On 26^th – 28^th September 2022, Australia hosted the 21st Basic Income Earth Network (BIEN) Congress in Brisbane. The aim of BIEN and its annual Congress is to offer education and a global platform for wide debate on basic income as an idea and policy option. 

This edition of Congress surfaced two substantial Australian universal basic income (UBI) proposals. The first is from Greens New South Wales MP Abigail Boyd titled the ‘Universal Wellbeing Payment’ and the second is by grassroots basic income advocacy group Basic Income Australia. 

Boyd’s contemporary platform on basic income is significant since the last major Australian political discourse on the topic occurred during the 1970s and 1980s and was driven by the Australian Labor Party (Arthur 2016). This level of interest mirrored the wave of North American basic income experiments featuring projects such as the Canadian ‘Mincome’ and a number of ‘income maintenance’ schemes across the several US states. 

Against the backdrop of a global COVID-19 pandemic, Basic Income is an idea that has regained traction in Australia in recent years with a 2021 Anglicare poll demonstrating that 77 percent of respondents (n=1000) support a basic income. Once again, BI momentum in Australia mirrors a resurgence in global interest as seen by the 100+ basic income pilot programs in the US as part of the Mayors for a Guaranteed Income initiative, GiveDirectly’s work in Kenya and Finland’s UBI trial amongst many others. 

Even more recently, the sharp global inflationary pressures in 2022 brought on by supply chain disruptions associated with Russia’s invasion of Ukraine have further compounded the wellbeing and financial stress for many. This in turn accelerates the need for transformative policies such as UBI to address today’s acute challenges.

With this economic and policy context in mind, this article prepares a high-level summary comparison on the key policy elements between the Universal Wellbeing Payment and the Basic Income Australia proposal that serves as a social policy conversation starter.

Section 1: Eligibility

Age	NSW resident 16+ years old	18+
Disbursement	Individual	Individual
Citizenship status	Resident or citizen	Citizen, resident or refugee

For its first iteration the UWP intends to roll-out to New South Wales residents 16-years old and above with the intention for a future federal roll-out. The BIA policy targets nationwide 18-year olds and above and specifically includes refugees. 

Section 2: How much and how do we do it?

UBI weekly amount	Henderson Poverty Line (~A$615)	Henderson Poverty Line (~A$615)
Implemen-tation	12-18 month rollout, replace benefits currently in Centrelink	Start at a low nominal amount, e.g., $10, phase up amounts per week up to the HPL over time (e.g., 5 years)
Funding	Fossil fuel levy, supplementary banking levy, overhaul of the stamp duty and land tax framework and borrowing	Central bank money creation

Both policies directly address poverty by setting their UBI amounts to the HPL, however the policies fundamentally differ in their funding approach; the UWP policy proposes new taxes whilst the BIA policy proposes money creation. The policies also differ drastically in terms of their roll-out periods with the UWP proposing a tighter one-year turnaround whilst the BIA policy proposes lengths of up to five years to start slow and gradually ramp up UBI payments to manage risk.

Section 3: How will certain groups be affected?

Both the UWP and the BIA proposals are largely comparable in how they intend to streamline and replace the current welfare support payments across various groups. The UWP proposal specifically outlines the provision of supplemental benefits for people with disability, whilst the BIA policy specifies a ‘no-worst-off’ approach to benefit replacement. 

People with disability	UWP replaces the Disability Support Pension (DSP), but a supplement will provide for additional needs. National Disability Insurance Scheme (NDIS) payments persist.	UBI replaces the DSP, except where the welfare benefit exceeds the UBI, the person receives the extra amount. Individual also receives any other ancillary benefits.
Age Pension	UWP replaces the Age Pension.	UBI replaces the Age Pension. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits.
Parents	The UWP will replace the Carer Payment, the Farm Household Allowance, the Parenting Payment and ParentsNext.	UBI replaces the relevant payments. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits.
Carers	UWP replaces the Carer Payment.	UBI replaces the carer payment. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits.
Students	UWP replaces the Student Payment.	UBI replaces the carer payment. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits.

Section 4: Political viability discussion

Of the two proposals, the BIA policy is the incrementalist option compared to the UWP. As such, the Basic Income Australia proposal appears more politically feasible as it proposes how to implement a UBI without extra tax, debt or inflation, nor negatively impacting welfare recipients via a UBI authority and money creation. This is compared to the Universal Wellbeing Payment which proposes to fund the UBI through new taxes such as a fossil fuel and supplementary banking levy. 

Furthermore, the BIA policy proposes a very conservative phased-in UBI approach at $10/week that will gradually ramp up to the Henderson Poverty Line (HPL) over a five-year period. The intention of the BIA proposal is to allow supply chains to adjust to the slower increase in money in the economy and theoretically stave off demand side inflation. This approach is compared with UWP delivering the full UBI (approximately $615/week) from the outset. 

