The following is a Discussion Paper prepared by Dr. Robin Krabbe from Live Well Tasmania 17/10/2018
Discussion paper – A proposal for a Tasmanian Trial of a Basic/Participation Income/Youth Guarantee
Prepared by Robin Krabbe, PhD, Coordinator – Live Well Tasmania, October 2017.
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This discussion paper begins with providing relevant definitions in relation to Basic Income, then discusses the background and rationale for the proposal and then outlines the proposal.
Three main aims for Basic Income (BI) and their variations posed here are to provide income (material) security, with the priority of addressing poverty; to provide employment (addressing needs of feeling valued), including encouraging social enterprise, microbusiness and self-employment, and thirdly to enhance human and social/community capital development. Some of the many variations of the basic concept include:
Universal Basic Income – a non-means tested and non-work tested payment made to all citizens
Job Guarantee/Employer of Last resort – the government employs all under-employed and unemployed who are ready, willing, and able to work in the public sector at a base wage
Community-based Basic Income – the socioeconomic participation of all citizens is strongly encouraged, but income payments are made regardless of participation
Participation Income – payment made to all citizens in return for a very broadly conceived and tailored level of socioeconomic participation
Community-based Participation Income – payments are made depending on a very broadly conceived and tailored level of socioeconomic participation of all citizens, facilitated by a Community Development Coalition (CDC). A CDC is a formal partnership between government and non-government groups.
Other terms and variations include Stakeholder Income, citizens dividend/income and negative income tax or tax credits. For this paper, the acronym of BI, which denotes the term Basic Income will be used for ease of reading, however this is used in a more general sense of any payment made to individuals to assist with living costs, and to encourage a level of participation in society. Its primary aim is to address a lack of employment opportunities, to ensure all can satisfy both material and non-material needs.
Poverty and climate change are two current significant challenges facing humanity. For some this involves a trade-off, whereby decreasing economic growth to address climate change is contended to increase poverty. This proposal seeks to strike a balance between a bold vision of much needed socio-economic change to tackle both poverty and climate change, and a realistic understanding of the numerous barriers people perceive in relation to change. There are still many details to be resolved, but this proposal aims to further the conversation regarding Basic Income towards developing a community, participatory based version that explicitly seeks to build both individual and collective capacity.
It is proposed that some type of basic income is a priority in Australia, in the first instance to provide economic security. Employment is becoming a problematic means of achieving financial or economic security. Firstly, automation is already taking many jobs and is likely to take more in the future (Rifkin 2004). Secondly reduced demand for goods and services, and increasing debt levels meaning borrowing money is becoming less of a possibility to boost demand (Pettifor 2005). Thirdly there is an argument that any level of involuntary unemployment means a failure of governance; feeling useful via some form of work or participation is vital for wellbeing and hence should be a right (Tcherneva 2012). It is highlighted here that in the current ‘technological and knowledge based’ era a monumental opportunity is available to fundamentally change the nature of work, to satisfy the basic human need for both meaningful participation and for meaningful relationships. Hence a Tasmanian trial of a version of Basic Income is proposed, using an Assets Based Community Development approach. This recognises that there are significant resources in our community which can be mobilised, providing ‘win-win’ benefits for the individual and for society.
Three alternative versions of Basic Income are proposed for discussion for a Tasmanian Trial. Live Well Tasmania has a preferred option, but believes it is important that there is widespread deliberation about the assumptions and likely consequences of each version. The first version is not conditional on work effort or participation (Community-based Basic Income, or CbBI), the second is conditional (Community-based Participation, or CbPI), and the third is a Community based Youth Guarantee (CbYG). These are all ‘community-based’ in the sense firstly of promoting a large range of roles performed by the community to satisfy unmet (particularly socioemotional) needs, aimed specifically at increasing quality of life via increasing human and social capital; ultimately aimed at what is increasingly identified as ‘positive psychological capital’, here called cognitive capacity. A further aspect of the trial will be a process of working with individuals (with a suggested focus on youth) with special physical, intellectual and behavioural needs. These would be addressed through collaborative processes involving the individual, their families, advocates, health professionals, and so on. The synergies and transformational potential of a CbYG would be that there is a significant range of ‘job opportunities’ for the broader community in terms of skilling youth, such as via mentoring, social enterprise establishment and so on. Secondly a community-led coalition (nominally called here a Community Development Coalition) would be intimately involved in managing the scheme. As well as both being ‘community-based’, each of the versions would also involve a staged approach whereby the level of the income would start at a subsistence level, then reviewed at timely intervals and increased as soon as considered feasible as individual and collective capacity increased. A final point is the importance for all proposals relating to a BI trial to conduct initial comprehensive community consultation, which would then also be used throughout the trial to guide the iterative process of refining the model in response to the evaluation as it unfolds.
