Should the left be seduced by the concept of Universal Basic Income (UBI) that is so widely touted as the future. The truth at the moment of course is that although a lot of the propaganda highlights, India, Finland, Holland and Canada. There has never been a trial of what UBI actually purports to be.
All of the trials are in reality replacing Welfare and Disability payments with a single payment. Is that not what Universal Credit in the UK is supposed to be?
It seems to be the new silver bullet that will tame capitalism, protect us from Robots and bring forth a land of milk and honey, by both the capitalist class, Social Democrats (I use the modern term for Social Democrats, Labour, SNP, Greens) and now some of the Left.
Most of the proponent’s state that UBI is required because of automation and that most jobs will in the future be short term low hour contracts, precarious work will increase and so people will need a guaranteed minimum income.
Over and over the right-wing thinkers of UBI state it will provide opportunities for people to either explore entrepreneurship because they wouldn’t have to worry about their basic needs being covered, at least for a short period while they develop their business concept. Thereby perpetuating the Free Market.
So where does the modern UBI come from? It is not a new concept and you can go back 100’s of years and find it as a concept. It has had many proponents from neo-liberals, conservatives through to left wing thinkers;
Economist F. A. Hayek1, was a leading critic of socialism and big government. Yet in a 1944 book, The Road to Serfdom, he endorsed the concept of providing “the security of a minimum income.”
“There can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody .… This is no privilege but a legitimate object of desire … that can be provided for all outside of and supplementary to the market system.
Peter Drucker2, a pioneer in the study of business and management, proposed a “predictable income plan” in The New Society, published in 1949 and reissued in 1962 and 1993. Predictable income would “banish the uncertainty, the dread of the unknown and the deep feelings of insecurity under which the worker today lives.”
He rejected the idea of trying to guarantee jobs or wages. Any job or wage guarantee “would not be worth the paper on which it is written. It would give the worker the illusion of security which is bound to be cruelly disappointed during economic downturns.”
Conservative economist Milton Friedman3 advocated a “negative income tax,” cash payments to the poor. In Capitalism and Freedom (1962), he wrote:
“The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash. It is general and could be substituted for the host of special measures now in effect. It makes explicit the cost borne by society. It operates outside the market.”
“We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions.”
Martin Luther King Jr4, called for a guaranteed income in his last book, Where Do We Go From Here: Chaos or Community? (1968). This is much more than a civil rights program, he noted, because more than two-thirds of the beneficiaries would be white.
“The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income. … We are likely to find that the problems of housing and education, instead of preceding the elimination of poverty, will themselves be affected if poverty is first abolished.
There is nothing except short-sightedness to prevent us from guaranteeing an annual minimum – and liveable – income for every American family. The time has come for us to civilize ourselves by the total, direct and immediate abolition of poverty.”
My main concern is that some of those who advocate UBI are more than a wee bit suspect on their ideology. Most on the right of the list actually see it as an end to our Social Security system for the protection of those in most need. They all focus on the poorest or the unemployed and not all citizens, as UBI is supposed to.
So I had a look at what information I could find on all the so-called trials of UBI.
Finland’s experimental scheme to provide its citizens with a basic income, regardless of employment.
The two-year pilot scheme will provide 2,000 unemployed Finnish citizens, aged between 25 and 58, with a monthly basic income of €560 that will replace their other social benefits. This is only €36 more per month. So to remove the administration of unemployment benefit is valued at €9 per week.
These citizens will continue to receive the basic income even if they find work.
This is in no way UBI, this only focusing on 2,000 unemployed people. Some of the advocates of UBI state that UBI will “encourage” people into employment. UBI is supposed to be a guaranteed income for everyone. All this is actually doing is replacing one form of Social Security with another. By what I have read it is a way of “encouraging” people to find employment and no more.
In Ontario it is not UBI they want to trial, it is just a Basic Income for those on Welfare and for the Disabled5.
What the pilot should and should not test
The pilot should test:
- A Basic Income replacing Ontario Works and ODSP, paid to individuals.
- A negative income tax (NIT), or refundable tax credit, that tops up all recipients to 75 percent of the Low-Income Measure, (LIM) regardless of their status in the labour market. For a single individual on Ontario Works, for example, this would correspond to having income support move from roughly 45 percent to 75 percent of the LIM, and to receive a minimum of approximately $1320 per month, non-taxable, with an opportunity to keep partial additional income earned from participation in the labour market.
