Ryan Greenaway-McGrevy argues the changing basis of economic prosperity demands a fundamental rethink of the way society is organised

Ryan Greenaway-McGrevy argues the changing basis of economic prosperity demands a fundamental rethink of the way society is organised

This article has been supplied by the University of Auckland Business School*

The idea of a state giving away money to its citizens with no strings attached doesn't sound like a sustainable economic policy, but that is exactly what Finland began doing at the start of 2017. And Business School economist Dr Ryan Greenaway-McGrevy is a fan.

The 2,000 participants in Finland's radical experiment, randomly chosen from those on welfare, will each get 560 euros ($860) a month – and the payment will continue even if they get a job. The hope is that providing a basic income will offer recipients financial security and allow them to make life plans.

It is not the first time a universal basic income (UBI) has been trialled. Pilot schemes have been run in Namibia, Ontario, Manitoba, Utrecht and elsewhere. And, in recognition that technology is displacing jobs, Silicon Valley start-up accelerator Y Combinator has begun a basic income experiment in Oakland, California to provide what its president, Sam Altman, calls "a cushion and a smooth transition to the jobs of the future".

In 2016, the New Zealand Labour Party expressed interest in something similar, citing a scheme proposed by economist Gareth Morgan that would see every adult New Zealander given a basic income of $210 a week. The then Prime Minister John Key was quick to dismiss the concept as unaffordable and "barking mad".

Greenaway-McGrevy counters that the changing basis of economic prosperity demands a fundamental rethink of the way society is organised. A guaranteed income would challenge the notion that people are only valuable to society if they are in paid employment.

"Finding a job for life is likely to become increasingly difficult as technology advances and roles become automated, so we need to think hard about where self-worth really comes from," he says.

"The industrial revolution also caused massive disruption, but over the long term it led to an increase in everyone's standard of living. Technology is a good thing if everyone can share in its benefits."

Greenaway-McGrevy, says many of the proposals to redistribute wealth have strings attached that cause people to change their behaviour, so the assessment of any scheme needs to take account of the wider economic incentives and impacts.

For example, welfare for the unemployed, which is intended as a financial safety net, and which is only paid while a person is unemployed, can act as a disincentive for people to take low-paid or temporary work. A basic income, which is paid irrespective of other income, would remove that barrier.

"A UBI would be a one-shot welfare policy that would replace much of the complicated system we have now and would be far less costly to administer. But the cost of paying every citizen a basic income would be substantial, and so it would need to be implemented as part of a broader restructuring of the taxation system," he says.

Greenaway-McGrevy suggests that such a restructure might include implementing a proper capital gains tax or a land tax, and doing away with progressive income taxation which, at the other end of the pay scale, can encourage tax avoidance. In any case, he says, a flat income tax coupled with the UBI could be quite progressive, because the supplementary basic income would be tax free.

One of the possible side effects of a UBI could be to raise wages in low-paid jobs such as in supermarkets, fast food outlets and cleaning services as these became less attractive to job seekers. As a result, the price of many goods and services would rise, at least in the short term, says Greenaway-McGrevy.

"So, inflation is most likely to come through the wage channel."

He also stresses that many other welfare policies create disincentives for firms to hire people. Minimum wages, for example, can contribute to higher unemployment as firms that are reliant on lower-paid workers respond by reducing their workforces.

"If we agree that it is the State's job to help those who are less well off, let's do it directly, and not force firms to do it by default."


This article was first published in the March 2017 issue of UABS Insights, and is reproduced with the permission of the University of Auckland Business School.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

160 Comments

Thanks Ryan. It's great to have informed debate, on this and other issues.

It would be great to also develop some way that we can actually enable genuine, open, evidence-based debate towards better economic and societal outcomes for all New Zealanders. Given the ideologically- and politically-driven kneejerk responses of politicians and commentators [all sides, I'm not being political here myself], quickly expanded and inflamed rather than channelled by sound-bite driven mainstream media, and further inflamed by ideologically-driven journalists and commentators, it almost instantly divides people into polarised shouty camps less capable of seeing, let alone openly discussing, ideas and alternatives. It seems to be this is the biggest barrier. As a small country with many natural and economic advantages, we have tremendous opportunity to lead the world, and create better futures for all New Zealanders. But, how do we get over our self-created, self-perpetuating barriers to having an actual discussion?

The wave of robotics and artificial intelligence is only expanding
Without jobs how is there money to buy ?
The existing welfare system has proven for decades to be a trap for many and has been abused in the past by others.
We pay back bench politicians to do nothing so the paradigm has already been tested

>"The wave of robotics and artificial intelligence is only expanding. Without jobs how is there money to buy ?"

Many of these jobs are already being exported under the banner of globalisation, while the companies who exported them continue to participate in the market - selling into it - while also in many cases exporting their profits.

Governments round the world are already looking at how this imbalance of profiting from a market while not contributing taxes to it can be rebalanced. If these companies use off-shore labour or robots to profit from the NZ market, perhaps part of the answer is the world sorting out how these companies must contribute in line with the money they take from the market.

It will come down to taxation of robotics and may even come down to the ownership of it all. Universality of a basic income will remove most of the stigma of it, and will, in fact, free society up. The author argues that a UBI will remove the disincentive to take low paid work, I expect much work will become low paid, but and this is the big one for me, what I see with a UBI is people, having the safety net of it, will be able to get into small niche businesses of their own, maybe hone a talent or hobby into something saleable, art and craft will perhaps come again to the forefront, what is produced by craftspeople and artisans will be almost impossible to replicate. People will again come to value the unique, something robotics will not be able to compete with. A UBI could also support the human race as it take humane steps (ie lower birth rates) to reduce our numbers on the planet and in doing so, preserve other species that help make it worthwhile even being here in the first place.
Done right, this could open the door wide for much enlightenment for us.

Ron Pol - as a slightly younger member of society, I expected that these conversations would be taking place at the government level. But it's become clearer the last few years that they appear more interested in trying to pull the wool over the sheeples eyes, than actually openly discussing and dealing with issues in a mature and rational manner.

