Revisiting the basic income

In countries that already provide welfare payments for the unemployed, replacing it with a universal basic income isn’t an invitation to become lazy, it’s an opportunity to improve prospects for those facing job-uncertainty without the luxury of a privately-funded safety net… 

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TL:DR* Many of the arguments against paying a universal basic income to a population seem to be based on the notion that people will stop working. Evidence suggests people prefer to live life to the full given the opportunity. A universal basic income is unlikely to change that

Over two years ago, I wrote a post ‘Eliminating unemployment‘ to share an idea that had been brewing for some time about how to help people stuck in the vicious cycle of unemployment and low-paid temporary work. Instead of having to apply for unemployment payments each time a temporary job ends, creating a highly stressful financial gap, how about paying everyone a minimum amount of money to cover the basic cost of living, but then tax all earnings?

Since writing the post I found out: a) I am completely unoriginal – the idea appears to have been first voiced by Thomas Paine in 1797 :-/; and b) the idea has become so popular in the two years since publishing, it now has a common label – universal basic income (UBI).

For a walkthrough the idea and how it could work, please refer back to the original post. This is a look at some of the recent debates about it.

Why do we need a universal basic income?

Well… for starters, in many countries we already have it. The current term in the UK is ‘jobseeker’s allowance (JSA)’. If you lose your job, the government will provide a monthly payment to help tide you over until you find another job.

The challenge with the current system is that it assumes that jobs are stable and long-term, and that claiming unemployment is a temporary blip in your career. Applying to receive the payment is not a five-minute process. Stopping it is. The reality facing many people today, particularly on the lowest rungs of the career ladder, is continual job-instability due to the rise in zero-hour contracts and temporary agency work replacing traditional employment.

…and that’s just the people lucky enough to find work at all. A consequence of global trade agreements is that products can be produced in the cheapest possible location and sold in the most expensive. And a consequence of technology advancement is that more jobs are being automated unless using people remains cheaper. Globalisation and technological progress both bring great benefits. But consequences in wealthier economies include reduced career prospects, stagnant wages and frequent gaps between jobs for many. The current welfare system was designed in a different era.

People should just take whatever jobs are available

A recent interview on BBC Radio 4 included a quote along the following lines:

“…people who are unwilling to take low-paid jobs need to accept that you have to start at the bottom and work your way up.

That would be a fair enough comment if the jobs being rejected had any career prospects. But the jobs being referred to are ‘casual’ positions in factories and distribution centres for companies like Sports Direct and Amazon, where the bulk of the human resource (and that’s all people are seen as) they need is supplied by third party agencies. Such methods help businesses to reduce costs but do not provide a career ladder for the majority. Of the more than 3,000 people working at one Sports Direct warehouse, just 200 are actually employed by Sports Direct. The rest are temporary positions.

Due to the current system for processing welfare payments, accepting a temporary position can risk being unable to cover the basic cost of living. Zero-hour contracts essentially means people can be hired and fired instantly and repeatedly, with no notice period. For some people, such flexibility is desirable. For others, it means not knowing from one week to the next if there will be enough or any money to pay the bills. In the latter scenario, people may be better off not taking the work and staying on unemployment payments. And better off in this scenario simply means being able to survive without resorting to food banks and ‘pay-day’ lenders.

We already have a universal basic income but it is flawed. Gaps when people are neither earning nor receiving JSA creates high levels of anxiety for those without private safety nets, affecting the poorest and most vulnerable in society. This isn’t about paying people more than they currently receive, it’s about eliminating those gaps and their consequences.

Won’t people just become lazy?

I truly want to scream every time I see this argument in print. The following was published on BBC News recently:

“Imagine this. You can sit back, relax, turn on the telly, put your feet up. And the government will pay you for it without any of that tedious job-seeking and signing-on business.”

Really?! Could you be any more patronising and presumptuous about what ‘the people’ will do if given a basic income. What the article considers to be the left’s big new idea could arguably be an old idea taken from the wealthy. Why else leave an inheritance or set-up a family trust fund for your children?

There is absolutely no evidence to suggest that doing nothing is what the majority of people will choose if given a more secure public safety net than the one currently on offer. And what defines acceptable versus unacceptable activities that don’t generate an income? Presumably we should look down on somebody who chooses to spend the day searching for virtual Pokemon in their local area? But somebody who spends their inheritance partying? How is that different? There are examples across all socio-economic classes of people choosing not to work. They make for easy headlines because they are unusual.

What there is ample evidence of is a human desire for life to have meaning. Whilst jobs may have stagnated, creative output has not. You can argue for and against the quality, but the quantity of content posted through channels such as YouTube, Instagram, Facebook and others is phenomenal. The challenge is that much of the time-consuming acts people willingly undertake for pleasure are not economically viable. Why should creativity and experimentation be the preserve of those with private safety nets? Why not make such opportunities accessible to all, if we can afford to?

