Jul 15, 2014

Another summer of cash distributions in Macau (more than US$1000)

Over the next few months from July to September 2014, the people in Macau are going to get cash from their government. Macau has been doing this consistently for a number of years. The people are getting more than what the Alaskans get from their Alaska Permanent Fund Dividend. The Alaskans need to get more oil revenue into their Alaska Permanent Fund.

1 July 2014 
Wealth Partaking Scheme 2014 

In order to share the fruits of economic development with the general public, the Macao SAR government had announced the“Wealth Partaking Scheme 2014”, under which, local permanent residents would receive 9,000 patacas, whereas non-permanent residents 5,400 patacas. With the Administrative Regulation No.11/2014 gazetted, the scheme came into effect on 27 May 2014, and its implementation will officially start in July.
(1000 patacas = US$125)

Jul 14, 2014

Real socialism must have citizen dividend

"After all the suffering, people finally understand that real socialism will distribute the national-wealth income to all people. "

In recent years, China has produced quite a number of very interesting writings about citizen ownership and citizen dividend. One China city, Sanya, has even implemented an unconditional basic income for five years. The following writing by a university professor is one example, about socialism, citizen dividend and the relationship between the people and the authorities.

真正的社会主义必定全民分红_曾飞的博客_天涯博客: by 曾飞教授 2011-04-21

It is a very interesting article. Here are a few translated paragraphs.
It is hard to distinguish real and fake socialism. Workers have repeatedly been deceived by fake socialism, and undergone a lot of unnecessary suffering. After all the suffering, people finally understand that real socialism will distribute the national-wealth income to all people (including civil servants). The so-called national wealth includes not only public capital, but also land resources (land, minerals, forests, scenic areas, water resources, marine resources, etc.).
The income from the operation of national wealth cannot fall directly into the government pockets, but must be distributed as dividend to every person in the country, while the rest is used for continued investment. This not only upholds the people's rights to the common property. It is the most crucial measure to prevent the authorities morphing from being the servants of society to being the masters of society.
It is only by distributing the national wealth income to all people, that the economic rights of citizens will be guaranteed, that the distribution will be fair, and society can avoid polarization.
In short, Communists and all workers must unite to recapture the national-wealth income dividend rights that originally belonged to us!
Some people have expressed a fear that an unconditional basic income or a citizen dividend will lead to more government control over the people. The view here is the reverse. By making it universal to everyone, the authorities have no control over this. For example, the Alaska Permanent Fund dividend is handled separately from the government. 

Jul 10, 2014

Should Sanya city obey directives and stop its unconditional basic income?

Sanya is a beautiful city on Hainan Island, in Hainan Province, in China.

Without much fanfare, Sanya has been distributing a small unconditional basic income to its residents. The Chinese calls this "all citizen dividend"The amount is about 60 rmb per month per resident. It has been doing this for 5 years. This unconditional payment is small, but to the poor, it is still a meaningful amount. The payment is about twice a year (every six months). Since 2011, this has been a regular payment and part of the operating budget. 

In 2014, the payments covering 6 months reach 620,000 people and total 223.2 million rmb (that is 360 rmb per person). Over 5 years, Sanya city has distributed 1.29 billion rmb. Early in 2014, Sanya distributed an additional 200 rmb per person. According to one estimate, the amount is about 1000 rmb per resident annually. According to China Labour Bulletin, the minimum wage in Hainan is about 1000 to 1150 rmb. So the unconditional "all citizen dividend" is about 1 month of minimum wage. As a percentage of salary, this Sanya payment looks comparable to or even better than the Alaska Permanent Fund Dividend  (US$900 in 2014).

Many people admire this Sanya city system and suggest that this could be done in other cities all over China. They highlight that this is really people equally sharing in the city's progress. Others say that returning wealth to the people is the right and just way to go. An analyst suggests that Xiamen city has a strong budget and can easily afford a similar "all citizen dividend" for its residents.

According to this online survey, 22695 (83%) support this unconditional cash distribution while 4396 (17%) are against it. If this survey is representative of people around the world, there is great hope for an unconditional basic income in many countries.

However, Sanya's unconditional basic income is under threat. 

A writer proposed that the payments should be legislated so that future payments will be according to the law instead of depending on the politicians' "mood and sense of generosity." Shortly after, in July 2014, Sanya announced that the payments will be modified and will no longer be unconditional. It will become a traditional targeted welfare payment. This is attributed to a directive from the Hainan Provincial government. As a result, only about one third of the residents will get paid, with a drastic drop in the total payment. 

