- 1 Introduction
- 2 Definitions
- 3 Typology
- 4 Characteristis
- 5 History
- 6 Status
- 7 Discussions
- 8 Critiques
- 9 Examples
- 10 More Information
A Basic Income is a monetary sum allocated unconditionally to citizens of a government. Guaranteed Minimum Income requires more than citizenship as it is provisional and may require a means test or contribution to community service.
Basic Income can be compatible with Peer-to-Peer philosophy by providing a sense of economic equality that suites the voluntary nature of peer networks. A secured standard of living can help develop even richer economic foundations for existing and as yet developed peer networks.
"A Basic Income Guarantee (BIG) is a government-ensured guarantee that all citizens will receive an unconditional income on an individual basis, without means test or work requirement – enough for food, shelter, and basic necessities." (http://www.usbig.net/papers/144-Sheahen-RefundableTaxCredit.pdf)
"Citizen's dividend or citizen's income is a proposed state policy based upon the principle that the natural world is the common property of all persons (see Georgism). It is proposed that all citizens receive regular payments (dividends) from revenue raised by the state through leasing or selling natural resources for private use. In the United States, the idea can be traced back to Thomas Paine's essay, Agrarian Justice, which is also considered one of the earliest proposals for a social security system in the United States. Thomas Paine best summarized his view by stating that "Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
This concept is a form of basic income, where the Citizen's Dividend depends upon the value of natural resources or what could be titled as "common goods" like seignorage, the electro-magnetic spectrum, the industrial use of air (CO2 production), etc.
The State of Alaska dispenses a form of citizen's dividend in its Permanent Fund Dividend, which holds investments initially seeded by the state's revenue from mineral resources, particularly petroleum. In 2005, every eligible Alaskan resident (including their children) received a check for $845.76. Over the 24-year history of the fund, it has paid out a total of $24,775.45 to every resident." (http://en.wikipedia.org/wiki/Citizen%27s_dividend Wikipedia)
"In economics, a negative income tax (abbreviated NIT) is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government. Such a system has been discussed by economists but never fully implemented. It was developed by Juliet Rhys-Williams in the 1940s and later by United States economist Milton Friedman in 1962 in Capitalism and Freedom. Negative income taxes can implement a basic income or supplement a guaranteed minimum income system.
In a negative income tax system, people earning a certain income level would owe no taxes; those earning more than that would pay a proportion of their income above that level; and those below that level would receive a payment of a proportion of their shortfall, which is the amount their income falls below that level.
Typically, this is proposed to be implemented as a flat tax combined with a fixed government payment. For example, if the flat tax rate is 25% and a government payment of $10,000, then:
- A person earning $40,000 per year would be at the break-even point. They pay no taxes, because their tax payment equals their government payment.
- A person earning $1,000,000 would pay close to the full 25% tax, as the government payment would be negligible compared to the $250,000 in tax payments.
- A person earning only $4000 per year would pay $1000 in taxes but receive $10,000 in payment, for a net income of $13,000, or $9,000 in net government payments. The net payment is 25% of the difference between their income and the break-even income."
"Asset-based egalitarianism is a form of egalitarianism which theorises that equality is possible by a redistribution of resources, usually in the form of a capital grant provided at the age of majority. Names for the implementation of this theory in policy include universal basic capital, basic capital and stakeholding, and all are generally synonymous within the equal opportunity egalitarian framework." (http://en.wikipedia.org/wiki/Asset-based_egalitarianism Wikipedia)
Andrea Fumagalli on the Five Criteria To Distinguish a Progressive Interpretation of the Basic Income
"Basic Income presents different and contradictory definitions. THat is why the terms can mislead. On my opinion, we can speak of Basic income only when the following five criteria are verified:
1. Individuality criterion: the basic income must be paid at the individual level and not familiar. It can then discuss if children under 18 years will have the right or not.
2. Criterion of residence: the basic income must be paid to all / the people who, residing in a given territory, live, rejoice, suffer and participate in the production and social cooperation regardless of their marital status, gender, ethnicity, religious belief, etc.
3. Criterion of unconditionality: basic income must be provided by minimizing any form of compensation and / obligation as a free individual choice as possible.
4. Access criteria: the basic income is paid in its initial phase of experimentation to all / the people who have an income below a certain threshold. This threshold may, however, be greater than the relative poverty line and converge toward the median level of the personal distribution of existing income. Moreover, this level of income must be expressed in relative terms, not absolute, so that increasing the minimum threshold (as a result of the initial introduction of the measure) the range of beneficiaries will increase continuously until to rise to graded levels of universality .
5. Criteria for funding and transparency: the modalities of financing of basic income must always be set out on the basis of economic viability studies, detailing where resources are obtained based on an estimate of its cost necessary. These resources have to fall on general taxation and not on other assets of origin (such as, for example, social security contributions, sale of public assets, privatization proceeds, etc.). Basic income is complementary to welfare systems and never substitutive. On my opinion, basic income should be a conflict tool not a compatibility tool with respect to the existing contemporary nelo-liberalist capitalism. That is why, the criteria of total unconditionality and an enough level (> relative poverty line as minimum) just to say "NO" to halting conditions of work and exploitation without blackmail, are more important than an immediate universality (may be, providing a insignificant amount of money)." (https://www.facebook.com/groups/p2p.open/permalink/1944269912283845/?)
by Shannon Ikebe:
"Considering the fundamentally different political implications, a basic income above and below the level of a livable income should be treated as different proposals. We could call them a livable basic income (LBI) and a non-livable basic income (NLBI).
Could an NLBI still be a significant improvement over the status quo, even if it is not as transformative as an LBI? It entirely depends on the source of its funding and other associated measures.
If the money for an NLBI comes from taxing the 1 percent or cutting prison or military expenditures, it is clearly positive. For example, Matt Bruenig and Elizabeth Stoker Bruenig call for a $3,000-a-year basic income that would be financed by raising taxes on the rich and reducing the “submerged welfare state for the affluent” — a robust redistributive measure even if it doesn’t lead to a radical post-work transformation of society.
But it should not escape our attention that an NLBI is very similar to the negative income tax (NIT) favored by libertarian economists, including Milton Friedman. An NIT simply means that those who make less than a certain income threshold receive money back from the government instead of paying any income taxes. Friedman argued that after instating an NIT, you could eliminate all other existing welfare programs, reducing bureaucracy and market interference.
More recently, the libertarian political scientist Charles Murray has proposed an annual unconditional grant of $10,000 for every adult and scrapping the rest of the welfare state, including Social Security and Medicare.
Even if a basic income is not introduced as a libertarian scheme, financing it by eviscerating other social policy or public investment programs (or through non-progressive taxes) would likely have a negative redistributive effect, without increasing the scope of freedom.
In a political context in which the Left is on the defensive, such an outcome is not unlikely. The Swiss proposal advocates for a considerably higher and livable 2,500 francs per month — and its proposed text for the constitutional amendment states a basic income should “enable a dignified existence” for the entire population — but the vast majority of parliamentary members bitterly oppose the social movement–led plan. In Finland, it’s a center-right government that’s proposing the multiple options up for consideration, with different levels of income and funding sources, containing both progressive and reactionary possibilities.
Even if the Left had sufficient political power to win a progressive NLBI, it is far from clear it should be our primary demand. We still need better-funded and free higher education, massive investment in green infrastructures and energy sources, and the restoration and expansion of decimated social policy programs, just to name a few priorities.
A basic income’s universalism and lack of means testing is certainly significant, as van Parijs emphasizes. He argues we should aim for a “basic income at the highest level that is economically and ecologically sustainable,” whether it’s a livable amount or not. On the other hand, a basic income may not be fiscally compatible with an expansive welfare state under the conditions of capitalism.
For feminist economist Barbara Bergmann, even a below-livable basic income would undermine a Swedish-style welfare state — the kind of welfare state that may contribute more to social and gender justice because of its targeted focus on socializing social reproduction. While a basic income would compensate those who spend countless hours doing unpaid reproductive labor, men who don’t engage in reproductive labor would receive the same amount.
The fundamental dilemma of a basic income is that the more achievable version — in which basic needs go unmet without supplementary paid employment — leaves out what makes it potentially emancipatory in the first place. Indeed, many commentaries cite basic income experiments to argue it does not significantly reduce work incentives.
This contradiction is directly tied to the fact that a basic income only addresses the question of distribution, while ignoring that of production. The kind of freedom from work — or freedom through work, which becomes “life’s prime want” — that an LBI envisions is, in all likelihood, not compatible with capitalism’s requirements of profitability.
The dramatic strengthening of working-class power under a robust LBI would sooner or later lead to capital disinvestment and flight, since capital can only make profits through exploitation and won’t invest unless it can make a profit. But slowing production would undermine the material basis of an LBI.
The only way out is to continue producing even if one can’t make a profit. Thus, an LBI would sooner or later force onto the stage the age-old question of the ownership of means of production.
Despite all these shortcomings, a basic income remains one of the few concrete proposals with emancipatory potential that is gaining mainstream attention and support. Especially in a period of left weakness, we should not dismiss it or disengage from discussions about it simply because a UBI throws up numerous challenges.