Section 5: Progressivity comparison

The two policies treat the UBI as part of an individual’s gross income which in turn determines their tax-free threshold. They both recapture the full UBI benefit after a certain point. UWP opts for the median salary (~$70K) as its threshold whilst the BIA policy opts for ~$81K (where 75% of the Australian population earns this amount or less). 

Both are progressive in that the more the individual earns, the less effective benefit they receive after paying taxes up until the point they become net contributors into the system. 

Threshold approach (individual is a net beneficiary until earning this amount where they become a net contributor)	The Australian median wage	Approximate salary for 75% of the Australian population
Threshold amount (individual benefits in decreasing amounts as their income increases up to this point)	$1,344.70 p.w. or $69,924 p.a. (Median wage source: ABS May 2022, seasonally adjusted all employees average weekly total earnings)	$1,550 p.w. or $80,600 p.a. (Source: ABS Characteristics of Employment, Australia, August 2017)

Section 6: Poverty alleviation comparison

Both policies set the UBI at the Henderson Poverty Line however the implementation plans are starkly different. The UWP would address poverty immediately whereas the BIA proposal suggests a small nominal UBI, say at $10/week that ramps up to the HPL in a target period (e.g., five years). 

The BIA suggestion to start at, for example, $10/week may prove distasteful to, or be rejected outright by some poverty advocates who are demanding immediate increases to JobSeeker above the Henderson Poverty Line to address the acute needs of 3M Australians in poverty. 

The BIA policy’s five-year roll-out approach trades off meaningfully addressing poverty in the immediate term for political feasibility and inflation/economy shock risk management. The benefit of this approach, should the modest $10/week approach deem the BIA policy benign enough to pass into law, is that popular social welfare policies tend to have staying power once introduced. Examples include superannuation policy in Australia and social security in the US (NASI n.d.). In taking a long-term perspective, this five-year roll-out may not only have a higher chance of becoming a reality, but also give the whole country (as UBI is universal) a chance to enjoy the benefits. In turn the desired outcome is that UBI becomes an established and enshrined institution such as mandatory superannuation in Australia, social security in the US and the Alaska Permanent Fund.  

Despite the potential political viability of the ‘start small’ approach and long-term outlook, the BIA proposal does not compare in the short term to the UWP proposal in terms of providing rapid relief to acute poverty.

Section 7: Managing inflation

The two policies tend to treat the inflation question differently, with UWP largely omitting intervention options if inflation occurs after the introduction of UBI. Instead, the UWP policy suggests that potential inflation could be offset with entrepreneurship and cites that other basic income trials around the world have not reported inflation, which is corroborated by Santens’ research. The UWP policy however does acknowledge that luxury products are more likely to become expensive.

In contrast, BIA’s five-year phase-in approach allows the UBI authority to monitor the economic and behavioural impacts over time. If inflation occurs, the BIA policy suggests raising interest rates to dampen borrowing and if necessary implement a flat spending tax as a last resort. 

However, both the UWP and BIA proposals state that their respective basic income amounts will be tethered to CPI. 

Final thoughts: how do the two policies compare? 

Across the four key policy design elements of 1) current welfare benefit replacements, 2) UBI recovery approaches, 3) funding mechanisms and 4) policy roll-out approach, the UWP and BIA policies are aligned on half. 

Overall, they both seek to streamline the current welfare system and replace the various benefits at the same dollar rate or better, especially in the case for people with disability.

They both propose a UBI clawback design through the taxation system whereby individuals earning approximately the median wage (~$70-$80K per year) and above become net contributors into the system. 

The two policies diverge significantly regarding their funding mechanisms with the UWP proposing revenue raising through new taxes and the BIA policy proposing the creation of money via the Reserve Bank of Australia and a dedicated UBI Authority. 

The two policies also differ drastically regarding their roll-out periods where the UWP is proposed to roll-out over 12 to 18 months at the full HPL amount compared to the BIA’s proposal of incremental payment increases up to the HPL over a few years, say five.

These last two points of divergence will be the likely drivers of UBI policy debate, where trade-offs on political feasibility, economic sustainability and poverty alleviation effectiveness must be considered against the backdrop of a challenging global macroeconomic environment.

The instance of two substantial UBI proposals in Australia, one of which is authored by a representative of parliament, is a significant advancement for the UBI agenda. Opportunity exists to further engage the public through continued comparative policy debate and raise awareness and support in the community.

Author: Jessica Chew
This blog alongside others on basic income can also be found at https://basicincomeaustralia.com/blogs/

I am posting a long overdue blog submission on the heels of the 21^st BIEN Congress that was held in Brisbane, Australia between 26-28 September. I was fortunate to be invited onto the local organising committee (LOC) made up of mostly Australian academics and other grassroots volunteers. We had been planning this hybrid BIEN for so long (since February 2022) that it’s just such a relief, but also very rewarding to be on the other side of the event now!