I try to raise these issues with the older generation (parents etc) - issues like housing affordability, effects of diary/tourism etc on the environment - and they think I've got a bad attitude! To them, it's comply, comply, comply! They have literally swallowed Nationals notion of 'there's nothing to see here, move along sheeples' hook line and sinker.

And they're the 'mature' and largest part of our demographic. Yet they show almost zero initiative in terms of desire to resolve these issues. It's a very severe case of sitting pretty IMHO because to them they have everything to lose but nothing to gain from it. But I like your question - how do we make progress and start dealing with these issues without causing rifts in society/demographics?

So in effect we would be lowering the retirement age to 18 is it?

Only if you want to exist on a low income for life. Any work done is additional to this so there is an incentive to work to boost your income. It also means volunteers and stay at home mums are valued by society.

duplicate post

Or if you build up a positively geared portfolio then retirement in your 30s becomes a very real option with this UBI proposal. Property prices would likely drop quite quickly if you put in a land tax/ tax on unrealised capital appreciation. This would result in less than projected being collected in tax and small businesses that are mortgage backed falling over. At one point in my life (7ish years ago) staying home and playing video games all day for the foresable future was a very real possibility (and that was on the jobseeeker benefit, this UBI looks to be designed to encourage that sort of cave dweller behaviour). At that point all I needed was enough money for a 10square meter bedroom, an internet connection and food (I managed to eat out every day on the dole!)

Imagine the immigration levels if UBI was put in place...

There would be a stand-down on receiving UBI fro new arrivals like there is today on receiving benefits. If you want to restrict it further, just make it available to citizens and permanent residents

PR is given away like Weetbix cards.
Citizenship is available for a fee.

NZ UBI for your elderly parents: Priceless.

>"Imagine the immigration levels if UBI was put in place and Bill & National were in government...

There, fixed that sentence for you.

We need some numbers and more detail e.g. how much is UBI, who is eligible...

My rough UBI would be based on $250/wk for all NZ residents (includes children under 16 whose UBI would be paid to their guardian). Note many beneficiaries would be worse off at this amount (e.g. super is $390/wk)

So annual cost would be 4.7m x ($250 x 52 weeks) = $61B
Current annual spending on welfare is $29B (see http://www.treasury.govt.nz/government/expenditure)

So we have a $32B shortfall. Where is that coming from?....

If UBI was set at current super rate of $390/wk so no one is worse off from shift to UBI then cost would be $95B - $29B = $66B shortfall.

More details please.

[Edited after feedback]

Welfare spending is currently $29bn http://www.treasury.govt.nz/government/expenditure so the shortfall is about $10bn

The shortfall will be raised via increased taxes at higher rates (and possibly a tax on capital). This works out better for anyone earning under a reasonable amount (probably around $80k) as the UBI is effectively a tax refund.

This is TOPs policy concept to make up not just the shortfall but the CGT would provide more than $10b in Government revenue.

There would be a boost to GST tax take that would come through pretty quickly as well as deferred consumption by the poorest 50% is addressed.

I reckon most of that "deferred consumption" would be gobbled up immediately by increased rental costs. Every landlord in the country would instantly raise rents on the back of this.

Could you please explain your numbers.

If we use current social welfare costs as $29B what is the cost and details of your UBI (i.e. who gets how much) which I presume you see as costing $39B (resulting in a $10B cost increase to move to UBI)?

From memory, the original idea from Morgan and co was to pay $210 per week to everybody over 18 yrs old. That equates to something like 3.5 million people and would cost $38 billion. I can't see how this works unless you tax the bejesus out of the normal working population to pay for it. You'd have to increase income tax, GST and introduce capital gains taxes as well. So, pretty much piss off everyone who works hard and earns good money as a result.

Did you see the comment above "Welfare spending is currently $29bn http://www.treasury.govt.nz/government/expenditure "

So what, we need to raise another 9 billion?

As a hard working good money earner I also get an extra $210 per week per the UBI. I don't mid giving that back as increased tax, so let's say the top 25% of adults see no benefit, but no down negative effect on income.

$38 billion * 0.25 = $9.5 billion

Ok, using your logic of increasing tax on the top 25% to pay for it: -

25% of 3,500,000 people (over 18yrs) = 875,000
$9,000,000,000 / 875,000 = $10,286 per person

So, the top 25% are now slightly better off at an income level as a result of this. But, the inflationary pressure as a result of this means their cost of living has gone up as well. I bet they will be very supportive of this!

There's one NZ'er who made about $5billion alone last year. There is an issue with the top 1% heading back to depression era levels of inequality. https://ourworldindata.org/wp-content/uploads/2013/12/Top-Incomes-750x53... Most of that money would come from the top 1% if you do the tax system progressively.

What are the odds of that person moving countries if you tried to take 3 billion tax out of that 5 billion income?

$210/wk for over 18s is not an accurate cost. If you have a solo parent with 4 children under 18 years $210/wk is a joke. So you are already back to an effective welfare system by topping up that parent's income to account for the 4 kids (this system is starting to look like our current system). You need to add these costs to your costs.

Similarly $210 is a lot less than current benefits so beneficiaries will take a hit, especially the elderly. TOP proposes a means tested "top up"; this also needs to be added to the cost.

Fact is the TOP’s UBI is some unrealistic halfway house designed to show a small cost increase when in reality it is not a true UBI but merely a tinkered welfare system.

Let's at least discuss a realistic UBI so a real analysis can be done.

As pointed out in The Big Kahuna, a sole parent with children would have the option of living with any number of other UBI recipients and income earners - i.e., pooling of income resources. That is presently not an option for sole parent beneficiaries, due to any live-in adult earners earnings needing to be offset against the benefit afforded to the sole parent - whose benefit is abated accordingly.

All that means-tested nonsense goes away. The positive net benefits of freedom to innovate via pooled resources, and freedom from state interference would surprise many, I suspect.

Yep, the present system provides no incentive for a sole parent to share a home with say 2 others, perhaps one be the stay at home mum, while the other two work, job share etc. Instead they are incentivised to obtain max accomomodation supps and get by on the odd long term boyfriend (or girlfriend). Thus leading to the inevitable relationship and benefit fraud issues and the downward spiral that comes with giving up on life... ...

