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Category: THE SOCIAL DEBATE

  • Opinion: The Undeniable Common Sense of UBI

    By Felonious Monk

    See original post here.

    Are you familiar with the concept of “the velocity of money”? If not, stop right now, and go read this essay by billionaire Nick Hanauer called Want to grow the economy? Tax rich people like me. Go ahead, I’ll wait.

    Back? Good. It should be clear now that a higher velocity of cash (how many times it changes hands before coming to rest) is better for the economy, and that part of the problem with the wealthy hoarding cash is that it reduces cash velocity to near zero.

    Now, let’s look at the banking crisis in 2007. Per Wikipedia:

    The 2007–2008 financial crisis, or Global Economic Crisis (GEC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers,[1] excessive risk-taking by global financial institutions,[2] a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a “perfect storm”, which led to the Great Recession.

    In simpler language, big banks knowingly took on higher and higher risk assets, and when the expected failure of those assets occurred, the banks went begging to the US government for taxpayer dollars to help them stay alive.

    Now, there were two different perspectives you could have taken on the issue:

    • The banks are loaded with bad paper debt, so let’s give them a big ass check to cover that debt.
    • A ton of homeowners are loaded with predatory debt they can’t pay, causing the banks to fail, so let’s cut them checks to cover their bad debt, which in turn makes the banks whole as well.

    In the first scenario, we see a velocity of near zero. The bank gets the money with no interactions along the way, while the homeowners are left in default. In the second scenario, the homeowners keep their home, the banks still get paid and have their bad paper covered, and the surplus of cash at the homeowner level grows the economy in total since more high velocity cash is flowing through it on the way back to the top.

    Naturally, our government went with option A.

    Now, let’s run some numbers here: the TARP program, one of several massive bank bailouts created by Presidents Bush and Obama, authorized 700 billion dollars to buy up bad debt from the banks. An alternative approach authorizing income and cost of living based subsidies to homeowners averaging around $3000 per month could have assisted roughly 19.5 million households, or roughly a quarter of all owner occupied homes. 6.4 million foreclosures occurred between 2007-2009, meaning that even a third of the TARP budget as a subsidy to homeowners would have kept as many 20 million US residents in their homes.

    It’s no coincidence that the spike in corporate owned single family housing occurred after this:

    There were 10.9 million renters living in single-family homes in 2001, just under 30 percent of all renters (Figure 1). Following the Great Recession of the mid-2000s, the number of single-family rentals grew significantly, peaking at 15.2 million in 2016, as investors took advantage of the flood of distressed home sales during the foreclosure crisis.

    Combined with the effects of Covid, 25 percent of single-family rentals were owned by non-individual investors in 2021, up from 17 percent two decades earlier, precipitating predictable rises in rent as corporate interests gained greater control of inventory, and helping to drive inflation as rental costs reached nearly 50% of gross income for nearly half the renter occupied housing population.

    We can see a clear line from a top only low velocity approach to shoring up the economy that has magnified wealth inequality, reduced average household wealth, and failed to do anything at all economically except generate record corporate profits while the average American is drowning in debt.

    This is obviously unsustainable. Worse, it encourages the socialization of risk and privatization of profit approach that has become a de facto strategy for corporations deemed “too large to fail” in the US. To create a sustainable growth model which preserves the middle class, and provides real opportunity for upward mobility from the bottom quintiles, the US must prioritize high cash velocity policies, where every dollar has a multiple effect on GDP, and benefits a greater swath of the population.

    Which brings us back to UBI.

    Universal Basic Income, or “Guaranteed Income”, programs are highly variable. They’re often limited to certain segments of the population, most usually around those living below the poverty line, although some folks like Andrew Yang have proposed a thousand dollar a month basic income for all US citizens. Of all the pilot UBI programs tried in the US, however, they have one thing in common: they work. Despite the typical fear mongering around welfare queens and government checks being spent on liquor and tobacco, actual data gathered shows significant outcomes on a number of important measures, from childhood health to general quality of life improvements. UBI recipients gained enough flexibility to find better jobs, or complete higher education. And contrary to the thinly veiled racist claims that people given free money would become lazy and blow it on vices, the opposite proved true:

    Recipients of the monthly payments were twice as likely to gain full-time employment than others, according to data analysis by a pair of independent researchers, Stacia West of the University of Tennessee at Knoxville and Amy Castro Baker of the University of Pennsylvania. Most of the money distributed was spent on food or other essentials. Tobacco or alcohol made up less than 1 percent of tracked purchases.

    A bottom up high cash velocity program not only was NOT wasted and driving lazy unproductiveness, it quite literally led to higher employment, improving the tax base, and reducing the cost of social safety nets. And because that cash was distributed to the bottom quintile, it was immediately pushed back into circulation through necessary expenses, instead of sitting in a money market or account simply earning interest.

    The data is readily available; UBI programs are not only the most effective policy to fight poverty, they also turn a social cost into meaningful contributions to the tax base, while simultaneously improving the average velocity of cash, and generating a higher quality of life and outcomes for most Americans. And, compared to bailout programs like TARP, they’re even more cost effective.

    Poverty in the US is a choice made by those in power in an effort to protect their dragon horde of gold. The more hands a dollar passes through, the better off we all are. For 99.9% of Americans, implementing a UBI program will result in both a stronger economy, and a better society. It’s just common sense.

    This post was originally published on Basic Income Today.

  • South Africa floats universal basic income for all

    By Hazel Sheffield

    See original post here.

    South Africa is facing the most dramatic political shift since the end of apartheid after the African National Congress lost its majority in the general election of 29 May. Weeks of difficult negotiations between the ANC and its rivals on how best to form a governing coalition are expected.

    One commitment that unites most parties – including the incumbent ANC and its biggest rival, the Democratic Alliance – is to maintain or increase income support for adults, which includes monthly Covid payments to the poorest households.

    But the ANC has gone one step further. A week before the election, it released a statement deepening its commitment to finalising a policy to transform the state’s Covid grant into a universal basic income (UBI) within two years of forming a new administration. If implemented, this would make South Africa the first country in the world to work towards a policy of paying all people between the ages of 18 and 59 a regular grant, with no condition to be seeking work.

    At the moment, South Africa’s Social Relief of Distress grant (SRD) is paid to people who have less money entering their account each month than the individual food poverty line – or the minimum needed to afford food with enough calories to survive.

    The ANC has committed to expanding eligibility to all adults by progressively increasing the means-test threshold. At present, the means-testing is based on the 2021 poverty line, which has increased, but the means-test threshold has not, meaning some people in food poverty do not qualify.

    The idea of a basic income for all people regardless of age, class or employability has long been discussed as a way to tackle inequality. Elon Musk touted it as the solution to robots taking human jobs. Martin Luther King wrote about it as the answer to widespread poverty. A policy that captured the public imagination during the pandemic, when governments around the world paid or subsidised wages, could finally become reality.

    “When you put money into the hands of the poorest households it lifts the whole economy,” says Kelle Howson, a senior researcher from the Johannesburg-based Institute for Economic Justice (IEJ), which is part of a coalition of civil society organisations calling for a basic income grant in South Africa.

    Ninety-three per cent of recipients spend SRD payments on food. Meanwhile, research from a large UBI study in Kenya by GiveDirectly found that recipients used the money to save up for large purchases, improve their diet and start their own businesses.

    Despite these benefits, the idea of a basic income was largely the stuff of political debate and fantasy until Covid. During the pandemic, many governments issued emergency grants and income support to replace employment in a way that would previously have been politically impossible.

    Spain implemented an anti-poverty payment of €1,015 (£900) a month to 850,000 households, while the Coronavirus Aid, Relief and Economic Security Act in the US paid $1,200 to all adults earning less than $99,000 a year. In the UK, furlough and the self-employment support scheme distributed £100bn to those out of work and the self-employed, as well as raising universal credit payments by £20 between March 2020 and October 2021.

    Afterwards, it was harder for governments to argue that a basic income was impossible to administer. But politics turned a sharp corner. Instead of expanding on these new social policies, many countries implemented austerity measures to address record government borrowing during the pandemic.

    In the UK, the National Institute of Economic and Social Research found that maintaining the uplift in universal credit payments, which ended in 2021, would have limited the number of households in extreme poverty – defined as lacking essentials like food, shelter, heating, clothes and toiletries – to 1.5 million in 2022. Instead, destitution rocketed to 2 million.

    South Africa was an exception: it maintained its Covid grants, despite broader austerity policies pushed through by the ANC. When the grants were stopped briefly, in April 2021, a summer of rioting followed, spurred by the imprisonment of Jacob Zuma. By August, the government had reinstated the payments.

    But the system is far from perfect. The payments are just R370, the equivalent of about £16, or half the income needed to meet the extreme or “food” poverty line, and millions of people do not get the grant each month. The IEJ says the process is designed to be exclusionary. It is given digitally, in a country where not everyone has a computer and internet access, and uses automated means-testing systems that often exclude eligible people, the IEJ says.

    Elizabeth Raiters is one of the many unemployed South Africans who regularly get declined. She works on the #PayTheGrants campaign, which joined the IEJ in filing court papers against the South African government in July 2023, challenging regulations excluding millions of people living in poverty from monthly payments.

    The IEJ and #PayTheGrants are part of a coalition of civil society organisations demanding a basic income for workers on the minimum wage, since wages are so low. “People make out like it’s sunshine and rainbows in South Africa,” said Raiters. “But when you’re on the ground, working and assisting people, beneficiaries crying every day that their kids are hungry and they can’t access the grant – it’s really tough.”

    Other trials of basic income payments have had positive results. In 2022, the Welsh government gave young people leaving care monthly payments of £1,600 for 2 years. Final results from the evaluation are not expected until 2027, to track the longer-term impact on the lives of recipients, but Jane Hutt, the minister for social justice, said in October that she had heard “fantastic feedback”.

    In May, the Irish government published findings from a basic income scheme providing €325 a week for 2,000 artists. After the first year, participants said the payments had allowed them to recover from illness, turn down small jobs for more ambitious projects, spend more time with friends, pay for therapy and even feel more at home in Ireland. “I feel like I am home now, and welcome, and have the ability to make a difference with my practice,” one said.

    Howson says their case for basic income hinges around the distribution of wealth in South Africa, where the top 0.1% (35,000 individuals) own almost a third of aggregate personal wealth, according to the UN. The IEJ has looked at a range of financing options to fund a basic income, including the introduction of a social security tax, a wealth tax or an increase in VAT revenue that results from additional consumption spending as a result of the grant.

    “We know the resources do exist in South Africa to sustainably finance a grant in a way that increases economic growth,” Howson says. “It’s not an admission of defeat in the scale of poverty that other strategies haven’t worked. It’s a new developmental paradigm.”

    This post was originally published on Basic Income Today.

  • Man walking length of Australia to campaign for basic income spent night in freezing temperatures after falling from a cliff

    By Yashee Sharma

    See original post here.

    A man walking the length of Australia to campaign for basic income has has spent the night in freezing temperatures after falling from a cliff.

    Daniel Hart, 27, fell off a coastal track while walking in Royal National Park at Eagle Rock south of Sydney yesterday.

    After spending the night in freezing temperatures, Hart was winched to safety by a rescue helicopter this afternoon.

    Hart told 9News he had taken a wrong turn before falling into the water.

    “I was walking along the coast track, took a wrong turn and I was too stubborn to turn back,” he said.

    “Spent about three hours climbing along the rocks then a massive wave came and changed everything,” he said.

    Hart had set off on foot to walk 4500 kilometres across mainland Australia from Wilsons Promontory in Victoria to the top of Cape York in Far North Queensland.

    He started the walk in April to campaign for basic income, under which everyone would receive regular and unconditional payments for basic needs.

    He was taken to hospital in a stable condition, where he was treated for minor scratches and mild hypothermia.

    This post was originally published on Basic Income Today.

  • Exploring Novel Direct Payments During the Pandemic: A Gateway to Universal Basic Income?

    This blog is based on a forthcoming article in Social Policy and Society by Päivi Mäntyneva and Heikki Hiilamo.

    See original post here.

    The covid-19 pandemic prompted an unprecedented global response, with nations implementing various social protection measures to mitigate the socio-economic impacts of lockdowns and restrictions. This blog, based on our forthcoming article “How did COVID-19 Social Security Measures Resemble Universal Basic Income? A Comparative Study of OECD Countries,” delves into the emergence of novel direct payments during the pandemic and explores their potential as a steppingstone towards universal basic income (UBI).

    Novel Direct Payments: Definition and Implementation

    Novel direct payments, as defined in this study, encompass one-off or periodic benefits delivered beyond traditional social risk categories. These payments aimed to address the diverse socio-economic consequences of the pandemic, offering support beyond the conventional frameworks of unemployment or sickness benefits. The purposes were manifold: preventing poverty, assisting individuals with income declines due to the pandemic, and stimulating economic activity at the societal level.

    Comparative Analysis of Novel Direct Payments and UBI Ideal-Type Characteristics

    Amongst OECD countries, only 11 introduced novel direct payments in 2020. Australia, Chile, Colombia, Denmark, Israel, Italy, Japan, Spain, South Korea, the UK, and the US were amongst the pioneers. Our study then compared these direct payments against the ideal-type characteristics of UBI, considering universality, periodical payment schedule, individuality, absence of means-testing, and no job-related conditionality.

    The analysis of novel direct payments implemented during the covid-19 pandemic revealed significant alignment with key characteristics of an ideal type of UBI. In Japan and South Korea, direct payments exhibited universality by reaching a broad population. Israel’s one-off payments were considered nearly universal, excluding only a small percentage of high-income earners. The US and Denmark distributed direct payments to substantial portions of their populations, resembling the inclusive nature of UBI. Spain’s minimum vital income, designed as an open-ended scheme, shared features with UBI.

    The distribution of benefits individually to recipients emerged as a consistent characteristic of the novel direct payments, aligning with the ideal type of UBI. Means-testing varied amongst the measures, with almost one-third adhering to the “no means test” criterion. Australia, Denmark, Japan, and South Korea provided one-off payments without considering recipients’ income or wealth. However, Spain, Italy, and the US conditioned certain payments on specific income levels and additional criteria, deviating from the pure universality ideal of UBI.

    The absence of work-related conditionality, a defining feature of UBI, was generally observed in the studied direct payments. While Spain’s minimum living income scheme required registration as a jobseeker, the majority of novel direct payments did not include stringent work-related criteria. Notably, Colombia introduced work-related conditionality in the form of Solidarity Income for informal workers and their families. Overall, these novel direct payments exhibited commonalities with the ideal type of UBI, suggesting a quasi-basic income status.

    Path-Creation and Future Implications

    The study’s third focus delved into the path creations of novel direct payments, examining whether these measures persisted and underwent modifications as the pandemic endured. Seven out of 11 countries—Australia, Chile, Colombia, Italy, Japan, South Korea, and the US—extended novel direct payments. Notably, Spain’s new minimum living income scheme became an integral and permanent component of the social security system, continuing as an open-ended initiative.

    Australia implemented three one-off payments and extended the Coronavirus supplement twice, showcasing ongoing financial support. Chile’s novel direct payments continued until December 2021, with varying targeting strategies based on household vulnerability. Colombia’s Solidarity Income benefit underwent multiple extensions until December 2023. Italy extended its emergency income three times, and the US, initially planning one-time economic impact payments, introduced additional rounds in response to the prolonged pandemic.

    Asian countries also witnessed new path creations. South Korea introduced emergency relief benefits in 2020, reaching 22 million households, and a second grant in 2021, covering over 20 million households. Japan continued cash payments in spring 2021, specifically targeting households with children. In Denmark, one-off payments were granted to a substantial portion of the population in December 2020, encompassing almost 40% of Danes, with a focus on traditional risk categories.

    However by June 2023, most novel payments had concluded, with exceptions in Colombia, where Citizen Income transformed incrementally from Solidarity Income, and Spain, where Minimum Vital Income became a permanent benefit.

    Questions of Crisis-Resilience and Sustainability

    The study’s findings also raise questions about the crisis-resilience and sustainability of social security systems in advanced economies. Even the introduction of direct payments during the pandemic, though overlapping with existing social benefits, may signal the inadequacy of current benefit levels. The convergence of means in social security across OECD countries during the crisis highlights the global nature of the response.

    Lessons Learned and Future Considerations

    In mature welfare states, social security has evolved to address new social risks, such as balancing family and working life, with an emphasis on social investment policies and preventive measures. The concept of basic income, with its potential to simultaneously meet various societal and individual targets, has gained traction in discussions around alternative social security models. Although novel direct payments during the pandemic displayed quasi-basic income characteristics, the crisis did not result in a widespread shift towards the immediate institutionalization of these social security measures.

    This post was originally published on Basic Income Today.

  • Opinion: Basic Income Grant only way to bridge gap between suffering and thriving economy

    By Brett Herron

    See original post here.

    The extent of poverty is the single greatest existential threat SA faces. It grinds people down to the extent that they become dislocated from the sense of common purpose societies need to function and develop.

    Political parties are falling over each other with fantastic promises of creating millions of jobs. But they’re not saying how people should survive in the interim.

    Creating sufficient jobs to address the backlog and the needs of a growing population requires a sustained period of far stronger economic growth than anyone has forecast lies ahead — such as 6% growth for 10 or 15 years …

    The extent of poverty places SA on a powder keg. It has created a fertile environment for dissatisfaction, low self-esteem, social instability, economic instability and criminal impunity. It is an environment that is counterproductive to economic growth and has led to capital flight, the opposite of investment.

    We spend billions of rand treating the symptoms of poverty — from broken families to cable theft, fixing infrastructure damaged during service delivery protests, substance abuse and all kinds of petty crime — instead of spending money on mitigating poverty.

    That’s besides the constitutional imperative, contained in section 27(1), that unequivocally states that no one should live in conditions of abject poverty: “Everyone has the right to have access to … (c) social security, including if they are unable to support themselves and their dependents, appropriate social assistance.”

    If the economy is unable to generate enough livelihoods, the burden of “enabling people to support themselves” falls on the state. The state’s current response to fulfilling this obligation is the Social Relief of Distress (SRD) grant, initially introduced in response to the Covid-19 pandemic.

    Hasn’t kept up

    It pays R370 per month to about 8.5-million recipients. The government-set food poverty line, the monthly amount individuals need to afford the minimum daily energy intake, is R742. The SRD grant is therefore exclusionary, discriminatory and wholly insufficient to enable those fortunate enough to receive it to sustain themselves.

    Unlike other grants, the SRD grant can be applied for only online, requiring digital hardware and expertise many people don’t have. And, unlike other grants, applicants are subjected to means tests that scrutinise their bank statements without making provision for ad hoc money receipts, such as money sent to the applicant for children or grandparents, or loans.

    A year ago there had been 14.4-million applications for the SRD, but only 8.2-million had been paid. The grant hasn’t kept up with inflation since being introduced three years ago.

    The only short-term tool available to bridge the current period of suffering to that of a thriving economy in future — indeed, to enable the economy to get there — is a nonexclusionary basic income grant (BIG).

    Political parties with supporters who largely don’t need a BIG, because they have livelihoods, raise two categories of issues with it. They say the country can’t afford it, and that it is wrong to give people money when they don’t work for it.

    Of course, affordability is a factor. But the idea that people who don’t work for their money should simply starve, directly mirrors the apartheid government’s approach to people of colour.

    BIG SA

    Two years ago the GOOD party contracted the services of a professional economist to crunch the numbers of the country’s economy, tell us what level of BIG SA could afford, and where the money would come from.

    This research has underpinned our campaign over the past year for a BIG of a minimum of R999 a month to all adults without jobs. For context, the upper-bound poverty line, which includes food and other minimal household expenses, is officially set at R1,588.

    We have calculated that R999 is affordable, largely through revising our approach to budgeting to exclude nonpriority and redundant expenditure and programmes, reducing the number of government departments and cutting spending on the provincial tier of government. In this way, a BIG will not add to the debt burden.

    The BIG must be inclusionary, not exclusionary. Recipients must not be subjected to jumping through digital hoops or dysfunctional means tests. Because of the high rate of unemployment, the state of the economy and projected economic growth, the uptake of the BIG will initially be substantial. As the economy grinds into gear again — in a stable society — and begins to generate jobs, the demand will diminish.

