Thursday, 29 November 2012

Basic Income Guarantee, or "Universal" Basic Income (UBI) Ideal

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A basic income guarantee (basic income, citizen’s income) is a proposed system[1] of social security that regularly provides each citizen with a sum of money unconditionally. In contrast to income redistribution between nations themselves, the phrase basic income defines payments to individuals rather than households,[2] groups, or nations, in order to provide for individual basic human needs. Except for citizenship, a basic income is entirely unconditional. Furthermore, there is no means test; the richest as well as the poorest citizens would receive it. The U.S. Basic Income Network[3] emphasizes this absence of means testing in its precise definition, "The Basic Income Guarantee is an unconditional, government-insured guarantee that all citizens will have enough income to meet their basic needs."
Basic income is related to the concept of a social dividend, and is one of the proposed means for distributing the surplus value or economic profits created by socially-owned enterprises in a hypothetical socialist economy.[4]
Basic income guarantee is not to be confused with Guaranteed minimum income, a similar concept where the income that is received may be conditional upon participating in government enforced labor or other conditional means testing. Basic income guarantee is distinct in that the only requirement for receiving it is to be a citizen of the country.
In everyday usage, the phrase basic income is often inaccurately conflated with means tested guaranteed minimum income alternatives such as a negative income tax. A basic income of any amount less than the social minimum is referred to as a partial basic income.
Similar proposals for "capital grants provided at the age of majority" date to Thomas Paine's Agrarian Justice of 1795, there paired with asset-based egalitarianism.

[edit] Arguments

One of the arguments for a basic income was articulated by the French economist and philosopher André Gorz:
...The connection between more and better has been broken; our needs for many products and services are already more than adequately met, and many of our as-yet-unsatisfied needs will be met not by producing more, but by producing differently, producing other things, or even producing less. This is especially true as regards our needs for air, water, space, silence, beauty, time and human contact...From the point where it takes only 1,000 hours per year or 20,000 to 30,000 hours per lifetime to create an amount of wealth equal to or greater than the amount we create at the present time in 1,600 hours per year or 40,000 to 50,000 hours in a working life, we must all be able to obtain a real income equal to or higher than our current salaries in exchange for a greatly reduced quantity of work...
Neither is it true any longer that the more each individual works, the better off everyone will be. The present crisis has stimulated technological change of an unprecedented scale and speed: 'the micro-chip revolution'. The object and indeed the effect of this revolution has been to make rapidly increasing savings in labour, in the industrial, administrative and service sectors. Increasing production is secured in these sectors by decreasing amounts of labour. As a result, the social process of production no longer needs everyone to work in it on a full-time basis. The work ethic ceases to be viable in such a situation and work-based society is thrown into crisis...
André Gorz, Critique of economic Reason, Gallile, 1989
The Basic Income Earth Network (BIEN) describes one of the benefits of a basic income as having a lower overall cost than that of the current means-tested social welfare benefits.[5], and BIEN has made several fully financed proposals.[6]

[edit] Examples of implementation

The U.S. State of Alaska has a system which provides each citizen with a share of the state's oil revenues,[7] although this amount is not necessarily enough to live on. The Alaska basic income is subject to income tax on the federal level. That way the "basic income" works like a negative income tax but with a "prebate" instead of a "rebate" (as far as state finances are concerned).
The U.S. also has an earned income tax credit for low-income taxpayers. In 2006 a bill written by members of the advocacy organization USBIG[8] to transform the credit into a partial basic income was introduced in the US Congress but did not pass.[9]
The city of Dauphin, Manitoba, Canada took part in an experimental basic income program ("Mincome") between 1974 and 1979.[10]
From January 2008 to December 2009, a pilot project with a basic income grant was implemented in the Namibian village of Omitara by the Namibian Basic Income Grant Coalition.[11][12] Six months after the launch, the project has been found to significantly reduce child malnutrition and increase school attendance. It was also found to increase the community's income significantly above the actual amount from the grants as it allowed citizens to partake in more productive economic activities.[13][14] The project team states that this increase in economic activity contradicts critics' claims that a basic income would lead to laziness and dependency.[15] After the conclusion of the Pilot Project, a monthly bridging-allowance to all who participated in the pilot was paid regularly until March 2012.[15] One of the conclusions of the project was that, even with the restriction that only residents of the village for over a year since the pilot's start could benefit from the grant, there was a significant migration towards Otjivero-Omitara, despite the fact that the migrants wouldn't receive the grant. The project concluded that this phenomenon reveals the need to introduce such basic income systems as a universal national grant, in order to avoid migration to particular regions, towns or households.[15] Another finding of the project was that after the introduction of the pilot, overall crime rates fell by 42%, and specifically stock theft fell by 43% and other theft by nearly 20%.[15]
In 2011, Iran implemented a basic income grant in order to compensate risen prices of basic goods such as petrol and food.[16]

