Category Archives: Basic Income

Give People Money. How a Universal Basic Income would end poverty, revolutionise work, and remake the world – Annie Lowrey.

A UBI is an ethos as much as it is a technocratic policy proposal. It contains within it the principles of universality, unconditionality, inclusion, and simplicity, and it insists that every person is deserving of participation in the economy, freedom of choice, and a life without deprivation. Our governments can and should choose to provide those things.

Surely just giving people money couldn’t work. Or could it?

Imagine if every month the government deposited £1000 in your bank account, with no strings attached and nothing expected in return. It sounds crazy, but Universal Basic Income (UBI) has become one of the most influential policy ideas of our time, backed by thinkers on both the left and the right. The founder of Facebook, Obama’s chief economist, governments from Canada to Finland are all seriously debating some form of UBI.

In this sparkling and provocative book, economics writer Annie Lowrey looks at the global UBI movement. She travels to Kenya to see how UBI is lifting the poorest people on earth out of destitution, India to see how inefficient government programs are failing the poor, South Korea to interrogate UBI’s intellectual pedigree, and Silicon Valley to meet the tech titans financing UBI pilots in expectation of a world with advanced artificial intelligence and little need for human labour. She also examines the challenges the movement faces: contradictory aims, uncomfortable costs, and most powerfully, the entrenched belief that no one should get something for nothing.

The UBI movement is not just an economic policy, it also calls into question our deepest intuitions about what we owe each other and what activities we should reward and value as a society.

Annie Lowrey is a contributing editor for The Atlantic, where she covers economic policy. She is a frequent guest on CNN, MSNBC, and NPR. She is a former writer for the New York Times, the New York Times Magazine, and Slate, among other publications.

Wages for Breathing

ONE OPPRESSIVELY HOT and Muggy day in July, I stood at a military installation at the top of a mountain called Dorasan, overlooking the demilitarized zone between South Korea and North Korea. The central building was painted in camouflage and emblazoned with the hopeful phrase “End of Separation, Beginning of Unification.” On one side was a large, open observation deck with a number of telescopes aimed toward the Kaesong industrial area, a special pocket between the two countries where, up until recently, communist workers from the North would come and toil for capitalist companies from the South, earning $90 million in wages a year. A small gift shop sold soju liquor made by Northern workers and chocolate-covered soybeans grown in the demilitarized zone itself. (Don’t like them? Mail them back for a refund, the package said.)

On the other side was a theater whose seats faced not a movie screen but windows looking out toward North Korea. In front, there was a labeled diorama. Here is a flag. Here is a factory. Here is a juche-inspiring statue of Kim ll Sung. See it there? Can you make out his face, his hands? Chinese tourists pointed between the diorama and the landscape, viewed through the summer haze.

Across the four-kilometer-wide demilitarized zone, the North Koreans were blasting propaganda music so loudly that I could hear not just the tunes but the words. I asked my tour guide, Soo-jin, what the song said. “The usual,” she responded. “Stuff about how South Koreans are the tools of the Americans and the North Koreans will come to liberate us from our capitalist slavery.” Looking at the denuded landscape before us, this bit of pomposity seemed impossibly sad, as did the incomplete tunnel from North to South scratched out beneath us, as did the little Potemkin village the North Koreans had set up in sight of the observation deck. It was supposedly home to two hundred families, who Pyongyang insisted were working a collective farm, using a child care center, schools, a hospital. Yet Seoul had determined that nobody had ever lived there, and the buildings were empty shells. Comrades would come turn the lights on and off to give the impression of activity. The North Koreans called it “peace village”; Soo-jin called it “propaganda village.”

A few members of the group I was traveling with, including myself, teared up at the stark difference between what was in front of us and what was behind. There is perhaps no place on earth that better represents the profound life-and-death power of our choices when it comes to government policy. Less than a lifetime ago, the two countries were one, their people a polity, their economies a single fabric. But the Cold War’s ideological and political rivalry between capitalism and communism had ripped them apart, dividing families and scarring both nations. Soo-jin talked openly about the separation of North Korea from the South as “our national tragedy.”

The Republic of Korea, the South, rocketed from third-world to first-world status, becoming one of only a handful of countries to do so in the postwar era. In 1960, about fifteen years after the division of the peninsula, its people were about as wealthy as those in the Ivory Coast and Sierra Leone. In 2016, they were closer income-wise to those in Japan, its former colonial occupier, and a brutal one. Citigroup now expects South Korea to be among the most prosperous countries on earth by 2040, richer even than the United States by some measures.

Yet the Democratic People’s Republic of Korea, the North, has faltered and failed, particularly since the 1990s. It is a famine-scarred pariah state dominated by governmental graft and military buildup. Rare is it for a country to suffer such a miserable growth pattern without also suffering from the curse of natural disasters or the horrors of war. As of a few years ago, an estimated 40 percent of the population was living in extreme poverty,‘ more than double the share of people in Sudan. Were war to befall the country, that proportion would inevitably rise.

Even from the remove of the observation deck, enveloped in steam, hemmed in by barbed wire, patrolled by passive young men with assault rifles, the difference was obvious. You could see it. I could see it. The South Korean side of the border was lush with forest and riven with well built highways. Everywhere, there were power lines, trains, docks, high-rise buildings. An hour south sat Seoul, as cosmopolitan and culturally rich a city as Paris, with far better infrastructure than New York or Los Angeles. But the North Korean side of the border was stripped of trees. People had perhaps cut them down for firewood and basic building supplies, Soo-jin told me. The roads were empty and plain, the buildings low and smalI. So were the people: North Koreans are now measurably shorter than their South Korean relatives, in part due to the stunting effects of malnutrition.

South Korea and North Korea demonstrated, so powerfully demonstrated, that what we often think of as economic circumstance is largely a product of policy. The way things are is really the way we choose for them to be. There is always a counterfactual. Perhaps that counterfactual is not as stark as it is at the demilitarized zone. But it is always there.

Imagine that a check showed up in your mailbox or your bank account every month.

The money would be enough to live on, but just barely. It might cover a room in a shared apartment, food, and bus fare. It would save you from destitution if you had just gotten out of prison, needed to leave an abusive partner, or could not find work. But it would not be enough to live particularly well on. Let’s say that you could do anything you wanted with the money. It would come with no strings attached. You could use it to pay your bills. You could use it to go to college, or save it up for a down payment on a house. You could spend it on cigarettes and booze, or finance a life spent playing Candy Crush in your mom’s basement and noodling around on the Internet. Or you could use it to quit your job and make art, devote yourself to charitable works, or care for a sick child. Let’s also say that you did not have to do anything to get the money. It would just show up every month, month after month, for as long as you lived. You would not have to be a specific age, have a child, own a home, or maintain a clean criminal record to get it. You just would, as would every other person in your community.

This simple, radical, and elegant proposal is called a universal basic income, or UBI. It is universal, in the sense that every resident of a given community or country receives it. It is basic, in that it is just enough to live on and not more. And it is income.

The idea is a very old one, with its roots in Tudor England and the writings of Thomas Paine, a curious piece of intellectual flotsam that has washed ashore again and again over the last half millennium, often coming in with the tides of economic revolution. In the past few years, with the middle class being squeezed, trust in government eroding, technological change hastening, the economy getting Uberized, and a growing body of research on the power of cash as an antipoverty measure being produced, it has vaulted to a surprising prominence, even pitching from airy hypothetical to near-reality in some places. Mark Zuckerberg, Hillary Clinton, the Black Lives Matter movement, Bill Gates, Elon Musk, these are just a few of the policy proposal’s flirts, converts, and supporters. UBI pilots are starting or ongoing in Germany, the Netherlands, Finland, Canada, and Kenya, with India contemplating one as well. Some politicians are trying to get it adopted in California, and it has already been the subject of a Swiss referendum, where its reception exceeded activists’ expectations despite its defeat.

Why undertake such a drastic policy change, one that would fundamentally alter the social contract, the safety net, and the nature of work? UBI’s strange bedfellows put forward a dizzying kaleidoscope of arguments, drawing on everything from feminist theory to environmental policy to political philosophy to studies of work incentives to sociological work on racism.

Perhaps the most prominent argument for a UBI has to do with technological unemployment, the prospect that robots will soon take all of our jobs. Economists at Oxford University estimate that about half of American jobs, including millions and millions of white-collar ones, are susceptible to imminent elimination due to technological advances. Analysts are warning that Armageddon is coming for truck drivers, warehouse box packers, pharmacists, accountants, legal assistants, cashiers, translators, medical diagnosticians, stockbrokers, home appraisers, I could go on.

In a world with far less demand for human work, a UBI would be necessary to keep the masses afloat, the argument goes. “I’m not saying I know the future, and that this is exactly what’s going to happen,” Andy Stern, the former president of the two-million member Service Employees International Union and a UBI booster, told me. But if “a tsunami is coming, maybe someone should figure out if we have some storm shutters around.”

A second common line of reasoning is less speculative, more rooted in the problems of the present rather than the problems of tomorrow. It emphasizes UBl’s promise at ameliorating the yawning inequality and grating wage stagnation that the United States and other high-income countries are already facing. The middle class is shrinking. Economic growth is aiding the brokerage accounts of the rich but not the wallets of the working classes. A UBl would act as a straightforward income support for families outside of the top 20 percent, its proponents argue. It would also radically improve the bargaining power of workers, forcing employers to increase wages, add benefits, and improve conditions to retain their talent. Why take a crummy job for $7.25 an hour when you have a guaranteed $1,000 a month to fall back on? “In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety,” argues the Economic Security Project, a new UBI think tank and advocacy group.

In addition, a UBI could be a powerful tool to eliminate deprivation, both around the world and in the United States. About 41 million Americans were living below the poverty line as of 2016. A $1,000-a-month grant would push many of them above it, and would ensure that no abusive partner, bout of sickness, natural disaster, or sudden job loss means destitution in the richest civilization that the planet has ever known. This case is yet stronger in lower income countries. Numerous governments have started providing cash transfers, if not universal and unconditional ones, to reduce their poverty rates, and some policymakers and political parties, pleased with the results, are toying with providing a true UBI. In Kenya, a U.S.-based charity called GiveDirectly is sending thousands of adults about $20 a month for more than a decade to demonstrate how a UBl could end deprivation, cheaply and at scale. “We could end extreme poverty right now, if we wanted to,” Michael Faye, GiveDirectly’s cofounder, told me.

A UBI would end poverty not just effectively, but also efficiently, some of its libertarian-leaning boosters argue. Replacing the current American welfare state with a UBI would eliminate huge swaths of the government’s bureaucracy and reduce state interference in its citizens’ lives: Hello UBI, good-bye to the Departments of Health and Human Services and Housing and Urban Development, the Social Security Administration, a whole lot of state and local offices, and much of the Department of Agriculture. “Just giving people money is a very natural solution,” says Charles Murray of the American Enterprise Institute, a right-of center think tank. “It’s a way of cutting the Gordian knot. You don’t need to be drafting ever more sophisticated solutions to our problems.”

Protecting against a robot apocalypse, providing workers with bargaining power, jump-starting the middle class, ending poverty, and reducing the complexity of government: It sounds pretty good, right? But a UBI means that the government would send every citizen a check every month, eternally and regardless of circumstance. That inevitably raises any number of questions about fairness, government spending, and the nature of work.

When I first heard the idea, I worried about UBl’s impact on jobs. A $1,000 check arriving every month might spur millions of workers to drop out of the labor force, leaving the United States relying on a smaller and smaller pool of workers for taxable income to be distributed to a bigger and bigger pool of people not participating in paid labor. This seems a particularly prevalent concern given how many men have dropped out of the labor force of late, pushed by stagnant wages and pulled, perhaps, by the low-cost marvels of gaming and streaming. With a UBI, the country would lose the ingenuity and productivity of a large share of its greatest asset: its people. More than that, a UBI implemented to fight technological unemployment might mean giving up on American workers, paying them off rather than figuring out how to integrate them into a vibrant, techfueled economy. Economists of all political persuasions have voiced similar concerns.

And a UBI would do all of this at extraordinary expense. Let’s say that we wanted to give every American $1,000 a month in cash. Back-of-the-envelope math suggests that this policy would cost roughly $3.9 trillion a year. Adding that kind of spending on top of everything else the government already funds would mean that total federal outlays would more than double, arguably requiring taxes to double as well. That might slow the economy down, and cause rich families and big corporations to flee offshore. Even if the government replaced Social Security and many of its other antipoverty programs with a UBI, its spending would still have to increase by a number in the hundreds of billions, each and every year.

Stepping back even further: Is a UBI really the best use of scarce resources? Does it make any sense to bump up taxes in order to give people like Mark Zuckerberg and Bill Gates $1,000 a month, along with all those working-class families, retirees, children, unemployed individuals, and so on? Would it not be more efficient to tax rich people and direct money to poor people through means-testing, as programs like Medicaid and the Supplemental Nutrition Assistance Program, better known as SNAP or food stamps, already do? Even in the socialist Nordic countries, state support is generally contingent on circumstance. Plus, many lower-income and middle-income families already receive far more than $1,000 a month per person from the government, in the United States and in other countries. If a UBI wiped out programs like food stamps and housing vouchers, is there any guarantee that a basic income would be more fair and effective than the current system?

There are more philosophical objections to a UBI too. In no country or community on earth do individuals automatically get a pension as a birthright, with the exception of some princes, princesses, and residents of petrostates like Alaska. Why should we give people money with no strings attached? Why not ask for community service in return, or require that people at least try to work? Isn’t America predicated on the idea of pulling yourself up by your bootstraps, not on coasting by on a handout?

As a reporter covering the economy and economic policy in Washington, I heard all of these arguments for and objections against, watching as an obscure, never before tried idea became a global phenomenon. Not once in my career had I seen a bit of social-policy arcana go viral. Search interest in UBI more than doubled between 2011 and 2016, according to Google data.“ UBl barely got any mention in news stories as of the mid 2000s, but since then the growth has been exponential. It came up in books, at conferences, in meetings with politicians, in discussions with progressives and libertarians, around the dinner table.

I covered it as it happened. I wrote about that failed Swiss referendum, and about a Canadian basic income experiment that has provided evidence for the contemporary debate. I talked with Silicon Valley investors terrified by the prospect of a jobless future and rode in a driverless car, wondering how long it would be before artificial intelligence started to threaten my job. I chatted with members of Congress on both sides of the aisle about the failing middle class and whether the country needed a new, big redistributive policy to strengthen it. I had beers with European intellectuals enthralled with the idea. I talked with Hill aides convinced that a UBI would be a part of a 2020 presidential platform. I spoke with advocates certain that in a decade, millions of people around the world would have a monthly check to fall back on, or else would make up a miserable new precariat. I heard from philosophers convinced that our understanding of work, our social contract, and the underpinnings of our economy were about to undergo an epochal transformation.

The more I learned about UBI, the more obsessed I became with it, because it raised such interesting questions about our economy and our politics. Could libertarians in the United States really want the same thing as Indian economists as the Black Lives Matter protesters as Silicon Valley tech pooh-bahs? Could one policy be right for both Kenyan villagers living on 60 cents a day and the citizens of Switzerland’s richest canton? Was UBI a magic bullet, or a policy hammer in search of a nail? My questions were also philosophical. Should we compensate uncompensated care workers? Why do we tolerate child poverty, given how rich the United States is? Is our safety net racist? What would a robot jobs apocalypse actually look like?

I set out to write this book less to describe a burgeoning international policy movement or to advocate for an idea, than to answer those questions for myself. The research for it brought me to villages in remote Kenya, to a wedding held amid monsoon rains in one of the poorest states in India, to homeless shelters, to senators’ offices. I interviewed economists, politicians, subsistence farmers, and philosophers. I traveled to a UBI conference in Korea to meet many of the idea’s leading proponents and deepest thinkers, and stood with them at the DMZ contemplating the terrifying, heartening, and profound effects of our policy choices.

What I came to believe is this:

A UBI is an ethos as much as it is a technocratic policy proposal. It contains within it the principles of universality, unconditionality, inclusion, and simplicity, and it insists that every person is deserving of participation in the economy, freedom of choice, and a life without deprivation. Our governments can and should choose to provide those things, whether through a $1,000-a-month stipend or not.

This book has three parts. First, we’ll look at the issues surrounding UBI and work, then UBI and poverty, and finally UBI and social inclusion. At the end, we’ll explore the promise, potential, and design of universal cash programs. I hope that you will come to see, as I have, that there is much to be gained from contemplating this complicated, transformative, and mind-bending policy.

Chapter One

The Ghost Trucks

THE NORTH AMERICAN International auto show is a gleaming, roaring affair. Once a year, in bleakest January, carmakers head to the Motor City to show off their newest models, technologies, and concept vehicles to industry figures, the press, and the public. Each automaker takes its corner of the dark, carpeted cavern of the Cobo Center and turns it into something resembling a game-show set: spotlights, catwalks, light displays, scantily clad women, and vehicle after vehicle, many rotating on giant lazy Susans. I spent hours at a recent show, ducking in and out of new models and talking with auto executives and sales representatives. I sat in an SUV as sleek as a shark, the buttons and gears and dials on its dash-board replaced with a virtual cockpit straight out of science fiction. A race car so aerodynamic and low that I had to crouch to get in it. And driverless car after driverless car after driverless car.

The displays ranged in degrees of technological spectacle from the cool to the oh-my-word. One massive Ford truck, for instance, offered a souped-up cruise control that would brake for pedestrians and take over stop-and-go driving in heavy traffic. “No need to keep ramming the pedals yourself,” a representative said as l gripped the oversize steering wheel.

Across the floor sat a Volkswagen concept car that looked like a hippie caravan for aliens. The minibus had no door latches, just sensors. There was a plug instead of a gas tank. On fully autonomous driving mode, the dash swallowed the steering wheel. A variety of lasers, sensors, radar, and cameras would then pilot the vehicle, and the driver and front-seat passenger could swing their seats around to the back, turning the bus into a snug, space-age living room. “The car of the future!” proclaimed Klaus Bischoff, the company’s head of design.

It was a phrase that I heard again and again in Detroit. We are developing the cars of the future. The cars of the future are coming. The cars of the future are here. The auto market, I came to understand, is rapidly moving from automated to autonomous to driverless. Many cars already offer numerous features to assist with driving, including fancy cruise controls, backup warnings, lanekeeping technology, emergency braking, automatic parking, and so on. Add in enough of those options, along with some advanced sensors and thousands of lines of code, and you end up with an autonomous car that can pilot itself from origin to destination. Soon enough, cars, trucks, and taxis might be able to do so without a driver in the vehicle at all.

This technology has gone from zero to sixty, forgive me, in only a decade and a half. Back in 2002, the Defense Advanced Research Projects Agency, part of the Department of Defense and better known as DARPA, announced a “grand challenge,” an invitation for teams to build autonomous vehicles and race one another on a 142-mile desert course from Barstow, California, to Primm, Nevada. The winner would take home a cool million. At the marquee event, none of the competitors made it through the course, or anywhere close. But the promise of prize money and the publicity around the event spurred a wave of investment and innovation. “That first competition created a community of innovators, engineers, students, programmers, offroad racers, backyard mechanics, inventors, and dreamers who came together to make history by trying to solve a tough technical problem,” said Lt. Col. Scott Wadle of DARPA. “The fresh thinking they brought was the spark that has triggered major advances in the development of autonomous robotic ground vehicle technology in the years since.”

As these systems become more reliable, safer, and cheaper, and as government regulations and the insurance markets come to accommodate them, mere mortals will get to experience them. At the auto show, I watched John Krafcik, the chief executive of Waymo, Google’s self-driving spin-off, show off a fully autonomous Chrysler Pacifica minivan. “Our latest innovations have brought us closer to scaling our technology to potentially millions of people every day,” he said, describing how the cost of the threedimensional light-detection radar that helps guide the car has fallen 90 percent from its original $75,000 price tag in just a few years. BMW and Ford, among others, have announced that their autonomous offerings will go to market soon. “The amount of technology in cars has been growing exponentially,” said Sandy Lobenstein, a Toyota executive, speaking in Detroit‘s “The vehicle as we know it is transforming into a means of getting around that futurists have dreamed about for a long time.” Taxis without a taxi driver, trucks without a truck driver, cars you can tell where to go and then take a nap in: they are coming to our roads, and threatening millions and millions of jobs as they do.

*

from

Give People Money. How a Universal Basic Income would end poverty, revolutionise work, and remake the world

by Annie Lowrey

get it at Amazon.com

THE FUTURE OF WORK. The Future of Not Working – Annie Lowrey.

As automation reduces the need for human labor some Silicon Valley executives think a universal income will be the answer and the beta test is happening in Kenya.

The village is poor, even by the standards of rural Kenya. To get there, you follow a power line along a series of unmarked roads. Eventually, that power line connects to the school at the center of town, the sole building with electricity. Homesteads fan out into the hilly bramble, connected by rugged paths. There is just one working water tap, requiring many local women to gather water from a pit in jerrycans. There is no plumbing, and some families still practice open defecation, lacking the resources to dig a latrine. There aren’t even oxen strong enough to pull a plow, meaning that most farming is still done by hand. The Village is poor enough that it is considered rude to eat in public, which is seen as boasting that you have food.

In October, I visited Kennedy Aswan Abagi, the village chief, at his small red-earth home, decorated with posters celebrating the death of Osama bin Laden and the lives of African heroes, including JaKogelo, or “the man from Kogelo,” as locals refer to former President Barack Obama. Kogelo, where Obama’s father was born, is just 20 miles from the Village, which lies close to the banks of Lake Victoria.

Abagi told me about the day his town’s fate changed. It happened during the summer, when field officers from an American nonprofit called GiveDirectly paid a visit, making an unbelievable promise: They wanted to give everyone money, no strings attached. “I asked, ‘Why this village?’ ” Abagi recalled, but he never got a clear answer, or one that made much sense to him.

The Villagers had seen Western aid groups come through before, sure, but nearly all of them brought stuff, not money. And because many of these organizations were religious, their gifts came with moral impositions; I was told that one declined to help a young mother whose child was born out of wedlock, for example. With little sense of who would get what and how and from whom and why, rumors blossomed. One Villager heard that GiveDirectly would kidnap children. Some thought that the organization was aligned with the Illuminati, or that it would blight the Village with giant snakes, or that it performed blood magic. Others heard that the money was coming from Obama himself.

But the confusion faded that unseasonably cool morning in October, when a GiveDirectly team returned to explain themselves during a town meeting. Nearly all of the village’s 220 people crowded into a blue-and-white tent placed near the school building, watching nervously as 13 strangers, a few of them white, sat on plastic chairs opposite them. Lydia Tala, a Kenyan GiveDirectly staff member, got up to address the group in Dholuo. She spoke at a deliberate pace, awaiting a hum and a nod from the crowd before she moved on:

“These visitors are from GiveDirectly. GiveDirectly is a nongovernmental organization that is not affiliated with any political party. GiveDirectly is based in the United States. GiveDirectly works with mobile phones. Each person must have his or her own mobile phone, and they must keep their PIN secret. Nobody must involve themselves in criminal activity or terrorism.”

This went on for nearly two hours. The children were growing restless.

Finally, Tala passed the microphone to her colleague, Brian Ouma. “People of the Village,” he said, “are you happy?”

“We are!” they cried in unison.

Then he laid out the particulars. “Every registered person will receive 2,280 shillings” about $22 “each and every month. You hear me?” The audience gasped and burst into wild applause. “Every person we register here will receive the money, I said 2,280 shillings! Every month. This money, you will get for the next 12 years.

How many years?”

“Twelve years!”

Just like that, with peals of ululation and children breaking into dance in front of the strangers, the whole village was lifted out of extreme poverty. (I have agreed to withhold its name out of concern for the Villagers’ safety.) The nonprofit is in the process of registering roughly 40 more villages with a total of 6,000 adult residents, giving those people a guaranteed, 12-year-long, poverty ending income. An additional 80 villages, with 11,500 residents all together, will receive a two-year basic income.

With this initiative, GiveDirectly with an office in New York and funded in no small part by Silicon Valley is starting the world’s first true test of a universal basic income. The idea is perhaps most in vogue in chilly, leftleaning places, among them Canada, Finland, the Netherlands and Scotland. But many economists think it might have the most promise in places with poorer populations, like India and sub-Saharan Africa.

GiveDirectly wants to show the world that a basic income is a cheap, scalable way to aid the poorest people on the planet. “We have the resources to eliminate extreme poverty this year,” Michael Faye, a founder of GiveDirectly, told me. But these resources are often misallocated or wasted. His nonprofit wants to upend incumbent charities, offering major donors a platform to push money to the world’s neediest immediately and practically without cost.

What happens in this Village has the potential to transform foreign-aid institutions, but its effects might also be felt closer to home. A growing crowd, including many of GiveDirectly’s backers in Silicon Valley, are looking at this pilot project not just as a means of charity but also as the groundwork for an argument that a universal basic income might be right for you, me and everyone else around the world too.

The basic or guaranteed income is a curious piece of intellectual flotsam that has washed ashore several times in the past half millennium, often during periods of great economic upheaval. In “Utopia,” published in 1516, Thomas More suggests it as a way to help feudal farmers hurt by the conversion of common land for public use into private land for commercial use. In “Agrarian Justice,” published in 1797, Thomas Paine supports it for similar reasons, as compensation for the “loss of his or her natural inheritance, by the introduction of the system of landed property.” It reappears in the writings of French radicals, of Bertrand Russell, of the Rev. Dr. Martin Luther King Jr.

Silicon Valley has recently become obsessed with basic income for reasons simultaneously generous and self-interested, as a palliative for the societal turbulence its inventions might unleash. Many technologists believe we are living at the precipice of an artificial-intelligence revolution that could vault humanity into a postwork future. In the past few years, artificially intelligent systems have become proficient at a startling number of tasks, from reading cancer scans to piloting a car to summarizing a sports game to translating prose. Any job that can be broken down into discrete, repeatable tasks; financial analytics, marketing, legal work could be automated out of existence.

In this vision of the future, our economy could turn into a funhouse-mirror version of itself: extreme income and wealth inequality, rising poverty, mass unemployment, a shrinking prime-age labor force. It would be more George Saunders than George Jetson. But what does this all have to do with a small village in Kenya?

A universal basic income has thus far lacked what tech folks might call a proof of concept. There have been a handful of experiments, including ones in Canada, India and Namibia. Finland is sending money to unemployed people, and the Dutch city Utrecht is doing a trial run, too. But no experiment has been truly complete, studying what happens when you give a whole community money for an extended period of time when nobody has to worry where his or her next meal is coming from or fear the loss of a job or the birth of a child.

And so, the tech industry is getting behind GiveDirectly and other organizations testing the idea out. Chris Hughes, a Facebook founder and briefly the owner of The New Republic, has started a $10 million, two-year initiative to explore the viability of a basic income. (He has also been a major donor to GiveDirectly.) The research wing of Sam Altman’s start-up incubator, Y Combinator, is planning to pass out money to 1,000 families in California and another yet-to-be determined state. Then there is GiveDirectly itself, which has attracted $24 million in donations for its basic-income effort, including money from founders of Facebook, Instagram, eBay and a number of other Silicon Valley companies. Many donors I spoke with cited their interest in the project as purely philanthropic. But others saw it as a chance to learn more about a universal basic income, a way to prove that it could work and a chance to show people the human face of a hypothetical policy fix.

In December, Altman, the 31-year-old president of Y Combinator, spoke at an antipoverty event hosted by Stanford, the White House and the Chan Zuckerberg Initiative, the charitable institution the Facebook billionaire founded with his wife, Priscilla. Altman discussed the potential for basic income to alleviate poverty, but his speech veered back to the dark questions that hang over all this philanthropy: Is Silicon Valley about to put the world out of work? And if so, do technologists owe the world a solution?

“There have been these moments where we have had these major technology revolutions, the Agricultural Revolution, the Industrial Revolution, for example that have really changed the world in a big way,” Altman said. “I think we’re in the middle or at least on the cusp of another one.”

GiveDirectly may be a charity, but it speaks in the argot of Silicon Valley. It is a platform, connecting donors and recipients, that prides itself on low overhead and superior analytics. It disdains what it sees as the bloated, expensive, stuck-in-their-ways incumbents that dominate the nonprofit space. And it even has a privileged bootstrapping creation story, beginning with its 20-something founders batting the idea around in Harvard Square academic buildings and scraping together money from friends.

The idea for the nonprofit came to Michael Faye and Paul Niehaus, who is now a professor of economics at the University of California, San Diego, when they were graduate students at Harvard. Both were studying development and doing fieldwork overseas, an experience that underlined an Economics 101 lesson: Cash was more valuable to its recipients than the in-kind gifts commonly distributed by aid groups, like food or bed nets or sports equipment. If you’re hungry, you cannot eat a bed net. If your village is suffering from endemic diarrhea, soccer balls won’t be worth much to you. “Once you’ve been there, it’s hard to imagine doing anything but cash,” Faye told me. “It’s so deeply uncomfortable to ask someone if they want cash or something else. They look at you like it’s a trick question.”

But at the time, distributing cash aid in a country with little to no banking infrastructure outside major cities would have required an extraordinary amount of manpower, not to mention introducing the risk of robbery and graft. But dirt-cheap mobile phones with pay-as-you-go minutes began flooding into sub-Saharan African markets in the 2000s. Enterprising Ghanaians, Kenyans and Nigerians started to use their minutes as a kind of currency. In 2007, Vodafone and the British Department for International Development together built a system, called M-Pesa, for Kenyans to transfer actual shillings from cellphone to cellphone. An estimated 96 percent of Kenyan households use the system today.

Faye and Niehaus along with their friends Rohit Wanchoo and Jeremy Shapiro, also graduate students, thought about setting up a website to raise cash in the United States and send it directly to poor Kenyans. But they never found a nonprofit that would distribute that cash abroad. They decided to do it themselves in 2008. “Because it was a start-up, and we started in grad school,” Faye said, “we were open to the idea of it being wrong or failing.”

We have the resources to eliminate extreme poverty this year

The following year, Faye traveled to small Kenyan villages during the summer break, offering cash to whoever seemed poor and would take it. (The money, about $5,000, came out of the foursome’s own pockets.) That, surprisingly, worked well enough to give them the confidence to start a threadbare randomized control trial the year they graduated. It found that the recipients, who received an average of $500, saw excellent outcomes: Their children were 42 percent less likely to go a whole day without eating. Domestic-violence rates dropped, and mental health improved.

In time, the non rofit attracted the attention of Silicon Valley and its deep-pocketed young philanthropists. Two Facebook founders gave six-figure donations. Then, in the spring of 2012, Faye went to a friend’s brunch in Brooklyn and met someone working for Google.org, the tech giant’s giving arm. She liked the sound of GiveDirectly and arranged for Faye and Niehaus to give a presentation at Google’s headquarters in Mountain View, California. The company ended up contributing $2.4 million.

At first, GiveDirectly handed out large lump sums, generally $1,000 spread into three payments over the course of the year. The nonprofit’s field officers would locate low income villages in Kenya, then find the poorest families in each individual Village using a simple asset test (whether a family had a thatched roof or not). The field officers would introduce themselves to the town elders, explain their purpose and return to provide mobile phones and training to recipient families. Then GiveDirecty would push a button and send the money out.

On a steaming October morning, I went with two GiveDirectly executives, Joanna Macrae and Ian Bassin, to visit one of the villages that had received GiveDirectly’s lump-sum payments. We took off at dawn from Kisumu, a bustling industrial city on the banks of Lake Victoria, and followed a twolane highway to Bondo, a small trading city filled with cattle, bicycles and roadside food stands. From there, we turned inland from the lake and drove into a lush agricultural region.

The residents of this village had received money in 2013, and it was visibly better off than the basic-income pilot village. Its clearings were filled with mango plantings, its cows sturdy. A small lake on the outskirts had been lined with nets for catching fish. “Could you imagine sitting in an office in London or New York trying to figure out what this Village needs?” Bassin said as he admired a well-fed cow tied up by the lakeside. “It would just be impossible.”

Perhaps, but delivering money by M-Pesa has some downsides, too. We visited an older woman named Anjelina Akoth Ngalo, her joints painful and swollen with advanced malaria. Sitting in her thatched-roof hut, she told us that she had received only one payment, not the three that she was promised. She had given her phone to a woman in a nearby Village who transferred the money out of it. Ngalo Visited the village elder to try to get her money back, but nothing had come of it. She was now destitute, living on about $5 a week. She had not eaten since the day before, and she had run out of malaria medication. (Bassin said that less than 1 percent of recipients experience theft, crime or conflict.)

By giving money to some but not all, the organization had unwittingly strained the social fabric of some of these tight-knit tribal communities. One man we visited in a separate village nearby, Nicolus Owuor Otin, had acted as a liaison between the community and the GiveDirectly staff, showing them where different families’ houses were, for instance. For that reason, he said, the other villagers thought he was determining who would get what and threatened to burn his house down.

Still, nearly all the recipients described the money as transformative. Fredrick Omondi Akuma, a Burning Spear devotee wearing a Rasta-style hat and bell bottoms when we visited, had been impoverished, drinking too much, abandoned by his wife and living in a mud hut when GiveDirectly knocked on his door. He used his money to buy a motorbike to give taxi rides. He also started a small business, selling soap, salt and paraffin in a local town center; he bought two cows, one of which had given birth; and he opened a barbershop in the coastal city Mombasa. His income had gone from 600 shillings a week to 2,500 shillings roughly $25, a princely sum for the area. His wife had returned. He had even stopped drinking as much. “I used to go out drinking with 1,000 shillings, and I’d wake up in the bar with 100 shillings,” he said. “Now I go out drinking with 1,000 shillings, and I wake up at home with 900.”

“I didn’t imagine I would be living in an ironsheet house,” he said, referring to his roof. “I didn’t imagine I’d be wearing nice shoes. I didn’t imagine I would have a business, and earnings from it. I didn’t imagine I would be a man who owns cattle.”

Many popular forms of aid have been shown to work abysmally. PlayPumps merry-go-round type contraptions that let children pump water from underground wells as they play did little to improve access to clean water. Buy-a-cow programs have saddled families with animals inappropriate to their environment. Skills training and microfinance, one 2015 World Bank study found, “have shown little impact on poverty or stability, especially relative to program cost.”

All across the villages of western Kenya, it was clear to me just how much aid money was wasted on unnecessary stuff. The villagers had too many jerrycans and water tanks, because a nongovernmental organization kept bringing them. There was a thriving trade in Toms canvas slip-ons: People received them free from NGO workers and then turned around and sold them in the market centers. And none of the aid groups that had visited the villages managed to help the very poorest families.

In the pilot-project village, for example, Faye and I paid a visit to a woman named Caroline Akinyi Odhiambo, who lives in a mud hut on the edge of town with her husband, Jack, a laborer, and her two small children. The most expensive thing she ever bought, she told me, was a chicken for 500 shillings, or about $5. Her family was persistently hungry. She knew of three nonprofit groups that had helped the village before GiveDirectly. One aided families with school fees, but it chose not to help her children. “I do not want to talk about it,” she said.

What is worse, Faye told me, walking away from Odhiambo’s hut, was that most nonprofit projects in the region were never subject to anything like an impact assessment, either. There is no way to know how well they are working, or whether that money would be better spent on something else. “The question should always be: Would we be better off just giving this money away as cash?” Faye said. “There usually is not a way to answer that question.”

A vast majority of aid, 94 percent, is noncash. Donor resistance is one reason for this; it is not easy to persuade American oligarchs, British inheritors and Japanese industrialists to fork over their money to the extremely poor to use as they see fit. “There’s the usual worries about welfare dependency, the whole ‘Give a man a fish’ thing,” said Amanda Glassman, a public health and development expert at the Center for Global Development. “It’s so powerful. It’s really a basic psychological feature of the landscape. You’ll start drinking. You’ll start lying around at home because you’re getting paid.”

Cash also seems harder to market. American taxpayers might be perfectly happy to fund education for young women in poor countries or vaccinations for schoolchildren. But they might balk at the idea of showering money on poor, unstable countries. “The Visual of putting a pill in a kid’s mouth is so much more attractive to people,” Glassman said.

Institutional inertia is another factor. “There are a lot of good people working in the system,” Niehaus said. “And there are a lot of organizations pushing to do cash transfers. But the way they are structured and incentivized from the top down they aren’t structured to do it. They have a specific mandate, like health. Cash transfers give choice of what goal to pursue to the recipients.”

Moreover, cash might force aid workers and nongovernmental organizations to confront the fact that they could be doing better by doing things differently often by doing less. “It’s easy to muster evidence that you should be giving cash instead of fertilizer,” said Justin Sandefur of the Center for Global Development. “The harder argument is: You should shut down your U.S.A.I.D. program, which is bigger than the education budget of Liberia, and give the money to Liberians. That’s the radical critique.” Faye put it more bluntly, if half-jokingly:

If cash transfers flourished, “the whole aid industry would have to fire itself.”

There is something to that. One estimate, generated by Laurence Chandy and Brina Seidel of the Brookings Institution, recently calculated that the global poverty gap, meaning how much it would take to get everyone above the poverty line, was just $66 billion. That is roughly what Americans spend on lottery tickets every year, and it is about half of what the world spends on foreign aid.

In the pilot-project village, the residents had just started to work through how transformative the program would be, what they could do with the money and how different their lives could feel in 12 years. Detractors often say that no one would work in a world with a basic income, that the safety net could grow a bit too comfortable. Ultimately, what a universal income would do to workers in the rich world will remain a mystery until someone tries it out.

But here, many Villagers were concerned primarily with procuring the sustenance and basic comforts that their penury had denied them. Odhiambo, the woman who had not been offered aid by the school group, planned to buy corrugated iron sheets for her roof; she considered possibly paying off her dowry. Another Villager, Pamela Aooko Odero, ran a household that had been suffering from hunger, with all eight of them living on just 500 to 1,000 shillings a week. She took her money as soon as she got it and went to buy food.

Many more made plans that were entrepreneurial. Two widowed sister-wives, Margaret Aloma Abagi and Mary Abonyo Abagi, told me they planned to pool their funds together to start a small bank with some friends. Charles Omari Ager, a houseboy for the sister-wives, had his phone turned off and wrapped in a plastic bag in his pocket when the first text came in. He was driving the widows’ goats and cattle from one dried-out, bramble-filled meadow to another when he happened upon an aid worker, who prompted him to pull out his phone, turn it on and wait. The text was there. The money was there. “I’m happy! I’m happy! I’m happy!” he said. He bought himself a goat that day.

When he got his money, Erick Odhiambo Madoho walked to the cow-dotted local highway nearest the village and took a matatu, a shared minibus, overloaded with 20 passengers, down to Lake Victoria. There he found an M-Pesa stand and converted his mobile money into shillings. He used the cash to buy the first of three rounds of filament-thin fishing line that he would need to hand-knot into nets to catch tilapia in the lake.

When the nets were done, he told me, he would rent a boat and hire a day laborer to work with him. He anticipated that his income, after costs, might reach as much as 2,000 shillings on a good day. I asked him why he hadn’t saved money for nets beforehand.

He shrugged, smiled and said, “I could not.”


Annie Lowrey is a contributing writer at The Atlantic and a former economic-policy reporter for The Times. She is writing a book about universal basic income for Crown.

Universal Basic Income and cryptocurrency Manna – Scott Santens * Manna Whitepaper – People’s Currency Foundation.

We, the people of the world, recognize and declare that money is a social invention which can be changed by the people according to our values.

As we witness the growing scourge of inequality and its consequences, we see that the existing system is unjust and unsustainable. Recognizmg and accepting the moral obligation that arises from such knowledge, we stand united in the decision to create a better alternative, a currency of conscience designed to facilitate the emergence of a more just and sustainable global economic system.

Manna Mission Statement, People’s Currency Foundation


Scott Santens

Manna is the first publicly traded, block chain based currency to be distributed as a Universal Basic Income subsidy to anyone in the world who applies and is verified as a unique human being.

On January 29, 2018, The People’s Currency Foundation (a U. S. based 501(c)(3) nonprofit) published their white paper for Manna, a relaunching of the basic income cryptocurrency formerly known as Grantcoin, which was the first publicly traded blockchain currency to be distributed universally to all those verified as unique applicants.

Its first distribution occurred on June 30, 2016. Four more disbursements occurred on October 1, 2016, January 31, 2017, June 17, 2017, and August 9 2017.

Note: In the interest of full disclosure, I was a recipient of each of these disbursements.

Since the last disbursement in August of 2017, disbursements have been paused as Grantcoin began the transition to Manna. Disbursements are expected to begin again this month as Manna, and on a new weekly basis to all verified accounts, of which there now number over 6,000 from over 100 countries around the world.

Since May of 2017, Grantcoin (now Manna) has seen a significant increase in value, and as of this writing can be ‘ exchanged on the SouthXchange for $0.011 USD. As shown in the chart below, the market price approximately doubled in 2015, more than doubled, again in 2016, and increased more than 16-fold in 2017, for a total gain of over 8,000% through January 1, 2018.

(Note: The price has continued to increase, with another doubling already in 2018, not shown on this chart.)

Considering each disbursement was around 7,000 coins per recipient, that’ s an unconditional grant of about $75 per person per disbursement in today’s USD cash equivalent market value, and more for those receiving referral bonuses.

That may not sound like much to those in countries like the US, UK, and Canada, but for those in countries like Kenya, that’s a full basic income, sufficient to cover basic needs. In fact, to give some further context, the largest basic income experiment ever devised is going on in Kenya right now, where the NGO GiveDirect is providing monthly basic incomes of around 22 USD for the next 12 years.

With the above in mind, Manna appears therefore an entirely realistic way of immediately providing basic incomes anywhere in the world, given sufficient access to currently available technology. And over time, as the value of Manna increases, it could potentially reach sufficient value to be considered enough for securing of basic needs in countries like the United States, especially in more rural areas, and in turn be considered far, far more than basic in places like East Africa where hundreds of dollars a month would be sufficient to provide median-level incomes as a monthly starting point.

Manna is planned to be distributed on a weekly basis, and divided equally among all recipients. A desktop wallet is now available in beta form (for Windows and Linux with Mac coming soon), with a web-based wallet also expected to be released soon. A block explorer for Manna is also now available for use.

The Manna money supply is planned to increase at an annual rate of 3.5%, chosen because it’s close to the historical average inflation rate of the US. For comparison, the inflation rate on Steemit is around 3% right now.

The value of Manna is determined not only by the market exchange rate, but unlike most other cryptocurrencies, it is also backed by tax deductible donations to the 501(c)(3) People’s Currency Foundation. One future goal is to go even further with this model by pursuing something similar to Alaska’s‘ Permanent Fund, where a diverse portfolio of investments would further back the cryptocurrency.

A referral process is in place for Manna where those who sign up through a referral link (such as this one), will receive a 50% bonus for one year, and those who refer others with their own referral links will receive their own bonus as well. The referral system is however temporary as a means of accelerating adoption, like how PayPal started, with plans to phaseout in time.

Because recipients of Manna are all over the world, this provides a very interesting way to help others all over the world. Through the Mannabase platform, users will be able to send a chosen percentage of their own Manna to others by region, for example, a place like Puerto Rico because of a hurricane, or a handful of countries based on their lower GDPs, or even a percentage of their weekly UBI to all other Manna UBI accounts.

Furthermore, with the addition of profiles on Mannabase, it will be possible to send Manna to specific people based on specific criteria for those who choose to provide that information. For example, someone may wish to provide 10% of their weekly Manna UBI to those who are over 65, to help boost their incomes further.

Another interesting element is the ability to send Manna to those under the age of 18. Parents will be able to sign up their kids with sufficient proof of identity, but those under 18 will not be able to Withdraw their Manna until 18. This opens the potential for those turning 18 to receive potentially quite large unconditional capital grants along the lines of what Thomas Paine advocated in Agrarian Justice.

Last but not least, here’s the roadmap for Manna to see what the plan is over the next year. Notice the intention to provide entire communities with Manna to test full universality.


Learn more at Scott Santens .com

Universal Basic Income Cryptocurrencies Like Manna are Pioneering the Way Towards Decentralized Targeting

ScottSantens.com


People’s Currency Foundation

EXECUTIVE SUMMARY

Manna is the first publicly traded, block chain based currency to be distributed as a Universal Basic Income subsidy to anyone in the world who applies and is verified as a unique human being. Manna, originally called Grantcoin, is also the first cryptocurrency to be managed and distributed by a US. based tax-exempt nonprofit organization, and to be value backed not only by investors, but also by tax deductible donations which are used to buy back the token on markets where it trades.

If sufficiently capitalized in the future, Manna will also be backed by profits from a capital reserve fund, similar to the Alaska Permanent Fund which pays an annual dividend to all citizens of the US. state of Alaska and is the longest lasting and most successful UBI subsidy program in the world.

Since launching as Grantcoin in 2015, Manna has seen an 80 fold increase in price and has attained a circulating market cap of over $4 million USD as of January 1, 2018. (Note: This has continued to increase, more than doubling already in 2018.) There are more than 3,500 known stakeholders of Manna in at least 100 countries around the world. Through the end of 2017 over $250,000 USD had been given away as basic income in the former Grantcoin or Manna currency.

The Manna project aims to achieve three main goals:

1. Implement an economically impactful basic income on the blockchain, especially to help some of the world’s poorest people, children, and developing nations.

2. Enable targeted direct giving for highly efficient, effective altruism, utilizing the technological benefits of cryptocurrency and smart contracts.

3. Build a global network of socially conscious businesses, nonprofit organizations, and their customers and supporters, using the Manna currency as a tool to create a more equitable economy for a better future.

To achieve these goals, our diverse team of talented professionals and volunteers will raise capital; develop an online platform and associated apps and plugins for websites and smartphones; form partnerships with charities; reach out to businesses, financial institutions, governments, NGOs, and quasi governmental organizations; and spread the word about Manna through a book tour, speaking engagements, social media, videos and artistic creations, and personal and professional networks to continue to grow the user base exponentially.

Ultimately, we envision Manna becoming an alternative global reserve currency backed by a portfolio of assets held by a global NCO. This currency will be distributed into circulation as a UBI subsidy and children’s savings account program, to ensure food security for the world’s neediest people and increased economic opportunity for young people.

We believe this fiscally sound, socially responsible design will lead to Manna’s adoption by millions of users around the world.

VISION AND MISSION

Why Manna?

Manna is a globally distributed currency based on egalitarian principles.

As expressed in the Manna mission statement:

We, the people of the world, recognize and declare that money is a social invention which can be changed by the people according to our values.

As we Witness the growing scourge of inequality and its consequences, we see that the existing system is unjust and unsustainable. Recognizmg and accepting the moral obligation that arises from such knowledge, we stand united in the decision to create a better alternative, a currency of conscience designed to facilitate the emergence of a more just and sustainable global economic system.

Throughout history, human beings have dreamed of a world in which even the poorest and most unfortunate people among us will have their basic needs guaranteed. The principle of inherent human dignity and the hope of universal abundance have inspired some of humanity’s most beautiful legends, artistic creations, and moral philosophies.

Today, in a world filled with refugees, desperate poverty and extreme inequality, we have both the resources and technological means to ensure everyone’s survival and expand economic opportunity for the next generation, through the power of block chain technology and skillful design of a new monetary system based on the universal human right to a basic income.

The Problem

Only 62 people own more than half the wealth in the world today, while almost half the human population over three billion people are living on less than $2.50 a day. At least 80% of the world’s people live on less than $10 per day.

This extreme wealth inequality is a moral outrage. On a practical level, it is an utter failure of civilization to include most of the world’s people as full fledged participants in the global consumer economy. As such, it is a poor allocation of resources that could be more profitably distributed for the benefit of rich and poor alike.

There are many undesirable, even dangerous consequences for society resulting from widespread lack of access to money, among them:

Insufficient consumer demand to prevent economic stagnation and recession, as not enough people can afford to buy the products and services being produced by the economy.

