244 - Universal Basic Income

This is not a new idea by any means, but its profile has been raised in response to the perceived threats of automation. [8]

I am leaving the history out and only addressing the possibility of its occurrence. A decent history of this idea is found at wikipedia, [1] and I encourage you not only to read it but to contribute to wikipedia, as I do financially.


The idea is that everyone will receive an allowance called basic income from the state. This might replace all welfare payments or it might supplement them. Much of the existing bureaucracy and administration would be simplified, which would reduce total costs. There are arguments in support of this but I found none that address the concerns of those who are not converted to the idea. You can consider basic income as a negative income tax, reducing as other forms of income rise; whether this is the same as UBI depends on implementation.  We have a variety of situations in which people choose to work for financial gain, while others expect such rewards and returns to be collected in other forms. One viewpoint describes the basic income as a citizen’s return on publicly owned assets. See [1].

There are a few places where something like this is in effect: also a summary of such schemes [6] 
1. One is Alaska, called the
Permanent Fund; it passes around $1000 per year to residents of Alaska. I see this as a dividend for choosing to live there and would argue it is not an example of basic income as other perceive it. 2. Another scheme is in Brazil, called the Bolsa Familia. This is an anti-poverty scheme that applies to around 26% of the population. This seems to be effective, particularly in stimulating education and social mobility.3. Finland is trialling this [2], giving around £500 per month for two years to 2000 (random) unemployed people. The Finns say this is not UBI but explores whether an unconditional income might incentivise people to take up paid work.
4. Scotland is trialling this (councils trial universal basic income), a very similarly worded article) too, as a campaign to reduce poverty (correlated with unemployment and deprivation). The more I looked at this, the less I found; it may only be a feasibility study, not a trial.5. Switzerland rejected a referendum vote (77:23) on having a basic income of around £21,000, on 20160605. see [4] and [5]. Quoting one of the supporters, "In Switzerland over 50% of total work that is done is unpaid. It's care work, it's at home, it's in different communities, so that work would be more valued with a basic income.”
5. See [6] for a web page that I think will be updated with the current position


If there is no means test then there is no work test [7]. These two are not obviously linked at all, but the extended argument for UBI argues strongly for abolition of the unemployment trap ('I’m better off not working’) and so argues strongly for offering and accepting low-paid jobs which currently do not exist. The general idea is that one would go do things for other reasons, such as social ones. In a sense, because the rewards for work are not financial.

There is often (me, too) an assumption that UBI would be pitched at a level to satisfy basic needs. This is not necessarily so, any more than an assumption that UBI would replace all other cash benefits. Some description of UBI do indeed do that. Be wary of such conflation of ideas; when someone is advocating UBI, test their specification to see if it meets with your approval– you may be surprised to find that there are versions with which you change your opinion about the whole idea.     See [7]


Arguments against:

People will become lazy, seeing no need for work. this means less tax collected hence less money available from the public purse. The magnitude of this laziness is coupled with the size of the basic income. In the same way, this ‘free’ income is a disincentive to employment. 

The German parliament concluded [1, my numbering]  quite enough to persuade me this is not going to happen without some dramatic changes:

1. it would cause a significant decrease in the motivation to work among citizens, with unpredictable consequences for the national economy      
2. it would require a complete restructuring of the taxation, social insurance and pension systems, which will cost a significant amount of money     3. the current system of social help in Germany is regarded as more effective because it is more personalised  the amount of help provided depends on the financial situation of the recipient; for some socially vulnerable groups, the basic income could be insufficient         4. it would cause a vast increase in immigration     5. it would cause a rise in the shadow economy         
6. the corresponding rise of taxes would cause more inequality: higher taxes would cause higher prices of everyday products, harming the finances of poor people        
7. no viable way to finance basic income in Germany was found.

For me, some of these are problems to choose to solve (2 ,3 ,6, 7) . Given the thrashing that Brexit is generating, the migration issue in point 4 might be solvable in Britain, but any country is made enormously attractive if it runs a basic income scheme, even if there was to be an extended residence delay before one became eligible. For Germany, and hence any other country, the whole scheme is unworkable without effective border control. I also wondered about paying this to children, perhaps in return for taking education. I see this as far too much incentive to increase the population. I see this as applying to children only in the special cases where adult support has been lost. We cannot have situations which encourage further population expansion.

I wonder if there would be extended consequences for things like pensions, with arguments against having them at all? The discussion I found [7] seemed to say that UBI would simply replace the state pension.

Arguments for:

Being freed from wage slavery gives society time to adapt to the changes brought about by automation, and frees up time for social change, leisure activities. An anticipated change is that many will improve their education (and stimulate that part of the economy).

Dramatic reductions in work-related illness  and a reduction in poverty will, it is thought, make a dramatic change to the costs of treating poverty-related illnesses and stress-related illnesses. 


[1] https://en.wikipedia.org/wiki/Basic_income
[2] https://www.theguardian.com/inequality/2018/jan/12/money-for-nothing-is-finlands-universal-basic-income-trial-too-good-to-be-true    
[3] https://www.theguardian.com/uk-news/2017/dec/25/scotland-universal-basic-income-councils-pilot-scheme      
[4]] https://www.ft.com/content/7c7ba87e-229f-11e6-9d4d-c11776a5124d      
[5] http://www.bbc.co.uk/news/world-europe-36454060    
[6]   http://basicincome.org/news/2017/05/basic-income-experiments-and-those-so-called-early-2017-updates/     
[7] http://basicincome.org/basic-income/faq/    
[8]    
http://basicincome.org/news/2018/01/international-mckinsey-report-identifies-basic-income-potential-response-automation/
[9]
[10]    

 However, © David Scoins 2017