[edit] Advocates

Many of the following advocates have actually proposed a negative income tax, which is means tested, rather than a basic income. Despite their differences in administration and effect,[citation needed] the two proposals are usually conflated.
Worldwide, supporters of a basic income have united in the Basic Income Earth Network. BIEN recognizes numerous national advocacy groups.
One of the world's outspoken advocates of a basic income system is the Belgian philosopher and political economist Philippe van Parijs.[17] Other advocates include Gunnar Adler-Karlsson (Sweden), Götz Werner (Germany), Saar Boerlage (Netherlands),[18] Herwig Büchele (Austria), André Gorz (France),[19] Michael Hardt and Antonio Negri,[20] Charles Murray[21] (USA), Keith Rankin (New Zealand),[22] es:Daniel Raventós (Spain),[23] Osmo Soininvaara (Finland),[24] Guy Standing (UK),[25][26] Eduardo Suplicy (Brazil)[27] and Walter van Trier (Belgium)[28]
In 1918, philosopher Bertrand Russell argues for a basic income in Roads to Freedom.[29]
In his last book, Where Do We Go From Here: Chaos or Community?, published in 1967, Martin Luther King, Jr. calls for a guaranteed income.[30]
In 1968, James Tobin, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce in that year a system of income guarantees and supplements.[31]
In the 1972 presidential campaign, Senator George McGovern called for a 'demogrant' that was very similar to a basic income.
In 1973, Daniel Patrick Moynihan wrote The Politics of a Guaranteed Income (ISBN 0394463544) in which he advocated for the Basic Income and discussed Richard Nixon's GAI proposal.
Mike Gravel, a former US congressman and presidential candidate, advocates a tax rebate paid in a monthly check from the government to all citizens as part of a transition away from income taxes and toward a pre-bated national sales tax (the FairTax).[32][33]
It is clear, however, that Friedrich Hayek did not advocate that any modern nation act to implement a minimum income. This was a concept that he attributed to his "Great Society," which was his Utopian liberal society, in the classical sense. Hayek emphasized a minimum income in the far future, and stated clearly that no wealthy countries such as the United States should guarantee any income not available to all around the world, as it would attract mass immigration and overwhelm the procedure:
"It is obvious that for a long time to come it will be wholly impossible to secure an adequate and uniform minimum standard for all human beings everywhere, or at least that the wealthier countries would not be content to secure for their citizens no higher standards than can be secured for all men. But to confine to the citizens of particular countries provisions for a minimum standard higher than that universally applied makes it a privilege and necessitates certain limitations on the free movement of men across frontiers... we must face the fact that we here encounter a limit to the universal application of those liberal principles of policy which the existing facts of the present world make unavoidable." [39]
In his final book Full employment regained? James Meade states that a return to full employment can be achieved only if, among other things, workers offer their services at a low enough price, that the required wage for unskilled labour would be too low to generate a socially desirable distribution of income, and that therefore a citizen's income would be necessary.[40]
Erik Olin Wright characterizes basic income as a socialist project and a further reform to capitalism that establishes the basis of a social economy by empowering labor in relation to capital.[41]
Richard Parncutt argues that income tax is effectively progressive when basic income is combined with flat income tax. The combination would simplify the tax-welfare system.[42]
Jeremy Rifkin, in his book The End of Work, argued that there may be an increasing need for such measures as automation would reduce the demand for workers in future.[43]
Edward Skidelsky and Robert Skidelsky favoured a basic income in their book called "How Much is Enough?"[44]

[edit] Funding

Several sources of funding have been proposed for hypothetical socialist (public or common ownership of the means of production) economic systems:

