Universal Basic Income

Europe is beginning to toy with the idea of Universal Basic Income, and boy is it controversial.

The district of Besós in Barcelona, Utrecht in the Netherlands and the Finnish city of Helsinki are all reportedly set to trial a universal basic income scheme.
Residents will be given money for two years to lift them above the breadline as the scheme looks to investigate “innovative and creative solutions”.
Each area will be been given €13m (£11m) from the European Union to fund the scheme, which will grant 1,000 randomly selected low-income households between €400 and €525 (£350 and £455) per month.

As you may have guessed, the capitalist PTB are very against this egghead experiment. Poor people can't be trusted with free money. They'll just waste it.
And they've got the math to prove it.

A universal basic income paid at a flat rate to all citizens would fail to reduce poverty levels in advanced economies and require substantially higher taxes to fund its simplicity, the Organisation for Economic Co-operation and Development has concluded in a detailed study of the idea...
Proponents of basic incomes argue that they would provide security for everyone in society, reduce inequality and provide insurance against robots replacing humans in the labour market.
These claims receive short shrift in the detailed modelling exercise undertaken by the OECD, the Paris-based international organisation that specialises in cross-national comparisons of policy ideas.

Ah yes, those wonderful neoliberal economic models that are always right.
Well, you have to use models, because no one was ever stupid enough to implement Universal Basic Income, amirite?
I mean, we would know about it if someone had, and then we wouldn't have to use mathematical models.
Right?

Wrong.
An entire major nation implemented Universal Basic Income six years ago, and the neoliberal world pretended it didn't happen.
That nation is Iran, and they just released a report about this bold experiment.

In 2011, in response to heavy cuts to oil and gas subsidies, Iran implemented a program that guaranteed citizens cash payments of 29 percent of the nation's median income, which amounts to about $1.50 every day. (In the U.S. such a measure would translate to about $16,000 per year.) Now, six years later, the results of that measure were released in a report by economists Djavad Salehi-Isfahani and Mohammad H. Mostafavi-Dehzooeifrom for the Economic Research Forum.
The report found no evidence for the idea that people will work less under a universal income, and found that in some cases, like in the service industry, people worked more, expanding their businesses or pursuing more satisfying lines of work.
The researchers did find that young people — specifically people in their twenties — worked less, but noted that Iran never had a high level of employment among young people, and that they were likely enrolling in school with the added income.

Interesting. People used the money to go to college and find more satisfying careers, rather than being lazy peasants with free money.
Could those fancy economic models based on neoliberal theories be wrong and actual facts based on real-world data be right?
Nah.

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Dhyerwolf's picture

But I'm completely jealous of whatever data scientists/econometricians are involved in this, because natural experiments (which really just means that the method of randomization is determined by outside forces) using lots of government money can generally answer questions so much more effectively than most other types of experiments.

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As I've said before, I managed federal and state job training programs. One such program gave dislocated workers a 1x lump sum payment to pay bills, purchase retraining, etc. Once they got the money, there was no accountability and no required career counseling/academic advising. It was considered a failure because they bought large TVs and other items they didn't have to have, and those that bought training got royally ripped off by schools like Trump University. When someone is used to living day by day, a lump sum can be a mystery and a temptation when it comes to management. However, the experiment is calling for a monthly lump sum. How is that any different than welfare in America, except there might be a whole lot less red tape and condescension for the recipients to put up with.

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"Religion is what keeps the poor from murdering the rich."--Napoleon

PriceRip's picture

          <Rant>
          I have lived this experiment. I and several people I could name, but won't, are living proof of the positive outcome this "experiment". If not for the stupid economists that have dominated "thought" in this country we would have solved our economic problems long ago.
          </Rant>

          I entered my professional career, Debt Free, at the age of 31. Okay, okay ... that was a lie! I owed a little more than $900 in student loans. With this crushing debt I moved halfway across the country to the only job I would have until retirement. Everyone in this country could have should have the opportunity to do something like that. There is no good reason for poverty to exist in the USofA.