    Research has clearly shown that the overwhelming majority of unemployed recipients of social grants in other countries would far prefer to have a job, and the extra money and better lifestyle a job brings.

    The BIG will not create a nation of layabouts. But it will alleviate the pressure cooker of indignity and hopelessness that extreme poverty and exclusion create. It is an investment in justice and stability that SA, and its economy, can ill-afford to delay.

    This post was originally published on Basic Income Today.

  • The walk for basic income in Australia arrives at Parliament House

    By Jessica Cordwell

    See original post here.

    From south to north, one determined Aussie is making tracks across the length of the country to spread the word about the need for basic income support. Daniel Hart, founder of You B I, wants to see a world where every adult receives regular unconditional payments that cover an individual’s basic needs.

    “We shouldn’t need to earn a living to have the right to access to food, water, shelter and those kinds of things, but then if you want a new iPhone, you can work for it,” says Daniel.

    A little over a month into the six-month trek, Daniel stopped in Canberra earlier this week. Locals were invited to join Daniel in Commonwealth Park on Monday morning, 13 May, to have a chat and then head over to Parliament Drive where Daniel completed 24 hours of lapping the through-road to Parliament House.

    The completion of the laps correlated with the start of the Federal Budget sitting.

    “I’m not going to get basic income implemented this week but there should be a lot of energy around Parliament House during this time… The Canberra event was awesome, a great turnout and so much love and support made the grind worthwhile,” says Daniel.

    Setting out from Wilson’s Prom in Victoria, the southernmost tip of mainland Australia, and heading to Cape York in far north Queensland, mainland Australia’s northernmost tip, Daniel will walk more than 4,500km.

    Still working while walking, Daniel provides email support for an American-based software company. He says his job, like many others, could soon be replaced with AI.

    “If you do any kind of job on a computer, it won’t be long before a system that incorporates large language models like ChatGPT, along with an action engine that performs tasks on a computer, can do your job.”

    It doesn’t stop there; Daniel believes that with advancements in robotics, the possibility of introducing human-level intelligence with human-level physical capabilities could one day replace physical jobs.

    “People are not going to be able to earn a wage through traditional work and if we don’t have some kind of safety net, to put it simply, people won’t be able to meet their basic needs,” says Daniel. “I would love the Australian government to be a leader in the preparation against the wave and reduce the suffering of Australian people.”

    It was from a YouTube video in 2017 that Daniel first learned about the principles of universal basic income, and he has since carried the idea that it could be the solution to poverty. While traveling through Asia, Daniel was struck by the extreme poverty, lack of welfare and the power of the Australian dollar.

    It was after this that he launched You B I, an initiative with short-, medium- and long-term plans to combat extreme poverty and provide people with a liveable wage. 

    “We’re crowdfunding basic income. We raise money each month and then distribute it evenly among our users who right now are about 150 homeless, disabled and orphaned people throughout Vietnam, Laos and Cambodia.”

    Dividing the money, each person receives about $20 AUD each month, which may not seem like much but can make a huge difference in someone’s life in those countries.

    “You can barely get a meal for that amount in Australia, certainly in Melbourne, you can barely get a drink. But in Laos, that is about 1kg of rice every day for a month, which is not nothing,” says Daniel.

    While the crowdfunding model might help people from lands where the Aussie dollar has significant value, what about the people here at home – where does the money come from? Daniel says there is potential for individual tax rates to rise, but there are other options.

    “I think the main way that we would fund it Is by taxing massive corporations correctly. You see how much these massive tech companies like Amazon and Apple are making in Australia and how little tax they are paying. If we tax them even close to the rate that individuals get taxed, we could fund this overnight.”

    If everyone is getting money for nothing, why would anyone willingly go to work? The idea of universal basic income would help one to survive, not to thrive. Daniel says it wouldn’t be enough to be going out with friends or live in an expensive city. The incentive for most to work would still be there.

    “The vast majority of people won’t be satisfied with just the $500 per week that Basic Income Australia is advocating for.”

    While You B I has been slowly growing over the past year, Daniel wanted something that would grab people’s attention, inspire viewers to consider the cause and create easily shareable content. Grateful for all the support the walk has already received – over 20,000 Instagram followers and the opportunity to extend You B I into Thailand – Daniel is excited to see what the rest of the trek will bring.

    Occasionally joined by his brothers, Daniel is doing the majority of the trip solo, sleeping rough every night and carrying the basics he needs on his back. Although he has been sleeping in the bush, on grandstands, benches and under one bridge, Daniel says he has been sleeping well. He suggests that may be more due to the long distances he is walking every day rather than the conditions.

    Having already completed the snowy mountain region, Daniel will now be walking toward a warmer climate. However, more challenges lie ahead, namely one with big teeth and snapping jaws.

    “Crocodiles, I’m going to have to not sleep on the ground with no tent, really exposed. That is the main thing really,” smiles Daniel.

    This post was originally published on Basic Income Today.

  • Universal Basic Income Grant: What should a payment system in South Africa look like?

    By Abby May, Zen Mathe and Michael Marchant

    See original post here.

    What should an effective social grant payment system look like?

    In the first two instalments of this series, we examined the weakening of the social grants payment system in South Africa and how private companies are entering the space looking to profit from access to a still largely untapped market.

    Access to online platforms for grant application and payments can reduce the time and money recipients spend applying for and accessing their grants and make it safer to do so. Many grant recipients have keenly taken up the chance to use new digital channels to apply for and receive grants – especially when these are accessible, low-cost, and user-friendly. 

    However, many social grant recipients, especially in rural areas, are still eager to receive their grants in cash, as close as possible to where they live. Civil society organisations that work closely with social grant recipients in South Africa have stressed the need to maintain a hybrid payment system in the short-term, to make the system as fair as possible.

    The March 2024 Black Sash documentary Broken Promises showed the consequences of the Department of Social Development’s (DSD) decision to close some 10,000 cash pay points in 2018. This followed the transition to the South African Post Office (SAPO) for the payment of grants, and SAPO’s failure to do the job.

    Some pay points were reopened in 2019, following pressure from Black Sash. But in late 2023 it was announced that all such points would be phased out and closed by March 2024, and that recipients would have to start using retailers, ATMs, or other means to receive their grant.

    Broken Promises reveals that many grant recipients have been forced into longer, often dangerous, and more expensive travel to access their grants since their local cash pay points have been closed. One grant recipient who used to walk to a local pay point must now spend R130 on a return taxi trip to collect the grant. Many beneficiaries have to borrow money to pay for that transport, and sometimes there is no money when they arrive, leaving them not only without the grant but also with new debt.

    SASSA says having so many cash pay points is inefficient and costly. This may be true, but for many grant recipients living in rural areas a locally available cash pay point remains the most effective way for them to access their grant. For many, access to a digital system or bank account is still impractical, and Black Sash argues that grant recipients’ constitutional right to social security would be better protected by continued access to a local cash pay point.

    Then there is the question of communication.

    #PaytheGrants’ Elizabeth Raiters told Open Secrets that general communication by the South African Social Security Agency (SASSA) about issues and updates regarding grant payments has been very poor. The responsibility is passed on to beneficiaries themselves to stay informed and share information. Organisations like Black Sash and #PaytheGrants do much of this work and help many people navigate the grants system.

    Amandla.mobi’s Koketso Moeti and Tlou Seopa pointed out continued lack of diversity in the language options for grant recipients in the system. For example, consent forms for the bank verification processes are almost always only available in English.

    State entities need to provide consistent and easily accessible communication channels for grant recipients on updates regarding payments. When it comes to the informed consent by grant applicants and recipients, all forms and online application and payment platforms must be available in multiple official languages.

    As #PaytheGrants and the Institute for Economic Justice (IEJ) have pointed out, grant recipients receiving the R370-a-month Social Relief of Distress (SRD) grant directly into a bank account are subjected to greater financial surveillance by SASSA, which checks the balance and inflows to their bank account every month. This has allowed SASSA to exclude millions of people who are in fact eligible for the grant. In their court application to challenge the constitutionality of the regulations governing the SRD grant, the IEJ and #PayTheGrants provided evidence that the bank verification process used to monitor grant applicants has resulted in the unfair exclusion of many applicants.

    Also, due to the automated system for both applications and appeals against rejection, less than 1% of appeals against this exclusion are successful. A system like this, that does not provide clear reasons to grant recipients for their application or appeal being dismissed, is a violation of the right to just administrative action.

    Then there is the danger of the predatory use of information about grant recipients by private companies. How can we offer recipients the benefits of technology while still protecting their rights?

    There are global examples that South Africa can look to. One of these is the system used in Maricá in Brazil, a small city close to Rio de Janeiro. The city, run by the Brazilian Workers’ Party, introduced a Renda Básica de Cidadania (RBC) – a “citizen’s basic income” – in 2013. Though not yet universal, the RBC is paid to anyone who has lived in the city for at least three years and who has a “moderately low income”, defined as three times higher than Brazil’s minimum wage (237 US dollars a month, about R4,350). Today, more than 25% of the city’s population receives a grant of 39 US dollars which is more than 95% of the individual poverty line in Brazil.

    In 2018, the RBC grant was switched to a new fintech platform and digital currency with great success. Grant applicants who meet the qualifying criteria, receive their grant in a digital community currency called ‘Mumbuca’, via a pre-paid credit card or a dedicated mobile phone application. The Mumbuca is tied to the national currency to ensure confidence in it, and can be used to pay many local bills. The 2018 move to the fintech platform improved the efficiency and reach of the grant, and lowered costs for all parties involved.

    The key distinguishing feature of the use of fintech in Maricá is that the fintech platform and Mumbuca currency are regulated and issued by a community owned bank – the Banco Comunitário de Maricá. This has led to a radically different approach compared to investor-driven fintech applications. For example, the bank offers services at a lower cost than its commercial competitors. It also charges businesses per transaction and uses these fees to ensure that RBC beneficiaries face no costs when accessing their funds.

    Two other crucial differences are:

    • Banco Comunitário de Maricá does not sell purchase-related data to third parties like most fintech companies do. This means that RBC recipients are not constantly bombarded with calls and messages offering extortionate loans, goods, and other financial services; and
    • Any surplus made by the bank is returned to the municipality rather than paid to shareholders. This means that there is little financial incentive for the bank to push financial products, such as loans, onto grant recipients that cannot afford them.

    The RBC model in Maricá shows that fintech platforms can be rolled out in a way that improves operational efficiency, reach, and costs of accessing a basic income grant. This is because it is designed to benefit the community rather than a narrow group of shareholders. The communal and local nature of the ownership changes the incentives of the platform, maximising its impact, and minimising the risks of abuse.

    A Universal Basic income Grant cannot be possible without a functioning grant payments system. This payments system must not only be efficient; it must also be safeguarded against predatory profit-seeking practices. Civil society organisations in South Africa have the basis of where to start and examples from across the world show that it is possible. Our call to action is that policy makers and political parties vying for the 2024 elections prioritise a just and equitable grant payment system, now and in the future.

    This post was originally published on Basic Income Today.

  • Iowa legislators benefit from government subsidies while blocking assistance to others

    By Ty Rushing

    See original post here.

    As the Iowa Senate debated earlier this year a bill to ban local governments from providing direct financial assistance to residents, Sen. Tony Bisignano called out the hypocrisy on display by many of his Republican colleagues who supported the legislation even as they receive direct payments from the federal government.

    “This body, a great deal of members in this body live off of subsidy or depend on it annually,” said Bisignano, a Democrat who represents the southeast side of Des Moines. “This study’s been going on since the ’30s—farm subsidy—and it was there to stabilize the farm economy, to stabilize farming to keep the farmers able to farm.”

    Starting Line dug into the data and Bisignano is correct: About a fourth of the 150-person Iowa Legislature benefits from some form of farm subsidies.

    House Speaker Pat Grassley has received $65,102 directly while his father, Robin, has received a little more than $1.4 million. Sen. Jeff Edler only received $1,180 in his name, but his family farming operation has received $2.5 million since 1995.

    These sums are available thanks to the efforts of the Environmental Working Group (EWG), a Washington, DC-based nonprofit that works “tirelessly to reform our nation’s broken chemical safety and agricultural laws.”

    One of the ways EWG does that is by tracking and maintaining a database of farm subsidy recipients. EWG files an annual Freedom of Information Act request with the US Department of Agriculture and uses those records to compile a farm subsidy database that features every individual recipient or individual entity.

    History of subsidies

    As Bisignano noted, farm subsidies started during the Dust Bowl and the Great Depression and the programs have not changed much nearly a century later. However, what has changed is the size of the farms, according to EWG Midwest Director Anne Schechinger.

    “Really now, the programs are benefiting the largest, wealthiest farms,” she said. “They are based on the acres you have or the amount of crops you produce. There were a lot of farms that were of the same size back in the 1930s and now there are these huge farms and a lot of very small farms as well.”

    In 1930, Iowa had 214,928 farms and the average farm size was 158.3 acres, according to the US AG Census. By 2022, the number of farms has dwindled to 86,911, while the average farm size has more than doubled, growing to 345 acres.

    According to EWG, from 1995-2023 Iowa received $42.4 billion in federal subsidies, which amounts to 8.1% of all farm subsidies in that period. Iowa only trailed Texas in total federal subsidies received for that duration.

    “Iowa’s always close to the top because of the nature of the state having so much agriculture and the fact that so much of the agriculture is corn and soybeans because all of these subsidy programs are designed to benefit commodity farmers,” Schechinger said.

    “People growing fruits and vegetables and nuts in California don’t benefit nearly as much from farm subsidy programs as commodity growers in the Midwest.”

    Who directly benefits from farm subsidies?

    If an individual makes less than $900,000 a year, they can still qualify for most farm subsidies. For couples, it’s $1.8 million. Furthermore, crop insurance subsidies have no income limit.

    “Basically, millionaire farmers can qualify for subsidies,” Schechinger said. “We like to make that dichotomy when we’re talking about SNAP [Supplemental Nutritional Assistance Program] because think of the income to qualify for food stamps versus farm subsidies.”

    Something else unique about farm subsidy programs is one farm can qualify for an unlimited number of subsidy recipients. In Iowa for example, Sen. Dan Zumbach has received $1.2 million in farm subsidies and five other people/businesses registered to his farm have collectively received close to a million dollars in subsidies.

    “You can qualify for payments if you are the son or daughter of the person who owns the farm if you are over 18—you have to be an adult,” said Schechinger, who noted that the 2018 Farm Bill extended this provision to cousins, nieces, and nephews of farmers and farm landowners.

    “So we end up seeing a lot of payments going to people who live in the same household,” she continued. “There’s also a lot of farmer partnerships. Basically, large family farms, but you can have an unlimited number of people on those.”

    Basic income in Iowa

    Members of the Iowa Legislature worked to ban programs like UpLift — The Central Iowa Basic Income Program, which receives no state funds, while personally benefiting from subsidies.

    UpLift is a poverty-reduction research pilot program to see how receiving an additional $500 with no restrictions will affect 110 recipients’ lives. The program covers residents in Dallas, Polk, and Warren counties. It is funded via a public-private partnership and supporters include Bank of America, Polk County, Principal, Wells Fargo, and the cities of Des Moines, Windsor Heights, and Urbandale.

    While UpLift will be able to complete its study by 2026, no future programs like it can be established unless HF 2319—which Gov. Kim Reynolds signed into law on May 1—is repealed by a future legislature and governor.

    During the Senate debate, Bisignano was quickly shut down when he pulled out a list and began to read the names of Iowa lawmakers who received farm subsidies or have relatives who have received them.

    “I’m just going to do some last names to show you what a stipend is—what socialism is—what subsidy is all about,” Bisignano said. “Might as well as start with the Grassleys—I don’t know which one—but it’s $1.3 million in subsidies from ’95 to 2021.”

    Bisignano told Starting Line he disposed of his notes following the legislative session; however, Starting Line ran the names of every Iowa state representative and Iowa state senator through the EWG 1995-2023 Iowa subsidy database to verify his claims.

    Using EWG data, Starting Line determined that 14 out of 50 Iowa senators and 24 out of 100 house representatives either directly received subsidies or had a close relative (spouse, grandparent, aunt/uncle, sibling, or in-law) who received federal subsidies.

    Starting Line also found instances where a farm address used by a legislator was connected to multiple other people or businesses.

    To verify these ties to legislators, Starting Line used a combination of obituaries, state business registrations, court documents, property records, social media, the Iowa Official Register 2023-2024 book, and more to confirm direct recipients or familial relationships.

    Below, we will list the members of the Iowa Legislature and/or their family members or business partners who received farm subsidies between 1995-2023 and how they voted on the bill to ban local government basic income programs:

    Iowa Senate

    Sen. Waylon Brown (R-Osage): $12,708 to Waylon Brown in Worth County and $18,854 to Waylon Brown in Mitchell County. Sen. Brown voted to ban local government basic income programs.

    Sen. Mark Costello (R-Imogene): $364,369 to Mark Costello in Mills County and $664,172 to Lynn Costello Inc.—the business is registered to the same address and Costello is listed as the company’s president, treasurer, and secretary in Iowa Secretary of State business filings—in Freemont and Mills County. Sen. Costello voted to ban local government basic income programs.

    Sen. Adrian Dickey (R-Packwood): $3,294 to Adrian Dickey in Jefferson County; $767,710 to Dickey Inc. (owned by multiple family members, including Adrian’s father, Dave) in Jefferson County; $7,161 to the Harold Dickey Trust (Adrian’s late grandfather) in Jefferson County; and $52,504 to the Caroline Dickey Trust (Adrian’s late grandmother) in Jefferson County. Sen. Dickey voted to ban local government basic income programs.

    Sen. Dawn Driscoll (R-Williamsburg): $101,381 to C. Elliot Driscoll (Dawn’s late father-in-law) in Iowa County; $172,374 to Erle Driscoll (Dawn’s uncle by marriage) in Iowa County; $35,508 to Joseph Driscoll in Iowa County, Iowa, and Henry County, Illinois, and $277,748 to Walridge Conventional Hamp AKA Driscoll Farms in Iowa County, Iowa. Sen. Driscoll voted to ban local government basic income programs.

    Sen. Jeff Edler (R-State Center): $1,180 to Jeffrey “Jeff” Edler in Marshall County; $2,500,207 to JJJ Elder Partnership/JJJ Farms (registered to same address as Jeff Edler) in Marshall, Story, and Wayne counties; and $1,180 to Jed Edler (Jeff’s brother) in Marshall County. Sen. Edler voted to ban local government basic income programs.

    Sen. Julian Garrett (R-Indianola): $283,154 to Julian Garrett in Clarke and Warren counties in Iowa, and Harrison County, Missouri.

    Sen. Jesse Green (R-Boone): $10,647 to Jesse Green in Webster County, $161,567 to Jesse Green Farms Inc. in Webster County; $141,053 to Viola C. Green (same address listed for previous entries); $129,938 to Frank Green (Jesse’s father) in Webster County; $1,449,894 to Frank Green Farms Inc. in Webster County; $7,608 to FS&J Livestock Co. (owned by Frank Green) in Webster County; and $30,862 to Viola Green Estate (registered to Frank’s address). Sen. Green voted to ban local government basic income programs.

    Sen. Kerry Gruenhagen (R-Walcott): $65,289 to Kerry Gruenhagen in Muscatine County and $1,302,747 to Ron Gruenhagen in Muscatine and Scott counties (Kerry’s father). Sen. Gurenhagen voted to ban local government basic income programs.

    Sen. Dennis Guth (R-Klemme): $648,579 to Guth Farms Inc. in Hancock County and $19,189 to Dennis Guth in Hancock County. Sen. Guth voted to ban local government basic income programs.

    Sen. Ken Rozenboom (R-Pella): $14,664 to Ken Rozenboom in Mahaska County; $172,905 to Calvin Rozenboom (Ken’s brother) in Mahaska County and $382,612 to Country Lane Park Inc. also in Mahaska County (same address listed for Calvin Rozenboom). Sen. Rozenboom voted to ban local government basic income programs.

    Sen. Jason Schultz (R-Schlewsig): $158,571 to Jason Schultz in Crawford County. Sen. Schultz voted to ban local government basic income programs.