The three days went by in a blur, especially since I was on the LOC helping to chair sessions, facilitate Q&A and be a general all-rounder. This blog will give me a chance to capture my overall thoughts on the sessions I was able to attend and note the sessions I’d like to go back and watch when the recordings are released (programme reference here).

Keynote address: Kathi Weeks in conversation and Q&A with Elise Klein
What a great, articulate speaker. I won’t do it justice here on my blog, but she spoke on feminism and basic income, and really deconstructed and analysed the different institutions we belong to. What will stick in my mind is her analysis of domestic chores and child-rearing as “privatised reproductive labour”. I’m putting her 2011 book The Problem with Work: Feminism, Marxism, Antiwork Politics and Postwork Imaginaries onto my reading list.

Jane Scott – Disability Activist & Blogger
‘How a Universal Basic Income could allow people with a disability to thrive’
Jane spoke of the frustrating and conditional bureaucracy of negotiating the National Disability Insurance Scheme. What particularly struck me was her assertion that disabilities are a normal part of being human, which is utterly true but I had just never heard it phrased that way.  The key takeaways are that a UBI could allow people with disabilities to further engage with society and thus be more visible, as well as spend the funds at their discretion. 

Dario Varcirca – Artist
‘Valuing creativity, criticality and care: the essential paradigm shift’
Dario’s provocation was that UBI would allow every person to become an artist. I think it’s an interesting frame that if we all had a UBI, we could all unleash our inner artist. 

Abigail Boyd – Greens MP
‘Building Power to Dissolve Power: Building Political Paths to UBI’ panel session
It was very encouraging to learn of an MP putting forward a complete and costed UBI proposal in Australia called the ‘Universal Wellbeing Payment’. Her policy is something I’ll need to look into. https://universalwellbeingpayment.com.au

Maiy Azize – Deputy director of Anglicare Australia
‘Building Power to Dissolve Power: Building Political Paths to UBI’ panel session
I’ve admired Maiy for a while now since I first heard her speak at the Australian Basic Income Lab inaugural workshop in December 2021. Her organisation has conducted a lot of research into the limitations, failures and cruelties of the Australian welfare state as well as Australian public attitudes towards UBI. However, Maiy states the work ahead is not technical but rather the need to tell better stories to change the hearts and minds of the public. As a technocratic data analyst, I especially take heed of her words ‘technical discussion erases the human experience’.

Te Rangikaheke Kiripatea – Projects Manager at Kai Rotorua Inc
Panel session: ‘Indigenous Perspectives on Basic Income’
Te Rangikaheke’s talk was perhaps the most striking. From the perspective of a Maori man, he bluntly advised that when communicating UBI to Maoris that the speaker should be young, Maori, have a good standing in the Maori community, understand UBI well and most of all; keep it simple. 

Janell Dymus – Māori Public Health Leadership COO
Panel session: ‘Indigenous Perspectives on Basic Income’
Janell shared a beautiful metaphor for describing the value of a UBI. She speaks of us all being on our personal mountaintops, each with differing heights that represent our varied and unique lived experiences and perspectives. A basic income allows every person to thrive no matter where they in life: on top of the mountain, in a valley or in the trenches. 

Alina Plitman – Philosophy doctoral student
‘Create vs. Toil: A New Concept of Work’
Alina’s presentation was about the different ways we think about work. She presented a few conceptualisations on ‘work’ as labour or hard ‘toil’ vs the creation of a body of work (such as an oeuvre). I mostly took from this the difficulty of labelling different kinds of ‘work’ (waged work vs unpaid care work vs hobbies). Perhaps I should more simply think of ‘work’ as an activity, and then I need to rest from that activity (even if it’s my hobby).

Jim Mulvale – Sociology professor
‘Is the Labour Movement Getting Onside with Basic Income? Views from Canada’
How the labour movement interacts/perceives UBI is a contentious space, with the labour union being primarily concerned with preserving the primacy of work and preferring job guarantee policy interventions. Jim provides a good summary of the research findings on Canadian unions’ views on UBI.

Considerations for UBI proponents when discussing with labour unions

Ibrahim Kuran and Sercan Pekel – Researchers
‘Public Opinion Towards Basic Income: Analysis of Twitter data (with the #BasicIncome Hashtag)’
Ibrahim and Sercan’s presentation concerning big data analytics was very close to my heart. Their research compliments existing survey data on attitudes towards basic income. I’ll have to check out their techniques when they share their code on git.

