Is a Universal Basic Income the Solution to Inequality?

Photo by Jill Wellington on

Imagine if you were entitled to an unconditional payment from the government which was enough to provide you with the basic necessities of life. What would you do? And more importantly, what wouldn’t you do? How would this economic security affect your life decisions?

For most people that sort of payment has the potential for wide-ranging effects on their life choices. It could impact their career choices, volunteer work, creative pursuits, entrepreneurial ventures, relationships they maintain and even what risks they take.

The thought of an unconditional payment like that is exciting to most people because economic security represents freedom. Freedom to pursue an occupation based on activities which inspire and fulfill them. Freedom to not compromise themselves to survive. Freedom from economic coercion in relationships.

What is a Universal Basic Income?

This simple idea of a guaranteed payment to every citizen is known as Universal Basic Income (UBI) and it is increasingly being discussed and trialed around the world. UBI holds the promise of equal opportunity, not equal outcome, a guaranteed starting line set above the poverty line. A system with dignity, equality and respect at its center.

We have widening wealth inequality within countries and between countries. There is a decrease in secure employment with casual, contract and gig employment becoming more widespread. Automation is slowly replacing low skilled jobs.

And combined with the changes technology causes on the nature of employment, our welfare systems are based on outdated social conditions and attitudes. They are designed for binary employment options, they assume full time employment at one job is the norm.

These initiatives and discussions about UBI demonstrate significant shifts away from deep-rooted stereotypes. Not only stereotypes about the nature of employment, but outdated attitudes that low income is caused by personal failings like laziness or irresponsibility with money.

These stereotypes, if they ever had any validity, are no longer relevant to the way our society is structured in the global information age. A UBI is a transformation of how we view social welfare payments. Rather than seeing them as a substitute for a wage or as a charitable handout, they are seen as a citizens “rightful share” of the collective wealth and resources generated by the society of which they are a part.

The Right to Basic Economic Security

The increased interest and discussion about UBI suggests a potentially innovative development in our ideas of human survival and social responsibility. One valuable aspect of UBI is it would allow us to rethink how we value people’s contributions to society.

There are a variety of contributions people make to society that are outside paid employment. This trend will only increase as automation increases and replaces low skilled jobs. Many of these unpaid contributions provide substantial social benefits. The opportunity to make these contributions is enhanced with a UBI. If everyone knows the provision of their basic needs are guaranteed, it will cause a shift in attitude.

This shift is not only about our right to basic economic security, but it has the potential to increase social cohesion. Our social structures should recognize our mutual dependence. Humans not only survive, but flourish because of co-operation. And when the system itself is seen to be unfair, social alienation results.

If people see the social system as unfair, they will fight against it and try to undermine it. If the perception of the system is it’s designed for equal opportunity and equal rights, people will contribute to it and try and improve it. When we have a personal stake in something, we treat it differently. We protect it and develop it. If we see it as something which is actively harmful to us, we fight against it.

All wealth is socially generated. Its production is totally dependent on investments in infrastructure, the legal system, healthcare, education etc. These are things that all citizens have contributed to over many generations. It follows from this that every member of society has a right to a share in that wealth.

The argument that wealth is communal is stronger if we consider that we are already transforming into an information economy. Business increasingly relies on access to data to succeed. Some have called data the new oil.

And that data is communally produced, we all contribute to creating it. Instead of thinking human survival depends on waged labor, we need to embrace the idea of a rightful share, citizens have a right to an income based on their share in ownership of national wealth.

Will people stop working if they are paid a UBI?

There is some concern that if people are paid an unconditional income will they choose not to work and create a burden on society. Currently most welfare systems are conditional, accepting any paid work leaves people worse off because their welfare is cut accordingly.

This creates a poverty trap, people can’t afford to lose the conditional welfare payments, so they are incentivized not to accept work. With a UBI any work someone performs will make them better off. A UBI removes the disincentives of the existing conditional welfare systems.

And UBI has some added incentives our current welfare systems lack. Studies of motivation show that money is a good motivator for mechanistic work, but a poor motivator for creative work. And given that automation is set to replace mechanized jobs, the future of employment for humans is one which isn’t best incentivized by money, but by the intrinsic motivations found in the rewards of the activity itself.

A rewarding occupation makes a substantial contribution to life satisfaction and mental health. UBI recognizes the future conditions of work and is capable of incentivizing and amplifying the many socially beneficial activities already being done for no payment.

Our current system doesn’t reward the extensive voluntary contributions people make. From unpaid care-giving to contributing to open-source software essential to the smooth operation of the internet, these types of activities that benefit everyone and currently financially disadvantage those who contribute them. UBI an make it possible for people to afford to engage in them.

Could UBI improve the labor market?

UBI also has the potential to contribute to increase in productivity and improve the labor market by making it optional. According to Gallup, globally only 13% of people feel engaged by their work. Poor engagement erodes social cohesion, affects mental health, and reduces productivity. UBI gives people the freedom to pursue employment they love.

This could transform employment because it gives workers the security and power to refuse jobs. This will create a natural method to match workers to jobs. Someone who finds their work unfulfilling and moves to some other occupation has left a job open for someone better suited to the task. This is a more productive outcome than staying with a job they hate for income security.

This basic level of income security is provided by the UBI. If you lose your job, there are no forms, no waiting periods, no conditions, your unemployment benefit is the UBI. If you get sick and can’t work, your basic income is already covered. The UBI has potential to replace many existing social security payments, reducing the costs of administration and compliance needed with the existing welfare existing systems.

The idea is simple, the politics are complex

Although UBI sounds like a left wing socialist ideal, it has a long history of support from right wing politics and economics. This right-wing support makes the left wing suspicious. The left is concerned that instead of UBI being used as a supplement social security measures, it will be used to replace existing services.

People would then to forced to use their basic income to pay for health, education and other social services from private suppliers. This type of UBI would only be a transfer of public wealth to private business and leave those on lower incomes worse off. Which highlights the importance of the design and implementation of any UBI scheme. The idea of UBI is simple, but its implementation is complex. The politics are as important as the economics.

Government spending is an expedient tool that is misused for political ambition and gives an opportunity for corruption. A UBI set above the poverty line and indexed to the cost of living can provide us with a political common ground. Whatever else we may disagree on, that basic income is our foundation, a tangible acknowledgement of our commitment to structural equality in society.

It transcends any political differences and gives us a foundation for equal opportunity. What we do with that opportunity is up to us. This retains personal rights and responsibility as the foundation of our society. The right of each citizen to a basic survival income from the society is non-negotiable. Everything above that is open to debate.

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