Marcel Canoy Distinguished lecturer Erasmus School of Accounting and Assurance Columnist Financieele Dagblad Adviser ACM (competition authority)

https://www.youtube.com/watch?v=C9wP7KQggvY

Changing attitudes and realities around work and leisure

Increasing need for participation, in a broad sense

Ageing

Robots

Changing social structures

Complex tax system

Excessively broad compensation schemes

Fraud, control and humiliation social security

Stigma

Expensive and ineffective activation policies

Limited incentive to work

Increased expenses health

care

Current system ill-suited for the future

The case for change is obvious

Those who look only to the past or present are certain to miss the future

John F. Kennedy

Response to changing social economic, political and economic environment?

Fear of Muslims, migrants, robots, globalization

Lack of trust in politics

Rise in fact-free

politics and populism

•UBI = unconditional amount in € at

subsistence level for all

• Differs from means tested social security

provisions

• Debate on ‘all’, ‘level’ and ‘finance’

Makes system much simpler

Gears towards participation in broad sense

Responds to future labour market trends

Liberal (reaction to paternalism and administrative burden of social security)

Marxist (equality, social mobility)

Philosophical (freedom)

Treat UBI as a bean counter

Ignore behavioural effects

Show model results that are clearly unsuited and hence should be ignored

Consider it unfair and not targeted

Out of their comfort zones (!)

Freedom is key

Can be exploited to ◦ Technological innovation bottomup

◦ Social innovation

Civil organisation in neighbourhoods, health care education

Social care (caregiving)

◦ Development

◦ Other stance towards experiments and failure

Freedom should be interpreted in a Tocquevillean way

No freedom without responsibility

Purpose of freedom is to add to the size of the cake, not to grab as much of it

Responsibility at individual level without prescribing nature of the responsibility

Lowers stress

At the margin great incentive to work

Likely to reduce health care costs

Fundamental change in bargaining positions

But can benefit either side

◦ Will it happen?

◦ It might

◦ But experiments in developing countries showed otherwise

◦ The Economist: nice idea but income tax need to be raised with 60%

◦ Scott Santens:

I beg you pardon? You forgot a few things

Not good to look at average incomes

You forgot current spending on social security

You assumed flat taxes

To which I add: you forgot behavioural effects

You end up with tax cuts instead of increase

But this assumes you can effectively tax the super-rich

Bold assumption in US, very bold under Trump

Treat UBI as a bean counter

Ignore behavioural effects

Show model results that are clearly unsuited and hence should be ignored

Consider it unfair and not targeted

Out of their comfort zones (!)

Landing and moving about on the moon offers so many serious problems for human beings that it may take science another 200 years to lick them.

-- Science Digest, 1948 While theoretically and technically television may be feasible,

commercially and financially I consider it an impossibility, a development of which we need waste little time dreaming.

-- Lee De Forest, 1926 The actual building of roads devoted to motor cars is not for the

near future, in spite of many rumors to that effect. -- Harper's Weekly, 1902

Heavier than air flying machines are impossible. -- Lord Kelvin, president, Royal Society, 1895

Wageningen, Groningen, Leeuwarden, Utrecht, Tilburg (and counting)

Advantages ◦ Lower scale less costly

◦ Allows us to see how people respond to freedom

◦ Gears at places where problems are most urgent

◦ No need to overhaul the system

Disadvantages ◦ Not a real UBI

◦ What can we really conclude?

◦ Practicalities, scale limited, length limited, not properly measured, weird stance minister

Developing countries (e.g. India, Namibia, Kenya) ◦ (Surprisingly?) positive results ◦ Namibia

malnourishment, crime and truancy fell 25-42%

◦ Malawi school enrollment girls and women up with 40%

◦ General: good use of the money

poverty decreases

longer-term benefits in income, health, and tax income

no negative effect on labor supply

saves money

Older experiments (US, Canada)

(Thanks to Prof. Olli Kangas)

Starts in 2017 for 2 years

Huge public and political support

Well funded (20 billion)

Various models (Full UBI partial negative income tax)

Scientific setup

◦ NIT is cheaper and more geared towards problem areas

◦ UBI is … unconditional

◦ Differences not that big, but NIT seems politically (much?) more feasible in NL

Universal basic income is an appealing idea, because ◦ It matches much better with future trends than

current system

Many arguments against are simply wrong

But not all

Lot of uncertainties still

Curious to see outcomes experiments in NL and in particular Finland

Negative Income Tax probably easier