Michael Haines – Vanzi CEO Social and Economic Innovator
‘UBI: Without Extra Tax, Debt or Inflation, or Taking from Other Programs’
Through my volunteering with Basic Income Australia, I am familiar with Michael’s proposal to use sovereign money to fund a basic income. I look forward to following how this policy proposal progresses since its debut at this BIEN Congress. 

Overall takeaways
BIEN 2022 was a huge leap forward for me in terms of my understanding of universal basic income and how I would like to contribute to its implementation in Australia. I walked away with two distinct impressions:

• I still have much work to do to munge through and compare the various detailed UBI proposals out there.
• There is a place for my interests in UBI modelling and microsimulation but from a political perspective, we need to focus on human narratives to drum up political support. (Harking back to Maiy’s warning that technical discussion erases the human experience.)

I still have some recordings to catch up on when they are released that mostly pertain to the various UBI modelling topics that I’m greatly looking forward to.

Now that Australia’s turn hosting the congress is complete, I look forward to hopefully making it to South Korea for BIEN 2023!

I’m pleased to slip in an update to the worldwide Basic Income dashboard just before the ball drops (Australian eastern time) for 2021!

The 2020 – early 2022 period features an exciting groundswell of guaranteed income initiatives with 25 new projects launched, up 127% compared to the previous five year period (11 initiatives). That is an astounding appetite for basic income experimentation and research driven largely out of the US’ Mayors for a Guaranteed Income movement, with many more pilots to come.

Huge acknowledgement must be given to Michael Tubbs, former Mayor of Stockton, California USA, who pioneered the first mayor-led guaranteed income project called the Stockton Economic Empowerment Demonstration (SEED) and sparked the movement we witness in the US today.

There are two other key callouts from this round of updates.

1) Four US cities: Gary – Indiana, Paterson – New Jersey, Seattle/Tacoma – Washington & Denver – Colorado carry on their bold legacy on basic income experimentation. These four cities conducted negative income tax experiments in the notable 1970s experimentation period and are stepping forward again in the 2020s as part of the Mayors for a Guaranteed Income movement.

2) A novel initiative arises from an Israeli cryptocurrency firm called Good Dollar in 2020. “The GoodDollar protocol is a community-driven, distributed framework designed to generate, fund, and distribute global basic income via the GoodDollar token (hereafter “G$”).” This is a fascinating basic income initiative to follow due to its (mostly) global and decentralised nature. Presently, any living person in Good Dollar’s included countries can sign up and claim a small amount of daily income in G$ coins.

Personally I view Good Dollar’s UBI initiative as a signal of basic income’s relevancy to the future of society and economies, much in the same way blockchain technologies are fast becoming mainstream in modern life.

Click here to view the updated basic income tracker.

2021 follows 2020 in being a difficult year. However, a glimmer of hope arises out of the COVID-19 crisis in the form of renewed hunger, advocacy and action in pursuit of basic income for a more just and secure world.

Happy new years and warm wishes for 2022!

On Friday 10^th December 2021 I attended the Australian Basic Income (ABI) lab’s inaugural workshop. ABI is a research collaboration between the University of Sydney, Australian National University and Macquarie University. It’s an exciting group newly formed in 2021 which aims to be the preeminent hub for basic income research and outreach in the Asia-Pacific region.

Workshop introduction

Overall takeaways

First of all, what a great day! It was an all-day session filled with a diverse group of speakers ranging from social policy/economics academics, unions, nonprofit representatives and most importantly Aussies themselves who need and interact with Australia’s punitive welfare system.

One of the main thrusts of the discussion on Friday was how Australia implemented a sort of basic income ‘light’ during the height of the pandemic (a Jobkeeper supplement of $250 per fortnight with mutual obligation suspensions) which drastically improved the quality of life for those on Jobseeker – and then walked back the changes in a stroke of policy amnesia.

Nonprofits such as Good Shepherd surveyed Jobkeeper clients to learn more about their experiences. Below is a very brief snapshot of some of the positive impacts on recipients:

• Feeling less alone
• Feeling themselves for the first time in years
• Able to buy good food, exercise

I’ll use this blog post to as a quick round-up of the key notes and takeaways I drew from the three sessions.

Session 1 – Organiser overview

Session 1 notes

Maiy Azize – Deputy Director, Anglicare Australia

• Anglicare divested from employment services about a decade ago because of the exploitative nature of being a contracted Australian job service provider
• Australia’s welfare system is amongst the most compliance-heavy regimes in the world
• Welfare states feature a care vs control duality – with Australia leaning further into the latter

Kristin O’Connell, Anti-Poverty Centre & Australian Unemployed Workers Union

• Focusing on the question ‘how to live lives with purpose?’
• People are not just mechanised parts of an economy
• Key concept: “Conditionality is the engine of the party machine”

Session 1 summary thoughts

This session was the most raw in terms of discussing the positive impacts of improving Jobseeker payments and suspending mutual obligations. These temporary policy amendments drastically improved people’s lives – only for the status quo to be reinstated.

