debating universal basic income

Universal Basic Income (UBI) seems like an idea whose time has come, given the widespread fear of workers that their jobs are threatened by automation (robots). Nonetheless, there are many who oppose the UBI, often on grounds that giving people “money for nothing” will discourage work. I never found this argument to be convincing. Means-tested (targeted) benefits almost always require an able-bodied person to be unemployed to receive benefits. In short, government pays citizens for not working. The unemployed who find jobs lose their benefits. A UBI, in contrast, does not require recipients to be unemployed, so does not discourage work.

Oxford economist Ian Goldin published an op-ed column in last Monday’s Financial Times with a typical attack on universal basic income. Here are the main points he makes.

First, UBI is financially irresponsible. Universal means everyone gets it … [so] much higher taxes or reallocation of resources from other areas such as health and education would be needed.

Second, UBI will lead to higher inequality and poverty … by reallocating welfare payments from targeted transfers … to a generalised transfer to everyone ….

Third, UBI will … reward… people for staying at home …. [This leads to][c]rime, drugs, broken families and other socially destructive outcomes ….

Fourth, UBI undermines incentives to participate. …. No decent society should tolerate dire poverty or starvation. But … safety nets should be a lifeline towards meaningful work and participation in society, not a guarantee of a lifetime of dependence.

Fifth, UBI offers a panacea to corporate and political leaders, postponing a discussion about the future of jobs. ….

Ian Goldin, “Five reasons why universal basic income is a bad idea“, Financial Times, 12 February 2017 (gated paywall).

Mr Goldin (born 1955) is Professor of Globalisation and Development at the University of Oxford. London economist Guy Standing today published a letter to the editor that is very critical of the column Mr Goldin. It should be clear to readers of TdJ which side of the debate I support.

Sir, Ian Goldin (Opinion, February 12) gives five reasons for dismissing basic income. In my recent book summarising 30 years of research, all five are considered, with 12 others.

First, he says universal basic income (BI) is unaffordable. Most [advocates] believe the BI should be clawed back from the rich in tax. This is administratively easier, more equitable and efficient than targeting by means-testing. The latter has high exclusion and inclusion errors, low take-up and poverty traps, inducing bureaucrats to use intrusive behaviour tests. ….

Second, he claims it would “lead to higher inequality and poverty” …. As for the claim, all pilots/schemes have shown reduced poverty and inequality. …. One cannot presume a BI would raise poverty or inequality.

Third, Mr Goldin claims a BI would “undermine social cohesion” by “rewarding people for staying at home”. All polls show that more than 90 per cent would continue to work if they had a BI. Unlike means-tested benefits, a BI would overcome the poverty trap, whereby many face marginal tax rates of 80 per cent in taking low-wage jobs.

Mr Goldin’s fourth point is similar to the third, claiming a BI “undermines incentives to participate”. His fifth point is that BI “offers a panacea to corporations and political leaders, postponing a discussion about the future of jobs”. Why? Most of us want to improve our lives.

A BI as anchor of a new distribution system is justifiable for six reasons. It is a matter of social justice, would enhance freedom, produce basic security, cut poverty, promote political stability at a time of rising discontent, and, as India’s government recognised in a parliamentary report, even in a low-income country, a BI is affordable.

Guy Standing, “Universal basic income would enhance freedom and cut poverty“, letter to the editor, Financial Times, 15 February 2018 (gated paywall).

Mr Standing (born 1948) is a professor of Development Studies at the School of Oriental and African Studies (SOAS), University of London, and co-founder of the Basic Income Earth Network (BIEN). His latest book is Basic income: and how we can make it happen (Pelican/Penguin, 2017).




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