Author: Resuf Ahmed
INTRODUCTION
On January 11, 1944, U.S President Franklin D. Roosevelt proposed Second Bill of Rights.[01] Roosevelt argued that existent Bills of Right and constitution have provided the citizen with political rights but it has proved to be inadequate to assure us the equality in the pursuit of happiness.[02] His solution was a Second Bill of rights which promised to attain/provide certain fundamental goals/rights. These rights included rights like
- The right to a useful and remunerative job.
- The right to earn enough to provide adequate food and clothing and recreation.
- The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad.
- The right of every family to a decent home
- The right to adequate medical care and the opportunity to achieve and enjoy good health.
- The right to adequate protection from the economic fears of old age, sickness, accident, and employment.
- The right to a good education.
All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.
FDR died before the war ended. But his legacy continues, U.S. continued over the years to strengthen the social security and ensure that the rights mentioned in Seconds Bill of Rights are given to everyone irrespective of race, religion, gender or creed. America showed the way to the world, America inspired everyone to have an American Dream.
But as Thomas Jefferson said, “Every generation needs a revolution”. We need one Economic revolution as our current economic model has failed us in large extent to provide economic equality. Here is the recent report by World Inequality Lab on the current situation of Income Inequality in major countries.
In this blog, I will talk about one such upcoming economics revolution which is BASIC INCOME and Guaranteed Minimum Income. A number of highly very comprehensive and optimistic experiments are taking place at this very moment in different parts of the world.
What is Basic Income and Guaranteed Minimum Income?
A basic income is an income unconditionally granted to all on an individual basis, without means test or work requirement. It is a form of minimum income guarantee that differs from those that now exist in various European countries in three important ways
- it is being paid to individuals rather than households;
- it is paid irrespective of any income from other sources;
- it is paid without requiring the performance of any work or the willingness to accept a job if offered.[1]
Guaranteed minimum income (GMI), also called minimum income, is a system of social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions. Eligibility is typically determined by citizenship, a means test and either available for the labor market or a willingness to perform community services. The primary goal of a guaranteed minimum income is to reduce poverty. If citizenship is the only requirement, the system turns into a universal basic income.[2]
History of Basic Income
The first Muslim Caliph, Abu Bakr, introduced a guaranteed minimum standard of income, granting each man, woman, and child ten dirhams annually; this was later increased to twenty dirhams. [3]
History of this idea in Europe goes back to as far as the 16th century with Thomas Morre’s Utopia (1516)[4], where he talks about a radical idea called universal Basic Income. Both English radical Thomas Spence and American revolutionary Thomas Paine declared their support for the idea of state-run basic Income in the 18th century.
One of the greatest intellectual Bertbard Russell said this in his support of Basic Income “Anarchism has the advantage as regards liberty, Socialism as regards the inducement to work. Can we not find a method of combining these two advantages? It seems to me that we can. Stated in more familiar terms, the plan we are advocating amounts essentially to this: that a certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income – as much larger as might be warranted by the total amount of commodities produced – should be given to those who are willing to engage in some work which the community recognizes as useful…When education is finished, no one should be compelled to work, and those who choose not to work should receive a bare livelihood and be left completely free.”[5]
There have been several attempts in the United States in the second part of 20th century.
Robert Theobald belief that “automation is rendering work for pay obsolete, and that government handout is the only way to give the public the means to buy the immense bounty produced by automatons”. [6]
Nobel laureate Milton Friedman proposed a radical simplification of the American Welfare State through the introduction of what he there called a “negative income tax”. Friedman’s proposal of a linear negative income tax would fully integrate the income tax and transfer systems. A negative income tax (NIT) is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government.[7]
Tobin’s demogrant – Tobin, Pechman and Miezkowski published the first technical analysis of negative income tax schemes in 1967, where they came out in favor of a variant involving an automatic payment to all citizens – a genuine UBI which Joseph Pechman proposed calling a demogrant.[8]
In the 1980’s the first true initiative and discussion began in Denmark and the Netherlands. Around the same time in Britain and Germany, the debate began to take shape. In France, the debate got off the ground more slowly. The influential left-wing sociologist and philosopher André Gorz (1923-2007) initially defended a life-long basic income coupled to universal Social Service.[9]
The Basic Income Earth Network (BIEN, until 2004 Basic Income European Network) established in 1986 is a network of academics and activists interested in the idea of a universal basic income based solely on citizenship and not on work requirement or charity. It serves as a link between individuals and groups committed to or interested in basic income and fosters informed discussion on this topic throughout the world. [10]
Finland Experiment
They will be paid a basic income for a period of two years (1 January 2017 - 31 December 2018). Set at €560 per month, the basic income is paid unconditionally and without means testing. Recipients get it automatically once a month.[12]
The experiment is still going so the conclusive report is not out yet, but there are some intermediary results available[13]
CNBC did a report in January 2018. Mika Ruusunen one of the participant said “I'm not accustomed to that kind of bureaucratic freedom” and call it a win-win situation for everyone. The responsibility of majority o the participant that it has led to more flexibility and less bureaucracy.
