Universal Basic Income – A cure for poverty?
If you are unfamiliar with this concept, Universal Basic Income (UBI) is a relatively new economic idea that advocates paying every adult (perhaps everyone, from cradle to grave) within a country a basic income from state coffers.
The idea has been developed, giving rise to different variations, but they all seem to agree on the following criteria:
· It is paid periodically (typically every month)
· It is a cash payment (ie it can be spent on whatever the recipient decides)
· It is paid to an individual (ie not a household)
· It is paid to everyone without means testing
· It is paid with no strings attached (ie the recipient is under no pressure to work or seek work)
The idea is that if the UBI is set at the poverty line – around $1000 a month in the USA, for example – then poverty will eventually be all but eliminated.
It’s a fascinating idea, and as automation has an increasingly detrimental affect on jobs, it could be a necessity in the coming years. It is certainly a progressive concept and hugely ambitious. It is supported by people such as Mark Zuckerberg, Elon Musk, Stephen Hawkins and Bernie Sanders, but reeks of socialism – perhaps even communism – and as such is viewed with much scepticism by many of those on the right.
At the moment, Finland is attempting a pilot study to try and gauge the effects of the scheme, but oddly, the Finnish government is centre-right and austerity focussed. It appears that they want to find out if UBI will ultimately incentivise people to take up paid work. That sounds intuitively nonsensical, but the thinking is that some people avoid work because they feel that they may be worse off than being on welfare, or fear the difficulty of getting back on welfare if the work fails. If these worries are removed, are people more likely to work?
Another advantage of UBI is that it could, in effect, remove welfare systems, which are hugely bureaucratic and expensive to run. A simple, streamlined system of universal payments would cost a fraction to administer.
Quite how UBI would be funded is a source of some controversy. Clearly, it would be hugely expensive, and this would have to be funded somehow, and it seems that the simplest way to do this would be to make the super-rich foot the bill. This, of course, is going to upset much of the right. The gap between rich and poor is increasing, and it is happening at a time where we can all see it occurring. It is happening in plain sight, shamelessly, and it is difficult to see a scenario where Western governments will redistribute wealth in this manner.
Something to consider in all this is that it seems likely that the vast majority of this UBI will be spent by the recipients of it. Imagine an economy where everyone gets (for example) $12000 more spending power, every year. This is bound to have an extremely positive knock-on effect, isn’t it?
The layers to this idea are many. Will it make for a happier planet? Will people spend less time in jobs that they hate? Will they be less stressed and by definition, happier? Will it make people more materialistic, or less? If all basic economic necessities are covered, will people re-evaluate what is important in their lives? Or will UBI make people lazy and complacent?
What do you think?
Further reading:
http://basicincome.org/basic-income/
https://www.ft.com/content/3b7938e6-c569-11e7-b30e-a7c1c7c13aab
https://www.forbes.com/sites/adigaskell/2018/03/05/does-a-universal-basic-income-discourage-work/
Good viewing here.
This is also an issue here. As of May, a minimum wage is being introduced for everyone other than agricultural and domestic workers (don't ask). Having been an employer, at various times in my career, I know that this is going to have a serious knock-on effect. Not to mention all the hoops one has to go through to hire and fire, here. That's another debate.
I have mixed feelings about this - which in South Africa, is called the Basic Income Grant. It's been bandied about for years. Not implemented, though. Already we have a huge number of folk on social grants: child support, disability and old age: 17,5 million in October 2017 with around 14,5 registered taxpayers. Do the maths. Last December our erstwhile president announced free higher for first year students and TVET. With effect from January 2018. And then people wonder why the VAT rate has just been put up by 1%. I could go on....
Returning to social grants: research has shown (SALDRU at UCT and the HSRC) that these grants have made an impact on poverty levels, and in the rural areas where we still see much migration of men, the women survive on them and support the children and families.
As a taxpayer with my own challenges, but with a social conscience, I find myself really conflicted about all of this. I understand the rationale, but when the tax base is so small, the government finds other ways to increas revenue, so it's no wonder that there is the real potential for a tax rebellion here. Oh, and that excludes the plundering that took place under Jacob Zuma, with the liberal assistance of his friends, the Gupta family.
PS I wasn't going to be here today, but I couldn't resist after I saw this post last evening. Now, I am going to turn into The Cook @ The Sandbag House!
I am delighted that I provoked you into a response! I have to say that I feel a whole lot better about being on here now. I am playing with fire on two or three blogs - big reps abounding! - but I am really enjoying it. I may well get burned, but it's a risk I have to take. I was stagnating here.
Yes, this whole thing, as lovely as it sounds - is fraught with problems. The cost is the main one. I did some "back of the fag packet" maths last night and I reckon it would cost about €40bn to give all adults in Ireland a €10k UBI, and it really depends on how you view that amount. On one hand, a footballer (Neymar) signed for a French football club last year, and the transfer fee and subsequent wages totals about €500m, or 1/80 of what it would cost to implement UBI in Ireland.
But of course, money doesn't work like that. Another (and far more salient) way of looking at it is that the annual budget to run Ireland is about €65bn. How on earth would they find an additional €40bn (actually quite a bit less if you remove pensions and welfare) to fund this?
It can only come from the rich, and I think that they might have a thing or two to say about that.
It would be a huge leap to get here.
SAs problems are many, I'm sure, and I am certain that any given country would have similar (if distinctly different) issues. I fear this is little more than a nice idea.
Let the governments experiment on it.Any experiments are possible in countries such as yours(Aren't you from Ireland?) as the population is less..It is impossible to enact it in countries like our's.
History has witnessed a lot of economic models.Capitalism,Communism...etc being few ..I'm of the opinion that governments cannot provide jobs to all that are eligible.UBI can be an alternative for that.But it will have its effects reflected in our society..Obviously,people will be non-productive and lazy..But it has another aspect..People can be more productive too!
I had read that,The intellectual Renaissance happened in Europe during mid-eras was due to the increased prosperity in terms of economy and all.
You say obviously people will be non-productive and lazy, and I understand why you might think that, but studies so far seem to indicate that this won't be typical. People may do voluntary work, or may return to education. There are a lot of potential benefits.
I am not sure if Ireland will try it, but yes, the population here is relatively small, and it would be more workable.
A world where everyone has enough money to avoid poverty, and can spend time bettering themselves, rather than spending half their lives doing repetitive jobs that they hate? Sounds pretty good to me!
I agree..When people get more time in their hand they are bound to think and act creatively..Crime rates can be reduced as the major source of them is poverty.(Im not generalising..In Somalia poverty is a reason,But in USA we cannot relate poverty and crime!)
Oh, we can Sathya:
https://vittana.org/26-poverty-and-crime-statistics