Some see the Provincial directive as a defensive response to the popularity of Sanya's unconditional basic income. The central governments are afraid of more demands for other cities, provinces, or even at the national level. Some see the Provincial directive as a regression in the country's progress.

In comparison, Macau's unconditional cash payment has not be curtailed by the central government since Macau is a semi-autonomous "Special Administrative Region".

At this moment, it remains to be seen how the Sanya system will evolve eventually, and whether other cities will want to do the same.

References (in Chinese)

Jul 9, 2014

About citizen dividend in China: How do we make state enterprises really belong to all citizens?

A. How do we make state enterprises really belong to all citizens?

国企如何才能真正全民所有--博客中国作者:信力建    2014-03-17

It says currently state enterprises are effectively "officials' enterprises" under the full control of officials and hardly benefit citizens.

It is a very interesting post. (Try Google Translate)

B. Why can't our state enterprises' profits be distributed to all citizens as dividend?

为何我们国企利润不可以全民分红?   李俊 2014-01-02

It estimates that state enterprises' profit can give a yearly citizen dividend of $653 (China currency). Although this is nothing to the rich, it is a meaningful amount to the 135 million people in China who survive on less than US$1 a day. 

In addition, it argues from various perspectives that citizens really own the state enterprises. "From the legal perspectives, state enterprises belong to all citizens and should distribute dividend to all citizens."

"This change is not really about welfare for the poor. Most importantly, it clarifies the ownership of state properties."

This is another very interesting post.

Jul 8, 2014

IMF note supports a partial citizen-ownership democracy

Direct Distribution of Resource Revenues: Worth Considering? 
Prepared by Sanjeev Gupta, Alex Segura-Ubiergo, and Enrique Flores, June 2014

The above discussion note from IMF examines direct distribution of resources revenues, i.e. a citizen dividend from a country's resources. Let's go to the conclusion of the report.
"Decisions on the appropriate fiscal framework for resource-wealth management should precede any discussion of direct redistribution. Policymakers first need to ensure that there is an  appropriate institutional setting so that fiscal policy supports macroeconomic stability and development objectives. In this regard, decisions on how much to save and invest or how to smooth out revenue volatility and deal with exhaustibility issues should precede any discussion of direct distribution of resource revenues to the population.

In our view, the extreme case of directly distributing all resource revenues to the population is not appropriate. As noted earlier, there is no guarantee that the mechanism of redistribution would be unaffected by large-scale rent-seeking. In addition, there is the issue that the state would be left with insufficient resources to carry out its core activities, such as providing basic public goods. DDMs would hardly be feasible at the political level as incumbent leadership, especially in countries that already have the symptoms of weak governance that DDMs are supposed to fix, would have no incentive to implement them. Finally, the labor market consequences of large transfers cannot be overlooked.

However, we see merit in more modest DDM schemes that either try to replicate the Alaskan model or seek to develop (or expand) the system of cash transfers to the population. The Alaskan model is innovative and has generated strong support from the population. Starting small is necessary given uncertainties about the administrative capacity of a typical resource-rich country and logistical concerns about how the system would work in practice. The limited size of the program would help avoid unanticipated implementation problems.
(DDM: Direct Distribution Mechanisms )
While the report rejects a full 100% citizen dividend from a country's resources, it supports a "modest" citizen dividend following the Alaskan model. The Alaska Permanent Fund receives 25% of the state's oil taxes, and distributes the investment income every year as a citizen dividend to all Alaskans.

A sudden 100% return of citizen dividend will most likely lead to the collapse of many government budgets, since they have been relying on this confiscated money for years. But that could be a middle or long term goal. For example, Alaska's government is run purely based on confiscated citizen dividend, without any income tax. A full citizen dividend will mean a gradual introduction of progressive income tax, with the rich rightly bearing more burden for the state's operation. Alaska's state burden now falls evenly on every Alaskan, regardless of his/her income or wealth.

Even Alaska can aim to return more and more citizen dividend back to its people.

Jul 5, 2014

UK: Upright judges refuse to let the ministers run amok with the laws

Court rules back-to-work legislation incompatible with European law (4 July 2014)

Justice Lang (from LMH)
Great Great Britain has upright judges who refuse to let the politicians play around with their laws and their people. Democracy needs upright judges to prevent dictatorial rule over the people. If first we have slave labour for benefits holders, soon we will be sending benefits holders to the front lines of war.
"The high court ruled on Friday that emergency laws introduced to shore up back-to-work schemes were incompatible with European law."
"Human rights lawyers successfully challenged emergency legislation introduced by the government after its flagship welfare-to-work schemes were ruled legally flawed. Mrs Justice Lang ruled that the retrospective legislation interfered with the right to a fair trial protected under article 6(1) of the convention on human rights."
"Critics say back-to-work schemes are "slave labour" because claimants are forced into unpaid work experience."
"The Department for Work and Pensions brought in retrospective legislation to overcome flaws identified by three appeal court judges in a case involving Poundland. The appeal court judges unanimously agreed that the 2011 regulations failed to give unemployed people enough detailed information, especially about sanctions – including loss of jobseeker's allowance – for refusing jobs under the schemes."