Instability of the global financial system and danger of catastrophic collapse, resulting from too much money being held in too few hands and used for reckless financial speculation instead of investment into productive businesses in local communities.

Geopolitical conflict and terrorism arising from anger and apocalyptic fanaticism that are predictable results of extreme poverty, inequality, and lack of economic opportunity, especially among young people.

The global monetary system as it exists today exacerbates these problems by causing economic inequality to worsen. This is a direct result of a design flaw in the methodology of how major world currencies are issued into circulation. As noted in the Manna mission statement:

Currencies created as issuance of debt by banks, whose mission is to gain profit by charging interest on loans, favor the accumulation of wealth by already wealthy individuals, businesses, and nations, which are preferred for access to credit over those without as much capital.

Automation will make the problem worse as we approach the “technological singularity” generally predicted to arrive in the middle of the 21st century when robotics and artificial intelligence will surpass the abilities of human beings and thus eliminate the need for most human labor, rendering most people unnecessary for economic production and therefore unable to earn a living.

According to an Oxford University study, nearly half of all jobs in the United States are at risk of being lost to automation in the next 20 years, and up to 85% of jobs in the developing world, where poverty is already more severe.

Technological capital ownership, far from being widely distributed among the population, is highly concentrated into a small number of wealthy nations and leading businesses and their shareholders, who will reap most of the profits of the future fully automated economy.

The Solution

The People’s Currency Foundation offers a solution to the growing problem of wealth inequality and its consequences. We have developed an alternative currency called Manna which is issued into circulation as a universal human right, with equal access for all whenever new units of the currency are created and distributed. Inflation of the Manna money supply functions as a built in mechanism to counterbalance factors in the economy and society that tend to increase economic inequality, thus helping to reduce the dangers posed by this problem.

Unlike the currencies generally in use in the world today, which are issued primarily through the for profit banking system as discretionary loans, Manna uses a non discretionary system of monetary issuance, to prevent corruption and favoritism for access to the money supply.

Manna is distributed as a Universal Basic income subsidy that every person in the world is eligible to receive, for free, just because they are human and have the right to resources to help them survive according to the same principle that grants us the universal, inalienable right to freely breathe the air.

Money is an intangible representation of value that is necessary to live in a civilized world; and although the amount of inherent value of a human being, when measured in economic terms, is less than the amount of economic value they might acquire through productive work or investment of capital, a person’s inherent value is not nothing. The monetary system we use should reflect this principle.

Another part of the solution is to enable well off people who do not need a basic income to automatically transfer the currency they receive as UBl to people in need or to charitable organizations that are assisting such people. This can be done using a technology called smart contracts which will be implemented on Mannabase, a user friendly online platform for Manna recipients, givers, and users.

Furthermore, the Mannabase platform will function as a full scale solution for targeted direct giving of any amounts of money at any time to any number or complexity of user selected demographics, enabling effective altruism.

Freely distributing Manna UBI to authenticated recipients will enable the currency and platform to acquire a large user base, which can be sorted by various characteristics (geography, age, economic status, etc), so that givers will be able to micro target their charitable gifts directly to groups of people they believe are most in need or worthy of their support. Children will also be eligible for basic income distributions and charitable gifts into Mannabase wallets that they can unlock when they reach adulthood, thus providing increased economic opportunity for the next generation.

The success of Manna in helping give rise to a less severely unequal distribution of wealth among people and nations is not dependent on the success of any political movement, legislation, or international treaty or institution, The people of the world themselves, by supporting and using Manna as their preferred currency and the Mannabase platform for targeted direct giving, may bring about the desired effect and a positive effect will not be prevented if less than a majority of people decide to support it, as would be the case using political methods in democratic countries. Even if only a small minority of the world’s population decides to use Manna, it will still be able to exert a positive influence on the global economy in the direction of equality.

Having said this, the People‘s Currency Foundation, as a socially conscious global NGO, will attempt to reach out to governments throughout the world, especially in small developing nations, and encourage them to sign up their population either en masse or in carefully selected pilot programs for Manna basic incomes. We will also attempt to persuade governments to acquire and hold Manna in their asset portfolios.

The Manna currency network uses decentralized, open source, peer to peer technology, is legal in most countries, and cannot be easily shut down or blocked by authoritarian governments that may wish to prevent their citizens from using it. Manna empowers the people of the world, both in its technological and socioeconomic structure and effects. This new alternative currency can be an important piece in the puzzle for solving the problem of wealth inequality in the 21st century.

ORGANIZATION AND TEAM

Legal Structure and Governance

The Manna project is managed by The People’s Currency Foundation, a United States based 501(c)(3) nonprofit organization, classified as a public charity by the US. Internal Revenue Service. Donations to the Foundation are therefore tax deductible in the United States.

The People’s Currency Foundation is investigating the possibility of establishing an international umbrella organization based in a country with a more favorable regulatory climate towards cryptocurrency, to over see national affiliates in countries around the world, including the organization already existing in the US.

The People’s Currency Foundation is governed democratically by a board of directors. Currently, board members are chosen by the board itself, but the governance process may be changed in the future so that people can become members of the Foundation and vote for its leaders. This would likely be a process of multitier elections at local, national and international levels, after the Manna economic network has grown into the millions of participants. Voting may be conducted on the blockchain using decentralized, secure solutions for community governance.

History

The People’s Currency Foundation was legally incorporated in March 2015, under the name The Grantcoin Foundation. The name was changed in January 2018 as part of a rebranding process. The Manna currency, originally called Grantcoin, was launched to the public in May 2015. The project was founded by three socially conscious executives with diverse experience in nonprofit management, project management, entrepreneurship and startups, charities and religious ministry, and the emerging field of alternative digital currencies.

From the beginning Crantcoin (now Manna) was envisioned as a currency that would be designed to help create a more egalitarian, democratic, and sustainable global economy. The specific economic model of the currency gradually came into focus through deliberation of the founders, consultation with other people of conscience, and experimentation with several types of grant programs for social good. Starting in May 2016, the Grantcoin Foundation implemented the current model of the currency being distributed through a simple, universally available program of basic income, which thus far has been popular and sustainable.

Mannabase, Inc.

In January 2018, the founders of Manna incorporated a company called Mannabase Inc. to oversee technological development of the Mannabase platform. The founders funded this company with a large portion of their own personal holdings of Manna.

The People’s Currency Foundation has an operating agreement with Mannabase Inc., and technical personnel overlap considerably between the two entities. The founders intend to donate the company to become a wholly owned subsidiary of the Foundation, likely within the next three years.

THE MANNA CURRENCY

In 2015, the founders of Manna created a cryptocurrency called Grantcoin, which would be primarily distributed as charitable grants by a nonprofit organization and backed in part by tax deductible donations to that nonprofit. The founders capitalized the project with donations of over $10,000 from their own savings, and ran it as a voluntear-based pilot study to determine:

Whether there was sufficient interest among the cryptocurrency investor community and the general public in a block chain based currency with a philanthropic mission to create a more equitable and sustainable world economy.

The most viable strategies for growth and development of such a currency and to prove implementation and formulate a road map for a globally scalable project.

After two years of bootstrapped development and experimentation, the evidence showed several things:

1. That there was indeed enough interest and support for such a project to make it worth pursuing in a highly professional way.

2. That focusing on gaining a large base of holders of the currency was necessary before any other goals could realistically be achieved, such as adoption by businesses and charities for payments and donations.

3. That giving the currency away according to the principle of Universal Basic Income was the most effective way to acquire a large base of holders, and ultimately users, of the currency.

4. That a referral bonus program was highly effective in generating rapid growth of the number of recipients of Grantcoin basic income. We conducted five distributions of basic income and referral bonuses during a period of just over one year, as follows:

a. June 30, 2016, 255 people

b. October 1, 2016, 757 people

c. January 31, 2017, 1,132 people

d. June 17, 2017, 2,511 people

e. August 9, 2017, 2,922 people

Most participants in the program have been referred by other participants, who earned a reward for the referrals, which is a formula for ongoing exponential growth. By September 1, 2017, more than 400 additional people had signed up and been approved for the next distribution, which will be of the rebranded Manna currency in early 2018.

5. That the currency can hold its value and gain value, despite large amounts of it being given away with no strings attached. This has proved to be true both during periods when the Grantcoin Foundation actively supported the price and also during periods when the Foundation did not do so. The “network effect” that the value of a tool for communications or transactions increases as the number of participants in its network increases has easily overcome price inflation due to expansion of the Grantcoin money supply. The value added by backing the currency with charitable donations has also proved to be significant, but perhaps actually more important for its psychological effect on stakeholders than strictly the Foundation’s financial input into the market.

6. That a large degree of automation was necessary to scale up the project into the thousands of users and beyond.

7. That sophisticated fraud detection mechanisms are necessary to prevent cheating by bad actors attempting to sign up multiple times under pseudonyms.

8. That a user friendly web based platform for receiving and transacting the currency is important to convert passive recipients into active users even for minimal levels of activity by ordinary, non technically inclined holders of the currency.

We discovered that user friendliness and intuitiveness of the front end design of the platform is an essential prerequisite for positive engagement with the currency among all but the most technologically gifted and highly motivated supporters, and that poor design (by a third party platform we experimented in partnering with) created a negative user experience and an inefficient use of time by Foundation personnel in communication with confused users.

In the summer of 2017, we took these lessons and applied them to our plans for relaunch of the project under the Manna brand. In late January 2018 we completed the rebranding process by updating the Grantcoin codebase and releasing Manna branded wallets that are fully compatible with the existing blockchain. Holders of Grantcoin have an equal number of tokens, now called Manna, in the new wallet. At block 1,100,000 (expected to be reached in May 2018), the blockchain is scheduled to fork and the old Grantcoin wallets will become deprecated and incompatible with the new Manna network.

Price and Market Cap

As of January 1, 2018, approximately 493 million Crantcoin was in circulation, At the currency’s price on that date (1,000 CRT = $8.47), the market cap of all Grantcoin in circulation was approximately $4.2 million.

During its history, Grantcoin has traded on two different public cryptocurrency exchanges. The market price of Crantcoin approximately doubled in 2015, more than doubled again in 2016, and increased more than 16-fold in 2017 for a total gain of over 8,000% through January 1, 2018, (Note: The price has continued to increase, with another doubling already in 2018, not shown on this chart.)

Stakeholders

As of January 1, 2018, there were approximately 3,500 known stakeholders, i.e. owners of Grantcoin (Manna) currency, in more than 100 countries around the world, There were likely at least a couple hundred more people who own some of the currency which they have mined or bought on exchanges, whose identities are unknown.

The three founders owned a combined 19% of the Manna in circulation, most of which they intend to use for charitable purposes. Each of the founders have donated thousands of dollars and thousands of hours of volunteer work to the Manna project.

The founders previously owned a much larger percentage of the currency, but decided to reduce their holdings by providing 36% of the float to Mannabase Inc., a technology development company. This Manna will be used to compensate developers, either directly in Manna or through sales of the currency, and to pay for other necessary expenses associated with maintaining and improving the Mannabase platform.

Contributing stakeholders, such as private investors, donors, and independent contractors who were paid in Grantcoin for their work for the project, accounted for another approximately 17% of the currency in circulation at the beginning of 2018. There are several dozen such stakeholders in countries including the United States, Saudi Arabia, Brazil, England, South Korea, Egypt, ltaly, Austria, and various others.

About 13% of the float has been donated to charities and nonprofit organizations which have agreed to hold it for the long term and use it for purposes compatible with the mission and values of the People’s Currency Foundation. Some of these Charities were established by the founders and others are outside organizations with a long track record of success in their charitable missions.

About 6% has been given away as basic income and referral bonuses to roughly 3,000 people. This percentage will grow much larger over time, and will ultimately surpass all other categories.

The remaining 9% of the float was mined into circulation and is held by various unknown stakeholders, which may include the miners themselves and others they may have sold it to on public exchanges or sent it to in other transactions. This percentage of the currency in circulation will decrease over time, as the mining reward rate is being reduced as part of the transition from Grantcoin to Manna. Ultimately, we expect that less than 0.25% of circulating Manna will be created through mining.

For the most part, the People’s Currency Foundation does not keep track of what people and institutions do with their Manna. and it is likely that some of the currency that has been distributed into circulation to known stakeholders has already passed to other stakeholders who are unknown, as a result of private transactions or anonymous public sales on exchanges. However, the Foundation does have a policy that any founder, director or staff member must publicly disclose any sales of over one million Manna in a period of one month.

Economic Model

Manna is distributed into circulation primarily as a Universal Basic Income subsidy for anyone in the world who signs up and successfully completes a verification process to prove that they are a unique human being, Corporate entities are not eligible to receive the UBl. Manna basic income is distributed weekly into web based wallets on the Mannabase platform. Each verified individual receives an equal share of the amount being distributed each week.

Distribution of Grantcoin in Circulation (though January 1, 2018)

The People’s Currency Foundation also gives referral bonuses of the currency to people and organizations that refer others to sign up and verify their account for Manna basic income distribution. Our referral program does not use multi level marketing; it is only a bonus for direct referrals. The purpose of this program is to encourage exponential growth of the Manna user base, as awareness of Manna spreads through people’s personal connections, nonprofit organizations, charitable networks, and businesses’ customers who might later be able to spend the currency at participating businesses.

The People’s Currency Foundation has set the annual rate of increase of the Manna money supply through basic income distributions at 3.5% of the current supply of Manna in circulation. This is close to the historical average annual inflation rate of the US. dollar, one of the world’s most successful currencies, and results in an approximate doubling of the money supply every 20 years. Distributed equally as Universal Basic income, the increase in money supply would cut in half the general level of economic inequality every generation within the Manna economic network, all other factors held constant.

Another 2 to 3% per year is currently being added through referral bonuses. The referral bonus program will be phased out after ten years.

The annual rate of issuance of Manna may be changed by the Foundation as deemed necessary to balance the goals of egalitarian monetary distribution and preserving the currency’s value. So far, during the Grantcoin pilot program, this rate of growth of the money supply has proved to be very sustainable without any threat to the ability of the currency to hold or even gain value relative to other currencies.

Under our current economic model, the value of the currency is primarily determined by the free market. Manna trades on SouthXchange, an online cryptocurrency exchange based in Argentina, where people can buy and sell Manna for either Bitcoin or US, dollars. The People’s Currency Foundation will pursue listing for the Manna token on larger exchanges as well.

One unique feature of our economic model is that the value of the currency is backed not only by investors in the market, but also by donations to the People’s Currency Foundation. Our organization sets aside a minimal administrative budget, only what is necessary to keep the organization in existence and the project functional, and we use all donations beyond that to support the price of Manna on markets where it trades, through gradual buybacks of the token.

In the future, after our project is sufficiently capitalized, we plan to establish a Capital Reserve Fund with a diverse portfolio of investments. The profits from this fund will be used as an additional value backing mechanism for the Manna token. The fund’s portfolio will consist of a balance of securities (stocks and bonds), commodities (precious metals, energy, agricultural, etc), and currencies (including criptocurrencies), and will be professionally managed according to policies and algorithms developed by the People’s Currency Foundation based on historical data and expert advice.

Grantcoin began with a premined reserve of 10 billion coins, most of which was intended to be gradually distributed into circulation as charitable grants, such as the basic income program, over a period of decades. In the transition to Manna, we have decided to destroy approximately 75% of those coins, and we will implement a software update within the next few years to enable the gradual creation of new units of Manna needed for UBI distributions. The Foundation is retaining enough Manna in reserve to fund the UBI for up to ten years, but some of this may also be destroyed if we transition to gradual creation of the tokens at an earlier date, as we expect is likely,

The total supply of Manna, including all tokens that are currently in circulation or are held in reserve by the People’s Currency Foundation for release during the next ten years, is broken down into categories as follows:

Technology

Grantcoin was created as a modification of Peercoin, a well vetted and popular offshoot of Bitcoin. Grantcoin was rebranded to Manna but retains the same blockchain, which is powered by SHA 256 proof of work mining. The proof of stake aspect of the Peercoin codebase is turned off in Manna, but has been retained in our codebase for possible future implementation, pending study of its impact on our economic model and ways that staking rewards could be used for charitable purposes.

In 2018, we intend to transition to a more advanced, feature rich codebase, perhaps by incorporating some of the functionalities of Ethereum into our own blockchain. Also under consideration is to build an API for using Ethereum’s technology in association with the Manna blockchain. Ethereum is the second largest cryptocurrency by market cap (about $72 billion to Bitcoin’s $230 billion USD as of January 1, 2018). Ethereum’s smart contracts technology allows tokens to be governed by algorithmic rules for issuance, distribution, and execution of complex transactions. These features are well suited for the needs of the Manna project.

Manna is distributed to UBI recipients on Mannabase, an online platform where users may store and spend their Manna or transfer it to other users or to external wallets. Manna can also be transacted on Twitter, through simple tweets to deposit, withdraw. and send the currency to other Twitter users.

THE MANNABASE PLATFORM

User-Friendly and Accessible

Mannabase is a website based on a simple core concept:

That everyone, everywhere in the world, should be able to participate in the cryptocurrency movement by receiving a Universal Basic Income in the form of the Manna currency, distributed on a regular basis into easy to use web based wallets on our platform.

To make cryptocurrency accessible to the general public, Mannabase will not only provide the currency as a basic right to all people who choose to participate, but will provide an intuitive, user friendly interface for transacting the currency.

Simplicity and user friendliness are key to the Mannabase philosophy. Most people have not yet adopted cryptocurrency, in large part because it has not yet become easily understandable and usable for the average person with little or no technical knowledge. Mannabase will correct this problem and empower millions of people to become new users of cryptocurrency specifically, the Manna currency that they will receive as basic income to help them get started and to improve their economic condition.

By providing people with currency and a simple and attractive platform to spend it, Mannabase will serve as a gateway to the exciting world of cryptocurrency for vast numbers of new users. By making it instantly accessible and easy to use, Mannabase will ensure that Manna will attain a large and growing market share among blockchain based tokens.

Signup and Referral System

The Mannabase user experience begins with an extremely simple signup form: entering your email address. If the email entered is unique, the new user will be asked to confirm their ownership of the address via email and prompted to select a username and password.

Once confirmed, the user will be taken to a “dashboard” page where they will see that the balance in their Manna wallet is zero, and they will be invited to sign up for distributions of Manna basic income. They will also be given a referral link which they can share with friends, on social media or elsewhere. The dashboard will show a count of how many new users they have referred to Mannabase, how many have been approved for Manna basic income, and how much Manna the referrer is eligible to receive in referral bonuses if they, likewise, are approved for UBI distribution.

The new user will be prompted to go through a verification process to confirm that they are a unique human being and after being approved, they will begin receiving weekly deposits of Manna basic income into their Mannabase wallet, plus however much they have earned in referral bonuses.

Each user receives the same amount of Manna in referral bonuses as the amount they receive in basic income, for each approved UBI recipient they have referred to the program during the past year. For example, a user who has 5 approved referrals will receive 6 times the amount of Manna per week that a user would receive who has no referrals.

Furthermore, if a new user signs up with a valid referral link or referral code, they will receive a 50% bonus in addition to their basic income distribution. Bonuses are given only for one year after each referral or signup occurs, to limit the financial advantage of participating in the referral system.

In the Grantcoin pilot program, we found that this specific referral system succeeded in generating exponential growth of our user base, because people are strongly incentivized to make referrals, and people are also incentivized to use the referral system when they sign up, so that referrals will actually be counted.

Anti-Fraud Strategies and Methods

The primary technical concern of any Universal Basic Income program must be to develop a viable “Proof of Humanity” system to ensure that people who sign up for the UBI are real, unique human beings, rather than fraudulent signups by the same users repeatedly with multiple pseudonyms. Combatting this type of fraud, known as Sybil attacks, is essential to the success of Manna or any other non governmental basic income program, which cannot rely on forcing people to submit identification documents to prove that they are who they say they are.

During the Grantcoin pilot study, we offered people the option of verifying their signup for the program using either a mobile phone or a government issued photo ID. Very few people chose the ID option, and some expressed worries about potential identity theft by our organization.

Furthermore, manually verifying signups by having a human staff member look at a submitted photo ID to determine its likelihood of authenticity is much more labor intensive than technological methods of verifying new users. Therefore, it became a high priority for us to develop an automated system of verification by phone with a relatively low rate of fraud.

Our anti fraud strategy at this stage is based on two aspects:

1. Requiring a real mobile phone, rather than a VOIP or landline. Multiple VOIP numbers can be generated easily for free, and many people have more than one landline, such as at home and at work, but most people have only one mobile phone. Therefore, for the average person, verifying that they have submitted a real, unique mobile phone number is sufficient to prevent multiple signups.

2. Some people who wish to try to beat the system may purchase multiple SIM cards or disposable mobile phones, thus faking the existence of multiple people. This is unlikely to be a problem now, because of the relatively small amount of economic value being distributed to each person receiving Manna basic income. However, this is likely to become more of a problem in the future, as the value of Manna increases by orders of magnitude. Therefore, we have implemented secondary algorithmic methods to detect whether a mobile phone number submitted is likely to be associated with a phone that is actually used by the same person who bought it, rather than a mobile phone number used only to sign up for Manna.

Using these methodologies, our study of the data from the Grantcoin pilot program indicates that we may have had a fraudulent signup rate of no more than 5%. In the future, however, we plan to implement a third method to detect and reduce fraud:

3. An algorithmic web of trust system, in which Mannabase users will be scored on their likelihood of being a real, unique human being, based on how they interact with the platform and other users. Users whose scores are too low may be required to submit documentary or biometric proof of identification and go through a manual approval process to continue receiving Manna basic income. We will also explore using blockchain based identity verification tokens such as Civic. The details of our system will remain proprietary, to prevent people from trying to game the system.

Automated Basic Income Distribution

Every Mannabase user who has passed the verification process and been approved for Manna UBI distributions will receive Manna in their wallet on the platform once per week. Each distribution occurs at a random time, to prevent users from all logging into Mannabase at the same time to check their balance and thus overloading the server.

Distributions of Manna basic income are fully automated. Once a user is approved for the program, they will be added to the recipient count, and the appropriate amount of Manna an equal amount per person will be calculated and sent into their wallet every week thereafter.

The amount each individual user receives per week will decrease as the total amount being distributed is divided among a growing user base. Referral bonuses will also be calculated and sent automatically to each user on a weekly basis.

Users may choose to automatically reallocate some or all of their Manna basic income and referral bonuses to other verified participants, either to all of them generally, or to specific users or groups of users selected according to user determined criteria. This option is intended for economically secure people who do not need a basic income subsidy, and prefer instead that it be distributed to others who may need it more. For example, a well off user in the United States might decide to allocate 40% of their basic income to their fellow citizens in Puerto Rico after a disastrous hurricane, 30% to children in the 10 countries with the lowest GDP in the world, 20% to a basket of their favorite charities on the platform, and 10% to all UBI recipients except themselves.

Searchable and Sortable User Profiles

Each Mannabase user whether an individual, nonprofit organization, or business, will be able to enter information about themselves, which will be displayed on their profile page and will be searchable and sortable by other users. Mannabase will provide a robust toolset for searching and sorting data from the user database, to find individual users, groups of users, and types of users that meet desired criteria.

For example, a Mannabase user wishing to spend some Manna to buy food or clothing from a socially responsible business could search for companies that are registered on the site which sell those categories of products. Or, a user who would like to donate to an environmental charity, a human rights organization, etc. could search and find organizations that fit those descriptions on the site and click a button on their profile page to make a donation in Manna.

Similarly, users will be able to search for individual basic income recipients who meet specific criteria or sets of criteria, and a Manna wallet address will be automatically generated and displayed, representing all of those people collectively. Such wallet addresses can be used for automatic reallocation of one’s basic income or other forms of targeted direct giving,

Targeted Direct Giving

Mannabase will store both user provided profile data as well as demographic data about the economic status of nations, regions, and the average person living in specific localities. Users wishing to verify their age, gender, geographical location, occupation, etc, on their profile must have other users confirm the accuracy of the information they submit. to prevent fraud (e.g. we don’t want wealthy American adults pretending to be impoverished African children).

The People’s Currency Foundation will also partner with well established charities that are working on the ground with specific people whom they have verified as being legitimately in need. Those people will be added to Mannabase as users with a special “verified needy” seal of approval.

All of this data will enable Mannabase users wishing to give Manna to the less fortunate, or to worthy charities and nonprofit organizations, to create a “giving portfolio” and automatically make donations quickly and easily, either by reallocating their basic income on a recurring basis or by giving extra Manna that they have purchased or received as income from selling goods and services. Wallet addresses will be generated by the platform, as needed, to represent specific groups of recipients, or even in specific proportions, to empower givers to transfer funds to their intended charitable beneficiaries in a simple and highly efficient manner. Complex transfers of funds will occur on the back end, using smart contract technology, without users needing to construct the transactions themselves.

Mannabase will thus be a powerful platform for blockchain based charitable giving, incorporating both Universal Basic Income as well as user friendly tools for effective altruism to targeted recipients.

ECONOMIC NETWORK

Target Audience and Sectors

From the time of its inception as Grantcoin, the Manna project has always been about more than just giving away money. Although our team strongly believes in Universal Basic Income as the foundation of a new, more humane and equitable monetary system, we also believe that Manna can become the premier alternative currency of socially responsible business and the nonprofit sector.

This is a vast and growing segment of the economy. According to a 2017 study, 66% of consumers overall, and 73% of millennials, are willing to spend more on a product if it comes from a sustainable brand. Another study showed that 81% of global consumers say they seek out socially responsible products whenever possible. Furthermore, philanthropic giving for sustainable development accounts for nearly $8 billion USD per year on average, a large pool of resources from which capital could flow into Manna as an innovative way to provide economic opportunity for impoverished people and communities.

There is a wide opening in the cryptocurrency space for a project that pursues this socially conscious, humanitarian image and audience. Indeed, a token that can come to be seen and used as the “cryptocurrency of conscience” could realistically become one of the leading blockchain based currencies alongside Bitcoin and Ethereum.

One of the biggest challenges that crypto currencies have faced, which has impeded their adoption by the general public, is their largely negative image in the minds of most people, who view them as being driven primarily by a get rich quick mentality and as playthings of geeks and speculators rather than as tools for long term, universally beneficial social change, Manna, with its charitable values and mission, is uniquely positioned as a counterpoint to this negative public perception -which means it has both a specific market niche and arguably a greater potential for mass adoption than Bitcoin itself.

A large and growing percentage of society is looking for alternatives to what they perceive as corrupt socioeconomic institutions. Some look to Bitcoin, but many others do not, because they see Bitcoin as insufficiently designed to remedy the imbalances in the economy and society that have been produced by existing mainstream systems. Such people tend to be aligned with the movement for socially responsible business, eco friendly products, natural and locally produced foods, alternative health and personal development, the progressive arts and music scene, and nonprofit organizations such as charities and spiritual communities. These interests and values would tend to make them more receptive to Manna than to most other cryptocurrencies.

Tools and Incentives

The Mannabase platform will link holders of Manna currency with businesses where they can spend it and nonprofit organizations to which they can donate it. Thus, Mannabase will function as a much needed clearing house of information for “conscious consumers” and “people of conscience” in general, about businesses and organizations that may be especially worthy of their support. The People’s Currency Foundation will promote acceptance of payments and donations in Manna as a mark of distinction, signifying that the accepting institution is especially humane, sustainable. socially responsible, or progressive in its values.

Being listed on Mannabase may in and of itself prove to be a significant incentive for adoption of the currency by corporate entities whose customer or donorbase fits with the target audience of the Manna network. Beyond that, other incentives may also be needed, such as partnership grants or coupon programs. Manna to be used to encourage adoption by businesses and charities will come from the People’s Currency Foundation’s reserve (tokens reserved for partners and miscellaneous).

Technological tools will be utilized or developed to encourage merchant adoption, such as ecommerce plugins and donation buttons that can be deployed on websites, including full compatibility with popular web development platforms such as WordPress and Drupal. We will also study the possibilities for development of point of sale solutions for spending Manna at brick and mortar stores and establishments, or partnerships with providers of such tools that are in existence or under development for other cryptocurrencies. Whenever possible, we will seek to integrate Manna into the most promising and widely used multi-currency transaction tools already available, rather than duplicating the efforts of such projects.

Children’s Savings Program

One of the most compelling aspects of the development of the Manna economic network is our children’s savings account program. People of all ages, starting at birth, are eligible for Manna basic income distributions. Parents or legal guardians may sign up their children to receive basic income, if they provide a government is sued ID such as a birth certificate of the child.

The People’s Currency Foundation will also partner with charities that help orphans, which may sign them up for this program and provide demographic and economic data about these children in need. For example, we are already in discussions with two well established charities, in Cuatemala and Malawi, to establish pilot programs for this purpose.

Until a child reaches the age of 18, they will not be allowed to send funds out of their Mannabase wallet, but anyone may send Manna into it. Upon reaching 18, the wallet may be unlocked by the formerly minor child who has reached the age of majority, after providing sufficient proof of identity.

Children who accumulate Manna basic income for many years in this way will thus be provided with a large “basic capital’ grant upon reaching maturity, money which they can use to get a good start in their adult life, such as for college education, starting a business, or any other personal needs. This program will therefore create a loyal user base for Manna in the next generation, and will add to the incentives for socially conscious businesses to accept the currency, especially businesses whose customers are likely to be young people.

IMPACT

Current Known Impact

As of January 1, 2018, over $250,000 in Grantcoin (Manna) currency had been distributed so far as basic income and referral bonuses, to nearly 3,000 people in more than 100 countries around the world. The average recipient received approxi mately $85 in value, and some people have received hundreds, or even thousands of dollars. A large percentage of this value has been distributed to people in developing countries many of whom benefit greatly from relatively small amounts of money.

Grantcoin (Manna) has already given hope to numerous people in need. The majority of recipients are saving it for the future rather than cashing it out for Bitcoin, dollars, or their local currency. They understand that if they save it, and its value increases by orders of magnitude over time, it could become a significant nest egg to increase their standard of living or that of their children.

Although this project is still in its infancy, it is already having a noticeable impact on people’s lives. Numerous people from around the world write to the People’s Currency Foundation, expressing their gratitude for our work to create a new monetary system promoting economic justice and sustainability. For example:

“My entire household has received the Universal Basic Income. When I showed it (on my wallet) to them, the rush of hope among everyone was palpable. ” Rafael DI Liacco lndonesia

” I am working, going around colleges and universities, schools, etc, teaching people how to sign up for Grantcoin basic income. Young people in Sierra Leone are happy for this program. ” Osman Mansaray, Sierra Leone

“Grantcoin has come a long way [already] and its humanitarian spirit will continue to sustain and drive its successes. Love always. ” Simon D Bognet, Nigeria

The Grantcoin pilot project attracted significant interest and support from the Basic Income movement and activist community. For example, Eric Stetson, the founder of the project, spoke at the North American Basic Income Guarantee conference in New York in 2017. Grantcoin received positive coverage by Basic Income News (basicincome.org) and other blogs and journalists in the field.

The People’s Currency Foundation has an email list of over 10,000 people with an average open rate of over 25% for our mass emails and a Twitter account (@MannaCurrency) with over 5,000 followers. These numbers have been gained with almost no systematic marketing efforts by our organization or any other organizations on our behalf, and thus represent purely organic interest in the Manna project that has emerged mainly through word of mouth.

Manna has established itself as the clear leader in blockchain based Universal Basic Income. This momentum and first mover advantage, especially considering that the project has been mostly self funded by its core team and has done no paid advertising so far, makes a compelling case for the continued success and potential for explosive growth of the project.

Future Potential Impacts

Manna will demonstrate a proof of concept that Universal Basic Income can be implemented to meaningfully reduce poverty without increasing the burden of taxation by government. Our project will prove that though a grassroots, bottom up quantitative easing approach to monetary policy “helicopter money”, as distributed by a people powered alternative currency with populist and progressive values it is not necessary for governments to take from the rich and give to the poor. Instead, the people themselves can create alternative economic institutions with a built in, systemic design that gradually reduces the inequality of wealth and lifts people out of poverty through equitable distribution of newly created currency.

Manna will give rise to a new generation that prefers people powered, people empowering cryptocurrencies over traditional, debt based currencies issued by the for profit banking system. This new generation of “monetary consumers” will use the power of their freedom of choice to make monetary monopolies (i.e. government imposed fiat currencies) obsolete.

Manna could eventually become one of the leading cryptocurrencies in the world. because it is distributed as a Universal human right, and thus has the potential to acquire a much larger user base than most other alternative currencies including the vast number of people who comprise the “global poor,” who could never afford to acquire a meaningful amount of other forms of money.

If enough people use it, and if it gains the endorsement of major international charitable NGOs, Manna may come to be seen as a viable “people’s reserve currency,” in an era when the global hegemony of the US. dollar is increasingly being questioned. Manna can distribute economic power more widely and equitably among the nations of the world and their people. Thus, national governments, especially of developing countries, might consider diversifying their currency reserves into alternative currencies such as Manna that are designed to be compatible with the spirit of a global, forward looking civilization and the rights and needs of human beings in a high tech future.

FUNDING AND CAPITALIZATION

Tax-Deductible Donations

As a 501(c)(3) tax exempt nonprofit organization, the People’s Currency Foundation may receive tax deductible donations from contributors in the United States. Contributors outside the United States may also donate to our organization, but must follow the applicable tax laws of their own country,

In 2017, the Grantcoin Foundation (now the People’s Currency Foundation) raised approximately $11,000 in donations from more than 80 donors around the world. This does not count additional funds raised through sales of Grantcoin.

The People’s Currency Foundation will continue to seek funding from our user base through donations, and will attempt to convert first time donors into recurring donors. As our user base grows, we expect that the amount of money we raise from donations will continue to grow along with it.

According to our current policy to allocate only a minimal administrative budget and use all donations beyond that to help back the price of Manna on the market (excluding donations as part of specific crowdfunding campaigns or fundraising drives), we are pursuing other sources of funding as well, to meet our organization’s growing needs for personnel, technology, marketing, etc.

Grants and Endowments

The People’s Currency Foundation seeks grants by charitable organizations to fund program development and increase our working capital to run the Manna project in general.

We also welcome endowments from philanthropists and estates. Large amounts of capital can be provided with instructions to be held by the Foundation in a Capital Reserve Fund that we intend to establish. Income from these investments will be used to fund the Foundation’s operations and, if enough is available, to provide further backing of the value of Manna.

Grassroots Crowdfunding Campaign

In the first quarter of 2018, the People’s Currency Foundation will launch a crowd funding campaign. This campaign will be designed to reach large numbers of people with an inspirational message about the world transforming potential of the Manna project, and is intended to grow our donor base with a large number of new, mostly small donors.

Requested donation amounts will range from $10 to $250, with specific rewards for each level of financial support. Rewards will include Manna branded apparel, instructional videos and technical support packages for learning to use cryptocurrency, sample wallets with small amounts of Manna currency, and an introductory book by founder Eric Stetson.

Eric has an agreement with an award winning publishing company that specializes in books about personal development and progressive social change” His book about Manna, to be published in summer 2018, will weave a powerful story of the history of money and how this new currency can change people’s lives and empower us to create a better future. Eric will take the book on a speaking tour to fundraise, raise awareness of the Manna project, and stimulate rapid growth and support among influencers in the fields of progressive spirituality, health and wellness, education, technology, sustainable business and socially responsible investing.

This campaign will aim to raise at least $50,000, to be used to fund basic operating expenses in 2018.

Sales of Manna

Mannabase. Inc. may sell Manna from its holdings on an ongoing basis to fund technology development of the Mannabase platform and other administrative expenses. This is not an ICC, and all sales will be conducted in compliance with applicable laws and regulations.

Capital Reserve Fund

When the People’s Currency Foundation is sufficiently capitalized, we will establish a Capital Reserve Fund consisting of a well balanced investment portfolio. Profits from this fund will provide an ongoing revenue stream for our organization, enabling us to become less reliant on donations or other methods of fundraising.

Ultimately, our goal is to use 100% of donations to back the market value of Manna, and to have a large enough capital reserve so that all of the Foundation’s financial needs can be covered by profits generated by our investment fund, without needing to use any of the principal. If our capital reserve grows large enough and generates more profits than needed each year, we will use the remainder as additional backing for Manna on the market.

Growing our capital reserve fund is therefore a key goal. which will ensure the long term financial sustainability of our organization, and can help Manna become a robustly asset backed currency capable of sustaining a multi billion dollar market cap with continued growth of its money supply for basic income distributions.

Left Should Stop Equating Labour with Work – Guy Standing.

It is intellectually excusable for those on the political right to want to restrict the meaning of work to labour, or income earning activity. It is inexcusable for those on the political left to do so.

Social democrats are paying a heavy political price for having done so throughout the 20th century. They fell into their own political trap, putting the notion of Full Employment on a pedestal, when that meant little more than maximising the number of people in labour, in positions of subordination to bosses.

Unless the left can escape from the folly of equating labour with work, they will continue to haemorrhage support and drift into the political margins. Why should putting as many people as possible in ‘jobs’ be construed as defining progressive politics?

Social democrats, who have based their politics on labour, should be reminded that the objective of employment stability, or security, was originally advocated by employers in the mid-19th century, not workers’ representatives. For many decades, the term ’in employment’ was a matter of regret, a recognition of low social status, typically applied to single women obliged to take low-paid positions serving in households headed by the bourgeoisie or aristocracy.

Through the 20th century, a peculiar alliance of political ideologies made labour obligatory, except by the landed gentry and the ‘idle rich’. What should at most have been regarded as an onerous necessity in a capitalist system became a pathological necessity in the Soviet Constitution in the Leninist phrase, ’He that doth not labour should not eat’, and took an equally antiemancipatory form in all forms of social democracy.

Very deliberately, entitlement to decent social security was limited to those who performed labour for bosses, or who demonstrated in demeaning ways a willingness to perform labour, or who, in a derivative subordinated way, were married to someone who was performing labour, or who had spent a long period in service doing so.

Forced Labour

Heroes and heroines of social democracy took all that to logical conclusions. Thus Beatrice Webb, mother of Fabian socialism, openly advocated labour camps, using force if necessary, giving Blairite Ministers a justification for advocating workfare several generations later. Meanwhile, William Beveridge, patron saint of the British welfare state, an avowed liberal currently being feted in a celebratory year in the LSE, believed in ’the whip of starvation’ to force workers to labour. At best, this perspective is paternalistic; at worst, anti-emancipatory.

These prejudices were taken forward into ILO Conventions, the embodiment of the social democratic model. They crystallised in Convention 102 of 1952, the Social Security Convention, which speaks of ‘breadwinners’, dependent wives and year of ‘service’ in labour, earning entitlementt protection. This quaint piece of legislation may seem like a throwback to the 1930s that led social democrats to work for it after 1945. However, in 2001 the trades unions of Europe and social democratic governments led the way in demanding that it be kept as one of the ‘up-to-date’ international conventions.

These inconvenient truths must be confronted, not brushed out of the left’s history. Social democrats have been remarkably silent on the systematic distortion of work as labour. They have, for a start, done nothing to alter the rhetoric or to question the statistical representation of work that has been used in national accounts and labour statistics since the 1930s. Unless they change, they cannot hope to recapture the political heights, and they will not deserve to do so.

If you spend six hours a day caring for an elderly relative, that in social democratic and neoliberal parlance is not work. If you spend three hours a day looking after somebody else’s elderly relative for a wage, that is called work, you are elevated to decency as an ’employee’, and you are likely to be protected in some way by labour and social security laws. This discrimination is absurd.

At this point, one should mention the common social democratic impertinence, the assertion that being in a job gives someone ’dignity’, ’status’ and the means of social integration, a sense of belonging in society. I should declare an interest here, perhaps shared by a few readers. I have never felt more dignity or more integrated in society than since I ceased to have a job.

Rather more germanely, tell a man going down a sewer to fix pipes that he is gaining dignity and a sense of belonging to society, and you may receive an unwelcome retort. Indeed, if you did not, one might be inclined to think of false consciousness. Tell a woman who reluctantly goes out in the morning to clean bed pans that she is being integrated and should be grateful for having a job, and you may receive an earful, as they say.

For most people, jobs are instrumental, not to be vilified or romanticised. There is no justifiable reason for elevating them above other forms of work. It is this that social democrats have done. That is not a progressive position. Marx was right in calling labour ’alienated activity’.

Populist Fallacy

However, today there are two other reasons for saying that all progressives should be more radical and intellectually honest about work.

First, the dualisms of labourism that made a rough-and-ready basis for social democracy in an era of industrial capitalism are breaking down. It is increasingly distortionary to persist with the pretence that they still apply as norms. The growing precariat know this all too well. That is one reason why they are tending to turn to new progressive movements that old social democrats are all too keen to dismiss as ‘populist’.

The two dualisms that were the base of social democratic social and labour policy were the ’workplace’ vs other places and ‘labour time’ vs other time uses. More and more work is being done away from formal workplaces and outside labour time, as l have argued at length elsewhere. Those in the precariat often spend more time doing work-for-labour and work-for-the-state than actual labour. Social democrats implicitly tell them that this is not real work.

If one accepts this reality, then one should recognise that existing national labour statistics increasingly distort the images of work and the way people are living. Making social policy dependent on observed labour is correspondingly indefensible for anybody claiming to be on the left. For somebody on the right, the distortion is fantastic. Protection should only be given to those in visible labour.

It was Third Way social democracy that went furthest down that road, claiming there should be no rights without responsibility, and that the poor should demonstrate that in labour, by being in jobs.

One should leave it to the conscience of social democrats to explain why they have been silent on the nature of national labour statistics. The end game of the acceptance of the labourist model is workfare, which is inevitable if one accepts means-testing and labour market flexibility. Matteo Renzi in Italy was the latest to go in that direction, and his social democratic party (PD) is the latest to pay the price of implosion, to become ‘dead men walking’.

Wim Kok, who forged the Third Way, set the way for the Dutch Labour Party entering the abyss, the Hartz IV reforms condemned Germany’s social democrats to its long decline, and New Labour with its lurch to means-testing and workfare lost the British precariat, and allowed the spectre of Universal Credit to emerge as the most illiberal social policy for many decades.

Ageing social democrats spend much more time vehemently attacking basic income, which besides offering prospective income security, encourages work rather than labour, than to critiquing workfare, forcing the unemployed into menial labour.

Unless social democrats can reverse their commitment to labourism, they are surely finished as a political force.

It is that fundamental. However, it is the other reason for wanting to refashion progressive thinking about work that is even more important in the context of the ecological crisis rushing towards us.

Sadly, the left in general and social democrats in particular have a bad record in ecological terms. Whenever there has been a conflict between job creation and the environment, they have given precedence to jobs, so-called ’working class’ jobs. At best, social democrats have been left with a residual policy of dealing with ’externalities’ and pollution control, rather than advocating a sustainable development strategy.

Green Left Growth

That aside, the left must restart. Consider the following dilemma. If only labour is captured by national statistics, and if only labour is accepted by the bureaucrats operating social policy, then ‘economic growth’ is underestimated and we give too much emphasis to activities that result in resource depletion. If instead, a nonlabourist approach were taken, the value of work that is not labour commonly called ’use value’ would be given at least equal weight to the value of labour exchange value.

For anybody on the ‘Green-Left’, this should have wonderful appeal. It would enable them to overcome the awkwardness of the term ’de-growth’.

If activities designed to conserve resources and reproduce ourselves and our communities, our commons, are given equal value to resource depleting activities, then shifting from the latter to the former would not lower ’growth’ or be ‘de-growth’.

It is hard to sustain a political campaign of de-growth if that means lowering economic growth, since with conventional statistics that implies lowering the standard of living on average. To a sophisticated Green, that might make one feel virtuous and principled, but it is unlikely to appeal on the doorstep of the typical voter.

If work that is not labour were given equal (or ideally more) weight and attention in statistics, in progressive rhetoric, and in articles and books written by progressives, that would enable everybody to measure ’growth’ in a more ecologically sensible way. I am sure many of us on the left feel uncomfortable with calls by quasi Keynesians and others on the left for more growth when that might just mean more rapid resource depletion, global warming and loss of work in favour of labour.

There is no escape from the social democratic trap, in conventional thinking, if you shift from doing a boring job going to an office each day to spending the same time looking after elderly relatives or your local community, economic growth goes down, which is regarded as ’bad’. If that care work were valued at no more but no less than that office job, the shift would not lower growth. Some of us would wish to be more radical still. But that would be a great start


Guy Standing is Professorial Research Associate at SOAS University of London and author of The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay (Biteback, 2016) and Basic Income: And How We Can Make It Happen (Penguin, 2017). He also wrote The Precariat: The New Dangerous Class (Bloomsbury, 2011), and A Precariat Charter: From Denizens to Citizens (Bloomsbury, 2014).

He is honorary co-president of the Basic Income Earth Network (BIEN), an international NGO that promotes basic income.

Raising the Floor. How a Universal Basic Income can Renew Our Economy – Andy Stern.

Sixteen years into the twenty-first century we are trying to find solutions to its unique problems, especially those that are challenging the way we work, earn a living, and support our families, with ideas and methods that worked in the twentieth.

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Most Americans, working or not, have lived through a very tough period, especially since the financial crash of 2008. What I have found from speaking with thousands of people from every economic strata is that they often blame themselves for not finding a permanent or good paying job; for getting laid off or working inconsistent hours; for taking multiple low wage jobs or contingent work just to make ends meet; for, especially in the case of recent college graduates, needing to move back into their parents’ house; for not building a nest egg or enough savings to retire; for working tirelessly so that their kids could go to college, and now their children can’t get a job.

What I want to say to each and every one is: This should not be about personal blame because the changes that are causing this jobless, wage-less recovery are structural. You worked hard. You played by the rules. You did exactly what you were supposed to do to fulfill your part of America’s social contract.

There is hope for our economy and future, but only if we come to terms with how the current explosion in technology is likely to create a shortage of jobs, a surplus of labor, and a bigger and bigger gap between the rich and poor over the next twenty years.

When I left my job as president of the Service Employees International Union (SEIU) in 2010, I undertook a five year journey to better understand the way technology is changing the economy and workplace, and to find a way to revive the American Dream. I have structured this book around many of the people I met on this journey, their assessment of the problem, my observations about whether I think they are on the money or just plain wrong, and then the solution of a universal basic income. That solution is a work in progress. I invite you to join me in debating it, refining it, and building a constituency for it, so that we can help America fulfill its historical promise to future generations of our children.

Andy Stern, Washington, DC, June 2016

Can we invent a better future?

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“There’s something happening here. What it is ain’t exactly clear.” Buffalo Springfield

CAMBRIDGE, MA. NOVEMBER 17, 2014

I am walking around one of the most out of this world places on earth, the MIT Media Lab in Cambridge, Massachusetts. There is a huge amount of brainpower here: more than twenty groups of MIT faculty, students, and researchers working on 350 projects that range from smart prostheses and sociable robots to advanced sensor networks and electronic ink. The Media Lab is famous for its emphasis on creative collaboration between the best and the brightest in disparate fields: scientists and engineers here work alongside artists, designers, philosophers, neurobiologists, and communications experts. Their mission is “to go beyond known boundaries and disciplines” and “beyond the obvious to the questions not yet asked, questions whose answers could radically improve the way people live, learn, express themselves, work, and play.”

Their motto, “inventing a better future”, conveys a forward looking confidence that’s been lacking in our nation since the 2008 financial crisis plunged us into a recession followed by a slow, anxiety inducing recovery.

On this cloudy November day, it seems that all the sunlight in Cambridge is streaming through the glass and metallic screens that cloak the Media Lab, rendering it a luminous bubble, or a glowing alternative universe. Architect Fumihiko Mako designed the building around a central atrium that rises six floors, “a kind of vertical street,” he called it, with spacious labs branching off on each floor. Walking up the atrium, you look through the glass walls and see groups of (mainly) young geniuses at work.