It’s a utopian ideal

Affordability is another popular criticism for why a universal basic income won’t work:

The trouble with the universal basic income is that the utopia it promises is a deceit. Replacing our complex system of welfare benefits with a single equal payment for everyone means one of two things: either [it] is too low to replace the additional benefits people with particular needs receive… or it costs much more than the present system we have.”

Ah that old trick of giving something a different label to make it easier to dismiss. I’m not aware of anyone claiming a universal basic income would lead to utopia. And there was no link to sources suggesting that the basic income should replace all welfare payments. Disability and childcare assistance are, and should continue to be, provided on a needs-basis.

There is an assumption that providing a universal basic income will cost too much. But in countries that already provide unemployment payments, it shouldn’t differ from the current system unless behaviour changes. Or unless the current system is being made deliberately insufficient or difficult to access so as to punish unemployed people and subject them to poverty, which is not a pleasant thought… People who are working shouldn’t notice any significant change because receiving a basic income would be offset by higher taxes, meaning the net gain should average out to 0.

Will behaviour change?

Where affordability does become an issue is whether or not receiving a basic income will alter attitudes to work. The popular assumption has already been outlined – that people will become lazy and not bother to work. If that happened, then tax receipts would drop which would be a problem. Aside from the lack of evidence, it is unlikely that people currently working will choose to become financially worse off. There is no reason to assume that a universal basic income would be any higher than current unemployment payments. The job seeker’s allowance in the UK for a single person over 25 years old is £73.10 per week, as of April 2016. Assuming a standard working week of 35 hours, that’s a tub-thumping £2.09 per hour. The current minimum wage is £7.60 per hour. So anybody working 10 hours per week or more on at least minimum wage will be financially worse off if they choose to quit and do nothing.

Instead of the negative perspective, what about the positive? Creative and risk-taking endeavours are currently dominated by individuals with private safety nets. It’s a lot easier to experiment when the worst that could happen is you have to go and take a less interesting job in the family firm or via connections, or fall back on your monthly allowance from the family’s trust fund. Creating a public safety net could provide the same opportunities to a much wider section of the population. But the biggest beneficiaries would be those currently stuck at the bottom, faced with either risking not having enough money by accepting temporary work only for it to end and be stuck in the gap of no income whilst waiting for JSA to begin, or risk prosecution by taking the illegal alternative of accepting cash-in-hand and not declaring the work. Removing those barriers makes it easier for everyone to take up work opportunities whatever they may be. The net result could be a rise in tax receipts and a growing economy if some of those innovative and creative experiments succeed…

Could life become Orwellian?

So what could possibly go wrong with providing everyone with a universal basic income instead of continuing with the current system of welfare payments for the registered unemployed?

…the basic income changes the relationship between people and government…  there is the worrying potential for a basic income to be used to enforce a change in people’s spending habits and lifestyle.

OK, hadn’t seen this one coming and it’s a valid argument. Systems that start off with the best of intentions can be easily abused in the wrong hands. However, it assumes that people will choose to become dependent on the basic income. I suspect that plenty of people would choose to avoid that scenario if at all possible. It’s another argument baked in the belief that people will simply stop working and, instead of thriving and living life to the full, will choose to just exist by surviving at the minimum cost of living…

I think most people would rather be like a trapeze artist. You don’t want to use the safety net but take a bad turn and it might just save your life.

References

• Eliminating unemployment – previous post, 31 January 2014
• Profile of Thomas Paine – Wikipedia page, as of 15 July 2016
• Sighing for paradise to come – The Economist, 4 June 2016
• Number of workers on zero-hour contracts up by 19% – The Guardian, 2 September 2015
• Foxconn replaces 60,000 factory workers with robots – BBC News, 25 May 2016
• Mike Ashley admits Sports Direct under HMRC investigation – Financial Times, 7 June 2016
• Why the right to be lazy is the left’s big new idea – BBC News, 15 July 2016
• Profile of Hans Kristin Rausing – Wikipedia page, as of 15 July 2016
• Don’t fall for the universal basic income – The Independent, 22 March 2016
• The basic income is a dangerous idea – The Independent, 15 May 2016
• Jobseeker’s Allowance (JSA) – gov.uk page, as of 15 July 2016
• National Minimum Wage – gov.uk page, as of 15 July 2016

Featured image: Cubicle Sea by Adam Fagan kindly shared under Creative Commons license, found via PhotoPin

*TL:DR Too long, didn’t read, aka the short version for those who didn’t make it past the first paragraph… 🙂