Jul 4, 2014

Canada First Nations well placed for a big citizen dividend

"The Supreme Court of Canada this week ruled in favour of the Tsilhqot’in and declared the
group holds aboriginal title to about 2,000 square kilometres of interior B.C."

“The Supreme Court of Canada has rejected this idea that aboriginal title just applies to specific sites, or rocks or buffalo jumps or fishing holes – it is territorial,” David Rosenberg, one of the lawyers involved in the case, said in Vancouver on Thursday.

“It goes from mountaintop to mountaintop in some places. It covers valleys and vast tracts of land. That is now what aboriginal title is.”
(Theglobeandmail, June 27, 2014)
The First Nations now has clear ownership of vast tracts of land in Canada. 

Regional chief of the B.C. Assembly of First Nations Jody Wilson-Raybould
“I see this decision as providing required clarity and the rules of the game,” said Jody Wilson-Raybould, regional chief of the B.C. Assembly of First Nations. “I think it’s an opportunity. First Nations want to be a part of resource development where resource development will benefit them and won’t infringe on their lands.” (Straight.com, July 2, 2014)
The Eastern Band of the Cherokee Nation in the USA gives out very substantial citizen dividends of about US$6,000 each annually. If the Canada First Nations follow this example and distribute citizen dividends, the First Nations peoples are going to get big citizen dividends. They own very valuable natural  resources.

Jul 3, 2014

Tomorrow, a New World of Citizen Dividends

The Pitchforks Are Coming… For Us Plutocrats By NICK HANAUER July/August 2014

Hanauer urges the super-rich to pay higher minimum wage. 

We citizens should get the politicians to return our citizen dividend.

Without citizen ownership of the country and citizen dividend,
many people are virtual slaves in the system.

Jul 2, 2014

South Korea introduces almost universal pension

(From koreaherald)

The “basic pension” program, which is one of President Park Geun-hye’s key pledges, is to benefit the poorest 70 percent of Koreans aged 65 or older by giving them a monthly allowance ranging from 100,000 won to 200,000 won depending on their income level.

President Park had initially vowed to offer 200,000 won to every senior citizen regardless of income level. The opposition party criticized her for deceiving the public after the government announced that the pension would only benefit the poorest 70 percent of seniors.

The first installment of the basic pension program will be given out on July 25.
Good, civilised countries have universal public pension. According to ILO, Public pension is essential for basic income security for older persons.

Hong Kong universal pension: Wrong to link pension to more tax

It is great news that Hong Kong is considering a universal pension for every old person.
The time is ripe for a universal pension but it will be painful to the taxpayers and wage earners. Still, government-appointed consultant Nelson Chow Wing-sun said he will bat for a universal pension to give retirees a more stable income in his report to be submitted to the government today. "If the community misses this chance [for a universal pension], it will be hard to raise it again in future," said Chow, chair professor of the University of Hong Kong's social work and social administration department. (Now or never for pension scheme, wn.com, June 2014)
However, it is very wrong to link pension to additional income tax. In general, it is wrong to link any expense of a government to income tax. A government usually pools all monies collected into one bag, and expenses are paid from this bag. Usually, there is no clear link from any source of money to any expense.

So it is not logical to link a particular expense to tax. unless the intention is to frighten the tax payers. Of course, many politicians do exactly this: Do you want to pay more tax to fund this (anything not in their favor)?

In the above video (1:40), it is explained that the universal pension of $4000 each will add to a total of $48 billion.

It then proceeds to link the universal pension to increase tax on workers. This is the unnecessary and illogical part. The Hong Kong government has its own responsibility to find this money, and not necessarily from increased tax on workers.

How about funding from common wealth? Common wealth belongs to the citizens, and it will be good to return the money.

A quick look at Hong Kong's budget shows that there are lots of money from common wealth.

Hong Kong has a reserve of $741 billion. They estimate return of 3.7 to 6.2% per annum. The investment return from the reserve could cover at least 60% of the universal pension.

Another interesting item is the huge surplus. For example, for year 2012-2013, there is a surplus of S64.9 billion. This is more than enough for the universal pension. There is no need for more tax.

The conclusion is that Hong Kong can afford the universal pension without sourcing it from tax.