At the World Economic Forum in January this year, four panelists were invited to talk about universal basic income (UBI): Professor Guy Standing (University of London), co-founder of BIEN and author of several books on UBI, Neelie Kroes, former minister in the Dutch Parliament, former EU commissioner, and current member of several boards, Amitabh Kant, CEO of the National Institution for Transforming India (NITI Aayog), and Professor Michael Sandel (Harvard University), author of “What Money Can’t Buy, the Moral Limits of Markets”.
According to Guy Standing, there has been much evidence gathered through foundational research on the feasibility, affordability and implications of UBI, but this research has been ignored for many years. Due to the realisation of the potential effects of automation, however, interest in UBI has recently increased. Automation is not Standing’s personal motivation though—he advocates for UBI for three main reasons:
It is a means of realising social justice in line with Thomas Paine, Henry George and others, who have claimed that public wealth is created over generations. Therefore, if private inheritance is permitted, we should also establish public inheritance as a social dividend of this public wealth.
It is a means of enhancing republican freedom: freedom from domination by figures of authority using their arbitrary power.
It is a means of providing people with basic security. It is not designed to eradicate poverty per se, but rather to address the issue of insecurity, which underlies the rise of populism we see today. It is known that mental health and mental development is improved by basic security.
Standing: “I wish people would look at the evidence rather than continue with their views. We have done pilots, covering thousands of people and most fundamentally we found that the emancipatory value of a basic income is greater than the money value.
It gives people a sense of control of their time, so that the values of work grow relative to the demands of labour. The values of learning and public participation grow, the values of citizenship are strengthened. We found evidence from UBI experiments showing that the values of altruism and tolerance are enhanced. At the moment, society is suffering from a deprivation of altruism and tolerance.”
When asked to explain the support for UBI from both left- and right-wing politicians, Kroes argues that the flexibility of the concept is a reason why there is an interest from both left- and right-wing political movements: it can either decrease or increase the role of the government, the level of the UBI can vary and there are a number of different ways to fund it.
As Kroes explains, the UBI could replace large parts of the existing welfare system and would require choices to be made in advance regarding which benefits would be cut. This specificity would make it more difficult to find support from politicians across the political spectrum, which is why Kroes suggests starting off with a more modest system that would more easily find political support and can be seen as a starting point.
“The least ideological arguments in favour of a UBI are coming from technical entrepreneurs in Silicon Valley at the moment”, Kroes continues, noting that “they are trying to defend their own future”.
Kant is asked to explain the attractions of a UBI from a governmental perspective. He explains that the huge rural employment guarantee scheme and the public distribution system in India are very inefficient, mostly due to corruption.
Furthermore, India is facing changes in the labour market, where low skill-low pay jobs are decreasingly necessary, while the demand for high skill-high pay jobs is increasing. This shift requires radical restructuring of the educational system to provide the right skills, Kant argues.
There are huge inequalities in India: one third of the population is living below the poverty line. These are the people that should be targeted with a UBI, and 1000 rupees per person per month would be affordable, says Kant. India also has a few specific advantages, he further argues. There is a huge infrastructure of biometric and mobile phone payment systems in the country. At the same time, India recently transformed its ‘black economy’ of almost 1 trillion US dollars (parallel to a 2 trillion US dollar formal economy) into a ‘white economy’. This resulted in a significant increase of government tax income, so there is enough money to potentially fund a UBI, Kant explains.
Kant suggests it would be best to provide people with a UBI in the form of an interest-free loan for a period of three years, ensuring the money is repaid and recycled so it can reach more people. Simultaneously investing in creating jobs on the back of domestic consumption would give this scheme a push.
In response to this, Standing argues that, “in our pilots in India, we found that people improved their nutrition, family health, schooling, schooling performance, and entrepreneurship. The consequence was that they were generating more income and lowering the public service costs, as they were healthier. I would be very wary about turning it into a loan, because a loan rewards the entrepreneurial and therefore would increase the inequality in the villages. Where there was a basic income, it didn’t sort out the potential winners from the losers, it increased community solidarity”.
Professor Sandel is asked to talk about the role of work and the importance of paid work. “We tend to think of work primarily as a source of income, but work is also a source of meaning, an identity. The debate about basic income forces us to debate about the social meaning of work,” he explains.