Yes, and it makes no sense whatsoever to me either. I can only imagine that those defending the current system are employed by it or have family employed by it. Not that I think these bureaucrats love their jobs - I just think the current system is so repressive in its nature, that those working in it have lost the ability to imagine an alternate/better future.

Dealing with many people many of those embedded into various ministry's system have little or no imagination, and those that do are in no position to instigate change.

There are some possible models of engaging with the public and industries that are being tried out but I'm waiting to see what the results are.

Interesting insight. I suspect many working within the system just don't realise how emancipatory it would be for them personally to be made redundant - particularly if such a UBI was there to sustain them while making new life/social choices for themselves and their families.

One Ministry that I have a lot of contact with seems to be surprised that the industry has been contributing insightful and useful feedback to help them develop regulations. Industry can't contribute like those at the Ministry who are working on the problems full time, but the external suggestions are sometimes creative or identify practical problems before they are released in the wild. It is possible for industry and Government to cooperate for the interests of a Nation rather than profit margins.

Of course the above works when the interests involve are not direct matters of Party policy. This type of engagement wouldn't work with MSD and the National Party.

So a sole parent with 4 kids gets $210 a week and then has to seek charity from others to try and survive. That sounds like a winning policy!

Even National aren’t that heartless.

Child poverty and the elderly living in garden sheds is a sign of success according to Bill English. I think you're crediting them with more heart than they have. My fear is National will read these comments and cancel more benefits in response.

No seeking of charity - that's the present Government's answer to poverty. You seem to have missed the points made above. Do you work for WINZ per chance?

Well then explain.

How much will a sole parent with 4 kids receive a week under your plan?...

You seem to say $210 but then go on to imply the sole parent can move into a hippy commune whose members will give them part of their UBI which they will all invest in magic beans to get golden eggs to feed the 4 kids. Can you leave out the fairy tale (commune/hippies magic beans and all that) and give me the cold hard cash scenario.

I don't work for WINZ but I do work, which I doubt you do given your sparkling personality.

If the UBI was set at $210/week (adults only) and all the children were <18, then the the UBI income for the sole parent would be $210. But, what the sole parent's total income is would be anyone's guess. One assumes that there is perhaps income from child support payments, or perhaps there is a defacto working partner, or perhaps the sole parent him/herself also has work.

I was raised from a young age (one of three kids) by a sole parent who worked throughout my childhood. One of her younger siblings lived with us for a while (when we were all pre- or primary school age) but within a couple of years the eldest of us was old enough to watch we two youngsters after school.

Thing is, HeavyG, most people know how to help themselves - you need to be more positive about sole parents and their capabilities. Without the punitive present abatement regime which dis-incentivises sole parents from taking on part time work, job-sharing, accommodation-sharing, etc. people will be free to make many more positive choices for themselves and their families...

...and with a guaranteed income - absent any reporting or other cumbersome administrative requirements demanded of them from the state - I suspect most families of all shapes and sizes would get by, using their own resourcefulness and ingenuity.

I imagine there will always be a demand for state housing - even fully subsidised state housing - and I imagine that many charities and neighbours and relatives will continue to help those around them in need when/where they can.

Yeah I work - in fact, having spent all this time on this blog today - I'll be working straight through the weekend to catch up. But it's a passionate subject of mine, the UBI, worth every minute of the discussion. interest.co.nz bloggers are a wonderfully instructive lot.

Go well.

Do you realise that you have just done a big circular waste of time.

Current welfare supports those in need by paying them $29B.

We pay an extra $9B to allow everyone to get UBI.

But we then increase tax on top 25% so they don't really get to keep their UBI saving $9B.

So we only distribute $29B to needy (bottom 75%) so no change in funding.

What a waste of time. Also, it is obvious the $29B you started off with probably only went to say 40% of the population but is now being spread to 75%. So assuming those originally receiving it were the most needy they are now worse off.

This is the problem with not thinking things through.

".. unless you tax the bejesus out of the normal working population to pay for it."

You might be missing the point. The idea is there won't be any jobs in the future because the robots do it all (or something like that). Under this scheme there isn't any working population.

Yes there is, only they are not human, they are the machines, they will not need the money that they earn from what they produce, ipso facto it can be distributed among those who do.

.. only until SkyNet my friend ..

If they do not have any costs, then by default everything becomes free, thus we don't need money at all.

If super is currently $390/week per person and you match it via a UBI for my son and his family (5 kids), they'd be on an income of $141,960 pa!

Presently they manage on one income which I believe is around $70K pa. They own a house, pay a mortgage, own two cars and feed and clothe themselves and the kids quite satisfactorily - not much left over of course but they're big into second-hand purchasing; try to restrict meat in dinner meals to twice a week; grow their own veggies; make homemade herbal household cleaning and personal care products; maintain their own house; chop their own wood and build their own fences etc. And they are outdoorsy types who mostly do free stuff in this beautiful country of ours with the kids.

Granted, their initiative amazes and impresses me too - but, based on their ability to manage and be happy, I suspect NZ super at $390/week is perhaps way too generous.

I've got no problem addressing genuine deprivation/need but I just don't think we want to gold plate anything like the current NZ super scheme into the future.

PS - has it been harder for them to get ahead than it was for us (i.e., the current generation of superannuitants)?

You betcha.

"Where is that coming from?..."

That's the best part of disconnecting money from work, you just print the money.

Universal Basic Income like other welfare schemes cannot deliver the same results in all countries. Each country has its own culture, set of problems etc. Every country should make a conscious effort to tailor such schemes according to their own internal characteristics.
The issue arises when such schemes are politicised and launched by governments on losing popularity for an upcoming election run. Practical moves like raising retirement age are met with resistance from the public despite positive, long-term outcomes.

Working classes pay tax. Tax rolls up into UBI. Beneficiaries, working class and wealthy all receive UBI. Wealthy put prices of essentials up (rent, power, food, petrol) to absorb extra available cash in system.