- Individuals with disabilities receiving an additional monthly sum of at least $500.
- A Basic Income that would not be associated with rules limiting earned income and work participation, such as those associated with Ontario Works and ODSP.
- In a Randomized Control Trial (RCT) held in a major urban neighbourhood/community, different treatment arms should test for various levels of Basic Income (starting at 75 percent of the LIM) and different tax rates on income earned on top of the Basic Income. Testing different parameters should help identify the best combinations to reduce poverty, while not discouraging people from improving their incomes through labour force participation.
- The pilot should also include saturation sites in which the community-level impacts of a Basic Income could be investigated. Ideally, one saturation site would be located in southern Ontario, one in northern Ontario, and one would be chosen and planned in close collaboration with First Nations communities.
The pilot should not test:
- A “Big Bang” approach, in which all social supports, including those not specifically related to poverty, would be replaced with a single monthly cheque.
- A universal demo grant, under which all adult Ontarians, living in poverty or otherwise, would receive a fixed amount, taxed according to a general income tax schedule.”
Once again this is a system designed to in effect create a single payment for Welfare benefits. Not UBI
In the Utrecht experiment, due to start on 1 January 2017, one group of benefit recipients will remain on the old workfare system, under which people who live alone get €972.70 and couples €1,389.57. Another group will receive the same benefits unconditionally, without sanctions or obligations.
The third group will also receive the same benefits unconditionally, plus an extra monthly bonus of €125 if they choose to do volunteering work. A fourth group will be obliged to do volunteering work. If they fail to do so, they will lose their €125 bonus. A fifth group will receive unconditional benefits without the bonus, while being allowed earn additional income from other jobs.
Similar experiments will be conducted in other Dutch cities such as Wageningen, Tilburg, Groningen and Nijmegen, most of them with the aim of finding ways to get rid of the sanctions and the obligation to apply for jobs. This is the only good thing I have found so far during this wee bit of research, removing draconian sanctions is a must for all benefits.
Yet again this is just for the unemployed, not UBI.
In India, public debate on cash benefits has been contentious. On one side are advocates of food subsidies, wishing to extend the Public Distribution System to 68% of the population, as planned in the National Food Security Bill, now before parliament. Critics believe it will worsen corruption, cost a vast amount, provide low-quality food and be unsustainable. On the other side, advocates of cash transfers have been accused of wanting to dismantle public services and cut social spending. The real problem is that existing policies have left over 350 million people, about 30% of the population, mired in poverty, even after two decades of high economic growth.
In that context, in 2011 we launched two pilots to test the impact of basic income grants, funded by UNICEF, with SEWA as coordinator. Results were presented at a conference in Delhi on May 30-31 (2013), attended by the Deputy Chair of the Planning Commission and the Minister for Rural Development, who is in charge of cash transfer policies. A private presentation was later made to Sonia Gandhi, at her request.
In eight villages in Madhya Pradesh, every man, woman, and child was provided with a monthly payment of, initially, 200 rupees for each adult and 100 rupees for each child paid to the mother or guardian; these were later raised to 300 and 150 respectively. We also operated a similar scheme in a tribal village, where for 12 months every adult was paid 300 rupees a month, every child 150. Another tribal village was used as a comparison6.
Yet again not UBI, but a basic income aimed at the poorest. India of course is a totally different construct to any European country. This trial certainly seemed to produce benefits for the poorest.
All I have found during this mini search for information are systems and trials that are there to;
- Target the unemployed and Disabled only
- Set a level at or marginally above current benefit rates
- Remove one set of Social Security payments and replace them with a single payment. Again, I am alarmed at how close this is to the concept of Universal Credit
- Encourage the unemployed into accepting part time and precarious work contracts
- Remove bureaucracy and the state from the Welfare system
- To prepare the workforce, particularly low skilled into accepting that full time contracts will inevitably become obsolete, due to continued Globalisation and automation.
