Basic Income In Switzerland

I Bet You Thought I Was Nuts

A few days ago, I wrote that the dole shouldn't be seen as this stigma but as a dividend a successful society can pay to its citizens. Turns out folks in Switzerland are way ahead of me on the curve with this one and they are proposing a 'Basic Income' for every citizen. How much? They're talking US$2,600 per month, which is like $3,000 in AUD right now.

The idea of a living wage has been brewing in the country for over a year and last month, supporters of the movement dumped a truckload of eight million coins outside the Parliament building in Bern. The publicity stunt, which included a five-cent coin for every citizen, came attached with 125,000 signatures. Only 100,000 are necessary for any constitutional amendment to be put to a national vote, since Switzerland is a direct democracy. 

The proposed plan would guarantee a monthly income of CHF 2,500, or about $2,600 as of November 2014. That means that every family (consisting of two adults) can expect an unconditional yearly income of $62,400 without having to work, with no strings attached. While Switzerland’s cost of living is significantly higher than the US—a Big Mac there costs $6.72—it’s certainly not chump change. It’s reasonable income that could provide, at the minimum, a comfortable bare bones existence. 

The benefits are obvious. Such policy would, in one fell swoop, wipe out poverty. By replacing existing government programs, it would reduce government bureaucracy. Lower skilled workers would also have more bargaining power against employers, eliminating the need for a minimum wage. Creative types would then have a platform to focus on the arts, without worrying about the bare necessities. And those fallen on hard times have a constant safety net to find their feet again. 

Detractors of the divisive plan also have a point. The effects on potential productivity are nebulous at best. Will people still choose to work if they don’t have to? What if they spend their government checks on sneakers and drugs instead of food and education? Scrappy abusers of the system could take their spoils to spend in foreign countries where their money has more purchasing power, thus providing little to no benefit to Switzerland’s own economy. There’s also worries about the program’s cost and long term sustainability. It helps that Switzerland happens to be one of the richest countries in the world by per capita income.

Money for nothing? Jeez, where can I get the chicks for free, and we'll have an 80's Dire Straits song going.

More seriously it makes sense to get rid of Centrelink and the assorted government bureaucracy designed to bully the out-of-work, and just hand out the money. The people working the bureaucratic machinery at Centrelink don't really want to be there any more than the out-of-work, applying for payments. Our society would be much better off if we simply junk the whole pretence that this 'procedure' is somehow productive or good.

It would be a lot less aggravating for a start, and probably result in an explosion of cultural expression and technological advances. If people want to earn more, they can work. If people don't want to work and can figure out a way of living on this money, they can just drop out and stop pretending they're keen on working. Think of the collective sigh of relief you would hear.

One would imagine that it would narrow the pool of working people considerably, but employers would have the benefit of knowing that the people who turn up, really want to be there. In turn, employers would have to genuinely compete to provide workplaces worthy of the people who want to work in spite of the free money available to them - because they must be genuinely dedicated types. We might even begin to have a sensible discussion about what work really means, and how it should be valued and evaluated. No more McJobs and working poor. No more angry queues at Centrelink.

Think of all the marvellous novels written about the angst of being well looked after by a generous state. I for one would say this would be a great thing.
If you think this is a great idea, spread it around. We need to be talking about this stuff.

More On That New Work-For-The-Dole Plan

"Dealing With Centrelink IS A Full-Time Job"

So sayeth a graffiti down in Victoria somewhere where everybody driving can see. It's most likely true. The dole being what it is - money for not working- the government sort of has to have scary gate-keepers to make the experience miserable enough so more people don't want to be come dole recipients. The Centrelink experience is the big stick, to the tiny carrot of disincentive to work that is the unemployment benefit payment. Gone are the days of the "non-specific arts grant".

What's even scarier is that under the ALP government, the ranks of people who had some kind of Centrelink payments swelled to 6million, which is roughly a quarter of the population. You can see why the Coalition government wants to do something about Centrelink payments to people except it also means kicking a lot of dust into a lot of faces. It's not going to win them votes. It's all very nutty and you wonder exactly how the numbers are stacked. Fortunately Guy Rundle over at Crikey has done some maths (thanks to Pleiades for the heads up):

Australia currently has around 830,000 people currently receiving unemployment benefit, which would suggest a raw figure of 33.2 million job applications being made per month under the new scheme.
However, a yet-to-be specified number of people will be exempt from this requirement because they are undergoing training and there will be a certain amount of non-fulfilment -- so let’s bang this down to a mere 25 million applications. Let’s now assume that people send these far and wide -- full letter and CV applications as required by the new conditions -- to all employers.

