Intro
When researching and writing this article I
kept asking myself: why should an Oxford student care about Universal Basic
Income (UBI)? After all, my main arguments below are that parts of the welfare state as currently conceived are
broken and perverse and that there are certain types of assets (like land or
oil) which are being unfairly exploited for the benefit of a minority to the
detriment of the majority and of future generations.
On the balance of probability, Oxford
graduates are less likely to ever come into contact with the welfare state; and
more likely to be part of that minority that benefits from the current state of
affairs.
They are, however, also more likely to be in
positions of power and responsibility in the future and having to make
decisions that affect all of us. And, therefore, just the group I want to convince
that there may be other ways of creating a fairer society.
What is Universal Basic Income
(UBI)?
At its core, it is based on the principle that
every individual should always have a minimum (basic) income floor that ensures
survival. UBI proposes to achieve this by implementing a regular cash transfer
to all qualifying citizens/residents. But for any transfer scheme to properly
be considered UBI, it has to be:
- Unconditional: It could vary with
age, but there would be no other conditions: so everyone of the same age would
receive the same amount, whatever their gender, employment status, family
structure, contribution to society, housing costs, or anything else.
- Automatic: Paid weekly or monthly,
automatically.
- Nonwithdrawable: Could not be
means-tested. If someone’s earnings or wealth increased, then their UBI payment
amount would not change.
- Individual: Paid on an individual
basis, and not on the basis of a couple or household.
- As a right of citizenship:
Everybody legally and continually resident in the country would receive it.
(http://citizensincome.org/citizens-income/what-is-it/)
Most of the current forms of state assistance
do not meet the above criteria. Nevertheless, it is worth pointing out at this
stage that UBI is not proposed as an across the board replacement to the
welfare state. However, if implemented, it would probably lift a large number
of people above the thresholds for many current means-tested programmes which,
as I argue below, can only be a good thing!
Why now?
The idea of a Basic Income is not new. The
spirit of what is currently being proposed in places as diverse as the US, the
UK, India and some African countries, can be traced back to political theorist
Thomas Paine, who at the end of the 18th century posited the idea that land was
the common property of humanity and that landowners did not actually “own”
it; they were merely “renting” it from the rest of us and therefore
owe us a fee for exploiting it:
“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.” As the land gets
cultivated, he goes on, “it is the value of the improvement, only, and not the
earth itself, that is in individual property. Every proprietor, therefore, of
cultivated lands, owes to the community a ground-rent (for I know of 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.”
(https://basicincome.org/basic-income/history/)
Over the following 200 years the concept and
its popularity have ebbed and flowed, as have the reasons that justify giving
everyone a regular income. But the core of the Basic Income idea, that there
are certain of the earth’s resources (the land, the oil, the electromagnetic
spectrum) which can never be owned and are forever the patrimony of all current
and future generations, has remained largely unchanged. If, as Thomas Paine
points above, the land was there and all our ancestors roamed it freely, then
the first people who put a fence around chunks of it engaged in an act of theft
from the others. And that unjust act has been formalised and preserved, but
remains unjust.
UBI has also picked up a number of influential
adherents from all walks of life, from Martin Luther King, to philosopher
Bertrand Russell, to the Economics Nobel Laureate Milton Friedman, whose
proposal for a Negative Income Tax is very close to UBI. And many more: https://vocal.media/theSwamp/eleven-nobel-laureates-who-have-endorsed-universal-basic-income
And before you come to the conclusion that UBI
is some extreme communist fantasy, the capitalist United States is a shining
beacon of UBI use cases. The country came close to implementing a UBI scheme
during the presidency of a Republican, Richard Nixon, but the project foundered
at the last hurdles in the Senate.
The state of Alaska, also deeply Republican
(it gave us Sarah Palin after all!), created the Alaska Permanent Fund in 1976
(https://en.wikipedia.org/wiki/Alaska_Permanent_Fund),
which is funded by the oil revenues of the state and has paid out a yearly
dividend to every Alaska resident ever since. The fund explicitly recognises
that the oil belongs to future as well as current generations.