    Sen. Tom Shipley (R-Nodaway): $24,894 to Tom Shipley in Adams County. Sen. Shipley voted to ban local government basic income programs.

    Sen. Annette Sweeney (R-Iowa Falls): $447,390 to David Sweeney (Annette’s husband) in Hardin County, and $8,325 to the David Sweeny Trust (listed at the same address) in Hardin County, and $21,033 to Cynthia Ioerger (Annette’s sister) in Hardin County. Sen. Sweeney voted to ban local government basic income programs.

    Sen. Dan Zumbach (R-Ryan): $1,208,071 to Daniel Zumbach in Delaware and Linn counties; $424,406 to Earl and Edna Zumbach Revocable Trust (Dan’s parents); in Buchanan and Delaware counties; $496,179 to Charles G. Ward (registered to Dan’s address) in Benton, Buchanan, Delaware, and Linn counties; $356,578 to Country Hill Farm LLC (registered to Dan’s address) in Buchanan and Delaware counties; $73,244 to Shelldan Farms LLC (registered to Dan’s address) in Delaware and Linn counties; $24,962 to Pac Land LLC (registered at Dan’s address) in Buchanan County.

    Iowa House

    Rep. Jane Bloomingdale (R-Northwood): $995,865 to James Bloomingdale (her husband) in Worth County. Rep. Bloomingdale voted against banning local government basic income programs.

    Rep. Ken Carlson (R-Onawa): $569,241 to Ken Carlson in Monona County, $119,946 to Katherine Alice Carlson Willey (his late mother) at the same Monona County address. Rep. Carlson voted to ban local government basic income programs.

    Rep. Taylor Collins (R-Mediapolis): $5,372 to John McCulley Sr. Revocable Trust (his great grandpa) in Louisa County; $71,620 to John McCulley Jr. (his great uncle) in Des Moines County; $993,775 to Oak Research Farms Inc. (same address listed for John McCulley Jr., who serves as secretary for the corporation, and Taylor Collins’ great uncle Mark is the president) in Des Moines and Louisa counties; $293,422 to Tren Corp (owned by Taylor Collins’ grandparents, Robert and Denise McCulley) in Des Moines and Louisa counties; $183,965 to Mark McCulley (great uncle) in Des Moines and Louisa County. Rep. Collins voted to ban local government basic income programs.

    Rep. Tom Determann (R-Camanche): $90,510 to Jay Determman (Tom’s late brother) in Clinton County, $860 to the Jay Determann Estate in Clinton County, $85,795 to Cory Determann (Tom’s brother and Jay’s son) in Clinton County. Rep. Determan voted to ban local government basic income programs.

    Rep. David Deyoe (R-Nevada): $108,994 to David Deyoe in Story County and $1,369 to Billy Deyoe (David’s later father) in Story County. Rep. Deyoe voted to ban local government basic income programs.

    Rep. Tracy Ehlert (D-Cedar Rapids): $542,779 to Steve Ehlert (Tracy’s father-in-law) in Linn County. Rep. Elhert voted against banning local government basic income programs.

    Rep. Dean Fisher (R-Montour): $33,103 to Dean Fisher in Tama County, $39,776 to Gerald Fisher (Dean’s later father) in Tama County; and $16,075 to Mary Etta Fisher (Dean’s late mother) in Tama County. Rep. Fisher voted to ban local government basic income programs.

    Rep. John Forbes (D-Urbandale): $9,267 to John Forbes in Tama County. Rep. Forbes voted against banning local government basic income programs.

    Rep. Thomas Gerhold (R-Atkins): $501,312 to Carl Gerhold (Thomas’ brother) in Benton and Linn counties, $72,369 to Daniel Gerhold (Thomas’ nephew) in Benton and Linn counties, $80 to Melissa Gerhold (Thomas’ niece) in Benton County. Rep. Gerhold voted to ban local government basic income programs.

    House Speaker Pat Grassley (R-New Hartford): $65,102 to Patrick Grassley in Butler County; $1,448,143 to Robin Grassley (Pat’s father) of Butler County. Speaker Grassley voted to ban basic local government income programs.

    Rep. Austin Harris (R-Moulton): $954,770 to Rex Harris (Austin’s father) in Appanose, Davis, and Wayne counties in Iowa, and Putnam County in Missouri. Rep. Harris voted against banning local government basic income programs.

    Rep. Heather Hora (R-Washington): $596,582 to HK Farms Inc. (owned by Hora and her husband, Kurt) in Washington County, $81,789 to Kurt Hora in Washington County. Rep. Hora voted to ban local government basic income programs.

    Rep. Chad Ingles (R-Randalia): $257,649 to Chad Ingles in Fayette County, $476,447 to James Ingles (Chad’s late father) of Fayette County. Rep Ingels voted against banning basic local government income programs.

    Rep. Thomas Jeneary (R-Le Mars): $228 to Thomas Jeneary in Allamakee County. Rep. Jeneary voted to ban local government basic income programs.

    Rep. Megan Jones (R-Sioux Rapids): $785,012 to William Jones (Megan’s husband) of Clay County, $124,413 to Jones Farms Inc. (registered to previous address) in Clay County, $113,943 to Jones Land And Cattle (owned by Megan’s father-in-law, Curtis Jones). Rep. Jones voted to ban local government basic income programs.

    Rep. Bobby Kaufmann (R-Wilton): $9,402 to Robert “Bobby” Kaufmann in Cedar County, $9.639 to Jeffrey “Jeff’ Kaufmann (Bobby’s father) in Cedar County. Rep. Kaufmann did not vote on the bill to ban local government basic income programs.

    Rep. Shannon Latham (R-Sheffield): $27,201 to Willard Latham (Shannon’s late father-in-law) in Kossuth County, $16,595 to the William J Lathan Irrevocable Trust in Kossuth County, and $26,840 to Linda Latham (Shannon’s mother-in-law) in Kossuth County. Rep. Latham voted to ban local government basic income programs.

    Rep. Gary Mohr (R-Bettendorf): $41,549 to Gary Mohr in Pottawattamie County. Rep. Mohr voted to ban local government basic income programs.

    Rep. Norlin Mommsen (R-De Witt): $126,148 to Norlin Mommsen in Clinton County. Rep. Mommsen voted to ban local government basic income programs.

    Rep. Anne Osmundson (R-Volga): $412,936 to Steve Osmundson (Anne’s husband) in Clayton and Fayette counties. Rep. Osmundson did not vote on the bill to ban local government basic income programs.

    Rep. Mike Sexton (R-Rockwell City): $336,521 to Michael Sexton in Calhoun County, $417,788 to Verle Sexton (Mike’s late father) in Calhoun County, $343,633 to Dale Sexton (Mike’s late uncle) in Calhoun County, and $77,945 to Mary Sexton (Dale’s wife and Mike’s aunt) of Calhoun County. Rep. Sexton voted to ban local government basic income programs

    Rep. David Sieck (R-Glenwood): $1,122,896 to David A. Sieck in Adair, Cass, Clarke, Fremont, Mills, Page, and Warren counties in Iowa; Finney County, Kansas; and Nodaway County, Missouri. Rep. Sieck voted to ban local government basic income programs.

    Rep. Devon Wood (R-New Market): $423,940 to Daniel Gordon Wood (Devon’s father) in Page and Taylor counties. Rep. Wood voted to ban local government basic income programs.

    Rep. Derek Wulf (R-Hudson): $230,286 to Derek N. Wulf in Black Hawk County; $1,319,019 to Shallow Creek Lane and Livestock LLC (owned by Derek Wulf) in Black Hawk County, $299,926 to Double D’s (registered to Derek Wulf’s address), and $140,739 to Duane Wulf (Derek’s father) in Benton and Black Hawk counties. Rep. Wulf voted to ban local government basic income programs.

    This post was originally published on Basic Income Today.

  • Opinion: I’m a venture capitalist, and here’s why I believe we need to guarantee everyone’s basic needs

    By Roy Bahat

    See original post here.

    For decades, politics in many countries—and especially in the U.S.—have been in an endless tug of war between two camps: one that believes we need to be more generous to people who are struggling, and another who believes that the taxes and regulations that create that generosity suffocate the very growth on which that generosity depends. 

    What if these two camps should actually be pulling in the same direction? What if raising the floor—of social benefits like income, health care, housing and more—might actually accelerate our economic growth? 

    When we invest in programs that reduce economic fear, we allow more people to participate in the economy and society—to invent, care, serve, and thrive. The safety net becomes a trampoline.

    We have new evidence this is already happening, detailed in the just-released book The Guarantee, by policy advocate Natalie Foster. Over the last few years, the U.S. has embarked on a sweeping set of new programs and experiments—everything from a child tax credit during Covid to cities trying to provide their least fortunate with a guaranteed income to states expanding Medicaid.

    These programs—which raised the floor for people in areas like family care, education, housing, income, wealth, and more, and more closely model how other Western countries operate—arrived on the back of a wave of working peoples’ anger. Millions of people have long felt that even if they play society’s game by the rules (work hard, get an education, stay out of trouble), they still can’t provide for a decent life for themselves and their families. That is a system in crisis.

    More and more young people, including college-educated young people, are entering the working class. The fears of artificial intelligence pulling the rug out from workers cuts across many socioeconomic classes, from delivery drivers to Hollywood writers to lawyers. Workers in industries everywhere are organizing and going on strike.

    Amid this, many corporations continue to thrive (in profits, stock value, and otherwise). Yet the American economy as a whole seems to be stuck in low gear. New business formation in the U.S. has declined by nearly 50% since the 1970s, while research suggests that scientific progress has slowed significantly in the last few decades. More people remain stuck, geographically, in the place where they’re born and that birthplace often limits their economic prospects.

    What if the issue is that too few people are actually contributing to our economic vitality, because the system holds them back?

    Economic “precarity”—the complicated word for people feeling fear—prevents them from participating in our economy. If you’re worried about housing, you’re unlikely to be a person who invents a new cure for a disease. If you’re unable to find childcare, you’re less likely to invest in yourself and learn new skills for a new career, spend time finding a better job, or take a chance starting a business. If you’re sick, you miss work. If you are short on money, you’re not buying the goods or services that employ others. You’re also more likely to let your valid rage at the system bubble into more destructive and violent forms of change.

    Enabling innovation

    Imagine how people might participate differently in the economy if the society guaranteed their basic needs—the world The Guarantee book describes.

    If all people have their basics covered, some will contribute the extraordinary. More people would have the opportunity to be the next Einstein, Marie Curie, or Katherine Johnson. One study estimates that we would have four times as many innovators, if everyone had the socioeconomic background to pursue innovation—imagine all those “Lost Einsteins.”

    In my occupation, investing in technology startups, people often see how a founder’s second startup—in part emboldened by the safety of their personal economic comfort—outshines the first. Look at Reed Hastings’ second act, Netflix. Or Evan Williams’ second act, Twitter. The founder of a well-known Silicon Valley startup accelerator told me that the best founders come from rich families; they can afford to go without an income until they raise capital.

    The worry about losing creators goes beyond science and technology—think of all the lost Lin-Manuel Mirandas, Octavia Butlers, Maya Lins, and Taylor Swifts whose creative gifts suffocate in the chokehold of economic necessity. By providing a foundation of economic stability, we can enable a new generation of innovators and creators across every field.

    If everyone felt economic safety, then more people could invest in their education and skills, and take chances on a better career. In Stockton, California, where an experiment offered a group of low-income residents a guaranteed income of just $500 per month, recipients were more likely to find full-time jobs.

    A higher social floor

    Risks come from feeling safe enough to take them, not (as many believe) from forcing yourself to take a risk out of fear. At a time when technology seems to be advancing in unpredictable ways, we need more than ever for people to feel confident enough to adapt.

    When people feel underpaid, they sometimes go on strike, and we end up as a society with risks to needed services, and companies lose revenue. Poverty also imposes a direct cost on the rest of the economy, estimated at $1 trillion in the U.S. per year in lost work, health care costs, crime, and more.

    Opponents of guarantees often make classist, and sometimes racist, arguments: that poor people “can’t be trusted.” To some extent, the debates to come over guarantees will turn on your view of human nature: if you give people free things, what do they do with their freedom? I believe people want to be productive—we all build our dignity from bricks of purpose, creativity, and contribution. We all yearn to feel needed, to have an impact, to leave a mark on this world in the short time we’re here. It’s ironic that many advocates for personal freedom seem to believe that people, given freedom, will just freeload (especially if they’re poor).

    Of course, there will be enormous cost to these guarantees. The question is whether there will be a return worth justifying that cost. Usually, commentators cast a higher social floor as a tradeoff: if we provide guarantees, we’ll slow the economy because taxes will give people less incentive to innovate. It seems like the incentives for the most privileged members of our society to innovate are strong enough. We need more people to participate more than we need a stronger incentive for the rich to make more money on investments (which happens to be my own occupation). The anxiety over AI might just create a pretext for us to do more now. And, with a divided U.S. Congress in near paralysis, policies that can both boost growth and take care of those in need might be the only ones that can pass.

    If we see the guarantees described in The Guarantee as a safety “net,” we’ll forever worry about people getting tied up in that net and never emerging. If we see these benefits as a floor, then they can lift people up. Best, though, might be designing a higher social floor as a trampoline: to bounce people upward into the dignity of inventing, of caring, and of serving our society’s needs.

    This post was originally published on Basic Income Today.

  • Opinion: Universal Basic Income for a Sustainable Future

    A collaborative study conducted by Stanford Basic Income Lab and the Centre for Guaranteed Income Research has compiled data from over 30 pilot universal basic income (UBI) programs across the United States, involving nearly 8,300 participants. The findings shed light on how the unconditional cash payments were utilized by the recipients. The analysis reveals that approximately 36% of the UBI funds were channelled towards retail purchases and services. Another 32% was allocated for food and grocery expenses. Transportation accounted for 9% of the expenditures, while an equal proportion (9%) went towards housing and utility costs. Notably, 6% of the UBI funds were directed towards financial transactions such as saving and investing activities. Leisure pursuits like travel and entertainment consumed 4% of the funds, while healthcare and medical expenses accounted for 2% of the expenditures. Miscellaneous expenses constituted 1.5% of the UBI utilization, and a modest 0.6% was dedicated to education-related costs.

    As automation and artificial intelligence threaten to disrupt various job sectors, the idea of providing all citizens with a universal basic income (UBI) has gained traction. At its core, UBI involves unconditional cash payments by the government to cover basic living expenses like food, housing and healthcare for everyone, while firms replace the labour force with artificial intelligence and robots. The firms then pay various taxes to the government, which the government uses to distribute the monthly payments to the public. While the concept sparks debate around its economic impacts, it may also intersect with environmental sustainability in powerful ways.

    At first glance, ensuring everyone has a reliable income stream may seem disconnected from planetary health. Yet UBI could help address some underlying drivers of environmental degradation rooted in poverty and overconsumption. With a basic income assured, people may be less tethered to jobs that harm the environment out of pure economic necessity. With more time, people could look towards urban farming or installing solar panels in their homes. A laid-off coal worker could retrain for the renewable energy sector.

    More broadly, UBI has the potential to ease societal pressures that fuel unsustainable human activity and reliance on extracting finite natural resources. When people can afford adequate food, shelter and education, there is less desperation that pushes deforestation, overfishing oceans, or burning cheap dirty fuels. Poverty alleviation allows a longer-term outlook beyond just fulfilling basic needs each day.

    Furthermore, having an equal and limited income, people will be less likely to overconsume and might lean towards upcycling, reuse and recycling instead of purchasing new products. This would ultimately lead to less waste produced when compared to the norm of overconsumption in today’s ultra-capitalist markets.

    This aligns with the philosophy of a circular economy, which aims to radically remake how goods are produced and consumed. Rather than depleting raw materials in a ‘take, make, waste’ linear model, the circular economy emphasizes ‘reuse, refurbishing, recycling and recovery’. It envisions an economy virtually free of waste, powered by renewable energy, where products are built to last through intelligent design.

    A UBI could empower underprivileged populations to fully participate in this circular economy revolution as workers, entrepreneurs, and conscious consumers. Funded job retraining could provide skills like repairing electronics or reclaiming materials. A cushioned income may allow people to take entrepreneurial risks on circular businesses that refurbish appliances or upcycle scrap into new products. And with UBI, citizens could reallocate their consumption from disposable goods to durable, sustainable services. The inherent benefit of a universal basic income is that it allows people to do what they want to do, and not hold a job out of necessity. This could lead to a more creative, less stressed and sustainable society.

    Of course, challenges and open questions remain. How would a UBI be funded – through taxation, redistribution of wealth, and sovereign funds? If not implemented thoughtfully, a UBI could drain resources from other social and environmental programs or exacerbate national debts. Its effectiveness hinges on accompanying policies like carbon pricing, incentives for sustainable investments, and education to nudge behavioural shifts.

    And importantly, UBI alone would not solve all overconsumption challenges if people simply spend their basic income on more material goods produced through unsustainable industrial models. A cultural mindset evolution would likely still be required, but less so as the binding chains of capitalism will have a diminished seize on our consumption habits.

    Critics are also sceptical about financing UBI or whether it could dampen motivation to work, though evidence from UBI trials has been mixed. There are also concerns about equitably rolling it out to avoid regional or national disparities.

    Yet the promise of UBI helping advance environmental sustainability alongside other aims like reducing poverty and inequality is compelling enough that it deserves serious consideration as a policy for the 21st century. Perhaps when people’s basic needs are met, they can collectively focus on higher goals – like safeguarding the planet that we all rely upon for our very existence.

    While UBI is not a panacea, it could provide a foundational level of economic security and freedom that enables more sustainable circular economic models to emerge. When people’s fundamental income is assured, will they choose to consume in endlessly wasteful ways? Or might they opt for more fulfilling livelihoods that create value for society and tread more lightly on the Earth? UBI has the potential to empower that choice in building a greener, circular world.

    This post was originally published on Basic Income Today.

  • Unlocking human potential through a universal basic income

    By Robin Morden

    See original post here.

    Growing up in a family where money was scarce, Floyd Marinescu (BMath ’02) saw firsthand the impacts of working class poverty. “Money was a source of a lot of conflict in my house,” he said. “I knew that if there was financial security, it would have been a lot better for my family.” 

    A fan of Star Trek, Marinescu yearned for the egalitarian, poverty-less society depicted on the show, often wondering, “How do we get to that future?”  

    When he heard about basic income, he felt he had discovered a key piece of the answer. “I was amazed that you could have a market system without poverty,” he recalled. 

    The more he read about basic income, the more passionate he became. In 2019, he launched UBI Works, a non-profit that shares knowledge and mobilizes support for the cause. He hopes to convince voters that basic income will not only reduce poverty but also fuel our economy and help people lead more creative, fulfilling lives. 

    “I believe innovation most often comes from inspiration, not desperation,” Marinescu said. “Innovators like Newton and Botticelli had the security to tinker and create. I look at basic income as a way to create psychological safety for our entire society so that we unlock people’s potential and enable them to pursue their best selves.”

    From creating community for software engineers to driving political change 

    Marinescu came to the University of Waterloo for Computer Science in 1997, drawn by the renowned co-op program. His experiences in the program proved formative.  

    In his second year, he secured a work term in Silicon Valley and used the time to network extensively. Visiting a conference during a lunch break, he met the CEO of a startup Java-training company and soon became the company’s first employee. Balancing this full-time job with his studies, Marinescu helped build the world’s top Java programmer news website, TheServerSide.com. 

    He enjoyed the work so thoroughly that shortly after the company sold in 2002, he launched his own technical media company, C4Media. The company runs InfoQ, a news website featuring stories written by and for software engineers, and a popular practitioner-driven conference called QCon, which has hosted events in London, San Francisco, New York, São Paulo and Beijing. 

    Marinescu’s proudest accomplishment, however, is the work culture. Despite being one of the world’s first globally distributed, fully remote workplaces – with more than 40 full-time staff from 12 countries – C4Media has a strong sense of community and experiences little turnover. 

    As C4Media became established, Marinescu found more time to devote to basic income advocacy. Through UBI Works, he hopes to reframe the conversation about basic income, balancing more familiar arguments about how it can eliminate poverty with arguments focused on its economic benefits. They funded research by the Canadian Centre for Economic Analysisshowing that a basic income would grow the economy by more than it costs.  

