Category Archives: tax

Universal basic income (UBI)

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) of 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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Moving towards a new, balanced, green economy

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In her recently published book, Dr Christine Parkinson sets out a series of measures which could move us towards a new, balanced, green economy:

 

  • introducing greater incentive schemes to encourage businesses to develop, use and market greener technologies and to penalise those who don’t. Examples of this could include: using and developing renewable forms of energy; phasing out motor vehicles which use petrol or diesel and introducing those that run on easily-accessible clean energy;
  • investing in research institutions which have the ability to develop innovative solutions to today’s climate-change problems;
  • introducing legislation to reduce the use of the motor car, such as restricting the number of cars owned by each household, unless they run on clean energy;
  • phasing out coal-fired power generation, ending fossil fuel subsidies;
  • introducing a carbon tax on those companies who continue to use fossil fuels;
  • rebalancing the economy, so that the rich are not rewarded for irresponsible behaviour that adds to the carbon load;
  • setting targets for meaningful reductions in carbon emissions by an early date, as suggested by Desmond Tutu in his petition (chapter 1) and ensuring that the calculations for this are correct;
  • phasing out nuclear power and nuclear weapons worldwide and re-channelling the money saved into the incentive-schemes and investments mentioned above;
  • proper funding of those institutions regulating the tax system, so that tax evasion and avoidance is properly penalised;
  • shifting the tax system to penalise those activities which need to be discouraged, such as greenhouse gas emissions and the accumulation of wealth;
  • banning certain household appliances and gadgets, which are not necessary and only add to the carbon load;
  • establishing a new institution, which will monitor the use of fossil fuels by companies and promote, and provide support for, the use of greener forms of energy;
  • encouraging less air travel, by raising awareness about the damage this is doing to the planet and encouraging airlines to invest instead in technologies that do not damage the planet;
  • working globally with other partners to reduce deforestation;
  • re-balancing international trading systems, so that goods and animals are not transported unnecessarily across continents and seas, adding to the carbon load;
  • encouraging countries worldwide to be self-sufficient in terms of goods and resources, so that goods are not imported which can be produced internally;
  • re-thinking and re-balancing entirely transnational trading systems;
  • working globally to find a better means of international co-operation in working jointly to reduce and reverse that damage that is currently being done to the planet;
  • encouraging partnerships between local government and local cooperatives and social enterprises;
  • encouraging the setting up of local groups (3G groups), where individuals can meet together to share what they are doing to reduce their carbon emissions and to encourage each other to keep going with it, even if the majority of others are still in denial (3G stands for three generations – the amount of time we have left).

She continues: “Some of the ideas above are already being worked on, and others are not about changing the economic system but about reducing carbon emissions, but I hope these are a starting point for others to add to, if we are really serious about taking meaningful anti-climate-change measures before it is too late”. 

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Christine will be speaking in Birmingham on April 22nd.

“Three generations Left” can be ordered direct from the publishers, using the following link: http://www.newgeneration-publishing.com/bookstore/reference/bookdetails/1778 or can be ordered from the Amazon website, print on demand, as follows: https://www.amazon.co.uk/Three-Generations-Left-Activity-Destruction/dp/1787190412/ref=sr_1_1?s=books&ie=UTF8&qid=1483704765&sr=1-1&keywords=Christine+Parkinson

It is priced at £11.99 per copy in paperback or £4.99 for an ebook.

Whilst much of the book is viewable on this website, she would prefer you to buy a copy as any profits from the sale of this book will be used to fund her son’s work amongst slum children in Uganda.  Last year was a difficult one for this project (Chrysalis Youth Empowerment Network), as due to the devaluation of the pound post-Brexit, monies sent from the UK to Uganda had lost a fifth of their value.

Contact: christine@cyen.org.uk

 

 

 

New Economics question: is there a socially just, green, internationalist and small ‘c’ conservative form of protectionism?

trump-carrier

There was widespread media coverage of American president elect Donald Trump’s appearance at the Carrier furnace factory in Indianapolis, marking a deal to stop the company from moving hundreds of jobs to Mexico and threatening “consequences” for companies that relocate offshore. He also exerted pressure on Ford who backtracked on opening another small plant in Mexico.

Whilst understanding the welcome for more local jobs, Margaret – at a recent meeting of the West Midlands New Economics Group (WMNEG) – wondered if any deeper thinking would take place, “Or will Ford continue to make the ‘gas-guzzlers’ which are damaging the health of human beings and the planet?” Ann asked if there were different forms of protectionism and has decided to look further.