It is most politically powerful as a demand — a demand that exposes the irrationality of an economic system in which productivity increases seem to bring more unemployment and misery instead of the expansion of freedom they make possible.
In addition, it is not inconceivable that even an NLBI could constitute a first step in a longer-term strategy toward an LBI, forming an institutional infrastructure that could be expanded when the balance of class forces is more favorable. And the very presence of a basic income could help highlight the arbitrary link between “work” and income.
But when it comes to basic income proposals, the details matter. Supporting any plan that seems politically attainable and bears the name “basic income” isn’t a strategy for winning radical change. In the end, there is no feasible way to achieve a free society, or even one close to it, without challenging the power of private capital." (https://www.jacobinmag.com/2016/01/universal-basic-income-switzerland-finland-milton-friedman-kathi-weeks/)
Taxation vs. Capital-Based Funding Mechanisms
"How should society be compensated? (for everything that capital gets from society)
Taxation is the wrong answer. Corporations pay taxes in exchange for services the state provides them, not for capital injections that must yield dividends. There is thus a strong case that the commons have a right to a share of the capital stock, and associated dividends, reflecting society’s investment in corporations’ capital. And, because it is impossible to calculate the size of state and social capital crystalized in any firm, we can decide how much of its capital stock the public should own only by means of a political mechanism.
A simple policy would be to enact legislation requiring that a percentage of capital stock (shares) from every initial public offering (IPO) be channeled into a Commons Capital Depository, with the associated dividends funding a universal basic dividend (UBD). This UBD should, and can be, entirely independent of welfare payments, unemployment insurance, and so forth, thus ameliorating the concern that it would replace the welfare state, which embodies the concept of reciprocity between waged workers and the unemployed. Fear of machines that can liberate us from drudgery is a symptom of a timid and divided society. The Luddites are among the most misunderstood historical actors. Their vandalism of machinery was a protest not against automation, but against social arrangements that deprived them of life prospects in the face of technological innovation. Our societies must embrace the rise of the machines, but ensure that they contribute to shared prosperity by granting every citizen property rights over them, yielding a UBD.
A universal basic income allows for new understandings of liberty and equality that bridge hitherto irreconcilable political blocs, while stabilizing society and reinvigorating the notion of shared prosperity in the face of otherwise destabilizing technological innovation. Disagreements of course will continue; but they will be about issues such as the proportion of company shares that should go to the Depository, how much welfare support and unemployment insurance should be layered on top of the UBD, and the content of labor contracts." (https://www.project-syndicate.org/commentary/basic-income-funded-by-capital-income-by-yanis-varoufakis-2016-10)
Basic Income and Freedom
"The postwar job-based income distribution system involved a tradeoff between economic security and freedom. Job-based income and benefits lead to dependence on an employer. Accessing means-tested benefits from a welfare state requires going through administrative hoops. Moreover, such welfare programs are often specifically conditioned on having or looking for employment, even if that means accepting a low-paying job.
A basic income stands against such strictures. Unlike other social policies, basic income would enhance three types of freedom: libertarian freedom, liberal freedom, and republican freedom.
The first—libertarian freedom—refers to the freedom from constraints. Modern policymakers impose paternalistic controls on what “the poor” must or must not do, on pain of worse impoverishment. As a right with no conditions attached, basic income leaves people free to spend their money as they wish, prioritizing what is most important to them. A basic income would strengthen the capacity to say no to abusive or exploitative relationships and yes to forms of paid and unpaid work that might otherwise be out of reach. People would be able to accept more fulfilling jobs that they may have rejected due to economic considerations or to spend more time caring for their loved ones, neighbors, and community. Nobody should need reminding in these pandemic times that there is a care deficit.
It would also foster liberal freedom, the freedom to be moral, described by the philosopher T.H. Green as the ability to decide and do what you think is right. You cannot be moral if you must do as you are told or “steered” to do by a paternalistic government or other authority. Unpaid community work is not a virtuous moral choice of activity if you are required to do it to receive welfare benefits or as a punishment. A basic income would reduce these hurdles to moral action.
Lastly, such a scheme would advance republican freedom, freedom from actual and potential domination by unaccountable authority. A woman, for instance, may lack such freedom if she can only do things with the approval of a husband or father, even if they usually “allow” her to do what she wishes. Basic income experiments in the US found that in some cases women who had their own basic income were able to leave abusive relationships.3 Mahatma Gandhi captured the essence of republican freedom by saying freedom means being able to look others in the face and not having to give in to their will." (https://greattransition.org/gti-forum/basic-income-standing)
A Brief History of Basic Income in the United States
"In 1964, President Lyndon Johnson declared a “War on Poverty” in America. He said we have a moral responsibility to end poverty. Four decades later, that war has yet to be won.
In 1969, a Presidential Commission recommended that America adopt a Guaranteed Income – often called a Negative Income Tax – with no mandatory work requirements, for all citizens in need. The idea was endorsed by Martin Luther King, the National Council of Churches, the California Democratic Council, the Republican Ripon Society, the 1972 Democratic Party platform, and several Nobel-prize-winning economists.
In his 1972 Presidential campaign, Senator George McGovern proposed giving $1000 to every needy American. During the 1970s, Congress debated four guaranteed income bills, but none of them passed.
However, some good things came out of these struggles. In 1974, Congress passed Supplemental Security Income, a negative income tax for people over age 65. In 1976, Congress adopted the Earned Income Tax Credit, which gives money to low-income workers.
In the 1980s and 1990s, the trend turned to cutting social programs. Homeless people reappeared for the first time since the Depression. Food banks and soup kitchens sprang up. This trend culminated in the 1996 welfare reform bill.
The new law was sold as a way to get people off welfare, and it did. Welfare rolls in the United States are down more than 50 percent from 1996. But it didn’t reduce poverty. That’s because welfare reform dumped many recipients into low-paying jobs – with no benefits or ability to move up.
A better strategy is available. In 1980, the state of Alaska began distributing revenues from state oil revenues to every resident. The Alaska Permanent Fund gives about $1000 to every man, woman and child in the state each year. There are no work requirements. It is not enough to eliminate poverty, but it is a model on which to build a simpler and more effective system of social protection."
* The Tax Cut for the Rest of Us Act of 2006
"On May 2, 2006, the first-ever Basic Income Guarantee bill, written by USBIG members Karl Widerquist and Al Sheahen, was introduced in the U.S. Congress by California Congressman Bob Filner."
"If we think USBIG should just stick to our annual conferences and remain nothing more than a discussion group, okay. We can all just write papers and schmooz with each other every year. If we think promoting a bill in Congress is too much for our little group, we should admit that to ourselves and I should probably tell Filner to forget about it; that we’re just too small to be effective.
But if we think we should keep at it and try to use the bill to advance what we are spending a good deal of our time on, then I feel each one of us has to do something to help out. A couple of us can’t do this alone. We need each one of us to somehow persuade our respective legislators to sign on as co-sponsors of the bill (which will be given a new number in the 110th Congress). Or we should write some op-ed pieces. Or write a letter to the editor. Or get on talk radio. Or give a talk to the Rotary Club or Lions Club and have them write their legislators. Or do something that we can take back to Filner to show him we’re not dead in the water. Otherwise, it is a certainty this will be our last shot and our credibility will be zero.
And it won’t be easy. The House of Representatives adopted a pay-go budget rule on January 5. Under this rule, a bill cannot be considered on the House floor if it changes tax and entitlement programs in a manner that increases the deficit. In other words, any entitlement spending increase must be offset by either tax increases or entitlement spending cuts of the same or greater magnitude.
Our bill has no such pay-go in it. It will cost $186 billion a year. I’ve been saying: “Well, we can pay for it by reversing the Bush tax cuts of 2001-03.” (Those cuts amounted to a $224 billion, according to Citizens for Tax Justice.) But that’s about as vague as you can get.
What we need is for a legislator to co-sponsor the bill just because he/she feels it’s the right thing to do, and the cost be damned; that it’s an investment in America, not just an expense." (Al Sheahen  The Rise and Fall of a Basic Income Guarantee Bill in the United States Congress)
The bill, considered a small BIG rather than a big BIG, provides $2,000 for each legal adult and $1,000 for others per year. See Text of H.R. 5257: Tax Cut for the Rest of Us Act of 2006 for details in finely woven governmental prose.
Contemporary Thought in favor of the Basic Income
by Shannon Ikebe:
"While the idea of a basic income as an egalitarian reform can be traced back to Thomas Paine, interest in the policy has picked up in the last few decades. Belgian philosopher and economist Philippe van Parijs, for example, sees in the basic income the possibility for a “capitalist road to communism” — a strategy for leaping over socialism (understood as collective workers’ ownership of the means of production) and moving directly to communism (“from each according to her abilities to each according to her needs”).
In recent years, a UBI has been embraced in particular by the post-productivist left, which carries a strong feminist and ecological bent and rejects the traditional left’s valorization of labor and the working class.
