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This edition continues with news of Universal Basic Incomes.
We Might Finally Get a Basic Income
Brian Mengus, Gizmodo, May 8, 2020
(https://gizmodo.com/we-might-finally-get-a-basic-income-1843342132)
Joined by Senators Bernie Sanders and Ed Markey, Kamala Harris is pushing new legislation that would provide up to $2,000 a month for every U.S. resident. There’s another term for that: a universal basic income.
While UBIs are usually associated with the magical thinking that we’ll at some point reach a fully-automated post-work economy, the closest America came to instituting one was arguably through vast expansions of unemployment benefits during the Great Depression. We’re certainly headed for similar territory now, with a current unemployment rate of nearly 15 percent, and an estimated 20,500,000 jobs lost so far.
The proposal builds on an idea Harris has been kicking around for some years, but which was previously a more modest tax credit of up to $500. This new bill—and we can hypothesize if these unusual times or the input of considerably more left-leaning Senators Sanders and Markey was a deciding factor—calls for direct cash payments of $2,000 per individual and $2,000 per child, and would apply retroactively to the months of March and April. This could be a lifesaving infusion for many Americans who are out of work, especially as no major city has yet instituted any form of rent cancellation.
To be clear, what Harris proposes isn’t a UBI exactly, as it’s not intended to be universal. Those with an income of $100,000 would see decreased payments, while anyone making $120,000 or more would be ineligible to receive the stimulus.
Is it even worth contrasting a proposal to consistently float struggling Americans through this pandemic with an unserious, one-time, $1,200 payment approved by the Trump administration, which some people still have not received? No, it most definitely is not—especially since the White House has announced it wouldn’t consider additional stimulus for the rest of the month. Unlike that ridiculous PR scheme, this bill would make funds available, even to those without social security numbers, and also stipulates that the monthly payments cannot be garnished by debt collectors.
All that said, Republicans—led by a majority leader who thought allowing states to propose bankruptcy was a smart idea—control the Senate currently, and are unlikely to vote favorably on any social welfare program. If and when this bill dies on the Senate floor, you’ll know who to blame.
Former presidential candidate Andrew Yang
$2,000 A Month Stimulus Check? Andrew Yang Proposed $1,000 A Month—Forever
Zack Freeman, Forbes, May 13, 2020
(https://www.forbes.com/sites/zackfriedman/2020/05/13/stimulus-check-univer-basic-income/#49d3c047557c)
With countless proposals now for a $2,000 a month stimulus check, Andrew Yang proposed that you get $1,000 a month – forever.
Here’s what you need to know.
Universal Basic Income
When it comes to universal basic income, many people either think it’s innovative and transformational or unrealistic and expensive. Yang, a former 2020 presidential candidate, proposed universal basic income (UBI) – a form of social security that guarantees money to recipients – through what he called the “Freedom Dividend.” Given the slew of $2,000 a month stimulus check proposals, it’s worth revisiting Yang’s plan to understand the underlying reasons behind monthly support from the federal government. This review may help inform decision-makers (and the public) as they debate a possible second stimulus check or other forms of financial support in the wake of the COVID-19 pandemic. Notably, Yang’s UBI proposal came before Coronavirus and was not tied directly to an economic crisis or health pandemic. Under his plan:
- Every U.S. citizen over the age of 18 would receive $1,000 a month, or $12,000 per year.
- There are no requirements to receive the money.
- These are guaranteed payments and would continue in perpetuity each month.
While Yang did not create UBI, he advocated for UBI principally due to job losses stemming from automation. Universal basic income has been supported by everyone from Martin Luther King, Jr. and Bernie Sanders to Mark Zuckerberg and Elon Musk. Yang has said that with the advent of robots, self-driving cars and other technologies, our lives will improve.
However, Yang believes that automation will cause one-third of all Americans to lose their job in the next 12 years. As a result of these job losses, Yang says, Americans could struggle to start a family, afford living costs or save for education or retirement. So, Yang believes that a “Freedom Dividend” would provide a guaranteed safety net to every American not to “live off the government”, but to have necessary funds to pay necessities, look for a job or start a business, for example.
