Friday, 23 February 2018

Universal Basic Income Pilot Study

NZ native tree showing epiphytes in symbiosis.
In the past I have written about universal basic incomes (here and here). I had thought that Switzerland was going to be brave enough to give it a crack, but their people voted no in a referendum (BBC, 2016). Fair enough. Giving all your citizens an income by right of birth is a fairly contentious issue: how will countries fund it? What ramifications will it have for the economy? For business? For innovation? For industry? For families? What will it do to work and study habits? What will the impact be on wages or salaries paid for people who want to work?

However, Finland picked up the baton, and are currently running a trial (The Economist, 2017). Starting in 2017, their first data collection is scheduled for 2019, which will hopefully gives enough time for the participants to get used to the programme. This will help to ensure that the reseachers can get clean, unambiguous results. This trial is, in my view, a very positive step. 

If anyone was going to give this idea a crack, I think it was always going to be one of these five European nations: Switzerland, Sweden, Denmark, Finland or Norway. These nations seem to look at problems differently and come up with socially-focused solutions. All nations make mistakes (take Switzerland's long-standing reluctance to let go of Nazi war gold, for example), but there appears to be something about smaller, largely homogenous nations which is community-focused, rather than solely about businesses or the economy. I like that 'reversed' attitude of "let's look after our people, and then business will be all right".

As a business lecturer, my view could be considered heretical. But if we could think about business as currently being a parasite, feeding off the host - taking from the community to earn its living, and giving nothing back until the host is exhausted. If we shifted our thinking to an ephiphytic relationship, where business teamed up with the community and lived alongside rather than taking from the host, we could afford a UBI. A healthy host means a more sound and longer-term symbiosis between community and business.

Why do I make this analogy? A growing trend in media stories has been non-payment of local taxes for multi-nationals. That is driven by off-shoring, transfer pricing and tax havens: the legal cracks that appear between where companies are actually based and where they SAY they are based. These companies predate upon our citizenry to make their money, but give little back to countries where they make their money, while externalising business clean up to local populations. For example, Starbucks goes through millions of takeaway cups, straws and plastic tops every year, which the local community disposes of. Starbucks talks big about recycling, but actual recycling numbers are in the single percentage points: about 1%, last time I looked. There are many serial tax avoiders - and apologies, the data is for American companies only: GM, GE, Starbucks, Xerox, Weyerhauser, HP, McDonalds, CBS, Netflix, Goldman Sachs, IBM, JP Morgan, Wells Fargo... the list goes on to 100 (ITEP, 2017; USA Today, 2016).

So let us imagine what kind of UBI we could afford if our nations set fees for being able to team up with our citizens: an 'access' fee (like a fishing licence), if you will. It might be based on volume of sales, or on number of people participating. While the calcuating of what that fee might look like will be difficult initially, companies will get used to paying it, factoring it in to their price structure. It would also probably mean that avoidance strategies such as off-shoring, transfer pricing, externalities and tax haven practices disappear. The cost-benefit for these would no longer exist.

We would end up with business being truly good corporate citizens.

Anyway, just my two penn'orth.



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