It is one of the most completely ridiculous ideas I have heard in a long time Bjarni Benediktsson, Iceland Finance Minister
UPDATE: 31 October Where Salisbury Compass lead, others follow. Well not quite, but there is an interesting article on the Finnish experiment of introducing UBI in today’s Guardian.
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The idea of a Universal Basic Income has made a brief appearance on this blog and a book has recently been published which explores the idea in some detail and tackles the many misgivings and criticisms people have about the idea. But first, some context …
The neoliberal experiment stumbles on and the parlous state of our economy grows ever worse. The prospect in a few days of higher interest rates – although likely to be only a quarter point – will result in greater stress for the ‘just about managings’. The promises made of prosperity resulting from liberalised markets, globalisation, relaxed controls and greater competition has been largely confined to those at the top of our society. The Big Bang in the City led directly to the banking crisis costing the country billions in bailouts and has left us weakened if another major shock should arrive. The austerity programme is now widely seen as a mistake (taking demand out of the economy at the wrong time) and the ‘A’ word is taboo now with conservatives.
Inequality is steadily getting worse. For those at the bottom of society in the precariat, work is uncertain, poorly paid and unlikely to have much in the way of prospects. They may have several jobs and liable to be summoned to work at a moments notice. They will not enjoy a pension scheme and may be termed self-employed for the sole benefit of the employer not themselves. So although more people are in work – one of the few positives the conservatives can claim – the work itself is often poorly paid and more and more people in work are poor and still using food banks.
At the top of society on the other hand, life is grand. Only a few days ago, the Financial Times (of all papers) led on a story about over £5bn being shunted overseas as part of another tax avoidance scam. The Tax Justice Network estimates that over $100bn is lost through tax evasion. We can question the precise figures but that they are staggeringly large is beyond doubt. The effect is to leave public services lacking funds and higher taxes for ordinary individuals to make up the shortfall. The City of London is the world’s biggest centre for tax avoidance. Major companies – often American – who use our roads, whose staff use our health service, who enjoy the protection of our police and fire services, avoid large chunks of tax with the help of one or other of the big four accountancy firms. Today, there is a report of Netflix paying almost nothing in tax despite huge and growing revenues.
Another factor becoming ever more important is the role of machines and artificial intelligence. In 1956 the Dartmouth Conference predicted that an intelligent machine would be built within a generation. It was at this conference that the very term ‘artificial intelligence’ was first created. Well it took a lot longer than predicted but nevertheless, machines are becoming more and more evident. We can check out at a supermarket without the involvement of staff. Phone BT and the conversation is with a computer. We can order most goods and services without human contact.
This combination of factors is going to have an ever increasing influence over the very concept of work. For generations, we took it as a norm that we went to school, gained some qualifications, went to college or university and thence to a job. To work. At 60 or so we stopped and took a pension. With variations, this was how it was. It is so ingrained, so part of our culture, so taken for granted, that our political discourse is nearly all about which party has the best policies for creating jobs. Not only that, those without work are demonised and are subject to ever increasing attacks to force them into work. The last ten years have seen the disabled hauled in to be tested and assessed, and the Universal Credit scheme is in the process of roll out with dire effects for many. This is based on the notion that work is good, we must all do it and those who don’t have to be punished and penalised. We denigrate them and call them ‘skivers and scroungers’.
None of the factors mentioned above are likely to change much for the better soon or even at all. The protestant work ethic is however, deeply rooted. It is linked to Calvinism and has a religious element to it. It has been the guiding force for most of the northern European nations and subsequently North America. It has been successful in its own terms leading to great prosperity for many, an abundance of consumer goods and has been the force behind the creation of great corporations. But the gaps are now beginning to show.