Or are they playing? I am struck by how casual and unhurried they seem. Whether they are lounging on couches, gathered around a computer screen, drawing equations on a wall, these inventors of the future seem to be having a whole lot of fun. That’s not how the thirty people who are leaders in the labor movement and the foundation world who accompanied me here would characterize their own workplaces. They have been grappling with growing income inequality, stagnant wages, and increasing poverty in the communities they serve, and also with political gridlock on Capitol Hill. It’s been harder for them to get funding and resources for the important work they do.

They have come here, as I have, to get a glimpse of how MIT’s wizards and their technologies will impact the millions of middle and lower income Americans whose lives are already being disrupted and diminished in the new digital economy. Will these emerging technologies create jobs or destroy them? Will they give lower and middle income families more or less access to the American Dream? Will they make my generation’s definition of a “job” obsolete for my kids and grandkids?

For the past five years, I’ve been on a personal journey to understand an issue that should be at the heart of our nation’s economic and social policies: the future of work. I have been interviewing CEOs, labor leaders, futurists, politicians, entrepreneurs, and historians to find answers to the following questions: After decades of globalization and technology driven growth, what will America’s workplaces look like in twenty years? Which job categories will be gone forever in the age of robotics and artificial intelligence? Which new ones, if any, will take their place?

The MIT Media Lab is one stop on that journey; since the early 1990s, it has been in the forefront of wireless communication, 3D printing, and digital computing. Looking around at my colleagues, I think: People like us, labor organizers, community activists, people at the helm of small foundations that work for social and economic justice, don’t usually visit places like this. We spend our time in factories and on farms, in fast food restaurants and in hospitals advocating for higher wages and better working conditions. While we refer to our organizations by acronyms, SEIU (Service Employees International Union), OSF (Open Society Foundations), and NDWA (National Domestic Workers Alliance)-there is one acronym most of us would never use to describe ourselves personally: STEM. Most of today’s discussion will involve science, technology, engineering, and mathematics, the STEM subjects and it will go way over our heads. Instead, we’ll be filtering what we see through our “progressive” justice, engagement, and empowerment lenses, and how we experience technology in our own lives.

Personally I am of two minds about technology. On the one hand, I want it to work well and make my life easier and more enjoyable. On the other, I’m afraid of the consequences if all of the futuristic promises of technology come to fruition.

As I wait for the first session to begin, I take out my iPhone and begin reading about the Media Lab’s CE 2.0 project. CE stands for consumer electronics, and CE 2.0 is “a collaboration with member companies to formulate the principles for a new generation of consumer electronics that are highly connected, seamlessly interoperable, situation-aware, and radically simpler to use,” according to the Media Lab’s website.

CE 2.0 sounds really, really great to me. Then I realize that I’m reading about it on the same iPhone that keeps dropping conference calls in my New York apartment to my partners and clients in other parts of the city. So how can I ever expect CE 2.0 to live up to the Media Lab’s hype? And then I find myself thinking: What if it does? What if CE 2.0 exceeds all the hype and disrupts a whole bunch of industries? Which jobs will become obsolete as a result of this new generation of consumer electronics? Electricians? The people who make batteries, plugs, and electrical wiring? I keep going back and forth between the promise and the hype and everything in between. Even though CE 2.0 is basically an abstraction to me, it conjures up all sorts of expectations and fears. And I think that many of my friends and colleagues have similar longings, doubts, and fears when it comes to technology.

All of the projects at the MIT Media Lab are supported by corporations. Twitter, for instance, has committed $10 million to the Laboratory for Social Machines, which is developing technologies that “make sense of semantic and social patterns across the broad span of public mass media, social media, data streams, and digital content.” Google Education is funding the Center for Mobile Learning, which seeks to innovate education through mobile computing. The corporations have no say in the direction of the research, or ownership of what the MIT researchers patent or produce; they simply have a front row seat as the researchers take the emerging technologies wherever their curiosity and the technology takes them.

Clearly, there is a counter cultural ethos to the Media Lab. Its nine governing principles are: “Resilience over strength. Pull over push. Risk over safety. Systems over objects. Compasses over maps. Practice over theory. Disobedience over compliance. Emergence over authority. Learning over education.” For me, that’s a welcome invitation to imagine, explore new frontiers, and dream.

Before we tour the various labs, Peter Cohen, the Media Lab’s Director of Development, tells us that there is an artistic or design component to most of the Media Lab’s projects. “Much of our work is displayed in museums,” he says. “And some are performed in concert halls.” One I particularly like is the brainchild of Tod Machover, who heads the Hyperinstruments/Opera of the Future group. Machover, who co-created the popular Guitar Hero and Rock Band music video games, is composing a series of urban symphonies that attempt to capture the spirit of cities around the world. Using technology he’s developed that can collect and translate sounds into music, he enlists people who live, work, and make use of each city to help create a collective musical portrait of their town. To date, he’s captured the spirits of Toronto, Edinburgh, Perth, and Lucerne through his new technology. Now he is turning his attention to Detroit. I love this idea of getting factory workers, teachers, taxi cab drivers, police officers, and other people who live and work in Detroit involved in the creation of an urban symphony that can be performed so that the entire city can enjoy and take pride in it.

We head to the Biomechatronics Lab on the second floor. Luke Mooney, our guide to this lab, is pursuing a PhD in mechanical engineering at MIT. Only twenty four, he has already designed and developed an energy efficient powered knee prosthesis. He shows us the prototype, a gleaming exoskeleton enveloping the knee of a sleek mannequin. Mooney created the prosthesis with an expert team of biophysicists, neuroscientists, and mechanical, biomedical, and tissue engineers. It will reduce the “metabolic cost of walking,” he tells us, making it easier for a sixty four year old with worn out knees and a regularly sore back like me to maybe run again and lift far more weight than I could ever have dreamed of lifting.

Looking around, I’m struck by the mess, coffee cups and Red Bull cans, plaster molds of ankles, knees, and feet, discarded tools and motors, lying all over the place, like the morning after a month of all nighters.

The founder of the Biomechatronics Lab, Hugh Herr, is out of town this day, but his life mission clearly animates the Lab. When he was seventeen, a rockclimbing accident resulted in the amputation of both his legs below his knees. Frustrated with the prosthetic devices on the market, he got a master’s degree in mechanical engineering and a PhD in biophysics, and used that knowledge to design a prosthesis that enabled him to compete as an elite rock climber again. In 2013, after the Boston Marathon bombings, he designed a special prosthesis for one of the victims: ballroom dancer Adrianne Haslet-Davis, who had lost her lower left leg in the blast. Seven months later, at a TED talk Herr was giving, Haslet-Davis walked out on the stage with her partner and danced a rumba. “In 3.5 seconds, the criminals and cowards took Adrianne off the dance floor,” Herr said. “In 200 days, we put her back.”

At our next stop, the Personal Robotics Lab, Indian born researcher Palash Nandy tells us the key to his human friendly robots: their eyes. By manipulating a robot’s eyes and eyebrows, Nandy and his colleagues can make the robot appear sad, mad, confused, excited, attentive, or bored. Hospitals are beginning to deploy human friendly robots as helpmates to terminally ill kids. “Unlike the staff and other patients, who are constantly changing,” Nandy says, “the robot is always there for the child, asking him how he’s doing, which reduces stress.”

With the help of sophisticated sensors, the Personal Robotics Lab is building robots that are increasingly responsive to the emotional states of humans. Says Nandy: “Leo the Robot might not understand what you need or mean by the words you say, but he can pick up the emotional tone of your voice.” In a video he shows us, a researcher warns Leo, “Cookie Monster is bad. He wants to eat your cookies.” In response, Leo narrows his eyes, as if to say: “I get your message. I’ll keep my distance from that greedy Cookie Monster.”

Nandy also sings the praises of a robot who helps children learn French, and one that’s been programmed to help keep adults motivated as they lose weight.

My colleagues are full of questions and also objections:

“Can’t people do most of these tasks as well or better than the robots?”

“If every child grows up with their own personal robot friend, how will they ever learn to negotiate a real human relationship?”

“If you can create a robot friend, can’t you also create a robot torturer? Ever thought of that?”

“Yeah,” Nandy says, seeming to make light of the question. “But it’s hard to imagine evil robots when I’m around robots that say ‘I love you’ all day long.”

As awestruck and exhilarated as we are by what we see, my colleagues and I are getting frustrated by the long pauses and glib answers that greet so many of our concerns about the long-term impact of the technologies being developed here on the job market, human relationships, and our political rights and freedoms. As they invent the future, are these brilliant and passionate innovators alert to the societal risks and ramifications of what they’re doing?

On our way into the Mediated Matter Lab, we encounter a chaise lounge and a grouping of truly stunning bowls and sculptures that have been created using 3D printers. Markus Kayser, our guide through the Mediated Matter Lab, is a thirty one year old grad student from northern Germany. A few years ago he received considerable acclaim and media attention for a device he created called the Sun Sinter.

Kayser shows us a video of a bearded hipster, himself, carrying a metallic suitcase over a sand dune in Egypt’s Saharan Desert. It’s like a scene in a Buster Keaton movie. He stops and pulls several photovoltaic batteries and four large lenses from the suitcase. Then he focuses the lenses, at a heat of 1,600 degrees centigrade, onto a bed of sand. Within seconds, the concentrated heat of the sun has melted the sand and transformed it into glass. What happens next on the video gives us a glimpse into the future of manufacturing. Kayser takes his laptop out of the suitcase and spends a few minutes designing a bowl on the computer. Then, with a makeshift 3D printer powered by solar energy, he prints out the bowl in layers of plywood. He places the plywood prototype of the bowl on a small patch of desert. Then he focuses the lenses of the battery charged Solar Sinter on the sand. And then, layer after layer, he melts the sand into glass until he’s manufactured a glass bowl out of the desert’s abundant supplies of sun and sand.

“My whole goal is to explore hybrid solutions that link technology and natural energy to test new scenarios for production,” Kayser tells us. But the glass bowl only hints at the possibilities. Engineers from NASA and the US Army have already talked to him about the potential of using his technology to build emergency shelters after hurricanes and housing in hazardous environments, for example, in the desert regions of Iran and Iraq.

“How about detention centers for alleged terrorists?” one of my colleagues asks slyly. “I bet the Army is licking its chops to build a glass Guantanamo in the desert only miles from the Syrian border.”

Another asks: “Has anyone talked to you about using this technology to create urban housing for the poor?”

Kayser pauses before shaking his head no. The questions that consume our group most, how can we use this powerful technology for good rather than evil and to remedy the world’s inequities and suffering, do not seem of consequence to Kayser. This is by design: the Media Lab encourages the researchers to follow the technology wherever it leads them, without the pressure of developing a big-bucks commercial product, or an application that will save the world. lf they focus on the end results and specific commercial and social outcomes, they will be less attuned to the technology, to the materials, and to nature itself, which would impede their creative process. I understand that perspective, but it also worries me.

As I watch Kayser and his Solar Sinter turn sand into glass, another image comes to mind: Nearly 4,700 years ago, in the same Egyptian desert where Kayser made his video, more than 30,000 slaves, some of them probably my ancestors, and citizen-volunteers spent seven years quarrying, cutting, and transporting thousands of tons of stone to create Pharaoh Khufu’s Great Pyramid, one of the Seven Wonders of the Ancient World. That’s a lot of labor compared with what it will take to build a modern day community of glass houses in the vicinity of the Pyramid, or in Palm Springs, using the next iteration of the Sun Sinter. I’m concerned about the Sun Sinter’s impact on construction jobs.

Employment issues are at best a distant concern for the wizards who are inventing the future. Press them and they’ll say that technological disruption always produces new jobs and industries: Isn’t that what happened after Gutenberg invented the printing press and Ford automated the assembly line?

It was. But, as I reflect on this day, I remember a conversation I had with Steven Berkenfeld, an investment banker at Barclay’s Capital. Berkenfeld has a unique and important perspective on the relationship between technology and jobs. Day in, day out, he is pitched proposals by entrepreneurs looking to take their companies public. Most of the companies are developing technologies that will help businesses become more productive and efficient. That means fewer and fewer workers, according to Berkenfeld.

“Every company is trying to do more with less,” he explained. “Industry by industry, and sector by sector, every company is looking to drive out labor.” And very few policy makers are aware of the repercussions. “They convince themselves that technology will create new jobs when, in fact, it will displace them by the millions, spreading pain and suffering throughout the country.

When you look at the future from that perspective, the single most important decisions we need to make are: How do we help people continue to make a living, and how do we keep them engaged?”

At the end of our visit to the Media Lab, my job, as convener of the group, is to summarize some of the day’s lessons. I begin with an observation: “It’s amazing how the only thing that doesn’t work here is when these genius researchers try to project their PowerPoints onto the screen.” The twenty or so people who remain in our group laugh knowingly. Just like us, the wizards at MIT can’t seem to present a PowerPoint without encountering an embarrassing technological glitch.

I continue by quoting a line from a song by Buffalo Springfield, the 1960s American-Canadian rock band: “There’s something’s happening here. What it is ain’t exactly clear.”

That’s how I feel about our day at MIT; it has given us a preview of the future of work, which will be amazing if we can grapple with the critical ethical and social justice questions it elicits. “I’ve spent my whole life in the labor movement chasing the future,” I tell my colleagues. “Now I’d like to catch up to it, or maybe even jump ahead of it, so I can see the future coming toward me.”

Toward that end, I ask everyone in the group to answer “yes,” “no,” or “abstain” to two hypotheses.

Hypothesis number one: “The role of technology in the future of work will be so significant that current conceptions of a job may no longer reflect the relationship to work for most people. Even the idea of jobs as the best and most stable source of income will come into question.”

Hypothesis number two: “The very real prospect in the United States is that twenty years from now most people will not receive a singular income from a single employer in a traditional employee-employer relationship. For some, such as those with substantial education, this might mean freedom. For others, those with a substandard education and a criminal record, the resulting structural inequality will likely increase vulnerability.”

There are a number of groans (“Jesus, Andy, can you get any more long-winded or rhetorical?”) but each member of the group writes their answers on a piece of paper, which I collect and tally. The first hypothesis gets eighteen yeses and two abstentions. The second gets sixteen yeses, three noes, and one abstention.

I am genuinely surprised by these results. Six months ago, at our last meeting of the OSF Future of Work inquiry, my colleagues had a much more varied response to these hypotheses. At least half of them did not agree with my premise that technology would have a disruptive impact on jobs, the workplace, and employer-employee relationships, and some of them disputed the premise quite angrily. (“What do you think we are, Andy-psychics?”) Today’s tally reflects their acknowledgment that something is happening at MIT and across the United States that will fundamentally change the way Americans live and work, what it is ain’t exactly clear, but it merits our serious and immediate attention.

As they go about inventing the future, the scientists and researchers at the Media Lab aren’t thinking about the consequences of their work on the millions of Americans who are laboring in factories, building our homes, guarding our streets, investing our money, computing our taxes, teaching our children and teenagers, staffing our hospitals, driving our buses, and taking care of our elders and disabled veterans.

They aren’t thinking about the millions of parents who scrimped and saved to send their kids to college, because our country told them that college was the gateway to success, only to see those same kids underemployed or jobless when they graduate and move back home.

They aren’t thinking about the dwindling fortunes of the millions of middle class Americans who spent the money they earned on products and services that made our nation’s economy and lifestyle the envy of the world.

They aren’t thinking about the forty-seven million Americans who live in poverty, including a fifth of the nation’s children.

Nor should they. That is my job, our job together, and the purpose of this book.

But I’m getting ahead of myself. The reason I am at the MIT Media Lab stems from a combination of personal and professional factors in what seemed to many to be my abrupt decision to step down as head of America’s most successful union, the Service Employees International Union, or SEIU. To better understand where I am coming from and going with this book you need to understand my personal journey.

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from

Raising the Floor. How a Universal Basic Income can Renew Our Economy and Rebuild the American Dream

by Andy Stern

get it at Amazon.com

The Indestructible Idea of the Basic Income. A History – Jesse Walker.

Is this the only policy proposal Tom Paine, Huey Long, Milton Friedman, Timothy Leary and Sam Altman can agree on?

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Andy Stern is a former president of the Service Employees International Union. Charles Murray may be America’s most prominent right-wing critic of the welfare state. So when they appeared onstage together in Washington, D.C., last fall to discuss the basic income, the idea of keeping people out of poverty by giving them regular unconditional cash payments, the most striking thing about the event was that they kept agreeing with each other.

It isn’t necessarily surprising that Stern and Murray both back some version of the concept. It has supporters across the political spectrum, from Silicon Valley capitalists to academic communists. But this diverse support leads naturally to diverse versions of the proposal, not all of which are compatible with one another. Some people want to means-test the checks so that only Americans below a certain income threshold receive them; others want a fully universal program, given without exceptions. Some want to replace the existing welfare state; others want to tack a basic income onto it. There have been tons of suggestions for how to fund the payments and for how big they should be. When it comes to the basic income, superficial agreement is common but actual convergence can be fleeting.

In Stern’s case, the central issue driving his interest in the idea is the turmoil he expects automation to bring to the economy. In the future, he and Lee Kravitz predict in their 2016 book Raising the Floor, tens of millions of jobs will disappear, leaving much of the country stuck with work that is “contingent, part-time, and driven largely by people’s own motivation, creativity, and the ability to make a job out of ‘nothing. A basic income, he hopes, would bring some economic security to their lives.

Read Murray’s first detailed pitch for a guaranteed income, the 2006 book In Our Hands, and you won’t see anything like that. Its chief concern is shifting power from government bureaucracies to civil society. It doesn’t just propose a new transfer program; it calls for repealing every other transfer program. And automation isn’t a part of its argument at all.

But onstage at the Cato Institute in DC, Murray was as worried as Stern about technological job loss, warning that “we are going to be carving out millions of white-collar jobs, because artificial intelligence, after years of being overhyped, has finally come of age.” Meanwhile, Stern signaled that he was open not just to replacing welfare programs for the disadvantaged but possibly even to rethinking Social Security, provided that people still have to contribute money to some sort of retirement system and that Americans who have already paid in don’t get shortchanged. He drew the line at eliminating the government’s health insurance programs, but the other guy on the stage agreed that health care was different. Under Murray’s plan, citizens would be required to use part of their grant to buy health insurance, and insurance companies would be required to treat the population as a single pool.

The Murray/Stern convergence comes as the basic income is enjoying a wave of interest and enthusiasm. The concept comes up in debates over everything from unemployment to climate change. Pilot programs testing various versions of the idea are in the works everywhere from Oakland to Kenya, and last year Swiss voters considered a plan to introduce a guaranteed income nationwide. (They wound up rejecting the referendum overwhelmingly, with only 23 percent voting in favor. I didn’t say everyone was enthusiastic.)

This isn’t the first time the basic income or an idea like it has edged its way onto the agenda. It isn’t even the first time we’ve seemed to see an ideological convergence. This patchwork of sometimes overlapping movements with sometimes overlapping proposals has a history that stretches back centuries.

It Usually Begins with Tom Paine

Just where you pinpoint the start of that history depends on how broadly you’re willing to define basic income. The idea’s advocates have identified plenty of precursors to their proposals, but sometimes the connection can be a little tenuous. It’s true, as they’ll tell you, that in 1516 St. Thomas More suggested that society could reduce crime by “providing everyone with some means of livelihood.” It’s a bit of a leap from there to the plans being debated today.

But we have to start somewhere, and for two reasons 1795 is a good place to begin. That’s the year Thomas Paine started to write his pamphlet Agrarian Justice. It’s also the year some squires introduced a new system of relief to the English district of Speenhamland.

Agrarian Justice, which was ultimately published in 1797, posited that “the earth, in its natural, uncultivated state was…the common property of the human race.” Therefore, Paine argued, each landowner “owes to the community a ground-rent” to compensate the dispossessed for their loss. From those fees, “the sum of fifteen pounds sterling” should be paid to everyone when they turn 21, with another “ten pounds per annum” paid after they’ve turned 50.

Eighteenth century England already had a welfare apparatus. Under the Poor Laws, different local governments devised different systems for distinguishing the “deserving” from the “undeserving” poor, and for extracting labor from able-bodied paupers. Paine was proposing something else: money for everyone just for being alive and of age, delivered as a matter of “justice, and not charity.”

The squires of Speenhamland were less idealistic and more afraid. The cost of grain had skyrocketed in Britain, food riots were breaking out, and the landed classes were casting their eyes uneasily at the revolutionary violence in France. And so in May of 1795, just a few months before Paine began his pamphlet, the Speenhamland magistrates decided to adopt a new method of public assistance. Junking the old deserving/undeserving distinction, they would now ensure that all the poor in their village received an income, with the level of aid varying with the market price of bread.

The so-called Speenhamland system was soon adopted in other parishes. It persisted until 1834, when a royal commission declared it a failure. Parliament then adopted the New Poor Law, which required able-bodied paupers who wanted relief to be confined in tightly disciplined workhouses.

The commission’s report on Speenhamland painted a picture of indolence and immorality, accusing the system of discouraging men from working and encouraging women to have children out of wedlock. The royal report also suggested that the system subsidized low wages, making it more a ceiling than a floor for poor people’s incomes. Since then, several scholars have challenged the commission’s conclusions, noting that its data were not collected very scientifically, that many effects attributed to the system actually preceded it, and, perhaps most notably, that the Speenhamland approach wasn’t actually all that widespread. (Different districts had continued to give relief in different ways.) But those critiques are a relatively recent development. In between, the commission’s conclusions influenced figures ranging from Marx to Mises.

Neither the system in Paine’s pamphlet nor the system in Berkshire County was a full-fledged basic income. But between the radical calling for a new allocation of power and the insiders afraid their power would be overturned, the 1790s anticipated a lot of arguments to come.

From Huey Long to Timothy Leary Several similar proposals circulated in the ensuing centuries. The economist Henry George, famous for arguing that government should be funded by a single tax on land, thought that any “surplus revenue might be divided per capita.” The philosopher Bertrand Russell suggested that “a certain small income, sufficient for necessaries, should be secured to all.” The engineer C.H. Douglas proposed a “national dividend” as part of his economic philosophy of “social credit.” Douglas’ doctrine was briefly in vogue among modernist intellectuals, with advocates ranging from the anarchist art critic Herbert Read to the fascist poet Ezra Pound.

Pound’s favorite governor, the Louisiana populist Huey Long, launched a Share Our Wealth campaign during the Depression; its planks included a guaranteed annual income of $2,500 per family (and confiscatory taxes on incomes over $1 million). In the early ’40s, the literary socialists HG. Wells and George Bernard Shaw proposed a basic income of $3,200 to $4,800 a year. (When The Tuscaloosa News reported this, it presented the idea to its American audience as “a sort of intellectual Huey Long Share-the-Wealth plan for Great Britain”) And there were others, from the English Quakers who called their proposal a ”state bonus” to the market socialists who endorsed a “social dividend.”

Some of these thinkers hailed from the left, but many did not; or at least they weren’t a part of the conventional left. There is a current of thought that’s deeply skeptical of both the statist forms of socialism and the monopolistic forms of capitalism, and which often fixates on quirky policy ideas, George’s land tax, Douglas’ monetary scheme, that aim to tame concentrated economic power without concentrating power in the government instead. The basic income fits snugly in that tradition, especially when the payments are presented not as a form of relief but as dividends to the owners of society’s resources.

Those third-way ideas tend to take hold in two places that aren’t usually associated together: avant-garde intellectual circles and populist movements. Social credit, for instance, made a strange transit from the modernists‘ salons to the prairies of western Canada, where the Depression left voters eager to try something new.

In 1935, the Albertan electorate swept a party based on the philosophy into power; the new premier, radio evangelist William Aberhart, pledged to distribute dividends of $25 a month. This turned out to be more easily promised than delivered, and in 1937, frustrated Social Credit Party backbenchers revolted over the government’s failure to issue the checks. They won the political battle but lost the policy war. (Two decades later, flush with energy wealth, a Social Credit government finally distributed “oil dividends” to Albertans in 1957 and 1958. A Tory government reprised the idea in 2006, this time calling the oil-fueled checks a “prosperity bonus”)

Yet another version of the idea took hold among free market economists. In the 1940s, Milton Friedman and George Stigler started exploring the concept of a negative income tax. The idea here, in Stigler’s words, was to “extend the personal income tax to the lowest income brackets with negative rates in these brackets.” By making sure “the negative rates are appropriately graduated,” he added, “we may still retain some measure of incentive for a family to increase its income.” Stigler thought this would be a good way to give a hand to low-wage workers without the market-distorting effects of a minimum wage. By 1962, Friedman was proposing it as a substitute for virtually the entire welfare state, or as he put it, “the present rag bag of measures directed at the same end.”

By then a push was coming from still another direction. Convinced that automation was on the verge of driving unemployment to unsustainable levels, several social scientists argued that a guaranteed income could cure the crisis. If you’re familiar with modern worries about what artificial intelligence and self-driving trucks will do to the job market, the rhetoric of the early ’60s will sound familiar. “The coming replacement of man’s skills by the machine’s skills will destroy many jobs and render useless the work experience of vast numbers now employed,” the futurist Robert Theobald argued in his 1963 book Free Men and Free Markets. Since only the most skilled workers will enjoy the “possibility of obtaining employment in one of the restricted number of new fields,” he feared we were headed for “the complete breakdown of our present socioeconomic system.”

Theobald’s ideas inspired the Ad Hoc Committee on the Triple Revolution, whose 1964 manifesto declared that “the combination of the electronic computer and the automated self-regulating machine” was breaking “the traditional link between jobs and incomes.” The solution, it concluded, was an “unqualified right to an income” that would “take the place of the patchwork of welfare measures.” That part may not sound so different from Friedman’s proposal, but the document also called for government planning and for a transition program that featured public works, public housing, public coal plants, and other interventions in areas that Friedman would leave to the market. The statement was signed by a collection of left-leaning intellectuals, from Linus Pauling to Tom Hayden, and it left enough of a mark on the culture to inspire everything from a Martin Luther King sermon to a Philip José Farmer science fiction story.

In another quarter of the left, activists formed the National Welfare Rights Organization in 1966. One of their chief complaints was the intrusiveness and humiliation built into America’s welfare bureaucracies; they too soon called for replacing the existing transfer programs with a guaranteed income.

Yet another version of the concept picked up fans in the counterculture. When the LSD evangelist Timothy Leary ran for governor of California in 1969, he declared that the state “should be run like a successful business enterprise. Instead of extorting taxes from the citizens a well run state should return a profit. Anyone smart enough to live in California should be paid a dividend.”

Needless to say, not everyone liked such notions. When Eugene McCarthy called for a guaranteed income in the 1968 presidential primaries, his rival Bobby Kennedy derided the proposal as “a massive new extension of welfare,” declaring that the proper “answer to the welfare crisis is work, jobs, self-sufficiency, and family integrity.” Shortly after the election, a Gallup poll showed 62 percent of the public rejecting the concept of a guaranteed income.

Nonetheless, by the end of the decade the idea had fans everywhere from the Black Panthers to the Nixon administration. That’s quite a convergence. But convergence doesn’t always last.

A Moment in the Sun

Those converging forces might not have agreed on everything, but they were listening to one another. When Ralph Helstein of the United Packinghouse Workers read Friedman’s proposal for a negative income tax, he thought to himself: “That’s it. This conservative has provided us with a way to get guaranteed income.” When the Ripon Society, a liberal Republican group, endorsed the negative income tax in 1967, it cited Robert Theobald along with Friedman. And when John Price, one of the Ripon Society’s founders, brought the idea to Nixon’s attention one evening in 1968, he had convergence on his mind. According to Daniel Patrick Moynihan’s The Politics of a Guaranteed Income, Price “proposed, at a dinner meeting with Nixon, that the negative income tax and the volunteer army were the two issues that might unite the liberal and conservative wings of the Republican party.”

Moynihan, who despite being a Democrat had gotten a job on the White House staff, folded a version of the negative income tax into a proposal he called the Family Security System. When he presented his plan to the president in 1969, Nixon asked if it would “get rid of social workers.” The aide replied that it would wipe them out, and Nixon took the news with pleasure.

Moynihan’s blueprint wended its way through the West Wing, evolving as different aides and interest groups encountered it. (One Nixon advisor opposed to the plan, the Randian economist Martin Anderson, put together a memo for his boss titled “A Short History of a ‘Family Security System.’ It was a critique of Speenhamland.) Wary of phrases like guaranteed minimum income, Nixon took to calling the bill “workfare” though the legislation did, in fact, leave some space to draw a check from the government without working. The final bill, now dubbed the Family Assistance Program (FAP), was a jerry-rigged mix of liberal and conservative ideas held together by a president who was no more idealistic than the Speenhamland squires had been.

The convergence didn‘t hold. The National Welfare Rights Organization wouldn’t back the plan, in part because it included work requirements. Milton Friedman opposed it too, on the grounds that it maintained too many of the programs and poverty-trap incentives that the guaranteed income was supposed to replace. (“The bill in its present form,” he wrote in Newsweek, “is a striking example of how to spoil a good idea”) In theory, a negative income tax could appeal to the left because it stopped trying to tell poor people what to do, to the right because it displaced dysfunctional welfare bureaucracies, and to libertarians for both reasons. But the FAP didn’t do either one.

The bill did pass the House in 1970 by a vote of 243-155, and in 1971 it passed again with an even more lopsided margin. But each time it ran aground in the Senate. In the 1972 election, Nixon’s opponent, George McGovern, called for guaranteeing every American a “demogrant” of $1,000; Nixon found it expedient to attack the proposal, and McGovern retreated rather rapidly. Other versions of the Basic Income idea were floated in the Ford and Carter years, with little success.

In the meantime, several field experiments attempted to test the concept’s effects in the real world. The Office of Economic Opportunity launched the first in New Jersey and Pennsylvania in 1968. That urban effort was soon joined by the Rural Income Maintenance Experiment, or RIME, conducted in Iowa and North Carolina. Those were followed by the Seattle Income Maintenance Experiment, also known as SIME; the Denver Income Maintenance Experiment, also known as DIME; and the Gary Income Maintenance Experiment, whose creators tried to avoid calling it GIME. (It looked too much like “gimme.”) Separately, in Canada, researchers ran the “Mincome” experiment in Manitoba; it included a unique effort in which every family in a town, the 10,000-head burgh of Dauphin, was invited to receive the money.

In Canada, the experiment was cut off early and the records were stuck into storage; no one even attempted to draw conclusions from the data at the time. Later analysis suggested that recipients came away from the experiment in better health and that they didn’t reduce their workload very much.

The US. experiments, meanwhile, were widely considered failures. This was partly because they showed some work disincentives, but that wasn’t the biggest problem: Pretty much everyone expected there to be some impact on how many hours people worked, and the effect was much smaller than the idea’s opponents had predicted. In Seattle and Denver, the efforts that got the most attention employed men spent up to 10 percent less time working. The numbers for women were higher, but Congress didn’t necessarily object if more women were opting to stay at home.

What did make Congress uncomfortable was the idea that those women might opt to leave their husbands. Yet in Seattle and Denver (though not the others), the experiments appeared to raise divorce rates by 40 to 60 percent. In the late ’80s this figure would be sharply challenged, as a pair of economists at the University of Wisconsin re-analyzed the data and concluded that any permanent difference in divorce rates that could be traced to the program was less than 5 percent. But in the late ’70s, the news ensured that Jimmy Carter’s variation on the negative income tax would not pass. Daniel Patrick Moynihan, now a senator, noisily recanted his support for the idea. “Were we wrong about a guaranteed income!” he wrote to William F. Buckley. “Seemingly, it is calamitous.”

The only piece of policy passed in all this time that had more than a faint connection to a basic income was the earned income tax credit, a 1975 measure inspired by the negative income tax. (It was proposed by Sen. Russell Long, son of Share-Our-Wealth Huey.) It didn’t replace any other programs, and the unemployed didn’t qualify to get it, so it fell far short of Friedman’s proposal, let alone the plans pushed on the left.

You can also arguably find traces of the Basic Income idea in the Supplemental Security income, a system for the disabled that passed easily in 1972. In practical terms, this was yet another addition to the maze of federal welfare programs. Still, it had legislative roots in the FAP-and as the historian Brian Steensland notes in his 2008 book The Failed Welfare Revolution, it was “the first federally recognized minimum income guarantee for any category of persons.”

As the Reagan era began, the government seemed to lose all interest in the concept. No longer plausible as legislation, the basic income was back to being a utopian thought experiment. Or at least that’s the conventional historical wisdom. Looking back from 2013, the liberal site Remapping Debate declared that the idea died because “market devotees drowned out those who continued to believe that government has a vital role to play….By Ronald Reagan’s election in 1980, the country in which [a guaranteed income] had seemed mainstream a decade earlier looked considerably different.”

Except that such a program was adopted in the Reagan years. What’s more, it passed in a state with a Republican governor, it got an important assist from the market devotees of the Libertarian Party, and it was a lot more radical than Nixon’s scheme. It had more in common with a different notion from 1969: Timothy Leary’s seemingly wild suggestion that a state should stop charging taxes and start paying dividends.

A Moment in the Midnight Sun

When Alaska started raking in money from the Prudhoe Bay oil boom, officials there decided to invest the money rather than blow it all at once. So in 1976 the state decided to channel a share of its resource revenue into an investment pool called the Alaska Permanent Fund. A debate quickly began: What should the government do with the fund’s earnings?

Arlon Tussing, an energy economist at the University of Alaska, had proposed an idea shortly after the oil was found. “The only way to guarantee that the money does any good to most of us,” he told Time in 1970, “is to hand it out to the people. The state should form an investment company, something like a mutual fund, and distribute the stock to Alaskans.” Tussing was an ideological maverick, one of his friends called him a “mix of Leon Trotsky and Milton Friedman”, and the coalition that formed around his proposal was also a mixture. Terry Gardner, a Democrat, was the first legislator to formally propose it. Jay Hammond, a Republican, was the governor who championed and signed it. And it got significant legislative support from Dick Randolph, who in those days was one of the Libertarian Party’s two representatives in the Alaska House.

The Libertarian Party supported the dividends partly on the grounds that sending the money to individual citizens was preferable to letting officials spend it, and partly as a second-best option as long as privatization was off the table. “The reason we have a Permanent Fund in the first place is that with all of the subsurface wealth, the royalty income goes to the government,” points out Randolph, who left the legislature in the ’80s and now works in insurance. “There is very little private property up here, and even what private property there is, unless it was homesteaded before statehood, you don’t own the subsurface rights.” As long as that restriction was written into the law, he figured that this “money that should be in the people’s hands anyway” might as well be distributed as dividends.

Almost simultaneously, thanks largely to the Libertarians, the state repealed its income tax. Since it doesn’t levy a sales tax either, Alaska is the closest approximation we have to Leary’s dream of a dividend, paying state that doesn’t charge you anything to settle there, unless, of course, you’re an oil company.

Since 1982, Alaskans have received a check for hundreds and occasionally thousands of dollars each year. The fund remains on decent footing, though the state government is not: Alaska has been running a big deficit for the last few years, and political pressure has been building to either pass a tax or dip into the fund’s earnings to make up the difference. Not surprisingly, Randolph would rather cut spending instead. (The discovery in March of approximately 1.2 billion barrels’ worth of new oil in the North Slope may allow the state to delay whatever reckoning is to come.)

While the Alaska Permanent Fund is the biggest example of a political unit treating its citizens as stockholders, it isn’t the only one. The state’s Native Americans are organized into regional and village corporations, and those companies pay out dividends as well, though the checks are usually substantially smaller than the payments from the statewide fund. And of the nearly 240 Indian tribes in the US. that run gambling operations, about half regularly distribute profits to their members.

Global Experiments

Versions of the basic income have been proposed and occasionally enacted in other countries as well. Mongolia flirted with an Alaska style scheme from 2010 to 2012, sending all its citizens a share of the money made from a mining boom, but then it decided to replace the system with one that directed its benefits to children. The Chinese city of Macau, a former Portuguese colony that retained some autonomy when it was handed back to Beijing in 1999, adopted a “Wealth Partaking Scheme” in 2008 that in some ways resembles a citizens’ dividend: The government distributes annual payouts meant to “share the economic fruits” with the residents. It is unlike the Permanent Fund dividends or the Indian casino checks in that the authorities set the amount they’ll pay rather arbitrarily; there’s no guarantee that they’ll even continue the program from year to year.

A more substantial reform was adopted in Iran. In 2010, the government in Tehran decided to phase out its controls on the prices of several goods, including electricity, water, bread, and especially fuel. To compensate for the ensuing increases in the cost of living, it decided to replace those price subsidies with direct cash payments to the people. Initially these checks were to be means tested, but that produced public dissatisfaction over who did or didn’t qualify for the money, so the country’s rulers decided to go ahead and send the payments to anyone who wanted them. They thus essentially stumbled into a universal basic income after setting out to do something else.

That wasn’t the only way they stumbled. The authorities eased several market distorting subsidies, but they didn’t eliminate them. (The price of gasoline is still below the market rate.) Meanwhile, they wound up committing to much higher payouts than they had initially expected. Soon they were asking wealthier Iranians to opt out of the program voluntarily; last fall they bit the bullet and adopted a means test that removed about a third of the country’s population from the rolls. Replacing regulations with cash is an interesting idea, but Iran’s example is not an inspiring one.

The biggest international shift toward something like a basic income hasn’t been confined to a specific country or city. It’s a movement within the aid community.

Global aid has traditionally focused on in-kind assistance: sending meals or medicine, helping build houses or schools, and so on. This can lead to all kinds of unfortunate side effects, as when free food from abroad undercuts local farmers. There is also a recurring mismatch between what the planners in aid agencies think a community needs and what the people on the ground actually want. And so, since the turn of the century, a cheaper, more flexible, and less paternalistic approach has become more popular: Just send people cash instead.

Initially, this took the form of so-called “conditional cash transfers,” in which the recipients get money as long as they agree to certain stipulations, such as vaccinating their kids or sending them to school. Several Latin American countries had moved their social welfare systems in that direction since the ’90s, and the new programs seemed to work better than the previous approaches. Elements of the aid community adopted their own versions of the idea, arguing that the needy know their needs better than outsiders do. Sure enough, the money was sometimes spent in useful ways that had not occurred to aid agencies, on mattresses, for example, or bicycle parts.

To be clear: Most aid agencies and nongovernmental organizations have not moved in this direction. A 2015 report from the Center for Global Development estimated that only about 6 percent of international humanitarian assistance takes the form of cash or vouchers. That’s up from less than 1 percent in 2004, but it’s still a small portion.

But while most NGOs still approach conditional cash transfers warily, a dissenting segment of the aid industry has moved on to an even simpler idea: conditionless cash transfers. The leading player here is GiveDirectly, a US based group buoyed both by the research showing cash transfers’ effectiveness and by the rise of mobile payments, which have made it much easier to send people money without passing through political or bureaucratic middlemen. Follow-up research on GiveDirectly’s efforts in western Kenya showed that the recipients used the money to build assets, invest in small businesses, and purchase more food; contrary to some cynical expectations, and in line with other studies of cash based aid, there was no boost in spending on alcohol, tobacco, or gambling.

Having moved from conditional to conditionless cash payments, GiveDirectIy‘s directors started thinking about takinq another step and experimenting with a full fledged basic income, not just payments to a village’s neediest families, but a long-term income for everyone in town, one set high enough for people to live on it. Other aid groups had already conducted experiments along these lines in India and Namibia; the results appeared to be favorable, but these studies were too short term to draw firm conclusions from them, and the Namibian experiment had the additional problem of not being randomized.

And so GiveDirectly devised a randomized control trial, sort of a privately funded Kenyan sequel to the SIME/DIME experiments. In one set of villages, every adult will receive monthly payments equivalent to 75 cents a day for two years. In another set of villages, every adult will receive such payments for 12 years. In yet another set of villages, the adults will receive a single lump sum payment equivalent to what the two year group will be receiving. The fourth set of villages is the control group, so they don’t get any money at all.

The aim here, GiveDirectly’s Ian Bassin explains, is “to isolate the effects of what most people consider a ‘basic income’, that is, a permanent payment over time, from something resembling more traditional temporary supports. For example, when someone knows they have a long-term, guaranteed floor below which they cannot fall, do they take more risks like starting a business or going back to school? And does that security produce greater overall returns?”

The current plan is for about 40 villages to go on the 12 year plan, 80 to go on the two-year plan, 80 to get the lump sums, and 100 to be in the control group. To answer the first question that probably popped into your minds: No, a villager can’t change which deal he’s getting by moving from one town to another. Once enrollment has started in a village, no new arrivals can take advantage of the payments there. Conversely, if you’re already enrolled in the program, you still get the money if you leave town. After all, one potential outcome the researchers are looking for is whether people will use their payments to move someplace with greater opportunity.

The group expects the experiment to cost about $30 million, and they have thus far raised more than $24 million toward that. (The lump-sum payments are being funded separately, with the money coming from GiveDirectly’s ongoing efforts in Kenya. They expect the costs there to be a little higher than $6 million, which is within the program’s usual annual budget.) One village in the 12-year group is already receiving funds, sort of a test case to work out any logistical kinks in advance. If all goes according to plan, the rest will start receiving their money this year.

Convergence (Again)

GiveDirectly’s project isn’t the only basic-income pilot in the works. The governments of Finland, Ontario, San Francisco, and several Dutch cities have experiments either underway or on the horizon. Y Combinator, the firm run by the venture capitalist Sam Altman, is planning a privately funded effort in Oakland. The German entrepreneur Martin Bohmeyer has been crowdfunding year long no-strings-attached incomes for dozens of randomly chosen winners.

Then there’s Scott Santens, a writer who’s been using the crowdfunding platform Patreon to generate his own “basic income,” shooting for $1,000 a month. In practical terms, it’s not entirely clear what the difference is between Santens and any other fellow with a Patreon account, other than that Santens calls his proceeds a basic income and writes about the basic income a lot. But the fact that his pitch actually attracts donations speaks to just how fashionable the concept has become. Over the past half decade or so, there has been a renaissance of interest in the idea.

As in the 1960s, the interest is coming from many different directions. Center left wonks perceive the basic income as a more market friendly approach to welfare policy. Radicals hail it as an alternative to the “neoliberalism” they associate with those same wonks, imagining a day when work is detached from income and we live in a world of postscarcity abundance. Silicon Valley figures hope it will help us survive the upheaval to be unleashed when artificial intelligence wreaks havoc on labor markets. Libertarians see it as a way to simplify the welfare maze into a cheaper and less intrusive single program.

It has even entered the climate debate. In the 1990s, the environmentalist Peter Barnes proposed a “Sky Trust,” based on the notion that the atmosphere is common property; companies would have to buy carbon emission rights, and the money would then be distributed to the people in a system he modeled on Alaska’s dividends. This version of the cap-and-trade idea picked up some steam on the Bush-era left, with articles touting it in such progressive outlets as Yes! and In These Times. Meanwhile, proposals for a carbon tax routinely include a provision to rebate the proceeds to citizens. In February, the conservative Climate Leadership Council called for a gradually increasing carbon tax, with all of the money collected then sent to Americans as quarterly dividend checks, direct deposits, or IRA contributions. (When British Columbia adopted a carbon tax in 2008, the provincial government actually issued what it called “climate action dividends.” But this was a one-time gimmick, not an ongoing feature of British Columbian life.)

Different as these currents may be, they’re often aware of each other. Silicon Valley has been a center of support for GiveDirectly. Peter Barnes has been flirting with social credit ideas about “debt-free money.” Andy Stern likes the idea of carbon dividends. And the Climate Leadership Council’s carbon-tax proposal was co-authored by George Shultz, who was one of the most vocal proponents of the negative income tax inside the Nixon administration.

Perhaps these tribes will manage to band together and pass something. “It’s going to take coalitions to get anything done,” Stern told me after he spoke at Cato last year. “Being in Charles Koch’s institution in the Friedrich Hayek hall is not a place where I feel, ‘Boy, I have a lot of things in common here.‘ But l’m willing, because I think it’s necessary to find allies wherever you can.”

But convergence, you’ll recall, can be fleeting. It’s hard to imagine Congress and the White House passing a sweeping basic income plan in the current political environment. This is especially true of the plans most likely to attract libertarian support, the ones that supplant rather than supplement the existing system. Replacing the entire welfare state in one fell swoop is a tall order, especially if you want to include popular middle-class entitlements as part of the deal. And if you’re thinking of following Stigler’s suggestion and eliminating minimum wages as well, you may find yourself pretty lonely.

For all the recent buzz about a basic income, the recent trend in welfare spending has been away from conditionless cash transfers. Temporary Assistance for Needy Families, the country’s chief program for assisting the poor, used to devote a majority of its money to direct cash assistance. Now the number is just over 25 percent. According to an analysis by the Center on Budget and Policy Priorities, the remainder is funding everything from abstinence education to drug treatment.

And for all the agreement among the political tribes, there are wide splits within them too. Some figures on the left see the basic income as a form of “pity-charity liberalism” and want to focus instead on strengthening unions and creating jobs. Many libertarians dislike even Friedman’s version of the idea, arguing that it won’t displace the rest of the welfare state for long: Other programs could still creep back, leaving us with an even costlier system than before.

And environmentalists have never been united on the best way to reduce the species’ carbon footprint. Even if all the strange bedfellows agreed on a plan, they’d still have to contend with dissension from their usual bedmates.

The lncrementalist Approach

Yet the forecast isn’t hopeless for basic income fans. For one thing, there’s the possibility that some other nation might take the plunge, adopting either a full-fledged basic income or a policy that resembles one. Last year, for example, Prime Minister Theresa May raised the possibility that Britain might start issuing shale gas dividends. A move like that could change the debate in other countries.

Beyond that, there are at least two ways the idea could progress incrementally here at home even if Washington is unwilling to enact a vast reconstruction of the relief system.

First: We might see a sequel to the Permanent Fund. From time to time a state will find itself awash in riches from natural resources. Some voices will suggest that the government not spend the new money at once but put some away for a rainy day. Some fraction of those voices will suggest it create a sovereign wealth fund to invest the windfall. And some fraction of that fraction will want the fund to pay dividends.

Now, there are all sorts of potential problems with government run investment portfolios, as anyone who has followed California’s pension troubles can tell you. If you’re wary about mismanagement, you’ll be wary about states playing the market; they won’t all invest as conservatively as Alaska has.

Still, several states have such funds already the most recent additions to the list are North Dakota and West Virginia, and the number may well grow. None has followed Juneau’s example and started paying dividends, but it is hardly unimaginable that someone else will eventually adopt an Alaska-style system.

Second: Congress might not be about to pass a basic income, but it can pass reforms that make the welfare state more like a basic income without adding a new entitlement to the mix. More specifically, it can cashify and combine programs.

By cashify, I mean taking a subsidy with strings attached, food stamps, Section 8 housing vouchers, anything like that,and instead simply send money to the people who qualify for it, letting them choose how to spend it. In other words, Congress can turn vouchers into conditionless cash grants. If it wants to really slash some bureaucracy, it can replace actual government services with cash grants, too.

The more programs you cashify, the more programs you can combine. Right now the system is set up to ask whether someone is poor enough to qualify for housing assistance, for health assistance, for food assistance, and so on. What if it just asked if someone is poor enough to qualify for assistance, period?

Those programs might not converge all the way to a basic income, but they could at least become simpler, less intrusive, and less expensive. They might even stay that way. Occasionally a convergence can last.

Jesse Walker is the author of The United States of Paranoia (HarperCollins) and Rebels on the Air (NYU Press).

Reason

The progressive case for replacing the welfare state with Basic Income – Scott Santens.