There are around 2 million registered businesses in Australia, but many of these are sole proprietors billing as companies or multiple shell companies around a single real business. Let’s assume 1 million employment entities. By this absurdly abstract raw count, every business would receive 25 extra applications per month.
If we assume that every application will be taken seriously -- and that is surely part of the social contract the government is proposing -- then every application will take, say, 20 minutes to process, or 8.3 hours a month, a full working day. Assuming these are being handled by an HR staffer on $50,000, that would be $200/month, or $50/week in extra business costs.

But of course, these things won’t fall equally. Many of these applications from minimally qualified applicants with little work experience will go to the entry-level service sector, dominated by small (under 19 employees) and micro (under four employees) businesses.

Let’s look at Tasmania, with the highest unemployment rate. The state has 18,500 unemployed looking for full-time work, who would generate 740,000 applications per month. It has around 25,000 businesses in the service sector -- but assuming sole traders and shells, we can bust that down to 15,000 companies. Since small businesses employ 45% of the overall workforce, let’s say they’ll receive 300,000 of these applications (in reality, it will likely be more).
Thus by this reckoning, every operating small business in Tasmania -- whether it has advertised or not -- will receive an average of 20 job applications per month, generating, by the implied social contract, 400 minutes, or 6.67 hours of extra work per month. That is less than the nationwide business average, but we’re talking about companies with one or two employees. Even if they don’t spend a great deal of time on these applications -- and many, being decent people, will give them a read -- the actual task of processing them will chew up time in a business day.

But the position gets terrifying when you limit this process to companies that are actually advertising vacancies. Seek.com.au currently has 78 vacancies in various service and unskilled sectors for the whole of Tasmania. Let’s multiply that by three for other sources -- local papers, word of mouth, milk bar windows -- and assume that those 234 vacancies receive two-thirds, 67%, of the applications. That is half a million applications per month for 234 jobs, or 2136 applications per job.

That's pretty scary. Being somebody who has to read job applications, I am just dreading seeing a load of job applications where I can't tell if they are keen or not at all. Just as night follows day, if the Coalition get their way on this idiotic idea, I will be reading a lot more resumes than I need to or want to - and that's just my own selfish take.

The somewhat bigger picture is this: If you are in a small industry, there won't be more than 40 companies in your sector of work. Once you're applied to all of them, you're done. It's one thing to imagine an infinitely interchangeable unemployed person going into a workforce with unlimited flexibility in how it handles skilled positions in the workplace but the reality is nothing like this.  Certainly if it was a small sector with only 40 or so companies, you would be sending in a resume every month to the same companies knowing full well they won't even read them because they know you're only doing it to get unemployment benefits.

As policies go it's pretty crappy because it cynically assumes that people won't get jobs, but they have to keep trying. And if everybody did do as assumed by the government says, the numbers say it can't work. The scheme also floods the HR departments of various companies with garbage data they didn't ask for, but must be processed anyway - which is costly as well as time-consuming and aggravating. And it also ignores how jobs are distributed across the country. I'm actually scared of how this one is going to turn out.

We Need To Reconsider Education, Work, And Pay

This isn't a popular notion but it bears mentioning anyway. Our society runs a kind of Darwinian race for our kids as they grow up. The rules don't stay the same and fads come and go, but in general, the 12 years of junior school and high school is to pick out the best students and send them to university. It also selects the group who are not as good academically, but kids with aptitude towards various trades. It really isn't interested in kids who are neither academically brilliant or have little sensate skill they can parlay into a trade. Unsurprisingly the dregs of this process end up as adults without a future of any kind. And it's this population that ends up on the long-term unemployed list, or ends up in a life of crime.

You know those kids. You know those people. You know they exist.

The point is, schooling spends a good deal of time picking winners and losers, and some of the losers lose big, and lose early.  Some of them get a second chance and find some kind of career, but more often than not, the pure abject losers end up as the long term unemployed. It's a brave employer that gives those people a chance by hiring them. Living at home with one's parents into one's forties is not a dignified way to be; living like a homeless person or actually becoming a homeless person is even worse. Doing it on welfare payments likely isn't exactly the lap of luxury.

Having created winners, the winners go into medicine and law, and some even become politicians and make laws; and this is where it gets really unfair. The people who never lost in their lives get to tell the losers who lost early and lost big that somehow their own fault for not having the right dedication when likely it has a great deal to do with circumstance and environment. Arguably, the winners get to corner the market for high-paying work and the benefits that accrue from such work over the less successful, and then press home the advantage at every turn.