Colin Hines presents a detailed alternative – ‘progressive protectionism’ – which will be the focus of a future WMNEG meeting. As he wrote in the Guardian:

There is a left, green alternative that could effectively challenge the rise of the extreme right, while giving voters hope for a better future. In my new book ‘Progressive Protectionism: Taking Back Control’, I detail why progressives should endorse the controlling of borders to people, capital, goods and services, but not as occurred in the 1930s, when governments attempted to protect domestic jobs while still wanting to compete and export globally at the expense of others.

Progressive Protectionism, by contrast, aims to nurture and rebuild local economies in a way that permanently reduces the amount of international trade in goods, money and services and enables nation states to control the level of migration that their citizens desire . . . championing policies geared to achieving more job security, a decrease in inequality and protection of the environment worldwide.

corbyn-eu-socialist-leaders

Hines would urge Jeremy Corbyn to use his undoubted popularity with European socialist leaders, at next month’s London meeting of European socialist parties, to discuss how all EU member states can cooperate to reverse the present political, social and economic instability that haunts the whole continent.

He calls for a beneficial treaty replacing the outdated, discredited Treaty of Rome, which is increasing economic insecurity through austerity, relocation of businesses and the rapid migration of workers: “This should prioritise the protection and rebuilding of local economies and so provide a positive answer to voters’ concerns. To achieve this, a debate needs to be started about why Europe needs a progressive protectionism to replace the increasingly discredited Treaty of Rome with a Treaty of Home Europe-wide”. Cross-border issues such as responding to non-European migration, climate change, pollution, crime and military security would still of course require intra-European cooperation”.

He will be speaking on this theme at various events, including one meeting on 22nd April in Birmingham

 

Colin Hines is the convener of the Green New Deal group and for ten years, co-ordinator of Greenpeace International’s Economics Unit. His latest book, ‘Progressive Protectionism‘, was published in January 2017. It details why and how groups of regional nation states and their communities should join together to reintroduce border controls to protect and diversify their economies, provide a sense of security for their people and prevent further deterioration of the environment. He is also author of ‘Localization – A Global Manifesto‘. This may be bought in hard copy or read on computer/Kindle via the Amazon website. Those who avoid Amazon may like to read the assessment of corporate tax avoidance by lawyer Marc Wadsworth, here.

 

 

Elect a public-spirited prime minister with the nerve to take on corporate ‘titans’

edward luceEdward Luce, an English journalist and the Financial Times’ chief US commentator and columnist based in Washington, DC, comments:

”The last people to grasp that things have gone wrong are the wealthy, the well-connected and the cognitive elites” . . .

“The wealthy’s share of the economy has risen sharply since the start of the century. The share of corporate profits in the economy has also soared. If you are rich you can afford what used to be normal for everyone — the privilege of interacting with human beings (in the service sector)”.

Thus:

  • high net worth individuals receive personalised banking, where their bank manager knows their name and needs.
  • The wealthy also benefit from so-called concierge health services, which come with a human face.
  • Many oligopolistic service providers keep clandestine lists of VIP customers who need not wade through robotic software before reaching a customer service agent. When they pick up the phone, a human answers.

Ordinary consumers, much like most voters, know there are different rules for them. They also sense that the big service providers pay more attention to regulators than to their disaffected customers. It is a perfectly rational thing to do.

The top companies have markedly increased their market share in the past decade and this has led to a lack of real competition — giving them licence to treat consumers with impunity in the telecoms, information technology, transport, retail services and banking sectors.

Politicians rank their priorities in much the same order. Voters come low on their list.

Lawmakers devote time to raising money from donors. In most areas, the voter barely matters since gerrymandering or the party elite will have has rigged the election. Politicians with large war chests are far less likely to be challenged for their party’s nomination. The same logic leads companies to keep a strong lobbying presence in government circles.

Luce asks “So what can people do? As consumers very little”.

But to elect a public-spirited prime minister with the nerve to take on corporate ‘titans’ would be great populism and smart policy.

 

 

 

Post Brexit: four contributions – add yours?

Instead of stealing the brightest and the best from poorer countries, spend on education, training and family support, financed by taxing the rich and closing tax havens. Address the concerns that drove the Brexit vote – mass immigration and declining job prospects . . .

Colin Hines, convenor of the Green New Deal group, writes in the Ecologist: “We need a new, cooperative union: of decentralised regional economies, with public investment in ‘green’ infrastructure driving our transition to a sustainable, low carbon future”.