It appears some establishment voices have picked up on a way of opposing the idea of the monthly citizen dividend of about $1,000 per month, known as universal basic income (UBI), in a way that successfully leaves some progressively minded people afraid.

The fear inspired is that those with the greatest need may be left worse off with UBI compared to the existing status quo of more than 100 government programs that currently comprise the U.S. safety net that UBI has the potential to entirely or mostly replace.

The argument goes that because we currently target money to those in need, by spreading out existing revenue to everyone instead, those currently targeted would necessarily receive less money, and thus would be worse off. Consequently, the end result of basic income could be theoretically regressive in nature by reducing the benefits of the poor and transferring that revenue instead to the middle classes and the rich.

Obviously a bad idea, right?

This new argument has been made most notably by the White House’s own chief economic adviser, Jason Furman, perhaps after himself reading the words of Robert Greenstein of the Center on Budget and Policy Priorities (CBPP).

The problem is that those who make this particular argument are building somewhat of a straw man, not only because of the blanket assumptions they are making around a very specific tax-neutral design, but also because they aren’t publicly acknowledging just how poorly our present means-tested programs are targeted by virtue of their applied conditions, and just how unequal one dollar can be to one dollar, however counterintuitive that may seem.

Assuming things work as we think they work is exactly one of the biggest obstacles we’ve always had to improving anything.

Basically, this particular argument would only make sense if we in no way altered our tax system to achieve UBI, and if our programs worked as we assume they work because that’s how they should work. The problem is they don’t work that way.

Assuming things work as we think they work is exactly one of the biggest obstacles we’ve always had to improving anything, because to fix something we first need to understand it’s broken. If it ain’t broke, don’t fix it, right? Well, guess what? Our safety net is broken, and it’s broken at such a fundamental level, there’s no fixing it, because it is by design.

A net full of holes must be replaced by a floor free of holes and that floor is unconditional basic income.

Nothing but net holes

In the United States today, on average, just about one in four families living underneath the federal poverty line receives what most call welfare, which is actually known as Temporary Assistance for Needy Families, or TANF. It gets worse. Because states are actually just written checks to give out as they please in the form of “block grants,” there are states where far fewer than one in four impoverished families receive cash assistance.

In Oklahoma, seven out of 100 families living in poverty receives TANF. In Wyoming, merely one in 100 of those living in poverty receives TANF.

Where does the money go instead?

It goes to educate the children of those earning over six figures.

It goes to programs trying to convince women to get married.

And it goes directly to state government treasuries so they can cut taxes on the rich.

The fact is that cash welfare, as it exists today, is not given to the overwhelming majority of those living in poverty who need it.

Single adults without children know this better than anyone. They even have their own moniker: ABAWDs (Able-Bodied Adults Without Dependents). ABAWDs have the lone distinction of being the only demographic in the U.S. to be literally taxed into poverty, all 7.5 million of them. Because they earn income and because they do not have the child necessary to qualify for virtually any assistance — even the earned income tax credit (EITC), which is meant as a boost for low-income workers through the tax code — those earning enough to be above the federal poverty line can end up beneath the poverty line after paying taxes. And those already beneath the poverty line are pushed even deeper, effectively punished for being childless and working.

Combine all of those without dependents with all of those with dependents but without sufficient income to qualify for EITC and living in states averse to cash assistance, and the reality is that tens of millions of adults and children fall straight through the net purportedly designed to catch them. Any net is mostly nothing but holes, and nowhere is that more true than in the United States.

Assumption: Everyone living beneath the poverty line receives cash assistance.

Observation: Most don’t.

The same is true of housing assistance. There is a belief that poor people galore are sitting on easy street with affordable living conditions, where housing vouchers are given away like Halloween candy to anyone with a hand out.

The truth is that 24 percent of those who qualify for housing assistance get it, and getting it can mean years of waiting on lists. Here in New Orleans, where I live, the wait list is opened about every seven years or so, and when it is, tens of thousands apply despite fewer than 1,000 people becoming new recipients of vouchers each year.

Additionally, vouchers are not at all “just like cash.” Cash is accepted in payment by all landlords everywhere. Section 8 vouchers, meanwhile, are accepted only by those who choose to accept them, which is few and far between, and certainly not in what are considered to be “high opportunity” neighborhoods. This is true even of “supervouchers” that are specifically designed for that purpose.

Assumption: Everyone living in poverty receives housing assistance.

Observation: Most don’t.

Food stamps, too, are not given to everyone living under the poverty line. About one-quarter of those living in poverty get no government food assistance, and of those who do, a third of them still need to visit food banks for added assistance because the amount given is nowhere close to being sufficient to get people through each month.

Estimates point to food stamps lasting on average about three weeks of every month. Worse yet, food stamps can even have harsh time limits (e.g. three months of SNAP every three years), growing restrictions on how they can be used (sorry, no seafood allowed) and work requirements (30 hours per week).

This is food we’re talking about. Why should any bureaucrat ever exist between the most basic human need of all — the need to eat — and access to food?

Assumption: Everyone living in poverty receives food assistance.

Observation: Some may temporarily, but the amount is insufficient and full of costly strings.

However, one of the best examples of all the vast differences between the assumption and the observation of how government benefits work is how we target those with disabilities. It has been estimated that 22 percent of adults in the U.S. have some form of disability. At the same time, 4.6 percent of adults age 18-64 in the U.S. are receiving disability income. So again, about one-quarter of those we say we should be targeting actually receive anything, while the bulk get nothing.

It’s not just apples and oranges. It’s rotten apples and ripe oranges.The absolute worst thing though, and what too few people seem to know, is that when it comes to disability income, you are essentially not even allowed to earn additional income. If you’re on SSDI and earn one dollar over $1,090 in a month, you are dropped from the program and lose 100 percent of your benefit. That is the steepest of “benefit cliffs” and it’s the equivalent of taxing those with disabilities at rates far greater than 100 percent as a reward for their labor. It’s also the exact opposite of a basic income that is never taken away.

It is this clawback of means-tested benefits with the earning of income that is possibly the single greatest flaw of all targeted assistance, and also the single most ignored detail when people defend the current system over the introduction of a basic income that would replace it.

Simply put, $1,000 per month in welfare is not at all the same thing as $1,000 per month in basic income. It’s not just apples and oranges. It’s rotten apples and ripe oranges.

With welfare, because it is targeted and therefore withdrawn as income is earned, people on welfare are effectively punished for working. Their total incomes don’t really increase with employment. Welfare functions in many ways as a ceiling.

With basic income, because it is unconditional and therefore never withdrawn as income is earned, people with basic incomes are always rewarded for working. Their total incomes always increase with any amount of employment. Basic income therefore functions as a floor.

Do you see the difference?

So when someone says the details matter when it comes to the idea of basic income and suggests the possibility that it could be regressive, and even increase inequality by taking money being targeted at the poor and giving it to the non-poor, understand that the details of the details matter even more than just the details.

Basic income is not some regressive conspiracy of the Silicon Valley elite to create a neo-serfdom. The regressive argument operates on the myth that for every four people living under the poverty line, four people get an amount of assistance that lifts them far above the poverty line, and that $1 of welfare is exactly equivalent to $1 in basic income.

The basic income argument operates on the reality that for every four people living under the poverty line, only about one person gets an amount of assistance that does more to trap them in poverty than to lift them out of it, and that $1 of welfare is worth far less than $1 of basic income.

It’s really important to understand this, so let’s zoom in a bit on a worst-case scenario. Let’s assume we replace all of our programs targeted at the poor with UBI, including even Medicaid (which I don’t recommend unless we replace it with universal healthcare instead), and that we provide the UBI to adults only, with nothing for kids (something else I don’t recommend).

Using an example of a single parent with two kids within the current system, we could regressively replace around $45,000 of benefits (if we also eliminate child care, which is yet another detail I don’t recommend) with $12,000 in cash. That is a worst-design scenario and totally regressive right? No. It’s actually partially regressive and mostly progressive.

Although true that one in four would be worse off in such an inferior UBI design, it’s also true that three of four would be far better off because they would no longer receive little to nothing. As an oversimplified example for the sake of clarity, that means instead of the distribution across four adults being $45,000/$0/$0/$0, it would be $12,000/$12,000/$12,000/$12,000. That is more progressive as a whole than it is regressive, and inequality is reduced overall, not increased, because the total at the bottom went from $45,000 across four people to $48,000 across four people. And that is for basically the worst possible, most unrealistic of UBI designs.

But again, those numbers cannot be compared dollar for dollar. Welfare dollars disappear with work and basic income dollars are kept with work. That same parent receiving $45,000 for nothing, if they got a job paying $30,000 right now would receive $20,000 in benefits. That would be a gain of $30,000 combined with a loss of $25,000. That’s a gain of $5,000 for a $30,000 job, or in other words, an income tax of 83 percent. Who else is taxed at 83 percent? No one. In fact, the richest are taxed the least because their income, which isn’t derived from work, is special. It’s simply capital gains, which is taxed at 20 percent.

Does this sound like a just and equitable system? Or does it sound more like a racist meat-grinder?

Even more troubling, welfare dollars themselves are not equivalent to each other. Despite it being against the law to vary welfare dollars along racial lines, that’s exactly what we do. How? It’s again due to the nature of block grants for states. When Bill Clinton signed his welfare reform into law, he agreed to write checks to the states and let them handle how they dish out welfare. As a result, just five years after welfare was reformed into what it is today, 63 percent of those in the programs with the least-harsh conditions were white and 11 percent were black, while 63 percent of those in the programs with the most-harsh conditions were black and 29 percent were white.

In other words, a dollar in welfare has about three to five times as many strings for someone who is black than someone who is white. These strings absolutely affect end results. Joe Soss, co-author of Disciplining the Poor: Neoliberal Paternalism and the Persistent Power of Race describes his findings thusly:

“The stringency of the rules matter tremendously for outcomes. The tougher the rules — and the more frequently people are punished for breaking them — the worse the outcomes are for people after they finish the program. In fact, in the toughest programs, people actually end up in worse shape after they get through them than they were before they got the benefits to begin with. And remember, they were in such a bad situation that they had to turn to a welfare program that’s been so stigmatized that pretty much everyone wants to avoid it. We also found that people who go through the toughest programs learn lessons about government that lead them to retreat from participating in politics. They become less likely to make their voices heard, and less likely to participate in elections and community organizations.”

Does this sound like a just and equitable system? Or does it sound more like a racist meat-grinder?

The bare naked truth of our present welfare system is a racially biased, overly paternalistic, unnecessarily controlling, grossly exclusionary system of punishment and blame that limits opportunity and taxes working beneficiaries more than any other worker in any income tax bracket.

It doesn’t abolish poverty. It helps sustain it. And this is the system establishment voices wish to improve upon in piecemeal fashion, possibly because they’re not the ones being chewed up and spit out by it, or even neglected by it entirely.

However, even if all of the above is clearly understood, there is one absolutely vital thing remaining to understand about basic income that cannot be replicated in any other way, by any other means.

Because basic income lacks conditions and is paid regardless of work, it provides recipients the power to refuse to work. This is the real fear of those who worry a basic income will result in people working less, but it is also its greatest strength.

The ability to say no to an employer provides people the bargaining power and the choice to determine how they work, where they work, for how much and for how long. No other policy does that. A minimum wage certainly doesn’t. Wage subsidies certainly don’t. Without basic income, the labor market is coercive, and that means people accept what they can get. With basic income, wages for low-demand jobs must go up and/or hours must go down in order to attract people with incomes independent of work to do them, or those same jobs must be automated to be performed by machines instead, whichever is cheaper.

A basic income is most simply a minimum income floor. It’s a new starting point above the poverty level instead of below it. There will still be jobs for people to earn additional income and those jobs can pay more if people hate doing them. Additionally, considering a potential future where there’s half as much employment, that also means just as many can be employed if we all work half as much so as to better share the remaining employment. And with the increased bargaining power basic income provides, that can also mean getting paid more for less work.

Basic income is not some regressive conspiracy of the Silicon Valley elite to create a neo-serfdom where the entire population only earns a maximum of $12,000 per year. That is the exact opposite of how it works. With basic income, $12,000 becomes the new absolute minimum for everyone and no one is a serf because everyone’s basic needs are covered. Poverty is eliminated. Inequality is reduced.

Additionally, everyone is free to earn any additional income, and on their terms. For the first time, everyone will have the individual negotiating power to dictate terms to employers that must be met. People who have this fundamental power are those who can then make further desired changes in the economy, in their businesses, in their governments and in their lives.

So you tell me. Would you prefer conditional welfare nets or would you prefer an unconditional basic income floor? Because one of these options is a relic of history, and the other is a road to the future.

Robots will take our jobs. We’d better plan now, before it’s too late – Larry Elliott.

The opening of the Amazon Go store in Seattle brings us one step closer to the end of work as we know it.

A new sort of convenience store opened in the basement of the headquarters of Amazon in Seattle in January. Customers walk in, scan their phones, pick what they want off the shelves and walk out again. At Amazon Go there are no checkouts and no cashiers.

Instead, it is what the tech giant calls “just walk out” shopping, made possible by a new generation of machines that can sense which customer is which and what they are picking off the shelves. Within a minute or two of the shopper leaving the store, a receipt pops up on their phone for items they have bought.

This is the shape of things to come in food retailing. Technological change is happening fast and it has economic, social and ethical ramifications. There is a downside to Amazon Go, even though consumers benefit from lower prices and don’t waste time in queues. The store is only open to shoppers who can download an app on their smartphone, which rules out those who rely on welfare food stamps. Constant surveillance means there’s no shoplifting, but it has a whiff of Big Brother about it.

Change is always disruptive but the upheaval likely as a result of the next wave of automation will be especially marked. Driverless cars, for instance, are possible because intelligent machines can sense and have conversations with each other. They can do things – or will eventually be able to do things – that were once the exclusive preserve of humans. That means higher growth but also the risk that the owners of the machines get richer and richer while those displaced get angrier and angrier.

The experience of past industrial revolutions suggests that resisting technological change is futile. Nor, given that automation offers some tangible benefits – in mobility for the elderly and in healthcare, for instance – is it the cleverest of responses.

A robot tax – a levy that firms would pay if machines were taking the place of humans – would slow down the pace of automation by making the machines more expensive but this too has costs, especially for a country such as Britain, which has a problem with low investment, low productivity and a shrunken industrial base. The UK has 33 robot units per 10,000 workers, compared with 93 in the US and 213 in Japan, which suggests the need for more automation not less. On the plus side, the UK has more small and medium-sized companies in artificial intelligence than Germany or France. Penalising these firms with a robot tax does not seem like a smart idea.

The big issue is not whether the robots are coming, because they are. It is not even whether they will boost growth, because they will. On some estimates the UK economy will be 10% bigger by 2030 as the result of artificial intelligence alone. The issue is not one of production but of distribution, of whether there is a Scandinavian-style solution to the challenges of the machine age.

In some ways, the debate that was taking place between the tech industry, politicians and academics in Davos last week was similar to that which surrounded globalisation in the early 1990s. Back then, it was accepted that free movement of goods, people and money around the world would create losers as well as winners, but provided the losers were adequately compensated – either through reskilling, better education, or a stronger social safety net – all would be well.

But the reskilling never happened. Governments did not increase their budgets for education, and in some cases cut them. Welfare safety nets were made less generous. Communities affected by deindustrialisation never really recovered. Writing in the recent McKinsey quarterly, W Brian Arthur put it this way: “Offshoring in the last few decades has eaten up physical jobs and whole industries, jobs that were not replaced. The current transfer of jobs from the physical to the virtual economy is a different sort of offshoring, not to a foreign country but to a virtual one. If we follow recent history we can’t assume these jobs will be replaced either.”

The Centre for Cities suggests that the areas hardest hit by the hollowing out of manufacturing are going to be hardest hit by the next wave of automation as well. That’s because the factories and the pits were replaced by call centres and warehouses, where the scope for humans to be replaced by machines is most obvious.

But there are going to be middle-class casualties too: machines can replace radiologists, lawyers and journalists just as they have already replaced bank cashiers and will soon be replacing lorry drivers. Clearly, it is important to avoid repeating the mistakes of the past. Any response to the challenge posed by smart machines must be to invest more in education, training and skills. One suggestion made in Davos was that governments should consider tax incentives for investment in human, as well as physical, capital.

Still this won’t be sufficient. As the Institute for Public Policy Research has noted, new models of ownership are needed to ensure that the dividends of automation are broadly shared. One of its suggestions is a citizens’ wealth fund that would own a broad portfolio of assets on behalf of the public and would pay out a universal capital dividend. This could be financed either from the proceeds of asset sales or by companies paying corporation tax in the form of shares that would become more valuable due to the higher profits generated by automation.

But the dislocation will be considerable, and comes at a time when social fabrics are already frayed. To ensure that, as in the past, technological change leads to a net increase in jobs, the benefits will have to be spread around and the concept of what constitutes work rethought. That’s why one of the hardest working academics in Davos last week was Guy Standing of Soas University of London, who was on panel after panel making the case for a universal basic income, an idea that has its critics on both left and right, but whose time may well have come.

The Guardian

#Automation #Robots #Amazon #Retail industry

What would I do if everyone had a basic income? – Scott Santens. 

What would you do if you had an unconditional basic income?

I regularly ask people this question, because the answer is the true definition of basic income. 

Basic income isn’t really about the money. It’s about what money enables us to do in our lives that we’d otherwise be prevented from doing without enough money to meet our basic needs, and without enough time to really live, due to all of our time being spent just trying to stay alive.

I already have a basic income via crowdfunding, which I use to advocate for basic income for everyone, so a question people ask me is what I would do if tomorrow everyone had basic income. 

I’ve answered this question a few times in various interviews, but I’ve never written about it. So here’s my answer.

. . .  Scott Santens.com

Imagine the tsunami of creativity that will be unleashed once everyone is free to spend their lives working on the things that they’re most passionate about instead of what they’re essentially forced to do, simply to “earn a living.”


New Economics Foundation. Miatta Fahnbulleh: People’s tolerance for an unfair economic model has hit a buffer – Dawn Foster.

Miatta Fahnbulleh, a former academic turned policy wonk who has worked for three prime ministers and the Labour party, is not your typical thinktank chief.

Fahnbulleh arrived in the UK from Liberia in 1986 and her family successfully claimed asylum in the UK, settling in Tunbridge Wells, Kent. “My childhood in Liberia had a massive impact,” says the 38-year-old. “You see abject poverty and extreme wealth, you see how the family you were born into affects your life and you understand why inequality is wrong. It’s not just that it perpetuates itself, it’s that it’s fundamentally wrong and it needs to be changed. And that’s my core, that pursuit of economic justice.

“Coming from two of the poorest countries in the world [Fahnbulleh also witnessed the deprivation in her mother’s home country, Sierra Leone] and seeing kids forced to fight in the civil war and being robbed of their childhood can’t help but colour your values,” she says. But while the economic and social injustices in Liberia are extreme, the UK is far from an egalitarian oasis, she says. “Whether you take the Brexit vote, or whether you take the shock results of the last election – you know there is something happening in the country. My read on it is that people are fed up. They are frustrated by an economic model that they think doesn’t work for them. The social contract defined the postwar period: if you worked hard, if you did the right thing, you would get on – but more importantly, your kids would do better than you. The fact is, that is now crumbling. And people have said, ‘we’ve had enough and we want change’.”

Fahnbulleh joins the New Economics Foundation(Nef) as its chief executive in mid-November from another thinktank, the Institute for Public Policy Research (IPPR), where she was director of policy and research. “For progressive politics, both are really important, but they play two different roles,” she explains. “IPPR has worked within the system and secured some really great changes and wins on social justice – on issues around the minimum wage, for example. Nef has always been the outlier, the radical outsider proposing ideas long before they become the status quo. And you need both for societal transformation: within-system change and without-system change.”

Nef also spends a considerable amount of time on community organising – helping community groups, workplaces and local people both run campaigns and feed into policy reports. This bottom-up approach also attracted Fahnbulleh to the job. “We’ve just done a big piece of work on housing, and new models of ownership and how we can drive that – but also on tenant voice. And we’ve been working on the Blue New Dealfor coastal towns, looking at how we can empower local – often really deprived – communities to bring in new, sustainable jobs. It’s about economic and social justice. We need an economic model that puts the environment front and centre in the fight against inequality.”

Fahnbulleh thinks the election has heralded Nef’s moment. “The fact that every single party went into the last election and said the economy doesn’t work for all signals a massive shift. I think that creates the space for the kind of change that we haven’t seen in a really long time. If you look across the political spectrum, the big questions are: what’s the alternative to this broken system – and how do we get there?”

The living standards crisis, which became integral to Labour’s 2015 general election campaign, still hasn’t been resolved and is key to political apathy and disgruntlement, she argues. “There are reasons why the public are so cheesed off. We’ve basically had a sustained period of declining wages: between 2008 and 2021, we will have seen the longest period of earnings stagnation for 150 years. And people are just fed up with that. You then add the fact that we’re also seeing huge increases in inequality. From 1979 to 2012, the share of income growth that went to the bottom 50% was 10%. The share of income growth that went to the top 10% was 40%.

“My sense is that people are willing to put up with that if they are seeing incremental improvements in their living standards. But as soon as you get to the stage where we see our wages flatline, it means you have these huge divides in wealth and people are feeling poorer, year after year. Their tolerance for a system that is fundamentally wrong has hit a buffer.”

If Labour is a government in waiting, Nef will clearly have a huge role in influencing the economic policy put forward by the shadow chancellor, John McDonnell. And Fahnbulleh will be key to steering that ship. “We have got an opportunity, in the next five years, to be at the forefront of a lively debate about what kind of economy we want – and what an economy that actually works for the many and not the few looks like. Nef should be leading that debate, because, quite frankly, we started it.”

Curriculum vitae

Age: 38.

Family: Married, one three-year old son.

Lives: South-east London.

Education: Beechwood Sacred Heart school, Tunbridge Wells; PPE BA Lincoln College, Oxford; master’s in economic development, London School of Economics; PhD in economic development, London School of Economics.

Career: 13 November 2017: chief executive, New Economics Foundation; December 2016 to November 2017: director of policy and research, IPPR; October 2015 to December 2016: consultant on devolution and local economic growth; May 2013 to September 2015: policy adviser to the leader of opposition, Labour party; July 2011 to May 2013: head of cities in the policy unit, Cabinet Office; June 2008 to July 2011: deputy director and previously senior policy adviser, prime minister’s strategy unit; December 2006 to 2008: consultant, International Projects Group, PKF (UK); October 2005 to November 2006: Post-doctoral research fellow and lecturer, LSE.

Interests: Reading, travelling and basketball.

The Guardian

If You Think Basic Income is ‘Free Money’ or Socialism, Think Again – Scott Santens.

First, saying basic income is socialism is as absurd as saying money is socialism. It’s money. It’s all it is. What do people do with money? They use it in markets. In other words, basic income is fuel for markets. Markets are a wonderful invention that serve to calculate via a massively distributed computer comprised of people, what goods and services should be made, using what, going where, by whom, of what quantity, etc. It’s an incredible act of decentralization built upon supply and demand signaling.

When someone has money and wants to buy something, that is a demand signal. Businesses meet this signal with supply. Basically, buying is like voting. We vote on what we want using money as our ballots, and we do this over and over and over again, every day. Now imagine someone has no money in a system built around markets. How do they vote? They can’t. The market thus confuses this lack of a vote as a “no” vote. These two signals are of course very different. One is zero and one is null, but markets don’t know that. They can’t differentiate between them. This means markets containing people who don’t have enough money to signal their demand can’t function properly.

Have you ever played the game Monopoly? I’m sure you have. Is that a game about socialism? According to “free money is socialism” logic it is, because everyone starts the game with free money and everyone gets free money for simply passing Go. But I’m sure you know the game is actually about capitalism, right? It’s just a smart enough game to know that a game involving money requires that all players get a minimum amount of money.

Have you ever heard of the Alaska dividend? Every year since 1982, all residents of Alaska receive an equal dividend as their share of the dividend of the Alaska Permanent Fund (APF), now worth over $61 billion. Rich or poor, adult or child, everyone has received a Permanent Fund Dividend (PFD) of $1,000 per year on average for over 30 years. Is Alaska a socialist utopia? Do people move to Alaska to worship at the altar of Karl Marx? Nope. Alaska is a red state, but not that kind of red state. It’s a conservative state where everyone gets what too many media outlets refer to as “free money”.

Of course, it’s not actually free is it? It comes from someone. It comes from the oil companies. How? Well, Alaska owns the land and charges oil companies for the right to drill in it. They then put 25% of the earnings in the APF. Being the conservative state it is, they figure that the government should keep it’s damn hands off that money. The APF is not to be touched, and the dividends go directly to Alaskans because Alaskans know far better what to do with that money than government does. As a result, the dividend boosts and stabilizes the economy, and every year come dividend time, local businesses compete against each other for the business of Alaskan consumers armed with dividend checks.

Does that sound like socialism to you?

It didn’t to Milton Friedman or Friedrich Hayek, both of whom supported the idea of basic income, and both of whom can be considered fathers of free market economics. Hayek was even from the Austrian school. If you are confused why free market economists could like the idea of basic income, that’s because you probably don’t actually know what basic income is.

But that’s not the only problem in such thinking. A bigger problem appears to be a preference of ideological thinking over scientific thinking. Here’s what you need to do to avoid this mental trap. Go out and find experimental studies that show how given two populations, one a control group, and one a group where the experimental variable is cash without conditions, that the one given money ends up worse off. Also, good luck with that. Because I’ve been looking for years now, and all I keep finding are study after study of people ending up better off.

Imagine that, right?

One of the biggest problems with government, and believe me, I recognize its many problems, is that it’s full of people who think they know what’s best for other people. But the thing is, it’s that way because that’s how we are. We vote for people who think they know what’s best for people because we think we know what’s best for people. It’s our problem. And it’s a big problem. Why?

Because that’s how places get to be what Americans think of when they think of the Soviet Union. Don’t trust people by giving them money and letting them spend it as consumers in markets. Give them food. Don’t let them choose what kind of food. They don’t know what’s best. Give them approved food as determined by a board of health specialists. Give them housing. Don’t let them choose their housing. Build public housing that’s best for them. Give them this. Give them that. Just don’t give them money, because money enables too much freedom. Money can be spent on anything. And don’t give money unconditionally, because money without conditions means lack of control. Money with conditions means people must do what we want them to do. No having kids out of wedlock. Two kids maximum. Fill out 10 job applications per day. No refusing a job no matter what it is or what it pays. Work eight hours a day. Go to school. Retrain. Do what we say, or else. That’s control. Conditions are control. Lack of conditions is freedom.

Do you think seniors receiving Social Security are under the control of government, because they’re all so scared that it can be removed at any time? Hell no. The exact opposite is true. Seniors vote in large numbers to make damn sure government responds to their needs. Government is afraid of seniors. And seniors can use their Social Security checks on anything. It’s cash. They can also work to the day they die if they so choose. No one is stopping seniors from earning additional income. Their Social Security checks are simply an absolute minimum. It’s a monthly non-zero income floor from age 65 or so till death, possibly 50 years.

Do you honestly think seniors are worse off with Social Security? That someone receiving it for 30 years is suffering under an oppressive socialist government that’s controlling them, and if only they stopped receiving checks, they would be emancipated and private charity would step in and lift them up just as high or even higher? Because there’s really clear evidence that before Social Security seniors were far worse off than after, and as Social Security spending per capita has risen, poverty rates have fallen in lock step.

But again, such understanding requires looking at actual evidence doesn’t it? It requires comparing the map that’s in our heads with the actual ground. Do they match? Always remember, the map is not the territory.

Here’s some more of the actual ground. UBI and UCT (unconditional cash transfer) experiments and programs have shown decreased hospitalization rates via reduced stress, lower crime rates, higher education rates, better education scores, healthier eating, reduced drug/alcohol use, increased entrepreneurship (3x more than control groups), economic multipliers ($1 grows the economy more than $1), healthier baby weights due to better maternal nutrition, higher rates of home ownership, reduced teen pregnancy rates, etc. The list goes on and on.

It’s really hard to look at the evidence and say giving people money is wrong, because having enough money means being able to buy enough food. It means being able to have a roof over your head. For those without money, money means everything. It can even mean the difference between life and death.

Now maybe you’re so extreme in your ideology that you don’t care about how basic income improves lives. Maybe you only care that the money had to come from someone in the top 20% (because the bottom 80% would all benefit from universal basic income), and that it’s stealing and therefore wrong. It’s wrong to eliminate poverty if it means yachts are a foot smaller, right? Okay, let’s look at that.

Once upon a time, none of the land was owned. Sure, in the US, natives lived here, but screw them, right? We started to carve up the land with invisible lines. It was done all over the world. What once wasn’t owned, became owned. That was a great deal for the new owners, not so much for those whose land was taken, or who lost access to the land or even just free passage through it. That land was passed down generation after generation and here we are now with everything owned where human beings are born onto a planet they aren’t allowed to exist on unless they work for those who own the planet.

Now that should be a problem to anyone who cares about voluntaryism. Should you be able to force someone to work by withholding the access they would have otherwise had to meeting their basic needs, had we not put walls up everywhere? I for one think the labor market should be fully voluntary.

Everyone should get enough money to be able to refuse to work. That way, the incentive is shifted to employers, where it should be. Want someone to do something? Pay them enough to do it. If you refuse to pay anyone enough thanks to their ability to tell you to take your job and shove it, then either automate that job, or let it go undone. If the work really needs to be done, you’ll sweeten the deal or hand it to a robot.

By the way, the best work is work done voluntarily. People are more engaged and productivity is higher. You should know that, but if you are fighting against a free labor market and for forcing people to do the bidding of those who own enough property to command people to do their bidding, maybe you don’t. Or maybe you’re the one enjoying the involuntary labor force?

Now, one of America’s founding fathers looked at this whole loss of common property situation and thought wait a second, when someone owns land, that land used to belong to everyone who no longer has access to it, and so they owe a rent to everyone to compensate everyone for their loss in exchange for the right of private ownership. That man was Founding Father Thomas Paine, and he thought the revenue from that rent should supply everyone an unconditional grant when reaching the age of adulthood and also pay for seniors and the disabled. Sound familiar?

Let’s also look at what’s been happening in the economy. For decades, almost all the economic growth has gone to the top ONLY. Our productivity has been going up and up and up, but wages haven’t.

It didn’t used to be this way. It used to be that as your income went down, the faster your income grew. Now it’s the opposite. Now, as your income goes up, the faster your income grows.

Even weirder, why did hours worked stop going down as they had for centuries, and instead start creeping back up starting in 1980? Does this make any sense in a country where productivity is increasing, that people are working more hours and earning less money?

So then let’s take a quick look at the technology picture where so many appear to subscribe to the silly notion that technology is nothing to worry about because jobs are always created. Yes, we’ve been creating jobs as we’ve lost jobs, but let’s look closer. We’ve been automating mid-skill, fairly high productivity jobs because the tech capability was there and the price point was right. Those unemployed were then put into new low-skill low productivity jobs, because the tech ability to automate those jobs wasn’t there (yet), and the price point wasn’t right (yet).

In other words, here many “experts” are saying everything is just fine and dandy when someone loses their $60,000 full-time 40-hour per week career job to a machine and gets handed two part-time $20,000 60-hour per week shit jobs. Notice how this explains the rise in hours worked? People need to work more hours in order to try to prevent their incomes from falling.

Meanwhile, what happens to all these newly created low-skill jobs once technology is cheap enough to even handle them too? Which jobs are left when technology is not only doing all the routine labor, but also the non-routine thanks to artificial intelligence breakthroughs like deep learning neural nets? There’s nowhere else to go except for the lucky few. Game over.

Yes, it really is different this time.

It’s also not only about how much people earn, but when they earn it, so let’s also make sure and notice that income variability has increased as well so even if someone is making the same amount of income per year working in a new job, their pay may vary a lot more month to month, which introduces the ability to fall behind on bills and fall into downward spirals of debt.

Suffice to say, our entire safety net is built around an antiquated notion of jobs, and universal basic income is a key component of a 21st century system built as a solid foundation instead of a hole-filled net.

By the way, about those holes, in the US about 1 in 5 people living under the federal poverty line get TANF (our cash welfare program). About 1 in 4 people who qualify for housing assistance get it. About 1 in 5 people with a disability get disability income. Basically, the way the system works right now is to exclude far more people in need than it includes. Even worse, due to targeting of benefits, those who receive them see the highest marginal tax rates of all. No billionaire sees as high a tax rate.

How does that work you ask? Well, by providing a targeted benefit, it gets pulled away when they earn income. Essentially, welfare punishes work. It’s built as a ceiling instead of a floor. Would you work a shit job if you were promised 5 cents on the dollar? Of course not. Why would you? Because any job, even a shit job that effectively pays 36 cents an hour provides the meaning of existence?

One final thing. Universal basic income need not be done via taxation, just as the Alaska dividend isn’t via taxation. It can be done in many ways including by non-debt-based money creation, which by the way is mostly done by private banks right now, not the government. And yes, even cryptocurrencies could be designed to provide UBI. So an issue against taxes is not necessarily an issue with UBI itself, at least it shouldn’t be, but with how it’s funded. In that case, be a part of the solution instead of part of the problem by talking about the best way to go about basic income instead of lying to people purposely or out of ignorance about what basic income actually is. Basic income is not left or right. It’s forward.

Basic income is also not charity. It’s not a handout. It is owed to you. It’s your dividend. It’s your compensation for your loss of access to this rock in space called Earth. It’s your return on investment for the tax dollars invested in Level 1 research and development behind the technology unemploying you. It’s your royalties for the big data which everything you now do (and even don’t do) is increasingly generating. It’s your share of rising productivity that used to go to you before it was stolen from you. It’s your right to life, and just as no one has the right to take your life, no one has the right to force you to do anything for them in order to stay alive.

Basic income is not free money. It’s freedom. And freedom belongs to you.

I like markets. I want to reduce the size of government. I want less bureaucracy. I want less administration. I want fewer government jobs. I want lower taxes for everyone who hasn’t been benefiting from our economic growth for decades. I want a simpler tax code. I want fewer subsidies. I want less market distortion. I want a voluntary labor market. I want more freedom. If we appear to want many of the same things, I urge you to question what you think you know, and spend some real time looking into basic income.

With that said, here’s how I recommend we go about doing universal basic income in the US in a way that doesn’t raise anyone’s income tax rates.

Medium

Why we can’t afford the rich – Andrew Sayer.

“The ideology that the rich shower on us is meant to justify their privilege, but it turns the truth completely inside out.
When inequality reaches the insane levels it has done, the rich depend on hoodwinking us all into thinking that they are the source of jobs, prosperity and everything we value.
But once we stop believing this, either governments have to tackle inequality or revolutions arise.
Rich developed societies are very inefficient producers of well-being – particularly those with bigger income differences between rich and poor. Twenty per cent of the populations of the more unequal rich countries are likely to suffer forms of mental illness – such as depression, anxiety disorders, drug or alcohol addiction – each year. Rates may be three times as high as in the most equal countries.
At the same time, measures of the strength of community life and whether people feel they can trust others also show that more equal societies do very much better.
Tackling inequality is an important step towards achieving sustainability and high levels of well-being.
Large material inequalities mean that status becomes more important and social life is increasingly impoverished by status competition and status insecurities.
Social anxieties and our worries about how we are seen and judged are exacerbated. The result is that people start to feel that social life is more of an ordeal than a pleasure and gradually withdraw from social life, as the data show.
By intensifying status insecurities, inequality also drives consumerism, which is the biggest obstacle to sustainability. Any idea that we should consume less will be opposed as if it were an assault on our social standing and quality of life. But by reducing inequality, we not only reduce the importance of social status but, at the same time, we also improve social relations and the real quality of life. Reducing inequality is the first step towards combining sustainability with higher levels of well-being.
The super-rich now see themselves as superior beings who are doing us a kindness by living amongst us.
If we are to reduce inequality and stop the zombie-like extraction of more and more fossil fuel, we have to bring the economic and political dominance of the rich to a close.”

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Richard Wilkinson Emeritus Professor of Social Epidemiology, University of Nottingham

***

There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.
Warren Buffett, estimated ‘worth’ $44 billion, Chairman and CEO of Berkshire Hathaway, New York Times, 26 November 2006

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We are seeing an extraordinary phenomenon: for years the rich have been pulling away from the rest, with the top 1% taking an increasing share of national wealth, while those on low to middling incomes have got progressively less. And the rich continue to get richer, even in the worst crisis for 80 years – they can still laugh all the way to their banks and tax havens as the little people bail out banks that have failed.

Meanwhile a new kind of bank is multiplying – providing food for those who can no longer make ends meet. Austerity policies fall most heavily on those at the bottom while the top 10%, and particularly the top 1%, are protected. Generally, the less you had to do with the crisis, the bigger the sacrifices – relative to your income – you have had to make.

Youth unemployment has soared – in Spain and Greece to over 50%; this is an outrageous waste of young lives, and in many countries it’s become clear that young people are unlikely to experience the prosperity their parents enjoyed. How ridiculous that the answer to our economic problems is seen as wasting more of our most important asset – people.

Meanwhile a political class increasingly dominated by the rich continues to support their interests and diverts the public’s attention by stigmatising and punishing those on welfare benefits and low incomes, cheered on by media overwhelmingly controlled by the super-rich.

But, while the divide between the rich and the rest has certainly grown, how can it be claimed that we can’t afford the rich?

Here’s a short answer

Their wealth is mostly dependent ultimately on the production of goods and services by others and siphoned off through dividends, capital gains, interest and rent, and much of it is hidden in tax havens. They are able to control much of economic life and the media and dominate politics, so their special interests and view of the world come to restrict what democracies can do.

Their consumption is excessive and wasteful and diverts resources away from the more needy and deserving. Their carbon footprints are grotesquely inflated and many have an interest in continued fossil fuel production, threatening the planet.

Of course, this brief summary leaves out many qualifications, not to mention the actual argument and evidence. Some readers may agree straightaway, some may have a few objections, but others may respond with incredulity, perhaps outrage, for to claim that we can’t afford the rich is to imply that they are a cost to the rest of us, a burden. Aren’t the rich wealth creators, job creators, entrepreneurs, investors – indeed, just the kind of people we need? Don’t entrepreneurs like Bill Gates deserve their wealth for having introduced products that benefit millions? Aren’t the rich entitled to spend what they have earned how they like? What right has anyone to say their consumption is excessive?

Couldn’t the rich cut their carbon footprints by switching to low-carbon consumption? Wouldn’t the world miss their philanthropy and the ‘trickle-down effects’ of their spending? In fact, isn’t this book just an example of ‘the politics of envy’ – directed at those whom former UK Prime Minister Tony Blair used to call ‘the successful’? Shouldn’t we thank, rather than begrudge, these ‘high net worth individuals’?

It’s the objections regarding the alleged role of the rich in wealth extraction, as opposed to wealth creation, that present the biggest challenge and occupy the bulk of this book, though I’ll attempt to answer other objections too. In the process it will become clear that this is not about the politics of envy – a cheap slur used by those who want to duck the arguments and evidence – but the politics of injustice. I don’t envy the rich, in fact I regard such envy as thoroughly misguided. But I resent the unjust system by which the rich are allowed to extract wealth that others produce and to dominate society for their own interests.

What’s more, this is not only unjust but profoundly dysfunctional and inefficient, and it creates inhumane, rat-race societies. The time is ripe for examining where the wealth of the rich comes from. The Occupy movement has very successfully highlighted the growing split between the top 1% and the 99%, and the dominance of politics by the 1%.

The rich have made a remarkable comeback since the 1970s – the end of the post-war boom – rapidly increasing their share of national income in a large number of countries, Britain included. We are now getting back to early 20th-century levels of inequality between the rich and the rest. Having cornered ‘only’ 5.9–9% of total income before tax in the UK in the early 1950s through to 1978 – ‘The Golden Age of Capitalism’ – the top 1% of ‘earners’ now hoover up 13%.

The early post-war period was a time when the majority of the population shared in the post-war boom, with low-income households doing slightly better than others and the top 5% growing at slower rates, albeit from a higher base. But from 1979 the majority of incomes stagnated or grew only slowly, while the poorest fifth suffered a substantial loss and the rich roared ahead, swallowing up most of the spoils of economic growth, with the top 0.01% enjoying a 685% rise in real income!

This divergence has continued since the crash; indeed the gulf is widening as a result of austerity policies, which disproportionately hit those on low to middle incomes, contrary to the rhetoric of ‘We’re all in it together’.

In fact, the inequalities within the top 1% are much greater than between them and the 99%. Those in the top 1% in the UK have incomes ranging from just under £100,000 to billions. What’s more, the richer they are, the faster their income has grown: the top 0.5% have increased their share faster than the rest of the 1%, but not as fast as the top 0.1%, while the top 0.01% (ten-thousandth) have enriched themselves even faster.

Inequalities in wealth – the monetary value of individuals’ accumulated assets minus their liabilities (debts) – are even wider than income inequalities, and increasing. In the US, the top 1% own 35% of the nation’s wealth and the bottom 40% a mere 0.2%! In the UK in 2008–10, the members of the top 1% each had £2.8 million or more (14% of the nation’s wealth), though, given the opportunities for the rich to hide their wealth, this is almost certainly an underestimate. Twenty-eight per cent of wealth in the UK is inherited, not earned. Half of the population had wealth of less than £232,400, and the poorest 10% had less than £12,600.

In the US, the top 0.01% have gone from having less than 3% of national wealth in the mid-1970s to over 11% in 2013.

The richest one-thousandth – currently those with more than $20 million – own over a fifth of the country’s wealth.

Oxfam 2014 data:

• The richest 85 people in the world own as much as the poorest half of the world’s population, all 3.5 billion of them!

• 46% of the world’s wealth is now owned by just 1% of the population.

• The wealth of the richest 1% in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.

• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

Have the rich got richer because those at the top have become more enterprising, dynamic wealth creators? Are today’s capitalists – or entrepreneurs, as they like to call themselves – so much better at leading economic development than their more moderately paid predecessors of the post-war boom?

The economic data suggests the opposite. Growth rates have been slower than in the post-war boom. The rich are clearly not taking the same share of faster growth, but an increasing share of slower growth. So how have they done it?

The rich are not only getting a bigger proportion of nations’ gross incomes, but keeping more of it, thanks to massive drops in top rates of taxation.

From the 1930s onwards, tax rates on the rich soared, topping 90% in the UK, US, France and, briefly, Germany. It’s hard to believe this now when they have fallen to less than 50%, with many governments repeatedly trying to drive them down still lower. The sky did not fall down when top rates of tax were high, indeed the economies of these countries boomed, yet we are now told in severe tones that taxing the rich merely restrains growth.

To show why we can’t afford the rich we need to do more than find out just how rich they are and describe how they got their money and spend it. We need to do something that most books on the rich and the financial crisis fail to do – question the legitimacy of their wealth. But it is important to realise just how rich the rich are. I don’t want to put readers off with an indigestible mass of figures, but some are needed, especially as few people realise how unequal our society is and just how wealthy the rich are.

In the US the boundary isn’t quite so sharp, with the 4% below the top 1% getting a slight increase in share of national income since the post-war boom, though nothing like as big an increase as those above them, but it’s at the top of the 1% where the big gains have been made.

The richer people are, the higher the proportion of their income is likely to be unearned, through being based on power rather than some kind of contribution.

The UK has 63.9 million people and yet many of their most important needs could be met several times over just by the collective wealth of the richest 1,000. (Could there be a solution here?) When people worry about the effect of an ageing population on the pension bill and the NHS bill, we need to remember that just the annual growth of the wealth of the super-rich could easily pay for it. This is a ridiculous and obscene misallocation of resources. And why should we celebrate the growth of the financial sector, but see the growth of the health sector as a problem? Globally, according to the Bloomberg Billionaires website, the top 100 billionaires controlled $1.9 trillion in 2012, adding $240 billion that year. Oxfam calculates that just over a quarter of this – $66 billion – would have been enough to have raised everyone in the world over the $1.25 per day poverty line.

With a ‘net worth’ of $76 billion, Bill Gates of Microsoft is the richest person in the world, according to the 2013 Forbes list of billionaires. Second, with $72 billion, and for many years the first, is Carlos Slim Helu, a Mexican who took over his country’s telecommunications industry when it was privatised – a nice example of the consequences of privatising state monopolies.

Warren Buffett, whose candid statement about class war heads up this introduction, is fourth.

The richest woman, at ninth, with $52.5 billion, is Christy Walton, who inherited part of the Walmart fortune. Three other members of the Walton family are in the top 20. Rupert Murdoch, the media mogul, with $13.5 billion, comes in at 78th.

Very few of the rich and super-rich are celebrities. The wealthiest, Steven Spielberg, with $3 billion, is 337th on the Forbes list. Next is Oprah Winfrey, at 442nd with $2.7 billion.

In the UK, the Sunday Times often uses a montage of photos of celebrities to publicise its Rich List, but as in the US, few of them reach the upper levels. The highest (2012), Paul McCartney, with £665 million, owes his high position partly to marrying Nancy Shevell, an American heiress. Author J.K. Rowling, came in at 148th, the Beckhams at 395th. Most of the super-rich above them are unknown to the vast majority of British people.

The top six in the UK are all foreign nationals resident in the UK, attracted by special tax deals open to them: Alisher Usmanov (first, with £13.3 billion) owns Russia’s biggest iron ore producer; second is another Russian, Leonard Blavatnik, who’s involved in a range of industries including music, aluminium, oil and chemicals; in third place, the Hinduja brothers inherited their father’s conglomerate, with interests in power, automotive and defence industries in India and overseas; Lakshmi Mittal, in fourth place, is an Indian-born steel magnate who owes much of his wealth to buying up former Soviet state enterprises when they were privatised; Roman Abramovich (fifth), from Russia, best known in the UK for his ownership of Chelsea football club, owns an investment company with interests in a wide range of sectors, particularly oil; Norwegian-born Cypriot citizen John Frederiksen (shipping and oil) is sixth.

‘Non domiciles’, like these individuals, take advantage of a rule unique to the UK and Ireland that allows those who can claim to be linked to some other domicile to escape UK tax on their income and capital gains in all of the rest of the world, providing they do not bring the money into the country.

At eighth, the richest British-born person on the list is the Duke of Westminster, with £7.8 billion, who inherited property in Lancashire, Cheshire, Scotland and Canada and prime sites in London.

Although only a minority of the super-rich around the world list their speciality as finance, most of those in non-finance business are nevertheless also heavily involved in finance, in playing the markets and making deals25 and, of course, steel, power or telecommunications companies and the like are chosen for financial gain.

Why have the rich got a bigger share?

The return of the rich over the last four decades has been closely associated with developments in capitalism. Most important has been the rise of a new political economic orthodoxy, called neoliberalism.

Initiated aggressively by Margaret Thatcher and Ronald Reagan in the 1980s, it was consolidated with more stealth by their successors, New Labour as well as Conservative, Democrat as well as Republican.

Now, after the crash of 2007–08 and in the ensuing recession – exactly when it has most clearly failed – it is being imposed with renewed vigour. It has three key features.

1.

Markets are assumed to be the optimal or default form of economic organisation, and to work best with the minimum of regulation. Competitive markets supposedly reward efficiency and penalise inefficiency and thereby ‘incentivise’ us to improve. Governments and the public sector, by comparison, are claimed to be inferior at organising things – monopolistic and prone to complacency, inefficiency and cronyism. Governments should therefore privatise as much as possible.

Financial markets should be deregulated and there should be ‘flexible labour markets’ – political code language for jobs in which pay can fall as well as rise and in which there is little security. Where parts of the public sector can’t be privatised, league tables should be established and individuals, schools, universities, hospitals, museums, and so on should be made to compete for funds and be rewarded or penalised according to their placing.