    The organization also promotes digital activism. Its online petitions have led more than 800,000 emails being sent to government officials at all levels since 2019 and its social media content is seen more than 2,000,000 times a month across all major online platforms. This activism seems to be working. At the 2021 Liberal National Convention, delegates voted overwhelmingly in support of a basic income, using references from research UBI Works promoted. Then, in 2023, basic income was passed and prioritized as official party policy. To date, members of every major political party in Canada have publicly supported some form of basic income. The recent Senate and House Bills S233 and C223, which aim to develop a national framework for a guaranteed livable basic income, have had more than 32,000 signatories.   

    Marinescu is also the first signatory and organizer of CEOs for Basic Income, a group of more 170 Canadian business leaders, representing $1.5 billion a year in revenues and more than 5,300 employees who signed an open letter in support of basic income. 

    As automation rapidly replaces good jobs, Marinescu feels the need for a basic income grows more urgent by the day. “Automation has been linked to falling job quality,” Marinescu said. “We need a means to help people in poverty reeducate. Basic income will help people in transition.” 

    Advice for students: Escape the Silicon Valley mindset 

    Marinescu believes basic income will enable people to pursue more fulfilling work, liberating them from the “hamster wheel of dead-end jobs needed just to survive.” In his own career, Marinescu has sought to prioritize meaningful work over money but that hasn’t always been easy.    

    “When I started C4Media, I had a Silicon Valley mindset where the goal was to build a company, make lots of money and then flip it,” Marinescu said. “But I realized that I didn’t want to sell, because our service to the world was useful and I enjoyed building its culture. I had to deprogram myself from the romanticization of the serial entrepreneur.” He explained that it’s fulfilling to continue C4Media’s services while channelling some of its profits into social change work.   

    Marinescu believes there’s a message in this for today’s students: “Be true to yourself. Work hard and make money but direct yourself to the things that bring you fulfillment.”

    This post was originally published on Basic Income Today.

  • Monthly payments of $1,000 could get thousands of homeless people off the streets, researchers say

    By Doug Smith

    See original post here.

    A monthly payment of $750 to $1,000 would allow thousands of the city’s homeless people to find informal housing, living in boarding homes, in shared apartments and with family and friends, according to a policy brief by four prominent Los Angeles academics.

    Citing positive preliminary results of pilot studies in several cities, including Los Angeles, they argue the income could provide access to housing for a portion of the population who became homeless primarily as the result of an economic setback. This could ultimately save millions of dollars in public services, they argued, and leave the overstretched and far more expensive subsidized and service-enriched housing for those who have more complicated social needs.

    “If the idea is to reduce the number of people on the street, definitely the fastest way to do that is money and not this incredibly complex system that we have built up primarily to help people with serious disabilities,” said lead author Gary Blasi, a professor emeritus in the UCLA School of Law.

    The paper offers no prescriptions for how the payments should be funded or who should receive the money. Instead, the authors, coming from four separate disciplines, contrast the simplicity and documented effectiveness of basic income with the high cost and inadequate results of programs to provide standard housing for every homeless person.

    “The truth is, we cannot afford not to do better than the current system, which spends a huge amount of money to house a small fraction of those in need,” they wrote.

    That system, relying on housing navigators to “seek very scarce subsidized housing subject to strict criteria” is a “lengthy and expensive process” leaving thousands of rental subsidy vouchers unused and thousands of people unable to find housing.

    “Providing interim housing during this process can be very costly, as is adding to the supply of housing,” they wrote.

    Meanwhile, a source of readily available affordable housing goes untapped.

    “Informal housing, once a subject of study only in developing countries, means housing that does not conform to the standards of the formal housing market,” they wrote. “It includes shared housing arrangements, housing that does not meet all code requirements, rooms rented in single-family homes.”

    “There’s a vast informal rental market going on already all across California,”co-author Sam Tsemberis, aclinical community psychologist with the UCLA Department of Psychiatry, said in an interview. “People are renting out single-family homes. They have two or three beds in each of the bedrooms and are charging $400, $500 a month for people to sleep.”

    Tsemberis is the founder of Pathways to Housing, a New York program that pioneered the Housing First approach now adopted across the nation as a model for housing chronically homeless people with compounding issues of mental illness and substance abuse.

    Basic aid is not a substitute for housing first, Tsemberis said.

    “This is for the group that has more resources internally, a work history, isn’t struggling mightily with mental illness or addiction,” he said.

    Pointing to research by the Benioff Homeless and Housing Initiative at UC San Francisco, the authors suggest that more than half of people living on the streets fall into that category.

    The study found that fewer than a third of a large sample of unhoused people in California had been tenants in “ordinary” housing before becoming homeless. “Most were last housed in a unit rented by someone else — i.e., the informal housing market. If they were required to pay rent, their median monthly rent was $450.19,” they wrote.

    The authors cited a 2022 survey by Urban Institute of guaranteed income programs in Austin, Chicago and Arlington County, Virginia, that found cash subsidies provided more flexible housing support at lower cost, allowed recipients more dignity, avoided voucher discrimination by landlords and served people who were ineligible for government subsidies.

    While those programs, and similar ones currently under way in Los Angeles County, are for a general population, a preliminary study by one of the authors has found that homeless people also benefit.

    Ben Henwood, director of the Center for Homelessness, Housing and Health Equity Research at the USC Suzanne Dworak-Peck School of Social Work, designed a controlled study of a cash stipend pilot mounted by the San Francisco-based nonprofit Miracle Messages.

    Early results were so promising that Henwood released a preliminary six-month analysis breaking down recipients’ spending as 36.6% food, 19.5% housing, 12.7% transportation, 11.5% clothing and 6.2% healthcare, leaving only 13.6% uncategorized.

    “The idea that to give poor people money is controversial is just strange to me,” Henwood said. “Of course that will help.”

    Blasi, a lawyer who has for decades engaged in litigation involving housing, welfare, homelessness, and redevelopment and started the Legal Aid Foundation of Los Angeles’ Eviction Defense Center in 1983, said Henwood’s study inspired the idea for the brief.

    Along with Henwood and Tsemberis, Blasi brought in Dan Flaming, president of the Economic Roundtable.

    Flaming has led research that documented the high cost of public services for chronically homeless people. He recently conducted a study that used predictive tools to identify individuals likely to be persistently homeless and provided them housing, mental health therapy and apprenticeship training for union jobs.

    At its conclusion, twice as many participants were housed and 40% more were employed than at its inception.

    “The larger perspective is that homelessness is a result of economic inequality and income at least as much as it is a lack of affordable housing,” Flaming said. “I don’t see a way that we can house our way out of homelessness. This is another tool, the tool providing people a basic income, that we need to be making a better use of.”

    While not proposing a specific administrative plan, the authors point to a potential mechanism for implementing basic income: raising General Relief, the county program mandated to provide minimal assistance to people who are “destitute, unemployed and ineligible for any other form of assistance.”

    “Liberal L.A. County hasn’t raised the GR grant in 40 years,” Blasi said.

    Since the 1970s the rate has been $221 per month. If it had risen with inflation, it would be $1,008.

    “Unsurprisingly, the County’s Department of Public Social Services reports that about 75% of the more than 100,000 General Relief recipients are homeless and have no stable address.” they wrote.

    The paper anticipates, and counters, the potential objection that their plan would push people into substandard housing.

    “There is no reason to think that housing will be worse than the last stable housing they had before becoming homeless,” it said.

    “I don’t have any illusions that people are going to be living in places that middle-class people would find acceptable,” Blasi said.

    Informal housing is no substitute for the thousands of units of supportive housing that are needed.

    But “somewhere around half of the people on the street and in those encampments don’t need supportive housing,” he said. “They don’t. And they don’t qualify for it and they’re not getting into it,” Blasi said.

    “We’re sort of communicating if you can just hang on for four years on the street, you’ll be troubled enough that you will rise to the top of our list. That’s just crazy.”

    This post was originally published on Basic Income Today.

  • A UBI in the United States May Necessitate Land Value Taxes

    By Matthew Downhour

    See original post here.

    “Pilot study shows effectiveness of Universal Basic Income” has essentially become an inside joke of a headline among those who follow economic and social policy, because we see it all the time. The number of pilot programs continues to grow, and the results are almost always positive. A pilot program in Stockton, California showed that, contrary to the expectations of many, a universal basic income increased employment rates for those who had it. A study in Denver found that $1000/month led to a measurable decrease in homelessness. And dozens of studies around the world have indicated positive impacts on social trust, mental health, and other measures of social and individual well-being. As anti-poverty interventions go, a universal basic income (that is, a fixed cash payment made to households with no strings attached) is well-studied and its effects understood. However, despite the popularity of COVID-19 cash payments during the height of the pandemic, movement towards a national UBI is nonexistent; indeed, since the pandemic, programs that resembled a UBI, such as the enhanced child tax credit, have been halted, based largely on concerns about employment and dependency that various pilot programs were intended to allay.

    Why the discrepancy between a growing mountain of data and noticeable lack of action? Well, UBI is hardly unique in the category of ‘policies where legislation isn’t moving forward.’ The US Congress is pushed to its limits every couple months with the task of simply keeping the doors of the government open, cobbling together taxing and spending plans with continuing resolutions and last-minute deals. An overhaul to not just our budget but our way of life as extensive as that called for by a universal basic income is difficult to imagine garnering sixty votes in the Senate or making it to the House floor. Moreover, one strength of UBI from the standpoint of policy militates against its implementation through legislation: the very idea is too simple. There are relatively few opportunities to carve out exceptions or insert special favors into a UBI program without compromising the entire concept. This makes winning over skeptical Senators or Representatives more difficult. And another possibility—a charismatic president sweeps into office and works across the aisle to bring about policy change—was already attempted by presidential candidate Andrew Yang, whose campaign attracted attention and a devoted following but never a significant number of votes.

    The best answer is likely to look at the last major reform to the US economic system (besides straightforward tax cuts)—the Affordable Care Act. This massive legislation was no one’s idea of a perfect bill but managed to pass because it was phased in gradually—and built on a model already tried and tested in Massachusetts. If ever a national UBI is to be attempted, a similar statewide model is a necessary (though far, far from sufficient) condition. An energetic, and almost certainly Democratic-controlled (since we appear to be fresh out of Romneys), state government is going to need to lead the charge on UBI, showing that it works on a grand scale to even begin a movement to expand it nationally. A success in one state will hopefully be contagious—as the gradual expansion of Medicaid has shown, it is difficult for even the most conservative states to ‘hold the line’ against humanitarian programs once they have proven themselves elsewhere.

    Starting with one state, however, introduces new difficulties. For many proponents of a UBI, the question of how to pay for such a program is less difficult. The Federal government has extensive revenue generating options, from a more progressive income tax to a more expansive payroll tax. High taxes can rarely force American citizens out of the country entirely, because they still owe income taxes so long as they are citizens, and renouncing citizenship is very rare. Besides, the government has enormous borrowing capacity and, as a monetary sovereign, cannot strictly speaking ‘run out’ of money.  For states, the situation is different. They are not monetary sovereigns and many are constitutionally obligated to balance their budgets. If they seek to pay their residents some regular dividend, they need to raise the money in some way. And the sums in question are not trivial. A $1000/month dividend would cost the state of Minnesota—to take an example of a state that has historically been open to major reforms with slight legislative majorities—would cost roughly $68 billion just in payments, to say nothing of administrative costs. For reference, the entire Minnesota state budget is $72 billion, with only a portion of that being displaceable by UBI. A new source of funding is desperately needed.

    This produces a bit of a problem for the gradualism strategy, however. The first state or states to adopt a UBI face a severe issue of adverse selection much more severe than the Federal government deos: individuals with few job prospects might find it worth relocating, especially from nearby states, to establish a minimum income for themselves, whereas higher income individuals or companies subjected to taxes to pay for the UBI might similarly cross state borders to lower their tax bills. These problems are especially acute in the face of income or sales taxes, but even traditional property tax revenues will likely suffer—after all, the sort of big, expensive property development that tends to bring in substantial revenue will also be discouraged if property taxes rise to cover a UBI.

    This is where an old idea, however, may come in handy—that of a land value tax. Championed by a diverse array of figures historically, from the French physiocrat Francois Quesnay to American journalist and activist Henry George, the idea has re-emerged, particularly in urbanist circles, in taxation discourse. The benefit to such a scheme is that, unlike income or even real property, the quantity of land is generally speaking fixed—so no statewide tax is going to drive land across the border, and if it drives landowners out of state, they can’t take their land with them and one way or another it will be available for alternative use. In economic terms, the supply of land is perfectly inelastic, and thus the deadweight loss of the tax does not exist so long as the land value tax is less than or equal to the rental value of land (though calculating rental value can get progressively more difficult as the tax approaches a greater percentage of it).

    Moreover, it is unlikely that land value taxes would seriously degrade the value of land, if they were used to fund a UBI. As David Ricardo postulated in the early 1800s, the value of land is based on its economic productivity relative to a free piece of ground. Of course, a UBI would not have a substantial impact on the agricultural productivity of land, which was Ricardo’s primary concern, but would certainly impact its economic productivity, as cities and town located in a state with a UBI would benefit from steadier consumers with more consistent incomes. In many cases this increase in disposable income, especially noticeable for lower income households, would likely outweigh the cost of increased taxes on land ownership. But even if it did not, and some firms sold their property in state, the economy would not have lost any real resources and the falling demand for land would likely improve its affordability for other uses.

    The possible revenue raised in this way is difficult to calculate, particular because American cities—with limited exceptions—do not consistently assess land and real property as truly separate asset classes. However, some of the best estimates put the value of just urban land in 2006 at twice US GDP. For states hosting the most valuable cities, like San Francisco and New York, the hundreds of billions of land value the cities sit on might be enough to fund a UBI on their own. To return to our example of Minnesota, the revenues would likely be somewhat less—Minneapolis (the most valuable city in the State) land values are more like $11 billion, so a 2-3% land value tax would likely not be, on its own, enough to capture the revenue needed to independently fund a UBI. But given the likely impact of a UBI in improving the health and stability of citizens—and thus reducing the strain on state coffers of other programs—its ability to close the gap might be greater than expected. And absent any kind of land value capture, a UBI may end up primarily enriching landlords at the expense of whomever is paying the taxes to fund it.

    What’s almost certain is that without tapping into this source of revenue, it is unlikely that a paid-with-taxes UBI will be able to achieve its full potential on a State level—and given the current state of congress the State level is almost certainly the place we must start. Though both may feel too far outside the political economy we’re used to in the United States, a Universal Basic Income and a revenue raising land value tax system are deeply complementary policies that offer substantial benefits for our future. If states are laboratories of democracy, it’s about time these two policies be put to the test together.

    This post was originally published on Basic Income Today.

  • AI is threatening Americans’ jobs. Could guaranteed income provide a safety net?

    By Catherine Thorbecke

    See original post here.

    Michael Tubbs was born and raised in Stockton, California, roughly a one-hour drive from Silicon Valley, the birthplace of the AI revolution that’s now forecast to forever change the way Americans live and work.

    But despite coming of age in Big Tech’s backyard, the America that Tubbs grew up in was marked by “scarcity and poverty,” he told CNN. Tubbs, 33, was born to a teenage mother, whom he says he never saw when he was younger because “she was always working — and it was never enough.”

    His own experiences led him to think about different ways that the wealthiest country in the world could help ameliorate poverty. When Tubbs went on to become the first Black mayor of his hometown in 2016, he spearheaded a guaranteed income pilot program in 2019 that did something simple yet radical: Give out free money with no strings attached. 

    That idea of guaranteed income is receiving renewed interest as AI becomes an increasing threat to Americans’ livelihoods.

    Global policymakers and business leaders are now increasingly warning that the rise of artificial intelligence will likely have profound impacts on the labor market and could put millions of people out of work in the years ahead (while also creating new and different jobs in the process). The International Monetary Fund warned earlier this year that some 40% of jobs around the world could be affected by the rise of AI, and that this trend will likely deepen the already cavernous gulf between the haves and have-nots.

    As more Americans’ jobs are increasingly at risk due to the threat of AI, Tubbs and other proponents of guaranteed income say this could be one solution to help provide a safety net and cushion the expected blow AI will have on the labor market.

    “We don’t really do a good job at designing policies or doing things in times of crisis,” Tubbs told CNN, saying it is urgent to start planning for guaranteed income programs before we see 40% of global jobs taken by AI.

    For a period of two years starting in 2019, Stockton handed out to 125 randomly selected residents in low-income neighborhoods $500 a month with no conditions around how they used the funds or if they had employment. The initial results from the pilot program found that recipients had drastically improved their job prospects and financial stability and saw better physical and mental health outcomes.

    “Let’s get the guardrails in place now,” he said. “Then, when we have to deal with that job displacement, we’re better positioned to do so.”

    Silicon Valley’s infatuation with guaranteed income

    The idea of a guaranteed income is not new. Tubbs said he was inspired to pursue it after reading the works of Civil Rights leader Martin Luther King, Jr., who advocated for guaranteed income in his 1967 book, “Where Do We Go From Here: Chaos or Community?”

    “I’m 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,” King wrote at the time.

    Decades after King’s death, the idea of guaranteed income went on to see a resurgence of support emanating out of Silicon Valley. The concept emerged as a buzzword of sorts among many of Silicon Valley’s elite — including Elon Musk, Mark Zuckerberg and Sam Altman — even before the public launch of ChatGPT in late 2022 re-upped a global debate about automation disrupting jobs.

    “Universal income will be necessary over time if AI takes over most human jobs,” Tesla CEO Musk tweeted back in 2018. Late last year, in an interview with UK Prime Minister Rishi Sunak, Musk said he thought AI would eventually bring about “universal high income,” without sharing any details of what this could look like.

    Meta CEO Mark Zuckerberg, meanwhile, called for the exploration of “ideas like universal basic income to make sure that everyone has a cushion to try new ideas,” during a Harvard commencement speech in May 2017. In a Facebook post later that year, Zuckerberg celebrated Alaska’s Permanent Fund Dividend — or the annual grants given to Alaska residents from a portion of the state’s oil revenue — as a “novel approach to basic income” that “comes from conservative principles of smaller government, rather than progressive principles of a larger safety net.”

    Altman, CEO of one of the world’s most powerful AI companies, OpenAI, has also been outspoken about what he sees as the need for some form of guaranteed income as many jobs are increasingly lost to automation.

    Back in 2016, when Altman was president of tech startup accelerator YCombinator, he announced he was seeking participants to help launch a study on basic income (or, as he described it at the time, “giving people enough money to live on with no strings attached.”)

    “I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale,” Altman wrote in a 2016 blog post for YCombinator.

    He has since left his post at YCombinator to focus on OpenAI, but Altman still chairs the board of OpenResearch, the nonprofit lab that is in the process of conducting this ongoing study on basic income that he helped launch.

    Elizabeth Rhodes, research director at OpenResearch, told CNN earlier this year that it hopes to release initial findings this summer from a three-year study on unconditional income involving some 3,000 individuals in two states.

    “We really see this as sort of a foundational exploratory study to understand what happens when you give individuals unconditional cash,” she told CNN.

    While she stressed that she could not get into the specifics of her team’s research while the study is underway, she hopes that their findings can eventually provide some data that answers some of the most common questions surrounding how cash payments will impact people’s desire to work and its broader potential advantages or disadvantages within communities.

    Other tech industry tycoons, including Twitter co-founder Jack Dorsey, have also thrown immense financial support behind guaranteed income programs. (In 2020, Dorsey donated some $18 million to Mayors for a Guaranteed Income, the organization that Tubbs founded).

    Dozens of cities across the United States have already begun experimenting with guaranteed income programs in recent years, with most of them funded by nonprofit organizations but organized by local officials.

    Tubbs said he ultimately thinks funding for these programs should come from the federal government but encouraged lawmakers to be creative about finding ways to raise revenue.

    “For example, you could legalize cannabis federally and use that tax revenue, you could do a data dividend or some sort of robot tax or AI tax,” he suggested.

    Opponents to guaranteed income programs, most of whom lean Republican, have argued that such efforts disincentivize work or that taxing successful tech companies can stifle innovation.

