Over the past few weeks, the idea of universal basic income has been talked about more and more. It’s an idea that I’ve been enthusiastic about for a long time, and had planned to write on anyway. In these times of economic uncertainty, as we are starting to see elements of basic income discussed in many countries around the world, I thought it was finally time to broach the topic.
For those who may be new to the concept, here’s a guide to what long term universal basic income could look like, its benefits, and the political arguments for it. I hope you find it useful.
What is basic income?
‘Basic income’ is a shorthand term for various policy proposals, all of which focus on the principle of giving people a specific amount of money on a regular basis. It isn’t like a welfare state system as you don’t need to prove your eligibility in some way (for example being disabled or unemployed), everyone gets the same unconditional amount. Other terms you may have heard include ‘universal basic income’, ‘basic income guarantee’, ‘guaranteed minimum income’, and ‘negative income tax’.
The most common terminology used in the UK is ‘universal basic income’ (UBI for short), which would take the form of a sum of money given unconditionally each month. In some models, this is funded by higher taxation for the super-rich, (the economics for this can work: in the UK the highest marginal tax rate was 83%, while in the USA the rate never dropped to lower than 70% from 1936-1980), in others by a carbon tax.
Proponents of UBI say it is a logical and affordable next step for us to take. It is argued that society has advanced far beyond the industrial revolution, leading to many people now working in jobs that seem pointless or that they actively dislike (right now 25% of people, predominantly in the private sector, aren’t sure their job has meaning at all).
The main benefit of UBI is the freedom it can bring to these people, who normally may not have other alternatives. Currently only those with financial privilege can say no to a job they don’t want, an unhealthy work environment, or a city they don’t want to live in. UBI provides an economic baseline: many would still choose to work and earn money on top of this sum, but they have more safety and time to pursue options that work for them. The unconditional nature of the cash transfer provides dignity and agency, allowing people the economic freedom to make their own choices.
In the age of dehumanising workspaces, where Amazon workers are incessantly monitored and fast food workers burn out, UBI is a return to empathy. While unions continue to be busted and worker rights are eroded, UBI can bring a sense of power, stability, and long term career satisfaction.
Poverty is a lack of cash
To understand why UBI is a promising policy, we also need to understand the fallacies we’ve been fed when it comes to poverty, work and welfare.
The main issue is that we often view poverty through a moralistic lens. We are taught that people are in poverty due to some kind of individual failing or personality flaw, or a personal inability to rise above their situations.
In reality, poverty is just a lack of money. Someone’s income level isn’t directly tied to their motivation, intelligence, or even their skills. People’s circumstances, levels of privilege and contexts have much larger roles to play than individual personalities.
Most people want to believe that we live in a meritocracy, where rewards are handed out in line with merit, but this isn’t the case. If there’s one thing we’ve seen proven in recent weeks, it’s that our idea of a meritocracy is inherently incorrect. It is those we’ve put at the low end of the scale: the bin men, supermarket workers, bus drivers, health workers and teachers that keep our society functioning, and therefore deserve the highest financial reward. More so than bankers or big business, it is these workers (many of whom we class as ‘unskilled’) who deserve the highest rates of pay. Unfortunately, that’s not currently how we’ve set up our financial hierarchies.
Additionally, we also live in a world where privilege and circumstance skew who has power, who succeeds, and who is kept in poverty. Implementing UBI would actually help us achieve a meritocracy, by working to eliminate inequality very practically. The financial safety net can then help those with less privilege pursue careers in areas that may have otherwise been unavailable to them (for examples: see my previous writing on unpaid internships and privilege), leading to more diverse perspectives across all industries, and a more level playing field that holds the potential to actually function on merit and skill.
We also need to think about the way we approach the idea of a welfare state, and how it relates to poverty. Right now our welfare systems, while important, aren’t perfect. UBI suggests another way of doing things.
So often the welfare state can be incredibly bureaucratic and paternalistic. And there’s the issue of the poverty trap, where people lose their benefits and are worse off because they start working. In many cases around the world the welfare state as we have it right now can trap people at the bottom rather than act as a trampoline for them to bounce up.
If we want to have a truly fair system, welfare should work to support the vulnerable, not trap them in poverty or stigmatise them. If we want a culture that’s truly focused on contribution to society, then providing a financial safety net that allows people to live safely and fully explore their career options, while also ensuring financial security for essential workers, seems to make the most sense.
There are also, fairly, questions about the cost of implementing UBI. This differs depending on the country and model you’re looking at, but here’s one example:
Some estimates for the cost of a U.S. basic income put the cost at as much as $3 trillion a year, or 15% of total national income. That assumes paying every adult $1,000 a month regardless of their other income. But Bregman favors a form of means-testing through the tax code: what’s known as a negative income tax. People above the poverty line would continue paying taxes as they do now; those falling below the line would have their incomes raised via tax credits to a level that covers their essential needs. The idea has a long history. The libertarian economist Milton Friedman proposed one version in the 1960s, and the city of Dauphin, in Canada, implemented one between 1974 and 1979. It led to no decrease in employment, an uptick in the high school completion rate, and a reduction of hospitalizations and medical costs, researchers who studied the relevant data say.