Session 2 – Organiser overview

Alison Pennington, Senior Economist, Centre for Future Work at the Australia Institute

• A distance has grown between work and income
• Unemployment is planned, not structural – women are priced out of being wage labourers, with the high cost of childcare
• There is a high level of underutilisation in Australia
• The Australian nurses’ union is a good example of an industry that was mostly dominated by women which organised to become one of the most powerful unions in Australia

Assoc Prof Shaun Wilson, Macquarie University

• Author of new book Living Wages and the Welfare State: The Anglo-American Social Model in Transition
• Proponent of the broad progressive potential of a living wage
• Challenges for UBI
  • Not winning support from Piketty & Krugman
  • How to put an electoral coalition together

Tim Kennedy, National Secretary, United Workers Union

• The UWU advocated for keeping a high jobkeeper
• Notes worker fragmentation and loss of solidarity
• Current organising campaign is “jobs you can count on”
• UWU’s position on UBI ranges from ambivalent to contested
• The union focuses on worker power rather than waiting for governments
• UWU meets their members where they’re at – 1^st order of business is addressing wage suppression
• BI doesn’t address asset inequality
• BI is on the horizon for unions, has potential to inform UWU’s ‘theory of winning’

Session 2 summary thoughts

A fascinating session that helped me to better understand the role and enduring relevance of unions in the context of a potential UBI. Income security is an outcome for both the union and UBI movements. However, this session reinforced awareness in me that workers have powers to seize the means of production and improve their bargaining position – whilst the basic income movement is dependent on putting together an electoral coalition. The key takeaway here is understanding how union actors may view UBI as an inferior tool compared to industrial action when considering their theory of winning for workers.

Session 3 – organiser overview

Martijn Konings, University of Sydney

• The economy is characterised as an asset economy featuring asset inflation
• The economy can be described as a post-Keynesian political economy

Professor Miranda Stewart, University of Melbourne

• An asset like home ownership is not taxed apart from stamp duty

Session 3 final thoughts

The key takeaway I got from this session was that labour has been divorced generating wealth, and that the key driver of wealth nowadays is in holding assets. I feel particularly grim about the outlook of people (young people especially) who can’t get a foothold into the asset economy and hope to learn more about how basic income may contribute to the solution.

Concluding thoughts

A big thanks to Dr Troy Henderson, Dr Elise Klein & Dr Ben Spies-Butcher for organising the workshop! Overall, it was a thought-provoking day with lots of two-way interaction between the panelists and attendees in each of the three sessions. My main question is how resonant within the Australian consciousness are the stories of those who benefitted from the basic income-esque natural experiment? How do we as basic income advocates leverage the momentum out of the last two years of crisis to evolve Australia’s punitive and inefficient social policy and make the good changes stick?

I recently got invited to join the local organising committee for the 2022 Basic Income Earth Network’s congress which is going to be held in Brisbane next year (hybrid online & in-person). I look forward to exploring my above questions further there.

Pragmatic questions

As much focus as there is on the why of a basic income model such as Universal Basic Income (UBI) (examples here, and further reading here), advocacy efforts also need to address the how of implementing the program. Four critical ‘how’ questions are:

1. How much does it cost?
2. How are we going to pay for it?
3. How do we institute a no harm UBI so that beneficiaries currently relying on social safety net programs are not net worse off?
4. How do we structure a UBI program where we meet everyone’s basic needs, but it still pays to work?

This post is mainly going to address the accounting methodology of question 1 and will lean heavily on the US context for its examples – but the cost estimation methodology will apply in most country contexts.

Some of the defining critiques of the UBI model involve its cost, with figures quoted at US$3 trillion per year, and at a cost of 20-35% of GDP. However, these critiques use a faulty cost calculation whereby the cost is the UBI amount given to each individual multiplied by the size of the population. In the $3 trillion/year example, this would equate to a $10,000 UBI multiplied by the US population (300 million).

However, UBI as a redistributive program is quite unique to other entitlement programs in that some recipients of UBI are simultaneously contributors to the UBI funding pool via their taxes. In order to meaningfully arrive at a cost estimate for UBI, the methodology must consider the positive tax contributions of those recipients in order to arrive at the net cost.

This methodology is based on the works of Karl Widerquist, prominent thinker and writer on basic income. It is also well summarized by Elizaveta Fouksman.

“Here’s a simple example: imagine a room with 15 people who want to set up a UBI for the room of $2 per person. The upfront cost of the policy would be $30. The ten richest people in the room are asked to contribute $3 each towards funding it. After they each put in $3, raising the total $30 needed, every person in the room gets their $2 universal basic income. But because the ten richest people in the room contributed $3, and then got $2 back as the UBI, their real, net contribution is in fact $1 each. So the real cost of the UBI is $10.”

