more than $12,000 in new taxes to pay for it. That however is not similarly true for the bottom 80% of all US households, who will pay the same or less in total taxes."


UBI necessary in Frankenstein defence

Members of the European Parliament have called on European countries to “seriously” consider introducing a general basic income to prepare for wide scale unemployment that could come as a result of robots taking over manual jobs, The Independent reports.

A draft report, tabled by a socialist MEP Mady Delvaux-Stehres, warns preparations must be made for what it describes as the “technological revolution” currently taking place, including provisions for the “possible effects on the labour market of robotics”.

In its introduction the report warns against Frankensteinian consequences to the widespread introduction of robots:

"Whereas from Mary Shelley's Frankenstein's Monster to the classical myth of Pygmalion, through the story of Prague's Golem to the robot of Karel Čapek, who coined the word, people have fantasised about the possibility of building intelligent machines, more often than not androids with human features," the report warns.

"Whereas now that humankind stands on the threshold of an era when ever more sophisticated robots, bots, androids and other manifestations of artificial intelligence ("AI") seem poised to unleash a new industrial revolution, which is likely to leave no stratum of society," it continues.

The report, which will be submitted to the entire European Parliament in February, urges member states to consider a general basic income in preparation for robots taking over people's jobs, The Independent says.

“In the light of the possible effects on the labour market of robotics and AI a general basic income should be seriously considered, and invites all Member States to do so,” the report says.



Mady Delvaux-Stehres / LSAP / Wikipedia / CC 3.0

Thursday, 12 January 2017

Pro and against UBI in Australia

Troy Henderson, PhD candidate in political economy at the University of Sydney, and Gigi Foster, associate professor with the school of economics at the University of New South Wales, debate the possibility of introducing UBI in Australia in an interview in The Guardian.

"UBI could reduce the levels of insecurity experienced by Australians in important ways," Henderson says. 'It could provide the means to bargain for better pay and conditions, or to leave an exploitative employer.

'If you lose your job, UBI means knowing you can pay next week’s rent or power bill without having to interact with Centrelink... UBI could also afford Australians greater opportunity to take a risk or have a break. It might provide seed capital for a small business, support while doing voluntary work, or some cash for a much-needed holiday," he continues.

It would "put some meat on the Australian “'air go' bone," but it would be expensive.

"It would mean Australians accepting a tax to-GDP-ratio as high as France (44%) or Denmark (47%) compared with our current level of around 27%," he sys 

Foster agrees that it would be expensive, so much so as to be unworkable.

"A UBI means giving money universally – to everyone, or at least to every adult. To make a material difference to people’s circumstances, this transfer has to be reasonably large. I’ve heard figures floated for the Australian context of between $10,000 and $30,000 per adult per year. 

"Using a mid-range figure of $20,000 yields a total cost of about $380bn per year, which is more than twice our present welfare bill. Where would this money come from?" she asks.

Wednesday, 11 January 2017

What to do when machines take our jobs? Give everyone free money for doing nothing

David Tuffley, Griffith University

It was Groucho Marx who said, “While money can’t buy happiness, it certainly lets you choose your own form of misery.” Quite true, but what if there’s no money coming in from work because your job’s been taken over by a machine?

Low wage earners appear to be most at risk from automation. In February 2016, the Council of Economic Advisers (an agency within the Executive Office of the US President) issued an alarming report predicting that an 80% or greater chance exists for people on basic incomes of US$20 per hour or less to be made redundant by smart machines in the foreseeable future.

After them come the mid-range workers. Clearly, we need strategies to address any job losses arising though increases in automation.

Theoretically, just about any job that can be described as a process could be done by a computer-controlled machine. In practice though, many employers will decide that keeping a human in a job is preferable to automating it.

These are jobs that involve some degree of empathy. Imagine telling a robot doctor what ails you in response to “please state the nature of your medical emergency”.

Free money for all – seriously?

But what about those people whose jobs are lost to automation? What if new jobs aren’t created to replace them? What are they to do if they can’t earn a living anymore?

This time it’s Karl Marx, not Groucho, who comes to mind with the idea of giving people a universal basic income (UBI). This is raised as a possible remedy to any misery caused by rising unemployment from job automation.

Put simply, a UBI is a pump-priming minimum income that is unconditionally granted to all on an individual basis, without any means test or work requirement. It eliminates the poverty traps that the poor fall into when welfare payments have many conditions and are administered by large and inflexible bureaucracies.

The suggestion of free money is sure to raise many peoples’ hackles. Yet, this seemingly outrageous idea is being taken seriously enough to be trialled by a growing number of governments around the world, including that of Finland, the Netherlands and Canada.