The idea of free money has become more popular in recent years thanks to advocates in Silicon Valley like Elon Musk and Mark Zuckerberg. They see universal basic as a cushion for workers whose jobs might be replaced by automation or robots. Advocates argue free money could provide workers with the flexibility to retrain for a new career, pursue creative interests, or start their own business.
Miska Simanainen, a researcher at Kela, the government organization overseeing the trial said “the main idea behind this version of basic income that we are testing is that it would replace the basic social benefits or at least basic unemployment benefits”. He also said “I think that about 100 years from now the people will see basic income as the same kind of thing as a universal suffrage”
But not everyone in Finland sees the basic income experiment as win-win, especially if it encourages workers to accept low-wage work. Antti Jauhiainen said “Our path shouldn't be to create low-wage jobs but to really improve education and to improve people's skills”, he further calls it “the wrong approach to a hugely important idea”.
Similar Experiments [14]
- Ontario’s Basic Income (Guaranteed Minimum Income): Officially announced in April 2017; currently enrolling participants.
- Dutch Social Assistance Experiments
- Two-year experiments have been launched in four cities in October 2017, after meeting compliance with federal legislation; a fifth will follow in December (Nijmegen), and two cities (Amsterdam and Utrecht) are discussing revisions necessary for legal compliance.
- Barcelona’s B-MINCOME: Launched in October 2017, Barcelona’s B-MINCOME experiment is exploring several potential solutions to address poverty and social exclusion.
- GiveDirectly’s Basic Income Experiment in Kenya
Major Support of Basic Income
1. Transparency and administrative efficiency
Basic Income can be seen as one comprehensive Universal welfare system. Instead of a different welfare program, just one program will improve efficiency. Less paperwork, less bureaucracy.[15][16]
2. Poverty Reduction
“If you really care about freedom, give people an unconditional income,” says the Belgian Political Economist Philippe Van Parijs.[18]
4. Basic Income as a part of post-Capitalistic Economic System
American Analytical Marxist Sociologist Erik Olin Wright has characterized Basic Income as a project for reforming capitalism into an economic system by empowering labor in relation to capital, granting labor greater bargaining power with employers in labor markets, which can gradually de-commodify labor by decoupling work from income. This would allow for an expansion in the scope of the "social economy", by granting citizens greater means to pursue activities that do not yield strong financial returns.[19]Major Critique of Basic Income
1. Employment
The major argument against Basic Income is that it will make people lazy as it ensures a Basic Income unconditionally.[20]In several experiments in the United States in 1970’s related to Basic income and Negative Income Tax, participant have reduced the number of labour hours. However, participant of these experiments was aware that the experiment was limited in time.[21] In the Mincome experiment in rural Dauphin, Manitoba, also in the 1970s, there was also a slight reduction in hours worked during the experiment. [22]
2. Drug and Alcohol Use
There are concerns that some people will spend their basic income on alcohol and drugs[23]. However, studies of the impact of direct cash transfer programs provide evidence to the contrary. A 2014 World Bank review of 30 scientific studies conclude that "concerns about the use of cash transfers for alcohol and tobacco consumption are unfounded".[24]
3. Economic Critique
MIT Professor Daron Acemoglu criticised Basic income by saying “Current US status quo is horrible. A more efficient and generous social safety net is needed. But UBI is expensive and not generous enough”[25]. Nobel laureate Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare”.[26]
5. Automation and Artificial intelligence
Advancement in Automation and Artificial Intelligence will take many jobs in the coming year in the opinion of Technology Giants like Mark Zuckerberg, Elon Musk, and Sir Richard Branson. This concern led to the promotion of Basic income as an implication of their business models.[27]
RECENT DEVELOPMENTS
In 2013, German Parliament discussed Basic Income but it was dismissed as it seemed “unrealizable”[28]In 2016, Switzerland hold a referendum for Basic income to its citizen, it was proposed as 2500 Swiss francs for adults and 625 Swiss francs for children per month. But people of Switzerland voted against this by 76.9%. It was a major blow to the whole movement of Basic Income.[29]
CONCLUSION
In Conclusion, I would say that as there is no primary statistics available, it's difficult to predict the exact quantifiable result of Basic Income experiment. But the whole discussion regarding this subject around the Globe is an achievement of its own.