The question is – will the introduction of UBI be an answer? Guy Standing in his recently published book Basic Income: And How We Can Make It Happen (Pelican, 2017) discussed the matter in great and readable detail and concludes that it would have many benefits. The idea of giving everyone a basic income however, is to many people perverse and strikes at the very heart of a society based on everyone earning their crust. At first sight, the objections are obvious and many: it is too expensive; it will turn even more people into scroungers and skivers; it will give unneeded money to the rich as well as the poor and so on and so on. Prof. Standing looks at these objections and some of his answers are as follows:
It is unaffordable
This is the most frequent criticism and Standing devotes most of a chapter to it. Firstly, critics do not take into account the increased tax take by giving the income to all income groups. Secondly, the cost of administering the current means tested system and policing it is extremely expensive. It is also inefficient in that audits have shown that many more people do not receive payments to which they are entitled than those who receive it who shouldn’t. It is also assumed that the monies needed are just added to what we spend now without considering other spending choices. Readers of this blog will know that we have commented on corporate welfare – the massive subsidies given to corporations amounting to at least £80bn a year set out in research by the University of York. But perhaps the most telling arguments are around the benefits that accrue to the ‘just about managings’ that a certain politician is vexed about. One such is a reduction in child poverty. By providing everyone with a basic income, they will have the wherewithal to buy basic foods and would make a big impact on the poverty trap.
It will reduce the incentive to work
This is based on the idea that people have to be forced to work and only the threat of no money and the withdrawal of benefits will force the feckless to go out and get a job – ‘get on yer bike’ to coin a famous phrase. It assumes that unemployment is some kind of choice that people are content to be in. People made redundant or who are unemployed are usually stressed and unhappy. One of the problems – certainly at the lower end of the income scales – is that work doesn’t pay. The combination of the cost of getting to work and the possible loss of benefits act as a disincentive for many. It also depends quite what we mean by ‘work’. There are many who do valuable ‘work’ to support elderly parents but receive no pay. There are others who volunteer for some charity or other who are unpaid yet are making a significant contribution to society. It also fundamentally assumes that people only work for money and that money is the only incentive. Yet there are many millionaires and billionaires who have more money than they can ever spend, who carry on working.
It will lower wages
The argument here is that employers will argue that you (a potential employee) are already receiving a basic income of £x per month therefore I can pay you that much less. So the benefits will therefore disappear. This overlooks the fact that those in receipt of a basic income will be better able to decide on whether to accept employment and will be in a stronger bargaining position to accept or decline what is offered. Employers will therefore either have to offer more, especially for less attractive jobs, or automate. This will in turn make a contribution to our lamentable productivity.
There are many other benefits which Standing discusses in his book. Perhaps the main point however is that UBI represents a power shift away from the owners of capital and more towards people. This was once the roll of unions which are now largely neutered. It is also where the main focus of resistance will emerge since the owners of capital have had it very nice. It suits employers to have access to a pool of individuals with little power or choice.
Will it happen?
Not without a struggle. In the penultimate chapter, Standing discusses how it might be progressed. He correctly identifies the need for public pressure and how difficult that will be to achieve given the media we have. There are many articles about scroungers and most people seem to know of someone who is enjoying benefits when they could or should be working. Mention ‘corporate welfare’ (see above) and most people look blank completely unaware of the scale of patronage companies receive from the state, so little coverage does it receive. Yet most of the venom is directed towards those at the bottom not those at the top. The revelation that Iain Duncan Smith – the architect of Universal Credit – had received over €1.5m in subsidies for his wife’s estate went largely unnoticed. Another individual who’s paper regularly castigates the poorest in society, Paul Dacre, editor of the Daily Mail, was recently revealed to be in receipt of over £460,000 from the EU towards his Scottish estate.
The forces described at the start of this piece are set to remain or get worse. The need for radical thinking is paramount. Standing is optimistic pointing to changed attitudes in various parties including the Greens, SNP and some sections of Labour. The effects of austerity are also being felt higher and higher up the chain. It is no longer just the poorest who are suffering but the offspring of the middle classes who cannot afford rents and whose dream of getting on the property ladder look dimmer by the day. Perhaps this is where the pressure might come from?
Peter Curbishley
Interesting, Peter, though I’ve not read Standing’s book so I won’t express points he may have already considered. I would note, though, that UBI is not the only game in town. Varoufakis has been plugging a Universal Basic Dividend – which sounds rather Social Creditish – his idea is to get an effective UBI without using taxation to fund it, but taking the public investment in automation used by new services as a source of the dividend ie socialising the return on capital. There’s more to investigate here, I think.