    And in Texas, opponents of guaranteed income are taking their battle to court. Earlier this week, Texas Attorney General Ken Paxton sued Harris County over its guaranteed income program that is funded using federal money from the pandemic-era American Rescue Plan. “This scheme is plainly unconstitutional,” Paxton said in a statement. “I am suing to stop officials in Harris County from abusing public funds for political gain.”

    In court documents, the attorney general goes on to slam the program as “illegal and illegitimate government overreach.”

    ‘It’s not just giving people money, it’s giving them opportunity’

    Tomas Vargas Jr., a recipient of guaranteed income in the Stockton pilot program, told CNN that he heard critics saying that receiving the extra payments would make people “lazy.” But he says it ultimately gave him the opportunity to find better work.

    “When I got the money, I was already in the mindset of hustling and getting money. So, it just made me want to get more money,” he said. “The thing that I want people to understand about the guaranteed income is it’s not just giving people money, it’s giving them opportunity.”

    For years, Vargas said he woke up every day with the crippling anxiety that comes with never quite knowing how he will be able to provide for his family. He was juggling multiple jobs: working at UPS, repairing cars, mowing lawns, delivering groceries and picking up any other work he could find. He said he almost never saw his children and said he briefly received food stamp assistance but was “instantly kicked off” when he would pick up extra hours of work.

    “There’s one thing that I’ve always wanted as a father, and that’s not to make my kids go through the same things that I went through: having no power, no water, or no food on the plates,” he told CNN. “So I was always trying to grind.”

    Vargas said the extra cash payments he received helped him focus and apply for one full-time job, which he never had the time or energy to do before. He now says he thinks guaranteed income could be one way to provide a cushion for re-training or education programs for people whose jobs are exposed to AI, the same way it helped him pivot to better and more secure employment.

    Vargas, like Tubbs, was born and raised in Stockton. Vargas said his father was never around much growing up and he eventually moved in with his grandmother when he was 12. Before participating in the program, Vargas said he was “a really negative person” and that he didn’t look at himself as someone even worth investing in.

    But the extra financial security allowed him to spend more time with his children, and ultimately break the cycle of poverty he had seen in his community his whole life.

    “One of the biggest things that helped me realize my full potential that I had in myself, and I was worth investing in, was seeing the reaction from my kids,” Vargas said, “and seeing the generational trauma and healing in them.”

    This post was originally published on Basic Income Today.

  • Opinion: It’s time to eliminate – and strategically replace – our nation’s welfare programs with UBI

    By David Pan

    See original post here.

    The United States government currently spends over $4 trillion per year on welfare and entitlement programs, redistributing over 80 percent of our nation’s annual tax revenue through a gauntlet of outdated and inefficient programs. 

    To many, the above sentence is sacrilege. Welfare programs like food stamps, housing vouchers, and supplemental security income are a bedrock of democracy and fair economics, I hear you say. And that may be true, but there is also evidence that these programs have prevented many Americans from earning their own money and building their own wealth, creating perverse incentives to depend on government funding and entrapping too many in poverty.

    There is also the very real problem that Social Security faces insolvency by 2034, at which point benefits are expected to be cut by 20%, creating yet more poverty. Our health care system, which accounts for over 18% of GDP, is almost 50% more expensive in terms of percentage of GDP than any other system in the world, even though we rank 48th in terms of life expectancy.

    The sad fact is that half a century after President Lyndon Johnson announced an “unconditional war on poverty,” official poverty rates are at about the same level as in 1970. What we have created is a system that is both dysfunctional and unsustainable. Our national debt is now rising past $34 trillion, or 120% of GDP, which is up from 60% of GDP 20 years ago, driven primarily by the costs of our welfare and entitlement programs.

    We have no choice but to develop an alternative to our broken system.  My proposition – and I am running for Congress on it in California’s 46th District – is to gradually phase out all of our existing welfare and entitlement programs, including Social Security and Medicare, and distribute the funds equally to both workers and non-workers.

    Some call this UBI – universal basic income. I call it smart economics. 

    Four trillion dollars is a lot of money – enough to fund a basic income of $16,000 per year for every citizen 21 and older for the rest of their lives. A quarter of this amount, $4,000 per year, could be designated for health insurance costs. At current prices, this would be enough to pay for an individual’s catastrophic plan with an $8000 deductible. We would have universal health care with private insurers. The remaining $1,000 per month could be paid directly into individual bank accounts through the Social Security Administration, and people could use this money however they want. Setting aside the transition costs of grandfathering in people who are already in, or within 30 years of, retirement and given our citizen population of 225 million who are 21 and older, such a system would cost at most $3.6 trillion per year, $400 billion less per year than the programs to be replaced.

    I hear you grumbling: How, what, when, why? You’re crazy! Impossible! But let’s imagine for a moment how this system would change lives. People on existing welfare programs would be released from the rules that restrict their income, assets, and living situations, allowing them the freedom to direct their own finances. The basic income would become an asset, like current welfare benefits, with the difference that it could be used for any kind of expenses as well as savings and investments to build long-term wealth. Instead of an asset requiring inactivity (remaining unemployed), the basic income would jumpstart its opposite. Studies of similar programs in the US and across the world, such as the Alaska Permanent Fund or Native American gaming distributions, have shown that individuals do not tend to waste such money on drugs and alcohol but use it to build up long-term assets.

    Working families would benefit most from my plan, because they currently pay into a welfare system without reaping any immediate benefits. How many times have you heard: Why should I work so hard to support those who don’t? Basic income could help diffuse political – and economic – polarization. The biggest change would be that working people would receive benefits previously reserved for the non-working.  An individual who works a day job could start a small business at night. A married couple, receiving $32,000 per year, could get ahead in saving to buy a house or to build up a retirement fund. 

    Local economies would also be boosted by this plan. With citizens each receiving $16,000 per year, spending decisions would be made by individuals rather than the federal government, shifting more economic decision-making to the local level in ways that would directly support small businesses and community organizations.

    Half a century is a long time for a welfare system to grow up and become too old. Americans deserve a new system that can introduce an era of socioeconomic mobility and opportunity for all. This new future is within reach. We just have to choose it.

    This post was originally published on Basic Income Today.

  • Red states fight growing efforts to give ‘basic income’ cash to residents

    By Kevin Hardy

    See original post here.

    South Dakota state Sen. John Wiik likes to think of himself as a lookout of sorts — keeping an eye on new laws, programs and ideas brewing across the states.

    “I don’t bring a ton of legislation,” said Wiik, a Republican. “The main thing I like to do is try and stay ahead of trends and try and prevent bad things from coming into our state.”

    This session, that meant sponsoring successful legislation banning cities or counties from creating basic income programs, which provide direct, regular cash payments to low-income residents to help alleviate poverty.

    While Wiik isn’t aware of any local governments publicly floating the idea in South Dakota, he describes such programs as “bureaucrats trying to hand out checks to make sure that your party registration matches whoever signed the checks for the rest of your life.”

    The economic gut punch of the pandemic and related assistance efforts such as the expanded child tax credit popularized the idea of directly handing cash to people in need. Advocates say the programs can be administered more efficiently than traditional government assistance programs, and research suggests they increase not only financial stability but also mental and physical health.

    Still, Wiik and other Republicans argue handing out no-strings-attached cash disincentivizes work — and having fewer workers available is especially worrisome in a state with the nation’s second-lowest unemployment rate.

    South Dakota is among at least six states where GOP officials have looked to ban basic income programs.

    The basic income concept has been around for decades, but a 2019 experiment in Stockton, California, set off a major expansion. There, 125 individuals received $500 per month with no strings attached for two years. Independent researchers found the program improved financial stability and health, but concluded that the pandemic dampened those effects.

    GOP lawmakers like Wiik fear that even experimental programs could set a dangerous precedent.

    “What did Ronald Reagan say, ‘The closest thing to eternal life on this planet is a government program’?” Wiik said. “So, if you get people addicted to just getting a check from the government, it’s going to be really hard to take that away.”

    The debate over basic income programs is likely to intensify as blue state lawmakers seek to expand pilot programs. Minnesota, for example, could become the nation’s first to fund a statewide program. But elected officials in red states are working to thwart such efforts — not only by fighting statewide efforts but also by preventing local communities from starting their own basic income programs.

    Democratic governors in Arizona and Wisconsin recently vetoed Republican legislation banning basic income programs.

    Last week, Texas Attorney General Ken Paxton sued Harris County to block a pilot program that would provide $500 per month to 1,900 low-income people in the state’s largest county, home to Houston.

    Paxton, a Republican, argued the program is illegal because it violates a state constitutional provision that says local governments cannot grant public money to individuals.

    Harris County Attorney Christian Menefee, a Democrat, called Paxton’s move “nothing more than an attack on local government and an attempt to make headlines.”

    Meanwhile, several blue states are pushing to expand these programs.

    Washington state lawmakers debated a statewide basic income bill during this year’s short session. And Minnesota lawmakers are debating whether to spend $100 million to roll out one of the nation’s first statewide pilot programs.

    “We’re definitely seeing that shift from pilot to policy,” said Sukhi Samra, the director of Mayors for a Guaranteed Income, which formed after the Stockton experiment.

    So far, that organization has helped launch about 60 pilot programs across the country that will provide $250 million in unconditional aid, she said.

    This is an effective policy that helps our families, and this can radically change the way that we address poverty in this country.

    – Sukhi Samra, director of Mayors for a Guaranteed Income

    Despite pushback in some states, Samra said recent polling commissioned by the group shows broad support of basic income programs. And the programs have shown success in supplementing — not replacing — social safety net programs, she said.

    The extra cash gives recipients freedom of choice. People can fix a flat tire, cover school supplies or celebrate a child’s birthday for the first time.

    “There’s no social safety net program that allows you to do that.” she said. “ … This is an effective policy that helps our families, and this can radically change the way that we address poverty in this country.”

    Basic income experiments

    The proliferation of basic income projects has been closely studied by researchers.

    Though many feared that free cash would dissuade people from working, that hasn’t been the case, said Sara Kimberlin, the executive director and senior research scholar at Stanford University’s Center on Poverty and Inequality.

    Stanford’s Basic Income Lab has tracked more than 150 basic income pilots across the country. Generally, those offer $500 or $1,000 per month over a short period.

    “There isn’t anywhere in the United States where you can live off of $500 a month,” she said. “At the same time, $500 a month really makes a tremendous difference for someone who is living really close to the edge.”

    Kimberlin said the research on basic income programs has so far been promising, though it’s unclear how long the benefits may persist once programs conclude. Still, she said, plenty of research shows how critical economic stability in childhood is to stability in adulthood — something both the basic income programs and the pandemic-era child tax credit can address.

    Over the past five years, basic income experiments have varied across the country.

    Last year, California launched the nation’s first state-funded pilot programs targeting former foster youth.

    In Colorado, the Denver Basic Income Project aimed to help homeless individuals. After early successes, the Denver City Council awarded funding late last year to extend that program, which provides up to $1,000 per month to hundreds of participants.

    A 2021 pilot launched in Cambridge, Massachusetts, provided $500 a month over 18 months to 130 single caregivers. Research from the University of Pennsylvania found the Cambridge program increased employment, the ability to cover a $400 emergency expense, and food and housing security among participants.

    Children in participating families were more likely to enroll in Advanced Placement courses, earned higher grades and had reduced absenteeism.

    “It was really reaffirming to hear that when families are not stressed out, they are able to actually do much better,” said Geeta Pradhan, president of the Cambridge Community Foundation, which worked on the project.

    Pradhan said basic income programs are part of a national trend in “trust-based philanthropy,” which empowers individuals rather than imposing top-down solutions to fight poverty.

    “There is something that I think it does to people’s sense of empowerment, a sense of agency, the freedom that you feel,” she said. “I think that there’s some very important aspects of humanity that are built into these programs.”

    While the pilot concluded, the Cambridge City Council committed $22 million in federal pandemic aid toward a second round of funding. Now, nearly 2,000 families earning at or below 250% of the federal poverty level are receiving $500 monthly payments, said Sumbul Siddiqui, a city council member.

    Siddiqui, a Democrat, pushed for the original pilot when she was mayor during the pandemic. While she said the program has proven successful, it’s unclear whether the city can find a sustainable source of funding to keep it going long term.

    States look to expand pilots

    Tomas Vargas Jr. was among the 125 people who benefited from the Stockton, California, basic income program that launched in 2019.

    At the time, he heard plenty of criticism from people who said beneficiaries would blow their funds on drugs and alcohol or quit their jobs.

    “Off of $500 a month, which amazed me,” said Vargas, who worked part time at UPS.

    But he said the cash gave him breathing room. He had felt stuck at his job, but the extra money gave him the freedom to take time off to interview for better jobs.

    Unlike other social service programs like food stamps, he didn’t have to worry about losing out if his income went up incrementally. The cash allowed him to be a better father, he said, as well as improved his confidence and mental health.

    The experience prompted him to get into the nonprofit sector. Financially stable, he now works at Mayors for a Guaranteed Income.

    “The person I was five years ago is not the person that I am now,” he said.

    Washington state Sen. Claire Wilson, a Democrat, said basic income is a proactive way to disrupt the status quo maintained by other anti-poverty efforts.

    “I have a belief that our systems in our country have never been put in place to get people out of them,” she said. “They kept people right where they are.”

    Wilson chairs the Human Services Committee, which considered a basic income bill this session that would have created a pilot program to offer 7,500 people a monthly amount equivalent to the fair market rent for a two-bedroom apartment in their area.

    The basic income bill didn’t progress during Washington’s short legislative session this year, but Wilson said lawmakers would reconsider the idea next year. While she champions the concept, she said there’s a lot of work to be done convincing skeptics.

    In Minnesota, where lawmakers are considering a $100 million statewide basic income pilot program, some Republicans balked at the concept of free cash and its cost to taxpayers.

    “Just the cost alone should be a concern,” Republican state Rep. Jon Koznick said during a committee meeting this month.

    State Rep. Athena Hollins, a Democrat who sponsored the legislation, acknowledged the hefty request, but said backers would support a scaled-down version and “thought it was really important to get this conversation started.”

    Much of the conversation in committee centered on local programs in cities such as Minneapolis and St. Paul. St. Paul Mayor Melvin Carter, a Democrat, told lawmakers the city’s 2020 pilot saw “groundbreaking” results.

    After scraping by for years, some families were able to put money into savings for the first time, he said. Families experienced less anxiety and depression. And the pilot disproved the “disparaging tropes” from critics about people living in poverty, the mayor said.

    Carter told lawmakers that the complex issue of economic insecurity demands statewide solutions.

    “I am well aware that the policy we’re proposing today is a departure from what we’re all used to,” he said. “In fact, that’s one of my favorite things about it.”

    This post was originally published on Basic Income Today.

  • Why are so many carers being taken to court for benefit fraud?

    By Patrick Butler

    See original post here.

    Five years ago the Tory MP Nigel Mills asked one of Whitehall’s most senior civil servants whether he would apologise for the fact that “many thousands” of unpaid carers were in hardship because official failures had landed them with huge debts running into tens of thousands of pounds.

    Mills’s directness reflected an undercurrent of shock among MPs on the work and pensions select committee. Tipped off by a whistleblower, and an article in the Guardian, it had begun an inquiry into why so many carers, claiming relatively trivial amounts of carer’s allowance, were being effectively accused of benefit fraud.

    Two months later the committee issued a scathing judgment: there was no evidence of mass fraud; rather, the surge in tens of thousands overpayments to carers – which led to hefty penalties imposed on them for often minor breaches of rules on how much they can earn – was largely the fault of the Department for Work and Pensions (DWP).

    Administrative failures at the department meant carers who claimed the government allowance, but who also worked part-time and failed to realise they earned more than the strict weekly earnings limits (currently £151), were being heavily and unfairly penalised. These were mainly “honest mistakes”. Worse still, the DWP could have identified these breaches at an early stage, but didn’t.

    The failure to spot earnings breaches for months or even years meant the amount carers were overpayed would typically grow to between £1,000 and £5,000 and in extreme cases to more than £40,000. At some point, the DWP would contact the claimant, tell them the earnings breach was their fault and demand they repay the sums or face prosecution.

    The amounts were so big in part because of an oddly anachronistic carer’s allowance design quirk. If claimants breached earnings limits for a week by just £1, they would have to repay to the DWP the entire week’s allowance (currently £81.90). A 26-week breach then, would result in a “cliff edge” repayment of not £26, but £2,182.

    At the time, the then chair of the committee, Frank Field, caught the essence of MPs anger at this injustice in an article for House magazine in which he accused the DWP of “shocking ineptitude” and “bullying” carers. The DWP, he said, “was all too divorced from human and economic reality”.

    Peter Schofield, the DWP permanent secretary, did not apologise to MPs, and did not accept that carers were being pushed into hardship by the repayments. He was, however, keen to say help was at hand: new technology would put an end to the overpayments “in some cases before they happen”.

    Sadly for carers, the technological solution suggested by Schofield appears not to have worked. Despite the introduction of the verified earnings and pensions tool (known as VEP) the number of overpayments (26,700 in 2022-23) and the amounts repaid (36 that were more than £20,000, and 835 of between £5,000 and £20,000) remains brutally high.

    Although the data-matching VEP technology used by the DWP issues thousands of alerts a month identifying when a carer’s earnings rise above the limit – often through a pay rise or a new job – less than half are investigated. Five years ago, MPs blamed understaffing issues for the failure to undertake timely checks, and it seems this area is still woefully under-resourced.

    The DWP says it is not responsible for overpayments, that it is legally incumbent on claimants to notify any changes in their earnings that take them over the limit. Critics say the DWP is in denial about its part in the misdirection of tens of millions in taxpayers’ money each year, and the human misery caused when it tries to recover it.

    Questions remain about why the DWP insists on prosecuting carers for overpayments cased by earnings breaches, even where they agree to repay the sums. Key criteria for referral to the courts include the sum recoverable being more than £5,000, evidence of premeditated or organised fraud and previous conviction for benefits fraud.

    A trawl of recent court cases reported by local media suggests many of the carer’s allowance fraud prosecutions are not clearcut. As the magistrate noted in one recent case involving the conviction of a carer relating to a £6,000 overpayment: “We think it’s been one of those things where it [the earnings breach] has been an oversight [by the carer].”

    The problems with carer’s allowance have been known for two decades, so it seems strange governments that say they want to encourage carers back into the labour market – and prevent employees from giving up work entirely when they start caring – fail to overhaul a benefit that critics say so easily impedes part-time working, and so often brutally punishes carers when they do try to work.

    Prof Sue Yeandle, an expert in care and work at the University of Sheffield, called for a fundamental overhaul of carer’s allowance, simplifying it and making it more generous. “A benefit which so many people fall foul of is basically telling you its badly designed,” she said.

    This post was originally published on Basic Income Today.

  • Opinion: Basic income is a concept Conservatives should champion

    By WIL ROBERTSON

    See original post here.

    Coming out of the COVID-19 pandemic, Canadians have considered the possibility of a guaranteed livable basic income for those living in poverty. Polling by Narrative Research in February of 2022 showed 60 per cent of Canadians supported the concept. In 2023 and 2024, motions have passed in dozens of municipalities across Canada calling for the implementation of a basic income.

    The idea of a basic income is not new, of course. Over the years, the policy has been championed by many, including conservatives. Former Ontario premier John Robarts, former Nova Scotia premier and leader of the Progressive Conservative Party of Canada Robert Stanfield, former prime minister Brian Mulroney, and former Senator Hugh Segal all at one point called for the consideration of a guaranteed livable basic income (GLBI).

    Wil Robertson is a basic income advocate with Basic Income New Brunswick, the Ontario Basic Income Network, Basic Income Ottawa, and Coalition Canada Basic Income. Photograph courtesy of Wil Robertson

    More recently, the current deputy leader of the Conservative Party of Canada Melissa Lantsman said in an interview that “Conservatives can own” the concept of a basic income. This comes as the Progressive Conservative government of Prince Edward Island continues to ask the federal government to support a basic income demonstration project to test the policy across the province.

    Additionally, the Canadian Chamber of Commerce has called for the policy to be considered further, and GLBI is supported by the Canadian Women’s Chamber of Commerce.