He sees a failure to control EU migration as being clearly undemocratic given the polls showing the overriding public opposition to present net immigration . . .

population trend eastern europe graph

“It will continue the present stealing of the brightest and the best from poorer countries to save the UK the expense of training its own people. Over 2,000 doctors who qualified in Romania for example are working here, a country that has lost over a third of its hospital doctors over the last few years.”.

Uncontrolled immigration will also have severely adverse environmental effects in terms of increased resource use, a greater national contribution to climate change and further building on the green belt in a country that has to import nearly half of its food in a world of likely ever increasing food insecurity.

green-new-deal-1-728Hines advocates building or refurbishing public sector buildings, more efficient energy and water systems, local transport, waste minimisation and digital infrastructure.

He points out that, aside from its obvious advantages of improving social conditions and protecting the environment, it is employment-intensive, less likely to be automated and can’t be relocated abroad. The scope of such work has been detailed by the Green New Deal group.

As the Bank of England contemplates a further round of quantitative easing, Hines points out that rather than buying bonds, ‘Green QE’ could provide the impetus to fund this work by unlocking massive private co-funding from pension and insurance companies and individual savers. The secure returns that can be earned from such investments are just what such funding sources need.

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Andrew Walton – whose site tweets the Hines article – has posted in Bioregional Birmingham, also urging the green left to reconsider its stance on immigration for social and environmental reasons:

  • “It’s clear that each bioregion has an environmental carrying capacity, which can be tipped out of balance by population growth and increasing economic productivity; both of which are in part driven by uncontrolled migration.
  • “The discontent among many working class voters is not mindless bigotry but a cultural anxiety. It is driven by the alienating nature of fast paced social change, over which communities have little control. Many of those who feel alienated mistakenly see migrants themselves as the problem.”

“The West’s aggressive geopolitical posturing, which seeks to control global resources, combined with its billion dollar weapons export industry, also contributes hugely to displacement and forced migration”. 

The basic UK problem: its inability to educate and train its population

applica header

Writing from Brussels in the FT, John Morley, Senior Policy Adviser at research institute Applica, highlights the basic UK problem: “namely the country’s inability to educate and train its population to the extent needed to meet the demands of its economy. This has resulted in its reliance on imported labour at all levels — from the governor of the Bank of England down to farm labourers in the fields of Lincolnshire . .

“Rather than invest in its people, the UK government has preferred to put public money into high-cost but high-vis school and hospital buildings, using costly private finance initiative funding, with little regard for what needs to go on inside them. Until this massive structural imbalance between human and capital investment is corrected, it will be very difficult for the UK to reduce its dependence on imported labour”.

j 2 sachsAndrew Walton recommends an excellent article by the widely respected American economist Jeffrey Sachs (right) in The Strategist which looks at the issues he raises in more detail.

We end with Professor Sachs’ sterling advice, to restore a sense of fairness and opportunity for the disaffected working class and those whose livelihoods have been undermined by financial crises and the outsourcing of jobs:

“This means following the social-democratic ethos of pursuing ample social spending for health, education, training, apprenticeships, and family support, financed by taxing the rich and closing tax havens, which are gutting public revenues and exacerbating economic injustice.

 

 

The FT examines the feasibility of the Californian remedy: a parallel currency for Greece

A summary of its recent article:

Central government could settle its domestic bills with pensioners and civil servants in IOUs, while using the euros collected via the tax system to pay back the IMF and other creditors, including the ECB. The IOUs become a de facto parallel currency and can be traded ‘on the street’ (ie with local businesses). The government may also decide to accept them as tax payment, a move which could increase their value.

IOUs have been issued in the past in Greece and elsewhere. Shortly after the Greek debt crisis erupted, Athens began paying some of its suppliers using IOUs. In 2009, the government in California, during a fiscal crisis, printed $3bn of IOUs for businesses, individual taxpayers and local counties in lieu of cash. It sent more than $450m of them to court-appointed attorneys, county-run health schemes and taxpayers awaiting rebates, among others. They continued to be issued until Arnold Schwarzenegger, California governor and the state legislature agreed a deal to close the $26bn budget deficit. Despite the opposition of large banks this measure was proposed again in 2010 see Bloomberg.