How would Yang pay for universal basic income?
Any major social program – particularly a $1,000 a month check – may raise eyebrows among skeptics who highlight the exorbitant cost and express concerns about the federal deficit. Yang said he would pay for universal basic income through four sources of income:
1. Current spending
Yang says that the U.S. already spends $500 to $600 billion a year on welfare programs. Under his plan, those who already receive benefits can choose to keep their current benefits or receive $1,000 a month, but could not receive both. With the extra income, Yang believes that more people could take care of themselves and avoid jails and hospitals, which further reduces taxpayer costs.
2. Value-Added Tax
A value-added tax (VAT) is a consumption tax on a product or service. Yang estimates that a 10% VAT can generate $800 billion of annual revenue. However, there would be some exemptions, such as groceries and clothing. Yang does not believe that a VAT would cancel the positive impact from UBI.
3. Economic growth
When consumers have more money, Yang argues, they spend that money in the economy, particularly their local economy. This resulting economic growth can generate $800-$900 billion, according to Yang.
4. Taxes
Yang would fund the remaining cost of the Freedom Dividend through a financial transactions tax, by ending favorable treatment for capital gains and carried interest, by removing the cap on Social Security, and through a carbon fee.
Universal Basic Income: Common Objections and Responses
Yang has identified many of the common objections to UBI, and included explanations on his campaign website to make his case. According to Yang, here are a few:
Objection: Won’t people just stop working?
Response: Yang says that $12,000 a year is not enough to live for a year, and therefore, people will need to work to earn an income. Yang also says that UBI will fuel entrepreneurship and job creation because people will be willing to take more risks knowing they have some guaranteed financial cushion on which to rely.
Objection: Why does everyone get $1,000 a month? Can’t we save money by excluding “rich people?”
Response: Yang said that UBI will help erase the stigma of taking government benefits because everyone receives them. Also, he believes that if UBI is funded through a VAT, “rich people” likely would pay more through a VAT than they would receive through UBI.
Objection: Wouldn’t employers just cut everyone’s annual wages by $12,000?
Response: Yang says employers are already paying employees less to complete more work. Yang believes that UBI can increase bargaining power for workers because they have a financial cushion and potentially can afford to be more selective about the work they choose and the wages they accept.
Final Thoughts
Whether you fully support universal basic income, a second stimulus check or a temporary monthly stipend, or you strongly believe that any of these financial proposals are unrealistic and cost prohibitive, it’s helpful to understand the facts and rationale underlying them so that you can make an informed decision about which proposals, if any, you would support.
DREAMS FOR UNIVERSAL BASIC INCOME
HALF OF EUROPE SUPPORTS IT
Brussels, Belgium: FEPS – Foundation for European Progressive Studies, March 2020
(https://www.feps-europe.eu/attachments/publications/ed_web.pdf)
The economic and political turbulence that has rocked Europe in recent years has brought the idea of establishing a tax-payer funded universal basic income (UBI) to the fore. This policy would benefit all citizens, regardless of their income or employment status. Our survey shows that support for UBI is mixed as citizens still have much to learn about its real-life application.
HIGHLIGHTS
With the strongest support for UBI in Germany, political parties and policymakers there may find it a safer environment to trial programmes.
Given UBI’s unpopularity in Eastern and Southern Europe, it is unlikely to become part of European Union’s social policy in the near future.
One of every fourth respondent (25%) did not have an opinion about UBI, which suggests the public still has much to learn about this policy and its application.
(Read more: https://www.feps-europe.eu/attachments/publications/ed_web.pdf)
HUDSON, N.Y. (NEWS10) – The Spark of Hudson and Humanity Forward announced Monday they have collaborated to launch a universal basic income (UBI) pilot program in Hudson later this year. The program, HudsonUP, will provide 20 Hudson residents $500 per month for five years.