The good bits;
- No sacntions regime
- Those receiving this can work and not be penalised by losing benefits
- Not means tested
What is UBI supposed to be?7
A universal basic income is an income paid to individuals, as a right of legal residence, without means testing or requirements to work. The payment is non taxable and should be sufficient to cover basic needs. Everyone who qualifies for the payment will receive it from birth till death. Having a basic income in place will provide a secure floor for people to build on rather than a safety net with holes so big many fall through.
Sounds good on the surface. They then go on to quote trials that are in no way what they say UBI is supposed to be.
As to costs and how the tax system would cope I have only found the following https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em17-14.pdf
A summary table
For all three schemes, National Insurance Contributions are collected at 12% on all earned income.
Relationship of Citizen’s Income to means-tested benefits
Citizen’s Income replaces means-tested benefits except for Housing Benefit and Council Tax Benefit
Means-tested bene-fits are left in place and the Citizen’s Income is taken into account when means-tested benefits are calculated
Means-tested bene-fits are left in place and the Citizen’s Income is taken into account when means-tested benefits are calculated
|Working age adult CI amount||£71||£71||£50|
|Young adult CI amount||£71||£71||£40|
|Income Tax, basic rate||20%||30%||25%|
|Income Tax, higher rate||40%||50%||45%|
|Income Tax, top rate
|Proportion of households in the lowest disposable income decile experiencing losses of over 10%||21.12%||0.04%||0.08%|
|Proportion of all households experiencing losses of over 10%||9.28%||5.38%||1.09%|
|Cost of scheme 17 *||£20bn||£24bn||£24bn|
These figures are based on 2013. In order for there to be a negligible decrease in the income of the lowest 10%, some means tested benefits need to remain in place. The personal Tax Allowance is also abolished. This is set at 12,000pa this year. So at 20% tax a worker on full time minimum wage, will lose £46.15/week, at 25% £57.69/week and at 30% £69.23/week in tax.
This appears to be a very ill thought out proposal and indeed there may be more out there, but I have not the time or inclination to look for others at the moment.
What this UBI really is in fact, is an acceptance that Capitalism, the Free Market and Globalisation are the only offers on the table. It accepts that Trans-national corporations will increase control and will continue unimpeded into the future. This is why right wing thinkers are so keen on UBI or a form of Basic Income.
- It gives them a pool of workers who will be on tap, through precarious and part time contracts. Zero Hours will eventually become the norm.
- It provides people with basic means to buy the products they produce and sell.
- It further destroys Union organisation within workplaces.
- Destroys all collective bargaining.
- Reduces wages and terms and conditions
- Destroys all state Social Security
UBI is no more than just another pseudo liberal trick to tame the capitalist system, another buffer between the haves and have nots. Why anyone on the Left supports this is at the moment, is a mystery to me.
This is a right-wing con that has been latched onto by the Social Democrats as the new way that Capitalism can work for us all. This falls right into the thinking and ideology of our so called left parties in Scotland and the UK.
There is only one way to achieve a real UBI and I will always revert to this one, “From each according to their abilities, to each according to their needs”
Of course, for that to work, the majority, not the minority need to control the means of production, finance and most of all democracy and political control.
Only Socialism is designed to provide a real workable UBI.
UBI relies on a fair and truly re-distributive wealth system.
UBI relies on the majority controlling all manufacturing, industry, energy, banking and finance. Not the top 10%.
UBI can only be provided if the majority controls our democracy, from the shop floor and our communities.
UBI is in fact a Socialist construct, “From each according to their abilities, to each according to their needs” and “All Power to the Soviets”
I am open to persuasion on this and anyone who can put forward a real version of UBI that actually works and is not just a way to destroy Social Security, reduce wages and terms and conditions, please educate and convince me.
Peter Drucker; https://en.wikipedia.org/wiki/Peter_Drucker#Early_influences
Milton Friedman; https://en.wikipedia.org/wiki/Milton_Friedman
Martin Luther King Jr; https://en.wikipedia.org/wiki/Martin_Luther_King_Jr.
Finding a Better Way: A Basic Income Pilot Project for Ontario https://www.ontario.ca/page/finding-better-way-basic-income-pilot-project-ontario
India’s Experiment in Basic Income Grants http://isa-global-dialogue.net/indias-great-experiment-the-transformative-potential-of-basic-income-grants/
What is Basic Income http://www.basicincome.org.uk/what_is_basic_income