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The Universal Basic Income: For the Sceptics

Why basic income is a necessary step towards building a society fit for the 21st century
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He was using his power to get sex. Photograph: Pascal Le Segretain/Getty Images

Contrary to popular belief, the case for basic income does not rest on the assumption that robots and artificial intelligence will bring about mass unemployment, nor that it would be a more efficient way of relieving poverty and reducing inequality (although it would). As set out in my recent book Basic Income: And How We Can Make It Happen, the arguments for wanting everyone in society to have a basic income are ethical rather than instrumental: a basic income would serve social justice, enhance individual and social freedom, and provide the basic security that people need to be healthy and functional.

Predictably, the growing interest in basic income has been met by a host of objections, all of which can be and have been refuted. Nevertheless, they persist. The two main criticisms are that basic income is unaffordable and that it will make people lazy.

Take affordability. This tends to be the immediate response – we cannot afford to give everyone a basic income. Often, this disguises the real reason for hostility. I would pose this question: suppose it could be shown, to your satisfaction, that a basic income was affordable. Would you then support it?

The cost of a basic income depends on the amount and how it would be implemented. Most advocates believe it should start at a very modest level, paid as a regular amount to all legal residents (subject to a waiting period for migrants, for pragmatic reasons). The payment to more affluent members of society would be clawed back partially or wholly through the tax system.

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"Means-tested benefits are expensive to apply and administer, fail to reach many of those in need, and create damaging poverty traps that discourage paid work."

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There are sound reasons for giving a basic income to all and then taxing back where appropriate, rather than applying a means test to determine eligibility. Means-tested benefits are expensive to apply and administer, fail to reach many of those in need, and create damaging poverty traps that discourage paid work.

The net cost of a basic income would thus be far less than the back-of-envelope calculations often bandied about, derived from multiplying a given amount by the population. Studies in the UK have shown that even under the existing tax and benefit system a basic income is affordable. So universal basic income would not, as some critics like to maintain, take resources away from public services.

My preference, however, would be a social dividend route, creating a national wealth fund built from rolling back the vast array of regressive subsidies and tax breaks that exist today and from levies on all forms of ‘rentier’ income derived from ownership of assets – physical, financial and intellectual. The fund could be supplemented by ecological taxes such as a carbon tax, and levies on the rental income flowing to Big Tech through use of our data.

The second standard objection to a basic income is that it would induce laziness and undermine the ‘work ethic’. I would pose a similar question: If I could show you, to your satisfaction, that it would increase work, would you then support it?

There is strong evidence, including from pilots and experiments in India, Canada and the US that a basic income does increase work, especially if work beyond wage labour, such as care work, is taken into account. Besides giving people more energy, confidence and ability to take risks, for those with most to gain from a basic income it would remove the disincentive to take paid jobs embedded in the existing social assistance system.

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"The current systems create a moral hazard – people are deterred from doing what they would otherwise do – and an immoral hazard – people conceal economic activity so as not to lose benefits."

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Means-tested assistance automatically creates a poverty trap by withdrawing benefits as income rises. In Britain today, the ‘marginal tax rate’ for people receiving means-tested benefits is over 80%. By contrast, the basic income would not be lost as earnings increased, which would be taxed at whatever normal tax rate applied. Thus shifting to a basic income would increase the incentive to take low-wage jobs.

The current systems create a moral hazard – people are deterred from doing what they would otherwise do – and an immoral hazard – people conceal economic activity so as not to lose benefits.

The system is made worse by what I have called the ‘precarity trap’. If you lose a job, you do not receive benefits for many weeks, during which debts rise, rent arrears grow, illness awaits. If and when you eventually start receiving benefits, taking a short-term job would make no sense as you would soon find yourself once again with no income, waiting to requalify for benefits. This is being made much worse by the cynically misnamed Universal Credit.

In sum, the current system is dysfunctional, unfair, arbitrary and costly. Those who oppose basic income should be required to show what alternative they would introduce that would be as socially just, as freedom enhancing and as oriented to basic security for all. Moving towards a Basic Income would help to build a Good Society fit for the 21st century.


 

Join the Institute of Art and Ideas' philosophy and music festival HowTheLightGetsIn in London in September. For more information and tickets, click here.

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