          Articles like this are like stepping into The Great Salt Lake with a small cut on a foot. The pain is excruciating and its origin is so very obvious. I seriously doubt the USoA's economic powers that be will even care about the results of this "experiment".


          And, for all the right reasons there is no reason we should care about this experiment, we should just do it.

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"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

Don't they send a portion of the oil revenue to every citizen? Not sure how much it is, but it's an idea.

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I've seen lots of changes. What doesn't change is people. Same old hairless apes.

@The Voice In the Wilderness
states that its citizens are the owners of its natural resources. This came from a deep frustration prior to statehood because lower 48 companies would come up, bring their own employees and supplies, take the resource(s) and leave with all their profits after spending zero in the state. Fish is the most prominent example.

So when oil was discovered on the North Slope, lots of negotiation ensued, and it was this clause in the constitution that provided for the Permanent Fund which is funded by oil revenues. The state government has been trying to steal this from the people for decades, and they finally succeeded in stealing half of it using the budget shortfall as an excuse. This followed a year in which our then governor, oil lobbyist Sean Parnell gave an annual windfall in tax breaks to the oil industry that would have done much to solve our budget problems.

The oil industry owns the state of Alaska. Our budget is almost wholly dependent upon oil revenues, so when the price of oil drops, we are in trouble. Attempts to diversify the economy have not managed to get enough mass to make a difference.

Were we living true to our constitution, Alaskans would be sharing in the profits of all our resources, not just oil. Incidentally, our constitution is a model studied because we were able to take advantage of the experience of 48 other states in constitutional law and avoid many pitfalls.

All states should contain the provision that its resources belong to the people.

By the way, most Alaskans aren't aware of this constitutional provision. They are just happy to get a check, although the amount is far from equaling a basic income - about $1000 last year. We get to spend it on the outrageously high oil prices in this state.

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PriceRip's picture

@gustogirl

          Fish is the most prominent example.

          One of my former students (≈ 30 years ago) and a very good friend owns and operates a small fishing company up there. During the season he employs two trawler crews and makes enough to live the rest of the year with his family in Nebraska. To describe him as well-off would be a bit of an understatement.

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"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

gulfgal98's picture

they did this experiment for five years in a small Canadian city in Manitoba and guess what? It worked!

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"I don't want to run the empire, I want to bring it down!" ~ Dr. Cornel West

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

@gulfgal98
except that a bigger minimum would be needed today to offset automation.

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A PROUD Hillary hater since 1993

The industrial revolution provided amplification of labor. One person could produce far more cloth tending a powered loom than sitting in a small shop weaving by hand. The key here is that you had to hire people to run the machines, and those people joined unions to guaranty that the output of the factory returned to the broad base of consumers. We have been transitioning to an automated production system, where the worker is now not needed. Offshoring has a similar effect, goods produced without local labor. As we engineers like to say, at the limit of automation no labor is required. So how do you then distribute the goods produced by automation, owned by the oligarchs? This is a serious problem and is only going to get much worse (that's an understatement, fer sure). I see two possible solutions, give away the income to buy the goods, that is, a UBI that is at median income today. Or, invent marginally productivity jobs, which is actually closer to where we are today. My guess is that the best solution is going to be a combination. People will work 24-32 hours a week at a marginal job and then have their income supplemented by an "Automation Productivity Factor", essentially UBI. The challenge is to design and implement an economic/political system that can get us there. Essentially, it is a transfer of wealth (goods) from the oligarchs to the people. The Oligarchs will scream and moan, but there is really no other alternative if they want a market for their automated goods.
I have to add this one thing. The claims from the oligarchs that people will be lazy, that is they don't deserve an income for not working, is total bullshit. They are the ones that don't deserve the wealth. Their clam that thay earned it is total bullshit. No one can work hard enough to earn millions of dollars in income. It's all based on economic rent and theft, and gambling, "heh, I made a killing on the stock market", well good for you but you didn't work for it.