And UBI has resurfaced in the 2020
presidential election, in the hands of Democratic candidate Andrew Yang, who
has made UBI (under the name of “Freedom Dividend”) the centerpiece
of his campaign for his party’s nomination.
Yang, an entrepreneur with no previous political experience, argues that
automation is leading to a wholesale destruction of jobs that are unlikely to
be replaced fast enough either in quality or numbers by the new emerging
economy. As a result, “a third of all working Americans will lose their
jobs to automation in the next 12 years”. So, enter the Freedom Dividend
as a means of redistributing wealth and ensuring that everyone can participate
in the economy and, more generally, in society.
(https://www.yang2020.com/what-is-freedom-dividend-faq/)
It’s the redistribution, stupid!
Andrew
Yang eventually dropped out of the race after the New Hampshire primary. But his message clearly resonated: he finished with 3% of the vote, raised tens of millions of dollars for his campaign and landed a spot in all but one of the party debates. No mean achievements
for someone with zero political experience when he entered the race.
Yang’s argument is the distillation of a generalised sense that the world is becoming more and more unequal, that money (and power) are getting more and more concentrated in fewer and fewer hands, and that the time has come to explore other, perhaps more radical, forms of wealth redistribution.
But even if radical, UBI is evolution, not
revolution. All advanced economies have for the last hundred years at least
incorporated elements of wealth redistribution and state assistance into their
economies. They have used the tax and benefit system to take from some people
and give to others.
Work or bust!
But it doesn’t always pan out the way it was
intended. The modern welfare state is largely built on the assumption that work
is the pathway out of poverty and so everyone of working age should be working.
Those who are unable to do so (the unemployed) are then given help, mostly but
not entirely in the form of money, until such a time as they can get back to
work. This may sound entirely reasonable but, on closer inspection, is very
flawed for a number of reasons.
Firstly, there is no clear correlation between
work and poverty. There are plenty of people who do not work but are not poor
(think of anyone who inherits a fortune, for example). And there is an even
larger number of people in modern Britain who work and are STILL poor (and so
have to go back to the state for more help). However, there is a direct
correlation between money and poverty: everyone who is poor has no money. This
may sound obvious but it is worth stating. In that light, giving people work so
that they can get money, when what they need is just money, is at worst
perverse, and at best a weirdly roundabout way of solving the problem. Why not
just give them the money directly?
Secondly, because the assumption is that
people should be working, those who are not are immediately suspected of
shirking. Therefore they have to explain themselves: why are they not working?
Is it because they are ill? Or because they have the wrong skills? Or maybe
they are just lazy? So the modern welfare state has spawned a whole army of
people whose job is to question those who are not working and make sure that
they can “justify” this anomalous state of affairs. In other words, these
“gatekeepers” are there to separate the “deserving” poor
from the “undeserving” poor. This is made worse by the fact that the
welfare state apparatus is generally incentivised to keep the numbers of
claimants low, because this stuff is expensive. As a result, we have all become
familiar with the heartbreaking stories of people having their benefits
withdrawn because they are deemed “not disabled enough” or “not
trying hard enough to get a job”.
For those who come into contact with the
welfare state, proving that you are “deserving” of help is a
humiliating and demeaning experience (and it leads to plenty of people who
would qualify for help not seeking it). It cannot be much fun for those having to
administer such a system either.
Thirdly, as a result of the above, the current
welfare system creates a massive disincentive for people to do what it wants
them to do: get work. It is so hard to claim benefits that once in the system
it is best not to do anything that jeopardises your weekly cheque, like
changing your circumstances by getting a bit of part-time work. It is an
acknowledged fact that if you are on benefits, the marginal rate of income tax
can be as high as 75% if you start earning money (https://fullfact.org/economy/do-you-pay-higher-tax-rate-millionaire/)
. It makes more sense (it is actually more rational from the individual’s
standpoint) to remain unemployed and continue drawing the money from the state.