For example, feminist theorist Kathi Weeks identifies a basic income as the linchpin of a “postwork political project,” which regards the minimization of work as the key to an emancipatory society. Her case for a UBI comes from the perspective of social reproduction feminism. In capitalism, socially reproductive labor within households is largely uncompensated, and still overwhelmingly performed by women; by severing the connection between income and activities designated as “work,” Weeks writes, a basic income “highlights the arbitrariness of which practices are waged and which are not.” (https://www.jacobinmag.com/2016/01/universal-basic-income-switzerland-finland-milton-friedman-kathi-weeks/)
2017, year of the pilots
"This interest has prompted the launch of several basic income pilots around the world. One started on 1 January in Finland with others planned in Ontario, Canada, Oakland, California, Aquitaine and Catalonia, and discussions are ongoing in Fife and Glasgow. A US NGO, GiveDirectly, is raising $30m for a 12-year experiment in Kenya.
It is important to stress that pilots can only test certain behavioural aspects of paying a basic income and seeing what people do differently, whereas its proponents rest their case on more fundamental justifications – social justice, freedom and economic security. None of these can be tested by pilots, which by definition are short-term and involve relatively small numbers of people.
Most pilots do not conform to a universal basic income system, in which everyone in a given community receives it, so these benefits cannot be tested. And if only a few people are given a basic income, recipients may soon find themselves under pressure from relatives and neighbours to share it.
For these reasons, some see pilots simply as a way of avoiding other important policy decisions. But once results start to come in, they may help to “win the argument”, as John McDonnell, Labour’s shadow chancellor has put it, by showing that basic income is both feasible and does not have the negative behavioural effects commonly attributed to it.
At the moment, Finland’s pilot is receiving global attention. It is not a true basic income experiment, which is not to imply it will have no value. Instead, 2,000 randomly selected unemployed people aged between 25 and 58 have started to receive €560 (£475) as a tax-free monthly unconditional benefit, paid for two years. It will not be reduced if they earn income, and they will not be obliged to search for jobs.
The reasoning behind the experiment is that the Finnish social security system, designed for an industrial society, has become dysfunctional. As in the UK, it is overcomplex and has created severe poverty traps. A basic income removes onerous benefit conditions to seek and take employment, yet increases the incentive to take low-wage jobs because it is not withdrawn as income rises. Thus the pilot’s designers pose the question: could a basic income simplify the social security system and increase employment?
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. In negative income tax experiments in the US in the 1970s, children from recipient families were less likely to drop out of high school.
And in an “accidental” basic income pilot in North Carolina, where a longitudinal study of child development coincided with the decision of a Cherokee community to distribute casino profits to all tribal members, children in recipient families had fewer behavioural disorders, performed better in school, and were less likely to drift into crime. This was attributed to more economic security and better family relations, partly because parents spent less time arguing about money and more time with their children. Alcohol and drug abuse also fell.
In developing countries, experiments coming closest to a test of basic income have been conducted in Namibia and, on a larger scale, in India. In the largest Indian pilot, about 6,000 men people in eight villages received a small basic income for 18 months, and their experience was compared with what happened in 12 similar villages where nobody received the basic income.
Four positive effects were observed: First, there were benefits to welfare – improved nutrition, better health, improved schooling. Second, there were positive equity effects; the basic income helped the disabled more than others, women more than men, and scheduled caste households more than high-caste ones. Third, there were positive economic effects; having a basic income led to more work and labour, raised productivity and output, and reduced inequality. In particular, there was a growth in secondary, self- employed work.
Later this month, the Indian government is due to publish its annual economic report, which will include a chapter on the feasibility of rolling out a basic income across India. It may be cautious and noncommittal but the fact that a major country is even considering the introduction of a basic income testifies to a growing legitimacy.
One unanticipated result was that the emancipatory value of the basic income, in terms of transforming people’s lives, was greater than the very modest monetary value. I would argue that this emancipatory effect would apply wherever a basic income system was instigated, whereas most other forms of benefit, by being selective, conditional and inefficient, have an emancipatory value less than the monetary value." (https://www.theguardian.com/commentisfree/2017/jan/12/universal-basic-income-finland-uk)
Union-based research, 2019
Anne Coote, NEF:
"A study published this week sheds doubt on ambitious claims made for universal basic income (UBI), the scheme that would give everyone regular, unconditional cash payments that are enough to live on. Its advocates claim it would help to reduce poverty, narrow inequalities and tackle the effects of automation on jobs and income. Research conducted for Public Services International, a global trade union federation, reviewed for the first time 16 practical projects that have tested different ways of distributing regular cash payments to individuals across a range of poor, middle-income and rich countries, as well as copious literature on the topic.
It could find no evidence to suggest that such a scheme could be sustained for all individuals in any country in the short, medium or longer term – or that this approach could achieve lasting improvements in wellbeing or equality. The research confirms the importance of generous, non-stigmatising income support, but everything turns on how much money is paid, under what conditions and with what consequences for the welfare system as a whole.
From Kenya and southern India to Alaska and Finland, cash payment schemes have been claimed to show that UBI “works”. In fact, what’s been tested in practice is almost infinitely varied, with cash paid at different levels and intervals, usually well below the poverty line and mainly to individuals selected because they are severely disadvantaged, with funds provided by charities, corporations and development agencies more often than by governments.
Experiments in India and Kenya have been funded, respectively, by Unicef and Give Directly, a US charity supported by Google. They give money to people on very low incomes in selected villages for fixed periods of time. Giving small amounts of cash to people who have next to nothing is bound to make a difference – and indeed, these schemes have helped to improve recipients’ health and livelihoods. But nothing is revealed about their longer-term viability, or how they could be scaled up to serve whole populations. And there is a democratic deficit: people who get their basic income from charities or aid agencies have no control over how payments are made, to whom, at what level or over what period of time.
The Alaska Permanent Fund, built from the state’s oil revenues, pays all adults and children a dividend each year – in 2018, it was $1,600 (£1,230). The scheme is popular and enduring; it has been found to produce some positive impacts on rural indigenous groups, but it makes no claim to sufficiency and has done nothing to reduce child poverty or to prevent widening income inequalities.
Finland undertook a two-year trial, from January 2017 to December 2018, of modest monthly payments of €560 (£477) to 2,000 unemployed people – but the government has refused to fund further expansion. It told us little about UBI except that, when push comes to shove, elected politicians may balk at paying for a universal scheme.
The cost of a sufficient UBI scheme would be extremely high according to the International Labour Office, which estimates average costs equivalent to 20-30% of GDP in most countries. Costs can be reduced – and have been in most trials – by paying smaller amounts to fewer individuals. But there is no evidence to suggest that a partial or conditional UBI scheme could do anything to mitigate, let alone reverse, current trends towards worsening poverty, inequality and labour insecurity. Costs may be offset by raising taxes or shifting expenditure from other kinds of public expenditure, but either way there are huge and risky trade-offs.
Money spent on cash payments cannot be invested elsewhere. The more generous the payments, the wider the range of recipients, the longer the scheme continues, the less money will be left to build the structures and systems that are needed to realise UBI’s progressive goals.
As this week’s report observes, “If cash payments are allowed to take precedence, there’s a serious risk of crowding out efforts to build collaborative, sustainable services and infrastructure – and setting a pattern for future development that promotes commodification rather than emancipation.” This may help to explain why UBI has attracted support from Silicon Valley tycoons, who are more interested in defending consumer capitalism than in tackling poverty and inequality.
The report concludes that the money needed to pay for an adequate UBI scheme “would be better spent on reforming social protection systems, and building more and better-quality public services”. Redistributing the personal tax allowance and developing the idea of universal basic services (UBS) could offer a more promising alternative. This calls for more and better quality public services that are free to those who need them, regardless of ability to pay. Healthcare and education are obvious examples, and it is argued that a similar approach should be applied to areas such as transport, housing, social care and information – everyday essentials that should be available to all. Collective provision offers more cost-effective, socially just, redistributive and sustainable ways of meeting people’s needs than leaving individuals to buy what they can afford in the marketplace." (https://www.theguardian.com/commentisfree/2019/may/06/universal-basic-income-public-realm-poverty-inequality)
- Frase, Peter. Do they owe us a living? Activist. 2010 Feb 3.
Available from: http://theactivist.org/blog/do-they-owe-us-a-living. Accessed 2012 Jun 2. Archived by WebCite at http://www.webcitation.org/687MnKT6y. [anchor]
"Frase advocates a guaranteed minimum income, also called Universal Basic Income (UBI), as a “non-reformist reform”, implementable under capitalism but setting the stage for further radical transformation of society. Both UBI and the general concept of non-reformist reforms are associated with the Marxist theorist André Gorz. Even a small UBI has the potential to reduce the dependence of individuals on the labor market for survival. UBI is often criticized on the ground that if no one needs to work in order to live, certain unpleasant but essential types of work will not be done at all, even for high wages. Frase responds that only a minority of socially useful types of work will fall into this category, and such cases can be addressed with ad hoc solutions as they arise. Much socially useful work needs little or no “material incentive”. Other forms of work that are common in capitalist societies are socially harmful, and removal of their incentives would actually be beneficial. UBI minimizes the need for top-down micro-management of decisions about the social usefulness of work. It also helps to dispel the illusion that all forms of work are socially beneficial, which tends to be common in a capitalist system without UBI, because without UBI any job helps someone to survive." (http://dedicto.com/wordpress1/bib/)
It can be done
Excerpts from various proposals demonstrate the ability to redistribute financial wealth.