The organizations are working closely with the community to design the project’s recipient selection process and implementation method.
“In light of the current ongoing crisis, this pilot will give a glimpse of hope to our constituents, many of whom are facing various financial burdens. We welcome out-of-the-box and innovative ideas that can better our communities,” said Hudson Mayor Kamal Johnson. “This pilot will provide a cushion for families, and this support could be life-changing.”
Former presidential candidate Andrew Yang believes the program will provide support and peace of mind for Hudson residents.
“Receiving a form of UBI allows you to begin making meaningful, long-term plans. It allows one to think beyond next month’s bills; through the HudsonUP project, we’re going to see families benefit enormously from receiving $500 a month for five years,” Yang said.
“UBI gives freedom—freedom to be entrepreneurs, to run for office, to stay home with the kids, to take care of sick parents, to leave abusive relationships, and to help our community in times of crisis,” co-founder of The Spark of Hudson Susan Danziger said.
The $600,000 project will be made possible by two $300,000 contributions, each from The Spark of Hudson and Humanity Forward.
The Spark of Hudson is a learning and training center set to launch in Hudson dedicated to reinventing education. In addition to The Spark of Hudson and HudsonUP, founders Albert Wenger and Susan Danziger have launched and funded a variety of other projects to better the greater Hudson community and beyond.
Humanity Forward is a 501(c)(4) nonprofit organization founded by former presidential candidate Andrew Yang. The organization is dedicated to continuing the movement inspired by Yang’s 2020 presidential campaign and to making its core ideas a reality, one of which includes UBI.
Two-thirds of Manitobans in a recent poll from Basic Income Manitoba say they would support a universal basic income for those in need — pandemic or not. Brayden Jagger Haines / Global News
Coronavirus: Basic income in Manitoba should be a right, not a privilege, says BIM chair
Many Canadians have lost jobs but have been saved from financial ruin during the COVID-19 pandemic.
A major contributor has been the Canada Emergency Response Benefit (CERB), providing $500 a week for those who have lost their income. As of May 7, the federal government has received 11.21 million applications for the benefit.
Now, some are hoping the government keeps that type of social assistance around.
Two-thirds of Manitobans in a recent poll from Basic Income Manitoba say they would support a universal basic income for those in need — pandemic or not.
“I would love to say I knew it all along, but those results are very encouraging,” says BIM chair Paul Walsh. “We’re trying to get our message across to Manitobans, and it’s very gratifying.”
He says the concept is relatively simple: fight poverty by ensuring everyone makes enough money to survive.
“The word ‘basic’, or other people say ‘livable’, means to meet the costs of their rent, food, clothes, transportation,” Walsh says.
Critics say the benefit works well in emergency situations, but installing it into our day-to-day lives would cost too much.
“Sometimes an idea that makes no sense in normal times makes perfect sense in times of crisis,” writes conservative strategist Ken Boessenkool in an opinion piece for The Globe and Mail.
“There’s a reason why our system of supports is complicated and difficult and that’s because the reasons why people are poor are complicated and difficult.”
There’s no fixed cost on a potential basic income program — that would depend on its structure.
A 2017 report from the Northern Policy Institute estimated a federal basic income program would cost $15 billion a year.
A 2018 report by Parliament’s fiscal watchdog suggested the annual cost of a guaranteed basic income for low-income Canadians could be $43 billion.
Walsh isn’t arguing the cost of such a program, but instead, how Canadians perceive that spending.
Instead of regarding it as a handout, he asks Manitobans to think of that money as a re-investment in their province.
“It restores dignity, it restores participation in the community, it allows for everyone to be a participating citizen. Our pilot projects, surveys and statistics show the economy and population all benefit.”
Walsh said the current programs available to Canadians were the result of a “knee-jerk reaction” by the federal government, but one he hoped would stick around.
“Hopefully, when we’re not focused exclusively on the pandemic, this will become a regular part of being a Canadian. Knowing your governments — that means all of us — are prepared to make sure no one falls below a certain income level, and everyone’s needs are met.”