Why do we need some form of a Basic Income (BI)?
There are two main arguments for a BI income trial – firstly a ‘push’ argument of declining employment opportunities, and of the increasing requirement for ‘21st’ century skills, including ‘soft skills’, creativity and social innovation needed for our technological age. The second is a ‘pull’ argument of the significant opportunity to build 21st century educational and health systems towards a ‘Good Anthropocene’, where individual flourishing is the basis of well functioning societies, who can then best support healthy ecosystems. While for many addressing climate change has severely negative connotations for our modern ways of life (Alcott 2008), the positive aspects of ‘Sustainable Wellbeing’ are highlighted here, where actions to reduce climate change are often also beneficial for human health and wellbeing (Costanza 2013).
A BI provides an opportunity to ensure that the basic material and non-material needs (for meaningful participation and meaningful relationships) are met for all. It is an opportunity to redefine work as ‘meaningful participation’. Our current systems predominately rely on private sector employment to satisfy basic material and non-material needs, however one element of market failure is the lack of capacity to ensure all who have want work have access to dignified work, and the payment for those who have work is enough for a dignified life. Beyond this, work, or participation is believed to give meaning to life, giving individuals a sense of purpose and a goal in their lives; in short providing a sense of being valued as a person (Christiansen and Townsend 2004).
This proposal contends that participation requirements should both be tailored to individuals’ existing skills, as well as challenging individuals to further build their skills towards greater cognitive capacity, including greater creativity and social innovation. Luthans and Youssef (2004) identify cognitive capacity or ‘positive psychological capital’ as a vital resource for organisational capacity, based on the concepts of self-efficacy/ confidence, hope, optimism, and resiliency. This includes the extent an individual has self-motivation for learning and education, and for participation in society and work.
While a Universal Basic Income focuses on income (material) security, both the Job Guarantee and a Participation Income focus on ‘employment’ security, in terms of facilitating confidence in one’s useful contribution to society. By maximising individual and collective human potential, a BI provides the opportunity to build 21st century education and health systems to in turn rebuild the human and social capital needed for the 21st century. To some extent these systems have failed to adapt to the knowledge and technological age we now live in. in addition it could be argued they have been seen as a lower priority in our determination to build our capacity to increase standards of living and overcome scarcities such as food scarcity. The evidence is clear however (for example, increased rates of mental illhealth, domestic violence, terrorism and so on) that no longer can they be a lower priority, they must be at the forefront of building systems that ensure the health and wellbeing of all. The focus of Live Well Tasmania is in tackling youth disadvantage, hence youth unemployment is a particular motivation for us to trial a BI in Tasmania. In fact one option to consider would be to start with a BI trial specifically for youth, following the use of a Youth Guarantee by Nordic countries, as will be mentioned in more detail below.
Finally, and crucially a BI could circumvent the process of cumulative disadvantage by which people living in poverty find it extremely difficult to prevent inter-generational poverty . The definition of cumulative disadvantage used here is adapted from DiPrete and Eirich (2006) whereby an unfavourable early environment creates an initial disadvantage that produces further disadvantage. For example, early disconnection from social relationships tends to result in disengagement from learning opportunities (Purvis, Cross et al. 2013), compounding poverty via a subsequent lack of access to resources. A Youth Guarantee is one option with potential for reducing inter-generational poverty.
What is a Youth Guarantee?
The two main examples of Youth Guarantees have been implemented in Scandinavia (Hummeluhr 1997) and in Europe (Escudero and Mourelo 2015) as a response to high youth unemployment and the difficulty of transitioning from education to employment. Escudero and Mourelo (2015) define a Youth Guarantee as a ‘guarantee that all young people under the age of 25 receive, within four months of becoming unemployed or leaving formal education, a good quality offer of work to match their skills and experience; or the chance to continue their studies or undertake an apprenticeship or professional traineeship’. It involves a commitment to mobilize all available resources to ensure that ‘no unemployed young person is left behind’. It emphasizes the need to tailor all measures to each individual and crucially highlights the need for reform of professional/vocational training systems, education systems and public employment services. Elements include programs focussed on education and training for employment; initiatives to reduce school dropout and provide remedial education; and employment intermediation services. Factors identified for success are early intervention, identification of the right target groups, good institutional frameworks, high quality programmes and sufficient resources. Finally, while the European Youth Guarantee was adopted in 2013, the comment was made “it needs to be stressed the scheme was not launched as early as it should have” (Escudero and Mourelo 2015).