There are two basic arguments for a UBI that are fundamentally distinct, according to Sandel: the ethical argument, which suggests that one can still choose to work and contribute to society, and the compensatory argument (from Silicon Valley), which sends the message that one is compensated for accepting a world without work and contribution to society is no longer of value.
Standing responds to Sandel’s view: “We need to reconceptualise what we mean by work. I believe the technical revolution is actually creating more work. The only problem is that it is not being remunerated, so it is contributing to growing inequality. The reason why Silicon Valley types are worried is because they think income is going to the owners of the robots and the others are going to be without an income.”
“The affordability question is a very easy one to answer,” Standing replies to a question asked by the chair. “Somehow, with Quantitative Easing [QE], the US government managed to fund Quantitative Easing of 475 trillion dollars. If that money had been used to pay a basic income, every American household could have received 56,000 dollars. That is just one little example. But I strongly believe that we must frame basic income as paid from rentier capitalism and from rentierism. Because at the moment the corruption of capitalism about which I’ve written is primarily because the returns to property and intellectual property and the rentier incomes from natural resources are going to a tiny minority – and we need to be sharing that.”
A Universal Basic Income (UBI) is a periodic cash payment unconditionally delivered to all on an individual basis, without mean-test or work requirement. A Universal Minimum Income (UMI) would be a UBI set at a level to ensure everyone has at least a minimum income sufficient to keep body and soul together. This would engender personal freedom. If we add to this public health & education, and other targeted benefits for the disabled for example, it would be a wonderful situation. What would it take?
The math is simple. If we have to pay out a UBI at X% of average income, then it will cost at least the same X% of GDP. The proportionality is clear.
Population x Average income
= Total income of country (GDP)
Population x UBI of X% of Average income
= X% of total income of country
We must first establish what should be the target level of Minimum Income. A simplistic definition would be to take a percentage of average income. The idea here is that if on average citizens are earning a certain amount, then a percentage of that average could represent the poverty line. Let’s assume we set the poverty line at 60% of the average income, and target a UMI at that level.
In practical terms, the US average family income in 2015 was $92,673. A UBI of 10% would be $9,267 per family, clearly not sufficient to create personal freedom. Similarly in India, per capita income in 2016 was Rs. 93,231. A UBI at 10% would be a meager Rs. 9,323.
It could be argued that, if average income is calculated by simply dividing GDP by total population, growing inequality and robotisation will distort that average by sequestering income in the hands of the very rich, swelling the perceived average income by increasing GDP while the actual income of an average citizen remains much lower. In order to deal with this issue, the Organisation for Economic Co-operation and Development (OECD) defines relative poverty for developed nations as 60% of the median income level. To calculate the median, we first list every person in ascending order of income. We then find the midpoint, and the income associated with it. Finally, we calculate 60% of this income to work out the relative poverty level.
The US median family income in 2015 was $70,697, or 76% of the average income of $92,673. The relative poverty line is 60% of the median income or $42,418. This works out to 45.8% of GDP (60% * 76%). It is still completely utopian to imagine the US could pay out nearly half its GDP as a UBI.
Suppose we use the World Bank definition of extreme poverty, $1.90 per day. By simple multiplication, for the US to provide a UMI at this level would require $57 per person each month. Not quite enough to survive on, but it would still cost the US government $221bn each year (pop of 318.9 million). In the Indian context, the World Bank’s poverty line is Rs. 28.71 (at PPP exchange rate of 15.11). A UMI would pay out Rs. 10,478 per person per year, for a total of Rs. 13,119 billion a year. This is more than 10% of India’s GDP, and is 61% of India’s entire 2017 Union Budget of Rs. 21,470 billion.
The essential proportionality of a UBI as a percentage of per capita income, requiring the same percentage of GDP to finance it, creates the dilemma facing UMI. If we wish to achieve a minimum income level, then targeting seems unavoidable. We may decide to keep goal of universality (everyone receives UBI) while giving up the goal of minimum income (the amount is enough to live on). Even then, it is clear that for any meaningful level of UBI, there needs to be substantive discussion of the financing source. Even a UBI of 1% of per capita income, a small amount for most individuals, would require 1% of GDP to finance, a very significant amount for any government. A UBI of 10% of GDP would likely require an entirely new financing mechanism.