Net result: The wealthy legally steal more of the blood, sweat and tears of the working classes.
Anyone who doesn't see what this UBI nonsense is really about is blind to the reality of the world about them.

Congratulations, zero value added to discussion.

The present problem is just that - it is the working class that pays tax and not the capital/ownership class!!!!

Wake up workers!

There is so much excess/unearned income and loss making capital sloshing around out there looking for the next investment/loss-making capital purchase venture - simply because, well, one needs to keep the tax free capital ownership ponzi going.

The world is awash with money to invest - just not in the worker classes.

Partly correct but wrong conclusion. Its not about tax. The world is awash with debt claims (money IS debt).
Debt growth is essential to keep the financial system going (and commodity prices viable). This is easily overlooked. So unless the real resources keep growing at the same rate as the new debt creation, the price of capital HAS to go up to absorb the excess debt created. Yes the rich become richer .

The trouble is if we all were suddenly to become as "rich" in debt claims as Mr Key, resources would collapse. The wealth not trickling down reflects a lack of actual riches out there.

Understood, but not an excuse not to act - even if the action is simply spreading around the "wealth of debt" - just as long as those on the bottom are no longer the ones having to borrow to keep that financial system going.

That is a big problem - the ones on the bottom can no longer afford to take on more debt burden and this shows in lower demand for lots of things & lower commodity prices ...
Chances are a UBI will come in in some form but it doesnt solve the limited resources root problem underneath all the financial trickery

I agree, the UBI is likely to come before the trickery ends. So once the capital owning class have redistributed the "money as debt" - they can turn their collective financial genius onto the real issue of a reset.

I oft think to myself, human ingenuity knows no bounds - as the sheer lunacy of the present situation tells us :-).

I read this article and the commentary following it and I wonder; to me it reads like a cop out. It seems that as a result of the industrial revolution and a very small percentage of the world getting extremely wealthy, that a UBI is a way to keep the masses happy while that very small percentage growth their wealth and power even further. The ultimate effect, and this is evident already, is that many principles and privileges of living in a democratic society are undermined and/or removed. A bit like animals in a zoo being thrown food to keep them happy.

So are those who are arguing for a UBI saying it is now too hard to rein the mega wealthy (and perhaps the political elites) in, stop having any more Davos's where they can discuss ruling the world, throw the masses a few crumbs and all will be well?

Precisely.

Yes, all would be: well, a whole lot better than it is now. I couldn't give a stuff just how much wealth Graeme Hart, say, accumulates over his lifetime - just as long as there is no one standing in line at the local food parcel distribution centre on the corner of Ferguson and Rangitiki Streets here in Palmy - and as long as all the kids at the local primary schools arrive with packed lunches every day - and as long as no one has to economise on electricity use in the winter - and as long as my students at uni don't have to indebt themselves for the next 10-15 years because they want to contribute to society in a meaningful and productive way in the future - and as long as my plumber with his five kids doesn't need to wait well over a year in agony to get a hip replacement - and as long as the old guy who can hardly walk but turns up at our doorstep monthly to sell us his home-made compost can finally put his feet up and enjoy life.... then yes, we'll all be very, very, very satisfied with "the crumbs", thank you.

Quite right. Regarding underfunding of the health system, we now have charity hospitals to treat severely unwell persons abandoned by our health system.

http://charityhospital.org.nz/
http://www.aucklandcharityhospital.org/

These are delightfully depressing:
http://tvnz.co.nz/sunday-news/charity-hospital-changes-lives-in-christch...
http://www.aucklandcharityhospital.org/about-us/patient-testimonials/

I take your point Kate, but think about psychology. These mega wealthy will very quickly go from the current to setting laws for the masses, from which they will be exempt right to the point where for them, murder will not be illegal. (look at the news today and consider Putin eliminating his opposition in the Ukraine and other places). Do you think this is acceptable? If so, what about the effect on you or yours when you decide to oppose some mega rich pratt? What if they decide slavery is acceptable? It is easier to prevent than to undo. The question this poses is hugely complex, and I do not believe the pollies today have the balls to face up to this issue.

Understand your concerns, murray. I like to read a lot from Marxian political economists and from historians. And yes, I have a very utopian outlook in that I think there are solutions for just about all our social ills. Bottom up social movements seem to me to be becoming very much more effective than they were say in the 50/60s. There is a more widespread mistrust of authority - and graft, secrecy, untruths - all the corruption you speak of is getting exposed/identified.

Good people, especially young people, are mobilizing. I have a lot of faith in the generations coming through. As long as injustices are laid bare - given the heightened awareness they deserve - they will be dealt to.

I noted in the US, that the relatives of the 9/11 victims have finally won the right to sue Saudia Arabia for its role in the attack;

http://www.usatoday.com/story/news/2017/03/20/families-911-victims-file-...

This is a major, major victory - giving the opportunity for truth to be understood about perhaps THE most important geopolitical event in the era of neoliberalism and the Washington consensus.

All in all - we live in positive times because change is in the air :-).

I find my cynicism doubts any success that they will have against Saudi in the suit. First the case must be heard in the US and US courts have no sway over foreign nations, so Saudi only needs to ignore the outcome what ever it may be. So what will be gained by the families apart from the opportunity to vent in a court room. Secondly while there were Saudi citizens involved, they're effectively suing their Government (and royal family?) for doing nothing? More effective would be the US Government taking action against Saudi. I see this as another cop out. the Government throwing a sop to the families because they don't want to do anything. Once again crumbs to the masses.

But yes, I think the internet and curiosity will enable many scandals to surface. But the question remains, how do we hold the Putins and the other mega rich accountable when they use their money and influence to buy immunity?

It is not a money issue per se, rather an issue of power. There will always be those with more power than others, they will eventually abuse that power.

Money is currently the way the Western World view power. But in many other parts of the world it is simple physical might, religious belief, or simple control of resources.

The point is that democracy was meant to negate this corruption of power by making the law makers accountable, but the reality is they can still change (or not change) the laws to benefit themselves - I believe we are all seeing this at present.