    But why should Conservatives champion the concept of basic income? 

    Let us first be clear about what we’re talking about. A basic income proposed by Bill S-233, municipal motions, and many advocates is not a universal basic income. Rather, it is a basic income paid to those living below a certain level of the official poverty line. In PEI, the proposed GLBI would be paid to those at or below 85 per cent of the poverty line. In essence, a GLBI is meant to sustain the necessities of life for those in hardship, and not substitute employment. But in fact, in the randomized control trial experiments in the U.S. in the 1970s, the work hours of primary workers receiving a basic income actually increased.

    The reality is this: food insecurity rates across Canada sit at roughly 20 per cent, while food bank usage has hit its highest levels since 1989—up 78.5 per cent from 2019 and 32.1 per cent from 2022. Seventeen per cent of food bank clients in 2022 were employed.

    Meanwhile, the International Monetary Fund predicts that 40 per cent of global employment will be disrupted by artificial intelligence.

    The very nature of poverty and food insecurity is changing in our country, alongside the expectations and understanding of employment. Add a cataclysmic shock to the labour market into the mix, like the rapid development of AI, and we could find ourselves in a social crisis far outstripping our current circumstances. 

    More importantly, the present social safety net is simply not prepared for the realities of tomorrow’s financial framework. Employment Insurance, and programmatic solutions created by the current government, while undeniably effective in their narrow scope, are not designed nor equipped to support the changing nature of labour and poverty our country is currently experiencing. 

    Enter Pierre Poilievre. A leader who established his reputation to Canadians early in seeing the looming crisis of inflation long before the government pivoted its policy or messaging to address the issue.

    Conservatives have an opportunity to prepare the Canadian economy, labour market, and social policy framework for the radically different economic future that is rapidly approaching. Adapting to such a future is in the national interest, and the political interest of the Conservatives, with the cost of living, affordability, accessibility, the economy, and poverty/inequality all top issues in the minds of voters.

    The Conservatives are likely to have a mandate in 2025 to reset the fiscal and social policy of the government. Should they wish to pursue a policy to set up the Canadian economy to withstand the labour shocks of the coming years, whilst having a negligible impact on labour participation rates, saving run-on costs in our health care and criminal justice systems, and slimming down spending into an efficient and reliable payment as opposed to a patchwork of tightly targeted and expensive programs, the CPC should look no further than a Guaranteed Livable Basic Income.

    Conservatives can champion the concept of a basic income and leave our country better off in doing so.

    Wil Robertson holds a BA in Great Books and Political Science from St. Thomas University and a Masters in Political Management from Carleton University. He is a basic income advocate with Basic Income New Brunswick, the Ontario Basic Income Network, Basic Income Ottawa, and Coalition Canada Basic Income. Wil is an analytical thinker, with a passion for promoting the sharing of our truths. He is proud to further the causes of social acceptance, sustainability, and justice.

    This post was originally published on Basic Income Today.

  • Indian Coalition for Basic Income Launched to Help Shape India’s Social Policy Future

    By Peter Knight

    See original post here.

    While India is a rich site of several Basic Income Pilots held by Research and Governmental agencies, there is a recent uptrend in the number of cash-based social policies in several states, especially with evidence that shows a marked increase in several indicators of a better life. The time has come in India when the discussion on Basic Income in India is to be taken to the next level. In this context, the Indian Basic Income Coalition (iBIC) was launched in a landmark initiative to craft a resilient and inclusive social policy framework for India as a pioneering coalition formed by Indus Action, the India Network for Basic Income, Project DEEP, and WorkFREE. The launch took place at the UBI Policy Roundtable in New Delhi at Sri Aurobindo College of Arts and Communication in New Delhi on 13 March 2024.

    A Convergence of Minds for a Unified Purpose

    The roundtable convened a select group of 20 eminent personalities, including policymakers, politicians, academics, and practitioners from across the country, to deliberate on the political and economic viability of Universal Basic Income (UBI) in India. The session was marked by insightful presentations showcasing evidence from various unconditional cash transfer pilots and the successful implementation of rights-based policies nationwide.

    Universal Basic Income: A Vision for India

    At the heart of iBIC’s mission is the Universal Basic Income (UBI), proposing periodic, unconditional cash payments to all legal residents to cover basic needs. UBI has gained momentum globally and in India, driven by increasing employment and income insecurity, technological advancements, and rising inequality. Exemplary pilots, such as SEWA’s initiative in Madhya Pradesh,  Project DEEP’s in Maharashtra, and WorkFREE study in Hyderabad, have highlighted UBI’s significant impact on healthcare access, education quality, financial inclusion, and empowerment.

     

    The Path Ahead: From Concept to Reality

    iBIC’s formation is a strategic move ahead of India’s significant 2024 election, aiming to unify efforts towards making UBI a scalable reality. The coalition seeks to build upon the guiding principles of the 2016-17 Annual Economic Survey and the successes of targeted basic income programs across eight states. The goal is to design a UBI model that aligns with India’s existing rights-based policy landscape and addresses the inefficiencies in the current welfare delivery system.

    Voices of Leadership

    ●      Tarun, CEO of Indus Action, reflects on the journey since the Annual Economic Survey’s discussion on UBI, highlighting its growing relevance in addressing the socioeconomic challenges of farmers, women, and youth. He asserts, “UBI’s time has come. It’s an efficient and equitable addition to our welfare portfolio, achievable within our public finance constraints.”

    ●      Pankhuri, Co-founder of Project DEEP, champions basic income for its ability to uplift living standards, spur economic activity and ensure no one is left behind. She believes, “A basic income is a security net that fosters productivity and local economic growth, a true win-win scenario.”

    ●      John Michael, WorkFREE Coordinator and BIEN’s Asia Pacific Hub Manager, emphasises UBI’s role in breaking the cycle of debt and dependency, highlighting its potential to provide psychological security and open up new personal and economic opportunities for the marginalised.

    ●      Sarath Davala, the Chair of Basic Income Earth Network and Research Director of WorkFREE mentioned the five pillars of the concept of UBI – individual, periodic, cash, universal and unconditional – and lauded that unconditionality is gaining traction in the policy space in India. He asserted that UBI is not a dream but necessary to address insecurity and deprivation in the Indian context.

    iBIC is committed to facilitating ongoing dialogues, building a comprehensive knowledge base, and advancing structured advocacy for the adoption of UBI at scale. This collaborative effort promises to pave the way for India’s more dignified, robust, and future-ready social policy framework, ensuring inclusive growth and a brighter future for all citizens.

    This post was originally published on Basic Income Today.

  • Basic Income: Why It Is Fair and How It Is Financed

    By Daniel Raventós

    See original post here.

    The basic income proposal has been activated – a public, individual, unconditional and universal monetary allowance. If 30 years ago it was a largely unknown proposal and there was little written material, today it is a subject of public debate. I can testify that when I was writing my doctoral thesis on this proposal, presented in 1998 but started 5 or 6 years earlier, it was an adventure to find a bibliography not in the form of books but of articles. They were scarce in English and French. In Spanish and Catalan, they were anecdotal. Nowadays, what can be found in paper and electronic format and many languages on the most varied topics related to basic income (political philosophy, pilot plans, financing, feminism, youth…) is immense. And a not insignificant part of these works is of high quality. Moreover, as we explain in the book En defensa de la Renta Básica. Why it is fair and how it is financed (Deusto-Planeta, 2023), the UNDP, the IMF, the UN Secretary-General, the ILO, the head of the Vatican State, and even the Financial Times editorial of 3 April 2020, are just some of the voices that have been raised in recent times in favour of basic income or, at the very least, in defence of the need to seriously debate its implementation. And much more importantly for me: feminist and LGBTI groups, social workers, cultural professionals, and mental health groups have spoken out in its defence without the slightest ambiguity. Yes, basic income was a rare thing 25 or 30 years ago, today it is in the public debate.

    One of the reasons, by no means the only one, for this increased awareness of basic income lies in the strength of this proposal, both in its philosophical-political and financial aspects. I would add, if anything, the good theoretical and empirical elaboration over the last decades in response to the most common criticisms of this proposal, such as: “nobody would work”, “there would be no incentive to innovate”, “there would be a large call effect”, “it is inflationary”, among the most frequent.

    This book addresses in great detail the answers to these two questions about basic income: is it fair and how can it be financed? We deal with other aspects, such as the historical failure of conditional subsidies (like the Spanish government’s Minimum Vital Income or the Guaranteed Income of Citizenship in Catalonia) and the history of the pilot schemes that have been carried out over the last few years in many different countries and geographical areas, including the one in Catalonia, one of the most well-designed in the world and now parked. But the main part is devoted to answering these two questions. In addition, we have provided more than 1,000 tables on the book’s website that Deusto has made available, which for obvious reasons could not be included in the many graphs and tables that are already in the book. They are available to anyone who wishes to consult them.

    One of the novelties of this book is the proposal for financing a basic income for the European Union as a whole based on three taxes: income, wealth, and CO2. At all times, the starting point has been the official data of the European Union, and in the case of Spain there is even a chapter that discusses the comparative advantages and disadvantages of the Living Conditions Survey and the Household Panel.

    In the book, we reproduce a quote from Louis Brandeis, a United States Supreme Court member from 1916 to 1939: “Most of the worthwhile things in the world have been declared impossible before they were done”. Perhaps we will soon see basic income as a worthwhile “thing” in the world. As will the democratic right to universal suffrage or the right to divorce. This book attempts to provide reasons why basic income should move from an impossibility to a worthwhile reality.

    This post was originally published on Basic Income Today.

  • Nobel Laureate gives lecture at University of Cape Town on universal basic income in the developing world

    By Maya Skillen

    See original post here.

    The hybrid lecture, which was held at UCT’s New Lecture Theatre and livestreamed on Zoom, was organised by the Abdul Latif Jameel Poverty Action Lab (J-PAL) Africa in association with UCT’s Southern Africa Labour and Development Research Unit (SALDRU), where J-PAL Africa’s headquarters are based.

    Professor Banerjee, a co-founder of J-PAL, is a Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology in the United States. He’s also the co-recipient of the 2019 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for his work in development economics.

    Correcting misconceptions

    In his lecture, Banerjee detailed a proof-of-concept study that is being conducted in two of Kenya’s poorest counties, Siaya and Bomet. The study is seeking to understand the underlying economics of universal basic income in developing countries.

    “There’s a long history of the idea that if you give poor people money, they’ll stop working … But there is no evidence of this.”

    “There’s a long history of the idea that if you give poor people money, they’ll stop working or undermine themselves in various ways, or that it will start a downward spiral,” Banerjee said in his opening remarks. “But there is no evidence of this.”

    He added that evidence from conditional cash transfer programmes – whereby low-income populations are subsidised if they satisfy specific actions, such as sending children to school or making regular health visits – indicates that people are not irresponsible when given extra cash.

    “We collected data from about 15 of these programmes and found uniformly, across the world, that it has no effect on how hard people work,” Banerjee said. “That sort of evidence put us in the place where we could ask whether providing a stable source of earnings would cause people to eventually stop working or whether it would transform their lives.”

    The case of Kenya

    The study investigated the impacts of giving individuals in 40 Kenyan villages a universal basic income of US$0.75 (approximately R14) per adult per day over 12 years. This was compared to two less expensive interventions: a two-year version (where payments were identical to the 12-year intervention) and a lump sum of $500 (approximately R9 000) per adult; the equivalent of the two-year income.

    Banerjee pointed out that the three interventions helped people in different ways, with two notable factors driving their behaviour: a lack of access to credit and limited savings opportunities.

    “People have a hard time borrowing and lending; this is important, because if you could borrow, you would have started a business already,” he said. “Also, saving is hard – banks are far away and typically not keen to give accounts to poor people because they deposit very small amounts.”

    Banerjee presented data that had been collated when the two-year intervention had ended, as that was the point at which all participants would have received exactly the same amount of money. Impressively, researchers managed to track 91% of recipients.

    The results

    Researchers found that several new enterprises have been created among participants who are receiving the long-term income (over 12 years) and those who received the lump sum. Across sectors, self-employment has gone up and wage employment down.

    In agriculture, long-term and lump sum participants have started new animal husbandry businesses, whereas short-term participants (who received income over two years) invested in what they have, resulting in more productive farms.

    “The ones who want to make the most of their money right now, because they know the money will run out, opt for a divisible product [like fertiliser], while the ones who are thinking about the future go for the indivisible product [like cows],” Banerjee explained.

    Tellingly, the study found that the number of hours people spent working has increased markedly.

     They’re also eating better; they’re eating more protein and have a more diverse diet.”

    “People are working harder,” Banerjee said, “which is not surprising, except that’s the prejudice we face – the idea that when people get richer, they stop working and enjoy more leisure. In fact, they’re working harder – if you have more fertiliser, you have more grain, so you spend more time harvesting.”

    Interestingly, total consumption has gone up the least among long-term participants.

    “They’re probably saving the money for their business,” Banerjee said. “They’re also eating better; they’re eating more protein and have a more diverse diet.”

    While there was more savings and a decline in borrowing, the more notable investment vehicle that long-term and lump sum participants are making use of is a rotating savings and credit association (ROSCA), known as a merry-go-round in Kenya.

    “Ten people may decide to each put in 100 Kenyan shillings [KES] a week for about 10 weeks, so that’s 1 000 KES a week,” Banerjee explained. “Then they have a lottery, and whoever wins it the first time, gets 100 KES.” That person sits out the next lottery, and the remaining nine people play, and on it goes.

    “Participation in a ROSCA is a way to transform small amounts of money into big amounts. This is what long-term and lump sum recipients are doing, as they may want to expand their businesses. But short-term recipients don’t participate in ROSCAs. This suggests that even though the cash flow is the same, behaviour is very different.”

    Banerjee mentioned various other social outcomes, placing emphasis on the well-being measure, having found that depression has gone down dramatically. The measure is most responsive among long-term recipients.

    “Lump sum recipients might be consuming more, but they’re stressed out because their business might fail,” he explained. “Long-term recipients have the assurance of money still coming in even if their business fails. This shows that even though they’re consuming the least, their well-being is the highest.”

    Final thoughts

    It’s too soon to know which intervention is best, Banerjee said in conclusion. He added that acting on savings and credit constraints may be beneficial, and that the possibility of a wealth transfer instead of universal basic income should be considered.

    “The fact that short-term and long-term recipients behave differently suggests that ‘lumpiness’ is a problem – that is, being able to turn little amounts of money into bigger amounts,” he explained. “The role of the ROSCA is a real issue, so there’s some value to having a lump sum.”

    However, he added, researchers can’t be sure what will happen in the long run.

    “If you were to take the long-term income and turn it into a lump sum, there might be a lot of new businesses. Whether that will make people better or worse off, we don’t know – perhaps the businesses will close or some might be unlucky. All kinds of shocks might happen and they won’t recover. These remain open questions.”

    This post was originally published on Basic Income Today.

  • Veteran Basic Income could be the solution the VA has been searching for

    By Yelena Duterte

    See original post here.

    Five years ago this February, the Department of Veterans Affairs (VA) underwent an overhaul of its appellate process when it implemented the Appeals Modernization Act. Congress wanted to shorten wait times for veterans, provide more choices in the appeals process and afford clear and understandable decisions. 

    This band-aid fix did not mend the broken system that is VA benefits, as veterans are still waiting an average of about 41 months for the Board of Veterans Appeals to adjudicate claims. Unfortunately, that wait time is only one step in the process and does not include the initial application, remands back to the VA Regional Office or appeals to the Court of Appeals for Veterans Claims. 

    As a researcher specializing in veterans law and disabilities, I have witnessed the significant harm the VA system has on veterans. 

    The VA benefits system relies heavily on the medical community to provide diagnoses, research on medical conditions and their causes, and the expertise of examiners to provide opinions on how an event or exposure during military service is related to a veteran’s condition. This overreliance on the medical community, however, impairs veterans. 

    First, there are significant concerns for veterans receiving a proper medical diagnosis.  

    For instance, doctors who conduct lung testing are trained to “race-correct” results if the patient is Black, even though studies have shown that there is no biological reason to do so. That means even if a Black veteran may have a significant lung condition, because of the race adjustment, a doctor could find the results to be normal. Further, women — especially women of color — have historically not been believed by doctors, due to implicit biases and systemic biases within the medical community. These medical tests and disbelief of women and people of color not only impact adequate treatment but will likely cause the VA to deny needed benefits. 

    Second, science often lags behind the lived experiences of veterans. Just last month, the Centers for Disease Control and Prevention (CDC) released data that several cancers, including esophageal cancer, may be related to toxic water exposure at Camp Lejeune more than four decades ago. Brain cancer is now associated with burn pits, unfortunately, years after Beau Biden passed away from that very disease after his service in Iraq. We have watched Vietnam veterans fight for decades to get recognition of the harmful effects of Agent Orange. 

    Veterans cannot wait for science to catch up, especially when they are suffering from terminal illnesses. Scientists and the medical community just do not have enough data to determine that association until decades after the exposure — sometimes too late for many veterans. 

    The old adage “delay, deny, wait til I die” appears to be many veterans’ experiences. 

    This system has become inherently adversarial, requiring attorneys to advocate for veterans because of the complexity of the system. Congress must change the VA benefits system to a Veteran Basic Income — a monthly, unconditional income for all veterans who are discharged from military for service. This monthly payment may create a softer landing for military members when they transition to civilian life. 

    We are in a significant recruitment slump, where the Navy is removing barriers to enlistment. The promise of a veteran basic income could encourage civilians to serve their country with an understanding that it, in addition to the GI Bill, will be a step out of poverty and into the middle class. 

    For many veterans, the VA system requires them to relive past traumas to prove their entitlement to benefits. In many cases, the trauma veterans experience — like sexual trauma or combat trauma — is not officially reported. Some of my clients decide not to move forward on their case because of the repeated requirement to tell another person about their experiences — their advocate, a doctor, in an affidavit, and even testimony — to provide the VA with proof of their experience.        

    A Veteran Basic Income would alleviate or mitigate some of these burdens. 

    Basic Income has also been shown to reduce homelessness, and lower mental health symptoms. Housing has also been shown to improve health outcomes for veterans. With veterans’ homelessness spiking recently and suicide rates at 17-18 veterans per day, Basic Income is the answer that may solve the bigger problems facing veterans and the VA. 

    Veteran Basic Income would be costly at the front end. Yet, it is shown that those who have income, are housed and have access to health care save money for the entire system. It would be a massive change for veterans and the VA, but this would allow the VA to do what it is best at: providing care to those who served. 

    This post was originally published on Basic Income Today.

  • Writer Kerry Hudson: ‘Universal basic income just makes sense’

    By Hephzibah Anderson

    See original post here.

    Kerry Hudson wrote two award-winning novels before her memoir Lowborn (2019), which described her harrowing early years spent bouncing between foster families and homeless hostels, established her as a vital advocate for social equality and inclusion. Now, follow-up Newborn: Running Away, Breaking from the Past, Building a New Family finds her eyeing the future. Having spent a few months living on a houseboat, the 43-year-old now resides on terra firma in Sheffield with her husband and their three-year-old son.

    What made you want to write about motherhood?
    Let’s be frank, I’m not the first author to have a baby and then immediately need to write about it, but I had these vast, complicated feelings about myself and motherhood and how I was brought up. Newborn felt like a natural progression from Lowborn, the culmination of what happens after you “escape” – I use the word very much in inverted commas: you don’t really escape but you move forward. How do you then build a happy, healthy, functional life of love and stability around you?

    You became very ill in the middle of writing the book, with a rare autoimmune disease that made it hard to breathe. How did that experience shape it?
    It’s not being dramatic to say that I really thought I might die, and so the book became a little legacy to leave behind for my son and my husband. I wanted to crystallise this complicated, beautiful family that we created, which for me was a miraculous gift because I’d been told to expect that I would never have a loving partner, that I wouldn’t be a good mother.

    Told by whom?
    I grew up with the narrative that working-class mothers were the worst of the worst, and then I was told directly by people quite often that with my background, having a child was going to be difficult. When Lowborn came out there was a really long review on Amazon from a woman who said – in capital letters – do not have children, please, and if you do, refer yourself to extreme psychiatric maternal care. At the time, I thought I was infertile but we were still trying for a baby, and I was just heartbroken.

