Universal Basic Income: Why Not?

Here’s a video that introduces the idea of a Universal Basic Income. Many of you will be deeply suspicious of the concept. I certainly was when I first thought about it while researching my book.

I was looking for solutions to the problem of how to recycle money through the productive economy, which is an essential feature of the system. If the money we spend isn’t replenished by income we can’t continue to buy the stuff that we need and businesses go bust.¬†Without a steady cyclical flow of money our economy seizes up.

We currently recycle spent money via wages, investment income, and welfare (public pensions, disability & sickness benefits, tax credits, unemployment benefits, etc.).

The problem with wages is that they’re only available to people who have the ability to work and the good fortune to have a job. This accounts for less than half of the population in the UK.

Investment income is only available to the few who have been lucky enough to accumulate wealth in the past, and the income is precarious because it relies on the performance of the economy.

The problem with welfare is that the money has to be collected as taxes, the recipients have to be means tested, the money has to be distributed, and the whole thing has to be policed to prevent fraud. The system is cumbersome, inefficient, costly and divisive.

A Universal Basic Income would be a straight replacement for the income that people already get from welfare system. It would provide a reliable backstop for those who get their income from precarious means (employment or investment). And it would guarantee a continuous flow of money around the whole economy, reducing the chances and severity of recessions.

The video is hazy about how to fund the UBI but I propose a funding method in my book that is completely sustainable and has the added advantage of eliminating taxes on commercial activity (e.g. VAT and national insurance contributions).

The UBI is an idea that’s worth thinking about. Watch the video, visit the website, and¬†sign the petition so that the concept is examined by the European Commission.

3 thoughts on “Universal Basic Income: Why Not?

  1. Pingback: Swiss To Vote On Universal Basic Income: How About That For A Referendum, Scotland? | Views From The Boatshed

  2. Like you, my first reaction was “It’ll never fly. Of course people need to earn their wages and if they were merely paid for doing nothing then too many would sit at home doing nothing”. But thinking a bit more, it occurred to me that those with wealth need only do that – they do not work for their income, in a rentier economy, they merely have to own something – land, property, or just money itself – and the earnings just pour in. There is a truism that the wealthy have to be paid lots more money to make them work harder, whilst for the poor it is a reduction in their pay that will make them redouble their efforts.

    The devil (as always) is in the detail. How would you stop the indolent merely taking the money and spending it on those things that the Daily Mail abhors – booze, ciggies, a flat-screen television and so on? Would it matter, if then the money went back into circulation rather than being salted away in an offshore tax-haven? Would we still need (the answer is almost certainly ‘probably’) further support from the welfare system for those who have ‘frittered’ their UBI? And most importantly, how could the concept be introduced without “The Markets”, (that appear to be the ultimate arbiters in the financial affairs of nations), taking offence at the concept and bringing down the financial system of any country that tried to introduce such a system?

    It is not implausible that we are heading, in the next couple of years, towards a further major implosion of the UK’s finance industry if it continues with its current economics paradigm. As interest rates rise those with high levels of debt will increasingly find their interest payments unsustainable. This time round it will not be (just) the banks that go down, it will be all of those who have taken on huge personal mortgage debt at a time of historically low interest rates and who are bankrupted by even a slight increase in rates. Those of us who are looking at an alternative to the current neoliberal economic orthodoxy had better be ready with alternatives.

    • Tom,

      Good to know you’re thinking about these things.

      The indolent will love to fritter away their UBI and then complain that it’s not adequate, and the Daily Mail will love to rant about them. The feckless and the fascists will always be with us whatever we try to do, but I don’t think we should design a system around them. We’ll still need social services to help the feckless and the reckless make some order from their chaos but at least they’ll all have a reliable source of money every month. In some cases maybe the courts will assign UBI management rights over to a caseworker so that the rent gets paid and the fridge gets restocked.

      I think the productive “Market” will embrace UBI if it’s accompanied by deregulation of the employment market. UBI levels the playing field between employer and employee. No longer is the employee terrified of not getting or losing the job so we should be content to allow the parties to negotiate terms. In some cases people will be happy to work for a few pounds per hour to supplement their UBI. Others might work for zero pounds per hour but take a healthy share of the monthly profits. People will work out what’s best for them.

      The big problem with UBI is funding it. If, as the Swiss appear to be considering, it’s funded by a massive hike in conventional taxes then I can see resistance from every quarter. If, as I propose here – http://basicincome.org.uk/opinions/2014/02/fund-universal-basic-income-without-scaring-horses/ – it’s funded by a negative interest rate then I can see huge resistance from the financial markets, which would be a significant challenge to overcome.

      However, I share your concerns that another (bigger) financial meltdown is on the cards which will further damage the credibility of “the market” and might provide opportunities to introduce more intelligent ways of doing things.

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