Meanwhile, Switzerland will hold a referendum in June on whether to include a flat monthly payment of 2,500 Swiss Francs (A$3,380) to all adults, and a reduced flat payment of 625 Swiss Francs (A$845) to children.

Some commentators, such as former US labor secretary Robert Reich, consider a form of guaranteed national income to be “almost inevitable”.

And the US libertarian think-tank, the Cato Institute, last May published an analysis on the pros and cons of a guaranteed national income. It makes for interesting reading.

The Dutch experiment

In the Netherlands, the provincial capital of Utrecht is planning a trial that it calls See What Works. This model is showing other governments how to go about their own trials. Four types of UBI will be tested over two years.

The first type gives people a basic income of around 850 Euros (A$1,250) per month, requiring nothing in return, no reciprocal obligation. People are allowed to earn as much additional income as they desire.

The second gives people the UBI, but requires them to do volunteer community work to qualify for the full 850 Euros (A$1,250). Non-volunteering recipients receive a reduced amount.

The third type offers additional money for volunteering, while the fourth gives people the 850 (A$1,250) but does not allow them to do any work. A control group rounds out the trial.

What about welfare?

Under existing welfare arrangements, some people are already being paid even if they don’t work.

Non means-tested income would encourage people to work to supplement their basic income, an arrangement that would suit the rising class of freelance and casual workers in today’s information economies.

A basic income is described by some advocates in Silicon Valley as venture capital for poor people. They see it as enabling a pool of creative talent which has good ideas but not the means to pursue their projects and create the dynamic new industries that will be key to future prosperity.

Where will the money come from?

Advocates suggest that much of the funding currently going into welfare, state pensions, tax credits and various poverty alleviation schemes could be redeployed to fund a UBI to achieve better results.

More savings can be made by reducing the size of the government bureaucracies that administer them. Big government becomes smaller government.

The shortfall would need to be funded from tax revenue, and therein lies the rub. Raising taxes is never popular, particularly with those already saddled with heavy tax burdens.

But one thing is for sure: automation will continue to change the nature of employment, forcing economic restructuring whether we like it or not. There is pain ahead, and no avoiding it.

As counter intuitive as it might seem to those of us with a traditional work ethic (myself included), a UBI is worth exploring as a simple solution to a complex problem.

We must not underestimate the value of untapped human capital; people with the desire and capacity to be engaged and creative. If they do not need to take a menial job to cover their living expenses, they will have time to do more interesting things that are of benefit to society.

The Conversation

David Tuffley, Senior Lecturer in Applied Ethics and Socio-Technical Studies , Griffith University

This article was originally published on The Conversation. Read the original article.

Charles Clark on UBI

Professor Charles Clark
"For all the renewed interest in this idea, I haven't seen a lot of talk about it among Christians, as such," writes Nathan Schneider at America magazine.

"Maybe we are especially committed to the notion that each person should get what he or she deserves? Then again, if that's the case, just about any arrangement would be better than what we have now."

One expert Schneider does mention is Charles Clark, a Catholic economist at St John's University, New York, "who has been a basic income advocate ever since being asked to study the idea by the Conference of Religious in Ireland, and then by the Irish government, in the late 1990s." 

Clark argues that to consider basic income 'something for nothing' misunderstands how truly interconnected the economy is, Schneider notes. "His research across Europe and North America suggests that a basic income would actually make production more efficient.

"He also believes that the idea reflects the insistence in Catholic social teaching on the intrinsic value of every person. It would free people to participate more fully in family life and combat the individualism that an 'every man for himself' economy teaches us."

According to Clark, even though it will require a major change in the public mindset, "a basic income is the easiest way to bring everyone above the poverty line and reduce income inequality without making major structural changes to the economy."

According to Wikipedia, Clark also "estimates that the United States could support a Basic Income large enough to eliminate poverty and continue to fund all current government spending (except that which would be made redundant by the Basic Income) with a flat income tax of just under 39 percent.[27]

Schneider also compiles an interesting list of other figures who favored such a proposal including Thomas Paine, Martin Luther King Jr, John Kenneth Galbraith, Margaret Mead and Buckminster Fuller.

Even Milton Friedman agreed and Richard Nixon proposed something similar, Schneider notes.


Monday, 9 January 2017

Scottish Councillor Matt Kerr investigates UBI

Scottish Labour Councillor Matt Kerr, an anti-poverty specialist on Glasgow city council, has been exploring how people become enslaved by poverty – and how they can escape it, the Guardian reports.

A meeting in Glasgow last month with Guy Standing, the radical economist who founded the Basic Income Earth Network, inspired Kerr to seek cross-party support to pilot a universal basic income in parts of Fife and Glasgow.

He acknowledges that these are very early days and that there are many obstacles ahead, but the move makes him the most senior incumbent politician in Britain to contemplate a radical scheme that only a few years ago was considered beyond the political pale, the Guardian says.