The upfront or gross cost in Fouksman’s example is reduced by a third.

Widerquist models a ‘back-of-the-envelope’ estimate of a UBI program set at the official US poverty line of $12,000 per adult and $6,000 per child with a 50% marginal tax rate (page 6). His estimate, after netting out the contributions of richer UBI recipients, lands at $539 billion per year, which is about 1/6^th of the gross cost of $3T, and constitutes about 2.95% of GDP.

Methodology discussion – the salient points

The key to gaining true insight into the cost of UBI is to distinguish between gross upfront cost and the real net cost. Again, Fouksman outlines it best. This net-cost concept is fundamentally important to understand, because most other transfer payments are designed to flow to those who do not contribute into it. Fouksman highlights a fundamental blind spot with most gross UBI calculations – those who pay for UBI through their taxes, will also receive a UBI – negating some of the cost of contributing to UBI in the first place.

Another angle with which to examine the true cost of UBI: although a UBI will be paid out to all members in society – because the rich have already paid for their share of UBI via their taxes, their payouts need not be included in the UBI cost estimate.

Widerquist presents yet another way to understand the accounting: “UBI involves a very large amount of taking money from and giving back to the same people at the same time in the same form. If you don’t account for all this taking-and-giving-back, you can’t get a realistic assessment of how much UBI costs or of the distributive benefits and burdens it involves.”

From this we can begin to understand when one is a net beneficiary, when one is a net contributor, and the rate at which people gradually switch over from beneficiary status to contributor status as their incomes improve.

Outcomes of understanding the UBI net-cost estimation methodology

Current UBI cost estimations are grossly overstated and misleading, and do not contribute meaningfully to the debate on why and how UBI could be implemented. In Widerquist’s poverty-level UBI example, such a program in the US would cost $539 billion per year, which is just 25% of current US entitlement spending and approximately of 2.95% of GDP.

Understanding the net cost of a UBI is very significant in advancing the policy discussion around whether or not basic income schemes should be universal.

Under a UBI scheme, every member of society should expect a regular income, irrespective of their existing wealth or work status. This would mean billionaires such as Jeff Bezos and Bill Gates would receive a basic income – a concept that at first glance seems obscene.

Since learning more about this topic four years ago, I knew that I broadly supported a UBI due to its inclusiveness, and the reduction in stigma of receiving government support (due to the universal nature of the payment). What I didn’t know was how I felt about the wealthy also receiving the guaranteed income. What I personally hadn’t considered was the differentiation between a net beneficiary of UBI and a net contributor. I hope that knowledge of the net cost of UBI better circulates in public debate, as well as the knowledge that we can afford it, should we choose to.

 

 

The concept of Universal Basic Income as an economic and social vehicle to recommit to the social contract has been experiencing a renaissance over the last few years – increasing in public consciousness and political discourse.

I’m happy to share my latest project – a Tableau data visualisation showcasing past and present Universal Basic Income projects around the world. This project was completed piece by piece over many weekends – combining my love for data visualisation and social welfare innovation.

Click on the viz preview below to visit Tableau Public and interact with the visualisation!

I hope this visualisation serves as an effective starting point for your exploration of UBI initiatives around the world.

Since coming to the realisation that I want to work for a better world through economic policy making I have been researching in greater detail my main area policy interest, Universal Basic Income.

Some simple Googling led me to The Economic Security Project. This movement strikes directly at the heart of my policy preoccupations – how do we achieve economic security for all in the face of rising inequality and job automation? Their website says it best.

The Economic Security Project is a network committed to advancing the debate on unconditional cash and basic income in the United States. In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety. Automation, globalization, and financialization are changing the nature of work, and these shifts require us to rethink how to create economic opportunity for all.

Now is the time to think seriously about how expanding unconditional cash could work, how to pay for it, and what the political path might be to make it a reality.

       – The Economic Security Project: Who We Are

The figurehead piece of literature for this movement is the book Fair Shot: Rethinking Inequality and How We Earn by Chris Hughes, cofounder of the social networking site Facebook which is now valued at over US$500 billion.

Fair Shot describes Hughes’ perspective on growing inequality and the power of luck on the insane fortunes of entrepreneurs. The book challenges the current meritocratic narrative that success (on the scale of tech entrepreneurs) is directly attributable to the hard work of the average person.

Below are the elements of his work that I found the most striking and valuable.

Description of the neoliberalisation of various world economies from the 1980s onwards.

Hughes provides a high-level narration of the evolution of the US economy from President Nixon’s significant domestic spending and growth of government size through to the corporates and big businesses self-organising in the mid-1970s to lobby their interests. This lobbying resulted in the continued trend of reduced labour protections and reduced taxation on the investment income of the wealthy in the US.