Allan Sheahen, It’s Time to Think BIG!:
"In 1997, Irwin Garfinkel of Columbia University and Chien-Chung Huang of Rutgers University produced a comprehensive paper which became the foundation of Leonard Greene’s 1998 book: The National Tax Rebate. Using 1994 government data, Garfinkel and Huang calculated that the U.S. could afford an annual BIG of $4000 per adult, $2175 per child, and $8000 per senior by eliminating 115 federal welfare programs, abolishing the income tax personal exemption, and taxing BIG benefits.
In 2004, Charles Clark of St. John’s University estimated the U.S. could afford a BIG at the 2002 poverty level of $9359 for an adult and $3500 for a child by eliminating some federal welfare programs and by replacing the individual income tax rates with a flat tax of 35%.
Those studies followed on previous work done by Michael Murray of Drake University, in his 1997 book: …And Economic Justice for All. Murray judged that a 35% flat tax could pay for a mid-ranged BIG of $6000 per adult and $2000 per child."
How to finance a UBI in the U.S.
From Robert Ayres :
I would like to pick up where Guy Standing left off: the question of how to finance a basic income. Most people who have thought about the problem of how to fund robust government expenditures, starting with Henry George and the current generation of “Georgists,” as well as some Democrats (like Bernie Sanders, Elizabeth Warren, and their followers), advocate progressive income and wealth taxes on the rich. A wealth tax serves as “negative reinforcement,” in the sense that it motivates the productive use of assets.
Wealth taxes are currently being collected in a number of countries, usually at quite low rates, meant to be less than the rate of inflation. France had one of the highest rates until 2017; now, it is lower and only applies to real estate. If not prevented, the owners of financial, non-real-estate wealth will simply move the money to other countries. Money is easy to move, as the French, in particular, discovered recently and as the Chinese are still learning. Guy Standing has advocated for a sovereign wealth fund, financed from levies on rentier income, not only from undeveloped land—as Henry George advocated—but from all kinds of assets, both physical and financial. However, he doesn’t explain how to sell those levies to the public, or their representatives in the legislature.
The notion that high taxes reduce growth is, of course, demonstrably false. Top income tax rates in the US and the UK during and long after WW II were around 82% in the US and above 90% in the UK, far above current rates. But economic growth was faster in the ‘80s than it is now. The top rates for US income taxes were still high (70%) until the Reagan administration cut them drastically. Yet the tax cuts of the ‘80s did not generate enough GDP growth to cover the revenue loss – the national debt kept rising.
Several recent econometric studies have shown conclusively that useful work (exergy) from fossil fuels and other sources is extremely underpriced, compared to labor. If, for social and environmental reasons, society needs more jobs and less carbon emissions, the way to achieve that is to increase the tax on energy (carbon) while reducing taxes on labor.
The negative reinforcement effect of carbon (exergy) taxes would encourage the search for non-carbon alternatives (and the search for more efficient means of recovery and recycling rare metals). Prices of some materials and consumer products would thus increase somewhat, of course, but not as much as the compensating savings from using more renewables, notably wind and solar energy. The price increases would mainly affect the well-to do, with several homes, expensive cars, private planes, etc. People using public transportation and not owning cars would pay very little. The price effect would be progressive, not regressive.
Assume the US GDP of $20 trillion, slightly more than the current level. Government expenditures in the US, at all levels, now amount to about 40% or $8 trillion, of which $4 trillion is federal. This currently includes something like $500 million for debt service on federal government debt. The tax revenues received by the federal government are divided as follows: 51% from personal income (i.e. labor), 35% from payroll taxes (to the Social Security Fund), and only 6% from corporate income taxes. The remaining 8% is a mixed bag, including excise taxes and estate taxes.
I would propose a “package” with three linked components. First, everyone over the age of 18 would receive a monthly “social dividend” of $1000, deposited in a bank. Roughly, this UBI would cost a net of approximately $3 trillion per annum (i.e., beyond existing programs and SS payments). The UBI would actually cut some existing government costs, both for targeted welfare services that would become redundant, and even for prisons and police. The net cost of UBI would then be around $3 trillion annually, raising the total costs of the federal government by $3 trillion,up to $7 trillion per annum (not yet taking into account productivity changes).
The second part would be a new excise tax on carbon, to be paid by primary producers and importers of hydrocarbons and products with “embodied” carbon (like plastics or Portland cement). The excise tax rates could be set to eventually provide annual government revenue of $1 trillion, mostly from taxing carbon emissions, while also cutting those emissions by at least 10%, maybe more. The carbon tax will run out as carbon-based fuel use decreases. The tax rate can increase, but not forever. On the other hand, the use of wood for paper and scarce metals, including lithium, cobalt, rare earths, and platinum group metals, should also be taxed to discourage consumption and encourage recycling.
The third part of the proposed package would be an electromagnetic frequency spectrum tax. Such a tax should be imposed, in our view, to bring in annual revenues of the order of $1 trillion if not more. The Internet is a public resource, and use of EM spectrum needs to be allocated fairly by charging realistic prices for its use. This tax could be collected partly as TV access fees (already common in Europe), fees on business data transfers, and fees on Internet usage paid by advertisers and mass message senders. Sending email should have a cost (like postage on first class letters). Frivolous marketing use of the Internet, such as unwanted “junk mail”—much of it fraudulent—would be strongly discouraged by this tax. Even “big data” users might benefit, especially as the tax would reduce congestion resulting from underpriced “junk” uses of the Internet.
Finally, corporate taxes, partly on profits but mainly on value added, should be raised to enough to bring in an additional $1 trillion, closing the UBI gap. Such a shift is a big deal and cannot be accomplished overnight.
The economic impact of these three changes in the US would be roughly as follows. First, bank deposits would increase significantly, but not by the whole $3 trillion input from UBI. Beneficiaries would first pay off their high cost credit card loans and student loans (though not all at once). Money left over after that would be spent on household goods and services, thus increasing GDP by roughly $2 trillion. Higher personal incomes available to spend on goods and services would also generate more taxes for the government. This would raise tax revenues significantly. Private debt would fall, but overall the government debt might increase somewhat, perhaps by $500 billion, perhaps even less. That would cover the increased money supply from 2% or 3% inflation. Of course, there is a chance that the stimulus effect of the UBI would increase economic growth even more than the rate of inflation if the program is intelligently planned.
This rough analysis above is only a first approximation of the costs and benefits of UBI. It would need to be extended and no doubt revised in various ways." (GTI discussion, September 2020)
2. From Daniel Raventós:
"One of the main criticisms of a Basic Income has always been the question of financing. This makes less and less sense considering how things are going in the year 2020.
It is obvious that the rich are getting richer, even in the midst of a huge crisis like the present one, and the poor are living worse and worse. In Spain, for example, over the past five years, the net worth of families (especially the richest) has increased by more than 1500 billion euros, 120% of Spain's GDP. In the calculations on the cost of financing the BI that Jordi Arcarons, Lluís Torrens, and I have made, we have never exceeded 6.5% of the annual GDP. In other words, a quarter of the increase in wealth can be used to finance BI.
Moreover, even if it were financed with public deficit (which is financed with debt bought by central banks), the net cost in fiscal terms (discounting the Keynesian fiscal mutliplier effect) would be less than 3%, a gift compared to the social disaster that the crisis is going to generate.
And obviously, there are mixed formulas for combining financing of BI with taxes and deficits. The important matter is that the rich transfer part of their wealth (or rather their increased wealth) to the poor.
The simplest model we (Arcarons, Lluís Torrens, and I) have developed following this idea is through a BI financed by income tax which ensures that 80% of the population with the lowest income wins (and the poorest stay above the poverty risk threshold) and the richest lose, even though they also receive BI, by paying more taxes.
The micro-simulation model, which is only applicable to the population identified in IRPF (personal income tax) data, allows us to come to several conclusions once all the data has been introduced.
A flat tax rate of 49% can finance a basic income for about 34.3 million people, almost 28 million adults and just over 6.5 million minors, while guaranteeing pre-existing levels of tax revenue. Moreover, it embraces the 9.4 million not detected in IRPF data, which means that 43.7 million citizens and accredited residents in Spain could receive a basic income.
A total of 61.7% of declarants would be better-off with a basic income. They would pay more tax for any income above the basic income, but the latter would exceed the increased tax. This figure rises to 75% when each taxpayer’s dependents are included because the basic income is paid to individuals. Accordingly, the figures for those who lose are 38.3% and 25% respectively.
The result is achieved with external financing to an amount of €51,102 million which can be broken down into the sum of the difference between the cost of financing a basic income for population not detected in the IRPF data and savings in benefits that would be abolished (€29,367.62 million), and applying the flat rate to those who are not obliged to declare (€21,734.38 million).
