The new guaranteed minimum income is part of a $3-billion anti-poverty plan announced Sunday. (Justin Sullivan/Getty Images)
The Quebec government has taken a “positive first step” toward a universal basic income with its commitment to provide a set amount of money to those unable to work, says a proponent of the idea.
“I think it’s a move in the right direction,” said Jonathan Brun, co-founder of Revenu de base Québec.
It also, Brun said, “puts the terminology square and centre within government policy.”
The new measure is part of a larger $3-billion anti-poverty plan announced Sunday. An estimated 84,000 Quebecers would qualify for the minimum income, largely those with physical and intellectual disabilities.
By next year, they will see their government assistance increased by at least $73 per month. That figure will reach $440 per month by 2023, bringing their annual guaranteed minimum income to $18,029.
Ideally, Brun’s group would have liked the Liberal government to have gone farther, switching many of its welfare programs to a negative income tax that would provide low-income earners with supplemental pay from the government.
He said the new measure, along with the Old Age Security pension provided by the federal government, means two of the most vulnerable segments of the population will receive a guaranteed income in Quebec.
“Hopefully, over time, we’ll add a basic income for others in our society,” he said, adding that, realistically, a more radical move by the Liberals was unlikely less than a year before the next provincial election.
Limited in scope
Other supporters of a universal basic income — which guarantees everyone has enough money to meet their basic needs, regardless of work status — argue the province’s plan doesn’t go far enough.
Karl Widerquist, an associate professor at Georgetown University-Qatar, said the advantage of a true universal basic income is there is no judgment or red tape involved in assessing who is eligible.
The measure being implemented in Quebec is “limiting,” he said, and isn’t necessarily a stepping stone toward something more ambitious.
The plan was announced by Employment Minister François Blais, who championed the notion of a universal basic income before entering politics.
The former academic makes an impassioned case for the policy in his 2001 book, Ending Poverty: A Basic Income for All Canadians, describing it as a politically fraught proposal that would require “a huge effort both morally and intellectually” to implement.
Employment Minister François Blais made the case for the idea in his 2001 book, Ending Poverty: A Basic Income for All Canadians. (Lorimer )
“It is a simple yet radical idea for changing our world and allowing a better life for those who truly need it,” Blais wrote in his book. “It proposes daring solutions to neglected yet fundamental problems.”
The new measure isn’t quite daring enough, in the view of several anti-poverty groups. Yann Tremblay-Marcotte, a spokesperson for the Front commun des personnes assistées sociales du Québec, said it will foster divisions between low-income Quebecers who are eligible and those who are not.
“In his approach, Minister Blais seems to believe that people on social assistance who have no recognized severe limitations do not deserve to improve their conditions,” Tremblay-Marcotte said.
Serge Petitclerc, the spokesperson for the Collectif pour un Québec sans pauvreté, echoed that view, saying the province isn’t “tackling other categories of people in social need or people living in poverty.”
What will we learn?
The idea of a universal basic income, while rarely implemented, has supporters on all sides of the political spectrum.
Proponents on the left argue it represents an opportunity for greater redistribution of wealth, while those on the right see it as a chance to cut back on red tape and give individuals more control over their own lives.
Ontario is testing out a variation of the idea, with 4,000 low-income earners in three communities being given a basic annual income of $17,000.
Finland is also experimenting. A total of 2,000 citizens who receive unemployment benefits will get 560 euros ($782 Canadian) a month over the two-year trial.
The anti-poverty plan was announced by Employment Minister François Blais, who championed the notion of a universal basic income before entering politics. (Jacques Boissinot/Canadian Press)
The new measure in Quebec will serve as a kind of pilot project in its own right, with a far greater sample size than those in Ontario and Finland, Brun said.
Social scientists will be able to use the data to analyze whether the guaranteed income produces benefits in other areas, and reduces the overall burden on the health system and social services.
The homeless population in the United States has risen this year, the first time since the 2008 Great Recession, as Wall Street continues to tout historic profit-based milestones.
Paradoxically, growing homelessness has followed rapid economic growth, as landlords raise rents, forcing many to move onto the street. Radio Sputnik discussed the issue with Los Angeles, California-based, housing advocate Tanya Tull.
A new federal study observes that over half a million people are homeless on any single night, adding that the number of homeless in New York has grown by over four percent in the past year alone.
On the west coast of the US, homeless populations in Seattle, Oakland, Portland and San Diego have risen. Many point to late-20th century moves by the Reagan administration in which federal investment in low-income housing was slashed.
