Tag Archives: UBI

Basic income

Readers who are unaware of the basic income concept can find an outline here.

As Ontario, Canada’s largest province, became the latest to announce a universal basic income three year trial (read on here), we read that a privately-funded, short-term pilot program is being run by this Silicon Valley accelerator, Y Combinator, in California.

The goal is to see how people react in the U.S., says Sam Altman, President, Y Combinator Group. The program gives “unconditional” payments to selected residents of Oakland. The administrators write, “we hope basic income promotes freedom, and we want to see how people experience that freedom.” If it is successful, the plan is to follow up the pilot with a larger, longer-term program”.

Altman says: “50 years from now, I think it will seem ridiculous that we used fear of not being able to eat as a way to motivate people.”

The Dutch universal basic income proposal is for UBI to replace other social security benefits. It would be paid for with revenue from a number of taxes, including a 30% tax on business profits, tax on air pollution, and a higher tax on “big fortunes,” according to Johan Luijendijk, co-founder of the Basisinkomen 2018 advocacy group, which argues that UBI would be affordable because it would replace other government support programmes.

Replacement or supplement?

Over the years in Britain the writer had always heard of UBI as a replacement proposal – but now she reads Professor Karl Widerquist, founder of Basic Income News, describing the Dutch proposal as unique.

The Basic Income European Network (BIEN) agreed at its general assembly in Seoul (in 2016) that universal basic income should not be a replacement of other social services or entitlements, but instead should work in combination with other services. Widerquist in an email with CNBC, is reported to have said universal basic income “is not ‘generally considered’ as a replacement for the rest of the social safety net. Some see it primarily as a replacement. Others see it as a supplement, filling in the cracks.”

The Swiss campaign for the basic income referendum

Earlier this year, a draft report, tabled by a Member of the European Parliament, Mady Delvaux-Stehres, warned that 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”. The report which urges member states to consider a general basic income in preparation for robots taking over people’s jobs passed by 17 votes to two.

Ms Delvaux-Stehres said: “We ask the commission to look at what kind of jobs — or more precisely what kind of tasks — will be taken over by robots. There needs to be a discussion about whether we need to change our social security systems. And even whether we have to think about universal revenue, because if there are so many unemployed people, we need nevertheless to insure that they can have a decent life”. 

However the recommendation to “seriously consider” basic income was rejected for inclusion in the final report, with 328 MEPs voting against the recommendation, 286 MEPs voting in favour, and eight abstaining from the vote.

A study by Oxford University’s Carl Frey and Michael Osborne estimates that 47% of U.S. jobs will potentially be replaced by robots and automated technology in the next 10 to 20 years. Those individuals working in transportation, logistics, office management and production are likely to be the first to lose their jobs to robots; according to the report universal basic income may be necessary.

 

 

 

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Universal Basic Income is in the news

The highly misleading BBC programme, Analysis on the subject of Universal Basic income, sometimes called ‘Citizens’ Income’, will now be balanced by information from a respected economic and financial magazine, a gifted economist’s summary, and news from the countries of Finland, Canada and the Netherlands, three of several countries who are taking this idea so seriously that they wish to put it into practice

Money Week explains:

  • UBI “makes all work pay by abolishing the classic trap of all means-tested benefits.
  • Under a universal income, there are no perverse disincentives that give people an excuse to stay at home in the face of an effective marginal tax rate of 80%.
  • Given that one of the main challenges of the age appears to be in-work poverty, rather than mass unemployment, a basic income system could play a significant role – especially in an age of disruptive technologies that make working lives less and less secure.
  • Nor is there any disincentive to prudent long-term saving – no one has their benefits stopped for having too much in the bank.

For a more detailed but readable account of UBI, see this extract from “It Doesn’t Have to Be Like This: global economics: a new way forward”, by Margaret Legum, ISBN: 1901557766. Margaret was educated at Rhodes University and Cambridge. She lectured at the LSE and Rhodes.

Money Week reports that Finland is planning to offer a national basic income to all of its citizens of 800 euros ($870) a month and Time magazine adds that the final proposal for the plan won’t be released until Nov. 2016. Three years of economic downturn, has led to rising unemployment and pressures on public spending. The centre-right government took office after general elections in April this year, and is carrying out a wide-ranging program of cuts that will affect education, health and welfare provisions.

A working group has been given the task of providing a preliminary study that will lead to the actual experiment. The study will identify a model for basic income to be tested. The experiment will evaluate the effects of giving a basic income to members of different population groups, and produce an overall cost estimate.

A poll commissioned by the agency planning the proposal, the Finnish Social Insurance Institute, showed 69% supported the basic income plan.

Times magazine has published an article about the city of Utrecht’s partnership with a local university to provide residents with a “basic income” which is enough to cover living costs. People who participate in the experiment won’t have any restrictions placed on how they choose to spend the money they receive. Researchers and city officials will study the people who are offered a basic income to see whether citizens dedicate more time to volunteering, studying and other forms of self and community improvement if they don’t have to worry about earning money to survive. The findings will be compared with those of a control group who continue to earn money in the traditional way. Utrecht officials are in talks with other cities to expand the experiment to other locations as well.

The most famous experiment was carried out in the Canadian town of Dauphin, in Manitoba. Between 1974 and 1979, The Mincome program gave a stipend to the entire population, varying depending on how much money each person earned. Evelyn L. Forget, an economist at the University of Manitoba, studied this experiment and wrote a report called “The town with no poverty,” published in 2011. Although working hours dropped, as sceptics had predicted, it happened mainly among young men, who instead continued their education, and mothers who used the financial freedom to focus on childrearing.

Her conclusion? Basic income reduced Dauphin’s poverty and alleviated several other problems.