Aug 01

Cyprus’ Guaranteed Minimum Income plan and the basic income

Last week, Cyprus unveiled an plan to implement a 'guaranteed minimum income for all citizens' by july 2014. A different and weaker proposal than the one of the unconditional basic income, but still by principle, a good step towards a better welfare in Cyprus.

“Beneficiaries will be all of our fellow citizens who have an income below that which can assure them a dignified living, irrespective of age, class or professional situation,” Anastasiades, Cyprus' president said in a statement to the press.

So, what does this tell us? Please note this is a worthwhile and much needed reform although it has some disadvantages that Basic Income doesn’t have. Also note that the principle of the minimum income was actually included in the Memorandum of Understanding (pdf) between the Cypriot government & the Troika. Three specific points deserve some attention.

The problem of means-testing

Because the proposed Guaranteed Minimum Income (GMI) is not unconditional nor universal, it requires a means-test which, if not carefully designed, could create a poverty trap and threshold effects. Typically, if the beneficiaries have to prove that they are 'poor enough' to merit the income support, it creates a barrier in their efforts to get out of the benefit scheme. 

Why working for 300 euros/month if the GMI is 200? The incentive to work may not be enough and therefore people have a finacial incentive to live on the benefits (or working on the black market). However with careful planning there could be a way to balance those too without losing the incentive. An unconditional basic income do the job better, because you don't lose it when you start working, you can cumulate it (a worker would get 200+300 = 500€).

Beware of the stigma effect

Secondly, having to apply for it, creates a stigma. Like it is the case in France, many people will choose to live in poverty rather than to ask for it. There is a way out of it too: don’t expect people to apply. Just give it to those that need it. You can build the taxation system around this problem. With the same logic you can get rid of the bureaucracy and minimize the added cost of it.

Basic income and participation in society

Lastly, we should remember that the goal of both a Basic Income and a Guaranteed Minimum Income should be to get people out of extreme poverty and to participate in society. Hence the idea of ensuring that basic needs are met.

As basic income proponents, we beleive that "participation in society" should be seen in a wider sense than rather paid work. In this sense, the GMI proposed in Cyprus is disappointing, since "the single but absolutely necessary precondition is that they don’t refuse to accept offers for employment and to participate in the policies of continuous employment that are determined by the state" Anastasiades said. Again, a fully universal and unconditional basic income would fulfill better this goal.

It is however a brave step in the right direction and the people who carry the responsibility to implement it should be helped in any way possible in order to make the welfare in Cyprus more emancipatory.


Credit picture: Terry Hassan

Jul 11

Three trends that will create demand for and Unconditional Basic Income

Article from Simulacrum by Lui

step-3-arrow-tutorialThe digitization of our economy will bring with it a new generation of radical economic ideologies, of which Bitcoin is arguably the first.  For those with assets, technological savvy, and a sense of adventure, the state is the enemy and a cryptographic currency is the solution.  But for those more focused on the decline of the middle classes, the collapse of the entry-level jobs market, and the rise of free culture, the state is an ally, and the solution might look something like an unconditional basic income. Before I explain why this concept is going to be creeping into the political debate across the developed world, let me spell out how a system like this would look:

  • Every single adult member receives a weekly payment from the state, which is enough to live comfortably on.  The only condition is citizenship and/or residency.

  • You get the basic income whether or not you’re employed, any wages you earn are additional.

  • The welfare bureaucracy is largely dismantled.  No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.

  • Employment law is liberalised, as workers no longer need to fear dismissal.

  • People work for jobs that are available in order to increase their disposable income.

  • Large swathes of the economy are replaced by volunteerism, a continuation of the current trend.

  • The system would be harder to cheat when there’s only a single category of claimant, with no extraordinary allowances.

This may sound off-the-charts radical, but here’s why you’re going to be hearing a lot more about it:

1 – The Middle Classes Are In Freefall

As Jaron Lanier points out, Kodak once provided 140,000 middle class jobs, and in the smouldering ruins of that company’s bankruptcy we have Instagram, with 13 employees.  It’s an extreme example, in most cases the economic misery is largely confined to young people, with entry-level workers trapped in a cycle of internships, every-lengthening education, and debt.  The result is that young people are not being allowed to grow up.  In the 1960s the average first-time house buyer was 24 years old, and as late as 2002 it was 28.  The average is now 37.  The path to economic selfhood is being stretched by market forces, too many people chasing too few jobs, and a continuation of the status quo is likely to push that lifeboat out even further.

In stripping out inefficiencies and pushing digital goods to near-free prices, the Internet kills middle-class jobs.  Digitization has already largely de-monetized academia, film, music, journalism, and lots more besides.  More industries will feel the pain, including the legal professions, real estate, insurance, accounting, and the civil service, all of which are built on inefficiency, and all of which will be stripped of jobs in the years to come.  As it becomes clear to those with established positions that there are no jobs for their children, they’ll push for a more radical solution.