Portuguese minister joins new call for ‘minimum European income”
Portugal’s labour minister Ana Mendes Godinho has signed her name to a new call by fellow ministers in Spain and Italy for a ‘minimum European income’ to help minimise the crisis caused by Covid-19.
Published in Público today, the three ministers stress: “We have to ensure that all people are guaranteed the satisfaction of their basic needs”.
Thus, a ‘common minimum income system’ is required “to combat poverty”.
Signing the text with Pablo Iglesias – Vice-President of the Spanish Government and Minister of Social Rights and Agenda 2030 – and Nunzia Catolfo – Italy’s minister for Labour and Social Policy – Ms Mendes Godinho claims the system doesn’t have to be based on average European income, but on what each Member State establishes as “a minimum income that is adequate and adapted to each country’s standard of living and way of life”.
Says the text: “We support the approach that has been taken to this crisis, which is based on the fact that nobody is left behind and that it pays particular attention to the most vulnerable groups. We, therefore, support the establishment of an initiative to support the generalisation of decent and adequate minimum income systems in all Member States”.
The three ministers describe Europe as currently facing the “greatest challenge since World War II”, with social and economic impacts already being felt at national and European levels, “with particular focus on the labour market” and “profound impacts on citizens’ lives”.
“Europe today has more than 113 million people at risk of poverty and social exclusion and 25 million children living below the poverty line. We must take urgent measures to avoid increasing this number and instead contribute to reducing it.”
Explain reports, for a political and legislative framework, the article highlights the European Pillar of Social Rights, adopted in 2017 by the European Parliament, the Council and the European Commission during the Social Summit in Gothenburg.
Principle 14 of that document states that anyone who does not have sufficient resources is entitled to adequate minimum income benefits that guarantee a decent standard of living at all stages of life, as well as effective access to supporting goods and services.
Indeed, Portugal has been a pioneer at this level, says the text, having launched Social Insertion Income, or RSI, in 1996.
It’s now imperative, say the ministers, that Europe should unite in solidarity for those hardest hit so as to avoid a social and economic crisis on the scale of that suffered in 2008 when so many economies went to the wall.
But while the call here in Portugal is being presented in a relatively muted fashion, in the UK, the Financial Times interprets it as “Spain’s deputy PM calls for EU to step up or risk extinction”.
Says the paper, Pablo Iglesias warns the bloc will not survive if it doesn’t show solidarity with countries worst hit by coronavirus.
This leads us right back to the ongoing tussle between what is loosely called ‘the Club Med countries’ of the south and the more frugal states of the north (click here).
As the FT accepts, “any suggestion of transfers between EU countries could further agitate the European debate” which is already at an exceedingly delicate and still undefined point.
But as the text in Público maintains, the “key thing about the minimum income guarantee now, in the context of the Covid-19 crisis, is its urgency”, says Mr Iglesias. “Families have suffered an atrocious collapse in their income”. In Spain’s case the lockdown is still in place and unlikely to ease before the second week in June.
The Times has followed up on the theme, running a story today suggesting a German survey has found that 70% of Europeans agree with the idea of the State paying a basic income.
In the past, the notion of Universal Basic Income, or UBI, was considered too radical.
Says the paper: “The idea of paying all citizens a minimum tax-free monthly income used to be regarded as a fringe proposal until the coronavirus lockdown introduced schemes in which governments across Europe stepped in to pay people wages, rather than unemployment benefits…”
Finland actually ran a full-scale pilot of a UBI scheme in 2017. It gave 2,000 randomly selected unemployed people a monthly tax-free €560 stipend with no requirement to be working.
Preliminary results showed it boosted wellbeing but failed to improve employment prospects, says The Times, concluding “the Finnish government chose not to extend the trial in 2018”.
The question now is will the current pandemic see countries warming to the idea of UBI, and Europe agreeing to start stumping up?