Democracy needs to be reined in because the ballot box can’t match markets in governing complex economies; people can express themselves better through what they buy and sell.

Unsurprisingly, neoliberals keep their anti-democracy agenda under wraps.

2.

The rise of neoliberalism also involves a political and cultural shift compatible with its market fundamentalism. Through a host of small changes in everyday life, we are increasingly nudged towards thinking and acting in ways that fit with a market rationality.

More and more, the media address us as self-seeking consumers, savvy investors, ever pursuing new ways of supplementing our incomes through ‘smart investments’.

Risk and responsibility are transferred to the individual. Job shortages are no longer acknowledged, let alone seen as a responsibility of the state: there are just inadequate individuals unable to find work: ‘skivers’, ‘losers’. No injustice, just bad choices and hapless individuals. The word ‘loser’ now evokes contempt, not compassion.

Those unable to find jobs that pay enough to allow them to cope and who still need the welfare state are marginalised, disciplined and stigmatised as actual or potential cheats. State health services and pensions are run down and replaced by private health insurance and private pensions.

You’re on your own, free to choose, free to lose, depending on how you navigate through the world of opportunities and dangers.

Instead of seeing ourselves as members of a common society, contributing what we can, sharing in its growth, pooling risks and providing mutual support, we are supposed to see ourselves as competing individuals with no responsibility for anyone else.

Want to jump the queue for medical services? Click here. Want to give your child an advantage? Pay for private tuition. We should compete for everything and imagine that what is actually only possible for the better off is possible for everyone; everyone can win simultaneously if they try.

We are expected to see ourselves as commodities for sale on the labour market, but also as ‘entrepreneurs of the self’. Hence the rise of the cult of the curriculum vitae (résumé) and self-promotional culture.

Education is increasingly debased by efforts to turn it into a means for making young people in this mould.

Some people – probably many readers of this book – may want to resist these tendencies, but in a neoliberal society it is impossible to avoid them totally, not least because in so much of life using markets (disguised as ‘choice’) and competing in league tables have become the only choices we can make.

3.

Neoliberalism has ushered in a shift in the economic class structure of the countries it has most affected.

It involves not only a shift of power and wealth towards the rich, marked most clearly by the weakening of organised labour in industrialised economies and the enrichment of the 1%, but a shift of power within the rich: from those whose money comes primarily from control of the production of goods and services, to those who get most of their income from control of existing assets that yield rent, interest or capital gains, including gains from speculation on financial products.

The traditional term for members of this latter group is ‘rentier’. Many of the changes noted in 1 and 2 above benefit them.

Neoliberalism as a political system supports rentier interests, particularly by making the 99% indebted to the 1%.

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A different approach: ‘moral economy’

The deregulation and spectacular growth of finance are central to neoliberalism and the rise of the rich – and to the biggest economic crisis since the Great Crash of 1929.

There has been a small avalanche of books on the financial crisis of 2007, some of them illuminating, many merely providing superficial narratives of successive financial disasters and the key players in them, served up with journalistic brio. Some critiques have targeted the hubris of the financial sector, identifying mismanagement, poor judgement and questionable legality.

But some have seen the credit crunch and recession as evidence of something more basic – capitalism’s crisis-prone nature.

Why We Can’t Afford the Rich isn’t just about the financial crisis, dire though it is. It’s about what underpins and generates such crises – the very architecture of our economy. It treats the economy not merely as a machine that sometimes breaks down, but as a complex set of relationships between people, increasingly stretched around the world, in which they act as producers of goods and services, investors, recipients of various kinds of income and as taxpayers and consumers.

The problems it identifies are as old as capitalism, though they have become much more serious with the rise of finance over the last 40 years. It goes beyond a focus on irrationality and systemic breakdown, to injustice and the moral justifications of taken-for-granted rights and practices. It’s not only about how much people in different positions in the economy should get paid for what they do, but about whether those positions are legitimate in the first place.

Is it right that they’re allowed to do what they’re doing?

There is of course a long history of critiques of capitalism aimed at different targets: alienation, insecurity and poverty; the treadmill of working and consuming; economic contradictions and irrationalities; and environmental destruction. There are useful things to learn from all of these critiques, but at the current time, when the rich have increased their power so much, and inequalities have widened, I believe we need a new line of attack, one that focuses on the institutions and practices that allow this to happen.

Too many books on economic justice, and especially on the economic crisis, take as given the very institutions and practices that need questioning. This book is about the injustices of some long-standing economic relations that have come to a head in the crisis. It could be described as an example of ‘moral economy’. By this I mean not moralising about greed but assessing the moral justifications of basic features of economic organisation. It’s about the huge differences between what some are able to get and what they do, need and deserve.

What people should get is a difficult issue, particularly where it’s a matter of what we think people deserve or merit, but in the case of the rich, it can be shown that what they actually get has more to do with power. I shall argue that basically, the rich get most of their income by using control of assets like land and money to siphon off wealth that others produce. Much of their income is unearned. What’s more, over the last 35 years, particularly with the increasing dominance of the economy by finance – ‘financialisation’, as it’s sometimes called – the rich have become far richer than before by expanding these sources of unearned income.

This book is not only about money and goods, but about the very language of economic life, for the history of our modern economy is partly one of struggles over how to describe or categorise economic practices, as this affects what we see as acceptable or unacceptable: words like ‘investment’, ‘speculation’ or ‘gambling’ invite different evaluations. Who wouldn’t prefer to be called an ‘investor’ rather than a speculator or gambler? But what do such terms mean and what practices fit them? When a top banker is described as having ‘earned’ £x million, we might question what ‘earned’ means in such a context: is it just what they’ve managed to extract from the economy?

This struggle over words has been largely won by the rich and powerful, so how we speak about economic life systematically conceals their activities. Mainstream economics has proved to be a helpful if largely unwitting accomplice to this process, fearful of anything that might be construed as critical of capitalism.

To show why we can’t afford the rich we need to go into some basic economic matters, but in a different and yet simpler way than usual. Most basically, we need to remember something that has been forgotten in modern mainstream economics: economics is about provisioning. As anthropologists and feminist economists have reminded us, it’s about how societies provide themselves with the wherewithal to live. Provisioning requires work – producing goods, from food and shelter through to clothes and newspapers, and services, such as teaching, providing advice and information, and care work. Almost all provisioning involves social relations between people, as producers, consumers, owners, lenders, borrowers and so on. It’s through these relations that provisioning is organised.

Some kinds of provisioning take place through markets; some do not. The market/non-market boundary does not define the edge of the economy: unpaid work in preparing a meal for someone is as much an economic act as preparing pizzas for sale – or selling computers or insurance. Most economists and political theorists think of economic actors only as independent, able-bodied adults, forgetting that they all started off as helpless babies, unable to provide for themselves and dependent on others, and who sooner or later reach a stage where, whether for reasons of illness, disability or age, they become unable to contribute to provisioning themselves and others.

There is nothing exceptional about these conditions. We all go through them: they are universals. We can never pay back our parents for all the work they did for us, just as future generations will never be able to pay their parents back. Dependence on others, particularly across generations, is part of being human; it derives from the fact that we are social animals, ‘dependent rational animals’, as the philosopher Alasdair MacIntyre put it; we cannot survive on our own.

Robinson Crusoe depended on having been brought up in society; the newborn Crusoe wouldn’t have lasted more than a few hours on his own. And like Crusoe we depend on the resources of the earth to survive; we cannot flourish if we damage the planet.

No one would deny the right of children to be fed (‘subsidised’) by their parents when they are too young to contribute anything in return. But would it be OK for me to buy up the company that currently provides your water and slap an extra 10% on your bills so that in effect you subsidise me, enriching me greatly? Would that be a defensible form of dependence?

Or if I seized a park or beach that you had visited regularly all your life and charged you for access, would that be all right? Dependence can be defensible or indefensible; it depends.

Because we are so dependent on each other, there are always likely to be questions of fairness and justice where economic activities are concerned. Are you being paid fairly? Is it right that some get so much/little, and pay so much/little tax? Should students pay for their university courses? Should you get interest on your savings? Should there be more/less/no child benefit? More money for carers, or none? Who should pick up the bill when a company goes bankrupt, and who should pay for clearing up a derelict site left by deindustrialisation? Who should pay for pollution?

These and other such questions are about moral economy. I believe we need to think much more about them – about whether our familiar economic arrangements are fair and justifiable, instead of taking them simply as immutable facts of life – or equally bad, as matters of mere subjective ‘preferences’, or ‘values’, beyond the scope of reason.

Individuals may sometimes give more than they get, or get more than they give, for justifiable reasons, as in the case of parent–child relations, but sometimes they do so for no good reason other than power. Sexist men free-ride on the domestic labour of women for no good reason. This free-riding is particularly likely where people or organisations are very unequal in power. Minority control of key assets that others need is a crucial source of power and inequalities.

Because they can.

Important though it is to think about moral economy, it’s different from explaining economic arrangements. Few of our ways of doing things in economic matters are arrived at through democratic decision or careful deliberation on what is good and fair. Most are products of power. Usually, the best explanation of what people do and what they get in economic matters is because they can.

Why do chief executive officers (CEOs) of big companies pay themselves such vast amounts? Because they can. They may offer justifications, but these are not only invariably feeble but redundant. They can get their pay rises even if the majority of people think they’re unjustifiable. And usually the fuss over their pay hikes dies down in a week or two anyway.

Equally, when we ask why care workers get so little for doing work that clearly benefits people, the answer is because that’s all they can get, given their limited power. What we think people should justifiably get or contribute is one thing, and what they can actually get is another. Justifications and explanations are usually different.

Many of the defences of existing economic institutions are surprisingly weak, but particularly if people start treating those arrangements as natural – as ‘just how things are’ – they can persist on the basis of power.

The landowner and the stranger

Here’s an example of a taken-for-granted economic institution – private ownership of land by a minority.

You may know the story of the stranger who trespassed on a landowner’s land and was told to ‘get off my land’, whereupon the stranger asked the owner how he got this land. ‘From my father’, was the answer. ‘And where did he get it from then?’ ‘From his father’ . . . , who got it from his father, and so on. ‘So how did one of your ancestors get this land in the first place?’ asked the stranger. ‘By fighting someone for it’, said the landlord. ‘Right’, said the stranger, ‘I’ll fight you for it. If it was all right for your ancestor to seize the land in the first place, it must be all right to seize it back now. And if it wasn’t all right for them to seize it, it should be seized back now!’

The story is striking but it’s not clear what a better alternative might be. Would private ownership of land be OK if it was divided up equally so everyone had some? Or should land be publicly owned with individuals renting plots from the state, with the use of the rent revenue to be decided democratically? What the story does, at least, is jolt us out of our uncritical acceptance of the institution of minority land ownership. At this time of crisis we need much more jolting.

Mainstream economics takes the particular features of capitalism – a very recent form of economic organisation in human history – as if they were universal, timeless and rational. It treats market exchange as if it’s the essential feature of economic behaviour and relegates production or work – a necessity of all provisioning – to an afterthought.

It also focuses primarily on the relationship between people and goods (what determines how many oranges we buy?) and pays little attention to the relationships between people that this presupposes. It values mathematical models based on if-pigs-could-fly assumptions more than it values empirical research; so it pays little attention to real economies, having little to say about money and debt, for example!

Predictably, the dismal science failed to predict the crisis. When the UK’s Queen Elizabeth asked why no one saw the crisis coming, the economists’ embarrassment was palpable.

I’ll be drawing on the work of thinkers who had a more critical view, including, in chronological order, Aristotle, Adam Smith, Karl Marx, John Maynard Keynes, the Christian socialist R.H. Tawney and many recent so-called ‘heterodox economists’ and political commentators. Significantly, many of the latter did predict the current crisis.

Capitalism: a mixed bag

While this is as much a critique of capitalism as a critique of the rich, capitalism is both good and bad in a host of ways. There is no doubt, in particular, that it has produced unprecedented growth in technology and science and led to the integration of formerly largely separate parts of the world, as eulogised by Marx and Engels in The Communist Manifesto.

Marx and Engels were less prescient as regards the improvement in living standards for many workers, who turned out to be better off being exploited than not being exploited, though that does not mean there were no losers or that there cannot be better alternatives to capitalism.

The media have a depressing tendency to favour simple stories of good versus bad over ones that portray the world as a complex mix of good and bad. This book should not be seen as ignoring the benefits capitalism has brought; nor, in criticising it, to be legitimising the state socialism of the former Soviet Bloc.

‘Neither Washington nor Moscow (former or contemporary!)’ would be my slogan. A recent Russian saying goes: ‘Marx was completely wrong about communism, but damn, it turns out he was right about capitalism!’

I don’t think he was entirely right about capitalism by any means, though his thinking on its dynamics and on its generation of inequalities was more illuminating than most. But I’ll draw on plenty of other thinkers too, many of them in varying degrees critical of Marx. If you’re wondering whether I’m a Smithian, Marxist or Keynesian or whatever, my answer in each case is yes and no: yes where I think they’re right, no where I think they’re wrong.

The belief in a just world

For New Labour and Conservatives it’s become an article of faith to deny that the rich are rich because others are poor. To get ahead, any career politician has to parrot this claim; it helps to keep corporate funders of their political parties happy, as well as media owned by the super-rich. No evidence or argument is needed, apparently; they just have to profess the belief, as if swearing on the Bible.

This book shows that whatever they might want to believe, the rich are indeed rich largely at the expense of the rest. How tempting it is for not only the rich but also the merely comfortably-off to imagine that, through their own efforts and special qualities, they deserve what they have, disregarding the fact that by the accident of birth they were born into an already rich country and in many cases an already well-off family within it that gives them significant advantages. How easy to overlook that they rely on getting cheap products made and grown by people from poor countries, who are no less hard-working or deserving but can be paid much less because they have little alternative.

But it’s not only the rich who believe that they deserve their wealth. Many in the rest of the population think so too: ‘they’ve earned it so they’re entitled to it’ is a common sentiment, even among those on low incomes. This is an example of what US psychologist Melvin Lerner called ‘the belief in a just world’. In economic matters, it’s the idea that, roughly speaking, we get paid what we deserve and deserve what we get paid.

Believing the rich deserve their wealth may seem a pleasingly generous sentiment, though assuming the poor also deserve their lot does not. It produces an unwarranted deference to the rich. As Lerner noted, the belief in a just world is a delusion, a kind of wishful thinking. Who wouldn’t want to live in a just world, where need was recognised and effort and merit rewarded, while their opposites were not? But it doesn’t follow that we do.

Understandably, since the 2007 crash, people have become more critical of the rich, especially those identified as bankers. Yet, according to recent surveys of public attitudes, they are even more critical of those at the bottom, scorned as ‘welfare mothers’, ‘chavs’, ‘trailer trash’, ‘scroungers’ and so on. What’s more, it seems that as societies become more unequal, their members become less critical of inequality!

The rule of the rich Economic power is also political power. The very control of assets like land and money is a political issue. Those who control what used to be called ‘the commanding heights of the economy’ – and increasingly that means the financial sector – can pressure governments, including democratically elected ones, to do their bidding. They can threaten to take their money elsewhere, refuse to lend to governments except at crippling rates of interest, demand minimalist financial regulation, hide their money in tax havens and demand tax breaks in return for political funding.

Investigative journalists have revealed the circulation of individuals between political posts and positions in key financial institutions, and the role of powerful lobby groups in maintaining the dominance of unregulated finance, even after the crash. Prominent financial institutions have been involved in illegal money laundering, insider dealing and manipulation of interest rates, yet in the UK no one has been prosecuted and, where banks have been fined, the fines have not been imposed but arrived at by negotiation, as ‘settlements’! They have infamously pocketed gains while the losses they have incurred have been dumped on the public, who have suffered substantial drops in income and services as a result.

Of course, many politicians are already from an upper-class background in which supporting the rich is as natural as breathing, but even if they are not, ‘our representatives’ have become increasingly unrepresentative of the majority of the population at large.

Even if they want to resist, they face an environment dominated by financial interests.

Spending it

The problem of the rich goes beyond issues of how they get their money, to how they spend it. Their massive spending on luxuries distorts economies, diverting producers from providing goods and services for the more needy. It’s a waste of labour and scarce resources.

In some cases, it makes things worse for those on low incomes, for example, by driving up house prices beyond their reach. The super-rich have so much that there is no way they can spend all of it on things they can use, so they recycle the rest into further rounds of speculation, buying up property, companies and financial assets that generate little or no productive investment, and merely siphon off more wealth that others have produced.

No one treads more heavily on the earth than the rich. Private jets and multiple mansions mean massive carbon footprints. Yet the inconvenient fact is of course that even though most of us have smaller footprints, in the rich countries they are still seriously in excess of what the planet can absorb. Even if we could afford them in money terms, we cannot afford high-carbon, high-consumption life-styles if we are to stop runaway global warming.

We are in deep trouble, not just because of the economic crisis, but because it’s overshadowed by a bigger and more threatening crisis – climate change. The solution to the economic crisis is widely thought to be growth. But that will only accelerate global warming.

The rich countries need to switch to steady-state or ‘degrowth’ economies to save the planet, but capitalism needs growth to survive; it’s in its DNA.

Soviet state socialism proved no better environmentally. We need a different model. If that seems a gloomy conclusion, there is a very important and positive counter message: that beyond a certain level, attained already by most people in rich countries, well-being is not improved much by further increases in wealth, and well-being tends to be higher in more equal countries.

Above this threshold, well-being is improved by greater equality, reductions in stress, exercise, being with others, both caring for and being cared for, developing interests and skills and projects and experiencing the world at large beyond the confines of narrowly defined jobs.

Ending the rat race will do us, and the planet, a lot of good.

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Why we can’t afford the rich.

by Andrew Sayer

get it at Amazon.com

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A philosopher’s take on Global Basic Income – Hillel Steiner. 

Philosophy and Economics

Inequality and poverty are bad. Almost everyone agrees on that. The solution? A basic income guaranteed to everyone on Earth. Renowned political philosopher Hillel Steiner explains why and how we should implement it.

One of the more rarely encountered phenomena in this world is agreement between people on opposing sides of the left-right political spectrum. And yet there are two separate, fairly specific policy proposals that seem to be emerging as objects of consensus among many contending political parties.

The first and more widely familiar of them is the increasingly publicised idea of an Unconditional Basic Income, known acronymically as UBI. Unlike the benefit provision of the standard welfare state — a provision conditional on its recipients being ill, single parents, disabled, unemployed or retired — a UBI is intended to be given to everyone, rich and poor alike. There are, of course, many different views about both the appropriate size of UBI and whether it should replace or supplement welfare state provision. But one point on which all agree is that its administration would be far less costly than that of any conditional benefit provision since, being universally supplied, UBI would require no assessment of its recipients’ personal circumstances. And so, as we might expect, the main objection to UBI is that it would thus amount to a charter for the lazy, enabling work-shy, able-bodied people to live parasitically off wealth created by hardworking taxpayers.

The second policy proposal, generally only familiar to economists, political philosophers, and people interested in public finance, is Land Value Taxation or LVT, also known as site or location value taxation. This tax is a levy on the unimproved value of a land site — a levy that, unlike property taxes, disregards the value of buildings, personal property and other improvements to that site. LVT has been referred to as “the perfect tax” and its economic efficiency has been recognised since the 18th century. Many economists since Adam Smith and David Ricardo have advocated for this tax, but it is most famously associated with the late 19th century American economist Henry George. In our own time, it has been endorsed by such otherwise ideologically divergent economists as Nobel laureates Milton Friedman and Joseph Stiglitz. The reasons are not hard to fathom. As The Economist notes,

When thinking about any tax, economists focus on how it affects decision-making. Income tax reduces the incentive to work. Corporation tax reduces the incentive to invest. Stamp duty deters some marginal house sales. Such prevention of mutually beneficial transactions is generally considered bad… Land value taxation is so beloved of economists because, in theory, it does not distort decision making. Suppose a land value tax of one per cent on land value is introduced tomorrow. There can be no supply response: there would still be as much land as there is today.

The moral justifications for LVT go back even further than the 18th-century origins of their economic counterparts: they can be found in works of 16th- and 17th-century political philosophy and, arguably, even in the Bible itself. The thought is that, originally, land sites and their natural resources were entirely unowned. So everyone was morally at liberty to make use of any of them. Someone wishing to privatise one of those sites — to acquire and maintain exclusive private ownership of it — incurs a moral duty (which transfers to their successors) to compensate everyone else for their loss of that liberty. That is, in order to rightfully exclude others from sites which they might otherwise have used, you must compensate them. In modern societies, where all land sites are owned, this compensation liability would assume the form of a tax borne by landowners on the value of their sites. And the revenue fund formed by that tax is one in which all persons have an equal share, representing their respective entitlements to compensation for the loss of their equal liberty.

If superior efficiency is what commends LVT to economists, its being distributively just is why it’s so attractive to many political philosophers. Centrally concerned with questions of who is morally entitled to what from whom, those philosophers often converge on the idea that persons are entitled to the fruits of their labour and that it’s therefore unjust to deprive them of what they’ve produced. Indeed, this is the very same idea that underpins the previously mentioned main objection to UBI: the objection that it would enable the work-shy to live parasitically off wealth created by hardworking taxpayers.

But — and here’s the crucial point — a UBI funded by LVT entirely escapes that objection! This is because no one made the land. It, and all the natural resources it encompasses, are not the products of any person’s efforts. Mark Twain’s financial advice to his nephew wasn’t mistaken: “Buy land, son”, he famously said, “they’re not making it any more”. A tax on the raw value of a land site — on the site’s value alone, and not on the value of the improvements made to it by human labour — deprives no one of the products of their efforts.

It is relatively easy, then, to see how this argument extends globally. Nations are owners of the land sites comprising the territory of their jurisdictions. Claiming the right to exclude foreigners from those sites means that they owe them compensation. Each national LVT revenue fund thereby rightfully becomes a component of a Global Fund: a fund in which, as before, all persons — regardless of their nationality — have an equal share. It’s this entitlement that would form the basis of a global UBI.

A global UBI funded by a global LVT promises considerable left-right consensus inasmuch as it would make a significant contribution to promoting economic development in poorer societies, disincentivising economic emigration from those societies, and incentivising settlement of international territorial disputes. Crucially, it would accomplish these things at relatively low administrative cost and without depriving persons of the fruits of their labour. Opportunities to link the demands of justice with those of economic efficiency are rare enough, and it would therefore be a great pity to forgo them when they are found.

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Hillel is Emeritus Professor of Political Philosophy at the University of Manchester. A Fellow of the British Academy, he is the author of the prize-winning book An Essay on Rights. His current research is on the concept of ‘the just price’ as well as the application of libertarian principles to global and genetic inequalities.

KnowItWall

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Modeling the Macroeconomic Effects of a Universal Basic Income – Rakeen Mabud and Felicia Wong. * A universal basic income would grow the economy – Dylan Matthews.

Our colleagues at the Roosevelt Institute, together with the Levy Institute, just published an exciting new paper entitled, “Modeling the Macroeconomic Effects of a Universal Basic Income.”

The paper takes a major step forward in answering an important question: How would a massive federal spending program like a “universal basic income” (UBI) affect economic growth and economic inequality? We live in a time when many big new economic policy ideas are suddenly on the table—from unconditional cash assistance programs like UBI; to single-payer health care, which would have the federal government as our sole medical insurance system; to significant increases in both individual and corporate taxes. At Roosevelt, we do our best to use data and analysis to understand who would benefit from new policies, who would lose, and how the economy as a whole—our institutions and the power relationships among them—would change as a result. So it is exciting to see our report on UBI, one of the biggest proposed game-changers, generate thoughtful media coverage. 

All models, of course, have baked-in assumptions, which are important to unpack. So, the rest of this post explains a little more about what those assumptions are; why many Roosevelt economists and researchers believe those assumptions have merit; and why we are proud members of the UBI research community. But we should note up front: We view this as part of a much larger conversation about UBI and other associated questions, including our assumptions about just how much the economy still has room to grow. Our paper shouldn’t be read as pro- or anti-UBI. We believe strongly in the goals that many UBI adherents have: the importance of alleviating poverty and suffering, the importance of giving workers and other low-income people more power and greater tools for self‑determination, and the importance of economic security for all Americans. But our position is that we still have a lot to learn about UBI, cash assistance, and improving the social safety net.

The Levy model and what we tested

The paper explores the macroeconomic effects of a UBI using the Levy Institute’s macroeconomic model. Important note: Economic models are simply stylized approximations of how our economy works, and we should be careful not to conflate what the model says with reality. The Levy model was developed over the course of years by comparing the model’s predictions to what actually happened in the real world. Through this iterative process, each round honing in on a “truer” picture of the economy, the team at Levy developed a baseline forecast—a prediction of what would happen to important components of the macro economy (e.g. household wealth and income and the government’s net debt) if nothing else changed and the Congressional Budget Office’s overall GDP forecasts came true. By comparing the effects of different sized UBIs to the Levy baseline, we can roughly predict how huge amounts of federal spending would affect inflation and other macroeconomic outcomes.

In the paper, we examine three versions of a UBI: $1,000/month for all adults, $500/month for all adults, and a $250/month child allowance. The headline result is that the model predicts that if we funded a UBI without raising taxes, GDP would grow—an eye-catching 12.56%, in the case of the full $1,000/month UBI. The model also predicts that even in tax-financed UBI scenarios, the economy would grow (because we incorporated the assumption that an extra dollar going to a poorer household is more likely to be spent rather than saved, something wonks call “the marginal propensity to consume.”) Dylan Matthews at Vox did a great job of explaining all of the results, so we won’t go further here, but it is worth reading his piece and the paper itself for the detail.

Economic worldview, and why it matters

We did want to emphasize the big-picture context here, because it’s important. The Levy model, and the results it offers us about the macroeconomic effect of a UBI, is situated in a larger worldview that many of our Fellows, including Mike Konczal and Marshall Steinbaum, hold: that there’s a lot of room to grow in our economy. Crucially, this is a Keynesian view, assuming that total spending is what determines economic output. As such, the model holds that policies that would increase total spending, like UBI, will grow the economy. The model also makes two other important assumptions that adhere to the broader perspective that the economy is not operating near potential output. First, unconditional cash transfers do not mean that people stop working, which our recent paper by Ioana Marinescu, surveying extensive empirical evidence, demonstrates. Second, the paper takes seriously the idea that when the government takes away an additional dollar of a rich household’s income through taxes, the household doesn’t respond by dropping out of the labor force. Instead, we believe that each marginal dollar taxed away reduces rich households’ incentives to bargain for a larger share of the economic pie. Our belief about this “bargaining elasticity” derives from important work by Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva, who show that the bargaining effect trumps the labor supply effect—it isn’t even close. This means that high progressive tax rates could have a very positive effect on reducing inequality, without harming growth. This is a big assumption, and we fully recognize that.

Implications and today’s economic debate

The fundamental idea that there’s a lot of room to grow in our economy, and as a result, a lot of room to think bigger about our social safety net, has implications for problems far beyond what a UBI is designed to address. What is the optimal interest rate? What is the best trade off between inflation and unemployment? What are the most effective ways to increase long-stagnant wages? The answers to each of these questions stem from one’s view of whether the economy is operating at its fullest capacity.

Further, the UBI conversation happening right now is important because it forces us to tackle big questions head on: If we can do more to expand the social safety net, what should that expansion look like? Who should get that expansion? Workers? What does it mean to work? Does going to school or raising a child count as “working”? Who is deserving of government support? We are privileged to be a part of the UBI community—one that enthusiastically tries to answer these very big questions, and, as a result, ends up breaking past all kinds of constraints in the way we think about how our economy and society are structured.

Of course, today’s political destabilization produces deep anxiety, and indecisions, or bad decisions, on the part of our current political leadership has caused real suffering in the lives of real people. But in one respect, our political era is liberating. We are now talking not just about a guaranteed cash income, but also about job guarantees (the idea that everyone who wants to work will have paid work to do); baby bonds (wherein all children, at birth, would be given a bond that would come due when that child became an adult—and thus all, regardless of their family wealth, would have some economic security); much higher tax rates on the wealthy; and innovative ways to break up monopoly companies that may be choking our economy and our workers: These are all real conversations today. And they are all radical ideas that embrace the concept that we as a society are able to solve big problems. We hope that this paper contributes to this ongoing conversation, and serves as one more piece of evidence that thinking bigger is not foolhardy, but rather, imperative.

Download the report: Roosevelt Institute.com

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Study: a universal basic income would grow the economy – Dylan Matthews.

A universal basic income could make the US economy trillions of dollars larger, permanently, according to a new study by the left-leaning Roosevelt Institute. 

Basic income, a proposal in which every American would be given a basic stipend from the government no strings attached, is often brought up as a potential solution to widespread automation reducing demand for labor in the future. But in the meantime, its critics typically allege that it is far too expensive to be practical, or else that it would spur millions of Americans to drop out of the labor force, wrecking the economy and depriving the government of a tax base for funding the plan.

The Roosevelt study, written by Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy, comes to a dramatically different conclusion. And it does so using some notably rosy assumptions about the effects of large-scale increases to government spending, taxes, and deficits, assumptions that other analysts would dispute vociferously.

Their paper analyzes three different models for a universal basic income:

  1. A full universal basic income, in which every adult gets $1,000 a month ($12,000 a year)
  2. A partial basic income, in which every adult gets $500 a month ($6,000 a year)
  3. A child allowance, in which every child gets $250 a month ($3,000 a year)

They find that enacting any of these policies by growing the federal debt — that is, without raising taxes to pay for it — would substantially grow the economy. The effect fades away within eight years, but GDP is left permanently higher. The big, $12,000 per year per adult policy, they find, would permanently grow the economy by 12.56 to 13.10 percent — or about $2.5 trillion come 2025. 

It would also, they find, increase the percentage of Americans with jobs by about 2 percent, and expand the labor force to the tune of 4.5 to 4.7 million people.

They also model the impact of the plan if it’s paid for with taxes. That amounts to large-scale income redistribution, which, the authors argue, would stimulate the economy, because lower-income people are likelier to spend their money in the near-term than rich people are. Thus, they find that a full $12,000 a year per adult basic income, paid for with progressive income taxes, would grow the economy by about 2.62 percent ($515 billion) and expand the labor force by about 1.1 million people.

These are extremely contentious estimates, borne of controversial assumptions about the way the economy works and the effects that a basic income would have on it. Many, if not most, economic modelers would come to very different conclusions: that a basic income discourages work, that raising taxes to pay for it could have profound negative economic impacts, and that not paying for it and exploding the deficit is a recipe for fiscal and economic ruin.

But the authors argue that the economic model they’re using, run by the Bard College Levy Economics Institute, uses more realistic assumptions than alternative models, and is particularly well-suited for predicting a UBI’s impact.

If nothing else, the paper should provoke other analysts with less rosy models to come up with their own predictions of what a large-scale basic income would do.

The predictions driving the model

Predicting how policies will change the economy is difficult, and requires making tricky and contestable assumptions about the way the economy currently works. And the Levy Institute model and Roosevelt Institute researchers make some big assumptions that many macroeconomists and public finance economists are likely to disagree with.

Perhaps the single most important assumption is that the economy is suffering from a lack of demand — consumers and businesses aren’t buying enough stuff. This is traditionally the problem in recessions, and it’s typically addressed through monetary or fiscal policies meant to boost demand. Governments can spend a bunch of money on infrastructure or tax breaks, which juices demand by having the government buy more or giving consumers more money to spend; this was the approach of the 2009 stimulus package. Or central banks can print a bunch of money and bring down interest rates, which makes it easier for businesses and individuals to borrow and spend money.

But in recent years there’s been growing concern that this might be a “secular” problem — one that persists even after the economy has seemingly recovered from a downturn. Larry Summers, the former Obama adviser, Harvard president, Treasury secretary, and eminent economist, has since 2013 warned of an ongoing “secular stagnation”, borrowing the term from the early 20th century economist Alvin Hansen, who coined it in the 1930s. Thomas Piketty’s book Capital in the 21st Century has prompted research tying this decline in aggregate demand to the surge in high-end inequality, if the rich control more and more money, and aren’t spending it, that helps explain sluggish demand.

The Roosevelt Institute has done a bunch of work on this theme, arguing that a shortfall in aggregate demand, tied to inequality, is strangling the economy. Roosevelt’s JW Mason argued in a June 2017 paper that the US economy is still quite far from full employment, and GDP is falling below its potential level, largely because of low demand; he argues for more aggressive Federal Reserve policy to correct the problem. Roosevelt’s Steinbaum and Mike Konczal argued in 2016 that low levels of demand have led to less labor mobility (fewer people switching jobs and moving for work), less entrepreneurship, and more concentration of profits in a handful of companies at the expense of competitors and potential new challengers.

So the Levy model used in the basic income paper, building off this research, assumes that demand is well below where it could be. That helps explain why big, unfunded increases in spending, like a basic income not funded by taxes, could be stimulative. Many economists would agree that in, say, 2009, when unemployment is surging and the economy’s in recession, it makes sense to do big deficit spending to get demand up again. The Levy model is arguing that a demand shortfall is still a problem, and similar measures would thus be effective in 2017 just as they were in 2009.

Plenty of other models would come to different conclusions. The Penn Wharton Budget Model, a widely used economic forecasting model used by politically unaligned groups like the Tax Policy Center, tends to project that policies that increase the deficit dramatically will have significant economic downsides. For instance, when the Tax Policy Center looked at Donald Trump’s likely tax plan, it used the Penn Wharton model and found that over two decades the tax plan would reduce GDP by 4 percent, mostly because the increased deficit would lead to a surge in interest rates on government debt, and then on small business loans, mortgages, and credit cards as well.

The Roosevelt-Levy model, by contrast, finds that any negative effect due to the deficit would be swamped by the positive economic impacts of increased demand.

The Roosevelt-Levy model also makes two other significant assumptions:

  1. A basic income does not discourage work at all
  2. Households don’t respond to changes in their tax burden

These are both contentious, but reflective of Roosevelt’s broader view of how the economy works. University of Pennsylvania economist Ioana Marinescu recently conducted a wide ranging review of the literature on unconditional cash programs for Roosevelt, focusing on programs in the US and Canada. She examined experiments in the 1970s and ’80s that evaluated “negative income taxes” (NITs, essentially basic incomes that phase out as you earn more), Alaska’s Permanent Fund (which taxes oil extraction and returns the money directly to every man, woman, and child through an annual check), and a dividend the Eastern Band of Cherokees issued to members of the tribe from casino revenues.

All of these cases find reductions in work that are, at most, modest. In the Cherokee case (where members got about $4,000 to $6,000 a year) there was no effect on work; in the Alaska case, where checks are generally $800 to $2,000 per person (so up to $8,000 for a family of four), there’s a small increase in the share of people working part time, but no overall effect on the share of the population working. Indeed, the part-time work boost could come from people entering the workforce anew. The negative income tax experiments are more complicated. Most of the studies found no statistically significant reduction in work; only one, the Seattle/Denver experiment, found a reduction, and it saw the employment rate fall by 4 percentage points

In any case, Marinescu concluded that the effects on work are small but minimal. “Our fear that people will quit their jobs en masse if provided with cash for free is false and misguided,” Marinescu writes. 

The new Roosevelt paper cites Marinescu’s finding as support for its assumption that there’d be no decline in work. But even if there’s a modest decline in work — or a socially salutary decline, due to new mothers taking more leave or kids staying in school longer or people choosing to retire earlier because they want to — that could have significant economic effects, which the model will not pick up.

The assumption of no household response to changes in taxes is also sure to be contentious. It cuts two ways. On the one hand, most conservative/libertarian leaning economists would argue that taxes, especially corporate and investment taxes and high individual income tax rates, have a tremendous impact on business decisions and individual decisions about work. This is the whole idea behind supply-side economics as practiced by the Reagan, Bush, and most recently Brownback administration in Kansas: that lowering taxes on economic activity will lead to more of it, which grows the economy. Correspondingly, enacting big tax increases to pay for a basic income would be predicted to hurt the economy.

The right-leaning Tax Foundation, for instance, has an economic model that predicts huge positive impacts from cutting taxes on corporations and high-income individuals, and significant negative impacts from raising them. For instance, the Tax Foundation found that the House Republican plan to cut individual and business taxes would lead to a 9.1 percent boost in GDP And a 7.7 percent boost in wages, and that Bernie Sanders’s tax plan WOULD CUT GDP by 9.5 percent and would lower the average American’s income by nearly 13 percent.

On the other hand, some left-leaning economists have argued that raising taxes on high earners has positive effects on household behavior. Berkeley’s Emmanuel Saez, Piketty, and Harvard economist Stefanie Stantcheva have argued that very high marginal tax rates (the top rate on wages was 91 percent for most of the 1950s) discourage the rich from making very large salaries. In particular, it prevented them from bargaining with their employers to divert money from shareholders or lower-ranked staffers into higher executive compensation.

Think of it this way. In 2017, the top federal income tax rate is 39.6 percent. So if a CEO convinces his company to raise his pay from $5 million to $6 million, he’ll get to keep $604,000 of that raise (I’m ignoring state and payroll taxes for the sake of simplicity). That’s a really healthy after-tax raise, so that CEO has a very big incentive to lobby for pay hikes like that. But in 1955, the top federal income tax rate was 91 percent. So that same pay raise would only net him $90,000. Not nothing, but a way, way smaller windfall. So back then, executives had less reason to try to fight to earn more, which kept down inequality.

The Roosevelt paper predicts that the super-negative Tax Foundation story, where big tax increases translate into economic calamity, would not come to pass, nor would the rosy Saez/Piketty/Stantcheva story, in which big tax increases translate into a quite big reduction in inequality, which in turn could alleviate secular stagnation by putting more money in the hands of the middle-class to spend.

This is predicting a huge, huge policy change

It’s worth being clear about just how significant some of the policies envisioned in this paper are.

Some of them are relatively modest in cost. A $3,000 per child per year child allowance is well in line with what other rich countries do; Canada gives family with children under 6 about US$5,000 a year, and families with older children about US$4,250 (the benefit phases out for the rich). That plan would be totally affordable for the US with relatively small tax increases, especially if we replaced other income support programs for children. A group of influential US property experts have recently recommended a $3,000 to $3,600 a year child benefit, and the Child Tax Credit Improvement Act from Congress member Rosa DeLauro, legislation backed by Nancy Pelosi and John Lewis, would create a new $3,600 fully refundable tax credit for kids under 6. This is well within the American political mainstream, and it could cut child poverty by a quarter, a third, or even in half.

But a $12,000 a year per adult basic income is another matter. The Roosevelt paper finds that paying for it would require increasing household tax revenue by 120 percent — a more than doubling. To do that, it assumes that all but the poorest 40 percent pay more in taxes. The middle quintile (households with an income between $48,300 and $85,600, per the Tax Policy Centre) would see their average tax rate go from 14 percent to 25 percent; the top one percent would see its average tax rate go from 32.9 percent to 67.9 percent.

This would be historically unprecedented. Note that even in 1979, when the top marginal tax rate was 70 percent, the top one percent paid only 35.2 percent of their income in federal taxes on average. To nearly double that number, we’d need much, much higher income tax rates, and likely a few other new measures to tax the rich.

Of course, implementing a basic income and not paying for it would not have these problems. But it would explode the deficit so dramatically that even many left of center economists would consider it dangerous.

All of which is to say, the most ambitious proposals that the Roosevelt paper considers would need to be refined considerably to be ready for implementation. There are big tradeoffs between growing the deficit and forcing big tax increases on the rich and middle class alike, and it may be that the child allowance, which Roosevelt predicts would do the least for the economy, is the most fiscally viable option.

Vox.com

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If you think Basic Income is “free money” or Socialism, think again – Scott Santens. 

First, saying basic income is socialism is as absurd as saying money is socialism. It’s money. It’s all it is. What do people do with money? They use it in markets. In other words, basic income is fuel for markets. Markets are a wonderful invention that serve to calculate via a massively distributed computer comprised of people, what goods and services should be made, using what, going where, by whom, of what quantity, etc. It’s an incredible act of decentralization built upon supply and demand signaling.

When someone has money and wants to buy something, that is a demand signal. Businesses meet this signal with supply. Basically, buying is like voting. We vote on what we want using money as our ballots, and we do this over and over and over again, every day. Now imagine someone has no money in a system built around markets. How do they vote? They can’t. The market thus confuses this lack of a vote as a “no” vote. These two signals are of course very different. One is zero and one is null, but markets don’t know that. They can’t differentiate between them. This means markets containing people who don’t have enough money to signal their demand can’t function properly.

continued at ScottSantens.com

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Universal basic income could expand whole economies, claims US think tank – Josie Cox. 

The study finds that the economic benefit of UBI would particularly be seen if the government were to finance it by increasing federal debt.

The potential advantages and drawbacks of Universal Basic Income have been debated fiercely in recent months, but a new study suggests that paying everyone an unconditional salary could have a welcomed side effect.

According to US think tank The Roosevelt Institute, a system of universal basic income – or UBI – in the US, under which every citizen is given a basic government salary unconditionally could actually grow the economy on a permanent basis.

But there is a catch.

The research, compiled by the institute’s Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza from the University of Cassino and Southern Lazio in Italy, finds that the economic benefit of UBI would be seen if the government were to finance it by increasing federal debt rather than, for example, by raising taxes.

The research examines three versions of unconditional cash transfers: $1,000 a month to all adults, $500 a month to all adults, and a $250 a month child allowance. When modelled on a plan based on increasing federal debt, all three versions led to economic expansion. The largest cash programme – $1,000 for all adults annually – expands the economy by 12.56 per cent over the baseline after eight years, according to the research.

When modelled on a plan that pays for UBI by simply raising taxes on households, the research found no effect on the economy.

“In effect, it gives to households with one hand what it is takes away with the other,” the academics wrote.

They examined a third model, under which – in the tax-financed scenario – the plan is adapted to include distributional effects: lower income households are taxed less than higher income households. Under that scenario the economy would also grow, the research shows.

“This occurs because the distributional model incorporates the idea that an extra dollar in the hands of lower income households leads to higher spending,” the academics write.

“In other words, the households that pay more in taxes than they receive in cash assistance have a low propensity to consume, and those that receive more in assistance than they pay in taxes have a high propensity to consume. Thus, even when the policy is tax- rather than debtfinanced, there is an increase in output, employment, prices, and wages.”

The study would likely be discredited by some economists who have argued that UBI discourages work and therefore would not contribute to economic expansion. The impact of raising taxes or increasing federal debt to pay for UBI would also likely be a matter of debate.

Earlier this month Richard Branson backed the idea of UBI, joining Facebook FOUNDER Mark Zuckerberg, Slack chief executive Stewart Butterfield, and Tesla boss Elon Musk who have also spoken out in favour of the concept.

A trial is currently taking place in Finland, which rewards 2,000 unemployed people an unconditional monthly sum of €560 (£515). The amount is paid even if recipients find work.

Participants have reported lower levels of stress, greater incentive to find work and freedom to pursue entrepreneurial ideas.

Cities across the Netherlands are launching their first universal basic income trials in October later this year. Other cities in Italy, Canada and Scotland are also at various stages of investigating and launching trials. 

NZ Herald

Forget the future of workers. What about the future of consumers? – Scott Santens. 

Universal basic income as a response to both falling demand and the rising sharing economy.

Discussing the future of work is all the rage these days. Some say we’re on the verge of the robot apocalypse of jobs. Others say jobs will always be created in sufficient numbers (and at sufficient rates) and that everything will be fine. Regular readers know where I fall on this particular question, that either way, our goal should be eliminating as many of the jobs as possible that we as humans don’t enjoy doing.

However, what doesn’t tend to get discussed is the flip side of all of this, which is the fruits of the all the work by humans and machines, the limited amounts any of us as humans can consume them simply because of limited time, and how our consumer preferences are being permanently and irrevocably altered by short-sighted greed.

… continued at Steemit



It’s Time to Shift the Economy into Fourth Gear Capitalism with Basic Income – Scott Santens. 

The economy is in between gears right now, and that’s a growing problem because as is true with all higher gears, we could be accomplishing so much more with so much less and prosperity could be greatly increased for not only the lucky few, but everyone. What do I mean? Well let’s look at the gears of capitalism, of which there have so far been three, before moving on to what fourth gear is, what’s stopping us from it, and how we can achieve it.

The Gears of Capitalism

First gear was made possible by the invention of the steam engine which allowed for the beginnings of industry and the bridging of great distances with trains and steam-powered ships.

Second gear was made possible by the invention of electricity which allowed for industrialization to go into overdrive while bridging even greater distances with the telegraph and telephones.

Third gear was made possible by the invention of the computer which allowed for full globalization and the connection of everyone to each other all over the world with information technology and the internet.

So what is fourth gear?

Fourth gear is the handing over of labor to machines, and that does not only include muscle labor as was already true in lower gears, but mental labor. It is the long awaited freeing of humanity to pursue human interests, paid or unpaid, as payment is of less concern when machines are working for us… that is as long as we humans are earning the machines’ paychecks to purchase what they’re producing.

And that’s the rub. That’s why we’ve so far refused to shift into fourth gear capitalism, because in fourth gear, human labor necessarily becomes unnecessary. This can be an obstacle within the mind, for capitalism itself was built to combat scarcity, and the division of labor meant everyone need pull their weight so that all may survive. But each gear along the way has enabled us to do more with less energy expended, so where once a majority of humanity’s time was spent in the fields, now about one percent is.

continued … Medium

Poverty-traps and pay-gaps: Why single mothers need basic income – Dr Petra Bueskens. 

Harper discovered she wasn’t alone when she packed up her house, stopped paying rent and took her four-year-old son, Finn, on a six month “holiday” up north to warmer climes.

“I found in every camp site, especially the show grounds as they’re the cheapest ones that still have facilities, there were a couple of other single mums and their kids. I was also travelling with a friend and her son, so there were often five or six of us and a bunch of kids at each campsite. Up north there’s even more. Over time we became familiar with each other.”

Harper gave up her home because she couldn’t afford the rent and have any quality of life. Paid work put her in a double bind: if she worked, she lost most of her Centrelink payments; if she didn’t work there wasn’t quite enough to make ends meet. So, she worked and stayed poor. These are the poverty-traps that keep many single mothers working-poor and unable to dig out.

In Australia now, there is a clandestine group of mobile single parents, mostly mothers, who have found they cannot, on Centrelink benefits and low-paid casual work, meet the cost of living. They have chosen instead to travel and live with their children in camping grounds and caravan parks around Australia, particularly in Northern NSW and Queensland, where living outdoors is relatively easy. For as little as $10 a night at national parks and showgrounds and up to $25 at caravan parks that have showers, washing machines and other facilities, they live on the move. 

continued … Basic Income.org

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Dr Petra Bueskens is an Honorary Fellow in Social and Political Sciences at the University of Melbourne, a psychotherapist in private practice at PPMD Therapy and a columnist at news media site New Matilda. She is the author of Mothering and Psychoanalysis: Clinical, Sociological and Feminist Perspectives. 



How basic income solves capitalism’s fundamental problem and what stands in its way – Nwaodu Lawrence Chukwuemeka. 

The Basic Income Guarantee (BIG) is back in the news. The Finns are considering implementing it, as are the Swiss, replacing all means tested benefits with a simple grant to every citizen, giving everyone enough money to survive. Unlike most current benefits programmes, it is not contingent on being worthy or deserving or even poor. Everybody gets it, you, me, Rupert Murdoch, the homeless man sleeping under a bridge.

Last seriously proposed by Richard Nixon in 1969, more and more economist and bloggers are suggesting that the Basic Income Guarantee may ultimately be the salvation of capitalism. The BIG will eliminate poverty, lessen inequality, and vastly improve the lives of the most vulnerable among us. But that is not why we need it. It may seem impractical, even utopian: but I am convinced the BIG will be instituted within the next few decades because it solves modern capitalism’s most fundamental problem, lack of demand.