Many different sources of funding have been suggested for a guaranteed minimum income for non-socialist economic structures:

[edit] Criticisms

One critical view of Basic Income theorizes that it would have a negative effect on work incentive[47][48] and labor supply. Even when the benefits are not permanent, the hours worked—by the recipients of the benefit—are observed to decline by 5%, a decrease of 2 hours in a typical 40 hour work week, in one study:
While experiments have been conducted in the United States and Canada, those participating knew that their benefits were not permanent and, consequently, they were not likely to change their behaviour as much or in the same manner had the GAI been ongoing. As a result, total hours worked fell by about five percent on average. The work reduction was largest for second earners in two-earner households and weakest for the main earner. Further, the negative work effect was higher the more generous the benefit level.[47]
However, in studies of the Mincome experiment in rural Manitoba, the only two groups who worked less in a significant way were new mothers, and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling.[49] Under Mincome, "the reduction of work effort was modest: about one per cent for men, three per cent for wives, and five per cent for unmarried women."[50]
Another study that contradicted such decline in work incentive was the Namibian pilot project implemented in 2008 and 2009 in the Omitara village; the assessment of the project after its conclusion found that economic activity actually increased, particularly through the launch of small businesses, and reinforcement of the local market by increasing households' buying power.[15]

[edit] Further reading

[edit] See also

[edit] References

  1. ^ History of Basic Income, Basic Income Earth Network (BIEN), retrieved on 18 June 2009
  2. ^ "About Basic Income," BIEN (Basic Income Earth Network)
  3. ^ U.S. Basic Income Guarantee Network
  4. ^ Social Dividend versus Basic Income Guarantee in Market Socialism, by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004.
  5. ^ *BIEN: frequently asked questions
  6. ^ Basic Income Studies: How it could be organised, Different Suggestions
  7. ^ See Alaska Permanent Fund Dividend; the fund's revenues are no longer only from oil.
  8. ^ USBIG
  9. ^ "The Rise and Fall of a Basic Income Guarantee Bill in the United States Congress", Al Sheahen, The US Basic Income Guarantee Network (USBIG), 2008
  10. ^ "1970s' Manitoba poverty experiment called a success". CBC News. March 25, 2010.
  11. ^ Namibian Basic Income Grant Coalition
  12. ^ "NewsFlash of the Basic Income Earth Network", BIEN nr. 49, 2008; BIG Coalition Namibia
  13. ^ Assessment report after 6 months of BIG pilot project
  14. ^ How a Basic Income Program Saved a Namibian Village Speigel Online, August 24, 2009.
  15. ^ a b c d e Basic Income Grant Coalition: Pilot Project
  16. ^ "Iran's bold economic reform: Economic jihad", The Economist, June 23rd 2011,
  17. ^ Philippe van Parijs (ed.), "Arguing for Basic Income: Ethical Foundations for a Radical Reform", London: Verso, 1992
  18. ^ Saar Boerlage: "Het basisinkomen stimuleert op een positieve manier de inzet van het individu in de samenleving" (Basic income stimulates in a positive way the input of the individual into the society), interview, Vereniging Basisinkomen: Nieuwsbrief Basisinkomen 48, 2007
  19. ^ "Critique of Economic Reason", André Gorz, in: Peter Waterman, Ronaldo Munck, "Labour Worldwide in the Era of Globalisation: Alternative Union Models in the New World Order", Macmillan, London, 1999
  20. ^ Empire PDF Michael Hardt – Antonio Negri, "Empire", Harvard University Press, 2000
  21. ^ Book review by Conall Boyle, Feb 2007: In our hands: A plan to replace the welfare state by Charles Murray, Washington DC, 2006
  22. ^ "Universal Basic Income: its Core and Essence", Keith Rankin, New Zealand, 1998
  23. ^ "Basic Income: The Material Conditions of Freedom", Daniel Raventós, Pluto Press, London, 2007
  24. ^ Osmo Soininvaara, "Hyvinvointivaltion eloonjäämisoppi" (A survival doctrine for the welfare state), Juva, WSOY, 1994, 298 p, ISBN 951-0-20100-6