Is it acceptable, no. But then unless you have power - what can you do?

dp

You make a great point. But, I do see we need to do something that helps us transition to the robot/AI world that is just around the corner. I work in the logistics field and have been to several seminars around the world in the last year that highlight the incoming changes in not only my field, but many others. What happens when millions of jobs disappear over the coming years as a result of this change. Not just manual labour roles, but professional services likes accountancy and even lawyers. They will become obsolete......
We will need to tax businesses for each robot/AI install to pay for everyone sitting at home. It's going to happen as not everyone can cut code as job security going forward, and lets face it, computers will replace coders soon enough as well.....

Right - like the Jetsons - where is the energy coming from to power this pipe dream... The system needs someone to make promises (ie take on debt) about what inputs they can provide into the future so that energy is served up up front ... Are robots going to be taking out loans? Or is the businesses to provide stuff for an unemployed public?

Ok, friday night, lets pretend.
A world awash with capital allows robotics and AI for all companies that are large enough to get a return on investment, or just shut their shareholders up.
Small busineess, lacking access to capital and less than 20 employees are the residual jobs, in NZ, generating about 600,000 jobs. Leaving 1,400,000 unemployed in the traditional sense of full time jobs.
http://www.mbie.govt.nz/info-services/business/business-growth-agenda/se...
In the words of the White Stripes " Whattcha going to do about it"

Set up a Conservation Corps - eradicate possums, eradicate wilding pines, eradicate gorse, eradicate Japanese kelp, reforest NZ, fence all waterways, riparian plant all rivers and coasts.

PWC report on AI robotics
https://www.theguardian.com/technology/2017/mar/24/millions-uk-workers-r...
I shuffled some guesses and maybe we could face 30% unemployment using traditional measures, its a new ballgame.

I hardly think forcing others to give you money is throwing in the towel. You know someone has an overblown sense of entitlement when the look down their nose at a hand out.

Are you talking about some of NZ's pensioners?

Definitely.

The UBI's principle is to stop the ever increasing inequality that means to pay those on the bottom more those on the top must pay more (or even pay tax). I dont agree those saying we need a UBI are saying its too hard, it has to happen but it is going to be hard to do so. In fact our very democracy and society stands or falls on that success IMHO.

"The industrial revolution", I agree assuming we have the same context.

"The ultimate effect" yes, down to us as voters to see if we let it happen or not.

UBI is just phase one. Once every gets used to the fact you don't have to work anymore we can vote our selves pay rises. And overseas holidays.

This argument is based on the assumption that everyone is lazy and stupid like the MPs who are paid a very large UBI plus benefits. Not everyone is lazy and stupid like our PM and the National Party. People want to contribute and feel useful.

But the proposal is to pay people not to work. What does that have to do with laziness?

No the proposal is to pay people to cover their basic human rights. Any money they earn beyond that they can use to enhance their quality of life. You seem to no understand the purpose of UBI and it's existing implementation as Super in NZ.

"..Super in NZ."

Would that be the very same Super that we are having a intergenerational debate over because it is financially unsustainable in its current form?

It's not financially stable because the government stopped putting any money into it.

No, it is a return on the country's earnings, a bit like income of rentals or shares, you know, that stuff that people aspire to so that they can, um, get paid for not working.

I have long advocated for income of politicians to be capped at 50% of their pre politics income or double the median wage, whichever is lower. Unfortunately people seem to think that it is unfair. If our PM gives pretty well his entire salary to charity while the opposition spends their salary surely the opposition should be the ones being viewed as greedy?

JK only pledged to give PART of pm salary to charity in 2008 along with many other things
nobody knows how much if any or what charities.
most of us learned not to believe to much of what mr non action man said.
when it came to actually going through with it he may have had one of his famous brain fades and denied saying it

Key never divulged how much of his salary was donated, the only thing we know for sure is that it was between 1% and 99%

Being unemployed and not receiving the dole,UBI sounds like a great scheme.
Got my vote.

FREE STUFF YAY (High Five).

Think of it more as your share of the natural resource wealth, infrastructure wealth, and intellectual wealth of your nation. A citizen's dividend if you like.

Or perhaps compensation for your exclusion from all those natural resources by default.

Or the monetary value of your share of the fishing quota, the oil and mineral royalties, the water rights the land taxes, your share of the produce of the flora and fauna of your nation.

I highly recommend reading Henry Georges: Progress and Poverty if you find the time.
https://mises.org/library/progress-and-poverty

Nice.

The top 10% of income earners pay 45% of our nation's income tax? How is that fair?

How is it not fair? It's what happens when you are a low wage economy.

In 2012, our largest cohort of income earners (700,000, or 21% of all earners) earned between $10-20,000 pa.

And I assume they'll have grown as a percentage by now, given that's probably the superannuitant cohort;

http://www.treasury.govt.nz/budget/2011/taxpayers/02.htm#_whopaystax

I think it's a good illustration of why continued reliance on income tax as our primary tax basis is simply unsustainable. Income is not wealth.

Intellectual justification for free stuff - even better. HIGH FIVE!

Most comments here are polarized into the 2 camps either side of "should one be paid for no specific effort" based only on the premise that money is distributed.
The welfare state has accepted that this is needed to support those affected by events beyond their control, but they have been joined by those incentivised to manufacture circumstances which make them eligible. If a UBI satisfies the first and destroys the latter then it may have significant effects most would not realize due to their current fixations regarding tax. The tax regime would change markedly so figures based on current are pretty much useless. If this land is a resource in which we should all share at least some of the benefit of its productive value why is it so that the landed gentry and rich foreigners are still able to lock it all up for their exclusive enrichment.
The article mentions low paid workers becoming more selective and employers having to respond with improved pay and conditions to attract staff. That can only be good.
But other social ills may also be alleviated, for example, fewer young women seeing single motherhood as a paying career move may improve outcomes for children as being a single parent is no longer required to achieve this. Having to choose work for survival over education, no longer being reliant on an abusive spouse for income support, seasonal work becomes an option, populations return to the regions, work/life balance becomes achievable.
Outside the box, away from the spreadsheet and the numbers on the page their may yet be solutions to some of the things we have come to accept as unavoidable in our current paradigm.