To put this in econometric terms, wages as a share of the economy have been in long term decline and recently hit a new low in the United States.  Meanwhile corporate profit margins have hit an all time high.  The last few years of economic turmoil has allowed industry to reduce staff numbers and reduce entry-level pay, without reducing capacity.  If that trend continues, wealth creation will increasingly be confined to those with capital, and things start to follow a Marxist logic.  The middle classes (and their elected representatives) will not let that happen.

2 – Demand For Human Labour Is In Long Term Decline

Imagine a point in the future when robots do more of our physical labour, computers do more of our mental labour, and our mechanized-digitized economy is ten times more efficient.  We don’t need to agree on a date, this could be 2050 or it could be 2500, all we need to agree on is that current trends are likely to continue in the same direction.  Between now and then two things can happen, either we do 90% less work, or we demand ten times more goods and services, or a bit of both.  The first option requires that we drastically revise downwards our expectations of how much work people do, the second requires that we drastically redistribute purchasing power to consumers.

We’ve redefined work in the past, so there’s no reason we can’t do it again.  The concept of “a job” as something that happens outside the home and for someone else is a largely Victorian creation.  Even after it was formalized into an obligation to the market economy, we always accepted that certain people do not have to work.  We do not expect infants, the elderly, or the disabled to work, and these categories are relatively fluid.  The expectation that children work inside and outside the home has been in steady decline ever since the industrial revolution, while the default retirement age has crept ever later, pushed by governments avoiding a pension crisis and senior employees hanging on to their established social roles.  While men were forced out of the home to do paid work, women were kept in the family home to do unpaid work.  During the world wars, everyone was expected to work.  During a world cup final, almost nobody is expected to work.  We regularly change our expectations of who works and how.  Forcing the unemployed onto a jobless market on the basis that “everybody has to work” is at best misguided and at worst cruel.

In 2012 the average working year in South Korea was 2,226 hours, and in the Netherlands it was 1,381 hours, 38% less.  You can have a rich, developed economy on relatively little work.  If we stop stigmatizing the non-employed, we can stop pushing people into jobs that offer little collective benefit.  From telemarketers to chuggers to sign holders to beggars, huge numbers of people are forced to eek out an existence on the fringes of the economy in roles that have almost no marginal economic output.

3 – Cultural Production Is Detaching From The Market

We already have a society of volunteers and creators, and that’s a good thing.  That Wikipedia article you just read, the parkour YouTube video you just watched, that Russian electronica you’re listening to, the code that powers your browser, all were probably given away for free.  Everyone expected an information economy, and instead we got an information culture.

When people are locked out of the jobs market, some may sit at home all day on the couch, but many will go out into the world and produce cultural goods that they then give them away for free.  I don’t buy into the myth that unemployed people are lazy.  I’ve lived in a country that had a period of “full employment” and now has 14% unemployment, and I don’t see how anyone can be so misanthropic to claim that those 14% of people just got lazier.  Employment doesn’t just give people an income, it also gives them an identity, status, confidence, a sense of mission, and a network of peers.  Anyone given access to those rewards will work for them.  As the fantastic talk by Dan Pink puts it, we are motivated by autonomy, mastery, and purpose, but not money.  As machines take over more of our work, we are going to have to find other ways of letting people fulfil these human needs.  Forcing them to send 500 CVs out every week is not a good start.

stakhanovite

Don’t dismiss this as socialism, it involves a complete rejection of the Stakhanovite work ethic and a full-throttle embrace of consumer culture.

How would we pay for it?

We could start by getting corporations to pay their taxes.  As I mentioned above, corporate profit margins have hit an all time high, and that money will circulate far faster if it’s placed in the hands of consumers.  For salaried workers a basic income would likely be a repackaging of tax free allowances, although they would likely need a net gain to buy into it.  The scheme would also yield savings elsewhere in the public sector, from a reduction in the size of the bureaucracy, to an increasing role for volunteers and charities.  The scheme would also stimulate economic activity, as shown by the PPI scandal in Britain which forced the transfer of £10 billion from banks to customers, and led to a GDP growth boost of 0.1% because consumers were so much quicker to spend it.

Frankly, in an era when communities can create their own currencies, capital can sneak across digital borders despite being legally frozen, and economic production is increasingly decentralized, finding ways of fairly collecting revenue for the public good is going to be one of the big questions of the century, regardless of whether or not we have an unconditional basic income.  Under the current set of rules, most developed world governments are bankrupt, but as the bank bailouts proved, the rules can be rewritten when needs be.  Money is a device we use to help us allocate resources, it is a symbol and an understanding, seemingly solid in the short term, but flexible and evolutionary in the long term.  If you burn all the notes in your wallet right now, you haven’t made the world any poorer, you’ve simply reduced your personal claim to available resources.  There is always more money.