The first 70%, from lowest to highest income, would increase their share of ex post income (after the basic income is introduced) by a total of 9.3% more than their ex ante income. This is the amount that the 30% richest segment would lose. In other words, a transfer of €32,000 million would be made from the top 20% to the bottom 70%.
In the ex ante situation, the first 70% would contribute 17% of tax revenue, while the richest 10% would contribute 53.7%. In the ex post situation, the first 40% are net beneficiaries (the basic income is higher than amount of tax paid), and the richest 10% contributes almost 64% of the new tax revenue.
The poorest seven deciles gain. Take the second decile, for example. The present real tax rate is 0.35%. With a tax-exempt basic income and a flat tax rate, the tax quota is -59.42%. The negative quota denotes a net transfer. In the seventh decile, the real tax rate ex ante is 9.84% and the ex post quota is 6.23%, signifying another net transfer. However, the ninth decile loses by comparison with the ex ante situation because the quota rises from 15.29% to 24.32%.
70% of the population detected in the IRPF data gains by comparison with the present situation. Then, of course, the richest 30% loses. And the population not detected in the IRPF data also gains, for obvious reasons. If these people are not declarants, it is because their income is so low that they are not obliged to file. There could be a few exceptions but most of the population not detected in the IRPF data receives income below the filing threshold. The basic income, clearly a redistribution of wealth from the richest 20% to the remaining 80%, entails a significant reduction of the Gini coefficient. If, as we have noted, this stands at 0.3664 before the present IRPF is applied, and rises to 0.4114 after IRPF, it drops to 0.2502 after the tax reform we suggest.
Below is a brief summary of the main results and data arising from this model of financing a basic income.
1) It is possible to finance a basic income equal to the poverty line without touching a single cent of tax revenue preceding the reform we propose, which means that social spending presently financed by IRPF, basically health and education, remains intact.
2) From the moment the basic income is introduced, poverty will be eradicated, at least statistically, as every citizen or accredited resident receives an amount equivalent to the poverty line.
3) Although every citizen or accredited resident receives a basic income, not everyone gains in net terms. The richest 20% will receive the basic income but will lose by comparison with the previous situation. The remaining 80%, starting with the poorest person, will gain with a basic income financed as we suggest.
4) Several indicators and, in particular, the Gini coefficient, show that the resulting redistribution of income will be much less unequal than it is at present."
(GTI discussion, September 2020)
The Objections to a Basic Income
"The case for a basic income is formidable and multidimensional. Yet, the proposal has generated vocal opposition, including on the left. Opponents typically focus on cost, universality, or negative side effects. But do these arguments hold up?
The cost of a basic income, critics say, is simply too high. The usual way of making this argument is to set a level of, say, 50-60% of median income, multiply this by the size of the population, and compare this total cost with current welfare spending. These back-of-the-envelope calculations are highly misleading. First, they do not account for administrative savings from removal of means-testing and behavior monitoring. Second, they assume the current pattern of taxation and spending, apart from welfare, remains unchanged, including vast sums now spent by most industrialized countries on subsidies and tax breaks for rich households and corporations. Third, they ignore the dynamic and feedback effects of a basic income: removing disincentives to take low-paid jobs and encouraging entrepreneurship would boost economic activity and tax revenues; conversely, improvements in health and well-being, and a shift from paid jobs to care work, would reduce public spending on health and social services.
During the pandemic, governments have demonstrated a willingness to spend on an extraordinary scale, so the issue is less one of affordability than of political will. However, the best way to finance a basic income in the long term would be to build a Commons Capital Fund from new and redirected sources of revenue, including revenue from eco-taxes and levies on unearned wealth and incursions into the commons. As its value grew, the fund would pay out a rising amount in basic income (or common dividends).6
Other critics take issue with the universality of a basic income. A basic income, such critics note, would provide “something for nothing” to the undeserving and thereby promote laziness. To the contrary, it is the poverty trap built into means-tested welfare that acts as a disincentive to take low-paid employment, requiring the threat of sanctions to force people into jobs. Real-world basic income experiments have shown that universality is not a disincentive to work.7 Moreover, conservative critics of a basic income tend to have no problem with inherited private wealth or capital gains—“something for nothing,” indeed.
But the universality critique of basic income does not just come from conservatives. Laborist social democrats argue that each person should contribute socially necessary labor time. However, pushing people into low-paid or unpaid jobs depresses wages. And what about all of the socially necessary labor that is unpaid? A basic income better enables people to perform the socially necessary work of caring for children, the elderly, or sick loved ones. The costs of screening out a tiny proportion of potential malingerers happy to live on a meager stipend would far exceed the savings.
Moreover, some skeptics argue, if our goal is to redistribute money away from the rich, why should we be cutting checks to them? The simple reason is that it is far more efficient to provide a universal basic income and tax it back from the wealthy than to “target” recipients via means tests. Such a system could easily be designed so that those with above median incomes receive no net benefit. And, in the US and UK at least, there is a strong case for increasing both income and asset taxes on the wealthy who have benefited from hefty tax cuts in recent years.
Other critics of a basic income allege negative economic side-effects, such as lower wages or inflation. While a basic income could encourage some employers to offer lower wages, the security it affords would strengthen a worker’s bargaining position. It would not rise or fall if wages changed, whereas means-tested benefits and tax credits rise as wages fall, reducing the incentive to push for higher wages. Basic income also would encourage workers to back unions and other collective bodies in bargaining for higher wages, because the greater security would make them less fearful of retribution.
Inflation, other critics argue, would negate any economic benefits as companies raise prices in response to greater aggregate demand. Such fears are unwarranted because additional demand for basic goods and services is likely to increase supply as well. To take one example, basic income pilots in India saw increases in supply of basic goods and prices fall because assured demand created economies of scale and more investment. Similarly, a basic income in poor US neighborhoods that are so-called “food deserts” would stimulate investment in local shops and supermarkets." (https://greattransition.org/gti-forum/basic-income-standing)
Critiques from the left
Summary: Risks of UBI and possible responses
"Risks of UBI
- Driving down wages:
- If a UBI is not to exacerbate this state of affairs, it is imperative that it is linked to a high minimum wage and one, moreover, that can be linked to systems where workers are paid by the task, not just to hourly rates.
- Undermining collective bargaining for employer-provided benefits: To avoid this risk, it is therefore important that the introduction of UBI should be accompanied by measures that support trade unions’ abilities to bargain with employers at company and sector levels for benefits for their members, by protection for existing company pensions schemes and by other measures that ensure that employers continue to contribute their share of the cost, for instance through employers’ contributions to National Insurance.
- Undermining collectively-provided public services: It is therefore imperative that the introduction of a UBI should be embedded with policies that protect the scope and quality of public services and their collective and universal character.
- Creating racist definitions of citizenship: The introduction of UBI must therefore be integrated with humane and well-thought-out policies on immigration and citizenship, perhaps by linking entitlement to the place of residence, rather than nationality."
* 1. Ackerman, Seth. The work of anti-work: a response to Peter Frase [Internet]. Jacobin. 2012 May 22.
Available from: http://jacobinmag.com/blog/2012/05/the-work-of-anti-work-a-response-to-peter-frase/. Accessed 2012 May 23. Archived by WebCite at http://www.webcitation.org/67suffmKj.
"Ackerman responds to Peter Frase’s “Category errors” with a defense of full employment as an important goal for the Left and a critique of Frase’s project of destigmatizing unemployment. According to Ackerman, the stigma attached to unemployment is not an arbitrary prejudice or a manifestation of a simplistic work ethic that holds labor to be intrinsically desirable; it is a consequence of the Left’s fundamental concern with equality. Fairness demands equal sharing of the burdens (including labor), as well as the rewards, of the collective social enterprise of production. The Communist Manifesto had called for “equal liability of all to work.” Even privileged elites throughout history have recognized that evasion of work is ethically questionable, and have freely chosen to work in the absence of economic necessity, or have tried to justify refusal of work by claiming that they offer other benefits to society. Normalization of unemployment with a guaranteed income, if possible at all, will embitter and divide the working class. The ultimate elimination of wage labor for all remains a fundamental goal of the Left, but can only be achieved through gradual reduction of working hours under conditions of full employment." (http://dedicto.com/wordpress1/bib/)
2. Francine Mestrum:
"why is the BI not on the agenda of the left if it is so interesting? If the advantages are so clear and irrefutable, and if it even can erode capitalism, why not organize a huge campaign in order to promote it? Why not support the citizens’ initiative?
A first doubt emerges because neoliberals are among the advocates of the BI. The Belgian example of the political party Vivant is clear in that respect. The BI is not a leftwing project. What is the neoliberal objective? To lower labour costs? To eradicate poverty? To give everyone a minimum income with which one can survive?
It is within this liberal framework that many countries already have a ‘negative income tax’: when your income falls below a certain level, the state will pay you the missing amount. Of course, this is different from what the advocates of the BI defend today, but one should never forget that a minimum income is perfectly acceptable in a neoliberal context, whereas a minimum wage is refused for distorting markets.
