Maitreesh Ghatak, “Is India Ready For A Universal Basic Income Scheme?”

Maitreesh Ghatak, “Is India Ready For A Universal Basic Income Scheme?”

Maitreesh Ghatak is a professor of economics at the London School of Economics, and regularly writes about economic and political issues with a specific focus on India. He begins his search for an answer to the question posed in the title of this piece by noting the multitude of poverty alleviation programs already active in India and their various successes and drawbacks. One possible solution arising from a broad societal debate on these issues is a Universal Basic Income (UBI). A UBI, thanks to its unconditional nature, would address two of the biggest problems with conventional programs – exclusion error (people not receiving a benefit who should) and inclusion error (people receiving a benefit who should not).

Ghatak continues by discussing some possible catches to the UBI approach. A universal program, such as UBI, would most likely be expensive and require spending cuts or increased taxes so as not to add to the fiscal burden. Ghatak notes, however, that increasing the tax base in India is a necessary fiscal reform for development, regardless of whether UBI is adopted. Furthermore, he notes, recent experience with implementing cash transfers in several states has been sobering, but these are logistical issues, in Ghatak’s view, rather than fundamental problems with cash transfers. Finally, Ghatak mentions the common worry that the poor might not spend such money wisely, and directs the reader to evidence that such concern is unfounded. Ultimately, he sees none of these potential issues as insurmountable, offering various counterarguments.

The article concludes by mentioning a number of standard argumentative pitfalls in discussing UBI, and offers the following advice to those evaluating its desirability:

  1. All policies have their pros and cons, so it is important to focus on their relative costs and benefits.
  2. One size does not fit all. We should be open to the possibility that different policies could work well in different contexts.
  3. There is no magic pill that will cure all problems. As Ghatak aptly puts it: “To give an analogy, giving certain nutritional supplements may help a person who is ill to gain some strength, but it will not cure any disease, nor will it make the person an athlete.“

Maitreesh Ghatak, “Is India Ready For A Universal Basic Income Scheme?” www.ndtv.com, August 26, 2016.

Basic income calculator shows policy’s feasibility

Basic income calculator shows policy’s feasibility

One of the biggest objections to the universal basic income, especially from libertarians and conservatives, is that it is far too costly to implement. Among OECD countries, however, this is largely untrue.

The Economist recently unveiled a Basic Income Calculator that can illustrate how much each person could receive under a UBI by scrapping existing non-health related welfare. The United States would be able to achieve a $6,300 basic income.

To reach a $10,000 basic income, the U.S. government would need to use an additional seven percent of GDP. This would still keep the United States at welfare spending below many other OECD countries as a percentage of GDP.

Seven countries already spend more than $10,000 per person on non-health welfare and could decrease their spending under a UBI.

To see the full Economist basic income calculator, click here.
Data Team, “Daily chart: Universal basic income in the OECD”, The Economist, June 3, 2016.

INTERNATIONAL: Christopher Pissarides, a Nobel Laureate, argues for UBI at the World Economic Forum at Davos

INTERNATIONAL: Christopher Pissarides, a Nobel Laureate, argues for UBI at the World Economic Forum at Davos

Sir Christopher Pissarides, a Nobel prize-winning economist and the Regius professor at London School of Economics, expressed his support for a universal basic income, at one of the debate sessions of the World Economic Forum at Davos, on 20th January 2016.

Professor Pissarides said:

The pie is growing bigger, there is no guarantee that everyone will benefit if we leave the market alone. In fact, if anything, we think that not everyone will benefit if we leave the market alone. So we need to develop a new system of redistributions, new policies that will redistribute inevitably from those that the market would have rewarded in favour of those that the market would have left behind. Now, having a universal minimum income is one of those ways, in fact, it is one I am very much in favour of, as long as we know how to apply it without taking away incentive to work at the lower end of the market.

[Transcribed by Toru Yamamori from the video. Any inaccuracy belongs to him.]

 

The session ‘A World Without Work’ was held in partnership with NHK, the Japanese national broadcasting agency. In addition to Pissarides, participants included:

  • Erik Brynjolfsson, Director, MIT Initiative on the Digital Economy, MIT – Sloan School of Management, USA
  • Yoshiaki Fujimori, President and Chief Executive Officer, LIXIL Group, Japan
  • Dileep George, Co-Founder and Chief Technology Officer, Vicarious, USA
  • Troels Lund Poulsen, Minister for Business and Growth of Denmark

The session was moderated by Hiroko Kuniya, an anchor for NHK and other speakers also discussed basic income. You can watch the highlights form the panel here:

The full session can be viewed online:

“World Economic Forum Annual Meeting: A World Without Work?” World Economic Forum. 20 January 2016.

“Davos 2016 – A World Without Work?” YouTube, 20 January 2016.