What is universal basic income and why is everyone interested in it?

on February 3, 2017

The idea of a universal basic income (UBI) seems to be gaining track again, with Scotland, Finland, Canada, and Netherlands launching new pilot schemes to test UBI. So what is then universal basic income (also knows as Citizen’s Income, basic income guarantee, universal basic income or universal demogrant) and what benefits does it carry?

The international non-profit organisation Basic Income Earth Network (BIEN)  define it as ‘a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement’.

According to BIEN, basic income has the following characteristics:

  • Periodic: it is paid at regular intervals (for example every month), not as a one-off grant.
  • Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.
  • Individual: it is paid on an individual basis—and not, for instance, to households.
  • Universal: it is paid to all, without means-test.
  • Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work.

To understand the history of universal basic income, we shall go to the beginnings and the beginning is the theory of social contract. The simplest explanation for the social contract theory is that people choose to live together in a society organised by common principles and give away some of their liberties to the government in exchange for protection of everyone’s fundamental rights and property. The agreement is simple and universally binding, people will seek to respect a set of rules (in our modern societies, those would constitute the law) in a trade-off for greater protection from their governments. The goal of the agreement is for people to live together in mutual harmony, in a society that, unlike a disorganised, antisocial natural state, prohibits murder, robbery, and assault of someone’s life or property.

Under this light, any form of social security and benefits pay is also part of the social contract, seen as the state is obliged under the social contract to do the best it can for the survival of  every member of society and that includes minimising threat of being killed or robbed and providing shelter, food, and clothes.

This is the main philosophical rationale behind what we now call the universal basic income, an idea championed by Thomas Paine, John Stuart Mill, Bertrand Russell, George Cole, among many others. But despite its humanist, XVIII century roots, the Citizen’s Income is still met with scepticism: ‘who will pay for it?’ and ‘won’t it just make people lazy?’. Both of these questions are reasonable but they shouldn’t put us off from exploring this avenue, while economists are developing and proposing new methods of taxation that could sustain a universal basic income.

More and more attention is given to UBI in a move to develop new approaches to dealing with rising social inequality, increased bureaucracy in the welfare system, and the automation of manual labour. Two Scottish councils, Fife and Glasgow are looking into a pilot scheme to offer everyone a fixed income. Labour Councilor for Craigton Ward Matt Kerr told the Guardian that there will be months of cross-party work ahead, and the idea will be met with resistance. “Part of the problem is we’re working against a whole discourse of deserving and undeserving poor”, he added.

Jamie Cook, head of RSA Scotland is optimistic that the pilots, once working, will provide a lot of learning material for those interested in UBI. In December 2015, the RSA has published a basic income model that they are supporting: “we have adopted a genuinely progressive tax system to make the tax simple and fair; we redistribute resources to families with young children to prevent losses in transitioning from Universal Credit; and we add some ‘design features’ to the model in order to emphasise that recipients, ie all of us, are expected to use this resource to make a contribution.” The RSA has also proposed a new taxing system that “achieves a much more sane, comprehensible and less distorting way of taxing and redistributing than the current”:

 

Basic income graphs data.xlsx

 

“The cost of our Basic Income system is greater than the current system or, indeed, the CIT alternative. We estimate that the changes we have made would cost up to 1 percent of GDP over and above the current model (including the abolition of personal allowances). This sounds like a considerable sum. However, it is no greater than the change that Gordon Brown made to tax credits and well below cumulative changes that George Osborne has made to personal allowances, VAT, inheritance tax and corporation tax despite austerity.”

 

The second most common objection people have to UBI is that it would not incentivise people to work and instead will make them lazy. This objection needs to be addressed both culturally and economically. Researchers found that households that were part of the Manitoba citizen’s income pilot scheme in the 60s and 70s  as a whole reduced their workloads by about 13%, as economist Evelyn Forget explains in a 2011 paper published by Canadian Public Policy. They have also found that people mainly cut back on their workloads where they had a small child at home or when they wanted to focus on their education.

In addition, the idea that the species that put a man on the moon would stop doing anything productive just because they were are given the means to pay for the most basic needs like rent and food is simply put disheartening. From Galileo to Adam Smith to Darwin, people who had the means to provide for themselves haven’t failed victims to the hands of idleness and have come to contribute greatly to the life of mankind. The same can be said about CEOs, actors and musicians who have secured the means to provide for themselves but yet continue to do what they love and are good at. At the other end of the spectrum, it’s acceptable to think that people would still prefer to top up their basic incomes and work part-time and unskilled jobs, given that those would offer decent working conditions.

We have to look at our worldview and where do employment and self-worth sit in relation to each other. At the end of the day, we all can agree that work shouldn’t be just about the paycheck. A basic income would enable people to invest more time in education, care for their children and family, travel, and set up new businesses. What basic income aims to achieve is to deter rampant inequality and to provide a universal security net for citizens but it could also empower people in jobs with poor working conditions to demand improvement. In its humanist tradition, a universal basic income should aim to eliminate the need to work menial or insecure jobs for the purpose of survival, and it should give everyone a chance at bettering themselves and living a fulfilling life in a career or occupation that suits them, while humanity adjusts to the challenges of automation and the deep ways in which it will transform our labour markets.

This article was originally published on introvertjournalist.com

 

Diana Gangan - Former Chief Editor, Currently Investigations editor of Birmingham Eastside. Journalism student, avid reader of classic literature, philosophy and political theory. I believe that everything is interesting if you look at it long enough. (Trying to) write clearly and edit often.

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