A second doubt arises concerning the freedom to participate or not in labour markets. Assuming that all people want to give meaning to their life with some form of work or activity, it is perfectly possible nevertheless that some people prefer to do nothing. We have to wonder then who will be prepared to do the burdensome and difficult tasks that remain to be done when there is no serious wage to compensate for it? Or, put differently, do we accept a right to laziness? Or do we think that all socially necessary and useful work has to be distributed fairly and that no one should be allowed to escape? From working in mines to picking fruit or garbage collection, there are some tasks that no one will be prepared to do willingly, out of conviction and with enthusiasm.
The BI exempts the State from doing anything for people above and next to the BI. Even if today’s social protection systems are not meant to fight inequality, they do rise peoples’ incomes and limit inequality. The best tool in the fight against inequality is a fair tax system and this can be maintained when a BI system is introduced. But the responsibility of the State stops when the minimum floor of BI is reached. Social progress through higher incomes stops to be a task of governments and income inequalities can rise.
Questions can also be put concerning the feasibility and the desirability of unconditionality. The freedom given to people is very important, but what if the BI is used for gambling or drinking? Is the State responsible for people who fall off the wayside of minimal protection? And if so, how are governments to justify this help to those who behave ‘correctly’? If not, is it possible to let people just die from hunger? Can conditionality not also be seen as reciprocity? It would mean that people have to behave correctly if they do not want their BI be withdrawn, whereas public authorities are committed to provide people with good quality social services. Or a decent labour market policy. Benefits rarely are totally unconditional and this is probably a good thing. Citizenship is based on a relationship between citizens and the state. It is an implicit agreement on rights and duties for all.
By eliminating non wage labour costs, labour will become far more cheaper for employers. The advantage for them is much more important than for workers who still will have to fight for decent labour conditions. In whatever way the BI is being financed, it will always be some kind of tax to be paid by everyone. And that means that labour costs which are now paid by workers and employers as part of the wage cost, will have to be paid by the whole of society, possibly through a higher VAT rate. It thus comes down to a shift from labour costs to costs for society. It is obvious that trade unions are not very keen on such a system. It will become much more difficult to negotiate good labour conditions, certainly when the BI is not high enough to live on. If workers do not only want to survive, but also want a car or a holiday abroad, it will become difficult to put pressure on employers. It is clear that trade unions will lose much of their power. The freedom not to work is very relative and is only valid when one is satisfied with a life in relative poverty. Chances are real that wages above the BI will remain very limited. An unconditional income outside of the labour market cannot influence that labour market. Contrary to the thesis that capitalism is being eroded, it is possible that one ends up with a capitalism without a labour market and that employers pass on as many costs as possible to the whole of society.
Finally the main questions concern the amount of the BI.
How much? How to finance?
In Vivant Europe’s proposal the idea is to have a BI amounting to 50 % of the guaranteed minimum wage. Children up to 18 years old would receive 25 % of this amount, young people between 18 and 25 years old would receive 75 %, whereas aged people above 65 years would receive 150%.
For Belgium this would mean 700 Euro per month and the system would cost around 24 % of GDP. This is more or less the share now taken by social expenditures.
Pensions, unemployment benefits, family allowances and costs for sabbaticals would disappear. Huge savings are possible on defence, police and cultural policies (because non wage labour costs disappear). The costs for health care would be halved because doctors would not to have pay social security costs.
Vivant also proposes a lowering of company taxes to 15 %, whereas all incomes beneath 1500 Euro per month would be exempted from income tax. Above 1500 Euro per month the tax rate would be 50 %.
The BI is financed through the savings on the current social expenditures and a substantial rise of VAT. The idea is that net wages would remain unchanged.
Apart from the clearly liberal ideology behind Vivant’s proposal – speaking about ‘taxes’ on labour instead of social contributions as being part of wages and on a ‘society of welfare recipients’, this proposal gives rise to serious doubts.
This contribution cannot analyse the detailed amounts, but a first look at the proposals does raise questions about their feasibility and adequacy. It is very improbable that net wages would remain unchanged. It would mean that workers would really gain with these proposals and pensioners would seriously loose.
It is clear that a ‘decent life’ is not possible with 700 Euro per month. Those who work can raise their income. But is it possible to chose not to work if it means you have to live with 700 Euro a month? Is it possible for an aged person to live with 1050 Euro a month, let alone to enjoy your old age?
Many of the arguments in favour of the BI disappear rapidly when translated into concrete amounts. In the European citizens’ initiative it is stated one wants to shift from a ‘compensatory’ system towards an ‘emancipatory’ system, but 700 Euro a month can hardly be said to be sufficient to achieve this.
The amounts for other countries are not any better. In Bulgaria the BI would only cost 5,45 % of GDP but the amount would not rise above 37 Euro per month. Bulgarians will not be too happy.
The current proposals for Germany, Spain and Finland all mention amounts around this same floor as in Belgium. No one proposes an amount up to the poverty line (for Belgium: 1000 Euro per month). Apparently this is too optimistic and this means the BI would not be sufficient to really eradicate poverty." (http://www.globalsocialjustice.eu/index.php?option=com_content&view=article&id=491:the-unconditional-basic-income-a-solution&catid=10:research&Itemid=13)
UBI as Hyperinflationary
By Alexander Kolokotronis and Sam Nakayama:
"Economist Pavlina Tcherneva has argued there could be disastrous results from wide-scale implementation of UBI.
In a paper from 2006, Tcherneva argues that solely implementing UBI would lead to "stagflation," i.e., "low employment and high prices."
- In order to coax [UBI] recipients back into the labour market, employers will need to offer higher wages (which, at first approximation, is a desirable result). However, soon thereafter, these same employers will also raise prices, to cover the increases in wage costs. As a consequence, rising prices will erode the purchasing power of the [UBI] payment, which will affect particularly those recipients who did not return to the labour market. To maintain the objective of the universal guarantee and provide just levels of standard living, there will be pressure to revise the [UBI] benefit upward. If this happens it will further induce some exit from the labour market, drop in output, a compensatory rise in wages and prices and further drop in [UBI] purchasing power. This vicious cycle renders the income guarantee self-defeating. Note that, if the benefit is continually increased -- the income guarantee becomes not just inflationary, but hyperinflationary." (http://www.truth-out.org/op-ed/item/40022-why-socialist-job-guarantees-are-better-than-universal-basic-income)
Defense of Basic Income from the Left
Kathy Weeks (in an interview by Georg Souvlis):
"Ιn your study, The Problem with Work, you put forward a strong argument for Guaranteed and Universal Basic Income. Now there seems to be a growing number of left-wing essays and thinkpieces claiming that Basic Income projects are not inherently leftist and are actually consistent with neoliberal logic and restructuring (basically throwing cash at a problem instead of providing any kind of infrastructural solution). Do you have any further thoughts regarding the Guaranteed and Universal Basic Income, particularly in light of these new left-wing critiques and the concept’s surge in popularity amongst conservatives?
I interpret the growing interest in a Basic Income across the political spectrum as a positive development. Here is how I see it: the demand for a Basic Income is, depending on the terms of the demand, a left-wing demand; however, the politics of the demand are not by any measure straightforward. Whether or not it can improve the lives of a broad crosssection of workers depends on several specifics, most important, on the level of the income that is provided. If it is too low, it risks further subsidizing low wage employers by offering their workers a wage supplement. The demand I support is for a miminal livable income that, insofar as it enables workers to opt out of waged work even temporarily, would force such empoyers to offer better wages and conditions. That said, the politics around this are tricky at best, as it is not unlikely that once won, a Basic Income will be first instituted at a low level. The struggle to then raise the level of income will require additional efforts.
But even if or when it is secured in the form of a minimal livable income, it should be clear that a demand for Basic Income is not a proposal to replace the wage system, but only to loosen its grip on us a bit by providing income for those now shut out of or rendered precarious in relation to waged work, and for those whose contributions to social (re)production that are not now remunerated with wages. It would also give individuals a stronger position from which to negotiate more favorable employment contracts and better enable us to make choices about what kinds of households and intimate relationships we might want to form. While these are not insubstantial benefits, they do not add up to some revolutionary postcapitalist vision.
On the contrary, I think a Basic Income is likely to be the only way capitalism will be able to sustain itself materially and ideologically in the near future as the wage system and family model continue to reveal themselves inadequate to the task of distributing income and organizing productive cooperation. Instead, what a Basic Income could provide is material support for the time and effort necessary to fight for additional reforms and a conceptual opening to think more critically about work and nonwork and more imaginatively about how they might be further transformed. It is in that sense a rather modest demand, but one that I think will enable further political thinking and action." (http://politicalcritique.org/world/2017/souvlis-weeks-feminism-marxism-work-interview/)
Support of Modern Monetary Theory for Basic Income
"Bill Mitchell warns that giving away money is more inflationary than purchasing labor; a basic income would have to be balanced by more vigilant taxation for its value to not be rapidly inflated away. He also believes that a job guarantee is more transformative in expanding our notions of “work” and political participation. While the implementation of such a program will no doubt be messy and imperfect, excessive fears of “make work” suggest a lack of imagination. If we run out of trees to plant and day cares to staff, everyone can just work fewer hours.