    It’s still very common for me to do panels with three writers from Oxbridge, so I’ll never feel totally comfortable

    Kerry Hudson

    As a society we’ve been slower to acknowledge classism than other prejudices, and the publishing industry is no exception. What makes you optimistic for change?
    When I started out, there just weren’t that many working-class voices. If I hadn’t been such a novelty, I’m not sure my career would have had quite as much momentum, but there are a lot of brilliant working-class writers now, like Graeme Armstrong, who was on the Granta [Best of Young British Novelists] list.

    Your voice has helped shaped the conversation. Do you feel powerful when you sit down to write?
    I don’t think I’ll ever quite get over that feeling of imposter syndrome. It’s still very common for me to do panels with three writers from Oxbridge, so I’m never going to feel totally comfortable. Where I do feel powerful is with my family and with the life that I’ve created, which writing has allowed me to build. This feels the right balance to me – that slight discomfort in the creative space is actually quite valuable.

    If you could wave a magic wand and do one thing to make Britain more equitable, what would that be?
    Can it be two? Universal basic income just makes sense. We’re a vastly unequal society and there’s really no reason for that. And the other thing is that I would heavily, heavily invest in social and affordable housing. Those are the things that cause the greatest sense of marginalisation. If you don’t have a secure, safe home it is really hard to build the foundations of any sort of life, and if all your energy is spent worrying about every penny, it’s so grinding and exhausting you can’t possibly be expected to make your life better.

    You’re taking a break from memoir to write two thrillers. What motivated that decision?
    I’ve always found writing helpful and therapeutic. It’s been a way to effectively make gold from the shit, you know? But as wonderful as it is being able to turn everything into material, it also means you’re always an observer in your own life. I just wanted to be able to live more in the present. I also miss the joyride of novels. There are so many ethical concerns about writing your own life, and you spend so much time analysing and deconstructing everything, whereas with fiction, you literally just make it up.

    You lived in Prague during the pandemic. What was that like?
    There were armed guards on the streets during lockdown and the fine for breaking the rules was equivalent to the cost of an apartment. But it is just an astoundingly beautiful place. Even when I talk about it I get a bit cheerful because every street is magnificent. If I had been well, we’d have stayed, but by the time we left I was spending 90% of the time in bed, and gave every ounce of energy I had to my son. How unbelievably lucky and privileged were we to be able to come home and access the NHS?

    You’ve since been diagnosed with a second autoimmune condition. How has that affected your life?
    I have to take a very low-dose chemotherapy drug and build in rest but I have a fairly good quality of life. Unfortunately it is an illness where people die earlier than they’re meant to, so it changes your perspective. I’ve really had to evaluate what is happiness, what I want my creative practice to be, how I want to use my time and my energy, and what brings me joy – and for that I’m grateful. External validation is something you need so badly when you come from a very marginalised place, and I was always driven, driven, driven. I could have spent years chasing after things that I don’t really care about on a deeper level.

    You’re an incredibly optimistic person but it’s a lot to deal with. What reliably picks you up?
    The joke in our house is that a slice of toast is what I always need. Food has always been a great pleasure, but these days it’s often just my kid. Every time I look at his little laughing face, life is OK.

    His childhood is already so different to your own. Do you ever worry that he might grow up too sheltered?
    Childhood is meant to be cushioned and sheltered. It shouldn’t be that you have to show resilience when you’re six or seven. If my son comes out of his childhood into his teens believing the world is just a generous, warm, kind place then I will consider myself to have done a very good job.

    This post was originally published on Basic Income Today.

  • How government plans to pay for a Basic Income Grant in South Africa

    By Seth Thorne

    See original post here.

    President Cyril Ramaphosa is looking to try make the shift to a Basic Income Grant a reality following renewed calls in this year’s ANC’s January 8th statement – but questions have arisen as to how the country is going to fund it.

    “Millions of working age adults in our country remain unemployed without any form of support and little prospect of gaining employment until economic growth picks up,” said Ramaphosa at the opening address of the the ANC’s 26-29 January 2024 national executive committee (NEC) lekgotla.

    The ANC’s January 8th statement says that the R350 Social Relief of Distress (SRD) Grant, which introduced during the COVID-19 pandemic, was “able provide relief to [millions of] unemployed people.” Ramaphosa said that this is “a strong case for a permanent form of targeted income support grant for the unemployed within our fiscal constraints.”

    The SRD is currently one of the only sources of financial support to millions of South Africans who are unable to find employment. South Africa’s unemployment rate of 31.9% is one of the highest in the world.

    As such, renewed discussions about introducing the Basic Income Grant has fast entered the arena.

    Minister of Social Development Lindiwe Zulu was asked in a parliamentary question at the end of last year what funding models are being explored to fund this proposed Basic Income Grant, and she indicated that the options on the table are between:

    • An increase in taxation;
    • Reallocation of current budget allocations;
    • Borrowing.

    Increase in taxation

    The tax options considered include wealth taxes, removal of tax expenditure subsidies, increases in the Value Added Tax (VAT) or personal income tax:

    Minister Zulu said that the wealth tax “has the advantage of being quite progressive as it would target the rich only”; however that route could result in significant tax avoidance and thus result in inconsistent revenue on a year to year basis “as the wealthy find ways to avoid it.”

    For the VAT approach, it would be a broad-based tax which has government collect revenue to fully fund the grant. Zulu said the disadvantage, however, is that “such an approach would negate the motivation for the grant as the poor would in effect pay proportionally more than the rich because VAT is a flat rate for everyone.”

    “The tax expenditure subsidies on retirement savings were also considered as a possibility,” said Zulu.

    In addition to providing a possible new revenue, the department said it would create larger equity in the tax system by “reducing support which is currently benefitting high income earners.” However, the department believes that it would be difficult to quantify and would be unreliable and “may result in disincentivising retirement savings among some high-income earners.”

    The most likely is the Personal Income Tax approach, which would take larger contribution from the high-income earners than the lower income earners, with the government saying this “reduces inequality”.

    Zulu said that this would a form of ‘progressive’ personal income tax would ensure ‘a more sustainable revenue source.’ “It is also more reliable than the other tax approaches, thus ensuring sustainable funding in the long term.”

    The borrowing option

    “The borrowing option has the advantage that it would provide additional funding without a need for budget reprioritisation or tax increases,” said Zulu.

    However, the government and National Treasury in particular is wary of this as it would be expensive for the country – increasing the country’s already high debt burden and also increase high interest payments which are currently one of the biggest spending items in government expenditure.

    South Africa’s gross debt is expected to rise to R6.52 trillion in 2026/27, up from from R5.24 trillion in 2023/24, and reach almost 75% of GDP in 2024. 

    Reprioritisation of current budget allocations

    “This would have the advantage of shifting funds from some government expenditures which are less effective and/or efficient, and redirect it to the urgent needs of the poor,” said Zulu.

    However, such a reprioritisation is seen to be complex and difficult to implement.

    Senior Research Fellow at the Johannesburg Institute for Advanced Study, Seán Muller said that the most recent budget policy statement has shown two very important things. 

    “The first is that South Africa’s fiscal situation is arguably at its worst in the post-apartheid era; the second is that any decisions taken, especially about the 2024/25 fiscal year, could affect how South Africans view the current government when voting in (the 2024) elections.”

    The Treasury’s head of budget office, Edgar Sishi, told a central bank conference last year that the institution had battled to sell spending cuts to the government. “When those things happen, political leaders find it very difficult; they feel constrained in withdrawing the support,” Sishi said.

    Department’s current grant expenditure

    The Department of Social Development has allocated 96.4% of its R263 billion for grants; meaning R253 billion has been allocated in the 2023/2024 financial for direct cash transfer payments. R36 billion has been used to fund the extension of the Covid-19 SRD grant until 31 March 2024.

    Zulu said in her speech at the budget vote that, in total, “[South African Social Security Agency] Sassa expects to pay to a projected 27 million eligible grant beneficiaries by March 2024.”

    Sassa has recently been in the headlines for many wrong reasons. At the tail-end of 2023, it was revealed that the payments system nearly collapsed at the beginning of September due to a system “glitch”, and also that they lost more than R50 million due to fraud and corruption within its ranks over the past two years. 

    This post was originally published on Basic Income Today.

  • Financial stress linked to worse biological health

    By Mark Greaves

    See original post here.

    The study, published in the journal Brain, Behavior and Immunity, found that not only major stressful experiences such as bereavement but chronic challenges such as financial strain were detrimental to the healthy interaction of these systems.

    Communication between our immune, nervous, and endocrine systems is necessary to maintain good health. Disruption of these processes is linked to a wide range of mental and physical illnesses, from cardiovascular disease to depression and schizophrenia.

    When a threat like stress occurs, signals between the immune, nervous, and endocrine systems are activated and spur physiological and behavioural changes.

    In this new study, the researchers analysed blood concentrations of four biomarkers in 4,934 people aged 50 and over who were participants of the English Longitudinal Study of Ageing. Two of these were proteins involved in the innate immune response to inflammation (C-reactive protein and fibrinogen), and two were hormones involved in the physiology of the stress response (cortisol and IGF-1).

    The team used a sophisticated statistical technique, latent profile analysis, to identify clusters of biomarker activity. Three groups were identified and labelled as low risk to health, moderate risk, and high risk. The researchers then looked at how earlier exposure to stressful circumstances might affect people’s likelihood of being in the high-risk group.

    They found that exposure to stressful circumstances overall, ranging from being an informal carer to experiencing a bereavement or divorce in the last two years, was linked to a 61% increase in likelihood of belonging to the high-risk group four years later.

    Separately, the effect was also cumulative, as the likelihood of belonging to the high-risk group increased by 19% for each stressor experienced, for those who experienced more than one stress-inducing circumstance.

    People who reported only financial strain – the perception that they may not have enough financial resources to meet their future needs – were 59% more likely, four years later, to belong to the high-risk group.

    Lead author, PhD candidate Odessa S. Hamilton (UCL Institute of Epidemiology & Health Care), said: “When the immune and neuroendocrine systems function well together, homeostasis is maintained and health is preserved. But chronic stress can disrupt this biological exchange and lead to disease.

    “We found that financial stress was most detrimental to biological health, although more research is needed to establish this for certain. This may be because this form of stress can invade many aspects of our lives, leading to family conflict, social exclusion, and even hunger or homelessness.”

    Experiencing stress over a prolonged period of time can disturb the communication between the immune and neuroendocrine systems. That is because our response to stress is similar to our response to sickness, activating some of the same pathways (for instance, both responses trigger the production of immune system signals called pro-inflammatory cytokines).

    The researchers also looked at genetic variants previously found to influence our immune-neuroendocrine response and found that the association between stressful life circumstances and belonging to the high-risk group four years later remained true irrespective of genetic predisposition. 

    The research was supported by the National Institute on Aging, the UK’s National Institute for Health and Care Research (NIHR), the Economic and Social Research Council (ESRC), the Biotechnology and Biological Sciences Research Council (BBSRC) and UCL.

    Links

    This post was originally published on Basic Income Today.

  • Opinion: A properly functioning social security system is a major stimulus to economic growth

    By Nomahlubi Jakuja

    See original post here.

    One of the pillars used by the World Economic Forum to assess global risk and growth is inclusiveness. Under this pillar, the provision of basic services and access to adequate social protection remain major drivers of inclusion.

    Upper middle-income economies have an average score of 54.8, exhibiting a somewhat stronger inclusive growth performance. South Africa has an inclusive score of 52.9 — a generous rating compared to our Gini Coefficient measure of 0.63, a measure of the gap between the top 1% and the poorest of the poor. 

    Location, race, gender, age and parental status play a crucial role in South Africa’s overall inequality measures.

    Entering 2024 with these weak inclusive measures, one must ask the important question of what South Africa will do differently this year to reduce inequality and unemployment while stimulating economic growth.

    South Africa has done a remarkable job of increasing the allocation of expenditure on the provision of basic services, with spending on education topping the fiscal budget allocation year after year.

    But an area that the country continues to shy away from is examining our social security system. In 1994, when the new government came into power, it adopted the already existing social security system developed by the apartheid government. Without addressing and examining the purpose of our social security system, the only new introductions were on the child support grant front.

    Other existing grants, such as the old age grant and disability grants, were merely extended to include black people without needs assessments of these groups or an audit of excluded groups, particularly the 18- to 59-year-olds, who were completely excluded.

    Young black females bear the brunt of unemployment, currently at 40%. The idea that this group can continue being ignored by our social security system while aiming to increase inclusion is diabolical.

    An expansive — in coverage and value — social security system fit for purpose is not only a means to achieve inclusion but is an economic tool many countries have used, at least in the short term, to address economic challenges such as sudden shocks hampering growth.

    Between March 2020 and May 2021, 222 countries implemented 3,333 social protection measures to protect incomes, jobs and livelihoods despite sharp declines in taxes and other sources of revenue. This highlights the important role social security can play as an economic stabiliser.

    Covid-19 response systems displayed this with irrefutable evidence and revealed the speed with which such policies can be implemented at both global and domestic levels.

    Coupled with other supply-side policies, including investments in infrastructure, South Africa needs to revisit and rethink the use and role of its social security system, not as a poverty alleviation tool, but as a demand-side economic stimulus to meet short-term economic growth.

    The need to adapt the entire social security system to meet the present-day needs of ordinary people, primarily young black women, is also necessary. If you are a 25-year-old black woman with a PhD and are unemployed, have never worked and are actively looking for employment and cannot find any (a lived reality in South Africa), you have no support from our social security system and have no financial claim or stake in the economy whatsoever.

    If overhauled by the addition of a universal basic income, our inadequate social security system could become a critical buffer for the unemployed to prevent the 25-year-old graduate from having to beg on the side of the road holding a placard saying: “I need food.” DM

    This post was originally published on Basic Income Today.

  • How would the Smith-Wyden tax package impact families?

    By Joshua McCabe

    See original post here.

    After several months of negotiations, Ways and Means Committee Chair Jason Smith has released the details of the Tax Relief for American Families and Workers Act of 2024. 

    The proposed tax package includes several changes concerning business deductions, international trade, housing, and families. Specifically, it would make several changes to the child tax credit that address conservative concerns about work incentives and progressive concerns about distributional impact, which had held back previous efforts to come to a bipartisan consensus. 

    Currently, the credit has two components–a nonrefundable portion and a refundable portion–that ensure the credit phases in as household income rises. Families who have not earned any income in the past year are not eligible to receive the credit. The refundable portion provides families with a credit equal to 15% of their earnings that exceed an initial $2,500 earnings threshold (up to $1,600 per child). The remaining $400 can only be claimed as a nonrefundable credit. 

    The proposed tax package would make four significant changes.

    First, it would speed up an already planned increase in the credit’s refundable portion. The 2017 tax reforms set it at $1,400 and indexed it to inflation so it would gradually rise yearly. Last year, it rose to $1,600. The proposal would retroactively raise it to $1,800 for 2023 and increase it by $100 annually until it reaches the total $2,000 in 2025. 

    Second, it would shift from a fixed phase-in per household to one that varies based on the number of children. The 15% phase-in rate currently applies to households regardless of how many children claim the credit. This increases the minimum earnings necessary to claim the maximum refundable portion of the credit for families with more than one child. A married couple with one child, for example, must earn at least $13,200 to receive the total $1,600. If they have a second child, they must earn at least $23,900 to receive the full $3,200 for both children. Under this proposal, the phase-in would shift from 15% per household to 15% per child after the same initial $2,500 earnings threshold. 

    These two provisions would majorly impact low-income working families–particularly those with two or more children. Figure 1 looks at how the changes would impact households with one person working full-time at various hourly wages this past year.

    Table 1. Total child tax credit amount under current law and proposed reform, 2023

    This would effectively make any family working full-time at the federal minimum wage eligible for the maximum refundable credit amount – $1,800 for one child, $3,600 for two children, and $5,400 for three children. Larger families would see the most considerable increase in their total credits. For example, a minimum wage worker with three children would see their credit triple from $1,800 to $5,400 at tax time.

    Third, the proposal would begin indexing the value of the child tax credit in 2024. Unlike most other family provisions in the federal tax code, the child tax credit is not automatically adjusted for inflation each year. As a result, the credit’s real (inflation-adjusted) value erodes each year unless Congress increases its nominal value. The recent spell of higher-than-usual inflation has led to a significant decline. If Congress had indexed the credit when it expanded it as part of the 2017 tax reforms, for example, it would be closer to $2,400 rather than the $2,000 it stands at today (see Figure 1). 

    Figure 1. Maximum value of child tax credit, 1997-2023

    The proposed indexation will not reverse this previous erosion but will prevent it going forward. This will be particularly important for middle-income families who have borne the brunt of the erosion.

    Lastly, the proposal will allow families to choose between the current or previous tax year when calculating their earnings to determine their credit amount. Under current law, families must use their current year’s income to determine how much credit they can receive during tax time. Because annual income can be volatile, particularly for low-income workers, families could see their total credit swing up or down from year to year. Under the proposed reform, for example, a worker whose annual earnings drop from $15,000 in one year to $10,000 the following because his hours were cut could still claim the maximum refundable portion of the credit by “looking back” to his previous year’s earnings and using that to calculate the credit. 

    If Congress is looking for a way to help struggling families, these four proposed changes would provide low-income working families with a much-needed boost to support them with the cost of raising children.

    This post was originally published on Basic Income Today.

  • Why Do We Work So Much?

    By Peter Gray

    See original post here.

    Work is a word with several different but overlapping meanings. Here I’m using it as a synonym for paid employment.

    Work, by this definition, dominates our lives. We live in a world of work. It is how we survive. It is how, on most days, we spend half or more of our waking hours (not counting the commute).

    It is a source of constant concern. We fret about too much work, or sometimes we brag about too much work, and we worry about too little of it. Work is how most of us define ourselves. “I’m a journalist… or a plumber… or a lawyer.” Why does work dominate our lives and dictate our identity?

    In a previous post, I noted that in 1930, the economist John Maynard Keynes (1930/1963) predicted that, by the end of the 20th century, because of automation, the average workweek would be about 15 hours. That, he predicted, would be sufficient to produce everything we need for a comfortable life. In one sense he was right: Automation has greatly reduced the amount of human work, whether physical or mental, required to produce everything we reasonably need. But he was wrong in his prediction that we would work less. The average work week for most today is little different than it was a hundred years ago. Why?

    One answer to this question, which I described in the previous post, has to do with the economy. We live in a world where less work is needed, but we have not adapted our economic system in a way that permits less work for most people. We still have a system of work for wages as the means of distributing what people need, and we still have wages set at a level that, for many people, necessitates many hours of work to support themselves and their family. The powers at the top of our economic hierarchy (the so-called “job creators”) have no interest in increasing wages (for anyone other than themselves), so most people still need to work about 40 hours a week to support themselves and their family.

    Instead of reducing work, our approach has been to continuously create new jobs Some of these jobs are useful, with social value, but many are not. In fact, as anthropologist David Graeber has argued in his book Bullshit Jobs (2018), many add no social value or are even harmful to society and the environment (see my previous post for examples).

    We could, if we had the political will, reduce through legislation the hours people must work, thereby improving lives and, at the same time, benefiting the environment. We could increase the minimum wage and decrease the workweek gradually, over time, in steps that would not dramatically disrupt the economy, eventuating in something close to the 15-hour week predicted by Keynes.

    Or we could, as some have proposed, provide a universal basic income, paid for by increased taxes on the very rich. Again, this could be instituted on a gradual basis. The powers that be—the ones who profit most from things as they are—provide roadblocks to such changes. But I think there are other reasons, too, why the rest of us have not demanded those changes.

    We Are Products of a Culturally Ingrained Work Ethic.

    We are raised to believe in the moral virtue of work. Historians attribute this in part to the Protestant Reformation, going back to the 16th century, whose leaders viewed work as God’s will and play as the breeding ground of sin, and even more to the Industrial Revolution of the 18th and 19th centuries, when the economy changed from primarily agricultural to factory-based industrial. The schools that arose in the Protestant era and became compulsory and state-supported in the 19th century and continue essentially unchanged today (but even more consuming of children’s time) were designed explicitly to promote the ideology of work and suppress the natural human desire to play (more on the history of schooling here).