Also, we now have Universal Basic Services, which suggests providing a number of es-sential (as you may define them) free to all, like the NHS
https://www.ucl.ac.uk/bartlett/igp/sites/bartlett/files/universal_basic_services_-_the_institute_for_global_prosperity_.pdf
Free transport for all would be perfect, free food…not sure how that would work. Anyway, there’s a good debate on Progressive Pulse for those interested.
Andrew
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Yes, an interesting debate is developing here and at Progressive Pulse (thanks for the reference Andrew). I haven’t read Standing’s book either but I have read Basic Income by Philippe Van Parjis and Yannick Vanderborght.
They make many of the same points as Standing and argue that it would be an ‘instrument of freedom’ funded, for example, by revenues from publicly owned resources and, perhaps, a land value contribution. Its fundamental justification is that it a fair share of the common inheritance in land quoting Thomas Paine when he said ‘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’. A basic income, they argue, ‘conceived as the fair distribution of an inheritance, requires only that people sharing a territory should all regard themselves and each other as free and equal members of one political community’. Similar points are made by the Leveller Gerard Winstanley in his classic The Law of Freedom and, more recently, Martin Adams in Land. And a situation similar to this is still in force in Letchworth Garden City, where I lived in my formative years. Another interesting shift is that the authors see a UBI as ‘an investment rather than a cost’.
Perhaps more interesting for this debate, however, is that they realise that a truly free society ‘cannot be reduced to instituting an unconditional basic income’. Also important are universal basic health care and education, lifelong learning, universal access to quality information on the internet and meaningful democratic participation. I note that one of the papers referenced by Progressive Pulse – Social prosperity for the future: A proposal for Universal Basic Services by the Social Prosperity Network – argues that UBS and UBI are ‘complimentary (sic) components of a sustainable future’. And although Jonathan Portes in his discussion paper argues strongly for a UBS, he also makes the point that it ‘need not be inconsistent, and could indeed be complementary, with a basic income introduced at a modest level’. This, in my view, is reinforced by the fact that of the four services that they want to add to health and education – Shelter, Food, Transport and Information – only the latter is truly universal; the other three all fall short of universality in some way.
So, I don’t think we are necessarily talking about an either/or situation here. What I like about UBI is its promise of freedom for the individual; what I like about UBS is the social capital it could build up against the social atomisation we have seen in recent decades. Because it is more universal, I would place UBI before UBS but the proposal by the authors of Basic Income that it should be introduced at a modest level first is, I think, compatible with Portes’s position.
Finally, and with regard to how any of this is implemented, they argue that we should think, as Machiavelli did, ‘about how the design of political institutions affects the feasibility of our proposals’. And they add: “Utopian visions do not turn real in a day, but they guide us and strengthen us through the effort.”
I’m off to reread The Prince!
Dickie Bellringer
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Interesting. What is missing from the argument is Professor Werner’s demonstration that the way money is actually created is as credit. That’s all one gets from banks in exchange for your mortgage, meaning an honest system would be like a credit card on which no interest (or penalty payment) is due so long as one repays it as agreed. But how can one repay credit with more credit? At the moment we do it by the banks running a Ponzi scheme which makes more credit available, inflating prices until buyers get cold feet, causing crashes like those of 1929 and 2007.
The alternative is to REALLY repay the credit which sustains us by doing the work necessary to regenerate what we use; thus the more of our credit limit we use up the more work we owe. In other words, those who live frugally are not a problem if they don’t repay on time. It is those who want a large credit limit who need to justify it, and those who have bought or otherwise acquired more than they need who will exhaust their credit and need to sell or bequeath back their surplus.
So yes, UBS could even further simplify the administration of this, but price differences are surely needed to signal greater resource use, including employee time? What’s wrong with IDS’s universal credit was his seeing it not as a credit limit but it as a loan of valuable money [actually fool’s gold], not seeing our suppliers and employers earning their own credit by accepting our creditworthiness for the goods and services they/we supply. What we need most, then, is honest money, and given that, paying for a combination of UBS and UBI is no longer a monetary issue but the real one of regenerating what we need and restoring our planet to a much more sustainable condition. That in turn requires education not so much of all the poor as of our policy-makers, about institutionalising the information systems needed for local population self-control.
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