How would a BI trial work?
Tasmania has been identified by commentators such as West (2013) has having a culture of low aspiration for education and work. Certainly there are some concerning statistics regarding educational attainment and more general indicators of health and wellbeing such as smoking rates, teenage pregnancies, and so on (West, 2013). This proposal contends that a BI is necessary to reverse these indicators, whereby substantial community capacity building has the potential to build structures which help people overcome adversity and build ‘psychological capital’ and self-motivation for education and work.
There is already an ideal network that exists in Tasmania which could provide the structure to manage the community governance aspect of either a CbBI or a CbPI. This is the Community Exchange Network Tasmania (CENTs) initiative (see www.cent.net.au), which began in 2011. It involves people trading goods and services without using money. CENTs provides a mechanism both to ‘advertise’ participation opportunities, and for members to record their participation hence allowing them to be paid the participation income.
Via the CENTs website, members post what goods and/or services they can offer to help others, and also list what goods and/or services they would like to receive from others. CENTs is part of a global network using an internet platform which focuses on facilitating trade locally, but also allows people to trade across the globe, with an explicitly focus on building community. Although the CENTs is internet-based, CENTs Local Area Coordinators can assist those who do not have access to computers or lack confidence using computers.
Everyone who wants to participate in the BI would register with CENTs. If it was decided to trial a CbPI, people would record their participation, that is the number of hours they ‘worked’, or the equivalent dollar value of goods they provided. If it was decided to trial a CbBI, participation would not be recorded. People would still be encouraged to use the system however to offer their services to others, and to find goods or services they want.
We have observed in CENTs a wide spectrum of self-motivation to participate via responding to the needs of others, for example to respond to requests for garden help, house cleaning help, tutoring help etc. CENTs in this respect is a microcosm of the broader society (or in fact members may in many cases have a higher level of self-motivation to participate in helping others since this is often at least part of the motivation to join (for example see Williams 2009). This is mentioned to point to a realistic appreciation of varying levels of ability/self-motivation to participate in society, indicating that a CbPI (as the preferred option of Live Well Tasmania) may be more effective than a CbBI.
This process would duplicate the BI trial approach in Finland, whereby Trufelman (2017) notes that
‘[r]ather than rolling out laws on a massive scale, they are trying to craft legislation in stages, with user feedback, just as one would create a piece of design. There are different ways to potentially address the problem, but the Finnish government wanted to start simply and then elaborate slowly, [t]hey wanted to design and test policy … If this test yields meaningful results, it should lead to another experiment, then another and another”.
Futhermore Trufelman states:
“Finland isn’t just designing experiments with basic income. There will be experiments for what languages to teach in schools, how to change childcare and other things. According to their website, the experimentation office is working on 26 key projects nationally. Slowly, Finland will use these experiments to solve problems, and express, test and cycle new ideas in this iterative, design-minded way”.
This type of approach appears to have much to commend it. Finally the strategy of each local Community Development Coalition responsible for socioeconomic development would be based on regular and comprehensive community consultation and involvement in monitoring the trial, developing ideas for ‘trust building by stealth’, for further both small and large adjustments and so on.
What level of income should either option be set at?
The level of income provided needs to be satisfy a balance between high enough for people to live on, but not too high to avoid incentivising people to leave private sector employment.
It is proposed as advocated by the Equal Life Foundation (2013) to start the CbBI/PI at a basic level to serve as a disincentive for a mass exodus of people leaving employment to participate in the trial. Then as capacity increased including capacity to share low status jobs, the income level could be increased. Job sharing for example via ‘Balanced Job Complexes” as advocated by Hahnel (2005) would be another aspect that could be considered as an integral aspect of building a socially cohesive society. There is some indication that increasing numbers of people may support this concept, who are demonstrating ‘post-materialist’ values (Welzel and Inglehart 2005) and hence may ‘self-organise’ to willingly engage in conversations about meaningful participation for everyone, ensuring that all have the opportunity for a mix of ‘higher status’ and ‘lower status’ forms of meaningful participation. Equity in terms of income is not the only requirement for social cohesion, equity in terms of work that is interesting and engaging is also important, encapsulated by the term ‘contributive justice’ (Sayer 2009).