Most people on the verge of homelessness do not receive any form of government assistance in the US, the study observed.
“The problem there is that a vast majority of homeless people are not living in the streets, they are not visible, they are not in shelter,” said Tull, a founder of Partnering for Change, an organization finding stable housing for families with children.
According to Tull, most homeless people actually live part time with relatives or friends, or in motels, or squatting in abandoned buildings.
Renting five rooms in one house for five different families is common, as it allows cheaper rent for all, but people who opt for these temporary measure are still, by definition, homeless.
Landlords in wealthy neighborhoods opt to raise rents as a means to increase cash flow, which forces people with fixed incomes out. Much of the recent successes on Wall Street are a form of economic growth that does not translate to incomes that can match the increases in the cost of living.
“The income gap between the rich and the poor has grown increasingly to the point that the middle class is slowly disappearing,” Tull observed.
“City officials, homeless advocates and those living on the streets point to the main culprit: the region’s booming economy,” according to an AP report.
Rents have soared for many low-wage workers who until just a just few years ago could typically find housing. Now, even a temporary setback can be enough to leave them out on the street, the agency reported.
As incomes do not increase to match costs of living, a recent spike in homelessness signals an even greater increase of the potentially deadly social problem.
Tull pointed out that mid-20th-century moves in the US by the wealthy from the inner cities to the suburbs caused city authorities to renovate and upgrade affordable housing in an attempt to attract upper-class residents back to the inner city, particularly as a means of reclaiming lost tax revenue. As affordable housing disappears, people are forced onto the street.
In order to solve this convoluted situation, she said, officials must take a completely different approach, focusing instead on ensuring affordable housing. Tull remains pessimistic as to when the approach would become the norm, rather than the exception.
Los Angeles Mayor Eric Garcetti said that insufficient federal funding for affordable housing and anti-homelessness programs are part of the reason for the city’s current crisis.
“Los Angeles’ homeless crisis was not created in a vacuum, and it cannot be solved by LA alone,” Garcetti stated. LA city and the Los Angeles County have passed a pair of tax-boosting ballot initiatives to raise an $4.7 billion over the next decade for affordable housing and services for the homeless, although many suggest that the move is too little, too late.
A United Nations official says many people in the United States face “barriers to political participation” and suffer from “great poverty and inequality,” despite the US government’s emphasis on democracy and the country’s great wealth.
Philip Alston, who is the UN Special Rapporteur on extreme poverty and human rights, is visiting several US states to examine inequality and poverty.
The Australian human rights expert started his US tour last Friday and will visit California, West Virginia, Alabama, Washington, DC, and the US territory of Puerto Rico.
Alston said he will visit West Virginia to look into the dwindling industrial jobs available there and will go to California to investigate the state’s homeless problem.
“Some might ask why a UN Special Rapporteur on extreme poverty and human rights would visit a country as rich as the United States. But despite great wealth in the US, there also exists great poverty and inequality,” Alston wrote in a statement.
“I would like to focus on how poverty affects the civil and political rights of people living within the US, given the United States’ consistent emphasis on the importance it attaches to these rights in its foreign policy, and given that it has ratified the International Covenant on Civil and Political Rights,” Alston said.
The UN official will also look into voting rights in the state and “government efforts to eradicate poverty in the county, and how they related to US obligations under international human rights law.”
On Friday, Alston plans to hold a press conference in the US capital to speak about what he found during his trip and give recommendations on how to confront the problems.
His full report will be presented in 2018 before the UN Human Rights Council in Geneva, Switzerland.
Experts hope that the visit will draw attention to issues of poverty in America, despite being the wealthiest country in the world.
“The US has an extraordinary ability to naturalize and accept the extreme poverty that exists even in the context of such extreme wealth,” David Grusky, director of the Center on Poverty and Inequality at Stanford told the Guardian.
According to the US census, around 41 million Americans live in poverty in a country of 323 million.
Moreover, the US consistently exhibits higher rates of income inequality than most developed nations in the world, mainly as a result of an unfair tax system and unrestrained capitalism.
Toxic Culture: How Capitalism Makes us Sick. Doctor Gabor Maté is a Hungarian-born Canadian physician and award-winning author who specializes in the study and treatment of addiction and is also widely recognized for his perspective on Attention Deficit Disorder and his firmly held belief in the connection between mind and body health. He has authored four books exploring topics including attention deficit disorder, stress, developmental psychology and addiction. The very nature of the system in which people live their lives is a significant source of illness. There are obvious factors like environmental pollution, toxins, and then of course there are the social determinants of health: the impact of poverty, the impact of inequality, the impact of history and continued racism.