In view of this simple mathematical challenge, the Basic Income movement would be well advised to pay closer attention to the funding mechanism. The success of UBI depends on the practical and political feasibility of the funding mechanism. And if such a mechanism is found, we would still have to explain why universality is preferable to targeting. It is likely that the only successful UBIs will be those where universality is a logical, political or legal necessity. This has been the case with the two most significant examples of UBI, Alaska’s Permanent Fund Dividend and Iran’s UBI in lieu of fuel subsidies.
About the author:Rahul Basu is a member of the Goenchi Mati Movement, which asks for minerals to be treated as a shared inheritance. Mining is the sale of the family gold. For fair mining, there must be zero loss mining, saving all mineral money in a permanent fund, and distribute the real income only as Citizens’ Dividend.
Photo: Crowd of over 950 people at the West Midlands Citizens Assembly (credit: Ravi Subramanian).
Mayoral candidates in the West Midlands have been challenged to take a position on running a pilot study of basic income in the region.
On Wednesday, March 29, the two mayoral candidate frontrunners, Andy Street (Conservative) and Sion Simon (Labour), were asked at a Citizens UK Assembly of 1,000 people from across the region about a range of proposals to make families better off. A basic income pilot was one of these ideas.
The candidates and the audience heard testimony from Shantella Pinnock, a nursery manager who said that basic income would have helped her team to feed their families while they were in dispute over unpaid wages. Sara Monaghan, caseworker for the UNISON West Midlands Community branch, said that this was not an isolated incident but in fact something she has dealt with repeatedly.
Pinnock and Monaghan give testimony in favour of a Basic Income pilot in the West Midlands region. (Photo credit: Becca Kirkpatrick)
Simon agreed to all of the proposals put to him by Citizens UK, including the basic income pilot, which also features in his manifesto. Street did not make a commitment to the basic income pilot proposal, but did say, “I’m fascinated, interested in this, I want keep my mind open to it. Let’s see the research from elsewhere and then let’s work towards it.”
A pilot of basic income has already made it into the West Midlands People’s Plan, a local manifesto for the future mayor, which was developed from a series of listening workshops last summer. UNISON West Midlands region also included it in their 20-point manifesto for the mayor.
James Burn, the Green Party candidate, has made clear his support for a basic income pilot in the local media. Basic income has been a Green Party policy for over 30 years.
Elsewhere in the UK, the councils of Fife and Glasgow are currently exploring the feasibility of running basic income pilots.
Citizens UK is a non-partisan civil society alliance of faith, education, trade unions and community groups.
Two pieces in the series are “Coming off the fence on UBI?” by Ruth Lister (chair of the Compass Management Committee and Emeritus Professor at Loughborough University) and, in reply to Lister’s contribution, “Basic Income and Institutional Transformation” by Louise Haagh (co-chair of the Basic Income Earth Network and Reader at the University of York).
Lister expresses much sympathy toward UBI, in part due to its challenge to the “contemporary fetishisation of paid work.” At the same time, however, she questions the total lack of conditionality on benefits — on grounds of both ethics (is it fair to subsidize the “right to be lazy”?) and feasibility (would the idea garner enough political support?) — and notes a “participation income,” as defended by the late Tony Atkinson, as a potential compromise. In the end, though, she states that “for all my ambivalence, I am coming round to the idea of a UBI as a means of ensuring everyone a modicum of basic security in an increasingly insecure world.”
Haagh, writing in part in response to Lister, argues for UBI as a way to fundamentally reconceptualize the relationship between citizens and the state. She emphasizes that removing conditionalities on a basic level of economic support does not “entail a general separation of income from work” (since monetary remuneration for work would continue to exist). Neither, in her view, should a basic income be seen as a “challenge to the work ethic.” Instead, according to Haagh, the removal of conditionalities should be seen as a way to enable individuals to think and plan for the long term. Conditional income support, as she puts it, aims to “motivate people in the short-term, with a heavy dose of stick.” For example, beneficiaries risk losing their most basic support if they do not take the first job offered — regardless of the job. The punitive nature of conditional benefits encourages short-term thinking aimed at mere self-preservation. In contrast, an unconditional basic income provides a floor on which individuals can engage in long-term strategizing.