Technology and capitalism have largely solved the problem of supply. We are able to make more stuff, with fewer inputs of labour and capital, than ever before. We have the knowhow, we have the resources, we have the trained labour, we have the money. The only thing businesses lack is customers. Making stuff has become easy. It is selling it that keeps entrepreneurs (and central bankers) awake at night. Stagnant wages tell us that the supply of labour exceeds demand. Microscopic interest rates tell us that we have more capital than we need. Since the Great Depression most economists have recognised that demand is the Achilles heel of the modern economy.

Over the past 80 years, we have solved the problem of demand in three very different ways. The first is war. In 1938, US unemployment was almost 20%. In 1944 it was barely 1%. Everybody knows World War II ended the Great Depression: but it is worth remembering that it wasn’t the slaughter of civilians or the destructions of cities that reinvigorated the global economy, but rather the massive fiscal stimulus of government borrowing. Had we borrowed and spent as much on building schools, homes and roads as we did on defeating the Axis powers, the economic effect would have been even greater. The advantage of military Keynesianism is political: conservatives who loathe government spending are able to overcome their distaste when it comes to war.

The second, during the post war Golden Age, was rising salaries. Between 1950 and 1970, the average American worker saw his real wages double: since then, they have barely gone up at all. Back then, productivity improvements translated almost immediately into wage gains. As workers’ wages went up, so did consumer spending. Productivity increases meant each worker was able to make more stuff. Wage increases meant he was able to afford to buy it. Advertising transformed luxuries into necessities. Productivity gains combined with wage hikes gave the Golden Age the greatest GDP growth the world has ever seen.

In our most recent era, from 1982 until the financial crisis, the engine of economic expansion was ever increasing levels of private debt. After Reagan and Thatcher, median wages stopped going up, even as productivity maintained its inexorable rise. With wages stagnant, only by taking on more debt were consumers able to keep spending enough to buy all they produced. As long as banks were happy to lend, the economy managed to grow (albeit much more slowly than during the Golden Age) and the party could go on. But after the financial crisis, both household’s willingness to incur more debt and bank willingness to lend contracted, leaving us with the stagnant economy we are trapped in today.

These three old methods of stimulating demand have passed their sell by dates. Global war would reinvigorate the economy, but at an unbearable cost. Rising wages, unfortunately, are unlikely, with more and more of us replaceable by robots, software or much cheaper foreign workers. And higher levels of debt not only increase inequality, they also engender financial instability. What is to be done?

Every year, technological progress allows us to make more goods and services with fewer inputs of labour and capital. As consumers, this is wonderful. We can buy better and cheaper goods than ever before. As workers, however, productivity increases threaten our jobs. As we need fewer workers to make the same amount of stuff, more of us become redundant. And it is likely to get worse. The rise of the robots may eliminate 47% of existing jobs within the next two decades. Unfortunately, even though a robot can make an iPhone, it cannot buy one. If we are hurtling towards a post scarcity future, only a Basic Income Guarantee can ensure sufficient demand to keep the global economy ticking over.

It is not just the poor that profit. The rich get exactly the same payment, in the form of a tax cut. Corporations also win. With more money in consumers’ pockets, sales increase, raising profits. And since firms no longer need provide a living wage, labour costs could go down, which would give employers reason to hire. Meanwhile, workers, with a guaranteed income, no matter what, will have the freedom to tell an unreasonable boss to “take this job and shove it.” These benefits suggest that a Basic Income Guarantee could command considerable support from diverse sectors. But these are all merely side benefits of the BIG.

If technological progress continues to eliminate jobs, the Basic Income Guarantee may well be only way we will be able to maintain demand in a post-work future. By giving every citizen a monthly cheque, a Basic Income Guarantee will be as fiscally stimulative as World War II without requiring the murder of millions. The Basic Income Guarantee is economically sensible and politically practical. What then stands in its way?

The first problem with the Basic Income Guarantee is that it sounds too good to be true. We have been told to be suspicious of anyone promising a free lunch, and giving people money for doing nothing certainly seems like a costless gift. Fear of scarcity is built into our DNA. For the Basic Income Guarantee to seem viable for most people, they need to learn that demand, not supply, is the bottleneck of growth. We need to recognise that money is something humans create, not something with fixed and limited supply. With Quantitative Easing, central banks created money and gave it to the financial sector, hoping it would stimulate lending. Today, even mainstream figures like Lord Adair Turner, Martin Wolf and even Ben Bernanke recognise that “helicopter drops” of money into individuals’ bank accounts could have been more effective. Technocrats are beginning to recognise the practicality of Basic Income. We in the economic blogosphere need to bring this message into the public eye. The rise of the robots, ever declining prices for goods and services, and disappearing jobs may ultimately teach this lesson more effectively than any number of well-meaning essays.

The second problem is sociological. Most of us are still in employment. We feel, in some fundamental way, that our work makes us more worthy than lazy lay about on benefits. This simultaneously makes us disinclined to raise benefits for others (or increase the number of people on benefit) and equally disinclined to think of ourselves as the kind of people that receive money from the state. Adam Smith, in The Theory of Moral Sentiments (the book he considered his masterpiece), said that we humans are motivated primarily by the regard of others. We want people to think well of us, and we want to think well of ourselves. The psychological pleasure of considering ourselves better than welfare recipients can trump genuine economic benefit. To overcome this objection, we need to recognise that defining ourselves by our jobs is very 20th century. If technological progress continues to kill traditional jobs, this objection too will eventually dissipate. As full-time jobs become harder to find, more of us will recognise the need for a Basic Income Guarantee.

The third problem is perhaps the most central. By stimulating the economy and pushing it towards its production possibilities frontier, the Basic Income Guarantee will be growth enhancing, but it is undeniable that it will also be redistributive. The pie will be larger, but it will be sliced differently. For the past 30 years, we have stimulated the economy by shoveling money towards rich people. A Basic Income Guarantee shovels money towards poor people. And for many in the top 1%, that is anathema.

Conservatives generally favour tax cuts as a way of stimulating the economy. Although they don’t like to admit it, this is textbook Keynesianism. As long as the government does not cut spending, more money in consumers’ pockets will inevitably increase demand. Unfortunately, tax cuts generally favour the richest among us, and they, unlike the poor, are liable to save rather than spend their windfall. Stimulating savings is a waste of a tax cut. Today, we have an over-abundance of saving and a shortfall of investment and consumption. A Basic Income Guarantee can be thought of as a tax cut targeted to those most likely to spend it, which is what the economy needs.

The Basic Income Guarantee solves the problem of demand, stimulates the economy, increases corporate profits, gives workers more freedom, and provides a safety net to the most vulnerable. It is economically sound and politically savvy. But the very rich don’t fear unemployment, they fear redistribution and they will be the most significant force against the implementation of the Basic Income Guarantee.

Business Day Online

Cutting the Gordian Knot of Technological Unemployment with Unconditional Basic Income – Scott Santens. 

Invisible Sheep, the Missing Right, and the Return of Common Wealth

In the opening of the film 2001: A Space Odyssey, viewers are shown a historic moment in time where primitive man used the first tool. It was a bone, and used like a club, it allowed a physically weaker group to overpower a physically stronger group. The story is of course fictional, but at some point in time we as humans did use our first tool, and ever since that day, directly because of our tool usage, we as a species have been able to accomplish increasingly more with increasingly less. Buckminster Fuller referred to this process as “ephemeralization.” The theoretical endpoint of this process exists as an asymptote that we can only approach but never reach, where we gain the ability to accomplish everything with nothing. This should sound great. It is. But there’s a catch. There’s always a catch.

What’s the catch?

The catch is of our own making. The catch, and it’s a big one, is two-fold. First, we require the exchange of money for the basic necessities of life like food and shelter. And second, we require the exchange of work in order to obtain money. The result of this pairing is that we systematically require the exchange of work to stay alive. So as long as everyone can exchange their labor for income, moral issues of involuntary servitude aside, everyone can then theoretically survive in a system where private property is established and enforced. However, tool use throws an unavoidable wrench into this system.

That wrench is technological unemployment.

The ability to find paid work is rooted within supply and demand. If there is a demand for your labor, and few can supply it in the same way you do, you will do well. If many can supply it just like you, you may not do so well, but you may also manage to get by if you’re lucky. However, we’ve been busy building tools far beyond those made out of bone, and these newer tools are increasingly able to meet our demand for labor without any need for us. So the question becomes, if machines can supply the demand for labor, and at a lower price point, what happens to the ability of living human beings to work, and therefore to live, and even to obtain what all the machines are producing?

There can only be three solutions to this self-created conundrum based on our two-fold catch. We can either stop requiring the exchange of money for basic needs, essentially making certain things like food, water, and shelter entirely free. Or we can guarantee that everyone can always find paid work for enough income to exchange for the fulfillment of basic needs. Or we can stop requiring the exchange of work for money by paying everyone an income whether they work or not, and the amount would just need to be sufficient enough to cover basic needs.

The first option would destroy the price system for basic goods and services. This would in turn destroy the ability to calculate just what to produce, how much of it produce, and where it’s needed. This option is a planned economy in for basic goods and services. The second would guarantee that in a world of machines able to do an increasing amount of work better than us humans, the work we could guarantee to ourselves would be increasingly pointless — the equivalent of digging holes and filling them. This is the job guarantee (JG). The third would fully preserve the price system and entirely avoid the pitfalls of unnecessary work. In fact, it would not only preserve the price system, but enhance it, and it would not only avoid the creation of unnecessary work, it would reduce it. That third option is the Unconditional Basic Income (UBI).

… continued at Medium.com

Guess Who Just Endorsed Universal Basic Income. Mark Zuckerberg – Scott Santens. 

“Every generation expands its definition of equality. Now it’s time for our generation to define a new social contract. We should have a society that measures progress not by economic metrics like GDP but by how many of us have a role we find meaningful.

We should explore ideas like universal basic income to give everyone a cushion to try new things.

If I had to support my family growing up instead of having time to code, I wouldn’t be standing here today.”

Mark Zuckerberg

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This is big!

I would put this endorsement of basic income right up there in history alongside Martin Luther King Jr.’s on the left and Milton Friedman’s on the right as far as the potential to influence the conversation.

The fifth richest person in the world, and the richest millennial in the world, just endorsed the idea of unconditionally providing everyone enough money for basic needs, and he even discussed it in the context of enabling the pursuit of meaning.

He did not say because of automation, people will need basic income or die. He said people seek purpose, and that with the greater opportunity that basic income provides, along with other programs like childcare, healthcare, and education, people will be more enabled to find their purpose.

Take this understanding of how basic income isn’t charity but a means of equalizing opportunity as part of a new social contract, and combine it with the global loudness of his voice as chairman and CEO of Facebook, and we’ve got a potential recipe for greatly accelerating the timeline for basic income adoption.

We’ll see just how much he ends up actively advocating for basic income in the years ahead, and how much of his own money he puts behind the idea itself, like perhaps helping fund a pilot somewhere in the U.S. as Sam Altman has.

I think I just woke up today into a world with millions more people having heard or read the words ‘universal basic income’ for the first time, which on its own, is no small victory.

Scott Santens

AliveTampaBay

Basic Income in a Just Society – Brishen Rogers. 

“Amazon needs only a minute of human labor to ship your next package,” read a CNN headline last October. The company has revolutionized its warehouse operations using an army of 45,000 robots and other technologies. Previously workers known as “pickers” would walk among shelves to find goods. Now robots bring the shelves to them; pickers select goods, scan them, and put them into bins; after robots whisk the shelves away. A network of automated conveyer belts then sends the bins to “packers,” who spend just fifteen seconds on each, sealing boxes with tape that is automatically dispensed at the perfect length. “By the time you take an Amazon delivery off your stoop, walk into your home, find a pair of scissors and open the brown box,” the story intoned, “you’ve already spent nearly as much time handling the package as Amazon’s employees.”

The story is hardly exceptional. Each week, it seems, another magazine, book, or think tank sketches a dystopian near-future in which new technologies render most workers unnecessary, sparking widespread poverty and disorder. Delivery drivers, the thinking goes, will not be needed when there are drones or autonomous cars staffed by robots, and Starbucks baristas and fast food workers will be redundant when a tablet can take your order and a machine can prepare it. Some even envision more skilled jobs at stake: robots repairing our homes, caring for the elderly, or nursing patients back to health. As President Obama warned in his farewell address, “The next wave of economic dislocations . . . will come from the relentless pace of automation that makes a lot of good, middle-class jobs obsolete.”

An economic challenge of this magnitude requires ambitious solutions, and many in public debates have converged around a basic income. The idea is simple: the state would provide regular cash grants, ideally sufficient to meet basic needs, as a right of citizenship or lawful residency. Understood as a fundamental right, basic income would be unconditional, not means-tested and not contingent on previous or current employment. It would help sever the link between work and welfare, provide income security for all who are eligible, and perhaps mitigate growing inequality. It could also enable people to provide unpaid care work or community service, start new businesses, or get an education.

While this widespread attention to the problems of work and equality is welcome and overdue, and while a properly designed basic income would have many virtues, we need to be clear about the policy’s justifications, merits, and limits. As noted above, basic income proponents often pivot off the threat of widespread technological unemployment. But students of capitalism have been predicting labor’s demise ever since they identified and named “capitalism” itself. Is this time different? Consider what has happened at Amazon: warehouse robotics lowered prices and increased sales, and in early February the company announced plans to hire one hundred thousand more workers across the country.

Yet the news is still not good. Technology has transformed work in ways that have to do with political economy, not resource distribution. Amazon workers spend less than a minute per package because the company requires them to work at a furious pace, and it can afford to hire them by the thousands in part because it pays fairly low wages. Amazon also outsources many deliveries to third-party vendors whom it pays by the package, thus avoiding duties under wage per hour, workers’ compensation, and collective bargaining laws. Increasing the pace of work and outsourcing are not new, of course, but information technologies make such efforts easier and more profitable. With computer analysis of barcode scans, for example, Amazon can track the efficiency of pickers, packers, and drivers without necessarily setting eyes on them. Technology is not a substitute for menial labor in this story but rather one among many tools to keep labor costs down by exerting power over workers.

This account changes the case for a basic income. Many of today’s basic income proponents are libertarians and view the policy as a means of compensating losers, or as an excuse to repeal wage per hour or collective bargaining laws. Few are concerned about public goods, workers’ and capital owners’ entitlements within the firm, the power of various social groups, the ability of workers to organize collectively, and the question of what constitutes good work, not just jobs.

An alternative case for basic income draws from classic commitments to social democracy, or an economic system in which the state limits corporate power, ensures a decent standard of living for all, and encourages decent work. In the social democratic view, however, a basic income would be only part of the solution to economic and social inequalities—we also need a revamped public sector and a new and different collective bargaining system. Indeed, without such broader reforms, a basic income could do more harm than good.

This agenda will of course make zero progress during the Trump administration. But questions surrounding work and rising inequality are not going away. After all, Trump exploited fears of a jobless or insecure future in his campaign, signaling a return to our industrial heyday, with good-paying factory jobs implicitly promised to whites, men, and Christians. On the left, meanwhile, there is grassroots energy and momentum to think big and to address these issues head on, in all their complexity. But we still need a vision of good work and its place in our society, one that recognizes how our economy—and our working class—have changed dramatically in recent decades. I do not think for a moment that I have all the answers. But I do think an ambitious agenda around technology, work, and welfare can be a focal point and political resource for organizers, and perhaps even candidates, in the years to come.

Consider the life of a truck driver forty years ago versus today. In 1976 long-haul truck drivers had a powerful, if flawed, union in the Teamsters and enjoyed middle-class wages and excellent benefits. They also had a remarkable degree of autonomy, giving the job a cowboy or outlaw image. Drivers had to track their hours carefully, of course, and submit to weigh stations and other inspections of their trucks. But dispatchers could not reach them while they were on the road, since CB radios have limited range. Truckers would call in from pay phones, if they wanted.

No longer. Trucking companies today monitor drivers closely through “telematics” devices that gather and analyze data on their location, driving speed, and delivery efficiency. Some even note when a driver turns the truck on before fastening his seat belt, thereby wasting gas. As sociologist Karen Levy has shown, some long-haul trucking companies use telematics to push drivers to drive for all the hours permitted per day under federal law, at times waking them up or even overriding drivers’ own judgments about whether it is safe to drive. UPS has used the technologies to reduce its stock of drivers, and many have noted the stress that “metrics-based harassment” puts on workers.

While the specter of self-driving vehicles is out there, this is the current reality for many drivers and will be for the foreseeable future. We have seen stunning advances in autonomous vehicles in recent years, but there is a vast difference between driving on a highway or broad suburban streets in good weather conditions and navigating narrow and pothole-filled city streets, not to mention making the actual delivery to houses, apartments, and businesses. As labor economist David Autor and others have argued, we are nowhere close to fully automated production or distribution of goods, since so many jobs involve nonrepetitive tasks. In other words, the reports of the death of work have been greatly exaggerated.

Technological development is nevertheless altering the political economy of labor markets in profound ways. As we can see in the truck driver example, many firms are deploying information technologies to erode workers’ conditions and bargaining power without displacing them.

And of course truck drivers are not alone. Many other firms today use advanced information technologies to push for more efficiency, in the process reducing workers’ discretion, ultimately requiring them to work harder, faster, and for less. For example, where once taxi drivers’ folk knowledge of the optimal path from A to B in a crowded city was a valuable skill, now Uber and Lyft can calculate the best route through GPS technology and machine learning processes based on data gleaned from hundreds of thousands of trips.

Other technological innovations make it easier—which is to say more efficient—to purchase labor without entering formal employment relationships and accepting the attendant legal duties. In the past firms tended to employ workers rather than contractors, or to pay employees above-market wages, in scenarios where it was difficult to train or monitor them. Workers who felt valued in this way would work diligently and remain loyal toward firms, ultimately reducing overall labor costs.

Again Uber’s model helps illustrate. The company’s app reduces consumers’ and drivers’ search costs significantly. Rapid scalability reduces Uber’s costs of identifying and contracting with new drivers and riders; its GPS-based monitoring of its drivers enables it to know whether they are speeding or otherwise driving carelessly and whether they are accepting a sufficient number of fares; and its customer rating system enables it to manage an enormous workforce without managerial supervision. The net result is an economic organization of global scope based largely on contract where the firm disclaims any employment relationship toward its workers and therefore any employment duties toward them.

To be clear, there are powerful arguments that Uber drivers meet the legal test for employment, given the company’s pervasive control of their work and its economic power over them. But given the ambiguities of current law, Uber has few economic incentives to bring drivers inside the firm, making them employees, or to extend them generous wage and benefit packages. Similarly Amazon’s analytics help it to keep wages low: with barcode scanners tracking pickers’ and packers’ efficiency, the company does not have to pay workers as well to keep them motivated.

Finally, extensive data about market structures and consumer demand can enable firms to exert power over their suppliers or contractual partners, driving down costs—and therefore wages and conditions—through their supply chains. Walmart has long leveraged its unparalleled market data to estimate the lowest possible price suppliers will accept for goods, putting downward pressure on their profits and their workers’ wages. Amazon does the same today, and franchisors such as McDonald’s set prices and detailed product specifications for their franchisees.

Many firms today have substituted algorithmic scheduling for middle-managers’ local knowledge, using data on past sales, local events, and even weather forecasts to schedule work shifts. A Starbucks employee, for example, has little schedule predictability since she is at the mercy of the algorithm, and a McDonald’s worker can be sent home early if computers say sales are slow. This push to limit labor costs through finely tuned scheduling practices also alters workplace norms, since workers cannot appeal to a computer’s emotions in asking for more or less time, a raise, or a slower pace of work. The net effect of all of this is that power in our labor and product markets is increasingly concentrated in a few hands.

Crucially such management techniques and new production strategies are often more efficient than the status quo. Amazon has undeniably lowered prices for goods through its use of automation. Similarly a recent MIT study calculated that just three thousand multi-passenger cabs using a version of Uber’s algorithm could serve Manhattan’s need for taxis. The potential benefits here are staggering, especially if coupled with a modern mass transit system: shorter commutes, less car ownership, less pollution, and more urban space.

But the line between innovation and exploitation is far from clear. While some workers will thrive as their unique skills and talents are rewarded by new technologies, many others will have less autonomy, less generous wages, less time for social connection, and unpredictable schedules. And under current laws, we can expect such trends to accelerate. Our labor and employment laws still envision the economy of the 1930s, which was dominated by massive industrial firms with hundreds of thousands of direct employees. Those laws rarely touch modern “fissured” work relationships such as Uber’s relationship with its drivers, Walmart’s relationship with its suppliers’ workers, or McDonald’s relationship with its franchisees’ workers. Those laws also limit workers’ ability to unionize or bargain effectively since they encourage bargaining at the firm or even plant level whereas today’s modal workplace is growing ever smaller. Workers have fewer and fewer means to exert power on their own behalf.

How would a basic income impact workers and firms in this context? It would surely protect workers against the economic harms of unemployment and underemployment by giving them unconditional resources, and it would enable them to bargain for higher wages and to refuse terrible jobs. But a basic income would do little to reduce corporate power, which is a function not just of wealth but of the ability of firms to structure work relationships however they wish when countervailing institutions—such as a powerful regulatory state—are absent or ineffective. Yes, a basic income would make it easier for workers to organize and demand reforms—Andy Stern dubbed it “the ultimate permanent strike fund”—but the threat of termination or retaliation would still prevent many workers from protesting or striking in the first place.

And of course many have argued that a basic income would make minimum wage and collective bargaining laws less necessary, since workers’ material needs would be met by the state. But cash benefits and reasonable wages are not morally equivalent. In Robert Solow’s memorable phrase, the labor market is a “social institution” governed in part by norms of reciprocity and mutual respect. Workers often demand higher wages from larger and more profitable employers. And they work less diligently when they feel disrespected. So there is a major difference between a generous wage on the one hand and a meager wage supplemented with cash from the state on the other. Generous wages help make firms’ economic responsibility roughly commensurate with their economic power. Meager wages signal disrespect, and state transfers are impersonal.

In fact, without labor market regulations in place, the impact of a basic income on very low-wage work could be disastrous. If a basic income were not extended to green card holders, guest workers, or “irregular” immigrants (those who enter or stay without authorization), such workers would be far cheaper to employ in menial jobs, at which point they would be permanently enshrined as a laboring underclass. (Currently minimum wage laws apply regardless of work authorization, on the grounds that differential treatment would undermine standards for all.) A basic income could even be designed to serve white nationalist ends. In fact, far-right European parties have often embraced the welfare state as a means of defending citizens against a purported tide of immigrants.

A standalone basic income also will not ensure equal access to quality education, health care, mental health care, housing, and transportation. Liberal markets systematically fail to provide such goods to the poor and working class, for the simple reason that they often are not profitable when provided on equitable terms. Giving cash to individuals to purchase them will not suddenly change matters.

Popular debates have largely ignored these limits of a standalone basic income, an oversight that is not entirely accidental. As a tax-and-transfer program, basic income would be consistent with a wide variety of political-economic systems, including neoliberal capitalism, social democracy, and various forms of socialism, but much of the basic income literature has a libertarian streak. On the right, Milton Friedman proposed a negative income tax in large part because he hoped it would reduce government bureaucracy. On the left, Philippe van Parijs’s now-classic argument for the policy held it would maximize what he called “real freedom” better than standard welfare-state policies. And Silicon Valley’s take exemplifies an “everyday libertarianism,” which views market results, including pre-tax incomes, as presumptively fair.

Unlike many libertarians, basic income proponents accept the necessity and fairness of income and wealth taxation. But a basic income is still no cure for the moral ills of liberal markets. Since labor cannot be separated from workers, it will never be a classic commodity, and labor markets will never be stock exchanges for faceless buyers and sellers. Low wages carry a stigma that low bids for soybeans never will. In the long run, companies cannot treat workers or even consumers as line items on a balance sheet without risking a revolt. Uber is now paying a high price for ignoring this lesson. The company’s flagrant disregard for our moral economy and its open embrace of a cutthroat, winner-take-all libertarianism made it a pariah in many quarters well before it faced allegations of a workplace culture of sexual harassment.

In my view, the more compelling arguments for basic income are rooted in commitments to equality as well as freedom. Take Thomas Paine’s Agrarian Justice (1797), which prefigured the later case for social insurance. The earth, he argued, had been “the common property of the human race” in its natural state. Private property enabled the few to profit from the earth’s resources, but all are entitled to compensation through a “citizens dividend.” G. D. H. Cole updated Paine in the twentieth century, arguing for a “social dividend” on the grounds that all production is “a joint result of current effort and of the social heritage of inventiveness.” Auto manufacturers did not discover electricity, after all, and Silicon Valley did not invent the Internet. Rather than a means of maximizing freedom, a basic income would help meet our duties toward one another.

A still more compelling case for basic income builds on Elizabeth Anderson’s and Philip Pettit’s (quite distinct) arguments that a just society must ensure that no group of citizens is subordinate to another. Extreme poverty causes subordination since it forces us to beg or to work at terrible jobs. Means tests are equally degrading since food stamps and similar programs tend to restrict what we can buy, again stigmatizing the poor. This argument is quite different from the libertarian case for a basic income since it does not view basic income as a replacement for the welfare state. Rather it asks basic income to serve a discrete and limited purpose: making sure nobody falls through the cracks.

And if one agrees that we need to root out subordination, we will need to do much more than pass a basic income. A just society would not just eliminate penury and then leave people to their fates. It would also strive for a fair distribution of power. This point strikes me as obvious, but we can miss it by focusing on unemployment and poverty. A society in which a few make decisions and the many take orders is an oligarchy, not a democracy.

This is what I mean by the “social democratic” case for a basic income: it would help build a post-industrial welfare state by alleviating dire poverty. But it is unlikely to pass and would do little good unless coupled with other efforts to ensure broadly dispersed power, including a substantially revamped public sector and new and stronger regulations around work.

The public sector agenda should begin with a massive investment in human services. This would include primary, secondary, and higher education; childcare and elder care; health care; and mental health services. All of these are critical to human flourishing and economic growth, especially in a technologically advanced economy. There is also the added benefit that these sectors are among the least vulnerable to automation since they require interpersonal communication and human judgment: turning them into basic rights of citizenship would create millions of jobs.

Extensive job training and placement programs for unemployed workers would reduce the devastations associated with job losses. This should be coupled with a guarantee that the government will stand as employer of last resort, as William Darity and Darrick Hamilton have advocated. Classic WPA-style public works would be one option, but we might do more good by thinking locally: retrofitting houses and other smaller buildings for energy efficiency, as john a. powell and others have suggested, or building and repairing local parks and schools, or training unemployed workers for jobs in childcare, education, elder care, or health care. Some subset of the projects could be identified through participatory budgeting or other deliberative processes and carried out in partnership with local governments or organizations.

Then we should consider unconditional cash benefits in some form, ideally a generous basic income, especially if technological unemployment becomes significant. But we need to design it correctly. If certain immigrants are denied a basic income, then we must establish a transparent pathway to citizenship and ensure that they enjoy generous wages. Currently many states restrict convicted felons from voting or collecting many public benefits. If that pattern holds with a basic income, that group could also become a pool of menial labor.

Paying for all of this would not be easy, of course, which is why it may make sense to take baby steps. Unconditional cash grants to parents, for instance, would go a long way toward alleviating poverty and would be less politically controversial than unconditional benefits for the able-bodied and childless. Or perhaps a participation income, in which citizens would be entitled to cash benefits on the basis of some qualified civic service each year, though this would be less desirable than a public jobs guarantee combined with other generous benefits.

As we wait for the politics to catch up with the policy, however, the “baby steps” approach can inch us closer to meeting social needs, developing a highly trained workforce and rebuilding faith in the public sector.

Then there are the near-intractable problems of improving private sector work and limiting corporate power. Of course what makes work “good” is hard to define, in part because it is so dependent on social context and individuals’ preferences. We look back fondly on the industrial era in part because manufacturing jobs delivered high wages and benefits, but those jobs only became “good” after workers organized and forced firms to raise wages and reduce hours. Manufacturing jobs were also physically and emotionally punishing, and factory workers’ pride was often based on a perverse ethic of masculine suffering.

It is easier to say what bad work is. There is certainly no shortage of it these days: many workers earn low pay, have long or unpredictable hours, and are vulnerable to arbitrary treatment. Raising the minimum wage and reducing the standard workweek to thirty-five or even thirty hours would help. So would the public investments in human services discussed above, since those new jobs would require significant judgment (ensuring a degree of worker autonomy) and current law extends many democratic norms to the public sector already. A public jobs guarantee would give workers the security of knowing that an alternative always exists if a private-sector job proves unendurable.

The centerpiece of reform efforts should be the encouragement of collective bargaining between workers, their employers, and whatever other firms enjoy economic power over them. That will require reforms to bring our labor laws into sync with the reality of what work now looks like. Rather than requiring workers to organize shop by shop, we could encourage bargaining at the corporate level, such that all McDonald’s workers, for example, would be in one bargaining unit, regardless of whether their restaurants are franchises or owned by the parent corporation. Better still, we could put all fast food workers nationwide in one bargaining unit empowered to negotiate with an association of fast food companies. Similarly workers could be granted bargaining rights with the firms at the top of their respective supply chains: Uber drivers would have bargaining rights vis-à-vis Uber, and Walmart and Target would have duties toward the workers who produce, process, and move goods to their shelves, including production workers, warehouse workers, farm workers, janitors, and many others.

This would work a major change in our labor law system, but the elements are already being built on the ground. On the company side, growing market concentration makes such bargaining quite plausible technically, if not politically. A national association of retail workers need only drive a settlement with Walmart, Target, Macy’s, Gap, and a few others to raise standards. Where once taxi drivers would need to negotiate with hundreds if not thousands of medallion owners, now drivers can negotiate with Uber and Lyft directly.

Unions and other worker organizations have been dealing with these issues for decades and have developed workable models of organizing and bargaining that demonstrate proof of concept. For example, the Coalition of Immokalee Workers (CIW), an organization of farm workers in Florida, has pressed many major retailers and restaurants to join a “fair food program” under which they commit to paying more for produce and to rooting out slavery, corporal punishment, and other abuses in the fields. CIW succeeded despite having no collective bargaining rights at all and no legal employment relationship with the retailers and restaurants involved. They instead relied on high-visibility worker action, consumer boycotts, and creative media strategies.

Legal scholar Kate Andrias has argued that these efforts reflect an emerging model of unionism she dubs “social bargaining,” in which workers demand that firms accept responsibility through their supply chains to a degree that exceeds the letter of the law. This strategy relies on public protest as well as more conventional union strategies—a kind of bargaining in the public green—and often utilizes state legislative power to backstop organizing efforts.

National legislation could encourage robust social bargaining in a variety of ways. Some states allow their departments of labor to constitute “wage boards” empowered to set wages within particular industries upon consultation with labor, firms, and the state. The federal government could follow suit, expanding the mandate of such boards to include issues of employee status, hours of work, and other basic standards. The federal government could also make it easier for workers to obtain union representation without enduring a contentious organizing process. Drawing from the Seattle legislation that established collective bargaining rights for Uber and Lyft drivers, firms could be required to disclose lists of workers to any worker organizations that meet basic indicia of independence and capacity.

It is crucial to emphasize the utility of social bargaining in today’s economy. It would better reflect contemporary production relationships among firms, suppliers, and workers. It may even be relatively acceptable to large firms, insofar as it would seek to equalize wages across a sector and would not encourage detailed bargaining over worksite-specific minutiae, which employers have good reason to resist. And it could be carried out through organizations less formal than classic unions, which seem more appealing to contemporary workers. Of course, as with the public benefits outlined above, passing labor law reforms will not be easy. But how else can we realistically enhance workers’ bargaining power?

These three policy shifts—a basic income and other economic security guarantees, vastly expanded social programs, and new rules to encourage social bargaining—would supplement and reinforce one another. Better educational policies should help employers by ensuring a mobile, highly skilled workforce, and public health care and other social insurance would reduce the costs of employment. A basic income and a public jobs guarantee would enable workers to stand up for themselves more readily. Unions representing broad swaths of the precarious workforce would have incentives to push for a robust welfare state and even a basic income. Those unions could also reduce elites’ domination of our politics, which may otherwise prevent implementation of a basic income, limit its generosity, or set it up to fail.

As many will realize, this institutional arrangement looks a bit like the Scandinavian “flexicurity” model—a portmanteau of “flexibility” and “security”—which combines high wages; extensive welfare and job training programs so workers can move between jobs; and relatively flexible employment policies that enable firms to hire, fire, and reassign workers at will. Such economies are quite open to technological innovation, but these institutions help ensure that its benefits are shared more equitably than they are in the United States. Not coincidentally, Scandinavian welfare states seem to be evolving toward a basic income, as the policy would fit nicely within flexicurity. But collective bargaining plays a crucial role in that system: without powerful unions, it is not clear that flexicurity would have developed in the first place, much less endured.

A basic income is a simple and elegant way to redistribute resources. But there are no simple, elegant solutions to complex political and economic challenges. A decent future of work and welfare requires a basic income—and much more.

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Brishen Rogers is Associate Professor of Law at Temple University’s Beasley School of Law.

Boston Review

​Basic Income, for a Free Society and a Sane Economy. PART 3: IS A UBI ETHICALLY JUSTIFIABLE? – Philippe van Parijs, Yannick Vanderborght. 

Of all objections to a basic income one sticks out above all others—and is more emotional, more principled, and more decisive in the eyes of many. It relates to its being unconditional in the sense of being obligation-free, of not requiring its recipients to work or be willing to work. Someone can concede that a basic income would provide an effective way of reducing poverty and unemployment while still being fiercely opposed to it on ethical grounds.

This objection comes in two main versions.

In one version, the “perfectionist” one, the underlying principle is that work is part of the good life and hence that an income granted without some work requirement amounts to rewarding a vice: idleness.

In the other version, the “liberal”one, the underlying principle is not about virtue but about fairness. As Jon Elster puts it, an unconditional basic income “goes against a widely accepted notion of justice: it is unfair for able-bodied people to live off the labor of others.”

How can this objection be refuted?

How can the proposal of an unconditional basic income be vindicated against this sort of objection?

Enjoying a basic income without doing any work constitutes unfair free riding — that is, it violates some norm of reciprocity, some conception of justice that stipulates that income should be distributed according to people’s productive contributions.

This accusation should be relativized and the accusers should temper their indignation.

The introduction of an unconditional basic income, far from increasing injustice as characterized, could reduce it.

If one is serious about denying an income to those able but unwilling to work, this denial should apply to the rich as well as to the poor.

UBI is a problem for those who, in today’s socioeconomic context, want to refuse to the poor the leisure the rich can get away with.

A modest unconditional income that would give to the poor, as well, the option of some chosen leisure would address the unfairness of such double standards.

Should a morality that stigmatizes an access to an income without work and thereby tries to restrict material gratification to those willing to contribute to society’s production not be abandoned when technological progress is leading to overabundant workers?

We have moved from a situation in which, say, 90 percent of the population were required to satisfy everyone’s basic needs in food, housing, and clothing, to one in which, say, 10 percent suffice.

Those who want to reduce the working week today do not want to do so in order to reduce a burden, but rather in order to share a privilege. In this context, should one still be as outraged as in the past at able-bodied people living off the labor of others?

Once the basic-income regime is in place, only a tiny minority will take advantage of it in order to do nothing or very little. This can be expected because the universal nature of a basic income, which makes it combinable with recipients’ other income, gets rid of the inactivity trap created by means-tested schemes.

Experiments with basic-income-type schemes suggest that even when freedom from obligation causes a fall in the labor supply, this does not translate into an expansion of leisure as idleness, but rather into an upsurge of productive activities in a broader sense such as education, childcare, and engagement in the community.

If one can expect only an insignificant minority of really lazy scroungers, there is no big clash between basic income and justice as reciprocity to get worked up about.

In order to avoid penalizing unfairly people who are sick, and wrongly assumed to be lazy, a modest unconditional income can be justified as the least bad measure.

For those truly concerned about free riding, the main worry about today’s situation should not be that some people get away with doing no work, but rather that countless people who do a lot of essential work end up with no income of their own. A huge amount of essential, productive work currently goes unpaid, as it is performed at home.

If there is massive free riding anywhere, it is within the traditional family structure in the form of men free riding on the unpaid work done by their partners.

An obligation-free basic income may well prove the least bad way of tackling free riding. The best feasible approximation of the principle that income should be distributed according to work does not exclude a basic income. It rather requires one, pitched at such a level that a further increase would worsen the injustice stemming from overpayment of the truly lazy more than it would reduce the injustice stemming from underpaying those who currently care for children, the elderly, or the disabled without any form of payment.

At present, the intrinsic attractiveness of a job and its remuneration are positively correlated . This can be viewed as a form of free riding or exploitation by the better paid: thanks to their bargaining power, they can do jobs they enjoy while benefiting from the toil of people who have no option but to accept low-paid jobs that the better paid would hate doing. A basic income, being obligation-free, would strengthen the bargaining power of the most vulnerable participants in the labor market and would therefore mean that the irksomeness of a job, its lack of intrinsic attractiveness, would be better reflected in the pay it commands. With irksomeness better compensated for, unfair free riding will not expand but shrink.

It is to a conception of distributive justice, not of cooperative justice, that one must appeal in order to best defend the fairness of an unconditional basic income.

An unconditional basic income is what we need if what we care about is freedom, not for just a few but for all.

Adopting such a conception of distributive justice generates a strong presumption in favor of an income paid to all in cash, on an individual basis, without means test or work test, indeed in favor of such an income paid at the highest sustainable level.

It makes sense to distribute this income at short and regular intervals throughout people’s lives, possibly at a lower level for children and a higher level for the elderly.

And for analogous reasons, it makes sense not to give the whole of this highest sustainable income in cash, but to allocate part of it in particular to free or heavily subsidized education and health care and to the provision of a healthy and enjoyable environment, at the cost of a lower cash basic income.

In all sorts of ways, but for most of us primarily as part of our earnings, we benefit very unequally from what was freely given us by nature, technological progress, capital accumulation, social organization, civility rules, and so on. What a basic income does is ensure that everyone receives a fair share of what none of us today did anything for, of the huge present very unequally incorporated in our incomes. And if given to all and pitched at the highest sustainable level, it ensures that those who receive least receive as much as is durably feasible.

“Current productive power is, in effect, a joint result of current effort and of the social heritage of inventiveness and skill incorporated in the stage of advancement and education reached in the arts of production; and it has always appeared to me only right that all the citizens should share in the yield of this common heritage, and that only the balance of the product after this allocation should be distributed in the form of rewards for, and incentives to, current service in production.” George D. H. Cole

Much of what we earn must be ascribed, not to our efforts, but to externalities which owe nothing to them.

“How large are these externalities, which must be regarded as owned jointly by members of the whole society?” Herbert A. Simon

The appeal of the conception of distributive justice on which our principled justification of basic income rests depends on our realizing the extent to which our economy functions as a gift-distribution machine, as an arrangement that enables people to tap— very unequally —our common inheritance.

In actual life, the opportunities we enjoy are fashioned in complex, largely unpredictable ways by the interaction of our innate capacities and dispositions with countless other circumstances such as happening to have a congenial primary school teacher or an inspiring boss, to belong to a lucky generation, to have a native language in high demand, or to get a tip for the right job at the right time.

The granting of a basic income to everyone should therefore not be misunderstood as aiming to equalize outcomes or achievements. Rather, it aims to make less unequal, and distribute more fairly, real freedom, possibilities, and opportunities. Granting a basic income to all helps equalize what people are given— the material substratum of their real freedom— and only as a consequence , indirectly and more roughly, what they achieve with what they are given.

A defense, on grounds of justice, of an unconditional income paid in cash does not presuppose a blind faith in the perfection of the market, but it does assume sufficient trust in the idea that prices reflect how valuable goods are in a sense that is relevant to determining a fair distribution of access to them. It therefore assumes an economy largely governed by something like a duly regulated market. It seems reasonable enough to suppose that this will remain the case for the foreseeable future.

Note, however, that granting to all an unconditional income does not increase dependence on the market. Quite the contrary. Because of its freedom from obligation, a basic income contributes to weakening the cash nexus, to de-commodifying labor power, to boosting socially useful yet unpaid activities, to protecting our lives against forced mobility and destructive globalization, and to emancipating us from the despotism of the market.

The conception of distributive justice is one that belongs to a family of conceptions commonly labeled liberal-egalitarian.

It is liberal in the sense that it does not rest on a particular conception of the good life but instead is committed to respecting equally the various conceptions of the good life that are present in our pluralist societies.

It is egalitarian in the sense of taking as a baseline an equal distribution of the resources people have at their disposal in order to try to realize their conceptions of the good life.

Justice is about sustainably maximizing the prospects of those with the worst prospects, not about equalizing prospects even at everyone’s expense.

Discussing proposals aimed at making our societies more just is important. Without such proposals, there is no hope— neither for ourselves nor for generations to come. But, for there to be hope, what is being proposed must be not only desirable but also realizable.

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Philippe van Parijs & Yannick Vanderborght

Basic Income, for a Free Society and a Sane Economy. PART 2: FROM UTOPIAN DREAM TO WORLDWIDE MOVEMENT – Philippe van Parijs, Yannick Vanderborght. 

The year 1795 was when the magistrates of Speenhamland set up a means-tested cash benefit scheme that started looking like a genuine minimum-income scheme , but soon led to a backlash. It was also when the book in which Condorcet first formulated the general idea of social insurance, much later to become the main principle of our welfare states, was published. And it was the year when one of Condorcet’s closest friends started writing a short piece that, while it was barely noticed at the time and soon forgotten, would be rediscovered and recognized two centuries later as the first proposal of something quite close to a genuine unconditional basic income.

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Thomas Paine (1737–1809)

In a pamphlet entitled Agrarian Justice (1796) and addressed “to the Legislature and the Executive Directory of the French Republic,” Thomas Paine (1737–1809), by then a prominent figure in the American and French revolutionary movements, put forward a scheme radically different from both public assistance and social insurance. In it, he proposed to “create a national fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her inheritance, by the introduction of the system of landed property. And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age. 

With their fifteen pounds per capita, a young couple “could buy a cow, and implements to cultivate a few acres of land.” The bulk of the fund would finance the payment of a strictly individual, universal, unconditional basic income to every man and woman aged fifty or more.

“It is the value of the improvement only, and not the earth itself, that is in individual property. Every proprietor, therefore, of cultivated lands, owes to the community a ground-rent for the land which he holds; and it is from this ground-rent that the fund proposed in this plan is to issue.

It is proposed that the payments, as already stated, be made to every person , rich or poor. It is best to make it so, to prevent invidious distinctions. It is also right it should be so, because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above property he may have created , or inherited from those who did. Such persons as do not choose to receive it can throw it into the common fund.”

Thus, what Paine proposed was a universal, obligation-free, individual cash payment, but not throughout adult life.

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Thomas Spence (1750– 1814)

It did not take long, however, before his proposal was radicalized into a genuine lifelong basic income.

In The Rights of Infants, a pamphlet published in London in 1797, the English schoolteacher and activist Thomas Spence (1750– 1814) formulated the proposal he claimed he had tirelessly defended since his youth.

All land and houses of each municipality should be entrusted to a committee of women, their use should be auctioned off, and part of the proceeds should be used to cover all public expenditures, including for the construction and maintenance of buildings, and the taxes owed to the government.

“And as to the overplus, after all public expences are defrayed, we shall divide it fairly and equally among all the living souls in the parish, whether male or female; married or single; legitimate or illegitimate; from a day old to the extremest age; making no distinction between the families of rich farmers and merchants and the families of poor labourers and mechanics.”

“Personal property is the effect of society; and it is as impossible for an individual to acquire personal property without the aid of society, as it is for him to make land originally. Separate an individual from society, and give him an island or a continent to possess, and he cannot acquire personal property. He cannot be rich. All accumulation, therefore, of personal property, beyond what a man’s own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came.”

Spence’s plan was debated by some radical English reformers in the 1820s, before sinking, along with Paine’s, into oblivion.

***

In London on February 21, 1848, the Communist League published a little book that the young German Karl Marx had finished writing in Brussels , in a great hurry, the previous month: the Manifesto of the Communist Party.

On March 28, a document was seized by the police at the house of Joseph Kats, brother of the Jacob Kats (1804–1886) who was a writer and prominent member of Brussels’s Association Démocratique, of which Marx was vice chairman.

Project of a New Social Constitution

Written in Flemish and titled Project of a New Social Constitution, this document stipulates that “the earth is the universal heritage of the people”and that “its fruits must be equally distributed among all of them”; and that “all personal property rights over real estate are abolished”; and that all land, whether built on or not, will be rented out by the state with their revenues “regarded as the fruits of nature in order to be distributed equally among all members of society in as many equal parts as there are people, no one excluded”.

This is clearly an unconditional basic income justified unwittingly in fundamentally the same way as the schemes proposed half a century earlier by Paine and Spence. But the short document is not more specific. Nor is its author known.

***

Joseph Charlier (1816– 1896 )

Nor is there any known connection with a book-length development of the same idea published in Brussels later that same year.

Compared to Marx’s Manifesto, its contemporary, Solution du Problème Social, is equally ambitious and no less original. But it is less engagingly written, and little is known about its author— a certain Joseph Charlier (1816– 1896 ). It had no noticeable impact at the time or indeed at any later point. Thomas Paine had advocated a basic endowment for the young and a basic pension for the elderly. Thomas Spence had advocated a genuine basic income at a municipal level.

Charlier’s book offers the first developed plea for a genuine basic income on a national scale: a uniform “territorial dividend” to be paid every quarter to each “indigenous” resident of the country, whether male or female, whether adult or child, and to be funded by rents on all properties, whether built or not.

Nature was created for the sake of meeting everyone’s needs. Therefore, he argued, private land ownership is incompatible with justice, and the state must ultimately become the sole owner of all land and all buildings on the land.

The revenues from this rent would provide all households with an income sufficient to cover their “absolute needs” and thereby provide “a sovereign remedy for the plague of pauperism.” Yes, the level of the dividend will be such that “the state will secure bread to all but truffles to no one,” he argued. “Too bad for the lazy; they will have to get by with the minimum allowance. The duty of society does not go beyond this: to assure to everyone his fair share in the enjoyment of the elements that nature has put at his disposal, without usurpation by some people to the detriment of others.”

“It is no longer the worker who will have to bow before capital, it is capital, reduced to its true role of collaborating agent, that will have to negotiate with labor on an equal footing.

Undoubtedly, by raising and improving the material condition of the masses, the implementation of a guaranteed minimum income will make them choosier in the choice of their occupations; but as this choice is usually determined by the price of manpower, the industries concerned will need to offer their workers a salary high enough to compensate for the inconveniences involved. Therefore, the proposed scheme will have as an immediate consequence a reparatory remuneration for this class of people presently condemned to misery by way of reward for their irksome and useful labor.

It is the only rational and just solution that should be given to the social question, no offense to my more or less self-interested contradictors. There are truths which one neither wants nor dares to face.”

His 1848 book seems to have been barely read at the time and his subsequent writings seem to have been just as quickly forgotten.

***

John Stuart Mill (1806– 1873)

This cannot be said of another, far more authoritative author who joined the tiny team of isolated early basic income supporters at about the same time.

The year 1848 not only saw the publication of Marx’s Manifesto and Charlier’s Solution. It was also the year that John Stuart Mill (1806– 1873) published the first edition of his Principles of Political Economy, one of the founding classics of modern economics.

Mill identifies and recognizes the structural problem inherent in public assistance to the poor: while the consequences of assistance itself are beneficial, he writes, the consequences of relying on it “are for the most part injurious.” But unlike Ricardo, Hegel, or Tocqueville, this did not make him advocate a return to private charity. Subject to some conditions, he wrote, “I conceive it to be highly desirable that the certainty of subsistence should be held out by law to the destitute able-bodied, rather than that their relief should depend on voluntary charity.”

