SA71. UNIVERSAL BASIC INCOME by John de Val

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Introduction

There is a current perception which appears to be borne out by available statistics that there is a growing gap between the less well-off in society and its richest members and that this situation will become worse with the increased pace of technological progress as more and more tasks can be mechanised thus creating less jobs. This may or may not be true. But it has given rise to increased interest in the idea of a universal basic income which its proponents argue will reduce such inequality.

Definition

Although there are a number of variants, a universal basic income can be defined as a modest amount of money paid unconditionally to individuals on a regular basis.

What is meant by ‘basic’ ?

At the least ‘basic’ means an amount that would enable someone to survive in extremis, in the society in which they live. It could be more. However, the underlying purpose is to provide basic economic security, not total security or affluence. Total security would be neither feasible nor desirable.

Deciding what constitutes basic security is a challenge but it should cover an amount sufficient to obtain enough to eat and a place to live, an opportunity to learn and access to medical care. Most advocates of a basic income believe it should be provided as a ‘right’ in the sense that it cannot be withdrawn at will.

What is meant by ‘universal’?

‘Universal’ means that a basic income would be paid to everyone usually resident in a given community, province or country. It would be paid to an individual adult as an individual, regardless of marital, family or household status. Thus it would not favour or discriminate against any type of household arrangement. It would be unconditional.

What is meant by ‘unconditional’?

There are three aspects of this unconditionality. First, there would be no income conditions, that is, no means testing. People would not have to prove they have only an income below a certain amount., or that this was not their fault or responsibility.

Second there would be no spending conditions; the basic income would be paid without direction or restriction on what, when or how recipients spent the money. A basic income would allow people to determine their own spending priorities.

Thirdly, there would be no behavioural conditions requiring people to behave in certain ways and not others, such as taking jobs or particular types of jobs, or being willing to do so, in order to qualify for the basic income.

What is meant by ‘regular’?

The basic income would be paid at regular intervals, the usual suggestion being monthly. Importantly, the amount each month would be similar and paid automatically, without form filling, queuing and so on. Predictability is a crucial component of basic security. Unlike most other forms of state benefit, basic income would be both guaranteed and known in advance.

Would it be just?

The following line of reasoning is taken from Thomas Paine in his essay ‘Agrarian Justice’;

It is a position not to be controverted that the earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race..it is the value of the improvement only, and not the earth itself that is in individual property. Every proprietor, therefore of cultivated land, owes to the community a ground rent (for I know no better term to express the idea) for the land which he holds; and it is from this ground rent that the fund proposed in this plan is to issue.

The plan derived from this reasoning was as follows;

To create a National Fund, out of which shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property.

He went on to justify his call for this payment to be universal;

It is proposed that payments…be made to every person, rich or poor. It is best to make it so, to prevent invidious distinctions. It is also right it should be so, because in lieu of the natural inheritance, which, as a right, belongs to every man, over and above the property he may have created, or inherited from those who did. Such persons as do not choose to receive it can throw it into the common fund.

Objections

Not surprisingly, the proposal for a universal basic income has met with strenuous objections. The following are some which are commonly made;

  • It would be unaffordable
  • It is unfair that people receive something for nothing
  • The current poor would be irresponsible in the way they used it e.g. spend it on alcohol and gambling etc.
  • It would lead to lower wages
  • It would be inflationary
  • It would lead to an increase in immigration
  • It would remove or reduce the incentive to work

Proponents of the idea can produce counterarguments some more plausible than others. But the last objection is the one most relevant to the study just now.

It seems a reasonable assumption that any programme that provides income without linking it to work will discourage work to some extent. That is the position of many critics. Proponents argue that there is no evidence from the various Basic Income experiments that have been undertaken around the world to support this view. Equally, the same experiments do not provide evidence to disprove the assertion so proponents rely on the following arguments;

  • Today’s means testing and behaviour testing for entitlement to state benefits create very strong disincentives to taking low-wage jobs. A basic income would overcome this poverty trap and encourage people with low skills to enter the labour market, and to enter the legal part of the labour market rather than the black economy. It would also enable people to take part-time jobs without fear of losing benefits, which would be especially useful for people with care responsibilities or those with disabilities unable to commit to full-time jobs.
    Basic income is not about giving people to do nothing, but giving them the opportunity to do what they wish and are able to do. It could increase the amount and quality of work. There is cross-national psychological to support this view. In a series of experiments, it was found that people with basic security tended to work more, not less. They were also more co-operative, which suggested that the work group would be more productive. Having basic security gives people greater confidence, energy and trust in others to work more and better.
  • A basic income would allow more people, and not only the well-to-do, to pursue their passions. This would not only be personally satisfying but could yield big dividends for society through the encouragement of entrepreneurship, through creative endeavour and through socially valuable pursuits at all levels. It would enable parents with very young children to spend more time looking after them at home rather than shipping them out to day-care centres.
  • It would help to reverse the trend of falling involvement in voluntary organizations of all kinds.
  • By making income less dependent on employment, basic income could encourage people to question the drive for jobs at any cost and encourage a rethink on the relationship between jobs, production and consumption. In an economic system based on incessant labour and consumerism, we need to slow down. A basic income would encourage us to do so.

Swiss referendum

Switzerland’s unique form of ‘direct democracy’ allows groups of citizens to call for national referenda on specific policies given enough signatures. Enough signatures were obtained to force a referendum on the introduction of a Universal Basic Income. The Swiss government did not back the proposal and other opponents used the scare tactic of claiming that basic income would lead to a sharp increase in migration into Switzerland, although under the Referendum proposal, Parliament would decide on eligibility conditions for migrants.

The wording of the proposed amendment to the Swiss Consitution was;

  • The Confederation shall ensure the introduction of an unconditional basic income;
  • The basic income shall enable the whole population to live in human dignity and participate in public life;
  • The law shall particularly regulate the way in which the basic income is to be financed and the level at which it is set.

23% of those who voted supported the initiative, on a turnout of just over 46%. A poll ahead of the the referendum asked people if they would cease their economic activity if a basic income were in place. Only 2% said they would, in the context of a suggested basic income of 2,500 Swiss francs per person – which most people would regard as ‘comfortable’. However a third thought other people would!

Editors note.

This is a useful summary of the proposals now being discussed. However, we should note that the author does not stray into the difficult area, “What do we think would be the effect on Rents?”

 

 

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