[1] https://web.archive.org/web/20080621140909/http://www.basicincome.org/bien/aboutbasicincome.html
[3] Grace Clark: Pakistan's Zakat and 'Ushr as a Welfare System
[4] http://basicincome.org/basic-income/history/
[5] Bertrand Russell, Roads to Freedom. Socialism, Anarchism and Syndicalism, London: Unwin Books (1918), pp. 80-81 and 127.
[6] https://www.thenation.com/article/week-nation-history-abundance-and-basic-income-guarantee/
[7] Friedman, Milton (2002) [1962], Capitalism and Freedom (40th anniversary ed.), Chicago: University of Chicago Press, pp. 190–195, ISBN 978-0-226-26421-9
[8] http://basicincome.org/bien/pdf/BI29.pdf
[9] http://basicincome.org/basic-income/history
[10] http://basicincome.org/about-bien/#overview
[11] http://www.kela.fi/web/en/basic-income-experiment-2017-2018
[12] http://www.kela.fi/web/en/basic-income-experiment-2017-2018
[13] https://www.cnbc.com/2018/01/01/one-year-on-finland-universal-basic-income-experiment.html
[14] http://basicincome.org/news/2017/10/overview-of-current-basic-income-related-experiments-october-2017/
[15] Standing, Guy. "How Cash Transfers Promote the Case for Basic Income". Basic Income Studies. 3 (1). doi:10.2202/1932-0183.1106. ISSN 1932-0183.
[16] G Standing, Basic Income: And How We Can Make It Happen (2017) ch 7. E McGaughey, 'Will Robots Automate Your Job Away? Full Employment, Basic Income, and Economic Democracy' (2018) SSRN, part 4(2)
[17] Bregman, Rutger (6 March 2017). "Utopian thinking: the easy way to eradicate poverty – Rutger Bregman"– via www.theguardian.com.
[18] http://bostonreview.net/archives/BR25.5/vanparijs.html
[19] Wright, Erik Olin. "Basic Income as a Socialist Project," paper presented at the annual US-BIG Congress, 4 – 6 March 2005 (University of Wisconsin, March 2005).
[20] "urn:nbn:se:su:diva-7385: Just Distribution : Rawlsian Liberalism and the Politics of Basic Income". Diva-portal.org. Retrieved 16 February 2014.
[21] Gilles Séguin. "Improving Social Security in Canada – Guaranteed Annual Income: A Supplementary Paper, Government of Canada, 1994". Canadiansocialresearch.net. Retrieved 16 August 2013.
[22] Belik, Vivian (5 September 2011). "A Town Without Poverty? Canada's only experiment in guaranteed income finally gets reckoning". Dominionpaper.ca. Retrieved 16 August 2013.
[23] Sheahen, Allan. Basic Income Guarantee: Your Right to Economic Security. New York: Palgrave Macmillan, 2012. Book. 29 March 2016
[24] David K. Evans, Anna Popova (1 May 2014). "Cash Transfers and Temptation Goods: A Review of Global Evidence. Policy Research Working Paper 6886" (PDF). The World Bank. Office of the Chief Economist.: 36. Retrieved 2017-12-18
[25] "Majority of Economists Surveyed Are against the Universal Basic Income". Retrieved 28 July 2016.
[27] http://www.independent.co.uk/news/business/news/richard-branson-universal-basic-income-mark-zuckerberg-elon-musk-virgin-ceo-a7911866.html
[29] https://en.wikipedia.org/wiki/Swiss_referendums,_2016
[02] "The Economic Bill of Rights". Franklin D. Roosevelt American Heritage Center. Retrieved 10 November2011.
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