Thus inequality in our society necessarily starts with our concept of education, work and payment. Inequality can only be addressed by governments that are willing to admit that part of its job is wealth re-distribution from the overly successful to those in need - that is to say, the successful lawyer or doctor or banker can afford to pay a little extra to help the people they left behind. To turn around and scorn the losers and cut the benefits seems like an incredibly ungracious thing to do. It's really not that difficult to understand. Hence a Coalition government that seeks to cut the welfare payments and cut taxes is a government that seeks to increase inequality in our society. There's really no two ways about it, and it's pretty deplorable.

 

They Sure Hate...

They Hate the Unemployed

Here's an interesting experiment. A WA Greens Senator is attempting to live a week on $35/day.

WA Greens Senator Rachel Siewert is trying to live on $35 a day in a bid to highlight that the meagre dole was causing jobseekers to be sucked into a cycle of poverty.
Rachel Siewert has $12 in her wallet for the rest of the week.
She went shopping on the weekend and bought some basic food items and toilet paper totalling $53, but if she runs out of toothpaste, she will just have to go without.

This week Ms Siewert is living off the average weekly Newstart Allowance payment in a bid to highlight what she says is a system which makes it even more difficult for job seekers to get out of unemployment.

The $244 she started with on Saturday has quickly been taken up by the essentials.
While in reality, she will remain in her four-bedroom, two-bathroom house in the northern suburbs, $125 has been deducted from her budget to pay for the one bedroom unit in Bentley or Armadale, which would be all she could afford on Newstart.

Thankfully for her, the amount has been subsidised down from $185 due to the rent assistance that she would be eligible for as a jobseeker.

The rest of it makes for some painful reading on penny-pinching. Clearly this experiment is trying to highlight this figure of $35 per day.

According to a survey of 500 Australians conducted for the Australia Institute, the amount, when averaged, is $454 a week - about $65 a day.

When 500 people in a separate survey were asked how much unemployed Australians should get from Centrelink they settled on $329 a week, or $47 a day.

But the less-impressive truth is the Newstart allowance peaks at $243 a week - $34.70 a day.

''Most Australians have little idea what unemployed Australians actually get,'' the executive director of the Australia Institute, Richard Denniss, said when releasing the survey results. ''They know what their own cost of living is and they think unemployed Australians should get something approaching it, but they would be shocked to find out what a Newstart recipient actually got.''

The $86 gap between Newstart itself and what Australians believe it should be exceeds the $50 increase proposed by a coalition of business, welfare and union organisations led by the Australian Council of Social Service. ACOSS says the increase would cost $1.2 billion a year.

Talk about disconnect. The first paragraph is interesting. People would budget for themselves $18per day more than they would for an abstract stranger. The second paragraph shows that the real figure the government is comfortable with is $12.30 meaner than what the average person dishes out to a stranger. ACOSS then steps up and tells the government it should do something about this gap but it too is $5-6 short of what people think is required.

There are 379 comments under that article, and it is surprising how many people are scornful of the unemployed for being unemployed, as if the unemployed are unemployed by principle. Clearly conservatives hate people they do not know, with as much hatred they can muster.

Think about all this for a moment. What the hell is it to you really if there were 10, 1000, or 10,000 dole bludgers out there, eking their lives out on 35 or 47 or 65 dollars a day? Especially if you are well off? What could it matter?

Now, conservative people? They want them shamed in public, made to work the most humiliating jobs. Why? One can only presume it is because it gives them some kind of sadistic satisfaction. And there's a mainstream party out there who think this sort of thing is great. The really disappointing part is that the ALP ain't doing much better than the sadistic psychos.

They Hate The Young

Amanda Vanstone had this opinion piece last month which was so odious I didn't bother to read it at the time, but seeing that we're talking about this kind of thing today, I thought I'd have a read and bring it up.

I have no quibble with the investment we make in higher education or in students. I just think that, to be fair, they should have to start paying it back sooner.
The full adult pension, including supplement, is about $19,000 a year. The minimum wage is just under $30,000. So why do we say to students, who get a massive loan at no real interest rate, that they do not have to pay back a cent until they are earning just under $45,000?

Now, if I cast my mind not too far, it is obvious to me that Amanda Vanstone is of the generation that got the Free Education from Gough Whitlam's Labor government and didn't have to pay *any* HECS, unlike the Gen-Xers. She writes a whole bunch of personal anecdotes about how some dude driving buggies in Rome taught her a life lesson but seriously, how can a person who didn't have to suffer the HECS repayments ask this?

The comparison to a pensioner is a spurious apples and oranges argument because pensioners tend to already own stuff, while graduates do not, but it is better for the economy if they spent their money on those things, rather than be taxed as if they did.