I hate to break it to you, but chances are you’re just not prepared for what’s coming. Not even close.
Don’t take it personally. I’m simply playing the odds.
After spending more than a decade warning people all over the world about the futility of pursuing infinite exponential economic growth on a finite planet, I can tell you this: very few are even aware of the nature of our predicament.
An even smaller subset is either physically or financially ready for the sort of future barreling down on us. Even fewer are mentally prepared for it.
And make no mistake: it’s the mental and emotional preparation that matters the most. If you can’t cope with adversity and uncertainty, you’re going to be toast in the coming years.
Those of us intending to persevere need to start by looking unflinchingly at the data, and then allowing time to let it sink in. Change is coming – which isn’t a problem in and of itself. But it’s pace is likely to be. Rapid change is difficult for humans to process.
Those frightened by today’s over-inflated asset prices fear how quickly the current bubbles throughout our financial markets will deflate/implode. Who knows when they’ll pop? What will the eventual trigger(s) be? All we know for sure is that every bubble in history inevitably found its pin.
These bubbles – blown by central bankers serially addicted to creating them (and then riding to the rescue to fix them) – are the largest in all of history. That means they’re going to be the most destructive in history when they finally let go.
Millions of households will lose trillions of dollars in net worth. Jobs will evaporate, causing the tens of millions of families living paycheck to paycheck serious harm.
These are the kind of painful consequences central bank follies result in. They’re particularly regrettable because they could have been completely avoided if only we’d taken our medicine during the last crisis back in 2008. But we didn’t. We let the Federal Reserve –the instiution largely responsible for creating the Great Financial Crisis — conspire with its brethern central banks to ‘paper over’ our problems.
So now we are at the apex of the most incredible nest of financial bubbles in all of human history.
One of my favorite charts is below, which shows that even the smartest minds among us (Sir Isaac Newton, in this case) can succumb to the mania of a bubble:
It’s enormously difficult to resist the social pressure to become involved.
But all bubbles burst — painfully of course. That’s their very nature.
Mathematically, it’s impossible for half or more of a bubble’s participants to close out their positions for a gain. But in reality, it’s even worse. Being generous, maybe 10% manage to get out in time.
That means the remaining 90% don’t. For these bagholders, the losses will range from ‘painful’ to ‘financially fatal’.
Which brings us to the conclusion that a similar proportion of people will be emotionally unprepared for the bursting of these bubbles. Again, playing the odds, I’m talking about you.
How Exponentials Work Against You
Bubbles are destructive in the same manner as ocean waves. Their force is not linear, but exponential.
That means that a wave’s energy increases as the square of its height. A 4-foot wave has 16 times the force of a 1-foot wave; something any surfer knows from experience. A 1-foot wave will nudge you. A 4-foot wave will smash you, filling your bathing suit and various body orifices with sand and shells. A 10-foot wave has 100 times more destructive power. It can kill you if it manages to pin you against something solid.
A small, localized bubble — such as one only affecting tulip investors in Holland, or a relatively small number of speculators caught up in buying swampland in Florida — will have a small impact. Consider those 1-foot waves.
A larger bubble inflating an entire nation’s real estate market will be far more destructive. Like the US in 2007. Or like Australia and Canada today. Those bubbles were (or will be when they burst) 4-foot waves.
The current nest of global bubbles in nearly every financial asset (stocks, bonds, real estate, fine art, collectibles, etc) is entirely without precedent. How big are these in wave terms? Are they a series of 8-foot waves? Or more like 12-footers?
At this magnitude level, it doesn’t really matter. They’re going to be very, very destructive when they break.
Our focus now needs to be figuring out how to avoid getting pinned to the coral reef below when they do.
Understanding ‘Real’ Wealth
In order to fully understand this story, we have to start right at the beginning and ask “What is wealth?”
Most would answer this by saying “money”, and then maybe add “stocks and bonds”. But those aren’t actually wealth.
All financial assets are just claims on real wealth, not actually wealth itself. A pile of money has use and utility because you can buy stuff with it. But real wealth is the “stuff” — food, clothes, land, oil, and so forth. If you couldn’t buy anything with your money/stocks/bonds, their worth would revert to the value of the paper they’re printed on (if you’re lucky enough to hold an actual certificate). It’s that simple.
Which means that keeping a tight relationship between ‘real wealth’ and the claims on it should be job #1 of any central bank. But not the Fed, apparently. It’s has increased the number of claims by a mind-boggling amount over the past several years. Same with the BoJ, the ECB, and the other major central banks around the world. They’ve embarked on a very different course, one that has disrupted the long-standing relationship between the markers of wealth and real wealth itself.