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Capitalism has always been the rule of the people by the oligarchs. You only have two choices, eliminate them or restrict their power.

Hawkfish's picture

@The Wizard It's not just manufacturing - both IBM and Google have demonstrated systems for medical diagnostics from digitized images. IBM spent about $4B to buy a huge trove of tagged medical data last summer. The kicker is that the only infrastructure they need for these kinds of systems is a cloud platform (which is already a commodity item) and the software (which is rapidly becoming a commodity e.g. Watson and TensorFlow). The "new economy" will not solve this problem.

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We can’t save the world by playing by the rules, because the rules have to be changed.
- Greta Thunberg

The Iranians gave everyone $16000 and what did they do? They worked more! So they could spend more, so they could want more, so they could produce more garbage. And the government considers this a success. And western democracies are trying it. All they want to do is prop up capitalism.
Instead make it more - enough to live on. Then we'll see.

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A PROUD Hillary hater since 1993

detroitmechworks's picture

17, 640 a year...

Which is because the VA counts 78% disabled as 70%, not 80%. (They always round down to the nearest 10%, which is idiotic, IMHO.)

As it is, over half my income every month goes to rent. Another third goes to gas, power and internet. (About 100 a month) I average about 100 bucks a month for medicine (Grass. It works, and is far cheaper than Big Pharma Drugs.) I average about 300-400 dollars a month for everything else. Of course, if a disaster strikes (Like Last Month) I have to play catch up for a month or two...

Overall, I tend to rely on Re-use, Recycle, Repair... New shoes for the kids every few months is a major expense because the fundamentals are important. If it wasn't for food stamps and rental assistance I could NOT live. If I had to pay full price for my rent, it would cost over 100% of my income.

As it is, I can't move in with my SO, because if she moved in, her income would count against my rental assistance... leaving us with even LESS money than we have now. Even with her living with her folks rent free... she doesn't make enough to cover the shortfall.

So, Honestly, I wouldn't have a problem at all, if RENT was reasonable. I don't need a lot of money and things, just the bare minimum. It's a shame I can't pay my rent towards a house, but the cost of buying is astronomical and I'll never be able to afford my own land, at least not in a city.

Didn't mean to get maudlin. I think UBI is a great idea, since my pension is the only thing that allows me to live, and I'd love to see that stability given to as many as possible, but ONLY if the rent isn't increased to suit. (Because you know the fucking Real estate Vultures would instantly raise all "Low Income" rents to be JUST unaffordable to a UBI recipient...)

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I do not pretend I know what I do not know.

PriceRip's picture

@detroitmechworks

          ... Which is because the VA counts 78% disabled as 70%, not 80%.

          Anyone with even a modicum of knowledge would agree with you and me, but bureaucracy runs in a different reality. One year a student of mine needed some index number to be N+1 to retain a scholarship or his eligibility of some sort, I don't remember any of the detail ... except ... We checked the numbers and calculated the value to be N + 0.999999 ⋯ and we were satisfied that all would be well ...

          You know ... the all knowing registrar, the keeper of the holy book of records noted that the computer spit out the number N + 0.999 and decreed that number to be less than N + 1 and therefore ... the rest of the story.

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"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

TheOtherMaven's picture

@PriceRip
was a cuttingly satirical story by Gordon R. Dickson back in 1965. Worth a look, if you are in the mood for a real horror story: http://www.dave.rainey.net/calendars/dystopias/process3.html

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There is no justice. There can be no peace.

PriceRip's picture

@TheOtherMaven

          The moment I saw this:


ComputersDontArgue
Computers Don't Argue

          I started laughing ...

          Back in the day I had no money so I didn't have a subscription of any sort. So, either I read this at the Library (fare probability) or I read an Analog borrowed from a friend(most likely). I had forgotten the details of this so very realistic nightmare.

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"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.