Well said. One of the best articles I've read by an academic is titled: The Good City: In defense of utopian thinking.

Your post reminds me of it :-).

Discrimination is alive and well I see!

What of the people whom you take this money from to fund this silly nonsense? How can one possibly claim to care about society without giving equal credence to all who make up the whole?

Don't fret - they can afford it and desire it and their existing quality of life will be not be impacted.

For example, in NY;

https://www.theguardian.com/us-news/2016/mar/21/40-millionaires-ask-new-...

Here locally, we have Gareth Morgan using some of his excess wealth to convince everyone to tax him more too. Lot's and lots and lots of Gareth's around. You'd be surprised how many people simply don't need all of the accumulated wealth they already have.

Nobody would be discussing a UBI if the current tax system didn't take so much from the lower income earners.....facts are people have to work nearly 7 months to pay for the system now......

The maths simply do not stack up for a UBI !! The economy might handle it for 4 to 5 years at most and then a crash landing.

Why are you so concerned for the welfare of multimillionaires and them not receiving further tax cuts? The top tax rate decrease coupled with the GST increase was just to tax the poorest part of the population more. Wealth is supposed to be redistributed to increase fairness and equality.

When UBI is coupled with a fair tax system the mathematics stack up easily. I don't see what your logic is here.

I am not concerned for the multi-millionaires and as long as people keep thinking the grass is greener on the other side of the fence they will arrange their finances to suit their needs not yours or some other political agenda that is floating around.

The maths does not stack up.....if you think you can get another liter of milk off every cow and up lambing percentages across the country to 200 to 300% and bring in another 500k or even a 1 million tourists, or how about immigration levels rising to more than double what they are now, and get our manufacturers to double their output all the while assuming all these people can sell all this product into the international market place then please tell me how!

noe, let me know if I have interpreted you right.

Para. 1 above asserts that tax loopholes will always be attainable by the wealthy.

Para. 2 above asserts that the only way NZ can compete in future is to grow our efforts in price-taking, non-value-add production; grow our population beyond natural replacement levels; and rely on wealth generated offshore to holiday here in greater numbers.

And, am I correct in my assertion that you vote National.

Have a look at the table on page six of this document. 61% of the taxpayers on incomes earning $50,000 pa and less pay 24% of all income tax. Then WfF tax credits kick in for those on incomes up to $80,000 (it varies depending on family size). That turns the net-tax-paid situation even sharper.

The issue is not the tax paid, or even the "current tax system". It is the income levels themselves. And those are not about to magically change with a similar step change in productivity.

Yep, my point as well below.

And that's just income tax, yeah. Add GST on top of that, especially for the poorer folk who must spend more or all of their income to get by.

Exactly.

That is only looking at income taxes not the plethora of other taxes, fees, rates, duties etc and if you don't have a family to qualify for the WfF they won't be getting anything back. That 61% of taxpayers earning $50k or less will also most likely require all their income just to survive so everything they spend has 15% GST on it as well.

The UBI will place significant numbers of the population into poverty and I don't see that as being beneficial to anyone. What's going to keep any of the multi-millionaires in NZ paying taxes here? Most will have entities offshore somewhere already so it is merely a flick and flight for them to relieve themselves of any obligations. What everyone seems to be forgetting is that approximately 95% of taxes paid in NZ come from SME and a UBI will demand an even greater contribution than what this group are already providing.

Away with your ugly reality, we'd rather entertain our fantasy world movie plots. We're gonna take everyone else's stuff and woe to anyone who tries to stop us!

And watch out anyone who works or is productive - we're coming for you.

I disagree but not a numbers person either. I just get the general impression that our wages in comparison to the cost of living are (on average) so low that there is a growing contingent of workers who receive transfers such that their effective marginal tax rates are very low already - and in some cases nil.

And I suspect many households pay more in interest pa than they pay in tax.

Income/PAYE is never going to sustain NZ society going forward - it is far too high a proportion of tax in the current mix.

That said though, NZ is a relatively wealthy country - $ billion 724,806 in total capital assets according to this post by David Chaston the other day;

http://www.interest.co.nz/opinion/86577/we-look-data-how-much-new-zealan...

A UBI is extremely do-able. UBI or not, we may well crash land due to an external shock anyway. That's no reason not to work toward positive change in the tax mix in the meantime given current accumulated wealth settings.

The arguments against UBI seem very emotional to me, is it the fear of success behind this? We already have super as UBI and National want to push the age to 67 which is heading in the wrong direction leaving a lot of blue collar workers out in the cold.

I always thought the economic ideal was for people to work less and have more leisure time. Not to work longer and longer hours with no improvement to the quality of living, or the pointless accumulation of assets beyond what you need to maintain your lifestyle.

It's not like the UBI amounts would lead to some "rock star" lifestyle but would allow for a more sophisticated and creative population more able to cope with future changes.

Yes, very hard to determine why those opposed seem unable to absorb rational arguments.

And yes, very proud that my ancestors fought very hard in civil society for that 40 hour working week. I intend to defend it similarly.

I feel that people are fighting for a bleak future where people work themselves to death for no reason and add nothing to our society or economy in doing so. When what we need is a workforce trained to start businesses and have a UBI safety net. Much better than high schools pumping out people trained in factory mentality when have limited manufacturing and fabrication jobs.

It's the Politics of Spite.

Are you not advocating for a system makes private enterprise a resource to be exploited?
You may well be proud of your ancestors for the 40 hour week but that privilege is not accorded to the business owners and they often work far longer hours and unpaid.

The more exploitation of SME's and those who work in private enterprise the harder these people have to work. We always hear arguments in regards to finite resources and damage to the environment yet the people delivering this argument are also the same ones who have expectations of a cut of the pie.

It is not a civil society that makes demands upon people they see as resources to deliver expectations.

And the UBI for the oldies is grinding workers into the ground. I am @%#@@ off every time I go to the in-laws and they brag about how they save their super so they can go on a holiday cruise every year. They are multi-millionaires but still receive a benefit as if they were needy.

