SOCIAL IMPACT

SOCIETY & UNIVERSAL BASIC INCOME

INTRODUCTION

Universal Basic Income (‘UBI’) is an income distribution system in which everyone, no matter what their economic situation, is paid a monthly income that is sufficient for their basic needs – with no strings attached.

In 1969, Richard Nixon was persuaded by 1,200 economists (including John Kenneth Galbraith and Paul Samuelson) of the value of a basic income plan. They wrote: “The country will not have met its responsibility until everyone in the nation is assured an income no less than the officially recognized definition of poverty.” Nixon’s 1970 Bill passed in the House, but failed in the Senate, after Nixon was persuaded to drop his support by the libertarian Martin Anderson.

Several countries (including Canada, USA, Finland, Switzerland and India) are considering implementing some form of UBI, although it has yet to get past the pilot project stage. The general approach is to regard UBI as a replacement for the hodgepodge group of welfare support systems. No-one is considering a true UBI, as the payments are only considered to be made to those in need. There is a lot of controversy relating to the absence of control over the recipients, even though several studies have shown that most recipients would use the money for basic needs while looking for a job, or upgrading skills or education.

While a UBI would eliminate most poverty by definition, its value to society would be far greater if it is seen as a wealth distribution system, reducing the increasing gap between the wealthy (the so-called 1%) and the rest of the world. That gap is caused, not so much by the greed of the wealthy (although there is much of that), but by the reducing value of human labour. In effect, the gap comes from entrepreneurs, who are investing and creating economic value while building their wealth, and workers, who are seeing their economic value deteriorate.

The current trend towards paid-joblessness is creating a need for governments to make a major change in taxation. If fewer people are being paid to work, governments are going to have to find a replacement for their loss of revenue. And then there is also the question of how to get money into the hands of people in order to maintain the economic cycle:

Let’s briefly and simplistically review the current economic cycle (with approximate government revenue % for Canada, BC province):

  • People work at jobs, provided by businesses (and government) for which they are paid wages.
  • Government takes a portion of those wages in taxes. (50, 17%)
  • The remainder of the wages are used to buy goods and services (and ideally to save);
  • Government adds consumption taxes to those sales. (5, 7%)
  • Businesses take the revenue from those sales, deduct their costs, and pay a portion of the profit to government. (15, 6%)
  • Businesses use the remaining profit and investment from people’s savings to expand, providing more jobs for people.

The cycle collapses if there are no wages because no-one is working!

UBI is one way to put money in the hands of the people. Then the question for government is how to find a source of that money. One viable option would be to increase consumption taxes, which would average in the 30s%, but would best be achieved with a layered structure. For example, basic necessities would incur a low tax rate, other goods and services would incur a modest tax rate while luxury goods would be highly taxed. In effect, the primary source of the money would come from the wealthy’s purchases, and the desired transfer of wealth would be achieved..

None of this negates the opportunity for entrepreneurial activity, which would provide economic growth, in addition to independent existence for some people, and paid jobs for others. (Think of the encouragement for starting up a new business or service if you already have sufficient income for your basic needs, and you can get staff without needing to pay them until the business grows!)

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UBI: The need for it and the benefits of it (UBI - 2018-05 - Medium.com)

This interesting, lengthy article discusses why UBI is essential, the job losses that started in 1990, the many individuals and social benefits of UBI, and how its impact could resolve many societal problems. The weakest area is dealing with how UBI can be afforded.

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Finland's basic income pilot was never a test of UBI (Society - 2018-04 - FastCompany)

Finland’s basic income pilot has not been renewed but was never more than a variant of their significant support for the unemployed. Y Combinator Research in Oakland is planning to give a no-strings-attached stipend to research the effects of UBI on everything from voter participation to mental health to spending habits. It’s limitation is that it plans to use private money. Alaska’s Divident Fund tests the required infrastructure for government distribution of a UBI.

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UBI has become part of California’s Democratic Party platform (UBI - 2018-03 - Recode)

UBI has become part of California’s Democratic Party platform, signaling that the idea is beginning to enter the political mainstream. At the same time, Silicon Valley leaders are putting their weight behind UBI by funding major projects, including a program in Oakland that gave people $1,500 a month for a year, and a project in Stockton for working individuals.

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Indian government advisor suggests some parts of India may introduce UBI (UBI - 2018-03 - BIEN)

India’s Chief Economic Advisor, Arvind Subramanian, recently told reporters that he would “bet” that one or two Indian states would be implementing universal basic income (UBI) by 2020.

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Inside Ontario’s big, bold Basic Income experiment (UBI - 2018-02 - FastCompany)

Ontario’s basic income experiment will see up to 4,000 residents of 3 metro areas receive guaranteed monthly stipends. Single recipients get up to $16,989 per year; Couples up to $24,027y. If people choose to work, they are taxed at 50% for anything over $200. The stipends are roughly 75% of Canada’s official poverty line, which is about 50% of median incomes. Early results are positive.