  25. ^ Guy Standing and Michael Samson (eds.), "A Basic Income Grant for South Africa", University of Cape Town Press, Cape Town, 2003
  26. ^ Guy Standing (ed.), "Promoting Income Security as a Right: Europe and North America", Anthem Press, London, 2005
  27. ^ "Citizen's Basic Income: The Answer is Blowing in Wind" Nuvola-inspired File Icons for MediaWiki-fileicon-doc.pngDOC, Eduardo Matarazzo Suplicy, USBIG 5th Congress, 2006
  28. ^ Walter van Trier, "Everyone a King. An Investigation into the Meaning and Significance of the Debate on Basic Incomes with Special Reference to Three Episodes from the British Inter-War Experience", Katholieke Universiteit Leuven: Fakulteit politieke en sociale wetenschappen, PhD thesis, 1995
  29. ^ Bertrand Russell, Roads to Freedom. Socialism, Anarchism and Syndicalism, London: Unwin Books (1918), pp. 80-81 and 127
  30. ^ Where Do We Go From Here: Chaos or Community? (New York: Harper & Row, 1967)
  31. ^ Steensland, Brian (2007). The failed welfare revolution. Princeton University Press. pp. 70–78. ISBN 0-691-12714-X, 9780691127149.
  32. ^ "How Mark stands on the issues" Gravel presidential campaign, 2008
  33. ^ "Income"
  34. ^ Herbert A. Simon, "UBI and the Flat Tax. Also winner of Nobel Peace Prize, archbishop Desmond Tutu advocates basic income guarantee. A response to 'A Basic Income for All' by Philippe Van Parijs", Boston Review, 2000
  35. ^ Friedrich Hayek, The Road to Serfdom, Chapter 9, page 124, Routledge, London 1944
  36. ^ Does he support a guaranteed minimum income? Hayek: "I have always said that I am in favor of a minimum income for every person in the country." from Hayek on Hayek: An Autobiographical Dialogue by F. A. Hayek, edited by Stephen Kresge and Leif Wenar (Chicago: University of Chicago Press, 1994)
  37. ^ Solow, Robert (1987). “An Economist’s View of the Income Maintenance Experiments,” in Lessons from the Income Maintenance Experiments, ed. Alicia H. Munnell, proceedings of a conference held in September 1986 (Boston, MA: Federal Reserve Bank of Boston, 1987). pp. 218–226.
  38. ^ Milton Friedman, "Capitalism and Freedom", University of Chicago Press, 1962
  39. ^ Hayek, Friedrich A. Von. The Political Order of a Free People. Chicago: University of Chicago, 1979. 56. Print.
  40. ^ James Edward Meade, "Full Employment Regained?", Cambridge University Press, 1995, ISBN 0-521-55697-X
  41. ^ Erik Olin Wright, "Basic Income as a Socialist Project," paper presented at the annual US-BIG Congress, March 4–6, 2005 (University of Wisconsin, March 2005) .
  42. ^ Richard Parncutt, "Free enterprise without poverty"
  43. ^ Rifkin, Jeremy (1995). The End of Work – The Decline of the Global Labor Force and the Dawn of the Post-Market Era (1st ed.). New York: Tarcher/Putnam. ISBN 978-0874777796.
  44. ^ Martin Sandbu (May 19, 2012). "Not for sale". Financial Times.
  45. ^ A Future for Socialism, by Roemer, John. 1994. Harvard University Press: "Stock prices are quoted not in currency but in coupons, issued to citizens on attaining their majority, not convertible to cash, and reverting to the treasury at death."
  46. ^ On the Economic Theory of Socialism, by Lange, Oskar. 1936. The Review of Economic Studies, Vol. 4, No. 1: "It seems, therefore, convenient to regard the income of consumers as being composed of two parts: one part being the receipts for the labour services performed and the other part being a social dividend constituting the individual's share in the income derived from the capital and the natural resources owned by society."
  47. ^ a b Improving Social Security in Canada – Guaranteed Annual Income: A Supplementary Paper, Government of Canada, 1994
  48. ^ The Need for Basic Income: An Interview with Philippe Van Parijs, Imprints, Vol. 1, No. 3 (March 1997). The interview was conducted by Christopher Bertram.
  49. ^ A Town Without Poverty? Canada's only experiment in guaranteed income finally gets reckoning
  50. ^ A guaranteed annual income: From Mincome to the millennium (PDF) Derek Hum and Wayne Simpson

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