A truck dumps five cent coins in the centre of the Federal Square during a an event organised by the Committee for the initiative “CHF 2,500 monthly for everyone” in Bern October 4, 2013.

Swiss to vote on $2,800 monthly income for all adults / 10/4/13

Switzerland will hold a vote on whether to introduce a basic income for all adults, in a further sign of growing public activism over pay inequality since the financial crisis. A grassroots committee is calling for all adults in Switzerland to receive an unconditional income of 2,500 Swiss francs — about $2,800 — per month from the state, with the aim of providing a financial safety net for the population. Organizers submitted more than the 100,000 signatures needed to call a referendum on Friday and tipped a truckload of 8 million five-cent coins outside the parliament building in Bern, one for each person living in Switzerland. Under Swiss law, citizens can organize popular initiatives that allow the channeling of public anger into direct political action. The country usually holds several referenda a year.

In March, Swiss voters backed some of the world’s strictest controls on executive pay, forcing public companies to give shareholders a binding vote on compensation. A separate proposal to limit monthly executive pay to no more than what the company’s lowest-paid staff earn in a year, the so-called 1:12 initiative, faces a popular vote on Nov. 24. The initiative’s organizing committee said the basic income could partly be financed through money from social insurance systems in Switzerland. The timing of the vote has yet to be announced, pending official guidance from the government.

8 million five-cent coins, representing every person living in Switzerland, were dumped from a truck in Bern by the committee that pushed for a vote on giving all adults a basic income.

Why A Swiss Proposal To Give Every Citizen $2,800 Each Month Is So Radical
by Adam Taylor  / October 17, 2013

Switzerland has a very direct style of democracy. For example, changes to the constitution, or “popular initiatives,” can be proposed by members of the public and are voted on if more than 100,000 people sign them. If a majority of voters and cantons (Swiss states) agree, the change can be come law. This system not only allows individual citizens a high degree of control of their laws, but also means that more unorthodox ideas become referendum issues. Recently, there has been a spate of popular initiatives designed to curb inequality in the country. Earlier this year Swiss voters agreed to an idea proposed by entrepreneur Thomas Minder that limited executive (in his words, “fat cat”) salaries of companies listed on the Swiss stock market. Next month voters will decide on the 1:12 Initiative, which aims to limit the salaries of CEOs to 12 times the salary of their company’s lowest paid employee.

Earlier this month an initiative aimed at giving every Swiss adult a “basic income” that would “ensure a dignified existence and participation in the public life of the whole population” gained enough support to qualify for a referendum. The amount suggested is 2,500 francs ($2,800) a month.

While most observers think that the vote is a longshot, it has certainly sparked debate — and not just in Switzerland. Writing for USA Today, Duncan Black said that a “minimum income” should be considered for the U.S. “It’s pretty clear that the most efficient way to improve the lives of people is to guarantee a minimum income,” Black concludes. However, Black understates just how radical the proposal is. We spoke to Daniel Straub, one of the people behind the initiative, to get a better understanding of what the proposal really means, why it is so radical, and what the world could learn from it.

Business Insider: Can you tell me a little bit about how the idea came to be?
Daniel Straub: A lot of people have proposed this idea. For example Thomas Paine in the United States or also the famous psychologist Erich Fromm has written about it in the sixties.

BI: Why choose a minimum income rather than, say, a higher minimum wage?
DS: We are not proposing a minimum income — we are proposing an unconditional income. A minimum wage reduces freedom — because it is an additional rule. It tries to fix a system that has been outdated for a while. It is time to partly disconnect human labor and income. We are living in a time where machines do a lot of the manual labor — that is great — we should be celebrating.

BI: How was the figure of 2,500 Swiss francs settled on? What standard of living does this buy in Switzerland?
DS: That depends where in Switzerland you live. On average it is enough for a modest lifestyle.

BI: What effect would you expect the minimum income to have on Swiss government expenditure?
DS: The unconditional income in Switzerland means that a third of the GDP would be distributed unconditionally. But I don’t count that as government expenditure because it is immediately distributed to the people who live in this society. It means less government power because each individual can decide how to spend the money.