The time I was repaying my HECS really sucked. I wad fortunate in that I was repaying it with a job I was trained to do, but it still hurt not to have that bit of money. What it taught me was how difficult it is accept one's education as having a concrete dollar value. But be that as it may, it incenses me that somebody who didn't have that experience thinks that these back of the envelope calculations are sufficient justification to make these ambit, loaded political claims.
It's not just in Australia that the old conservatives are trying to scare off the young from education through taxes. here's an article in The Economist.

AS I begin this post, the president is across town buttering up University of Iowa students with promises to keep federal student-loan interest rates low. The College Cost Reduction and Access Act, a measure from 2007 that, among other things, lowered the interest rate on federal student loans from 6.8% to 3.4%, is set to expire in July. Messrs Obama and Romney both have come out in favour of supporting an extension of the subsidy for student-loan debtors.

---

This sort of giveaway may be good politics, but it's terrible policy. Extending the programme just one year would cost $6 billion. The measure is promoted as a way of making college more affordable, but it will mainly benefit those well out of school, many of whom are relatively well-to-do, mid-career professionals, such as your indebted correspondent. There is a movement afoot to get the government to forgive student-loan debt entirely, and when compared to this, the cost of the scheme to keep student-loan interest rates low looks quite small. Stilll, it's bad policy for many of the same reasons it would be bad policy to forgive student loans.

Look, maybe they're right and it's bad policy, but here's the thing. Wall Street and the big end of town are getting 0.5% interest charges from the Fed. Why is it even remotely fair that students continue to get slugged with even 3.4%, let alone 6.8% in the current economic climate? What makes the students magically immune from the GFC fallout? It's easily arguable the big end of town are far more capable of dealing with tough times through the high salaries and established assets and savings compared to university students - and they're getting 0.5% interest rates!

You wonder about the brains of these conservatives.

They Hate Foreigners

Here's the latest on Asylum seekers.Ever since the 'Malaysian Solution' melted down thanks to the High Court, it's been weathering the storm of bad press and spin ever since. Even so, if the Liberal Party had any heart, they'd negotiate so that the government can do its proposed Malaysian Solution in exchange for being able to do it Nauru Solution when (I'm pointedly not going to bother saying 'if') they get in power.

But no. Tony Abbott has put his kaibosh on any understanding over the legislation and keeps carping that Julia Gillard's government can't stop the boats. Well, no, she can't because Tony, you won't let her. It gets sillier than that with this:

The Coalition spokesman for border protection, Michael Keenan, welcomed the government's response but said the potential for a repeat of the tragedy remained until people smuggling was stopped.

Good God. Have they no shame? No embarrassment? I know one needs a thick skin to be a politician, but this is breath-taking.

Oh, look, there's another boat!

I'm wracking my brains as to when exactly the Liberal Party started playing dirty pool in divisive race politics. Malcolm Fraser as hated as he was in his heyday didn't stoop to such depth and has since departed the party he led. I don't remember a single moment where Andrew Peacock or John Hewson saying anything that seemed unseemly; it really did start with John Howard and somehow he's entrenched it into the Liberal Party culture that it's okay to play subtle dog-whistle race-baiting. There are days I look at Gladys Berejiklian and I think there's hope yet for the Liberals and their acceptance of ethnicity, but most days I feel like the Liberal Party has allowed itself into the company of xenophobes.

In case you think I'm just talking out of my rear end, here's an article you should look at.

Mr Abbott wants to link in the minds of former Howard battlers the asylum seeker issue with a growing population, tapping into community anxiety about urban congestion and water scarcity.

He’ll run these two arguments in parallel, but invite voters to make their own connection with unauthorised boat arrivals and a growing population.

Shadow Attorney-General George Brandis falsely claimed this week that there has always been bipartisan support for immigration, air-brushing from history John Howard’s shameful effort of 1988 to harvest votes by claiming there was too much Asian immigration.

Senator Brandis went on to say that the Coalition wanted a return to the immigration levels achieved when it was last in power, as if this would lead a lower population figure by 2050 than 35 million.  Yet in the last year of the Howard government, net overseas migration was 232,800 – much higher than the 180,000 per annum assumption that Treasury used in the Intergenerational report in arriving at a projected population of 35 million by 2050.

It's chicken or the egg whether the race-baiting politics of John Howard works because the electorate is racist already, or whether the electorate allows itself to give into their inner xenophobe because there are politicians that enable them. Still, the stench of Xenophobia hasn't gone away from modern conservatism, and you wonder how in their god's name they pretend they can have any moral high ground in any of these kinds of policy areas.