Job and income guarantees are complementary policies. One ensures that those who want to participate in society can do so and be formally recognized and compensated for their contribution. The other ensures that no one is compelled to work if they don’t want to. MMT sees the former as the most direct path to both full employment and price stability, but the programs are by no means mutually exclusive." (http://thenewinquiry.com/essays/the-world-according-to-modern-monetary-theory/)
* 1. Frase, Peter. Category errors [Internet]. Jacobin. 2012 May 22.
Available from: http://jacobinmag.com/blog/2012/05/category-errors/. Accessed 2012 May 23. Archived by WebCite at http://www.webcitation.org/67syocvw8. [anchor]
"Frase cites socioeconomic research showing that the psychological stress resulting from unemployment is considerably reduced when the unemployed are socially recategorized as “retired”. He infers that the unhappiness of the unemployed is largely due to the social stigma attached to their condition, and that the Left should make it a high priority to “combat the ideology that equates working for wages with contributing to society.” Frase also advocates the adoption of a “Basic Income” or UBI policy that guarantees everyone a minimum income independently of work:
- 'In the short term, job creation may be a necessary response to our immediate crisis. But the longer term project is to disconnect waged work from its associations with material well-being and with social prestige'." (http://dedicto.com/wordpress1/bib/)
2. Francime Mestrum:
"The proposal to give all citizens, irrespective of their status, income or job a certain amount of money is rather old. It is based on the idea that all have a right to an ‘adequate standard of living’ as is stated in the International Pact for Economic, Social and Cultural Rights, and the fact that States have to guarantee it.
In Belgium, the idea was promoted by the philosopher Philippe Van Parijs in order to promote social justice and given the fact that ‘equality of opportunity’ cannot really be achieved. Today, the idea is promoted by the political party Vivant and some greens. More recently, the idea was strongly promoted by Guy Standing in his book on ‘the precariat’..
There are convincing arguments to defend a system of BI.
The first one relates to citizenship, this is the idea that all human beings are equal and have equal rights. It is unacceptable to make distinctions in function of job or status. All citizens of a national community should in the same way be able to share in nationally produced wealth. In this way, the BI creates a kind of real freedom instead of the formal freedom of an abstract citizenship.
This is directly linked to the idea of universalism. Our systems of social security are, in theory, also universal but far from it in practice. By treating everyone in the same way and giving equal rights, one can work towards an effective social integration. Targeted and selective allowances should not exist. This will make an end to stigmatization, the frequent manifestations of clientelism, the biased assessments and the high administrative costs linked to the management of granting benefits and detecting possible fraud.
The BI is unconditional, which means that huge targeting and management costs can indeed be avoided. The amount can differ in function of age – children and youth on the one hand, aged people on the other hand will receive lower or higher amounts. This is the only criterion to be taken into account.
In the proposal of the Finnish Left Alliance it is stated that such a BI gives all people the possibility to work on the labour market or not. Those who prefer to dedicate their time to artistic activities or to social and/or political work, can do so. No one is obliged to go and look for a job, which can only have an emancipating and liberating impact. No one can be put on pressure to participate in the labour market.
The BI also makes an end to ‘the precariat’, people who today have no rights and therefore no interest in defending the rights of social security. Migrants and refugees can now participate in the labour market precisely because they do not respect the social rules and can offer their labour force at a much lower price. By eliminating labour costs above the net paid wages, the BI can make an end to the ‘black’ or ‘informal’ labour market which is based on competition.
By also eliminating the pressure to look for a job or to create jobs, it would no longer be necessary to subsidize companies.
With a BI system, people would be free to participate or not in the labour market. Labour would become much cheaper, not only because non wage labour costs would disappear but also because employers would not be willing to continue to pay the same net wage above the BI. A labour income certainly would help to raise the living standards above the BI and workers will be able to exert more pressure on employers since they are not obliged to stay on the labour market. Employers would thus be stimulated to offer attractive labour conditions so as to attract sufficient workers.
Contrary to our social security systems the BI cannot be made responsible for the high labour costs or for distorting labour markets. BI is indeed a distribution of incomes but outside the market for labour and goods. It is not a simple distribution from rich to poor, since the rich would also receive the same amount of money.
Finally, the BI is an effective tool to eradicate poverty, at least if the amount is high enough. The BI gives freedom to the poor who are now constantly harassed in order to receive their conditional benefits and have to give evidence of their willingness to work and to justify their expenses.
These advantages are very important and can advance a real systemic, progressive and ecological change. It could mean the end of capitalist labour relations by giving workers their freedom. Workers would indeed no longer be obliged to sell their labour force in order to survive. Labour relations can be based on free contracts that can be terminated if labour circumstances become unsatisfactory." (http://www.globalsocialjustice.eu/index.php?option=com_content&view=article&id=491:the-unconditional-basic-income-a-solution&catid=10:research&Itemid=13)
The basic income and the Commons sphere
Vasilis Kostakis, from http://www.re-public.gr/en/?p=418
"The need of adopting a new environmental policy is imperative, but there is a common understanding that whatever we do, we can’t eliminate pollution. It is a part of the system’s entropy that, fortunately or unfortunately, will always exist. The reduction of the level of environmental pollution to a viable frame is our responsibility. In addition, whether they pollute the environment or not, many financial activities use our common wealth for producing services and goods and making profit (while this profit is not re-distributed back to society-even a part of it-and it is accumulated by a few people, despite the fact that for its creation a part of the field of the Commons was used as a means of production). The radio station uses air frequencies for its operation, whereas hydroelectric companies use water wealth for electric energy production, which will be later sold to consumers. Coming back to one of the questions of this special issue, I will try to answer tentatively how can environmental policy become connected to the fight against world poverty.
Based on all the above hypotheses, I argue that a new environmental policy that will include the institutionalization of the field of the Commons, can contribute to the fight against local and world poverty, through the establishment of a universal income. Enterprises, states, and even individuals, that pollute the environment through various ways (waste, nuclear tests, etc.) or television stations and telephone companies that use the air (the air consists a means of production for them) for the transmission of their signals, will pay a large amount of money to a Commons fund, as they use or affect, directly or indirectly, part of our common wealth. The money that will be raised through this process, will create a reserve fund, which will support the distribution of the basic universal income targeting poorer social groups. An example of environmental protection (it has to do with the reduction of carbon dioxide emissions) and, at the same time, of fundraising for the universal income is the cap and dividend system, that is being developed by the Onthecommons Organization. The idea behind this method is relatively simple: a limited number of pollution licences is issued (according to official reduction objectives), and then sold through auction to the pollutants through, while the money raised are not spent by governments, but distributed equally to all citizens. As the poorer social groups are those who pollute less, they benefit more by such a policy measure, according to Barnes. In a few words, the cap and dividend system is a way for reducing carbon dioxide emissions and protecting household incomes with one stroke. The pillar of this system is the creation of a trust that can be run either by the government, or by a non-profit company. This trust will issue pollution licences and will distribute the money raised through their auction to all citizens."
Belgium: Debate on the Basic Income
"On the occasion of the publication of "L'allocation universelle", an introductory book on basic income by Philippe Van Parijs and Yannick Vanderborght (see NewsFlash 32), the Belgian media seem to be paying renewed attention to the idea, at least in the French-speaking part of the country. On Sunday June 12, 2005, both authors were invited to talk for one hour about basic income in a live broadcast of the public radio RTBF. On June 22, 2005, one of the main Francophone daily newspapers, "La Libre Belgique", published a double-page debate on the topic.
Van Parijs and Vanderborght restated some of the arguments presented in their essay, and tried to show their relevance in the Belgian context. Three intellectuals were asked to give their opinion on the feasibility and desirability of the proposal. Claudine Leleux (University of Brussels) argued in favour of basic income and explained why she feels most attracted by a version of the idea defended by Jean-Marc Ferry, a French but Brussels-based philosopher. The two others were much more skeptical. Jean-Marie Harribey (University of Bordeaux IV and member of the Scientific Council of ATTAC) criticized the idea of disconnecting work and income, arguing that the left should rather go for full employment. Paul Palsterman (scientific council of Belgium's main trade-union CSC-ACV) argued that basic income proponents were too skeptical about the remaining possibilities of collective action in the field of welfare.
Finally, on July 9, 2005, the picture of the front cover of the popular weekly "Télé Moustique" featured a typical manager in his three-piece suit, lounging on the beach. It ran as a title: "Tomorrow, paid to do nothing?" While in a long piece a journalist presented the basic income idea and the international debate, including a reference to the Alaskan Permanent Fund Dividend, in a short interview unionist Paul Palsterman restated again some of his main objections. "The BI proponents", he said, "might be good science-fiction authors, but they are bad philosophers."