BI: I’ve seen people compare it to Milton Friedman’s negative income tax, do you think that comparison works?
DS: We go a step further than Friedman with the unconditionality. This would lead to a paradigm change. Not the needy get an income from the community but everybody.

BI: There have been a variety of initiatives recently that appear to be aimed at limiting inequality in Switzerland, from the 1:12 initiative to Thomas Minder’s “against rip-off salaries” referendum. Why do you think this is happening?
DS: People seem to be unhappy with the rising inequality. The other initiatives try to put a band-aid on an outdated system. We are proposing a new system.

BI: On the surface of it, Switzerland is a good place to live, with a high quality of life, relatively high salaries, and good public services. Why do you need to take these big steps to rearrange society?
DS: Switzerland has incredible material resources. But we are not using them in a smart way. A lot of people are stressed and there is a lot of fear. Our resources don’t lead to the freedom they could. And I am not saying that this freedom is easy — but it could lead to more meaningful lives. If more people start to ask what they really want to do with their lives, Switzerland will become an even more beautiful place to live.

BI: Switzerland is a unique country in a lot of ways. Do you think that other countries — for example, the U.S. — could learn from both its referendum system and the egalitarian initiatives enabled by it?
DS: I think that our system of semi direct democracy leads to more involvement by the public — that is a good thing. What other effects it would have on a system such as the U.S. I do not dare to predict.

Basic income proposal worth considering everywhere
by Duncan Black  /  October 10, 2013

“Voters in Switzerland will soon be voting on a referendum for whether the country should provide its adult residents a minimum monthly income of about $2800. It’s something we should be seriously considering here, and while implementing government aid to the poor is typically associated with liberalism in America, this is actually a very conservative way to lift people out of poverty, supported by none other than libertarian-conservative economist Milton Friedman.

People’s views on just how much government assistance should be provided to people of limited means, either for people experiencing short term unemployment or for families experiencing long term poverty, differ, nonetheless federal and state governments spend a lot of money on a variety of programs which do just that. Whatever the merits or appropriate relative generosity of each individual program, having a patchwork of agencies and eligibility requirements greatly increases administration, compliance and enforcement costs. And the general conservative complaint that welfare programs, broadly defined, trap people in poverty is not without merit. It isn’t that most people would prefer to subsist on meager benefits, it’s that asset and income means testing for program eligibility make it hard for people in those programs to get ahead. For people in poverty it’s at best three steps forward and two steps back. If they’re fortunate enough to find ways to increase their wage incomes, they’ll end up losing some of their benefits. If those lost benefits include housing vouchers and health insurance for the kids, that’s quite a loss.

We do provide some cash transfers for those in poverty in the Earned Income Tax Credit and the pretty temporary and limited in scope Temporary Aid for Needy Families program, and in unemployment insurance payouts for the recently laid off, but otherwise our social safety net leans towards the paternalistic. We don’t give people cash. Instead we give them health coverage, housing vouchers and food stamps. There are reasonable arguments for some of this paternalism. Some of these benefits are ultimately meant to flow to children and providing the means to obtain food, shelter, and health care for them ensures that at least some of this aid does reach the children directly, even if their potentially irresponsible parents are the decision-makers. Still it’s worth asking if this all of this additional complexity and costly administration is really worth it? Maybe we should just give people some money.

It’s not impossible to imagine something as generous as the proposed Swiss program having widespread political support in this country. The fact is that the simplest way to keep people out of poverty is to give them enough money to stay out of poverty. We already spend a lot of money trying to ameliorate the effects of poverty and a lot of money on the administration of those programs. Why don’t we cut out the middlemen and just give people cash and let them decide what they should spend it on? At some level there are two basic questions. First, how much redistribution should there be? Second, for a given level of redistribution, how best to improve the lives of recipients? There will probably never be much consensus on the first question. Some argue for a very generous welfare state, and some argue for almost none at all. But wherever you stand on the first question, it’s pretty clear that the most efficient way to improve the lives of people is to guarantee a minimum income. Maybe we can agree on the policy, even if we don’t agree on the amount.”


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