However, the FT ends, there are problems with the use of these documents:

  • the legality of a new currency would be questioned under EU law, which states that the euro should be the sole legal tender in eurozone member states;
  • the eurozone authorities would see these measures as a deviation from the stringent fiscal rules to which governments, including Athens, have agreed;
  • by issuing IOUs, the Greek government would probably be spending in excess of budget deficit limits and
  • tax credit certificates risk blowing a hole in future budgets, if the recovery they are supposed to prompt fails to materialise.

Some economists doubt the long-term sustainability of a country-wide parallel currency system because when there are two currencies in circulation and one has more value than the other, consumers would prefer to store the more valuable banknotes – euros in this case – and use the paper which is worth less – the IOUs – for day-to-day transactions.

The FT article by Ferdinando Giugliano, Economics Correspondent may be read here: http://www.ft.com/cms/s/0/5033fc1c-104e-11e5-b4dc-00144feabdc0.html#axzz3dD4JzM2M

The Nordic model: a beneficial culture for Britain

 

tim harfordTim Harford, the Financial Times economics leader writer and author of ‘The Undercover Economist Strikes Back’, won the Royal Statistical Society’s 2010 award for statistical excellence in broadcast journalism.

He raises an important subject, comparing the tax-raising regime in Scandinavian countries with that in Britain: Denmark, Norway and Sweden receive taxes worth about 45% of GDP according to economist Henrik Jacobsen Kleven – 10 points higher than the British take. The following text follows Harford’s theme, supplemented by an Economist article and Wikipedia entry on the Nordic countries.

Scandinavian “universalist” welfare states aim to enhance individual autonomy, promote social mobility, ensure the universal provision of basic human rights and stabilise the economy. They rank highest on the metrics of real GDP per capita, healthy life expectancy, interdependence, perceived freedom to make life choices, generosity and freedom from corruption.

nordic welfare model graphic 2013Jon Kvist: Institute of Society and Globalisation, Roskilde University, Denmark

The Nordic model emphasises maximizing the labour force, promoting gender equality, extensive benefit levels, income redistribution and maximisation of public participation in social decision-making. This also operates in the workplace as employers, trade unions and the government, negotiate terms as a social partnership, rather than having conditions imposed by law. Other strengths:

  • free education,
  • universal healthcare,
  • strong property rights,
  • contract enforcement,
  • overall ease of doing business,
  • public pension plans or
  • union-run unemployment funds.

Transparency

Comprehensive tax reporting in Scandinavia makes evasion very difficult. Norwegian tax returns are published for all to examine. An Economist article amplifies: “The performance of all schools and hospitals is measured. Governments are forced to operate in the harsh light of day: Sweden gives everyone access to official records. Politicians are vilified if they get off their bicycles and into official limousine.”

Tax

The Nordic welfare systems are mainly funded through taxation: Sweden at 56.6% of GDP, Denmark at 51.7%, and Finland at 48.6% reflect very high public spending. A large number of public employees work in various fields including education, healthcare and the civil service. They often have lifelong job security and make up around a third of the workforce (more than 38% in Denmark).

Harford points out that the UK system needlessly excludes swathes of the economy from tax. Rather than charge a 10%t rate of VAT on everything, the UK government charges a 20% rate of VAT on roughly half of what consumers spend.

He concludes that the simplest way to broaden the tax base is to dismantle barriers to getting a job, putting entitlement programmes on sound economic foundations: “Scandinavian governments subsidise education, transport and care for children and the elderly, all of which help people to work who might otherwise find themselves stuck at home. As a result, even high taxes do not keep them out of the labour market”.

True free trade

Though they employ 30% of their workforce in the public sector, compared with an OECD average of 15%, they are true free-traders who resist the temptation to intervene even to protect banks (following the lessons learnt in the ‘90s) and iconic companies: Sweden let Saab go bankrupt and Volvo is now owned by China’s Geely.

Tempering capitalism

The Economist notes that Nordic countries look for ways to temper capitalism’s harsher effects. Denmark has a system of “flexicurity” that makes it easier for employers to sack people but provides support and training for the unemployed, and Finland organises venture-capital networks.

The anonymous author concludes: “A Swede pays tax more willingly because s/he gets decent schools and free health care. The generous Nordic welfare states have negotiated far-reaching reforms with unions and business lobbies to sharpen performance”.

A prescription for Britain? So near and yet so far below par

nordic countriesThe Nordic culture has been arrived at by rooting out corruption and vested interests and a readiness to forage for good ideas across the political spectrum. It would be good to believe the Economist’s conclusion: “The world will be studying the Nordic model for years to come” and – even better – to see action under way for beneficial change.