    Our continued implicit beliefs that work is good for us derive not just from our cultural history and our schooling (where learning is turned into work), but also from the continued propaganda deriving ultimately from those who profit most from the work of others. We are made to feel ashamed if we take what is called a “handout,” even if we are disabled or burdened with the unpaid labor that comes from caring for others who need our care.

    Our culturally ingrained work ethic may also lead us to humblebrag about being overworked. We may “complain” to friends and relatives about being too busy with work and not having time to do the things we would really like to do, but research by Silvia Bellezza and colleagues (2016) suggests that this may often be more boast than complaint. In a series of studies, these researchers found that people—at least in the Unites States (it didn’t hold up in Italy)—accord higher status to those who work more, other things being equal, than to those who have more leisure time. The assumption is that long hours of work imply that the person has desirable qualities that make them much valued by employers. This is only true, however, for people who work more by choice, not for those who work more out of necessity.

    And so, as a society, we don’t push as hard as we might for reduction in work. Instead, we push for more jobs.

    Too Many Have Forgotten How to Play Outside of Work.

    In a research study conducted in the late 1980s, Mihaly Csikszentmihalyi and Judith LeFevre (1989) found that many workers were happier at work than during free time at home. Their reports on what they were doing at work and home help us make sense of this seemingly paradoxical finding. At work they were often engaged, in a social setting, in challenging, skill-stretching tasks that were within the range of their competence and over which they had a good deal of control. These are the conditions that lead a person to experience work as play, or at least as highly play-like. At home, in contrast, they tended to engage in passive activities, such as watching television or lying on the couch trying to sleep, with relatively little social engagement.

    The primary message I take from this study is that many adults in our work-obsessed society had, by the 1980s, forgotten how to play. At work, at least in some kinds of jobs, they found themselves in a situation that had play-like qualities. During leisure time away from work, they became, by comparison, both mentally and physically passive. They saw themselves as relaxing, recovering from work, but in fact were depriving themselves of the joy they might gain from more engaging activities.

    I don’t think this was just because they were exhausted at work and needed to rest at home. In earlier decades, when work was, if anything, more exhausting than in the 1980s, adults often engaged in active, play-like activities during their free time. At least this is my impression, though I don’t know of any quantitative research showing it to be true. I recall, in the 1950s when I was a child, my parents and other adults engaged in softball games on summer evenings and weekends, socializing with friends over cards, skill-demanding hobbies of various sorts, gardening, and chores such as lawn maintenance and home repairs that people tend to hire out today. Such activities seemed to be a great source of satisfaction and perhaps more effective in rebounding from work than hours on the couch.

    Are We on the Cusp of Change Toward a “Post-Work Society”?

    The world keeps changing, and we are now experiencing a revival of calls for less work. Some are proposing change toward what they call a “post-work society” (Minerva, 2023; Rattee, 2023). Nobody suggests we can do away with work entirely, but many believe that Keynes’s idea of a 15-hour workweek is well within reach. Another idea in this movement is that we could change the nature of work, so it is more varied and everyone could choose a balance of physical and mental work rather than just one type of work, which would improve health and make work less tedious.

    The post-work movement has been brought on by several social forces. The work shutdown during COVID led some to see advantages—for workers, employers, and the environment—of a world in which people aren’t traveling back and forth to work five days a week. Digital technology has made it possible for more people to work from home, which means they can live wherever they want, including near friends and relatives and at places where they like to play, and can choose their own hours of work.

    More people are choosing to work less, even though it means less income, so they have time for other activities that are meaningful to them (for many examples, see Balderson et al., 2021). Dramatic advances in artificial intelligence have led to predictions of a raft of jobs becoming obsolete and revival of concern that there won’t be enough work for everyone if we insist on maintaining 40-hour workweeks.

    It will be exciting to see what the next few years will bring.

    Final Thought

    Play apparently does not come naturally to us adults today. Ironically, for many it seems to occur more when at work than during free time at home. Perhaps, if we want more play in today’s world, we must plan for it, arrange for it—dare I say, even discipline ourselves to come home to something other than the couch. Once we get started on some hobby we used to enjoy, or join a social group, or create a vegetable garden, we won’t regret it. We will start having more fun away from work than at work.

    As always, I welcome your thoughts and questions. Psychology Today does not allow comments, so I have posted this on a different platform where you can comment and read others’ comments here.

    References

    Balderson, U., et al. (2021). An exploration of the multiple motivations for spending less time at work. Time & Society, 30(1), 55–77.

    Bellezza, S., Paharia, N., & Keinan, A. (2016). Conspicuous consumption of time: when busyness and lack of leisure time become a status symbol. Journal of Consumer Research, 44, 118-138.

    Csikszentmihalyi, M., & LeFevre, J. (1989). Optimal Experience in Work and Leisure. Journal of Personality and Social Psychology, 56, 815-822.

    Graeber, D. (2018). “On the phenomenon of bullshit jobs: a work rant”. Strike Magazine. August 7.

    Graeber, D. (2018). Bullshit jobs A theory. Simon & Schuster.

    Keynes, J. M. (1930/1963). Economic possibilities for our grandchildren. Reprinted in John Maynard Keynes, essays in persuasion. New York: Norton.

    Minevich, M. (2023). Charting the roadmap to a post-work society. Forbes, July 27.

    Rattee, A. (2023). A new model of work in a post-work society. Medium. June 18.

    This post was originally published on Basic Income Today.

  • The Child Tax Credit Is Back From the Dead

    By Grace Segers

    See original post here.

    Two years after the expiration of the expanded child tax credit, a pandemic-era policy that temporarily but dramatically lowered child poverty rates, federal lawmakers are close to a bipartisan deal that may reinstate some version of the credit.

    Leaders of the tax-writing committees in the House and Senate are working on a deal to expand the existing child tax credit in exchange for extending certain business tax credits, including a popular credit related to research and development that expired at the end of 2022. Punchbowl News reported on Tuesday that the tax deal on the table may end up in the $50 to $80 billion range. A source familiar with negotiations told me that the leaders of the Senate Finance Committee and House Ways and Means Committee had not yet agreed to a final number, but that it would likely be a multiyear deal, rather than making the credits permanent.

    But the road ahead is anything but smooth, as this potential deal arises during a particularly busy and politically fraught legislative period. With so many other pressing agenda items currently under consideration in Congress—such as keeping the government funded—it is unclear whether this tax deal will be approved in a timely manner.

    Democrats have previously floated the idea of reinstating some version of the child tax credit that was temporarily expanded in 2021—and implementing it in concert with a credit related to business deductions for R&D expenses, a policy popular on both sides of the aisle. Senate Finance Committee Chair Ron Wyden, a Democrat, and House Ways and Means Committee Chair Jason Smith, a Republican, launched negotiations last year. Wyden and Smith spoke with Senate Finance Committee Ranking Member Mike Crapo about the proposal on Tuesday. The staff of the House Ways and Means Committee was also set to discuss the deal with Republican committee members on Wednesday.

    “We’ve already, I think, prevailed on a crucial issue, which is that there’s going to be equal treatment with working families and business,” Wyden told reporters on Tuesday. “I want to get as much help as possible for these working families, and get as many families out of poverty as we possibly can. That’s what the objective is, is reducing child poverty in America.”

    The version of the child tax credit agreed to in this potential deal will likely differ from the expansion implemented in the summer of 2021. That iteration of the credit was established by the American Rescue Plan Act, the nearly $2 trillion coronavirus relief legislation passed by Congress shortly after President Joe Biden took office. The expanded credit went into effect on July 15, 2021, with three fundamental changes to the preexisting policy. The amount of the credit increased to $3,000 for children between the ages of 6 and 18, and to $3,600 for children ages 5 and under, in households earning up to a certain threshold. It was also disbursed in monthly installments, rather than a lump sum issued during tax filing season—a move that helped poor Americans to address some of their most pressing financial needs, such as rent and food costs.

    The most significant change to the credit, however, was a provision commonly known as “full refundability,” which allowed parents who owed little or no income tax to receive the credit. Prior to the American Rescue Plan Act, the child tax credit was not fully available for households that had no or extremely low income.

    The full refundability provision was critical to the expanded credit’s success in lifting millions of children out of poverty. In December 2021, the final month that the credit was in effect, 3.7 million children were raised out of poverty; the following month, January 2022, that same number sank right back down. According to census data, child poverty more than doubled from 2021 to 2022, in large part due to the expiration of the enhanced credit. Had the credit been in place in 2022, it would have kept over five million children out of poverty and cut the child poverty rate nearly in half. (Still, although it reached millions of children in low-income households, not every eligible family received the credit, in part because they needed to register with the IRS to obtain it.)

    “In the end, the part of it that’s most important to me is full refundability, to try to make sure that the poorest kids who’ve been excluded from the credit benefit,” said Senator Michael Bennet, who is an advocate for expanding the child tax credit but not directly involved in the current negotiations. “I think there have been some promising discussions about it. We’re going to have to see what the details are.”

    The child tax credit has historically been a bipartisan priority. The 2017 Tax Cuts and Jobs Act, the massive tax package signed into law by President Donald Trump, increased the amount of the child tax credit from $1,000 per year to $2,000 annually, and increased the amount refundable per child, although it fell short of full refundability.

    “The current law policy, which was created by Republicans in the 2017 tax law, is effectively 80 percent refundable—it’s $1,600 out of every $2,000 per child is refundable, whereas the Democratic policy is that all of it should be refundable,” said Andrew Lautz of the Bipartisan Policy Center. “It’s 80 percent versus 100 percent, not 0 percent versus 100 percent. And so, theoretically, that divide should not be difficult to bridge.”

    It’s unclear whether Republicans would consent to full refundability, which would functionally eliminate the earnings requirement for the credit. “Some of the things they asked for, they want to go back to pandemic levels [of spending], for example, they want full refundability. Those are really hard issues, and you’re not going to get Republicans to agree to a lot of that,” Senator John Thune, the minority whip and a Republican member of the Senate Finance Committee, told me. “I think their asks have to be reasonable, and there’s going to have to be a good balance between what they’re requesting and what Republicans are going to need.”

    Senator Thom Tillis, another GOP member of the Finance Committee, said that he believed Republicans and Democrats were still relatively far apart on the child tax credit. “There still seems to be a number of people on the other side of the aisle that believe the Covid-era policy should be codified. That’s just not going to happen,” said Tillis, echoing Thune. “Incidentally, even if there was support in the Senate, there’s no way that would pass the House.”

    Democrats on the Finance Committee indicated that while they would prefer a return to full refundability, they accepted the reality of needing to find a compromise. “I want to get whatever we can get. And we’re going to drive as hard a bargain as we can,” said Senator Sherrod Brown, a Democrat who has worked to expand the child tax credit, although he is not directly involved in current negotiations.

    Others were more skeptical. Representative Rosa DeLauro, who has advocated for an expanded child tax credit for several years, argued that the American Rescue Plan version was “our most effective tool in the fight against rising costs.”

    “I am concerned about the deal that is being negotiated, and am skeptical that any changes were necessary to improve the quantifiably successful child tax credit expansion that was included under the American Rescue Plan,” DeLauro said in a statement. “I believe that we need to extend that expanded, monthly child tax Credit as we knew it. I strongly believe anything less will fail to meet the moment.”

    Still, such a deal would also be a victory for Republicans; although the R&D credit is popular across the aisle, the business credits as a whole are particular priorities for the GOP. The 2017 tax law had included a provision requiring businesses to expense their R&D investments over five or 15 years, instead of immediately writing off the full amount. This policy, which began in 2022, has been universally loathed by the business community; CFOs and the U.S. Chamber of Commerce are among those who have urged Congress to reinstate the ability to deduct R&D expenses annually.

    The deal would also likely bring back lapsed benefits for businesses deducting interest expenses and asset purchases. Beyond being a key Republican policy priority, approving business credits might be politically helpful for Johnson, the newly minted speaker, as a way to prove to the business community that he takes their concerns seriously.

    However, even if Democrats and Republicans were to reach an agreement, its future in Congress would be uncertain—in part because it may not include revenue raisers to accompany the tax cuts. Of course, supporters of both the child tax credit and business credits can argue that these policies will help the economy in the long term, but the cost may make some fiscal conservatives queasy. The Committee for a Responsible Federal Budget estimated in December that, if made permanent, the policies under consideration could cost $830 billion over the next 10 years, with the business credits amounting for the majority of that cost.

    Just as pressing as the price tag is the functional question of procedure; not whether it can pass in Congress but how soon. Americans often begin the process of filing their taxes in January. If members of Congress want to pass legislation that expands the child tax credit retroactively—making it possible for parents to claim this year—they will need to do so quickly. Wyden told reporters on Tuesday that his goal was to finalize the legislation by January 29, when tax filing season formally kicks off.

    Crapo, the ranking member of the Finance Committee, indicated that he believed the conversations were serious. “I wouldn’t be working on it if it couldn’t become law,” he told HuffPost’s Arthur Delaney on Tuesday. “We have to put together a bipartisan, bicameral agreement that will be able to not only survive a filibuster, but survive the dynamics in the House.”

    Those dynamics can be complicated; Johnson is already facing pressure from his right flank on issues of government funding and immigration policy. Moreover, Smith’s committee is one of three spearheading the impeachment inquiry into President Joe Biden, although Wyden said that Smith’s role in those investigations has not factored into their negotiations on a tax deal.

    There is also the question of attaching the tax deal to a plausible legislative vehicle to allow for its quick passage. Funding for four government agencies expires on January 19, with the remaining eight funded through February 2. Although Johnson and Senate Majority Leader Chuck Schumer agreed to a funding deal over the weekend, there is very little time to pass such massive spending legislation. Indeed, Senate Minority Leader Mitch McConnell said on Tuesday that Congress would need to pass a short-term continuing resolution to keep the government funded temporarily.

    Moreover, Johnson will likely face revolt from some of the more hard-line conservative members of the House angry that the spending deal matches the agreement reached by former Speaker Kevin McCarthy and Biden last spring. In theory, a tax deal including an expanded child tax credit and extended business credits could be added to such spending legislation; however, it’s uncertain whether such an addition would help or hinder the overall goal of averting a government shutdown. (Johnson had also painted himself into a corner by saying last year that he would not support another short-term continuing resolution.)

    When asked about a potential vehicle for a tax deal, Wyden compared the situation to the movie Field of Dreams. “If you build it, then everybody’s gonna show up,” he said, echoing the film’s famous tagline. “That’s not exactly how the Congress of the United States works, but we’re generating a lot of support right now.”

    This post was originally published on Basic Income Today.

  • Opinion: Universal basic income for a more prosperous Australia

    By William Bourke

    See original post here.

    AUSTRALIA IS HEADED in the wrong direction.

    Recent research shows that we have reached a stage of shocking inequality. Australia’s wealthiest 20% are now worth 90 times the country’s poorest 20%. Australians of all ages are feeling the pain. In October 2022, a Parliamentary Inquiry found the “face” of homelessness is ‘an older person aged over 55 — particularly women’.

    This extreme divide is not due to laziness or “dole bludging”. It’s mainly due to successive federal governments operating a crony form of capitalism, with a range of very deliberate policies that spur wealth inequality and “disproportionately benefit those with the most”.

    For example, modelling on the distribution of the 50% capital gains tax discount indicates that the top 10% of households by income receive nearly three-quarters of the benefit. Further, the top 1% of taxpayers receive about 14 times as much in superannuation tax concessions as the bottom 10% of income earners.

    We need big, bold change.

    The biggest and boldest change we can strive for right now to claw back some of the excesses of their crony capitalism is an unconditional universal basic income (UBI). A UBI is a payment from the state to every citizen with no strings attached, like a “citizen dividend” for being a “shareholder” in Australia. But the main reason we should introduce a UBI is not our extreme wealth inequality.

    To coin a phrase: It’s the environment, stupid.

    The environment is the most important reason because it is our life support system. But with a growing number of consumers dependent on the finite and non-renewable resources it provides, we need to take action to lighten our individual and collective footprint.

    We need to put our environment first, and therefore allow it to sustain our health, economy and quality of life. That’s where a UBI comes in. There have already been many UBI studies and trials around the world.

    Developed world studies show important results including:

    • Positive effects on economic and general well-being. Treated households enjoyed better physical and mental health, educational performance, and homeownership rates.
    • A modest reduction in work effort. Primary earners worked about 5-10% less and were unemployed for longer stretches of time. The reduction in working hours was much larger for secondary and tertiary earners (15-30%), who devoted more time to childcare and education.

    While these findings may present challenges for some, they should be welcomed. Tapering off our working hours will help us to rebalance our economy and environment. This should lead to a tapering of spending on “stuff” and hence, the overconsumption degrading our planet.

    How much?

    Every Australian should be entitled to a minimum basic income – or citizen dividend – of $500 per week, being $26,000 per year (indexed). Importantly, this is not a “comfortable” income, but a “basic” income. A UBI would also not replace special needs payments required by some, such as disabled Australians. No Australian welfare recipient would be worse off.

    There are around 18 million adult citizens in Australia. At $26,000 per person, you reach a figure of around $470 billion per year. This is affordable.

    The main benefits of a UBI

    The benefits of a UBI are so profound that we can only touch on them here.

    In no particular order, a UBI will:

    • increase our equality, health, well-being and happiness;
    • provide greater financial security and relieve the cost-of-living crisis;
    • reduce homelessness;
    • simplify our bureaucracy;
    • help fix our punitive and conditional welfare system;
    • give us more time to study and/or upskill;
    • help Australian casual staff rent housing in areas where casual labour is most needed, thereby resolving many skills shortages;
    • allow senior citizens to work a day or two a week without losing their pension-now-UBI, thereby also resolving many more skills shortages;
    • encourage economic entrepreneurship, innovation, dynamism and risk-taking by financially supporting people to set up new businesses because they have greater income security;
    • provide an additional safety net for those seeing downward wage pressure from AI, automation and globalisation, at a time when real unemployment and under-employment in Australia is already around 3 million people;
    • help increase volunteering and charitable donations; and
    • allow for more personal freedom to be who we want to be.

    What are the cons?

    No society is perfect and therefore no social system is perfect. There are legitimate questions. Will it be affordable? Will people waste it or drink it away? Will taxes go up for some? Will it be inflationary?

    The research shows there is a modest reduction in labour input, as noted above. We should face up to this and understand that this is in our collective best interests. Research also shows no noticeable increase – and frequently a decline – in consumption towards “temptation goods” (such as alcohol).

    The short answer is that the sky won’t fall in.

    Regarding inflation, the tax and funding mix will be important. Stabilising Australia’s population at the same time will help to offset the significant inflationary impacts on everything of rapid population growth.

    How do we fund a UBI?

    Funding a UBI is simply a matter of priorities and here are some of the choices, in no particular order:

    • a UBI would provide significant savings by replacing a range of welfare payments, which alone would likely cover around 25% of the UBI;
    • a UBI would be subject to income tax at standard marginal rates, meaning up to around 20-25% could come straight back;
    • phase out all superannuation-related tax concessions, currently costing up to $45 billion a year;
    • abolish negative gearing;
    • abolish the 50% capital gains tax discount on taxable assets, including Australian property;
    • introduce an economy-wide super profits tax;
    • end multinational tax avoidance;
    • increase tax on all excessive personal income, through a more progressive tax system, meaning multi-millionaires would not be net beneficiaries of the UBI;
    • introduce a (say, 10%) inheritance tax on wealthy estates; and
    • broaden the base of the 10% GST.

    Do Australians support a UBI?

    When Anglicare polled Australians in 2021 on the question ‘Should every Australian have an income level above the poverty line?’ 77% supported the concept. The COVID pandemic also demonstrated that lifting people above the poverty line was possible and indeed preferable.

    An unconditional UBI provides a simple and eloquent foundational step to resolve many of our growing environmental, economic and social problems. We don’t need more trials, as some others propose in Australia. It’s time to go “all in” on a UBI. That’s what the Sustainable Australia Party is doing. You will soon see “universal basic income” on federal election ballot papers.

    Everyone has the right to share in the wealth of our country. It’s time to demand your dividend.

    What do you think?

    This post was originally published on Basic Income Today.