Now we want to roll this rort out to everyone. What is the point if it just means more tax for workers. I accept a universal UBI is better than just one for the old but they are both tax inefficient systems.

The objection is based on reality not emotions.

You are angry about oldies using their super. I can understand that. Not that long ago I remember reading about minimum wages workers being angry that WCC employees received a living wage. I can understand the anger but the solution would be to apply for a living wage job.

However UBI and our current flawed welfare system are two different things. If we continue with the current system we should, to be fair, means test pensioners the same way the unemployed have benefits reduced for working. However the current welfare system creates disincentives to work. When you work any hours, the old rules I remember, would cause instant loss of living allowance and often you would end up with less money even though you worked and paid tax on the income.

Everything about the current system is about maintaining a certain level of unemployment. Instead we could transition away from that.

The real rort is in the tax incentives. No capital gains tax is a major problem here, along with many write offs that the very wealthy manage to receive that are questionable. What we need is fairness in the tax system, then look at redistribution to achieve the minimum human rights that we think our citizens should have.

False analogy.

No, it was perfectly rational explanation.

What? You state: " I accept a universal UBI is better than just one for the old but they are both tax inefficient systems."

A UBI is not a tax - it is a basic income for all citizens paid for through taxes/revenue collected by a government.

What tax system is inefficient in your opinion? Our present one? One that would be required in order to fund a UBI? And if the latter, are you saying that taxing capital in inefficient?

This all seems very narrow minded, why limit yourself to taking the $724,806B that other people created - buy yourself a printing press and then you can make yourselves *seriously* rich.

You don't seem to be engaging in discussion. However seeing you've mentioned seizing all assets in NZ you'll have to beat me to it.

Printing "wealth" is so much easier the expropriating others wealth because you don't have to fight anyone for it.

Well that's an issue you'll have to take up with the Federal Reserve.

That's what all those who invested in unearned income have already done.

As unearned income is like free cash, so a printing press is like a credit card without a credit limit.

Cash is for amateurs.

And you buy your food with...?

Unlimited credit.

You mean borrowed time - yeah I think it's a relatively common approach. Not clever, but common.

But Kate, time is very essence of intergenerational debt. So long as it doesn't fall due until I die (or after of course).

Mmmm the word Finland in the first sentence. For starters Finland is above us on the OECD charts so options for Finland are not necessarily options for New Zealand.

A lazy and growing class of people who do nothing except sit around voting themselves an ever increasing portion of other peoples hard work ... hm, reminds me of the French aristocracy.

What could go wrong?

Why do you hate pensioners so much?

I realise that people collecting Super often tend to site around doing nothing and voting for selfish policies. However, I lot of people collecting super have age and health issues catching up with them. Some of them aren't as agile as when they were young.

We still need to provide for the elderly and allow them some dignity despite what you are saying.

Are pensioners like the French aristocracy. Well yes there are some comparisons. Massive market bubbles, printing too much currency and large Crown debts. Yes we do have all of those.

Are you suggesting we have a revolution and overthrow the current Government?

Because they receive an entitlement based on their age rather than their need. No other generation receives such an entitlement. The fact you oldies cannot even see the injustice is telling.

I'm GenX, not a boomer. I'm also late GenX so I've been shafted with student loans, etc.

Well I guess the problem with all these schemes is that there are times in history when those who do all the work get sick of it and spit the dummy.

Besides, the idea of a pension was as a safety net for dignity. This UBI is nothing like a safety net and not about dignity.

Ralph, if you're one of those doing all the work and paying all the PAYE - don't worry, you'll be much better off when capital taxes take that burden off you.

I'll be able to retire and stop paying all taxes.

Eventually our righteous crusade will bully all workers into submission until they ether;

(a) join the crusade (accept they must retire from all paid work on the UBI),

(b) collapse from working ever harder to stand still (as we take more and more of the fruits of their hard work - misguided fools),

(c) or leave the country (traitors every one).

Except the kids who now live overseas, they aren't traitors, bless their hearts. But it is getting awfully expensive having to travel so much to see the grand kids.

I think you'll have to die before you stop paying all taxes. Morbid but true.

Might be splitting hairs there Kate. Sure I pay the GST when I spend, but if the money I use to pay that GST was a gift from the same government who collected that GST .. well.

I guess we could *say* am I an equal tax payer if it makes you feel good.

So you're a tax bludger?

It is every persons duty to pay as little tax as possible.

The idea of a pension was a safety net - yes. Not for those who didn't need it.

It only became a universal basic income at a certain age later on.

I don't know if you haven't read the background of UBI discussions, but they're talking about it exactly as a safety net when jobs are fewer and further between, when robots and automation displace many of today's jobs.

The same argument made by proponents of universal pensions ("means testing unfairly punishes those who save") can be made for a UBI. Unemployment benefit unfairly punishes those who have jobs.

Just as the pension was "just a safety net" and then wasn't - so shall UBI be. If you can get away with voting yourself a freebie, why would you not do it again?

The assumption there will be no useful work to do because of automation or robots - is bollocks.

So generating unearned income is hard work? I don't think so.

If you are unwise enough to have saved any money then you are ipso-facto an unfeeling "fat cat" and will be first up against the wall when the revolution comes.

Which, I suspect is why a lot of "fat cats" would like to see wealth distribution sorted out such that the revolution is averted :-).

Were I mischievous I might read your post as acceptance of putting people up against walls and shooting them because they the temerity to work hard enough to save something as morally acceptable.

But I would never do that ..

Thanks for that, that first article made me laugh out loud. Started out great, the super rich are tax avoiding (not defending that), but then stated - "107 out of 161".

So there we have it. Poor little NZ only has 161 super rich people to fleece. And 54 of them are apparently honest. All this endless debate when we could probably ring them all up in one day; lets see hours hours work, one hour for lunch ..

To solve NZ's inequality issues I need to make 15 people an hour, or one every four minutes. Its tight I admit, but with the right motivation (freebies for all) I think I can do it.

