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.