What are these conditions? Essentially that there should remain an incentive to work— that is, that the condition of the person receiving help should not be made as desirable as that of “the labourer who supports himself by his own exertions.” If that is the case, there will be no need to set up a system of forced labor for the undeserving poor—that is, “an organized system of compulsion for governing and setting to work like cattle those who had been removed from the influence of the motives that act on human beings.” Moreover, “the state must act by general rules. It cannot undertake to discriminate between the deserving and undeserving indigent. The dispensers of public relief have no business to be. inquisitors.

”What is needed, therefore, is neither private charity nor workhouses, but a legal guarantee of subsistence for all the destitute, whether able-bodied or not, whether “deserving or not.”

“This System does not contemplate the abolition of private property, nor even of inheritance; on the contrary, it avowedly takes into consideration, as elements in the distribution of the produce, capital as well as labour. In the distribution, a certain minimum is first assigned for the subsistence of every member of the community, whether capable or not of labour. The remainder of the produce is shared in certain proportions, to be determined beforehand, among the three elements, Labour, Capital, and Talent.

The scheme guarantees “certainty of subsistence” to all, whether able-bodied or not. No inquisitorial distinction is made between the deserving and the undeserving. Yet incentives are preserved through the remuneration of labor, capital, and talent as a top-up over and above the minimum that has been “first assigned.

The social problem of the future? How to unite the greatest individual liberty of action, with a common ownership of the raw materials of the globe, and an equal participation of all in the benefits of combined labour.”

***

Bertrand Russell (1872–1970).

“The great majority of men and women, in ordinary times, pass through life without ever contemplating or criticising, as a whole, either their own conditions or those of the world at large. They find themselves born into a certain place in society, and they accept what each day brings forth, without any effort of thought beyond what the immediate present requires. Almost as instinctively as the beasts of the field, they seek the satisfaction of the needs of the moment, without much forethought, and without considering that by sufficient effort the whole conditions of their lives could be changed.” Bertrand Russell

Something more akin to a real public debate took shape in Britain shortly after the end of World War I.

The first to open fire was the mathematician, philosopher, nonconformist political thinker, militant pacifist, and Nobel laureate Bertrand Russell (1872–1970).

In Roads to Freedom, a short and incisive book first published in 1918, he argues for a social model that combines the advantages of socialism and anarchism:

Anarchism has the advantage as regards liberty, socialism as regards the inducement to work. Can we not find a method of combining these two advantages? It seems to me that we can. Stated in more familiar terms, the plan we are advocating amounts essentially to this: that a certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income, as much larger as might be warranted by the total amount of commodities produced, should be given to those who are willing to engage in some work which the community recognizes as useful.

“The necessaries of life should be free, as Anarchists desire, to all equally, regardless of whether they work or not. Under this plan, every man could live without work: there would be what might be called a ‘vagabond’s wage,’ sufficient for existence but not for luxury. The artist who preferred to have his whole time for art and enjoyment might live on the ‘vagabond’s wage’, traveling on foot when the humor seized him to see foreign countries, enjoying the air and the sun, as free as the birds, and perhaps scarcely less happy.

One great advantage of making idleness economically possible is that it would afford a powerful motive for making work not disagreeable; and no community where most work is disagreeable can be said to have found a solution of economic problems.

Modern technique has made it possible for leisure, within limits, to be not the prerogative of small privileged classes, but a right evenly distributed throughout the community. The morality of work is the morality of slaves, and the modern world has no need of slavery.

When education is finished no one should be compelled to work , and those who choose not to work should receive a bare livelihood, and be left completely free; but probably it would be desirable that there should be a strong public opinion in favor of work, so that only comparatively few should choose idleness.”

***

Dennis Milner (1892–1956)

In the same year as Russell’s Roads to Freedom, the young engineer, Quaker, and Labour Party member Dennis Milner (1892–1956), published jointly with his first wife, Mabel, a short pamphlet entitled Scheme for a State Bonus.

Using an eclectic series of arguments, they argued for the introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom. Pitched at 20 percent of GDP per capita, the “state bonus”would be funded by contributions from everyone “with any income at all,” and should make it possible to solve the problem of poverty, particularly acute in the aftermath of World War I.

As the state bonus scheme is based on the moral right to the means of subsistence, any obligation to work enforced through the threat of a withdrawal of these means is ruled out. “Persuading people to work,” the Milners wrote, “is an educational problem. Starvation must not be used as an educative force, for it only makes inefficient workers.” Having gained access to the “primal necessities of life,” workers will be “in a fairer position for bargaining” about wages. Better wages, in turn, “will mean a greater demand for necessities, and thus a steadier state in all the staple industries.”

***

Clifford H. “Major” Douglas (1879–1952)

Clifford struck by how productive British industry had become after World War I and began to wonder about the risks of overproduction. How could a population impoverished by four years of war consume the goods available in abundance, when banks were reticent to give them credit and their purchasing power rose only very slowly? To solve this problem, Douglas proposed, in a series of books and popular lectures and writings, the introduction of “social credit” mechanisms, one of which consisted in paying all households a monthly “national dividend.”44 The social credit movement enjoyed varying fortunes. It failed to establish itself in the United Kingdom but attracted many supporters in several parts of Canada.

***

George D. H. Cole (1889–1959)

The first holder of Oxford’s Chichele Chair of Social and Political Theory, Cole was fully aware of the earlier pleas by the State Bonus League and the social credit movement. In several books, he consistently defended what he seems to have been the first to call a “social dividend”and “basic income.” Incomes, he argued in 1935, should “be distributed partly as rewards for work, and partly as direct payments from the State to every citizen as ‘social dividends’, a recognition of each citizen’s claim as a consumer to share the common heritage of productive power. The aim should be, as speedily as possible, to make the dividend large enough to cover the whole of the minimum needs of every citizen.

“If the maximum a man could earn came to no more than the amount of his social dividend, the incentive to earn it, in a society living nearly at a common standard, would be fully as powerful as the incentive to earn many times as much in the class-ridden society of today. For the demand for little luxuries and larger supply of substitutable necessaries is the keenest of all human demands.… Earnings will become, under such a system, more and more of the nature of “pocket money,” without any loss of the incentives to effort such as absolute equality of incomes would involve. Work will have its sufficient reward; but the main part of national income will no longer be distributed as a by-product of industry.”

***

James Meade (1907–1995)

He defended the “social dividend” with even greater tenacity than Cole. The idea is present in his writings from the 1930s onwards as a central ingredient of a just and efficient economy. And it is still at the core of Meade’s Agathotopia project, which he advocated with great enthusiasm in the last years of his life: partnerships between capital and labor and a social dividend funded by public assets are there offered together as a solution to the problems of unemployment and poverty.

***

Robert Theobald (1929–1999)

From the early 1960s, Robert Theobald started advocating a “guaranteed income” on the grounds that automation was at the same time making goods abundant and workers redundant. The guaranteed income, he argued, “is essential for both short-run and long-run reasons. In the short run, it is required because an ever-growing number of people—blue-collar, white-collar, middle-management and professional—cannot compete with machines; in the absence of the guaranteed income the number of people in hopeless, extreme poverty will increase. In the long run, we will require a justification for the distribution of resources that is not based on job-holding.”

Ultimately, as also suggested by the title of one of Theobald’s books, Free Men and Free Markets (1963), what must guide this distribution is a concern for freedom for all: “A guaranteed income provides the individual with the ability to do what he personally feels to be important. The guaranteed-income proposal is based on the fundamental American belief in the right and the ability of the individual to decide what he wishes and ought to do.

The need is clear: the principle of an economic floor under each individual must be established. The principle would apply equally to every member of society and carry with it no connotation of personal inadequacy or implication that an undeserved income was being received from an overgenerous government.”

Along with other activists and academics, Theobald was one of the chief authors of a report sent to President Lyndon Johnson in May 1964 that urged the government to address the “cybernation revolution” by guaranteeing an adequate income to all:

“We urge, therefore, that society, through its appropriate legal and governmental institutions, undertake an unqualified commitment to provide every individual and every family with an adequate income as a matter of right. The unqualified right to an income would take the place of the patchwork of welfare measures— from unemployment insurance to relief— designed to ensure that no citizen or resident of the United States actually starves.”

***

Milton Friedman (1912–2006)

Friedman, the founding father of “Neoliberalism”, never advocated a basic income but he did popularize a proposal that, though different from a basic income, can be partly defended on the same grounds: the negative income tax.

If we want to alleviate poverty, he argues, “the arrangement that recommends itself on purely mechanical grounds is a negative income tax.”

A negative income tax amounts to a uniform refundable tax credit. Even in the versions closest to a genuine basic income, it lacks one crucial feature of it: its being paid upfront to all. But the two ideas have enough in common for the discussion of one of them to be relevant to the discussion of the other.

The negative income tax, in his view, should replace the bulk of America’s welfare programs:

“We have a maze of detailed governmental programs that have been justified on welfare grounds— though typically their product is “illfare”: public housing, urban renewal, old-age and unemployment insurance, job training, the host of assorted programs under the mislabeled “war on poverty,” farm price supports, and so on at incredible length. The Negative Income Tax would be vastly superior to this collection of welfare measures. It would concentrate public funds on supplementing the incomes of the poor—not distribute funds broadside in the hope that some will trickle down to the poor.”

“I see the negative income tax as the only device yet suggested by anybody that would bring us out of the current welfare mess and still meet our responsibilities to the people whom the program has got in trouble.”

Thus, what justifies a guaranteed income, in Friedman’s view, is only a damage-control argument.

***

Friedrich Hayek (1899–1992)

Hayek us the other founding father of “Neoliberalism” and Friedman’s colleague at the University of Chicago and fellow Nobel Memorial Prize winner.

From The Road to Serfdom (1944) to Law, Legislation and Liberty (1979), Hayek unambiguously supported a minimum-income scheme as a permanent feature of a free society. He does reject “the security of the particular income a person is thought to deserve” because “it can be provided only for some and only by controlling or abolishing the market. ”Instead, “the security of a minimum income,” which can be “provided for all outside of and supplementary to the market system,” is “an indispensable condition of real liberty”.

“There is no reason why in a society which has reached the general level of wealth which ours has attained, the security of a minimum income, should not be guaranteed to all without endangering general freedom. There are difficult questions about the precise standard which should thus be assured.… but there can be no doubt that some minimum of food, shelter and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody .” And even more firmly: “The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.”

Hayek never specified the institutional setup most appropriate to secure this “uniform minimum income”.

***

James Tobin (1918– 2002)

Starting in 1965, the Yale economist and Nobel Memorial Prize winner James Tobin published a series of articles in which he defended what he initially called a “credit income tax.” This scheme was not meant to replace the whole system of public assistance and insurance schemes, let alone to help extinguish the welfare state altogether, but rather to reconfigure its lower component so as to make it a more efficient and work-friendly instrument for improving “the economic status of the Negro ” or for “raising the incomes of the poor,” to quote the titles of two of Tobin’s articles.

With his colleagues Joseph Pechman and Peter Miezkowski, Tobin published in 1967 what can be regarded as the first technical paper on negative-income-tax schemes, in a broad sense that covers the upfront-basic-income variant. In the scheme they proposed and analyzed, each household was to be granted a basic credit at a level varying with family composition, which each family could supplement with earnings and other income taxed at a uniform rate. In their view, this “credit income tax” was as preferably to be administered through “automatic payments of full basic allowances to all families, except those who waive payment in order to avoid withholding of the offsetting tax on other earnings.” It could therefore be regarded as a household-level “demogrant”: universal and obligation-free, though not strictly individual.

***

John Kenneth Galbraith (1908–2006)

In the first edition of his best seller The Affluent Society (1958), the Harvard economist expressed great skepticism as to the possibility of a guaranteed minimum income: “An affluent society, that is also both compassionate and rational, would no doubt, secure to all who needed it the minimum income essential for decency and comfort. It can use the forthright remedy of providing for those in want. Nothing requires it to be compassionate. But it has no high philosophical justification for callousness. Nonetheless any such forthright remedy for poverty is beyond reasonable hope.”

The best hope he saw for the reduction of poverty “lies in less direct but, conceivably, almost equally effective means,” such as education and slum clearance.

In an article published in 1966, however, he expressed a very different view on what could be reasonably hoped, repudiated the “strongly traditional” approach to poverty he had held until then (“we should help them to help themselves”), and argued:

“We need to consider the one prompt and effective solution for poverty, which is to provide everyone with a minimum income. The arguments against this proposal are numerous, but most of them are excuses for not thinking about a solution, even one that is so exceedingly plausible. It would, it is said, destroy incentives. Yet we now have a welfare system that could not be better designed to destroy incentives if we wanted it that way. We give the needy income, and we take away that income if the recipient gets even the poorest job. Thus we tax the marginal income of the welfare recipient at rates of 100 percent or more. A minimum income, it is said, would keep people out of the labor market. But we do not want all the people with inadequate income to work. And there is no antidote for poverty that is quite so certain in its effects as the provision of income.”

The second edition of The Affluent Society (1969) reflects this radical change of mind. The passage quoted above remained unchanged up to the sentence “Nonetheless any such forthright remedy for poverty is beyond reasonable hope,” but at that point made room for the following paragraph: “Within the last ten years, the provision of a regular source of income to the poor, as a matter of broad social policy, has come to seem increasingly practical. The notion that income is a remedy for indigency has a certain forthright appeal. As elsewhere argued, it would also ease the problems of economic management by reducing the reliance on production as a source of income. The provision of such a basic source of income must henceforth be the first and the strategic step in the attack on poverty.”

The “elsewhere argued” refers to a chapter titled “The Divorce of Production from Security,” completely rewritten for the second edition so as to support the following position: “For those who are unemployable, employable only with difficulty or who should not be working, the immediate solution is a source of income unrelated to production. In recent years, this has come extensively into discussion under various proposals for guaranteed income or a negative income tax. The principle common to these proposals is provision of a basic income as a matter of general right and related in amount to family size but not otherwise to need. If the individual cannot find (or does not seek) employment, he has this income on which to survive.”

“Everybody should be guaranteed a decent basic income. A rich country such as the US can well afford to keep everybody out of poverty. Some, it will be said, will seize upon the income and won’t work. So it is now with more limited welfare, as it is called. Let us accept some resort to leisure by the poor as well as by the rich.”

***

In 1968, consistently with his revised conviction, Galbraith supported, along with James Tobin, Paul Samuelson, and Robert J. Lampman, a petition signed by over one thousand economists calling for the US Congress to adopt “a system of income guarantees and supplements.”

In the meantime, academics had been joined by other components of American civil society. Thus, at its inaugural convention in August 1967, the National Welfare Rights Organization (NWRO) adopted as its first goal: “Adequate income: a system that guarantees enough money for all Americans to live dignified lives above the level of poverty.”

***

Martin Luther King, Jr. (1929–1968)

In his last book, Where Do We Go From Here?, published the same year, King wrote:

“I am now convinced that the simplest approach will prove to be the most effective, the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income. The dignity of the individual will flourish when the decisions concerning his life are in his own hands, when he has the assurance that his income is stable and certain, and when he knows that he has the means to seek self-improvement.”

***

President Lyndon B. Johnson (1998 – 1973)

In January 1968, President Johnson had already set up a Commission on Income Maintenance Programs which included, along with several businessmen, economists Robert Solow and Otto Eckstein. Johnson insisted: “We must examine any and every plan, however unconventional.”

Published in November 1969, the final report recommended, as an alternative to the existing welfare system, a “basic income support program” that would take the form of a “direct federal cash transfer program offering payments to all, in proportion to their need.”

***

President Richard Nixon (1913 – 1994)

Before this report was published, however, Republican Richard Nixon had taken office as president in January 1969 after winning the election against Democrat Hubert Humphrey. He immediately launched the preparation of the Family Assistance Plan, an ambitious public assistance program that would provide for the abolition of the aid program targeting poor families (AFDC), and incorporate a guaranteed income with financial supplements for workers. The plan came close to a household-based negative income tax, but with one major difference: the legislation made provision for a reduction of benefits “if recipients refused to accept suitable employment or register for job training”.

“In the final analysis, we cannot talk our way out of poverty; we cannot legislate our way out of poverty; but this Nation can work its way out of poverty. What America needs now is not more welfare, but more ‘workfare.’”

***

Senator George McGovern (1922 – 2012)

In January 1972, however, as the controversy about the Family Assistance Plan reached its height, a considerably more ambitious guaranteed income plan managed to attract much attention.

One of the candidates for the Democratic presidential nomination, Senator George McGovern, with Tobin and Galbraith on his campaign team, decided to incorporate a basic-income proposal into his platform. Labeled “minimum income grant,” “national income grant,” or sometimes “demogrant,” it consisted of paying every American a yearly installment of $ 1,000. “I propose that every man , woman, and child receive from the federal government an annual payment . This payment would not vary in accordance with the wealth of the recipient. For those on public assistance, this income grant would replace the welfare system.”

The proposal he mentioned in greatest detail is one by James Tobin, which “calls for the same payment to be made to all Americans”: “the payments are made on an individual basis. Thus, there would be no incentive for a family to break up in order to receive higher total”.

***

The Presidential election took place in November 1972, and Nixon won a landslide victory, just a few weeks after the final demise of his own Family Assistance Plan. These events marked the end of the short but spectacular appearance of basic-income-type ideas in the US debate.

Four large-scale experiments took place in the United States between 1968 and 1980. Initiated by the federal administration in connection with the preparation of Nixon’s Family Assistance Plan, these unprecedented experiments were a major landmark in social scientific research. Never had there been a scientifically motivated social experiment on such a scale. Households were randomly assigned to groups enjoying the benefit of a negative-income-tax scheme for a number of years and to control groups that continued living under existing arrangements. The main goal was to establish the effects of the guaranteed-income scheme on various indicators such as weight at birth, school performance, divorce rate, and above all, labor supply.

Among the most discussed effects of these experiments were an uncontroversial yet relatively modest reduction in the labor supply of secondary earners and an alleged increase in the divorce rate in one of the experiments. Such results contributed to killing for many years the political attraction of basic-income-type proposals in the United States, even among some of their keenest supporters.

***

Dauphin

Under the influence of the US debate, several official reports discussing a “guaranteed annual income” were published in Canada in the early 1970s. These reports inspired the so-called Mincome negative income tax experiment, conducted in 1975– 78 in the city of Winnipeg and in the small town of Dauphin (Manitoba) at the request of Canada’s federal government.

Data collection was interrupted after two years, however, and the results were never officially published. It was only many years later that they were analyzed. The very fact that the Canadian government lost interest long before the experiment was completed confirmed that the North America of the 1970s was not ripe for a major new step towards something that would start resembling an unconditional basic income.

***

Jay Hammond (1922–2005)

And yet it was North America that hosted, just a few years later, the most decisive step towards a basic income in the strictest sense of the term. This happened with barely any connection to the big US debate of the late 1960s and early 1970s.

In the mid-1970s, Jay Hammond (1922–2005), the Republican governor of the state of Alaska from 1974 to 1982, secured ownership of the Prudhoe Bay oil field, the largest in North America, for the citizens of Alaska (rather than for all US citizens). However, he was concerned that the huge wealth generated by oil extraction would benefit only the current generation of Alaskans. He therefore proposed setting up a fund to ensure that this wealth would be preserved for future generations, thanks to the investment of part of the oil revenues.

In 1976, the Alaska Permanent Fund was created by an amendment to the State Constitution. In order to get the current Alaskan population interested in its continuity and growth, Governor Hammond conceived of a dividend paid annually to all residents. “The Dividend concept,” Hammond explains in his memoirs, was “based on Alaska’s Constitution, which holds that Alaska’s natural resources are owned, not by the State, but by the Alaskan people themselves.”

A genuinely universal basic income paid to all legal residents at the same level, including newcomers and foreign nationals.

The program was first implemented in 1982. Since then, every official resident of Alaska for at least one year is entitled to an equal annual dividend. Around 637,000 applicants qualified in 2015. This dividend corresponds to some proportion of the average financial return, over the previous five years, of the Alaska Permanent Fund.

Although Alaska’s oil dividend is by no means sufficient to cover an individual’s basic needs, at its maximum, it reached about 20 percent of the official US poverty line for a single person and it never exceeded 4 percent of Alaska’s GDP per capita, it is clearly a genuine basic income: it is an obligation-free cash payment made to all on an individual basis. Is it surprising that it should have been introduced by a Republican administration?

Is it surprising that the Alaska dividend scheme has not been emulated elsewhere? Perhaps. There are now over fifty countries with sovereign wealth funds similar to the Alaska Permanent Fund. Yet, despite various proposals, Alaska’s dividend scheme remains unique so far.

***

Since the mid-1980s, the history of basic income is no longer a set of isolated national developments, completely independent and mostly ignorant of each other. Thanks to the existence of an international network, to the power of the internet, and to the spreading of the idea, new initiatives around basic income are now happening every day and are being echoed worldwide.

***

Philippe van Parijs & Yannick Vanderborght


World Economic Forum: 15-hour weeks, basic income & doughnuts. Could these ‘big ideas’ end inequality? – Ross Chainey. 

At an unusually divisive time for politics in the West, there’s one thing most people can agree on: the economy is not working well enough, for enough people.

Right now, just 1% of the world’s population holds over 35% of all private wealth, more than the bottom 95% combined. According to Oxfam, the eight wealthiest individuals in the world – all men – have the same wealth as 3.6 billion of the world’s poorest. The world could see its first trillionaire in the next 25 years, yet one in nine people go to bed hungry every night and one in 10 of us still earns less than $2 a day.

And while the problem is truly global, it also exists within countries – including some of the world’s most advanced economies. By the late 2000s, income inequality had risen in 17 out of the 22 OECD countries, including by more than 4% in Finland, Germany, Israel, New Zealand, Sweden and the US.

Inequality is, as Jaideep Prabhu, a Professor of Business at Cambridge University, writes, “the defining social, political and economic phenomenon of our time.” The latest Global Risks Report agrees. The report ranked “rising income and wealth disparity” as the most important trend that will shape the world in the next decade.

The rise of anti-establishment populism, as well as concerns about the revolution in robotics and artificial intelligence, suggest that a revival of economic growth alone may not be enough to address the widening gap between rich and poor.

With capitalism in need of fundamental reform, here is a list of some of the bold ideas that could challenge the status quo.

Universal Basic Income

“Consider for a moment that from this day forward, on the first day of every month, around $1,000 is deposited into your bank account – because you are a citizen,” writes the author Scott Santens in this article.

Universal Basic Income, or UBI, is not a new idea (experiments have taken place in the US, Canada, Namibia, India and Brazil, while Finland and the Netherlands plan to follow suit), but this “social security for all”, which would guarantee a starting salary that is above the poverty line for the rest of your life, is experiencing a revival.

“Rising inequality, decades of stagnant wages, the transformation of lifelong careers into sub-hourly tasks … all of these and more are pointing to the need to start permanently guaranteeing everyone at least some income,” says Santens.

While critics argue that a UBI is unaffordable and would encourage people to do nothing, some advocates believe it would help to soften the blow of automation and give us the freedom to do something we really enjoy. “I firmly believe that a Universal Basic Income is the most effective answer to the dilemma of advancing robotization,” argues Dutch economist Rutger Bergman. “Not because robots will take over all the purposeful jobs, but because a basic income would give everybody the chance to do work that is meaningful.”

Redistribution

We should share more of the world’s wealth, or face the populist consequences. That was one of the over-riding messages from Davos 2017.

Oxfam’s Winnie Byanyima said it was time to “rebalance this unjust economy,” and other high profile voices agreed. “Individuals and societies need to be smart and well organized to emerge as ‘winners’ in a new renaissance,” said Oxford academic Ian Goldin. “They should create social safety nets for the dispossessed” through greater wealth distribution.

Jack Ma, the founder of Alibaba and one of China’s most successful businessmen, urged countries to avoid the mistakes made by the US, which he said has squandered its wealth on foreign wars instead of investing in infrastructure and education. “You’re supposed to spend money on your own people,” he argued.

In the session Squeezed and Angry: How to Fix the Middle-Class Crisis, Christine Lagarde, chief of the International Monetary Fund who warned Davos participants about the dangers of inequality back in 2013, didn’t mince her words. “It’s an opportune time to put in place the policies we know help,” she said. “When you have a real crisis, what kind of measures do we take to reduce inequality? It probably means more redistribution.”

Wealth redistribution, of course, means higher taxes for higher earners (though some would argue that this would stifle growth), which is what then US Vice-President Joe Biden argued for in Davos. We need to take “common sense” steps, he said, such as “implementing a progressive, equitable tax system where everyone pays their fair share.” He also proposed providing free college education for all.

A 15-hour work week?

Most of us would like to work less, but would forcing us to spend fewer hours at our desks be good for the global economy? Rutger Bregman thinks so.

The world’s major economies are richer than they’ve ever been, yet excessive work and pressure is killing us, he argues in his book, Utopia for Realists.

“As we hurtle through the first decades of the 21st century, our biggest challenges are not too much leisure and boredom, but stress and uncertainty,” he writes in this piece for The Guardian.

If we worked less and cut out pointless jobs, we’d make fewer errors and have time to do the things we enjoy. Furthermore, countries with shorter working weeks consistently top gender-equality rankings, while “countries with the biggest disparities in wealth are precisely those with the longest working weeks.”

Bregman isn’t the only one to call for a shorter working week. James W. Vaupel, from the Max-Planck Odense Institute for Demographic Research, argues that we should only work 25 hours a week (though we should keep this up until we’re 80). “In the 20th century we had a redistribution of wealth. I believe that in this century, the great redistribution will be in terms of working hours,” he said.

Doughnut economics

While growth at all costs has lifted millions out of poverty, it’s also left a lot of people behind and ravaged our environment. Is the solution to be found in … a doughnut?

In her book, Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, Oxford University’s Kate Raworth argues for a radical overhaul of our traditional economic models. What’s the point of a thriving economy if people, and the planet, continue to suffer?

“Humanity’s 21st century challenge is to meet the needs of all within the means of the planet,” she says. “In other words, to ensure that no one falls short on life’s essentials … while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend.”

Raworth’s “doughnut” is a diagram showing social and planetary boundaries, between which lies an “environmentally safe and socially just space in which humanity can thrive.” The model “allows us to see the state in which we now find ourselves,” Raworth writes. At the moment, there are billions of people who still live in the hole in the middle, while several of the planetary boundaries have been breached.

The purpose of economics, says Raworth, should be to help us enter that safe space and stay there.

Open borders

Fears over immigration may have played a central role in the Brexit vote and US election, but at a time when the world has more barriers than ever before (three-quarters of all border walls and fences were erected after the year 2000), is there a case for tearing them down?

Closed borders are one of the biggest barriers to global equality, says Bregman. “Just take for example someone who lives in Nigeria and has exactly the same skill set, the same education as someone who lives in the UK or the US, but they earn about eight times less,” he told Business Insider.

“So the right passport is worth a lot of money. It’s a huge source of global inequality.”

A World Bank study estimated that if developed countries were to take in just 3% more immigrants, the world’s poor would have over $300 billion more to spend, while there is a huge body of research that shows how carefully managed global migration and ethnic diversity strengthens a country’s long-term economy.

“In a world of insane inequality, migration is the most powerful tool around for fighting poverty,” writes Bregman.

***

by Ross Chainey, digital media specialist at the World Economic Forum

Eyewitness News

Basic Income, for a Free Society and a Sane Economy. PART 1: THE INSTRUMENT OF FREEDOM  – Philippe van Parijs, Yannick Vanderborght. 

To rebuild confidence and hope in the future of our societies, in the future of our world, we shall need to subvert received wisdom, shake our prejudices, and learn to embrace radical ideas. One of these, simple but crucial, is that of an unconditional basic income: a regular cash income paid to all, on an individual basis, without means test or work requirement.

The idea is not new. Since the end of the eighteenth century, it has occurred to any number of bold minds. Today, however, the conjunction of growing inequality , a new wave of automation , and a more acute awareness of the ecological limits to growth has made it the object of unprecedented interest throughout the world.

Yes, a better world is possible, and in order to achieve it, it is necessary to be imaginative and enthusiastic. But intellectually honest discussion that does not elude inconvenient facts and embarrassing difficulties is just as indispensable.

A basic income is not just a clever measure that may help alleviate urgent problems. It is a central pillar of a free society, in which the real freedom to flourish, through work and outside work, will be fairly distributed. It is an essential element of a radical alternative to both old socialism and neoliberalism, of a realistic utopia that offers far more than the defense of past achievements or resistance to the dictates of the global market. It is a crucial part of the sort of vision needed to turn threats into opportunities, resignation into resolution, anguish into hope.

1: The Instrument of Freedom

Action is urgently needed on many fronts, from the dramatic improvement of our cities’ public spaces to the transformation of education into a lifelong activity to the redefinition of intellectual property rights. More than on any other front, action is needed to restructure radically the way in which economic security is pursued in our societies and in our world. In each of our societies and beyond, we need a sturdy floor on which we can stand as individuals and as communities. If we are to stem our anxieties and strengthen our hopes, we must dare to introduce what is now commonly called a basic income: a regular income paid in cash to every individual member of a society, irrespective of income from other sources and with no strings attached.

In the past, a broad consensus existed between the right and the left that continued growth would keep unemployment and precariousness in check. Today’s unprecedented interest in basic income in the more affluent parts of the world is evidence that this consensus has ended.

Thus, the expectation that meaningful work will be lacking easily leads to the conviction that the growing jobless population must be provided with some means of livelihood.

But there are two very different ways of fleshing out this conviction, and one of them is very unattractive. It consists of expanding the old model of public assistance first born in the sixteenth century and instantiated by today’s guaranteed-minimum-income schemes of a conditional sort.

People are entitled to continuing handouts on the condition that they remain destitute, and can prove it is involuntary.

Thus, if conditional minimum-income schemes are the only way of addressing the expected lack of meaningful jobs, it seems that the technological progress that is meant to liberate us is going to enslave in poverty a growing part of the population instead.

The proper way of addressing today’s unprecedented challenges and of mobilizing today’s unprecedented opportunities does require a minimum-income scheme, but of an unconditional sort.

It is strictly an individual entitlement, as opposed to linked to the household situation; it is what is commonly called universal, as opposed to subjected to an income or means test; and it is obligation free, as opposed to tied to an obligation to work or prove willingness to work.

Basic Income remains however conditional in one important sense. Recipients of it must be members of a particular, territorially defined community. In our interpretation, this condition must mean fiscal residence rather than permanent residence or citizenship. This excludes tourists and other travelers, undocumented migrants, and also diplomats and employees of supranational organizations, whose earnings are not subjected to the local personal income tax. It also excludes people serving prison sentences, whose upkeep costs more than a basic income, but who should be entitled to it from the minute they get out.

A basic income does not only need to be paid regularly. Its amount must also be stable enough and, in particular, immune to sudden declines. This does not mean that it should be fixed. Once in place, it can meaningfully be linked to a price index or, even more meaningfully, to GDP per capita.

A basic income cannot be mortgaged; its beneficiaries must not be allowed to use its future stream as a guarantee for loans. This requirement flows naturally from viewing basic income not as a top-up on other incomes but rather as the bottom layer for every person’s income, which current legislation usually protects against seizure.

The word “basic” in basic income is meant to convey the idea of a floor on which one can stand because of its very unconditionality. It is a foundation on which people can build their lives in various ways, including by topping it up with income from other sources.

A basic income should not be understood as being, by definition, a full substitute for all existing transfers, much less a substitute for the public funding of quality education, quality health care, and other services.

Unconditional Basic Income means far more than existing conditional minimum-income schemes. It does not operate at the margin of society but affects power relations at its very core. Its point is not just to soothe misery but to liberate us all. It is not simply a way of making life on earth tolerable for the destitute but a key ingredient of a transformed society and a world we can look forward to.

Fundamental to the concept of a basic income is that it is paid in cash and not in the form of food, shelter, clothes, and other consumer goods. a fair and efficient distribution of cash, especially in an era of electronic payments, requires far less bureaucracy than a fair and efficient distribution of food or housing. Cash distribution is also less prone to clientelistic pressures, lobbying of all types, and waste through misallocation. Furthermore, when cash is distributed rather than food it creates purchasing power in the areas where poor people live, boosting local economies rather than depressing them, as the distribution of imported free food tends to do.

A basic income is not meant to replace all services provided or funded by the state. A combination of mild paternalism, awareness of positive and negative externalities, and concern for the preconditions of competent citizenship can easily override the argument for cash in the case of some specific goods such as basic health insurance and education at the preschool, primary, and secondary levels. Such provisions in kind can be defended in terms of the long-term interests of the individuals concerned, and also in terms of societies’ interests in maintaining the healthy and well-educated workforces and citizenry that are crucial to well-functioning economies and democracies. Analogous arguments can be made for provisions of safe and enjoyable public spaces, and some other public goods and services. For all these reasons, making a strong case for a basic income paid in cash is consistent with supporting public provision of various services in kind.

UBI is paid to each individual, and at a level independent of that individual’s household situation. Direct payment to all individual members of the basic income to which they are entitled can make a big difference insofar as it affects the distribution of power within the household. For a woman with low or no earnings, control over the household’s expenditures will tend to be greater and exit options will tend to be less forbidding if she receives a regular income as an individual entitlement for herself and her children than if her existence and that of her children entail a higher net income for her partner.

Under existing, conditional minimum-income schemes, how much an individual is entitled to depends on the composition of the household. There are two reasons why the amount to which an individual is entitled should be independent of the size of the household to which he or she belongs.

The first is that cohabitation is hard to confirm. The more general the trend towards informality and volatility in the formation, decomposition, and recomposition of households, the more that competent authorities are stuck in a dilemma between arbitrariness and unfairness on one side and intrusiveness and high monitoring costs on the other, and consequently the stronger the case for a strictly individual transfer.

Differentiating according to household composition also has the effect of discouraging people from living together. While it might seem paradoxical, a more strictly individual tax or benefit scheme is a more community-friendly one. The degressive profile of a household-based scheme creates a loneliness trap: people who decide to live together are penalized through a reduction in benefits.

Other negative effects follow. The mutual support and sharing of information and networks stemming from cohabitation is weakened. Scarce material resources—space and energy, fridges and washing machines—are underutilized. And the number of housing units for a given population increases, leading to less dense habitats and hence greater mobility challenges. As concern for the strengthening of social bonds and the saving of material resources intensifies, the argument against household differentiation grows stronger by the day. In the pursuit of sustainable freedom for all, cohabitation should be encouraged, not penalized.

UBI is unconditional in the sense of being universal, not subjected to a means test. The rich are entitled to it just as much as the poor. And it is unconditional in the sense of being obligation free, and not being subjected to a willingness-to-work test.

The combination of these two unconditionalities is crucial. The former frees people from the unemployment trap, the latter from the employment trap. The former facilitates saying yes to a job offer, while the latter facilitates saying no. The former creates possibilities, while the latter lifts obligations and thereby enhances those possibilities. Without the former, the latter could easily foster exclusion. Without the latter, the former could easily foster exploitation. It is the joint operation of these two features that turns basic income into a paramount instrument of freedom.

A basic income operates ex ante, with no means test involved. It is paid upfront to rich and poor alike, regardless of the income they derive from other sources, the property they own, or the income of their relatives.

With a basic income paid automatically to all legal residents, access to benefits does not require any particular administrative steps. Moreover, society is then no longer visibly divided between the needy and the others, those who need help and those who can manage on their own. There is nothing humiliating about receiving a basic income granted to all members of society. This does not only matter in itself for the dignity of the people involved. It also enhances effectiveness in terms of poverty alleviation. Thus, by avoiding complication and stigmatization, a universal scheme can achieve a high rate of take-up at a low information cost.

The fact that one remains entitled to the basic income irrespective of any other income one may be earning, is important not only for freeing people from a lack of money. It also matters for freeing them from exclusion from work.

Under a means -tested scheme, even precarious earnings cancel the entitlement to part or all of the benefits. Rational avoidance of uncertainty contributes to trapping welfare recipients in situations of unemployment. The risk is compounded by the very nature of many of the jobs the most disadvantaged would qualify for: jobs with precarious contracts, unscrupulous employers, and unpredictable earnings. If they are unsure about how much they will earn when they start working, about whether they will be able to cope, or about how quickly they might lose the work and then have to face more or less complex administrative procedures in order to reestablish their entitlement to benefits, the idea of giving up means -tested transfers holds less appeal.

The contrast between a means-tested minimum-income scheme and a basic income should be clear. The former provides a safety net that fails to catch a great many people it should catch, and in which many others get trapped; the latter provides a floor on which they can all safely stand.

This difference may be of little significance as long as the trap catches only a small minority of people suffering from various handicaps. It becomes of central importance when, for the reasons sketched above, a large and growing proportion of the population is at risk of getting trapped. One reason often given for not raising the level of means-tested benefits is precisely that it would catch even more people in the unemployment trap.

It is true, indeed self-evident, that universality is achieved at a far higher level of public expenditure. Paying a given sum of money to all costs far more money than paying it only to the poor. But there is cost and there is cost. Much of the cost, if the scheme is funded by taxation, consists in taking money with one hand and giving it back with the other hand to the same households. The rest simply represents a redistribution of private spending between different categories of the population. This is quite different from a budgetary cost that involves the use of real resources, such as to build infrastructure or employ civil servants.

A basic income is a regular cash income that is individual and universal. It further differs from conditional minimum-income schemes in having no strings attached; it carries no obligation for its beneficiaries to work or be available on the labor market. It is paid without any such conditions. Homemakers, students, and tramps are entitled to it no less than waged workers and the self-employed, and those who decided to quit no less than those who were sacked. No one needs to check whether its beneficiaries are genuine job seekers or shirkers.

Work quality can be expected to get a big boost as a result of both today’s existing jobs’ being improved and many non-existing jobs’ becoming viable. In particular, the average quality of the jobs performed by the most vulnerable can safely be expected to increase. This is why so many people committed to freedom for all like the combination of universality and freedom from obligation. This is why they want a basic income.

It seems hard to deny that basic income, owing to its multidimensional unconditionality, constitutes a powerful instrument of freedom. But is it sustainable?

A common worry is that the supply of labor will be badly affected by the combination of an obligation-free minimum income and increased taxation of the productive activities required to fund it. It would be wrong, however, to reduce the economic impact of a basic income to its immediate impact on the supply side of the labor market. By providing an unconditional floor, a basic income can be expected to help unleash entrepreneurship by better buffering the self-employed, worker cooperatives, and capital-labor partnerships against the risk of uncertain and fluctuating incomes. Even more important is the expected longer-term effect on human capital.

Coupled with a redirection of the educational system towards lifelong learning, such a more flexible and relaxed labor market should be far better suited to the development of twenty-first-century human capital than a market that makes a rigid division between young students and mature workers.

This positive impact concerns not only the human capital of the present working population, but also that of their children. Like other ways of making family income more secure, basic income can be expected to have a beneficial effect on children’s health and education.

To the extent that it addresses the unemployment trap, it reduces the number of children whose eagerness to work is negatively affected by their growing up in households without anyone employed. Above all, by facilitating chosen part-time work and promoting a smoother conciliation of work and family life, it enables parents to devote more attention to their children when this is most needed.

Making an economy more productive, sensibly interpreted, in a sustainable fashion is not best served by obsessively activating people and locking them in jobs that they hate doing and from which they learn nothing.

It is arguably not only fair but also economically clever to give all, not just the better endowed, greater freedom to move easily among paid work, education, caring, and volunteering. This intimate connection between the greater security provided by a basic income and the expansion of a desirable form of flexibility makes basic income an investment rather than a cost. It also explains why a basic income can be viewed as an intelligent, emancipatory form of “active welfare state” and an emancipatory interpretation of what an active welfare state could be.

In this case, activation is a matter of removing obstacles such as the unemployment and isolation traps, and empowering people with easier access to education and training, in order to give them a wider spectrum of options for paid or unpaid activities. It consists of freeing them to work rather than forcing them to work. It forms the core of an emancipatory active welfare state, in sharp contrast also to the means-tested minimum-income schemes typical of “passive” welfare states that focus their transfers on the inactive and thereby keep them inactive.

True, by providing an obligation-free income, a basic-income scheme can be viewed as desacralizing paid work: it legitimizes pay without work for all, not just for the disabled and the rentiers able to live on income from property or securities. But by providing a universal floor to which income from other sources can be added, it can nonetheless also be viewed as an instrument of activation that will help other instruments, such as retraining or social work, do a better job. Being obligation-free, basic income can help to “de-commodify ”human labor; but being universal, it also helps to “commodify” the labor of people who would otherwise remain excluded.

A basic income is fully compatible with the view that recognition and esteem are not earned by self-indulgence, but by service to others. A basic income is there to facilitate the search by all of us for something we like to do and do well, whether or not in the form of paid employment. Many at some stages in their lives might best contribute to the well-being of those close to them or of the human community as a whole through unpaid activities, from running voluntary childcare initiatives to contributing to Wikipedia. However, most people at the “working age” stages in their lives will best contribute through some sort of paid work, whether or not within a firm, whether or not on a full-time basis. A social norm that values this—a work ethic in this sense—is consistent with a basic income, indeed contributes to its sustainability, without cancelling the liberating impact associated with the expansion of the range of ways in which this social norm can be met.

Involuntary unemployment is a major issue for people committed to freedom for all. Growth has routinely been offered as the self-evident remedy for unemployment. But strong doubts have emerged as to the possibility and desirability of sustained growth in rich countries and about its ability to provide a solution to unemployment. A basic income offers an alternative solution that does not rely on an insane rush to keep pace with productivity growth, subsidizing low-paid work with low immediate productivity and by making it easier for people to choose to work less at any given point in their lives. At the expense of material consumption? In developed countries, certainly. And deliberately so—because our economy not only needs to be efficient. It must also be sane. And sanity requires us to find not only a way of organizing our economy that does not make people sick but also a way of living that is sustainably generalizable. An unconditional basic income is a precondition for both.

Philippe van Parijs & Yannick Vanderborght

‘Utopia for Realists’ Rutger Bregman on Basic Income and More – YouTube

Full Interview

For roughly 99% of the world’s history, 99% of humanity was poor, hungry, dirty, afraid, stupid, sick, and ugly.

But in the last 200 years, all of that has changed. In just a fraction of the time that our species has clocked on this planet, billions of us are suddenly rich, well nourished, clean, safe, smart, healthy, and occasionally even beautiful.

A Free Basic Income For Everyone Is The Answer To (Pretty Much) Everything. So believes historian Rutger Bregman – Leigh Campbell. 

Things aren’t as bad as they seem, if you just take a look at history — and that’s what historian Rutger Bregman does in his book, Utopia for Realists

The book, which has become an international best seller, explores our current place in history. It looks at levels of poverty, famine, wealth, homelessness and unemployment and uses history to evaluate how far we’ve come. Right now we are living in the utopia which was dreamed of in the Middle Ages.

“I think that the big problem of today isn’t so much that we don’t have it good, but that we have no vision of where we want to go next.”

Bregman uses history to take aim at many of the world’s current welfare systems that simply don’t work. Laying blame and distrusting people in poverty by ways of restricted and difficult support systems only perpetuates the issue, and history shows that.

“What history can show us is that the way we have structured our society and our economy right now is not natural. We are living in incredibly rich countries and there are still millions of people living in poverty, when it doesn’t have to be that way. It can be different. That’s why I try to use history to throw open the windows and show to people that we can do things differently. People have tried different things in the past that have worked, and we can do that again.”

These ‘things’ Bregman refers to that have been trialled in the past is the distribution of a free basic income. Free money for everyone — a modest amount but enough to lift those living in poverty out of it and enough to help everyone else do more with their lives. You don’t have to work for it, you don’t have to answer for it and you don’t have to be poor or homeless — everyone gets it. It’s a revolutionary idea that’s immediately met with doubts. But history shows it works.

“The first thing that people think is that free money will make people lazy. If we gave everyone an unconditional basic income then they will probably stop working. Then I always ask them what would they do with a free basic income, and about 99 percent of people will say ‘oh, well I wouldn’t stop working, I have dreams and ambitions, but it’s the other people you’d have to worry about’.”

Huffington Post

Watch Bregman’s TEDTalk on the concept of ‘free money’.

Addressing uncertainty in basic income – Michael Lewis. 

As someone interested in basic income (BI), I read a fair amount about the topic. I read pieces by supporters and opponents, as well as those who might be considered more neutral. I’m often struck by the degree of uncertainty concerning implementation of BI.

A popular argument for BI these days is based on concerns about the possibility of mass technological unemployment. Some in the “tech industry” contend that BI will become necessary as automation replaces more and more human laborers in the years to come. This has led to a debate among economists and others regarding whether automation will result in a net loss of jobs (for humans) big enough to warrant the need for something like BI. Both sides of this debate bring evidence to make their cases. But in the end, we simply don’t know for certain if and when automation will lead to a net loss of jobs for us human beings.

Assuming BI might be implemented in a society which would still require a fair amount of human labor power, we’d like to know what impact BI would have on people’s inclination to sell their labor or, more commonly, “work.” A BI could affect labor supply in at least two ways.

One is that people who received an income they didn’t have to work for may be inclined to work less. The second possible effect has to do with how BI would be financed. If it were financed by an increase in income taxes, this could also reduce labor supply. The reason is that a large proportion of many people’s incomes are earnings, meaning that an income tax is largely a wage tax. A higher wage tax has two possible effects on labor supply.

On the one hand, such an increase could cause people to work less because with the higher tax (and all else equal) their take home pay is smaller than it was before, creating an incentive to work less. On the other hand, a smaller take home pay means one would have to work more than before to maintain their standard of living. This would create an incentive for people to work more not less. If BI were implemented, we have no way of knowing which of these effects would dominate the other.

Leaving the labor market (but still related to it), another area of uncertainty has to do with how people would spend their time, assuming they did reduce their labor supply. Opponents of BI worry that people would use their time “unproductively”, while proponents tend to argue that individuals would engage in more care work or pursue “self-actualization” through pursuing education, writing poetry, starting a business, and the like. But if we’re being honest, regardless of which side of the debate we’re on, we must admit that we don’t have much of an idea what the relative proportion of unproductive to productive activities would be, assuming we could even agree on how to categorize activities as unproductive or productive.

A third area of uncertainty is related to personal relations and household composition. BI could have an effect on who lives with whom, who marries whom, who has kids or not (as well as how many to have), etc. As a society, we obviously differ when it comes to our values about such matters, meaning we might differ on the desirability of BI. But we don’t really know for sure how implementation of BI would affect “family life.”

Now I’m not saying we’re completely in the dark when it comes to questions of BI’s effect on labor supply, use of non-wage time, etc. Economists, sociologists, and others can draw on theory to help us think through these matters. And, by this point, there’ve been several experiments/studies (as well as more recent “startup” studies) which offer a lens on what might happen if BI were implemented. But we should be careful not to overestimate how much help we can receive from such experts, as well as the studies that have been (and are being) conducted.

Considering the many BI experiments (as well as proposed ones) around the world, we need to be cautious about what lessons might be learned. The philosopher Nancy Cartwright, well known for her work in the philosophy of science, has a phrase that’s quite relevant to this discussion: “it works somewhere.” Cartwright frequently utters this phrase within the context of discussing randomized controlled trials (RCTs), the so called gold standard of empirical research in the social sciences. Her point is that even if a well-designed RCT shows that a policy works in one context, that doesn’t necessarily mean it’ll work in another one. This is relevant to BI studies because they’re being conducted, or proposed, in a variety of different contexts. So if we find out that something works in India or Finland, that doesn’t mean it’ll work in Japan or the U.S. In the article cited above, Cartwright goes into great detail about why generalizing experimental findings from one context to another can be so difficult. For those interested in what we might learn from BI experiments, I think her work is quite instructive.