They are aided and abetted by both the media and our educational institutions, which reinforce the idea that the claims on wealth are the same as real wealth itself. It’s a handy system, of course, as long as everyone believes it. It has proved a great system for keeping the poor people poor and the rich people rich.
But trouble begins when the system gets seriously out of whack. People begin to question why their money has any value at all if the central banks can just print up as much as they want. Any time they want. And hand it out for free in unlimited quantities to the banks. Who have their own mechanism (i.e., fractional reserve banking) for creating even more money out of thin air.
Pretty slick, right? Convince everyone that something you literally make in unlimited quantities out of thin air has value. So much so that, if you lack it, you end up living under a bridge, starving.
Bankers, pharmaceutical giants, Google, Facebook … a new breed of rentiers are at the very top of the pyramid and they’re sucking the rest of us dry
This piece is about one of the biggest taboos of our times. About a truth that is seldom acknowledged, and yet – on reflection – cannot be denied. The truth that we are living in an inverse welfare state.
These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurialism that are helping to advance the whole world.
Now, we may disagree about the extent to which success deserves to be rewarded – the philosophy of the left is that the strongest shoulders should bear the heaviest burden, while the right fears high taxes will blunt enterprise – but across the spectrum virtually all agree that wealth is created primarily at the top.
So entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.
In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue.
To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.
But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.
For those who know their history, the term “rentier” conjures associations with heirs to estates, such as the 19th century’s large class of useless rentiers, well-described by the French economist Thomas Piketty. These days, that class is making a comeback. (Ironically, however, conservative politicians adamantly defend the rentier’s right to lounge around, deeming inheritance tax to be the height of unfairness.) But there are also other ways of rent-seeking. From Wall Street to Silicon Valley, from big pharma to the lobby machines in Washington and Westminster, zoom in and you’ll see rentiers everywhere.
There is no longer a sharp dividing line between working and rentiering. In fact, the modern-day rentier often works damn hard. Countless people in the financial sector, for example, apply great ingenuity and effort to amass “rent” on their wealth. Even the big innovations of our age – businesses like Facebook and Uber – are interested mainly in expanding the rentier economy. The problem with most rich people therefore is not that they are coach potatoes. Many a CEO toils 80 hours a week to multiply his allowance. It’s hardly surprising, then, that they feel wholly entitled to their wealth.
It may take quite a mental leap to see our economy as a system that shows solidarity with the rich rather than the poor. So I’ll start with the clearest illustration of modern freeloaders at the top: bankers. Studies conducted by the International Monetary Fund and the Bank for International Settlements – not exactly leftist thinktanks – have revealed that much of the financial sector has become downright parasitic. How instead of creating wealth, they gobble it up whole.
In other words, a big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body. It’s not creating anything new, merely sucking others dry. Bankers have found a hundred and one ways to accomplish this. The basic mechanism, however, is always the same: offer loans like it’s going out of style, which in turn inflates the price of things like houses and shares, then earn a tidy percentage off those overblown prices (in the form of interest, commissions, brokerage fees, or what have you), and if the shit hits the fan, let Uncle Sam mop it up.
The financial innovation concocted by all the math whizzes working in modern banking (instead of at universities or companies that contribute to real prosperity) basically boils down to maximising the total amount of debt. And debt, of course, is a means of earning rent. So for those who believe that pay ought to be proportionate to the value of work, the conclusion we have to draw is that many bankers should be earning a negative salary; a fine, if you will, for destroying more wealth than they create.
Bankers are the most obvious class of closet freeloaders, but they are certainly not alone. Many a lawyer and an accountant wields a similar revenue model. Take tax evasion. Untold hardworking, academically degreed professionals make a good living at the expense of the populations of other countries. Or take the tide of privatisations over the past three decades, which have been all but a carte blanche for rentiers. One of the richest people in the world, Carlos Slim, earned his millions by obtaining a monopoly of the Mexican telecom market and then hiking prices sky high. The same goes for the Russian oligarchs who rose after the Berlin Wall fell, who bought up valuable state-owned assets for song to live off the rent.
But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely that makes us overlook their massive rent-seeking.
Take the pharmaceutical industry. Companies like GlaxoSmithKline and Pfizer regularly unveil new drugs, yet most real medical breakthroughs are made quietly at government-subsidised labs. Private companies mostly manufacture medications that resemble what we’ve already got. They get it patented and, with a hefty dose of marketing, a legion of lawyers, and a strong lobby, can live off the profits for years. In other words, the vast revenues of the pharmaceutical industry are the result of a tiny pinch of innovation and fistfuls of rent.
