Archive for the ‘Universal Transfers’ Category

Canada’s path to basic income

Monday, October 7th, 2019

Montreal writer Pierre Madden has written a very interesting article in which he argues that Canada already provides a basic income for parents of children aged 0 to 17 and to legal residents 65 years of age or older, so why not extend this to all ages?. Here are the main take-aways from his article: (more…)

my path to pension reform

Wednesday, June 19th, 2019

My interest in pension reform began 19 years ago, in April of the year 2000. I was at an OECD conference in Prague, listening to presentations of two World Bank economists (Estelle James and Dimitri Vittas). At that moment, it suddenly dawned on me that an ideal pension system should provide basic pensions for everyone, funded pay-as-you-go from general government revenue, allowing citizens who desire more than basic income in retirement to save in any way they please, without subsidies, tax breaks or coercion from government. This was my ‘Eureka’ moment.

When it was my turn to speak, the very next day, I spoke with excitement and enthusiasm. The conference was on private pensions, so the audience did not react warmly to my talk. Nonetheless, I presented my core ideas orally, and drafted a discussion paper (“Three Pillars of Pensions?”) immediately after the conference. (more…)

universal pensions and retirement savings in New Zealand

Sunday, November 25th, 2018

New Zealand has a simple, very successful pension system that could serve as a model for other countries. Unfortunately, despite its simplicity, few understand how the system works. The Government of Ireland, which is reforming its system, is an example of this misunderstanding, Susan St John points out.

New Zealand recently added an auto-enrolment, voluntary savings scheme, known as KiwiSaver, to its pension system. KiwiSaver has many shortcomings, is fiscally costly, and and is considered by many to be unnecessary since nearly all residents of New Zealand are guaranteed a basic old-age pension for life. (more…)

universal vs targeted transfers

Sunday, November 11th, 2018

Two Boston economists, Rema Hanna from Harvard and Benjamin A. Olken from MIT, have drafted a paper on basic incomes for the Journal of Economic Perspectives, a publication of the American Economic Association. They argue that, though a universal basic income (UBI) might be appropriate for wealthy countries, it is not appropriate for developing countries.

The paper is well-written, but fails to support their thesis. In fact, drawing on a phrase from William Shakespeare’s play Hamlet, they “hoist themselves with their own petard”.  A “petard” is a small bomb. Shakespeare, writing in the singular, referred to a case in which a bomb-maker is blown up (“hoisted”) with his own bomb. The phrase came to be used more generally, to indicate ironic reversal or poetic justice.

My point is simple: the text of the paper provides abundant evidence that universal incomes should be preferred to transfers that are limited to the poor. (more…)

universal pensions in Georgia

Sunday, November 4th, 2018

The Social Security Administration (SSA) of the USA informs us that Georgia, a former member of the Soviet Union, will require workers to contribute up to 6% of their wages to private pension funds beginning January 2019. Georgia is adding a second tier to its first tier: a universal, government-financed pension of 180 tlari [US$69] a month for men from age 65 and women from age 60. The SSA describes this as a “subsistence-level benefit”, but Georgia is a poor country, so the pension amounts to about 20% of per capita GDP. In the US, a benefit equal to this portion of per capita GDP would be nearly one thousand US dollars a month. (more…)

universal age pensions for India

Monday, October 8th, 2018

This is one of the best, concise essays I have seen in defence of universal age pensions. The author, Prabhat Patnaik, is an Indian economist known to be a Marxist, but I see nothing Marxist in this essay. Since the newspaper link may not last long, I have taken the liberty of sharing with TdJ readers an edited version that is about half as long as the original. To download and read the full essay, click on the link below. (more…)

Frank Field on universal pensions

Monday, September 24th, 2018

The British politician Frank Field, on the 70th anniversary of the famous Beveridge report that established a welfare state in his country, expressed very clearly my own views regarding the important but limited role of government in provision of old age pensions: there should be a universal pension for everyone of pensionable age, financed from general government revenue, regardless of the income or wealth of a beneficiary. Everyone is free to supplement this basic pension with his or her own savings, or wages from working beyond the official state retirement age.

This system, though simple, is rarely put into practice. (more…)

basic income pilot in a California city

Monday, August 27th, 2018

Beginning in 2019, a demonstration of basic income will begin in Stockton, a city of about 300,000 residents, in California’s Central Valley. One hundred households will be selected randomly from neighbourhoods where the median household income is at or below the city median of $46,033 a year. One person, 18 years of age or older, in each selected household will receive $500 a month for 18 months. It is not clear how the recipient within each household will be selected. Benefits will be unconditional, meaning that there are no work requirements and no restrictions on how the money is spent. This makes the experiment more universal than most of this type. The benefits will be funded entirely from private donations, so there is little chance that payments will continue beyond the 18-month period. (more…)

New Zealand’s universal pension is in danger

Saturday, June 16th, 2018

New Zealand has a universal pension scheme that is the envy of the world. It is simple, affordable, and eliminates poverty in old age. When a qualified resident reaches the state pension age, he or she receives a basic, flat pension, regardless of income, wealth or employment history. This benefit, called ‘Superannuation’, is financed from general government revenue. Earmarked taxes are not levied to support it, but benefits are taxable as regular income, so net benefits are lower for pensioners who have income from work or from savings. (more…)

old age pensions in the Philippines

Sunday, May 27th, 2018

In January 2017, the government of the Philippines increased social security pensions by 1,000 pesos (19 US dollars) a month without any increase in contributions. Simultaneously, the government reduced income taxes. A young Philippine economist writes that this was bad policy first because it increases government deficits and second because it helps the wealthy at the expense of the poor.

Fewer than a third of the country’s workers have access to any retirement pension at all. The vast majority of pensions are from the social security system, and the beneficiaries are not exactly poor. Increasing their pensions by increasing deficit spending does not help those who do not participate in the social security system, so have no entitlement to a pension in old age.

It would be much better, this economist believes, for government to introduce a universal pension, payable to all residents from the age of 60. I agree, and am pleased to see this call for a simple, universal pension in a country with so much poverty.

All in all, the yawning gaps of the country’s social pension system require bold, comprehensive, and forward-thinking solutions like universal social pension – not simplistic, superficial, and short-sighted ones like [Rodrigo] Duterte’s pension hike. ….
(more…)