Basic Income in the Netherlands, see https://en.wikipedia.org/wiki/Basic_income_in_the_Netherlands
- this is one of the best treatments of the arguments pro and contra basic income that I have seen recently: https://iea.org.uk/wp-content/uploads/2017/10/ecaf-oct17-davies.pdf
- Karl Widerquist, “The Basic Income Guarantee Experiments of the 1970s: A Quick Summary of Results,” Basic Income News, December 3, 2017, https://basicincome.org/news/2017/12/basic-income-guarantee-experiments-1970s-quick-summary-results/.
- The multiplier effect has already been demonstrated by a large-scale basic income experiment in Kenya. See Dylan Matthews, “A Charity Dropped a Massive Stimulus Package on Rural Kenya – and Transformed the Economy,” Vox, November 25, 2019, https://www.vox.com/future-perfect/2019/11/25/20973151/givedirectly-basic-income-kenya-study-stimulus; full paper at https://www.givedirectly.org/wp-content/uploads/2019/11/General-Equilibrium-Effects-of-Cash-Transfers.pdf.
- Finland’s basic income experiment found that removing the condition that the unemployed had to search for jobs made no difference to employment. In fact, recipients had slightly more days in employment than the control group. See “Results of Finland’s Basic Income Experiment: Small employment effect, better perceived economic security and mental wellbeing,” KELA, May 6, 2020, https://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/results-of-the-basic-income-experiment-small-employment-effects-better-perceived-economic-security-and-mental-wellbeing.
- The pilot in Ontario, Canada, induced a substantial increase in voluntary work. See Mohammad Ferdosi, Tom McDowell, Wayne Lewchuk, and Stephanie Ross, Southern Ontario’s Basic Income Experience (Hamilton, ON: Hamilton Round Table for Poverty Reduction, McMaster University, and Hamilton Community Foundation, 2020), 55, https://labourstudies.mcmaster.ca/documents/southern-ontarios-basic-income-experience.pdf.
- Pilots in developing countries indicated increases in work as poor people were enabled to invest in income-generating activities and cope with work-related costs such as transport and childcare. See Guy Standing, Basic Income: And How We Can Make It Happen (London: Penguin, 2017), chapter 10 [published in the USA as Basic Income: A Guide for the Open-Minded (New Haven, CT: Yale University Press, 2017)].
Resources in English
- a good overview of the basic income debate in the U.S. and Canada, focusing on the Alaska experience.
- an interview with Philippe Van Parijs, justifying the idea of the basic income
- a critique of the basic income proposals, by Jon Elster
- Is basic income exploitation of those who work?, by Stuart White
Article by Andrea Fumagalli (not available online yet): http://multitudes.samizdat.net/Basic-Income-Sustainability-and.html
- WIDERQUIST, Karl, LEWIS, Michael Anthony & PRESSMAN, Steven (2005). The Ethics and Economics of the Basic Income Guarantee. Aldershot: Ashgate, ISBN (Hardback).
"Governments in the US, the UK and other nations around the world routinely consider and, in some cases, experiment with reforms of their income support systems. The basic income guarantee, a universal unconditional income grant, has received increasing attention from scholars as an alternative to the kinds of reforms that have been implemented. This book explores the political, sociological, economic, and philosophical issues of the basic income guarantee.Tracing the history of the idea, from its origins in the late eighteenth century through its political vogue in the 1970s, when the Family Assistance Plan narrowly missed passage in the US Congress, it also examines the philosophical debate over the issue. The book is designed to foster a climate of ideas amongst those specifically interested in the income support policies and more widely for those concerned with public, welfare and labour economics. Its coverage will enable readers to obtain an in depth grounding in the topic, regardless of their position in the debate." Publisher's website: http://www.ashgate.com/
RAVENTOS, Daniel (2007), Basic Income: The Material Conditions of Freedom, London: Pluto Press, 240pp., ISBN: 9780745326290 (Paperback), ISBN: 9780745326306 (Hardback), http://www.plutobooks.com/
Basic Income is a policy idea that could help us revolutionise the way we organise society, Daniel Raventós argues. Raventós is chair of the Spanish Basic Income Network, and Professor at the University of Barecelona. His book is a first-class introduction to basic income - what it is, how we can organise it, and how it can benefit the majority in different spheres of their lives. Basic Income is simply the idea that everyone in a given society has a right to a minimal income. This is paid by the state out of taxation. Unconditionally set at a subsistence level, it would take the place of unemployment and other conditional benefits, and enhance effective freedom. This would bring profound social changes, Raventos argues. The campaign in favour of basic income is growing and governments are beginning to take notice. This is a clear, concise guide to the principles and practicalities of this revolutionary idea.
According to Philip Pettit, L.S. Rockefeller University Professor of Politics and Human Values, Princeton University, Raventos' book is 'The best introduction. It offers a first rate history of the idea, develops a powerful case in its support, and explores all its implications'. In his endorsement, Philippe Van Parijs, Professor of Economic and Social Ethics at the Université Catholique de Louvain and Visiting Professor of Philosophy at Harvard University indicates that "in several countries, no one has contributed more to the public emergence of [basic income] than Daniel Raventós.'
Three books based on American movements are listed here at http://www.progress.org/dividend/cdbooks.html
- Arneson, Fred Block, Harry Brighouse, Michael Burawoy, Joshua Cohen, Nancy Folbre , Andrew Levine, Mieke Meurs, Louis Putterman, Joel Rogers, Debra Satz, Julius Sensat, William H. Simon, Frank Thompson, Thomas E. Weisskopf, Erik Olin Wright. Edited and introduced by Erik Olin Wright (Volume II, Real Utopias Project Series, London: Verso, 1996)
- Redesigning Distribution: basic income and stakeholder grants as cornerstones of a more egalitarian capitalism, by Bruce Ackerman, Ann Alstott and Philippe van Parijs, with contributions by Barbara Bergmann, Irv Garfinkle, Chien-Chung Huang , Wendy Naidich, Julian LeGrand, Carole Pateman, Guy Standing, Stuart White, and Erik Olin Wright (Volume V of the Real Utopias Project Series, London: Verso, in press 2005)
Two documents from Eric Olin Wright:
A 35-page summary from Philippe Van Parijs
Basic Income Studies (BIS)
(the website below doesn't exist anymore, description left for reference)
Basic Income Studies: An International Journal of Basic Income Research (BIS) is a new international journal devoted to the critical discussion of and research into universal basic income and related policy proposals. BIS is published twice a year by an international team of scholars, with support from Red Renta Basica, the Basic Income Earth Network and the U.S. Basic Income Guarantee Network.
The inaugural issue of BIS will appear in 2006 with articles by Joel Handler, Stuart White and Yannick Vanderborght, and a retrospective on Robert van der Veen and Philippe Van Parijs's seminal article on "A Capitalist Road to Communism". The retrospective includes a reprint of the original article and a set of specially written comments by Gerald Cohen, Erik Olin Wright, Doris Schroeder, Catriona McKinnon, Harry Dahms, Gijs van Donselaar and Andrew Williams.
BIS is currently inviting contributions from academic scholars, researchers, policy-makers and welfare advocates on a wide variety of topics pertaining to the universal welfare debate. The editors are interested in publishing research articles, book reviews, and short, accessible commentaries discussing aspects of basic income or a closely related topic. BIS accepts research from all main academic disciplines, and welcomes research that pushes the debate into previously uncharted areas. BIS aims to promote the research of young scholars as well as seasoned researchers, and the editors particularly welcome contributions from non-Western countries.
For more information, please visit our website at www.basicincomestudies.org or contact the editors, Jurgen De Wispelaere and Karl Widerquist. Scholars who want to have their books considered for review or who would like to review a book for BIS should contact Sandra Gonzalez-Bailon.
Basic Income Earth Network is a global resource.
The U.S. Basic Income Guarantee Network (The USBIG Network) is an informal network promoting discussion of the basic income guarantee in the United States.
The Citizen Policies Institute is a Basic Income advocacy group in the United States.
Basic Income Advocacy Organisations
http://www.usbig.net/ : website of the U.S. Basic Income Guarantee Network.
http://www.basicincome.org/bien/ : website of the Basic Income Earth Network.
www.citizensincome.org : website of the Citizen's Income Trust, U.K.
www.basicincome.qut.edu.au : website of Basic Income Guarantee Australia
www1.doshisha.ac.jp/~tyamamor/bijnenglish.html : website of the Basic Income Japanese Network
www.ingresociudadano.org. : website of Red Argentina de Ingreso Ciudadano
http://www.icu.org.mx/ : website of Red Mexicana Ingreso Ciudadano Universal
http://www.redrentabasica.org/ : website of Red Renta Basica, Spain
http://www.bin-italia.org/ : website of Basic Income Network Italy
http://www.grundeinkommen.at/ : website of Netzwerk Grundeinkommen und sozialer Zusammenhalt, Austria
http://www.grundeinkommen.de/ : website of Netzwerk Grundeinkommen, Germany
http://www.borgerloen.dk/ : website of Borgerlønsbevægelsen, Denmark
http://www.basisinkomen.nl/ : website of Vereniging Basisinkomen, Netherlands
http://www.globalincome.org/ : website of the Global Basic Income Foundation