As has become increasingly clear, austerity is not working, and shouldnever have been expected to work.  An unconditional basic income would be the Keynesian response that should have been launched as soon as it became clear the financial sector had a rotten core.  In other words, it would be a bailout for consumers.

Jul 10

What are we asking with this initiative?

earlywritingWe are asking the European Parliament to discuss the benefits of a Basic Income and to make the necessary ecomomic and technical studies.

The most common reactions to this initiative have answers:

"It will never be done": If we don't even try, this is a certain.

"We have other problems right now": There are always other problems. Basic Income solves some of them, like decent living conditions.

"They won't give us money": We are not asking for money. Only what belongs to us. At this stage the right to find out if a Basic Income is feasible.

"This is not a European Union we want": Exactly the reason to try as citizens actively to make it what we want.

Finally, if we were happy with the way Europe or our state works today, there would be no reason for citizen initiatives and movements. Now is the time to try for the best, together. Us, the citizens.

May 21

Frequently Asked Questions

Apr 23

Call for Basic Income

Beyond social divisions, corporations and doctrines, we, the signatories of the present call, express our will to contribute to a realistic and constructive transformation of our society: basic income.

What is basic income?

The idea has been long time supported by a great number of personnalities from all political horizons, religions or nationalities. It is known equally as: guaranteed minimum income, citizen’s dividend, citizen's income etc.(cf. Wikipedia )

Basic income shouldn’t be confused with a minimum income, liek it currently exists in countries like UK, or France’s RMI or RSA, and other conditionally allocated allowances. Basic income is by essence, automatic, unconditional, universal and unalienable. Everybody, rich or poor gets it, without even asking for it. It is granted to each individual, from birth to death. Its amount should be enough to guarantee each and everyone a decent living – whatever happens -. It is cumulative with other sources of income (wages or other). It shan’t be withdrawn from the poorest, but the richest will pay taxes on it.

Basic income won’t reward employment, but redefine work in a wider significance.

Neither employment, nor capital income, nor conventional social aid can henceforth claim to guarantee the right to existence of each individual as defined in Article III of the Universal Declaration of Human Rights. The fact is: due to computerization and automation of production, full employment can not be reached anymore. On the other hand work is still relevant, and its task is huge.

More than ever, it is necessary for each of us to work. First of all, work to take care of ourselves, of our parents, our children and our family, then work to contribute to the common wealth available to all (knowledge, art, culture, software, etc.) and finally work to invent and implement, at all levels, the means that will bequeath a liveable planet to future generations.

Far from encouraging idleness, we claim that a basic income will, in the extent of their capabilities and their desire, engage each one serenely, freely and responsibly in an essential activity for the general interest where traditional jobs are not intended to do so.

How to finance the basic income?

First, one idea to finance basic income is to use all means and resources currently allocated to the pursuit of full employment — and the handling of the failure of these policies. Second, the introduction of basic income will require to reconsider our fiscal and social systems, and probably to regain control over the process of money creation they had surrendered to private banks.

Economists have thought about the question in depth and have made the demonstration that it is definitely possible. There is no need to wait for a disaster to start considering this profound transformation. It can be done smoothly and without damage, provided the awareness and commitment is strong and massive. It is to this commitment that, we, signatories of this call want to tend.

What do we have to lose?

Along with the crisis, the illusion of duly paid employment vanished. The habit to define oneself according to a professional activity will certainly disappear for many people as well.

Our proposal is not a panacea: the introduction of basic income will induce ever more questions about our identity, our role in society, our aspiration to procreate in regard with demographic problems, about the quality of the legacy we want to give to our children.

Basic income does not go without deeply questioning many habits. We nevertheless believe that this shift of consciousness and behaviour can be accomplished without violence, and in a spirit of mutual help to each other in order to develop a new culture of responsibility.

What do we have to gain?

The introduction of the basic income challenges the meaning of “work” as usually understood, namely as the basis of capital and social relations. As we know, reducing “work” to the mere “employment” has the effect of automatically excluding the unemployed, because it induces fear of unemployment among workers and social control of helped people. This confusion between “work” and “employment” has a huge cost for our societies, both financially and socially. The psychological and social pathologies that result are simply not sustainable.

We do not expect basic income will settle all problems, but it is absolutely necessary to overcome the current crisis of mistrust by reducing the intolerable level of poverty, exclusion and fear.

Action

At a time when media daily announce the imminence of disasters due to the breakdown of economies, climat change or pandemics, we claim there is a way to face these issues collectively and to gather the driving forces : this is the path of the unconditional basic income.

We, citizens from various background who have signed this appeal, are asking policians from all horizons, labor unions and experts in Greece and around the world, to consider this option in the shortest term to initiate this big transformation with us.