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An argument against UBI (UBI - 2018-02 - City Journal)

A review of current activity in support of UBI, and a description of what is regarded as its “fatal flaw” – creating a disincentive to work, and multiple generations of work-resistant personalities. (NOTE: See Nick Arden’s blog which argues in favour of UBI, noting that UBI is essentially a wealth distribution system, which will additionally eliminate poverty, and that will require a new definition of ‘work’.)

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People in 2 U.S. States will get $1,000 a month in a new basic income trial (UBI - 2017-09 - Futurism)

Startup incubator Y Combinator is expanding their research into the benefits of universal basic income (UBI). Their plan is to pick 3,000 individuals from two states at random to receive a monthly cash handout. 1,000 participants will receive $1,000 per month for a period up to five years, while the other 2,000 will receive $50 per month, serving as the control group. Their goal is to discover how basic income can help people respond to economic instability and uncertainty, or perhaps even find alternatives to UBI that achieve the same purpose. The overarching goal of this trial is to advance the debate about the future of work.

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Richard Branson backs UBI (UBI - 2017-08 - The Independent (UK)

Richard Branson: “In the modern world, everybody should have the opportunity to work and to thrive. Most countries can afford to make sure that everybody has their basic needs covered.” He joins Facebook founder Mark Zuckerberg, Slack chief executive Stewart Butterfield, and Tesla boss Elon Musk. Finland trial: Gives 2,000 unemployed people an unconditional monthly sum of €560 (£515) for 2 years, even if they start working. Results show lower stress with greater incentive to find work and freedom to pursue entrepreneurial ideas – increased self-esteem. Other trials are planned for the Netherlands Cities (October 2017), and possible in Italy, Canada and Scotland.

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Hawaii may become the first US state to support a universal basic income (UBI - 2017-07 - Business Insider)

In June, Hawaii passed the first piece of legislation aimed at exploring a UBI. The bill, HCR 89, directs the government “to convene a basic economic security working group.”

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Opposition to UBI from Doug Casey (UBI - 2017-06 - Casey Daily Dispatch)

Doug Casey, a renowned Libertarian, regards UBI as “incredibly stupid from absolutely every point of view.” He opposes UBI because of its disincentive to have productive members of society (as proven by the current welfare system) and because it gives too much power to the government to define the rules of the UBI distribution and to extract the required capital.

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Facebook, Tesla CEOs lead charge for guaranteed income (UBI - 2017-06 - Fox News)

Zuckenberg and Musk included consideration of UBI as a way to deal with the upcoming massive job loss. Experiments in Canada, Finland, and the Netherlands had results interpreted differently. Hawaii is the first US state to commit to considering it, although Nixon introduced the concept in a 1970 legislation proposal which died in the Senate.

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Is UBI possible in America (UBI - 2017-04 - BigThink)

UBI programs exist in Alaska and North Carolina. Discussions of UBI are not new. Opinions of Robert Reich (a way for companies to save money), Dan Savage (who says it was Richard Nixon’s idea), and Elon Musk (who regards it as necessary in the evolution of the workforce). There’s a pretty good chance we end up with a UBI, or something like that, due to automation. The psychological issues of unearned pay and not having work are considered.

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Ontario's basic income trial to launch in Hamilton, Lindsay and Thunder Bay (UBI - 2017-04 - Huffington Post)

People in Hamilton, Lindsay And Thunder Bay will be able to apply to the pilot project, and 4,000 people will be selected. Single people will receive up to $16,989 per year, less 50 percent of any income they earn. Couples will receive up to $24,027 per year, less 50 percent of any income they earn. People with disabilities will receive up to an additional $6,000 per year.

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Letter: Support for UBI from Ray Kurzweil (UBI - 2017-03 - Kurzweil Newsletter)

Ray Kurzweil supports UBI, believing that adopting it can help society think creatively with new ideas, develop new industries — and free-up people to work on important future projects. This practical social support program can grow as science & technology rapidly evolve, becoming part of world abundance. He quoted Facebook founder & CEO Mark Zuckerberg from his commencement speech at Harvard University and announced UBI as the subject of his next book.

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Basic income would cost Canada $15 Billion annually (UBI - 2017-03 - Huffington Post)

A new study from the Northern Policy Institute suggested that basic income program similar to the one Ontario is testing would cost Canada around $15 billion annually, consisting of $30 billion for the program less $15 billion in savings from replaced disability and support programs. The cost is only about 5% of federal government expenditures and much less than currently spent on seniors’ benefits.

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Ontario is betting on UBI to help cities gutted by manufacturing job loss (UBI - 2017-02 - Quartz)

Ontario is considering a 3-city pilot UBI program as a welfare replacement, setting it at 75% pf the official poverty line.

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Finland giving unemployed free money (UBI - 2017-01 - Business Insider)

Finland is offering free money ($590 each month for two years) to help 2,000 jobless Finns get back to work. The experiment should provide insights on whether basic income could help clean up Finland’s messy system of social security; and how people behave when they’re receiving free money.

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