How would it be funded?
Those who subscribe to modern monetary theory (for example Glotzer 2016, Mitchell and Fazi 2017) contend that via fiat currency, government has an unlimited capacity to issue currency, and hence a significant capacity at least in theory to provide public employment opportunities via “Quantitative Easing’. A “buffer stock” of labor would then be available that can at least in theory switch to the private sector when/if these jobs become available. The Centre for Full Employment and Equity in NSW has done significant work to show this will not lead to inflation (see for example Quirk, Allen et al. 2006 ). One reason this is predicted to be the case is that the level of the income at least initially would not be high enough to create inflation.
Who are some of the countries considering/trialling a BI?
While Finland, Canada, The Netherlands, USA, Scotland and France are either currently trialing or considering trialing some form of BI (McFarland 2017, Wispelaere and Stirton 2017), as well as Kenya (Lowrey 2017) and Uganda (McFarland 2017), one prominent example of an actual trial of relevance here comes from Argentina (Kostzer 2008). Following one of the worst social and economic crises in its history crisis in 2001, the government implemented an ‘Employer of Last Resort’/Job creation program, called ‘Plan Jefes’. Kostzer states that Plan Jefes ‘illustrated that public employment programs can have a transformative impact on persistent socioeconomic problems such as poverty and gender disparity. Women—by far the largest group of program beneficiaries—report key benefits to their communities, families, children, and … themselves from participation in Jefes’. Further research would be beneficial in highlighting what has worked well and what are some of the persistent problems still to be addressed in these types of schemes, however on balance it seems there are hopeful signs of the feasibility of the basic concept.
The Tasmania proposal
The basic proposal is that government together with community via Community Development Coalitions would decide whether a CbBI or a CbPI would be trialed, and for how long (for example a three or five year initial trial). Either one could just be implemented in North-West Tasmania, where there is strong existing capacity to implement such as trial, or on a Tasmanian wide basis. CENTs Local Area Coordinators could operate as CbPI/BI Local Area Coordinators, for example working with local community groups, local schools, and local government to identify roles that could be filled by people wanting to participate. An early task of the scoping process would be to decide the criteria for evaluation, and how extensive the evaluation would be. It is noted in itself the evaluation process would be a valuable community building opportunity, in terms of increasing social interaction and increasing social connectedness. The criteria to measure the success or otherwise of the trial for example could be whether the trial results in:
- Increases in subjective wellbeing/self-efficacy, hope, optimism, resilience in the general population and in participants
- Increases of people participating in the CbBI/PI
- Increases of people engaging in informal and formal learning opportunities
- Decreases of health problems such as depression and anxiety
If desired, a control group/s could be used to increase the validity of the evaluation. In any case qualitative and quantitative research would be used for the evaluation.
Longer term vision – A Learning Region
Live Well Tasmania perceives that a CbBI/PI is a stepping stone towards establishing Learning Regions throughout Tasmania. This builds on the work already underway in Tasmania, for example in Circular Head, Devonport, Kentish and Glenorchy, whose councils all have some form of explicit plan to promote Lifelong Learning (for example see Auckland, Woodroffe et al. 2016). The underlying assumption is that a ‘cooperative learning civilisation’ is needed to address the challenges of the 21st century. The basis of a learning region is ensuring that all residents (with a focus on youth) have the opportunity to develop habits of self-directed learning, and then for Community Development Coalitions to provide a variety of formal and informal learning for all age groups.
Why would the government be advised to implement either a CbPI, CbBI or CbYG trial in Tasmania? On the one hand it could be said there is no alternative but to consider some form of basic income in the future. On the other hand, it is a very liberating concept to believe we can progress towards a governance system within which people work because they choose to engage in meaningful work that they on the whole enjoy doing. This is a timely opportunity for cross-disciplinary, participatory action research involving economists, socio-economists, organisational scientists, sociologists, social psychologists and so on. There are still some finer details to be worked out in a collaborative process, but the will definitely exists to fully develop and implement a Tasmanian BI trial. Live Well Tasmania favours a Community based Youth Guarantee, combined with a Community based Participation Income trial, which has the potential to not only focus on early intervention to prevent inter-generational poverty, but also to mobilise the whole community around human and social capital building for a better future.
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