Even paragons of modern progress like Apple, Amazon, Google, Facebook, Uber and Airbnb are woven from the fabric of rentierism. Firstly, because they owe their existence to government discoveries and inventions (every sliver of fundamental technology in the iPhone, from the internet to batteries and from touchscreens to voice recognition, was invented by researchers on the government payroll). And second, because they tie themselves into knots to avoid paying taxes, retaining countless bankers, lawyers, and lobbyists for this very purpose.
Even more important, many of these companies function as “natural monopolies”, operating in a positive feedback loop of increasing growth and value as more and more people contribute free content to their platforms. Companies like this are incredibly difficult to compete with, because as they grow bigger, they only get stronger.
Aptly characterising this “platform capitalism” in an article, Tom Goodwin writes: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”
At the heart of Philip Alston’s special mission will be one question: can Americans enjoy fundamental human rights if they’re unable to meet basic living standards?
The United Nations monitor on extreme poverty and human rights has embarked on a coast-to-coast tour of the US to hold the world’s richest nation – and its president – to account for the hardships endured by America’s most vulnerable citizens.
The tour, which kicked off on Friday morning, will make stops in four states as well as Washington DC and the US territory of Puerto Rico. It will focus on several of the social and economic barriers that render the American dream merely a pipe dream to millions – from homelessness in California to racial discrimination in the Deep South, cumulative neglect in Puerto Rico and the decline of industrial jobs in West Virginia.
With 41 million Americans officially in poverty according to the US Census Bureau (other estimates put that figure much higher), one aim of the UN mission will be to demonstrate that no country, however wealthy, is immune from human suffering induced by growing inequality. Nor is any nation, however powerful, beyond the reach of human rights law – a message that the US government and Donald Trump might find hard to stomach given their tendency to regard internal affairs as sacrosanct.
The UN special rapporteur on extreme poverty and human rights, Philip Alston, is a feisty Australian and New York University law professor who has a fearsome track record of holding power to account. He tore a strip off the Saudi Arabian regime for its treatment of women months before the kingdom legalized their right to drive, denounced the Brazilian government for attacking the poor through austerity, and even excoriated the UN itself for importing cholera to Haiti.
The US is no stranger to Alston’s withering tongue, having come under heavy criticism from him for its program of drone strikes on terrorist targets abroad. In his previous role as UN special rapporteur on extrajudicial executions, Alston blamed the Obama administration and the CIA for killing many innocent civilians in attacks he said were of dubious international legality.
Now Alston has set off on his sixth, and arguably most sensitive, visit as UN monitor on extreme poverty since he took up the position in June 2014. At the heart of his fact-finding tour will be a question that is causing increasing anxiety at a troubled time: is it possible, in one of the world’s leading democracies, to enjoy fundamental human rights such as political participation or voting rights if you are unable to meet basic living standards, let alone engage, as Thomas Jefferson put it, in the pursuit of happiness?
“Despite great wealth in the US, there also exists great poverty and inequality,” Alston said in remarks released before the start of the visit. The rapporteur said he intended to focus on the detrimental effects of poverty on the civil and political rights of Americans, “given the United States’ consistent emphasis on the importance it attaches to these rights in its foreign policy, and given that it has ratified the International Covenant on Civil and Political Rights.”
Poverty experts are watching the UN tour closely in the hope that it might draw public attention to a largely neglected but critical aspect of US society.
David Grusky, director of the Center on Poverty and Inequality at Stanford, said the visit had the potential to hold a mirror up to the country at a moment when globalization combined with a host of domestic policies have generated a vast gulf between rich and poor.
“The US has an extraordinary ability to naturalize and accept the extreme poverty that exists even in the context of such extreme wealth,” he said.
Grusky added that the US reaction to Alston’s visit could go either way. “It has the potential to open our eyes to what an outlier the US has become compared with the rest of the world, or it could precipitate an adverse reaction towards an outsider who has no legitimacy telling us what to do about internal US affairs.”
Alston’s findings will be announced in preliminary form in Washington on 15 December, and then presented as a full report to the UN human rights council in Geneva next June. An especially unpredictable element of the fallout will be how Trump himself receives the final report, given the president’s habit of lashing out at anyone perceived to criticize him or his administration.
Trump has also shown open disdain towards the world body. In the course of the 2016 presidential campaign he griped that “we get nothing out of the United Nations other than good real-estate prices”.