While $3 trillion a year is an extremely high number, the US has recently announced a $2 trillion rescue package (25% of which is going to big businesses such as the aviation industry) post-COVID-19. It’s hard not to wonder how different the US would look right now if UBI was already a core economic policy, now that unemployment is also peaking in the country. With a safety net to fall back on, especially one funded by progressive taxation of the ultra-wealthy and the fossil fuel industry, perhaps there would be less economic uncertainty right now. People would still be losing their jobs, but there would potentially be a lot more stability to fall back on, rather than a rapidly collapsing economy as no one can afford to spend.
For an economy to function you can’t just produce, you need people who can afford to consume. How many more small businesses, restaurants and cafes would survive if their customers had a financial security net that would enable them to continue living safely and supporting these businesses post-pandemic? We can’t know for certain, but I think it’s an important concept to consider.
UBI is not about laziness
It is also suggested that the implementation of UBI could lead to people choosing not to work. However, the data on that isn’t clear.
When people hear that UBI doesn’t do a lot to change working patterns, it feels counter-intuitive. But I think it shouldn’t be. First, these UBIs tend to be small. You’re talking about $12,000 a year and most people do not want to make $12,000 a year. Second, given people’s work ethics and their work motivations, it’s strange to imagine that some kind of basic living standard would rob people of interest in working.
I can imagine that argument applying to people with really terrible jobs, but maybe people with really terrible jobs either should be paid a lot more or shouldn’t do them. But just look around. People work for status. They work for meaning. They work because they want more money than they have. It’s not clear to me what UBI would do to disrupt that.
Past negative income tax experiments in the USA and Canada have found that, while work effort declines when a basic income is brought in, the effects are small. Most of the reduction comes from people increasing school attendance or taking longer stints of unemployment (most likely taking more time to find a job that is a good fit for them). Overall, the amount of lowered work effort is minor and seems to create long-term economic benefit, as people find more fulfilling careers they’re likely to stay in.
When it comes to the concept of ‘laziness’, UBI requires us to see humanity in a more hopeful light. Some narratives suggest people need to be forced into work, but is this the truest or fairest perspective around which to organise our society?
Personally, I think people are cooperative, creative, and generally want to help each other. In the UK, over half a million people left without work due to coronavirus immediately signed up as volunteers to help the NHS and the vulnerable, is this not a truer picture of the world we live in? People have a desire to be of use, many of whom are still being paid while not currently working, presenting us with an idea of what the reality of UBI could look like. When given complete agency over their day to day lives, it seems people don’t tend to choose selfishness.
Why would you want to organize all your institutions around the 1 percent of people who are lazy instead of around the 99 percent who actually want to contribute something?
People value work for differing reasons, and money isn’t the only motivating factor in the paths many want to pursue. People also value meaning, personal interests and being proactive. UBI simply gives all people the ability to explore their dream career, care for others, or enhance society, rather than dividing the population between those who must work wherever they can to stay alive, and the privileged who get to enjoy pursuing their passions.
UBI and automation
UBI is also not simply a response to automation. While technological advances have changed the nature of work, making some jobs redundant in the process, it also hasn’t permanently reduced employment levels. After all, capitalism is very good at inventing new jobs.
While UBI would offer up protection from automation suddenly leaving large numbers unemployed, recent circumstances have clearly shown that other factors can create sudden, mass unemployment. We are already seeing the spike in mental health issues as countless people find themselves out of work. UBI would at least mitigate the financial aspect of this strain.
Plus, the idea of UBI vs automation seems to be a false binary. One example that UBI advocate Rutger Bregman has used is the increase in yoga teachers. Theoretically, automation should eradicate the need for new teachers, because apps and YouTube exist. However, people still go to yoga classes. In these current circumstances, we’re living in a much more automated world, where many local businesses are running automated delivery-only services and exercise is being taught online. And yet, we want more.
I think most of us crave connection in some form. Even for introverts, where staying home comes easy, it’s nice to be able to go out for an occasional coffee or yoga class. It is therefore unsurprising that the future of work is likely to be in service jobs, many of which were previously classed as ‘low skilled’.
Across the world, we’ve seen how this labour transformed into ‘essential key work’ very quickly. It is these jobs that have value both in providing us with food and care, but also in displaying compassion for others. These things can’t be automated, and so our priorities must shift beyond efficiency and cost.