When engineers design systems, such as buildings, bridges, etc., they also must face uncertainties. They don’t know for sure what loads the systems will end up having to bear, they don’t know if there will be earthquakes, they don’t know how forceful the winds will be, etc. One of the things engineers do to deal with such uncertainties is include safety factors in their designs.

For example, suppose an engineer is designing a structure and wind, seismic, and other data indicate that it’ll have to bear a load of 1000 kg. Suppose also that the engineer wants a safety factor of five. Then the load which the structure should be able to bear isn’t 1000 kg but 5×1000 = 5000 kg. So a safety factor is a multiple used to increase the strength or robustness of a system beyond that which is thought to be required to account for uncertainty in what’s thought to be required.

Those of us designing policies don’t have the luxury of being able to use simple equations, which include safety factors, the way engineers do. But perhaps we should adopt a similar safety factor mentality. Implementation of BI would be a complicated undertaking, involving a great deal of uncertainty. Perhaps BI supporters should consider how to increase its robustness in response to labor supply reductions, as well as other unanticipated effects. I admit I’m not exactly sure how to do this. But I believe it’s something worth thinking about.

Michael Lewis

Getting Basic Income Right – Kemal Dervis.  

Universal basic income (UBI) schemes are getting a lot of attention these days. Of course, the idea – to provide all legal residents of a country a standard sum of cash unconnected to work – is not new. The philosopher Thomas More advocated it back in the sixteenth century, and many others, including Milton Friedman on the right and John Kenneth Galbraith on the left, have promoted variants of it over the years. But the idea has lately been gaining much more traction, with some regarding it as a solution to today’s technology-driven economic disruptions. Can it work?

The appeal of a UBI is rooted in three key features: it provides a basic social “floor” to all citizens; it lets people choose how to use that support; and it could help to streamline the bureaucracy on which many social-support programs depend. A UBI would also be totally “portable,” thereby helping citizens who change jobs frequently, cannot depend on a long-term employer for social insurance, or are self-employed.

Viewing a UBI as a straightforward means to limit poverty, many on the left have made it part of their program. Many libertarians like the concept, because it enables – indeed, requires – recipients to choose freely how to spend the money. Even very wealthy people sometimes support it, because it would enable them to go to bed knowing that their taxes had finally and efficiently eradicated extreme poverty.

The UBI concept also appeals to those who focus on how economic development can replace at least some of the in-kind aid that is now given to the poor. Already, various local social programs in Latin America contain elements of the UBI idea, though they are targeted at the poor and usually conditional on certain behavior, such as having children regularly attend school.

But implementing a full-blown UBI would be difficult, not least because it would require answering a number of complex questions about goals and priorities. Perhaps the most obvious balancing act relates to how much money is actually delivered to each citizen (or legal resident).

In the United States and Europe, a UBI of, say, $2,000 per year would not do much, except perhaps alleviate the most extreme poverty, even if it was added to existing social-welfare programs. An UBI of $10,000 would make a real difference; but, depending on how many people qualify, that could cost as much as 10% or 15% of GDP – a huge fiscal outlay, particularly if it came on top of existing social programs.

Even with a significant increase in tax revenue, such a high basic income would have to be packaged with gradual reductions in some existing public spending – for example, on unemployment benefits, education, health, transportation, and housing – to be fiscally feasible. The system that would ultimately take shape would depend on how these components were balanced.

In today’s labor market, which is being transformed by digital technologies, one of the most important features of a UBI is portability. Indeed, to insist on greater labor-market flexibility, without ensuring that workers, who face a constant need to adapt to technological disruptions, can rely on continuous social-safety nets, is to advocate a lopsided world in which employers have all the flexibility and employees have very little.

Making modern labor markets flexible for employers and employees alike would require a UBI’s essential features, like portability and free choice. But only the most extreme libertarian would argue that the money should be handed out without any policy guidance. It would be more advisable to create a complementary active social policy that guides, to some extent, the use of the benefits.

Here, a proposal that has emerged in France is a step in the right direction. The idea is to endow each citizen with a personal social account containing partly redeemable “points.” Such accounts would work something like a savings account, with their owners augmenting a substantial public contribution to them by working, studying, or performing certain types of national service. The accounts could be drawn upon in times of need, particularly for training and re-skilling, though the amount that could be withdrawn would be guided by predetermined “prices” and limited to a certain amount in a given period of time.

The approach seems like a good compromise between portability and personal choice, on the one hand, and sufficient social-policy guidance, on the other. It contains elements of both US social security and individual retirement accounts, while reflecting a commitment to training and reskilling. Such a program could be combined with a more flexible retirement system, and thus developed into a modern and comprehensive social-solidarity system.

The challenge now – for the developed economies, at least – is to develop stronger and more streamlined social-solidarity systems, create room for more individual choice in the use of benefits, and make benefits portable. Only by striking the right balance between individual choice and social-policy guidance can modern economies build the social-safety programs they need.

Social Europe

No, wealth isn’t created at the top. It is merely devoured there – Rutger Bregman. 

This piece is about one of the biggest taboos of our times. About a truth that is seldom acknowledged, and yet, on reflection, cannot be denied. The truth that we are living in an inverse welfare state.

These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurialism that are helping to advance the whole world.

Now, we may disagree about the extent to which success deserves to be rewarded – the philosophy of the left is that the strongest shoulders should bear the heaviest burden, while the right fears high taxes will blunt enterprise – but across the spectrum virtually all agree that wealth is created primarily at the top.

So entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.

In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue.

To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.

But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.

For those who know their history, the term “rentier” conjures associations with heirs to estates, such as the 19th century’s large class of useless rentiers, well-described by the French economist Thomas Piketty. These days, that class is making a comeback. (Ironically, however, conservative politicians adamantly defend the rentier’s right to lounge around, deeming inheritance tax to be the height of unfairness.) But there are also other ways of rent-seeking. From Wall Street to Silicon Valley, from big pharma to the lobby machines in Washington and Westminster, zoom in and you’ll see rentiers everywhere.

There is no longer a sharp dividing line between working and rentiering. In fact, the modern-day rentier often works damn hard. Countless people in the financial sector, for example, apply great ingenuity and effort to amass “rent” on their wealth. Even the big innovations of our age – businesses like Facebook and Uber – are interested mainly in expanding the rentier economy. The problem with most rich people therefore is not that they are coach potatoes. Many a CEO toils 80 hours a week to multiply his allowance. It’s hardly surprising, then, that they feel wholly entitled to their wealth.

It may take quite a mental leap to see our economy as a system that shows solidarity with the rich rather than the poor. So I’ll start with the clearest illustration of modern freeloaders at the top: bankers. Studies conducted by the International Monetary Fund and the Bank of International Settlements – not exactly leftist thinktanks – have revealed that much of the financial sector has become downright parasitic. How instead of creating wealth, they gobble it up whole.

Don’t get me wrong. Banks can help to gauge risks and get money where it is needed, both of which are vital to a well-functioning economy. But consider this: economists tell us that the optimum level of total private-sector debt is 100% of GDP. Based on this equation, if the financial sector only grows, it won’t equal more wealth, but less. So here’s the bad news. In the United Kingdom, private-sector debt is now at 157.5%. In the United States the figure is 188.8%.

In other words, a big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body. It’s not creating anything new, merely sucking others dry. Bankers have found a hundred and one ways to accomplish this. The basic mechanism, however, is always the same: offer loans like it’s going out of style, which in turn inflates the price of things like houses and shares, then earn a tidy percentage off those overblown prices (in the form of interest, commissions, brokerage fees, or what have you), and if the shit hits the fan, let Uncle Sam mop it up.

The financial innovation concocted by all the math whizzes working in modern banking (instead of at universities or companies that contribute to real prosperity) basically boils down to maximising the total amount of debt. And debt, of course, is a means of earning rent. So for those who believe that pay ought to be proportionate to the value of work, the conclusion we have to draw is that many bankers should be earning a negative salary; a fine, if you will, for destroying more wealth than they create.

Bankers are the most obvious class of closet freeloaders, but they are certainly not alone. Many a lawyer and an accountant wields a similar revenue model. Take tax evasion. Untold hardworking, academically degreed professionals make a good living at the expense of the populations of other countries. Or take the tide of privatisations over the past three decades, which have been all but a carte blanche for rentiers. One of the richest people in the world, Carlos Slim, earned his millions by obtaining a monopoly of the Mexican telecom market and then hiking prices sky high. The same goes for the Russian oligarchs who rose after the Berlin Wall fell, who bought up valuable state-owned assets for song to live off the rent.

But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely that makes us overlook their massive rent-seeking.

Take the pharmaceutical industry. Companies like GlaxoSmithKline and Pfizer regularly unveil new drugs, yet most real medical breakthroughs are made quietly at government-subsidised labs. Private companies mostly manufacture medications that resemble what we’ve already got. They get it patented and, with a hefty dose of marketing, a legion of lawyers, and a strong lobby, can live off the profits for years. In other words, the vast revenues of the pharmaceutical industry are the result of a tiny pinch of innovation and fistfuls of rent.

Even paragons of modern progress like Apple, Amazon, Google, Facebook, Uber and Airbnb are woven from the fabric of rentierism. Firstly, because they owe their existence to government discoveries and inventions (every sliver of fundamental technology in the iPhone, from the internet to batteries and from touchscreens to voice recognition, was invented by researchers on the government payroll). And second, because they tie themselves into knots to avoid paying taxes, retaining countless bankers, lawyers, and lobbyists for this very purpose.

Even more important, many of these companies function as “natural monopolies”, operating in a positive feedback loop of increasing growth and value as more and more people contribute free content to their platforms. Companies like this are incredibly difficult to compete with, because as they grow bigger, they only get stronger.

Aptly characterising this “platform capitalism” in an article, Tom Goodwin writes: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

So what do these companies own? A platform. A platform that lots and lots of people want to use. Why? First and foremost, because they’re cool and they’re fun – and in that respect, they do offer something of value. However, the main reason why we’re all happy to hand over free content to Facebook is because all of our friends are on Facebook too, because their friends are on Facebook … because their friends are on Facebook.

Most of Mark Zuckerberg’s income is just rent collected off the millions of picture and video posts that we give away daily for free. And sure, we have fun doing it. But we also have no alternative – after all, everybody is on Facebook these days. Zuckerberg has a website that advertisers are clamouring to get onto, and that doesn’t come cheap. Don’t be fooled by endearing pilots with free internet in Zambia. Stripped down to essentials, it’s an ordinary ad agency. In fact, in 2015 Google and Facebook pocketed an astounding 64%of all online ad revenue in the US.

But don’t Google and Facebook make anything useful at all? Sure they do. The irony, however, is that their best innovations only make the rentier economy even bigger. They employ scores of programmers to create new algorithms so that we’ll all click on more and more ads. Uber has usurped the whole taxi sector just as Airbnb has upended the hotel industry and Amazon has overrun the book trade. The bigger such platforms grow the more powerful they become, enabling the lords of these digital feudalities to demand more and more rent.

Think back a minute to the definition of a rentier: someone who uses their control over something that already exists in order to increase their own wealth. The feudal lord of medieval times did that by building a tollgate along a road and making everybody who passed by pay. Today’s tech giants are doing basically the same thing, but transposed to the digital highway. Using technology funded by taxpayers, they build tollgates between you and other people’s free content and all the while pay almost no tax on their earnings.

This is the so-called innovation that has Silicon Valley gurus in raptures: ever bigger platforms that claim ever bigger handouts. So why do we accept this? Why does most of the population work itself to the bone to support these rentiers?

I think there are two answers. Firstly, the modern rentier knows to keep a low profile. There was a time when everybody knew who was freeloading. The king, the church, and the aristocrats controlled almost all the land and made peasants pay dearly to farm it. But in the modern economy, making rentierism work is a great deal more complicated. How many people can explain a credit default swap, or a collateralized debt obligation?  Or the revenue model behind those cute Google Doodles? And don’t the folks on Wall Street and in Silicon Valley work themselves to the bone, too? Well then, they must be doing something useful, right?

Maybe not. The typical workday of Goldman Sachs’ CEO may be worlds away from that of King Louis XIV, but their revenue models both essentially revolve around obtaining the biggest possible handouts. “The world’s most powerful investment bank,” wrote the journalist Matt Taibbi about Goldman Sachs, “is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

But far from squids and vampires, the average rich freeloader manages to masquerade quite successfully as a decent hard worker. He goes to great lengths to present himself as a “job creator” and an “investor” who “earns” his income by virtue of his high “productivity”. Most economists, journalists, and politicians from left to right are quite happy to swallow this story. Time and again language is twisted around to cloak funneling and exploitation as creation and generation.

However, it would be wrong to think that all this is part of some ingenious conspiracy. Many modern rentiers have convinced even themselves that they are bona fide value creators. When current Goldman Sachs CEO Lloyd Blankfein was asked about the purpose of his job, his straight-faced answer was that he is “doing God’s work”. The Sun King would have approved.

The second thing that keeps rentiers safe is even more insidious. We’re all wannabe rentiers. They have made millions of people complicit in their revenue model. Consider this: What are our financial sector’s two biggest cash cows? Answer: the housing market and pensions. Both are markets in which many of us are deeply invested.

Recent decades have seen more and more people contract debts to buy a home, and naturally it’s in their interest if house prices continue to scale now heights (read: burst bubble upon bubble). The same goes for pensions. Over the past few decades we’ve all scrimped and saved up a mountainous pension piggy bank. Now pension funds are under immense pressure to ally with the biggest exploiters in order to ensure they pay out enough to please their investors.

The fact of the matter is that feudalism has been democratised. To a lesser or greater extent, we are all depending on handouts. En masse, we have been made complicit in this exploitation by the rentier elite, resulting in a political covenant between the rich rent-seekers and the homeowners and retirees.

Don’t get me wrong, most homeowners and retirees are not benefiting from this situation. On the contrary, the banks are bleeding them far beyond the extent to which they themselves profit from their houses and pensions. Still, it’s hard to point fingers at a kleptomaniac when you have sticky fingers too.

So why is this happening? The answer can be summed up in three little words: Because it can.

Rentierism is, in essence, a question of power. That the Sun King Louis XIV was able to exploit millions was purely because he had the biggest army in Europe. It’s no different for the modern rentier. He’s got the law, politicians and journalists squarely in his court. That’s why bankers get fined peanuts for preposterous fraud, while a mother on government assistance gets penalised within an inch of her life if she checks the wrong box.

The biggest tragedy of all, however, is that the rentier economy is gobbling up society’s best and brightest. Where once upon a time Ivy League graduates chose careers in science, public service or education, these days they are more likely to opt for banks, law firms, or trumped up ad agencies like Google and Facebook. When you think about it, it’s insane. We are forking over billions in taxes to help our brightest minds on and up the corporate ladder so they can learn how to score ever more outrageous handouts.

One thing is certain: countries where rentiers gain the upper hand gradually fall into decline. Just look at the Roman Empire. Or Venice in the 15th century. Look at the Dutch Republic in the 18th century. Like a parasite stunts a child’s growth, so the rentier drains a country of its vitality.

What innovation remains in a rentier economy is mostly just concerned with further bolstering that very same economy. This may explain why the big dreams of the 1970s, like flying cars, curing cancer, and colonising Mars, have yet to be realised, while bankers and ad-makers have at their fingertips technologies a thousand times more powerful.

Yet it doesn’t have to be this way. Tollgates can be torn down, financial products can be banned, tax havens dismantled, lobbies tamed, and patents rejected. Higher taxes on the ultra-rich can make rentierism less attractive, precisely because society’s biggest freeloaders are at the very top of the pyramid. And we can more fairly distribute our earnings on land, oil, and innovation through a system of, say, employee shares, or a universal basic income. 

But such a revolution will require a wholly different narrative about the origins of our wealth. It will require ditching the old-fashioned faith in “solidarity” with a miserable underclass that deserves to be borne aloft on the market-level salaried shoulders of society’s strongest. All we need to do is to give real hard-working people what they deserve.

And, yes, by that I mean the waste collectors, the nurses, the cleaners – theirs are the shoulders that carry us all.

The Guardian

BitNation: Recent Advances in Cryptocurrency See Basic Income Tested | Basic Income News. 

Swarm Redistribution Theory. 

Johan Nygren, a basic income activist, is currently exploring if basic income can be implemented using cryptocurrency.

Cryptocurrency are digital currencies whose value and number of units are regulated by encryption techniques, outside of any central banking system. A cryptocurrency-based basic income will be funded with taxes.

A cryptocurrency-based basic income will be funded with taxes grown within a peer-to-peer (P2P) network. P2P is an architecture for building computer networks that’s focus is on equality and sharing among peers, each user consuming and supplying information to the network. Nygren’s experiment aims to use decentralized ‘swarms’ of users to distribute a basic income through what Nygren calls ‘dividend pathways’.

A dividend pathway is “the world’s first peer-to-peer financial security,” where every transaction opens up a pathway, to a global network of connected users. RES, Nygren’s crypto-currency, is then shared through a branching scheme with all who are connected to the pathways – those on the BitNation network. The branching scheme is analogous to our network of veins, pumping information instead of blood.

This model tests whether a network can electronically divert income to users, in this case using a small tax levied on financial purchases and exchanges made over a system called BitNation; the process is called Swarm Redistribution. Nygren writes that “the whole experiment is public, transparent, auditable, [and] includes a close-down switch in case a bug is discovered.”

BitNation, a Decentralized Borderless Voluntary Nation (DBVN), provides public services to its naturalized citizens. As a virtual jurisdiction, the main difference from traditional governments is voluntary allegiance to its constitution – membership is open to anyone and involvement limited only by the user. As a blockchain-based structure, government activities are transparent. Its mission, according to founder Susanne Tarkowski Tempelhof, is to “get rid of geographical apartheid” and offer “better and cheaper governance services.”

Nygren’s swarm redistribution theory assumes that ongoing transactions with the crypto-currency RES will infuse BitNation’s cybereconomy with a branchwork (think the blood analogy) of paid-forward value additions. This would mean extracting essentially a value-added tax (VAT) along the way and pooling a coffer for the basic incomes’ distribution. The model theorizes that growth is incentivized by the desire for personal return and altruism, or a desire to contribute to social resilience (more information can be found here).

BitNation’s current population of nearly five thousand users with roughly fifty thousand daily transactions involving the cryptocurrency ETH could eventually provide the structure for a basic income for its users.

Read More:

Johan Nygren, “Resilience – game theory of incentive-based basic income using Taxemes and branching schemes” Steemit – Resilience, November 2016.

Johan Nygren, “Swarm Redistribution live experiment, could a “Decentralized Basic Income Swarm” grow their own taxes?” P2P Foundation, January 4 2017.

Johan Nygren, “Using P2P value maps and universal darwinism for a crypto basic income system” Resilience Press, Feb 19 2016.

Ian Allison, “Bitnation launches Decentralised Borderless Voluntary Nation Constitution with Ethereum” International Business Times, February 17 2016

BasicIncome.org

Ryan Greenaway-McGrevy argues the changing basis of economic prosperity demands a fundamental rethink of the way society is organised.

The idea of a state giving away money to its citizens with no strings attached doesn’t sound like a sustainable economic policy, but that is exactly what Finland began doing at the start of 2017.

The 2,000 participants in Finland’s radical experiment, randomly chosen from those on welfare, will each get 560 euros ($860) a month – and the payment will continue even if they get a job. The hope is that providing a basic income will offer recipients financial security and allow them to make life plans.

It is not the first time a universal basic income (UBI) has been trialled. Pilot schemes have been run in Namibia, Ontario, Manitoba, Utrecht and elsewhere. And, in recognition that technology is displacing jobs, Silicon Valley start-up accelerator Y Combinator has begun a basic income experiment in Oakland, California to provide what its president, Sam Altman, calls “a cushion and a smooth transition to the jobs of the future”.

In 2016, the New Zealand Labour Party expressed interest in something similar, citing a scheme proposed by economist Gareth Morgan that would see every adult New Zealander given a basic income of $210 a week. The then Prime Minister John Key was quick to dismiss the concept as unaffordable and “barking mad”.

Greenaway-McGrevy counters that the changing basis of economic prosperity demands a fundamental rethink of the way society is organised. A guaranteed income would challenge the notion that people are only valuable to society if they are in paid employment.

“Finding a job for life is likely to become increasingly difficult as technology advances and roles become automated, so we need to think hard about where self-worth really comes from,” he says.

“The industrial revolution also caused massive disruption, but over the long term it led to an increase in everyone’s standard of living. Technology is a good thing if everyone can share in its benefits.”

Greenaway-McGrevy, says many of the proposals to redistribute wealth have strings attached that cause people to change their behaviour, so the assessment of any scheme needs to take account of the wider economic incentives and impacts.

For example, welfare for the unemployed, which is intended as a financial safety net, and which is only paid while a person is unemployed, can act as a disincentive for people to take low-paid or temporary work. A basic income, which is paid irrespective of other income, would remove that barrier.

“A UBI would be a one-shot welfare policy that would replace much of the complicated system we have now and would be far less costly to administer. But the cost of paying every citizen a basic income would be substantial, and so it would need to be implemented as part of a broader restructuring of the taxation system,” he says.

Greenaway-McGrevy suggests that such a restructure might include implementing a proper capital gains tax or a land tax, and doing away with progressive income taxation which, at the other end of the pay scale, can encourage tax avoidance. In any case, he says, a flat income tax coupled with the UBI could be quite progressive, because the supplementary basic income would be tax free.

One of the possible side effects of a UBI could be to raise wages in low-paid jobs such as in supermarkets, fast food outlets and cleaning services as these became less attractive to job seekers. As a result, the price of many goods and services would rise, at least in the short term, says Greenaway-McGrevy.

“So, inflation is most likely to come through the wage channel.”

He also stresses that many other welfare policies create disincentives for firms to hire people. Minimum wages, for example, can contribute to higher unemployment as firms that are reliant on lower-paid workers respond by reducing their workforces.

“If we agree that it is the State’s job to help those who are less well off, let’s do it directly, and not force firms to do it by default.”

Interest.co.nz

UBI, Realistic Goal or Pipedream? – The Opportunities Party. 

A number of people have asked me what the ultimate objective of “The Opportunities Party” is. We have a tonne of policies, so which are the most important? What are we trying to achieve?

It’s a more than fair question given that the policies we’re promoting are radical by recent New Zealand measure – although I’d argue they’re not by historical comparison in the land of the 1893 Woman’s Suffrage Electoral Bill, our 1938 Social Security Act, 1975 Treaty of Waitangi Act and 1987 NZ Nuclear Free Act.

The answer is simple: reform of the tax and benefit system is central to creating a fair and prosperous society. If our ultimate goal of an Unconditional Basic Income (UBI) were enacted, that would certainly rank alongside the other pioneering policies listed above.

Instead of continuing to be pioneers, agile and farsighted, New Zealand has lost its mojo of late and our society has degenerated into one where Establishment parties are loath to provide leadership on anything lest they lose votes. This. in a society where more and more people are living their day-to-day lives on a treadmill of fear, is unacceptable lethargy and intellectually lazy.

The “fear” I’m referring to is the trepidation we all feel from job insecurity, astronomical housing costs, the future we’re leaving for our children and grandchildren, and of course our own future once we’ve passed our ‘used by date’ insofar as paid work is concerned. It’s ironic that we should have these emotions when on paper our society is markedly more prosperous than it’s ever been – at least insofar as GDP measures and even GDP per head is concerned.

So at TOP we say “stop”. Enough is enough of this imbalance of power – New Zealanders need to care for our most vulnerable citizens and ensure all participants pay their fair share of tax. This stuff is not hard, but there has to be a will. Sadly we don’t see that from National; and Labour really has yet to prove itself given that these trends have been underway for 30 years now.

So what is The Opportunities Party’s philosophical approach? You have had plenty of policy detail from us for each of our TOP 7 Policy Priorities, you know our whole package is fiscally neutral (meaning any spending initiatives are accompanied by detail on the source of funding), and you know that we are championing the rights of those at the wrong end of the inequality gulf that has opened so widely since 1990.

But where are we heading? We’ve introduced the first steps toward a UBI (Unconditional Basic Income) which will sit at the centre of the rejuvenated approach to fair capitalism, but we haven’t laid out how we’ll make that truly universal yet. We know how to, but the first step has to be integrity in the tax regime – and our Policy #1 confronts that head on. We can’t  be sure the public is up for and it’s essential before we even dream of making a full UBI a reality.

We’ve suggested that the level a UBI can be set at is confined by (a) fiscal affordability and (b) the minimum wage. In short it cannot cost so much that taxpayers can’t tolerate the tax burden nor as high that the incentive to perform paid work is removed. With those constraints in mind you end up with a UBI that plays a role more akin to bridging finance as people are between jobs or retraining or off work for family reasons. It does not replace targeted benefits but it does allow us to roll them back significantly – particularly those that are the worst of witch hunt welfarism – the impossibly tightly targeted ones with the atrociously steep abatement rates or poverty traps. Returning the humanity to social assistance and getting rid of this victim targeting that gives the Hard Right their jollies, is a priority at TOP.

Ultimately a UBI will be affordable with an income tax regime that has a single or flat tax rate –the UBI makes the lower of the graduated tax rates redundant. And progressivity of the overall tax regime remains because we include accumulated capital (or wealth) within the tax base. Wealth is far more accurate indicator of ability to pay than income is.

It will take time but it is certainly possible. A future where everyone pays their fair share of tax, where our tax and welfare systems are hugely simplified, where the stigma and poverty traps associated with welfare are removed, and where unpaid work is honoured. It won’t happen overnight, but it will happen.

TOP

The Opportunities Party – UBI and Thriving Families. 

The Opportunities Party is starting along the road to an Unconditional Basic Income (UBI) by ensuring two groups are the first to get it.

As covered in the book, The Big Kahuna, a UBI:

  • empowers people through giving them more choices on how to spend their time, invest their means;
  • recognises the contribution of the 1 million people who work but are not paid, and without whom our society would collapse;
  • provides a cushion to lessen the impact of the casualisation of work;
  • eliminates the poverty trap, the disincentive to work accompanying targeted benefits; and
  • winds back the dehumanisation and stigmatisation of benefit targeting.

The major constraints on how high that a UBI can be set includes its cost to the taxpayer and its relativity to the rewards for paid work. If fiscal overload is to be avoided then the taxpayer cannot be expected to foot the bill for whatever level of UBI proponents dream of. Likewise, the incentive to seek paid work cannot be undermined by the level of the UBI otherwise the resultant lack of labour available and the rising costs of production faced by New Zealand firms, would impart serious consequences to our economy.

A full UBI is our firm objective but requires first that integrity be restored to the income tax regime as per Policy #1 and then we will introduce further taxation reform to fund this aspiration. It is unlikely that a UBI will ever totally replace targeted social assistance but it certainly will markedly reduce our reliance on targeting, with its stigma-laden selection criteria and its perverse impact on behaviour.

A UBI can relieve poverty without creating poverty traps. This will be increasingly important as the job market becomes more and more disrupted. The key difference between the UBI concept of social assistance and the targeted approach of the current regime is the absence of work testing. There may be broad criteria for certain types of UBI – age, income, family type for example – but those delineations will be nowhere near as granular and onerous as the poverty traps that targeted, work-tested benefits entail. In time there will be an underlying UBI for everybody – it must be modest of course and not compromise the incentive to take paid work.

The Policy … 

The Opportunities Party UBI Policy

Want to Increase Goodwill? Implement a Universal Basic Income – Natalie Shoemaker. 

It’s difficult to deny the attractive qualities a Universal Basic Income (UBI) holds. A radical policy such as this could right many of the inequalities that exist in our societies, says Eva Cox, a former program director of Social Inquiry at the University of Technology, Sydney.

“Brought together, it is clear that a Universal Basic Income (UBI), if implemented appropriately, could help address historic gender, race and material inequities,” Cox wrote in an essay for the Green Institute, titled Why a Universal Basic Income Can Address Historic, Gender and Material Inequities. 

She argues there’s a bias in how we calculate the GDP, which does not account for many unpaid activities that contribute to the health of our society and economy. “My case for changing the paid work bias is based on wider traditions that recognize the value of widely diverse ways of living and contributing to the common good and personal wellbeing.”

At its core, the purpose of a UBI is to create opportunity and freedom where it formerly never existed. It would help ease the frustration many factory workers in America’s heartland are facing with the rise of automation and give those in poverty a chance for something better. This movement has a message centered around creating a fair start for everyone, and challenging misconceptions surrounding the very nature of work. It’s an idea that has had promising outcomes for society in at least one past study.

But many economists question it’s practicality. It’s an expensive system to be sure, which is why many countries (the Netherlands, Finland, and Canada) are launching pilot programs to test how it might best be implemented and whether the return is worth the investment.

Cox argues that a UBI would not only recognize the unpaid contributions people already make through volunteer projects and societal demands, it could also encourage its expansion. “It would allow people to redirect some of their energies to unpaid roles, encourage creativity, enterprise and goodwill,” writes Cox. She continues:

“If we accept officially that people are not essentially lazy or work-shy, we can change the current assumption that welfare payments need to be mean and stigmatising, with sexist and racist overtones. Removing requirements to search for paid work or prove incapacity, would enable many more people to feel value and return a sense of agency.”

Universal Basic Income is an idea that has long been discussed by history’s great thinkers, but is finally being tested. Whether its time has come is still being debated and trialled, but many hope it can narrow the inequality that causes so much societal tension. The proof of its worth will be in the data.

Big Think

Why we should all have a basic income | World Economic Forum – Scott Santens. 

Consider for a moment that from this day forward, on the first day of every month, around $1,000 is deposited into your bank account – because you are a citizen. This income is independent of every other source of income and guarantees you a monthly starting salary above the poverty line for the rest of your life. What do you do? Possibly of more importance, what don’t you do? How does this firm foundation of economic security and positive freedom affect your present and future decisions, from the work you choose to the relationships you maintain, to the risks you take?

The idea is called unconditional or universal basic income, or UBI.

It’s like social security for all, and it’s taking root within minds around the world and across the entire political spectrum, for a multitude of converging reasons Rising inequality, decades of stagnant wages, the transformation of lifelong careers into sub-hourly tasks, exponentially advancing technology like robots and deep neural networks increasingly capable of replacing potentially half of all human labour, world-changing events like Brexit and the election of Donald Trump – all of these and more are pointing to the need to start permanently guaranteeing everyone at least some income.

A promise of equal opportunity

“Basic income” would be an amount sufficient to secure basic needs as a permanent earnings floor no one could fall beneath, and would replace many of today’s temporary benefits, which are given only in case of emergency, and/or only to those who successfully pass the applied qualification tests. UBI would be a promise of equal opportunity, not equal outcome, a new starting line set above the poverty line.

It may surprise you to learn that a partial UBI has already existed in Alaska since 1982, and that a version of basic income was experimentally tested in the United States in the 1970s. The same is true in Canada, where the town of Dauphin managed to eliminate poverty for five years. Full UBI experiments have been done more recently in places such as Namibia, India and Brazil. Other countries are following suit: Finland, the Netherlands and Canada are carrying out government-funded experiments to compare against existing programmes. Organizations like Y-Combinator and GiveDirectly have launched privately funded experiments in the US and East Africa respectively.

I know what you’re thinking. It’s the same thing most people think when they’re new to the idea. Giving money to everyone for doing nothing? That sounds both incredibly expensive and a great way to encourage people to do nothing. Well, it may sound counter-intuitive, but the exact opposite is true on both accounts. What’s incredibly expensive is not having basic income, and what really motivates people to work is, on one hand, not taking money away from them for working, and on the other hand, not actually about money at all.

Basic income in numbers

What tends to go unrealized about the idea of basic income, and this is true even of many economists – but not all – is that it represents a net transfer. In the same way it does not cost $20 to give someone $20 in exchange for $10, it does not cost $3 trillion to give every adult citizen $12,000 and every child $4,000, when every household will be paying varying amounts of taxes in exchange for their UBI.

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

Now, this idea of replacing existing programmes can scare some just as it appeals to others, but the choice is not all or nothing: partial consolidation is possible. As an example of partial consolidation, because most seniors already effectively have a basic income through social security, they could either choose between the two, or a percentage of their social security could be converted into basic income. Either way, no senior would earn a penny less than now in total, and yet the UBI price tag could be reduced by about $220 billion. Meanwhile, just a few examples of existing revenue that could and arguably should be fully consolidated into UBI would likely be food and nutrition assistance ($108 billion), wage subsidies ($72 billion), child tax credits ($56 billion), temporary assistance for needy families ($17 billion), and the home mortgage interest deduction (which mostly benefits the wealthy anyway, at a cost of at least $70 billion per year). That’s $543 billion spent on UBI instead of all the above, which represents only a fraction of the full list, none of which need be healthcare or education.

So what’s the true cost?

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

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

To some, this may sound wasteful. Why give someone money they don’t need, and then tax their other income? Think of it this way: is it wasteful to put seat belts in every car instead of only in the cars of those who have gotten into accidents thus demonstrating their need for seat belts? Good drivers never get into accidents, right? So it might seem wasteful. But it’s not because we recognize the absurd costs of determining who would and wouldn’t need seat belts, and the immeasurable costs of being wrong. We also recognize that accidents don’t only happen to “bad” drivers. They can happen to anyone, at any time, purely due to random chance. As a result, seat belts for everyone.

The truth is that the costs of people having insufficient incomes are many and collectively massive. It burdens the healthcare system. It burdens the criminal justice system. It burdens the education system. It burdens would-be entrepreneurs, it burdens both productivity and consumer buying power and therefore entire economies. The total cost of all these burdens well exceeds $1 trillion annually, and so the few hundred billion net additional cost of UBI pays for itself many times over. That’s the big-picture maths.

The real effects on motivation

But what about people then choosing not to work? Isn’t that a huge burden too? Well that’s where things get really interesting. For one, conditional welfare assistance creates a disincentive to work through removal of benefits in response to paid work. If accepting any amount of paid work will leave someone on welfare barely better off, or even worse off, what’s the point? With basic income, all income from paid work (after taxes) is earned as additional income so that everyone is always better off in terms of total income through any amount of employment – whether full time, part time or gig. Thus basic income does not introduce a disincentive to work. It removes the existing disincentive to work that conditional welfare creates.

Fascinatingly, improved incentives are where basic income really shines. Studies of motivation reveal that rewarding activities with money is a good motivator for mechanistic work but a poor motivator for creative work. Combine that with the fact that creative work is to be what’s left after most mechanistic work is handed off to machines, and we’re looking at a future where increasingly the work that’s left for humans is not best motivated extrinsically with money, but intrinsically out of the pursuit of more important goals. It’s the difference between doing meaningless work for money, and using money to do meaningful work.

Basic income thus enables the future of work, and even recognizes all the unpaid intrinsically motivated work currently going on that could be amplified, for example in the form of the $700 billion in unpaid work performed by informal caregivers in the US every year, and all the work in the free/open source software movement (FOSSM) that’s absolutely integral to the internet.

There is also another way basic income could affect work incentives that is rarely mentioned and somewhat more theoretical. UBI has the potential to better match workers to jobs, dramatically increase engagement, and even transform jobs themselves through the power UBI provides to refuse them.

A truly free market for labour

How many people are unhappy with their jobs? According to Gallup, worldwide, only 13% of those with jobs feel engaged with them. In the US, 70% of workers are not engaged or actively disengaged, the cost of which is a productivity loss of around $500 billion per year. Poor engagement is even associated with a disinclination to donate money, volunteer or help others. It measurably erodes social cohesion.

At the same time, there are those among the unemployed who would like to be employed, but the jobs are taken by those who don’t really want to be there. This is an inevitable result of requiring jobs in order to live. With no real choice, people do work they don’t wish to do in exchange for money that may be insufficient – but that’s still better than nothing – and then cling to that paid work despite being the “working poor” and/or disengaged. It’s a mess.

Basic income – in 100 people

Take an economy without UBI. We’ll call it Nation A. For every 100 working-age adults there are 80 jobs. Half the work force is not engaged by their jobs, and half again as many are unemployed with half of them really wanting to be employed, but, as in a game of musical chairs, they’re left without a chair.

Basic income fundamentally alters this reality. By unconditionally providing income outside of employment, people can refuse to do the jobs that aren’t engaging them. This in turn opens up those jobs to the unemployed who would be engaged by them. It also creates the bargaining power for everyone to negotiate better terms. How many jobs would become more attractive if they paid more money or required fewer hours? How would this reorganizing of the labour supply affect productivity if the percentage of disengaged workers plummeted? How much more prosperity would that create?

Consider now an economy with basic income. Let’s call it Nation B. For every 100 working age adults there are still 80 jobs, at least to begin with. The disengaged workforce says “no thanks” to the labour market as is, enabling all 50 people who want to work to do the jobs they want. To attract those who demand more compensation or shorter work weeks, some employers raise their wages. Others reduce the required hours. The result is a transformed labour market of more engaged, more employed, better paid, more productive, workers. Fewer people are excluded. 

Simply put, a basic income improves the market for labour by making it optional. The transformation from a coercive market to a free market means that employers must attract employees with better pay and more flexible hours. It also means a more productive work force that potentially obviates the need for market distorting minimum wage laws. Friction might even be reduced, so that people can move more easily from job to job, or from job to education/retraining to job, or even from job to entrepreneur, all thanks to more individual liquidity and the elimination of counter-productive bureaucracy and conditions.

Perhaps best of all, the automation of low-demand jobs becomes further incentivized through the rising of wages. The work that people refuse to do for less than a machine would cost to do it becomes a job for machines. And thanks to those replaced workers having a basic income, they aren’t just left standing in the cold in the job market’s ongoing game of musical chairs. They are instead better enabled to find new work, paid or unpaid, full-time or part-time, that works best for them.

The tip of a big iceberg

The idea of basic income is deceivingly simple sounding, but in reality it’s like an iceberg with far more to be revealed as you dive deeper. Its big picture price tag in the form of investing in human capital for far greater returns, and its effects on what truly motivates us are but glimpses of these depths. There are many more. Some are already known, like the positive effects on social cohesion and physical and mental health as seen in the 42% drop in crime in Namibia and the 8.5% reduction in hospitalizations in Dauphin, Manitoba. Debts tend to fall. Entrepreneurship tends to grow. Other effects have yet to be discovered by further experiments. But the growing body of evidence behind cash transfers in general point to basic income as something far more transformative to the future of work than even its long history of consideration has imagined.

It’s like a game of Monopoly where the winning teams have rewritten the rules so players no longer collect money for passing Go. The rule change functions to exclude people from markets. Basic income corrects this. But it’s more than just a tool for improving markets by making them more inclusive; there’s something more fundamental going on.

Humans need security to thrive, and basic income is a secure economic base – the new foundation on which to transform the precarious present, and build a more solid future. That’s not to say it’s a silver bullet. It’s that our problems are not impossible to solve. Poverty is not a supernatural foe, nor is extreme inequality or the threat of mass income loss due to automation. They are all just choices. And at any point, we can choose to make new ones.

Based on the evidence we already have and will likely continue to build, I firmly believe one of those choices should be unconditional basic income as a new equal starting point for all.

World Economic Forum

Why we should put ‘basic’ before ‘universal’ in the pursuit of income equality – John Quiggin. 

Providing a basic income to all that’s not enough to live on makes no sense. The first order should be a guaranteed minimum income for those who need it

John Quiggin, an economist, Professor and Research Council Laureate Fellow at the University of Queensland, has written a recent article for The Guardian on how a functional conception of UBI would look despite the current and successional neoliberal course. Quiggin argues that the political cautiousness of centre-left parties has resulted in their failure to provide radical alternatives to neoliberalism since its inception in the 1970s. The article outlines that the UBI offers a potential alternative to the present economic standing. The question is, how to introduce it in such a way as to render it achievable.

Where many proponents of UBI stress the “universal” aspect of the idea, Quiggin suggests that our emphasis should instead be on the “basic” aspect to begin with. That way we could start by providing a sufficient income to those most in need with the intention of expanding it to the entire population. This would meet the objective of ensuring that everyone has at least a basic income from the outset, and it could be achieved by building on structures that are already in place.

Quiggin claims that it would be more effective to introduce sufficient income support in a model more likened to the “guaranteed minimum income” which would then become universal incrementally, rather than starting with a small universal payment and increasing the level over time, until an adequate level of income is reached. This would significantly reduce the risk that the program would be disbanded or derailed before meeting the target of being adequate enough to live on, which would likely take several decades. Quiggin explains “Of course, an attempt to expand access to income support will be politically difficult, more so than advocacy of a small universal payment. But, in an environment where the economic and political order is breaking down around us, political caution is a road to oblivion. Social democratic parties need to break with their current role as the responsible managers of the status quo, and offer a radical vision for the future. An expanded, and ultimately universal, basic income is such a vision.”

The idea of a universal basic income (UBI) has been around for a long time. However, it has seized the imagination of large sections of the public only very recently, in the wake of the global financial crisis and the subsequent political upheavals.

The failure of the market liberal (or neoliberal) economic order that has been dominant since the 1970s is evident to just about everybody. This has presented a big problem for the parties of the centre-right, supporters of the “hard” version of neoliberalism exemplified by Margaret Thatcher. But it has presented an even greater problem for the parties of the centre-left, which capitulated to neoliberalism in the 1990s, but sought to retain their relevance by offering a “soft” version, sometimes described as a “Third Way”, along with claims to superior, less ideological, management.

None of this works in political terms any more. The right has mostly managed to retain its support by stoking resentment against various ethnic, religious and cultural minorities. But the left needs new and exciting ideas, after decades of defensive managerialism. A UBI seems to fit the bill.

As a vision of the future, there’s plenty of appeal in the idea of a society in which everyone has sufficient resources to meet their basic needs, regardless of their assets, abilities or the way they choose to live their lives. But once we return to the realm of electoral politics, the unavoidable question arises: how do we get there from here? Given the obvious impossibility of implementing a UBI in one or a few terms of governments, what should be the first steps?

For a variety of reasons, the most ardent supporters of a UBI are more excited by the first term “universal” than by the second, “basic”. Logically, this leads to the idea that we should begin with a small universal payment, which would gradually increase in value to the point where it becomes sufficient to meet basic needs.

Alaska’s Permanent Fund Dividend, paid out of the invested proceeds of oil royalties is often cited as an exemplar of this approach. The fund, which began operations in 1982, paid out about $2100 to every Alaskan resident in 2015.

There’s an obvious problem here. $2,100 a year is $50 a week, a handy addition to the budget but not nearly enough for a person to live on. So, in the absence of independent income (say, from private investments), the number of Alaskans who have been freed from the need to work, or meet the demanding conditions for unemployment benefits, is approximately zero.

Nor is there any real prospect that this will change. Even if the dividend were to double or triple, it would not provide a poverty line income as defined by the US government, let alone a decent living standard. And, in the absence of an unlikely oil bonanza, there’s no reason to expect any increase at all.

In practical terms, a strategy of starting with a small universal benefit, and gradually increasing it, can yield no real impact for several decades. Over the course of such a period, it’s virtually certain that some real or imagined budgetary emergency would see the program curtailed and ultimately scrapped.

The alternative is to start with “basic” rather than “universal”. That is, begin by providing sufficient income to support a decent standard of living to those most in need, then expand it to the entire population. This approach is often referred to as a guaranteed minimum income (GMI), and is seen by many UBI supporters as a second-best “residualist” scheme.

In reality, however, provided the objective of ensuring that everyone has at least a basic income is achieved, UBI and GMI schemes are almost identical. To be more precise, in terms of the ultimate distribution of income and effective marginal tax rates (including the effects of means-testing basic payments) any UBI is equivalent to a GMI with the same guaranteed payment and similarly progressive taxes, and vice versa. For wage earners operating under the pay-as-you-earn system, there would be no difference in net pay, just a different way of calculating it on the payslip.

The main difference is that the UBI requires collecting more taxes from people on high incomes and returning some of that revenue to the same people in the form of a universal payment. The appeal of making the payment universal must be weighed against the “churning” costs of collecting and returning it. In an integrated tax-welfare system, such as that we have in Australia, these costs, while real, are not huge. For taxpayers, the UBI could be implemented as a tax rebate, which would cancel out the extra tax relative to a GMI. So, if we actually achieved a genuine GMI, transforming it to a UBI would be largely a matter of definitions.

But the problem of the ultimate design is less important than the choice of a path to get there. Compared to “universal first” the “basic first” approach has the merit that we are already part of the way there, and the next steps involve clear, and feasible, political demands.

The basic old age pension in Australia is around 28% of male total average weekly earnings (MTAWE) for single pensioners and 42% for couples. This income has proved sufficient to eliminate, almost completely, poverty among the old, who were once the most exposed to privation. The same level applies to service pensions, disability support pensions and carer payments.

By contrast, unemployment benefits (now given the Newspeaky name Newstart) were briefly set equal to old pensions at 25% of MTAWE under the Whitlam government. However, a long series of cuts and freezes have reduced access to benefits and cut their relative value to around 18% of MTAWE today. That’s been combined with aggressive attempts to claw back benefits from anyone who might possibly have received income in addition to their benefits, culminating in the recent data matching fiasco.

Any demand to increase access to basic incomes therefore involves a direct assault on the policy directions that have prevailed for at least the past 25 years. It links an ultimate, currently unattainable objective to immediate political struggles. Until they capitulated to neoliberalism in the 1980s, this combination of currently achievable goals and and an ultimate objective of transforming society was the standard approach of social democratic political parties.

Of course, an attempt to expand access to income support will be politically difficult, more so than advocacy of a small universal payment. But, in an environment where the economic and political order is breaking down around us, political caution is a road to oblivion. Social democratic parties need to break with their current role as the responsible managers of the status quo, and offer a radical vision for the future. An expanded, and ultimately universal, basic income is such a vision.

BasicIncome.org

Preparing Our Economy And Society For Automation & AI – Robert Reich. 

Professor Reich comes to Google to discuss the impact of automation & artificial intelligence on our economy. He also provides a recommendation on how we can ensure future technologies benefit the entire economy, not just those at the top.

Social Europe

Funding basic income through data mining – Basic Income News – Craig Rhodes. 

We are fast entering an era in which there’s going to be a chronic shortage of jobs for millions looking for employment. That trend is only going to accelerate. Everyone’s job is on the line now. If we don’t begin to address this problem, then we will suffer long-term consequences: mass unemployment and political alienation of millions because jobs are fast disappearing mainly due to automation.

My suggestion is strategic not tactical. The details can be worked out in committee negotiations.

Corporations are mining nearly every piece of online data that we as individuals produce and then selling it to the highest bidders including the NSA for hundreds of billions per year. It’s an unregulated modern day gold rush happening under our very noses without notice. We as individuals should be compensated for our data in the same way that corporations are compensated for their data. Copyright law should protect us in the same way it protects corporations. Terms of Service Agreements should be outlawed. Copyright laws should be amended or rewritten.

There’s a reason Google and Facebook do not bill us. We’re not their consumers — we’re their product. The lion’s share of profits made by Google, Facebook, AT&T, Verizon, and scores of other corporations are from the data we produce. Facebook’s billion plus users are the largest unpaid workforce in history.
If a corporation profits from our data, whether it be browsing history, emails, buying habits, contact lists etc. then they should have to pay us for it just as we must pay for their movies, music, software and more. Such compensation might go a long way toward alleviating our chronic employment problems as well as help the working class who are losing jobs faster than any other demographic. It would not be welfare nor would it involve raising taxes. It would be payment for services rendered in the form of a subsistent guaranteed income similar to the Alaskan model.
Manufacturing jobs are not going to come back. And in time automation will begin to affect the professional class as well. Those who depended on such jobs should be dealt with or our nation is going to suffer catastrophic consequences.

This and many more initiatives should be included in a robust strategy. We must be bold.

Basic Income News