"Look, it might be that at the end of this whole exercise we find that it’s just not workable, but I’d rather give it a go in good faith. At the moment, defending a system that is only slightly better than the one the government is trying to implement is simply not good enough. It’s not giving anyone any hope."

The current welfare system "has been a 70-year experiment," he said. 

"It worked at the time when we had high levels of employment. But we don’t have that now. And although I’ll always strive for full employment, the reality is that as technology improves and increases, that’s going to be harder to achieve.

"This is a big challenge to the left. In these circumstances you can’t just write people off and nor can you have the current system that is hugely difficult to navigate and completely enslaves people to the state."



Sunday, 8 January 2017

The UBI already exists for the 1%, says Matt Bruenig

Occupy Wall Street / Wikipedia
In a comment that inverts received wisdom, US lawyer and welfare expert Matt Bruenig argues that the UBI already exists for the richest 1% of the population.

"In 2015, according to PSZ, the richest 1% of people in America received 20.2% of all the income in the nation. Ten points of that 20.2% came from equity income, net interest, housing rents, and the capital component of mixed income. Which is to say, 10% of all national income is paid out to the 1% as capital income.

"Let me reiterate: 1 in 10 dollars of income produced in this country is paid out to the richest 1% without them having to work for it," Bruenig emphasises.

"Put another way: the average person in the top 1% receives a UBI equal to 7.5 times the average income in the country.

"If passive income is so destructive, then the income situation of the 1% surely is a national emergency! Where does the 1% get its meaning with all of that free cash flowing in?" he asks, citing an argument often used against a UBI for the poor.

Publisher Tim O'Reilly concurs.

"This was Thomas Paine’s argument in his 1795 essay Agrarian Justice," O'Reilly argues. "He called it 'the citizen’s dividend,' arguing that the bounty of the new land should be shared fairly among all. The same point could be made for the fruits of productivity brought to us by the machine age."

Saturday, 7 January 2017

Perspectives on the Universal Basic Income

Working with taro roots in Hawaii
Subconsciously, I guess my initial perspective on the concept of the Universal Basic Income was informed by the Old Testament injunction in Genesis 3:19 that "by the sweat of your brow you will eat your food."

This was reinforced by what St Paul wrote in 2 Thessalonians 3:10 that "the one who is unwilling to work shall not eat."

Other more positives passages in Genesis, in which labour is presented as a sharing in God's work of creation, also add to this view:

"God blessed them, and God said to them, “Be fruitful and multiply, and fill the earth and subdue it; and have dominion over the fish of the sea and over the birds of the air and over every living thing that moves upon the earth.” (Gen. 1:28)

"The Lord God took the man and put him in the garden of Eden to till it and keep it." (Gen. 2:15)

Joseph Cardijn's theology of work is powerful here:

"Young workers, are not machines, or animals or slaves," he wrote. "They are the sons, the collaborators, the heirs of God.

Thinking from this perspective, welfare payments such as unemployment, sickness, disability benefits and the like only seemed justifiable on the basis that those who were unemployed, sick or disabled could not work. Moreover, leaving people to subsist on welfare payments hardly seemed to benefit those who had to survive on such welfare benefits. Why then would we extend this to the point of implementing a universal basic income?

The first time that I remember feeling challenged in this perspective was when I was on a visit to Fiji in 1988.

There, many people still lived in a semi-traditional lifestyle based on fishing and farming for yams, which grew in profusion. What sense did a life based on nine-to-five work make in such an environment? Moreover, it did not mean that people did "nothing." Rather they focused more on cultural activities.

In any case, the point here is not to present Fiji as any kind of original Garden of Eden (and certainly not to imply that people in Fiji do not work) but simply to note that living comfortably did not imply the need for intensive sweat of one's brow.

Reflecting on this it dawned on me that the starting point of the New Testament was a Garden of Eden - not a desert! In other words, God provides humankind with the basic needs of life before he invited people to share in his work of creation.

Yet in the modern world, particularly in cities, it is not possible to go out and fish or gather yams for one's minimum subsistence - as harshly illustrated by the increasing number of homeless on the streets of many of the world's cities.

From this perspective, the concept of the universal basic income (UBI) can be viewed as providing the equivalent of the fish and yams available in an abundant natural environment. In other words, as God did in the biblical Garden of Eden, first we have to provide people with the means they need to survive.

This is a concept very far removed from the increasingly punitive concept of welfare that our politicians have come to embrace.

In any case, over the last few weeks, I have started to read more about the concept as it picks up steam in the media.

In this blog, I hope to share some of the key articles that I find. Hopefully, I may even find time to add a few more thoughts of my own.