The point of the future is that we can have a huge amount of inefficiency because that’s what makes life meaningful. Good care is inefficient. You actually have to talk some to someone to have the meaningful relationship. If you want to make health care more efficient, you usually destroy it.
The way we assign value to work, and each other, has to move beyond financial contribution. The hope is that UBI will both support those doing essential work, well also shifting the way we view work in general.
if all those people who are doing jobs that don’t really matter, say telemarketers, go on strike, then we won’t care, so their wages may go down a little bit. I can imagine that in the long run, in a basic income society, the wages of people will much better reflect the social value that they contribute.
What are the political arguments for UBI?
Conversations around some form of basic income have been going on for at least 50 years. For example, in the 1970s basic income proposals were popular among both American political parties. At the time Richard Nixon nearly implemented basic income, as did Jimmy Carter.
Notorious advocates for UBI include Martin Luther King Jr and Milton Friedman, who are on opposite ends of the political spectrum. King discussed the idea in his book Where to Go From Here: Chaos or Community? while Friedman favoured a negative income tax as a replacement for the welfare state. Libertarian economist Veronique de Rugy also endorsed the idea on Fox News, while conservative political scientist Charles Murray wrote about why a negative income tax should replace the existing welfare state.
Those who are politically left see UBI as a way to redistribute wealth, give power back to workers, reduce inequality and improve human rights.
Those on the right see basic income as a means to empower individual choice and responsibility while dismantling bureaucracy.
“The biggest advantage of a [negative income tax] is that it requires the smallest possible bureaucracy to implement,” Guy Sorman, a right-leaning French philosopher, wrote in City Journal. “No longer would the federal and state governments maintain the sprawling multiple agencies necessary to distribute food stamps, public housing, Medicaid, cash welfare, and a myriad of community development programs. Nor would they need to pay the salaries and enormous future pensions of the public employees who run all these programs.”
What evidence is there for UBI?
There have been multiple UBI experiments, but never a completely satisfactory, long-term, randomised trial. Honestly, I think it’s very difficult to fully trial something that would affect such a huge spectrum of individuals beyond actually just implementing it as policy.
The trials that have been conducted, however, whether specifically focusing on basic income or direct cash transfers as a form of aid, seem to have consistent findings
There was a small experiment in London with 13 homeless men and they received £3k each as personal budget to spend how they wanted to. A lot of people were very sceptical of that experiment.
But a year later nine of the 13 had a roof above their house, two more had applied for housing and it actually saved everyone a lot of money. The experiment cost £50,000 in total and probably saved society hundreds of thousands in all the associated costs of those men remaining homeless.
Finland recently conducted a two-year basic income experiment which saw 2,000 people given €560 per month, which ended in December. The study found that employment numbers barely changed, and basic income recipients on average worked a half-day more than those not on basic income.
A survey also found that 55% of basic income recipients perceived their state of health as good or very good, compared to 46% for the control group, while just 17% reported feeling very stressed compared to a 25% of those without payments. The basic income group also reported more confidence in finding employment, less bureaucracy in claiming benefits, and increased likelihood to accept a job or start a business.
There have been huge [UBI] experiments in the US. One of them was in Seattle where a thousand families received this basic income. What researchers found is that health improves, mental health improves, kids do better in school, etc. At the same time, you had a really nice experiment in a small town called Dauphin in Canada.
For four years, hundreds of families received a basic income. Same results. Crime goes down, kids do much better in school, health improves. In this case, they had a reduction in the hospitalization rate of around 8.8 percent which is quite a lot. Then there’s also the whole literature around cash transfers that you’re probably fmiliar with. Around the globe, NGOs and governments have been experimenting with just giving the poor money and it turns out the poor are the real experts in their lives.
No trial of UBI is likely to be perfect. The main thing UBI affects is quality of life, which is difficult to quantify in comparison to things like GDP. But GDP is inherently flawed, where quality of life invites us to think holistically. While UBI can provide financial stability, the fact that it can also increase health and education rates while reducing homelessness and hospitalisation, suggests that it would provide numerous economics benefits that may be harder to measure on the surface.
Overall, there are many things we can say about UBI. While recently seen as a fringe idea, I’m encouraged to see it enter mainstream discourse once again. People across the political spectrum believe in it, while economics, practical implementation, changing perspectives on work, and ideas around meritocracies seem to support it as a legitimate option too.
More than any of these, however, to me it seems that UBI is the right choice when we think about what it means to be human, and to create a world that cares for each other on the other side of this crisis. Because ultimately, if this pandemic has shown us anything, it’s that people are worth fighting for.
It’s about a vision of what society should be. It’s about human dignity. It’s about giving people the platform on which to stand to live a flourishing life. It’s not an investment and its not form of charity. It’s a form of constructing a society that we collectively think is just…
I think the best argument for why you should not have poverty is that in in a rich society, it is unjust to have poverty.