What is so special about work
anyway?
On a more fundamental level, the obsession
with paid work (the only type that the counts in the welfare system) as a sign
of virtue or utility doesn’t stand up to much scrutiny either. There is plenty
of work that gets done which does not attract a monetary reward but is of great
value. Think of the amount of work that parents (mainly, but not entirely,
mothers) put into raising their children to be good citizens and good human
beings. Or the work done by those caring for sick or disabled relatives or
friends. Or the millions of hours of work people do voluntarily helping in
their local communities. Conversely, there is a lot of paid work of very
dubious value to anyone. According to David Graeber’s very entertaining book
“Bullshit Jobs” (https://www.amazon.co.uk/Bullshit-Jobs-Theory-David-Graeber/dp/0241263883/)
more than a third of people surveyed in the UK
thought that their jobs did not ‘make a meaningful contribution to the
world’. In other words, a third of people in paid employment think they are
doing a bullshit job.
Fetishing work seems to originate in notions
of Christian ethics: if work is holy, then it could be argued that those who
get rich do so by doing something pleasing to God. Therefore wealth was a sign
of God’s pleasure with you. The corollary to that, which is perhaps even more
insidious, is that poverty is therefore somehow immoral. Looked at in this way,
poverty is not just a lack of money, it is a lack of character. This suits the
rich, who can not only enjoy their wealth, but also their moral superiority for
having it. But again, this does not stand up to much scrutiny. There is plenty
of evidence to suggest that where we start in life (an event of pure randomness
as far as each individual is concerned) largely determines where we end up in
life (see, for example, https://hub.jhu.edu/2014/06/02/karl-alexander-long-shadow-research/
). That is why social mobility is such a hard nut to crack. And as Dutch
historian Rutger Bregman points out in this fascinating TED talk (https://www.ted.com/talks/rutger_bregman_poverty_isn_t_a_lack_of_character_it_s_a_lack_of_cash),
poor people make stupid decisions because they are poor, not because they are
stupid. If you were to find yourself poor, you would also start making stupid
decisions, regardless of how much expensive Oxford education you had received.
Regardless of its origins, the obsession with
paid work as the underpinning of access to welfare appears dubious and
self-defeating. What UBI is saying is: don’t give people work, just give them
money and they will figure out the rest.
So if it is that simple, why
isn’t it happening?
The objections to UBI appear to fall into two
categories: its effect on humans and its effects on the economy.
Isn’t UBI bad for humans?
An immediate objection to the idea is that
“people will just spend the money on fags and alcohol”, or that
“people will stop doing anything useful and become layabouts”. But if
you think about what you would do with $1,000 per month (that is Andrew Yang’s
proposal in the US), you don’t think about cigarettes, alcohol and a life in
front of the telly. You probably think of going back to university to finish
that degree, or getting that job that you really wanted to do but couldn’t
because it did not pay enough money. Or, yes, working less, but not in order to
watch telly but in order to spend more time with your infant children. So who
are those mythical “other” people who are waiting for the opportunity
to get drunk and watch TV all day? If they are not you, or the people you know,
where are they?
It turns out that you are not so special. In
fact, most people are like you –that is why we get things like, say, car
insurance: insurers can analyze and predict the behaviour of large numbers of
people and use the normal (most people don’t crash most of the time) to cover
the abnormal (paying out when someone crashes). So it makes more sense to
assume that if you think and act one way, most other people will think and act
in a similar way.