On the past Thursday, 15th of March 2017, basic income was discussed for the first time on a prime-time television program in Portugal, through the recently created channel RTP3.
The program, which ran for 1hr 30 min, was framed as a group interview and debate, moderated by journalist Carlos Daniel. The program included some related reporting and excerpts from other interviews. Four participants made up the panel, and the main theme of the discussion was automation and its societal consequences.
Manuela Veloso, a robotics researcher in the United States and head the Machine Learning department of the Carnegie Mellon University, was one of the panelists. Asked if automation will be good or bad, she first pointed out its inevitability. Machines are capable of capturing much more data than human minds cannot possibly manage to cope with in order to make decisions: people will have to rely on machines for support in decision making. She also argued that although machines will naturally replace some human work, other human tasks will be created with the increasing use of automation in industry and services.
Another participant was Carvalho da Silva, a lifetime syndicalist and researcher in sociology. Carvalho da Silva pointed out certain caveats when facing what many are calling a “technological revolution”. He said that we should not be deterministic about it (casting doubts about its impact on jobs), since ultimately decisions are political. He underlined that the entire situation must be contextualized and inserted into a crisis framework, where many more jobs have been lost than those estimated to be lost to automation. Like Manuela, he also highlighted the job creation potential of these new technologies.
António Moniz, a sociologist specializing in work and enterprises, and a researcher on the impact of automation in society was also invited. António pointed out that machines are demanding higher professional standards from people tasked to handle them. He relativized the question of job destruction due to automation, believing that there is no direct relationship between introduction of machinery and loss of jobs (although the numbers shown during the program clearly depicted elimination of jobs in large swathes due to automation).
Finally, João Paulo Oliveira, an executive manager of a large paper production company in Portugal, was also present. He alerted the audience to the fact that the adoption of automation is extremely fast these days, so that all politicians must be made aware of its effects on society. According to him, an important aspect of this transformation is education, which must be more in tune with demand. According to him, the marketplace will determine what the “jobs of the future” will be, and the education system must follow suit.
The program included short pieces and interviews, inserted between presentations by the panel. One of those segments was with Gabriele Bischoff, a long time syndicalist and president of the Workers’ Group of the European Economic and Social Committee. Shocked to learn that a company in Belgium already uses chip implants in its employees, she highlighted the importance of respecting workers’ fundamental rights and the need to provide them – especially young workers – with good quality, stable jobs, which can give them, dignified life standards.
Another segment featured Guy Standing, a lifetime researcher of economic and social issues; a professor and activist defending the basic income concept. He summarized the basic income principle and, when questioned as to how the Portuguese people can finance it, he clearly stated that “It’s a matter of fiscal priorities”. According to him, if, for example, such regressive practices as the systematic saving of banks in the past decade were eliminated and the money used for the benefit of all citizens, a basic income could have been already administered in Portugal. Standing also predicted that within the next five years some country will implement the basic income concept, which will lead other countries to gradually follow suit.
Guy Standing. Credit to: RTP3
During the program, simple graphics were shown, both for briefly explaining what basic income is and to report on the estimated number of jobs likely to be lost (and gained) to automation in the next 15 years. Notably, the next Basic Income Earth Network (BIEN) Congress, happening in Lisbon on September this year, was also cited.
The conversation about the future of work naturally led into a debate about basic income. Each of the participants was directly asked what they thought about the idea and its anticipated consequences. Maria Veloso was quick to support it, although questioning its feasibility. She regards the idea as a freedom gaining instrument, in an age of relentless automation and ever-expanding learning opportunities. She also referred to its role as a secure financial platform that allows people to engage in activities not bound by economic viability, in such a way that work is aligned with what each person wants to do in life. Clearly against was Carvalho da Silva, despite his past as a syndicalist. According to him, basic income is against the work ethic, and he assumes that people will lose their motivation to work under that regime, hence also losing a great deal of their meaning in life. He also thinks that basic income is the perfect instrument for the far right political branch to push in neo-liberal agendas slashing the welfare state. On the other hand, António Moniz was more cautious, supporting the basic income idea in general but warning that its effects on the marketplace and especially on companies must be well understood. João Paulo Oliveira was not convinced by the basic income concept or its rationale, as presented by Guy Standing or his fellow panelists. According to him, basic income will just kill competitiveness as more and more people move away from work.