Critically, Hughes states that these changes provided the foundation for three forces: rapid advances in new technologies, globalised trade and the rise of venture capital that made Facebook possible.

At this stage of my economic understanding, I always find it valuable to read up on the high-level changes that have occurred in the modern economy, in the US or otherwise.

Hughes’ opinion on how he and the other founders were in the right place at the right time in the technology industry and global economy when Facebook launched

Direct from a cofounder himself, Fair Shot informs us Facebook’s insane success was largely borne from launching during the “sweet spot” of the early days of the internet in 2004, that is, leveraging the first mover advantage that is difficult for latecomers to compete with.

“When Mark coded the first lines in the early days of 2004, only a third of people in the developed world were using the Internet at all. Today over 80 percent are, and Facebook was perfectly poised to capture nearly all of them. Like Google and Amazon, which had a few years’ head start on us, Facebook began operations in this sweet-spot in history when the size of the web was modest and quickly growing… We started Facebook just in time to ride the wave of the web’s explosive growth (Hughes 2018, p. 32).

The second element of Facebook’s success is the proliferation of internet-accessible devices, such as the Apple iPhone, that could be built cheaply by manufacturers in China with components sourced worldwide due to Washington’s lowering of tariffs and embrace of a globalised market the decade previous. Customers had a point of access to the Facebook product with the explosive growth of these devices.

The availability of unprecedented investment capital into risky early stage ideas by venture capitalists also grew during this time, thanks to high stock market prices and historically low tax rates. This level of capital was incredible fuel for growth.

Drawing back upon my undergrad studies in Strategic Management, Hughes clearly touches upon the fundamentals of business and entrepreneurship theory – that a successful business competes by exploiting its position in its industry, and that in true zero-sum-gain fashion, creates a high barrier of entry for its competitors. However, specifically within the context of the global economy at the time of Facebook’s launch – Hughes and his cofounders enjoyed a remarkable economic environment in which they achieved phenomenal growth and success.

Hughes’ evolution from traditional International Development approaches towards unconditional cash transfer approaches to addressing global inequality

I closely identify with the way that Hughes’ interest in basic income programs grew from his initial experiences with the traditional International Development model. Hughes, having greatly profited off Facebook, wanted to give back, and decided to focus on fighting extreme poverty internationally as his method to empower people to chase their dreams. However, having engaged with Jeffrey Sachs’ Millennium Villages program (which is now largely regarded as a failure), he rapidly became suspicious of the scale of impact of these kinds of interventions.

My experience working in International Development in Cambodia has led me to similar conclusions. I will refrain from going into great detail about the efficiency and effectiveness issues that Hughes’ witnessed, however I will highlight one particular quote that sums it up well. “Aid interventions can occasionally work, but the question is, at what cost”? He and I both are concerned about the efficiency of our dollars that we put into programming, and a simple question is posed. What if, instead of “experts” from abroad creating complex interventions in developing countries, we simply gave our target beneficiaries cash? It speaks volumes about the agency it would grant individual people to spend the money as they see fit to actually benefit their lives.

It’s interesting, and encouraging, to see Hughes’ train of thought and mine converging when it comes to the methodology for tackling poverty and inequality worldwide.

Hughes’ pragmatism when it comes to unconditional cash transfer initiatives

Fair Shot addresses the more detailed question of “how” to implement a basic income, which is a policy obsession of mine.

Hughes’ overall position is that a guaranteed basic income of, for example, $500 per month should be provided only to working people with an annual income of $50,000 or below. This amount should be paid by the ultra-rich, such as Chris Hughes himself. This design is modest compared to the universal basic income concept of paying a dividend to each and every single citizen, regardless of income or employment status.

His approach is more measured, as he believes that executing grand ideas too fast is unrealistic and sets up guaranteed income for failure. This is a lesson learned from his failure to make The New Republic, a liberal US politics and arts magazine, a financially successful venture. Hughes’ key takeaways from The New Republic experience: “In my work today I purposefully choose more modest means to accomplish otherwise idealistic and ambitious goals. …A prosaic and incremental approach can be a more effective way to put poetic ideals into practice” (2018, p.133).

Some examples of previous and current economic security pilot programs

The Alaska Permanent Fund is a current guaranteed income fund, albeit a small one. Every Alaskan gets approximately US$1,400 paid out of the fund. This initiative deposits a quarter of the annual royalties from the production of oil and gas in the resources rich Alaskan state and deposits it into a government-run savings account. The amount that is divvied out to each Alaska resident is not equivalent to the amount proposed by most guaranteed income schemes, but is exemplary of the kind of clockwork payment floor that can help Alaskans make ends meet.