And the data bears this out. For example, this
Harvard/MIT study of cash transfer programmes in different countries found no
evidence to suggest that they negatively impacted people’s willingness to work.
https://economics.mit.edu/files/12488
People also object to the idea of giving money
to people who don’t need it: why not target scarce resources at the poor
instead of giving money to Oxford graduates with cushy jobs in management
consultancies? Well, it turns out that once you create and fund the vast
edifice of bureaucracy needed to figure out who is poor enough and who is not,
you might as well just give everyone a bit of money and let them get on with
it. This is explained in this very entertaining article by US UBI campaigner
Scott Santens http://www.scottsantens.com/the-water-room-analogy-why-giving-basic-income-to-even-the-richest-makes-sense
Arguably, universal services are not also more
cost effective but lead to more social cohesion. If everyone has a stake, then
everyone has an interest in the system working well, and there is no stigma
attached to receiving it. If welfare is “for the poor” then everyone
who is not poor now has no interest in the system at all, even if there is no
system to go to if and when they find themselves in need. Which partly explains
why the NHS (universal) is much more popular and politically sacred than
Universal Credit (means-tested).
Will UBI destroy the economy?
Another objection is the idea that giving
everyone money will bankrupt the economy or lead to rampant inflation, or both.
This is a harder issue to unpack because the
argument, to some degree, depends on the detail of how the scheme would be
implemented. But suffice it to say that Andrew Yang’s UBI scheme of giving
$1,000 per month to every American is predicated on introducing a VAT of 10%, a
risible amount of VAT for us Europeans.
And in the UK, the Citizen’s Basic Income
Trust recently ran a simulation that showed that you could give everyone in the
country a UBI of £65 per week by abolishing the personal tax allowance and
raising income taxes by 3%, while keeping the rest of the tax and benefits system largely unchanged (http://citizensincome.org/news/microsimulation-research-results-for-2019/).
So yes, modest tax increases, but hardly the stuff of economic collapse or
societal apocalypse.
There is also the more general issue of where
money comes from and how it makes its way into society. After all, it is not
like the Government is shy about just printing money. The cryptically-labelled
Quantitative Easing programme that followed the financial crash of 2008
involved the printing of over £400 billion to inject “liquidity”
(i.e. money) into the UK economy (https://www.theguardian.com/business/2019/mar/08/the-verdict-on-10-years-of-quantitative-easing). It just so happened that the money was given
to the banks, who in turn gave it to us in the form of loans.
This is not the place to go into the pros and
cons of this, but suffice it to say that there is plenty of evidence to suggest
that even if this is good for the banks, it is not necessarily good for the
people and there are definitely other ways of going about it (see, for example,
https://positivemoney.org/videos/introduction/).
Again, if the state wants to make money available to the people, why not give
it to the people instead of giving it to the banks in the hope that it
eventually makes its way to the people?
There is also evidence to suggest that giving
people an unconditional income actually helps the economy by, for example,
reducing people’s health problems, like those associated with the mental health
impacts of the stress of poverty
(https://www.psychologytoday.com/us/blog/short-history-mental-health/201911/universal-basic-income-and-mental-health
or https://academic.oup.com/jpubhealth/article/40/1/3/2966187
). At a time when the NHS is under severe strain these are arguments that need
to be explored.
There are other ways
So UBI is not as new or as radical a concept
as you might think. It is based on centuries of thinking about how to create a
fairer society and how to share in the bounties of the earth. It recognises
that we cannot “own” a thing like the land we farm and build our
houses, or the oil we extract from the ground. They belong to all of us
(present and future) and a way needs to be found to recognise and deliver on
that for everyone’s benefit. This doesn’t mean abolishing private property or
capitalism, but it does require a shift in how we think about the resources of
our nation and our responsibilities to future generations, as well as our own.
And UBI challenges some very basic assumptions
about the way we, as a society, go about doing things, what we think is
important and why. Why do we make people “prove” that they are poor
and deserving of help? Why does paid work signal virtue, even if it is
pointless?
This article only barely touches the edges of
the issue. There are plenty more arguments for (and against!) UBI and I hope it
will encourage you to explore them.
Mostly we do things today because that is the
way we did them yesterday and inertia is a powerful force. But this does not
mean that what we are doing is right or good, and ideas like UBI force us to
question some of the things we are doing and either justify them afresh or find
a better way. It is time for a better way.
