18 July 2016, The Tablet

The best way to help the poor is to give everyone income support - regardless of their circumstances


An idea that has been around for centuries and has often attracted derision is inching closer towards acceptance

The Universal Basic Income (UBI) is an exciting idea whose time has come. The growing currency of the idea was witnessed in June when the Swiss held a referendum on creating a UBI of £20,000 a year, regardless of work or wealth. The call was defeated but the seed had been planted that an idea that has often been touted as crazy was close to having its day in the spotlight.

The Finnish government is experimenting with the idea, making tax free monthly payments of £300 to a random sample of 10,000 adults of working age, as part of a two year experiment.

In Britain, the idea has recently received the backing of the GMB and Unite unions, as well as coming under consideration as part of Labour's new economic strategy.

The UBI is a radical idea that has drawn supporters on the left like John Kenneth Galbraith and Milton Friedman on the right. The idea appealed on the left on the grounds of redistribution of wealth for the good of all. The right is attracted by the lure  of cutting the power of the coercive state, reducing welfare and promoting individual freedom.

The driving forces for the idea now comes with the increasing levels of automation going on worldwide and the need to find solutions to welfare provision.

The idea resonates with the outlook in the 1970s, when it was predicted that in the future there would be shorter working weeks, more leisure time and earlier retirement ages.

Then came Margaret Thatcher with the neo-liberal model, which promptly saw the opposite indices come into play, with longer working weeks, less pay and an ever more distant retirement age.

Ironically, it has been some of the features of neo-liberalism that have helped accelerate the demand for the UBI today.

The neo-liberal model has led to a very polarised society, with fewer and fewer people coming to hold most of the wealth. The wealthy don’t spend money in the same way that the poor do, they often store it away or place it offshore - so the constant recycling of money, which keeps an economy moving, grinds to a halt.

Governments married to the neo-liberal model have attempted to stimulate economies slowed by the mothballing of money in savings with an explosion in credit, but this has proved to have a disastrous effect on the poor. In contrast to this credit boom born during the Thatcher years, universal basic income would place money in the hands of the poor rather than force them to spend any spare income furnishing debt - and ultimately lining the pockets of the rich (who once again take that money out of the economy rather than recycling it). Demand in the economy falters once more until more debt is created. And on it goes.

This problem will increase in a world where there is a growing population but fewer jobs due to automation. In the future, many ask where will the money generate from to create that demand to keep the wheels of market capitalism turning?

In the UK, the recognition of the crisis in capitalism has seen the tentative efforts to raise the minimum wage to a living level and extend personal tax allowances – taking many people out of tax.

Many questions remain of course, such as what would be the motivation for people to work if they were receiving UBI. The level of course is the subject of fierce debate betweeen both sides of the political spectrum but it likely to start low, so many would want to work anyway.

On this point there are concerns from unions that UBI could be set too low, thereby cutting welfare, whilst not providing adequate compensation via payment.

So far, the experiments in universal basic income in Germany, in Utrecht, in the Netherlands. and in Finland have been small scale but early indications have suggested that people receiving the income have shown little desire to stop working and contributing to an economy.

Funding for the UBI is likely in the main to come from general taxation, with the sums no doubt taking some balancing. A working paper created by Compass, the left-wing think tank, suggests that the majority of the money can come from abolishing the income tax personal allowance and some minor tweaking of the sliding scale of contributions. 

In Switzerland, a referendum last month on the implementation of universal basic income was well beaten. But the major sticking point was more a question of immigration: politicians feared that the scheme would create an explosion in people moving to the country.

The Swiss may have rejected the idea this time but the referendum seems only the latest stage in the advance of an idea which could lead to a huge emancipation of society in terms of personal freedom and quality of life. 

 




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Comment by: Mark godswin
Posted: 07/09/2016 04:48:58
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Comment by: Joseph
Posted: 09/08/2016 19:30:49
Very good idea. Has potential to unite left and right. A main problem comes from warped connection between work and reward - and could come from certain interpretations of 1 Thess. Perhaps we also need a theological re examination - what does work mean when automation and globalisation takes meaningful jobs away?
Comment by: Mike
Posted: 29/07/2016 15:02:28
A great idea but needs careful working out. There are no doubt other ways of equalising society but we have to get rid of the dominance of the neo-liberals in all rich country Governments and Universitiesm the IMF and the World Bank.
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