No, I'm not suggesting they are fleeced (or anyone is fleeced by the tax system), I simply advocate for the removal of all tax loopholes in order that everyone's wealth is taxed fairly and in accordance with the intent of Parliament. Absolutely no intention to bankrupt anyone. Although, as I understand it, when Gareth Morgan spoke to the Society of Accountants about his comprehensive capital tax, they all laughed knowingly about it putting most of them out of a job.

Do u think a Capital Tax will simplify things...???
I'm guessing it will create another industry of avoidance.... especially if Financial assets are exempt.??

I assume income from financial assets would be taxed in the same manner they are now.

Hello Kate ... is that the "Royal We" ... or

Have you joined the Big Kahuna Party committee?

Good point - sloppy on my part - edited accordingly.

I like the idea of a UBI .... I think it should go hand in hand with Monetary reform..
Ie.. Do away with money being created in the form of credit ( debt) and bring it into existence in the form of a UBI.. to all
UBI together with taxation and interest rates can become a tool of monetary and fiscal policy...

Perhaps stage 2 - reset - but UBI will be needed before you get there, I suspect.

can't we just let everyone from anywhere in the world come here and let them all share in our wonderful country or have we all grown so selfish that we can't just live on a naan bread a day.?????

Dp

Nothing wrong with naan or chappati
Just add rice and dahl, one bowl
Except on feast days...

This is all just a lame attempt to create inflation, because the world's debt levels are too high. Record low interest rates, money printing, immigration, globalisation have all just been failed attempts to kickstart real economic growth.Anyone who takes this helicopter money seriously is a crackpot, and the fact that countires are trying or considering this shows how desperate world leaders are too find away out of an economic stalemate. If they ever start printing money and handing it out the first thing you should buy is a gun.

Non cents

Universal Basic Income - All equal = Communism. Give up your rights with the marketable window dressing Trojan Horse UN 2030 Agenda. Its a blueprint for a New World Order. Then meatless Mondays, then give up your rights to drive a car, then give up your rights to private property, then control of food and water, then...
No thanks.

I think you might need to bone up on what a UBI is, how it would function and even why it is being considered.

With the increase in the number of people wishing to live alternative lifestyles such as remaining single, LGBTQIA, or pursuing creative lifestyles that don't generate much income a UBI could be beneficial. The system currently heavily favours traditional lifestyles and people who adhere to a Victorian work ethic.
However it could favour the traditionalists too who could then start charging stay at home children board.

A scheme like this is in itself workable in theory. In practise what it will mean is that inflation will absorb all of it if not more and nobody is better off within a short time frame. Based on some of the numbers quoted approx. 3.5 million people being eligible for $210 per week, that is about $40 billion per year. So we raise some of the taxes and those that can afford it pay more into it then those that are at the lower end of the scale. For the ones that are paying for this through income taxes the nett result won't be as good, pick any number it will depend on how the tax system is going to change. Let's say that someone below the average ends up $180 better off as a nett result. Progressively those that earn more will get less as a final nett result to the point where it is likely to cost those who earn over say 200K per year. Which might not make much of a difference to them as long as prices would stay the same and they won't.
Some will argue that it will alleviate some of the social imbalances. Within 5 years the high income earners have much less to spend and the lower income earners have in inflation adjusted terms about as much as they had before.
Those that really benefit are the people currently on a benefit of some sort. They get another $210 in the pocket. Which could be acceptable if it would make a difference in the long run. Sadly it won't, life adjusts, prices go up particularly accommodation, both house prices and rent, more to borrow from the bank higher interest payments and principal payments. To keep a lid on inflation the interest rate itself will go up. Etc. People have more to spend and they are inclined to be willing to spend more on housing. Anything where supply and demand is a factor within the price is likely to go up.
The gap between being on the benefit and those at the lower end of the wage earning scale is reduced possibly leading to more people being less inclined to work.
This may then indeed have an inflationary impact on wages to incentivise people to work. Leading to higher prices leading to higher wages and so on.
GST is mentioned as a way to pay for it, while it is a great tax to get some of the black market money taxed, all it will mean here is that those most in need will spend more, reducing the impact of UBI. CGT on houses is an option but will do nothing to slow the long term growth in house prices if overseas experience is anything to go by and what is going to happen if the price of your dwelling is now less then what you paid for it, do you get a tax refund?
Personal income and company tax increases are likely to be the most dependable ways to pay for this.
But then there is a saying somewhere which translates roughly into the following: when everyone gets the same, no one gets anything.
And there is a lot of truth in that.

Well thought out comment Jake Wiltshire.I think the UBI would be the final nail in the coffin of young Kiwi men. The temptation to opt out of a world that is increasingly denying them participation would be too great. Now they can stay at home and play computer games, grow their own weed and brew their own hooch, or live like a hippy at the beach in a hut made from driftwood and surf all day and do a bit of fishing. Sounds quite appealing. Ultimately it would lead to despair and self destruction. “Where there is peace, the warlike man attacks himself.” I'll just throw it out there, is that the intention?

There are no easy answers to this Zachary.

We are dealing with the limitations of human nature, luckily for those on a benefit there is a social conscience within that human nature, some have that stronger then others, which is great but it needs to be paid for somehow. In the old days if you were no good at hunting but did want to eat you needed to find something else that the group thought was of enough value to throw you a bone. Playing computer games all day does not quite cut it in my opinion.
It is also human nature to want to be rewarded for effort.
To me it seems that the people strongest in favour of increasing any form of benefit forget how they are paid.
Contrary to popular belief it is not the government that pays for it.
In democracies the government does not generate money, they spend it.
No matter how one looks at it, the ultimate source for the money the government spends comes from private enterprise (anyone working for a non government owned organisation this is you). In the english speaking world they give that money the name "tax". Increasingly it appears that it is forgotten where the well for that money is located.
To satisfy our social conscience we can not let that well ever run dry lest there is no money to pay to anyone for any benefit.
If anyone thinks they are hard done by now they better wish that that never happens.

Does that mean that we need to change to a system where the government controls and owns everything? A system where the government actually generates money for want of a better expression. Plenty of examples of this, none of them survive in the long run.
Why not? Human nature.