The Negative Income Tax was the most popular design for how to create a guaranteed income for the better part of the 20^th Century. The more that a person makes, the higher the income tax that they pay. At the same time, a tax allowance should also increase in proportion to the amount he falls further under the poverty line.

If the poverty line was set at £500, for example, and the negative tax rate was 50 percent, then a person who earned zero income would receive 50 percent of the poverty threshold, a guaranteed income of £250. If the person earned £200, then he would receive half of the difference between his wages and the poverty threshold, or £150, for a total income of £350. Once his wages passed the poverty line, he would begin paying taxes (2018, p.143).

Most policymakers loved that it encouraged people to work, as it paid to work. They would earn more from employment and policy combined than just benefits alone. However, this form of guaranteed income did not pass the senate in 1971.

Out of this guaranteed income debate grew the Earned Income Tax Credit (EITC) which is an anti-poverty program that offers Americans a tax refund, depending on how much was earned in the previous financial year. Currently the EITC provides $70 billion in cash with no strings attached to 26 million working families and individuals, and recipients get $500-$6000 per year from the Internal Revenue Service to spend as they wish.

The City of Stockton, California is providing a small group of its citizens with a guaranteed income. The Economic Security Project provided the seed funding for this initiative!

Key results from EITC impact assessments

• Kids whose families receive the earned income or child tax credit are significantly more likely to stay in school longer, and they perform better on standardised tests. Economists have found that for every $1,000 a family receives in tax credits, students’ test scores improve by 6 percent. Kids are more likely to finish high school and to enrol in college, and when they get there, they are more likely to stay there.
• In families with incomes boosted by $250 per month, children under five go on to earn 17 percent more each year than kids from families with no boost.
• For every 10 percent increase in the EITC, infant mortality rates decrease significantly. The number of babies born with low birth weights, a sign of inadequate nutrition, also decreases meaningfully.
• There is no evidence that cash benefits cause people to work less. In fact, some studies suggest that they work more. Women make more money in the years after getting a boost in their EITC than women in control groups who do not receive the boost.
• The EITC seems to slightly reduce the rates of smoking and drinking, presumably because of decreased stress levels (2018, p151).

My favourite standalone ideas from Fair Shot

 “If you inherit a mansion, you should pay the same tax as you would if that mansion had been cash. Closing these loopholes would raise $34 billion (2018, p.165).”

“We should raise the tax rates on income above $250,000 back to the historical average for much of the twentieth century – 50 percent. A family making $300,000 a year would see their taxes go up by only a few thousand dollars, but a billionaire making $30 million would pay millions more each year. This change would raise $190 billion per year. These changes would pay for the entirety to the benefit without adding anything to the national debt (2018, p165).”

“The bumper-sticker promise would be simple: if you work to make your country better, your country will take care of you. Every American who lives in a household that makes less than $50,000 and who works in the formal economy, does caregiving at home, or who is enrolled in school would receive a guaranteed income of $500 a month. The wealthy won’t get the benefit, and only the richest of the rich will pay for it (2018, p166).”

“A surtax on the one percent isn’t pitchforks coming for the rich or punishment for prosperity (2018, p165).”

“We [Hughes’ guaranteed income skeptic father] both agree that people want to work, and that if you work, you should not live in poverty. He has come to understand how unstable jobs in America are becoming and the evidence behind cash transfers” (2018, p179).”

“The natural drift of capitalism toward inequality requires a constant vigilance to make the market work for everyone, not just for the rich. …The scarier, more dystopian possibility is an America that looks more like the old European civilizations, in which a wealthy gentry lord over the struggling masses (2018, p182).”

“When Martin Luther King Jr. began his fight for the guaranteed income in 1967, there were 40 million Americans living in poverty. Today, fifty years later, there are still 40 million Americans living in poverty and even more lower-middle-class people who are teetering on the brink of economic collapse. We have the power to change this. A guaranteed income of $500 a month, paid for by the one percent, would lift 20 million people out of poverty and give them a fair shot at economic independence (2018, p179).”

“I [Chris Hughes], got lucky. That the reason we are wealthy is not because of a gift of brilliance or decades of my own hard work, but because a new economy at the start of the twenty-first century created massive financial windfalls for a select few like us overnight (2018, p.184).”

Final thoughts

Overall I found this book very accessible and personal to Hughes. It provides a very general and high level perspective of the economic forces driving the US today. This book was a great way to learn more about how guaranteed income is an ultra-relevant policy lever to improve lives using the obscene wealth generated by the 1 percent. Hughes’ writing has weight, because he was a cofounder of Facebook – so I find it encouraging that his experience and views on how to help people reach their full potential evolved in-line with mine! (Except for the part of being a multi-millionaire technologist of course!)

I definitely recommend giving this book a read, and I look forward to hearing your own thoughts on the matter!