Money for nothing: Is universal basic income the future of the welfare state? – Published in The i

For some, universal basic income is a silver bullet for inequality. For others, it’s a socialist plot. But it’s an idea that won’t go away – and could come into its own in the age of robot workers. By Etan Smallman

 
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Imagine a single government policy that could guarantee a universal safety net for every citizen, from cradle to grave – without a single form needing to be filled or job centre visited. A state intervention that could eradicate the bureaucracy of means-tested benefits, eliminate the stigma felt by claimants and get rid of the disincentives to work thrown up by a labyrinthine welfare system. An idea that could provide financial security for all, not only in the increasingly precarious era of the gig economy – but in the not-too-distant age of artificial intelligence and turbocharged automation likely to decimate our jobs.

To its ardent supporters, the universal basic income (UBI) is the silver bullet to fix a broken welfare state, increasingly unequal society and fractured jobs market.

To its critics, it is a socialist fairy tale, the most expensive single policy a political party could come up with, a charter for layabouts and a ridiculous use of public cash – giving “money-for-nothing” handouts even to the rich while risking making the poor poorer.

On whichever side you stand, the idea of giving everyone a modest but unconditional monthly income is the economic philosophy of the moment, piquing the interest of everyone from the Scottish First Minister Nicola Sturgeon to the tech visionary Elon Musk.

Stockton in California (which filed for bankruptcy in 2012 and where one in four residents lives in poverty) recently announced it will be the first US city to trial UBI, giving £380 a month for 18 months to about 100 families.

The fact that it is being tested in the US, a country not able or willing even to fund universal healthcare, illustrates how potent this concept has become.

It is an idea that has caught fire in Silicon Valley, whose billionaires have been getting rich by transferring jobs from humans to robots. The Facebook co-founder Chris Hughes’s Economic Security Project is funding the Stockton plan. “It is such a fundamental idea behind America that if you work hard, you can get ahead – and you certainly don’t live in poverty,” he said. “But that isn’t true today. I believe that unless we make significant changes today, the income inequality in our country will continue to grow and call into question the very nature of our social contract.”

For his Facebook co-founder Mark Zuckerberg, the principle is as much about liberation as economics. He promoted it last year as a way “to make sure that everyone has a cushion to try new ideas”.

Hillary Clinton revealed in her recent memoir that she considered including UBI in her 2016 campaign for president, but said, “unfortunately, we couldn’t make the numbers work”.

The concept is nothing new. The English philosopher Thomas More promoted it in Utopia in the 16th century and Martin Luther King Jr argued for a “guaranteed income” in the 1960s.

Neither is UBI as radical as some contemporary politicians may think. Nearly half of all UK adults would support one at the level to cover basic needs, according to an Ipsos Mori survey last year (though this drops to 37 per cent if it means a cut to benefits, 30 per cent if it means an increase in taxes and 22 per cent if it precipitates both).

The Greens were the first British party to include UBI in a manifesto, standing on the policy at the last two general elections.

Jonathan Bartley, the Green Party’s co-leader, tells i: “I remember, growing up in the 1970s, we were told we were going to have this amazing technological revolution, unprecedented levels of growth, we were all going to be able to work fewer hours. But instead of the promised utopia, we are working longer hours in more precarious jobs, while ravaging the environment and with growing inequality.”

Bartley, whose party has also proposed a four-day working week, accepts that UBI is “quite hard to defend in a soundbite and it’s easily attacked”. But he believes that the system would emancipate millions of workers to pursue their dreams, “whether that’s caring for loved ones, spending more time with their families, leisure pursuits, being entrepreneurial, pursuing careers in the arts or just building a career knowing you don’t have to just go for the highest salary all the time”.

He adds: “We’re in an age when politicians are running out of ideas. This is a way of providing security within the gig economy and therefore it’s a reality I think that politicians are going to have to face up to sooner or later.”

Labour has not yet embraced the theory, but the shadow Chancellor John McDonnell has said that, in time, “I think we can win the argument on it”. The former Labour leader Ed Miliband has said he thinks UBI is “a bet on human nature”, but added that he believed: “If we get rid of a complex, intrusive, demeaning, means-tested system, people will do extraordinary things.”

Remarkably, UBI has managed to unite people from both ends of the political spectrum.

Many on the right see it as an empowering example of smaller government. The neoliberal Adam Smith institute has advocated UBI, saying it could mean “capitalism and efficient redistribution can be vindicated in equal measure” (and perhaps the body should be listened to; its president once boasted: “We propose things which people regard as being on the edge of lunacy. The next thing you know, they’re on the edge of policy”).

Meanwhile, the approach has critics on the left, with some fearing it could be an excuse to dismantle the welfare state or subsidise companies that pay low wages.

Chris Goulden, of the anti-poverty research charity the Joseph Rowntree Foundation, tells i: “When you look at its effect on poverty, it could actually make things worse. The principle stem is based on need and where that need is higher, you get more support. Those two principles are diametrically opposed to each other.”

“The idea that the public would generally support unconditional social security payments, I think, is quite unlikely, to say the least. We know that some level of conditionality is effective at helping people back into work more quickly.”

Instead of revolution, Goulden says we should be trying to improve the system we already have. He adds that UBI is “superficially simple and superficially appealing”, saying: “I think we just need to be a bit wary because the problems are complex and the solutions need to be complex too.”

Annie Lowrey, author of Give People Money, published earlier this month, says that the concept is “a curious piece of intellectual flotsam that has washed ashore again and again over the last half millennium, often coming in with the tides of economic revolution”.

But, this time, she thinks it will stick. “I would expect to see it on trial at a provincial, state or county level within the next five to 10 years, possibly sooner than that,” she says. “As for a national policy, I think it will take some time, but I would not be surprised to see it happen in our lifetimes.”

The really contentious issue may end up not being the idea itself but precisely how much is paid out.

Luke Martinelli, a researcher at the University of Bath Institute for Policy Research, has said that opposition to the policy could be summed up as follows: “Affordable UBI would be inadequate, and an adequate UBI would be unaffordable.”

And with the Government’s (comparatively modest) overhaul of the benefits system in the form of universal credit still floundering after seven years of controversy, it may be some time before politicians in Britain are prepared to consider something even more dramatic.

Fast Facts: Finland and UBI

Supporters of the universal basic income concept had high hopes for Finland’s test, dubbed Europe’s first national government-backed experiment in giving citizens free cash.

A two-year trial began in January 2017, paying 2,000 unemployed citizens a monthly stipend of £490, with no strings attached.

In April this year, the government rejected a proposal to extend the project when it comes to an end at the beginning of 2019. But the pilot’s full results will not be released until later that year, once its impact has been assessed.

Universal basic income around the world

Various types of universal basic income are being considered and piloted across the world.

The Scottish Government has put up £250,000 over two years to aid four local authorities – Glasgow, Edinburgh, Fife and North Ayrshire – in laying the groundwork for pilots. Nicola Sturgeon has said it “could be an idea worth pursuing”.

In Canada, Ontario’s basic income pilot, which has been running since April, will give 4,000 people almost £10,000 per year, minus half of any earned income.

The charity GiveDirectly is running a 12-year trial in villages in Kenya. So far, it has found that its unconditional cash transfers have boosted earnings, assets and the amount a family spends on nutrition, while having no effect on spending on alcohol or tobacco.

An unconditional cash transfer programme that launched in Iran in 2011 did not result in people dropping out of the labour market “in any appreciable way”, researchers found.

In Barcelona, the B-MINCOME project is giving families a minimum income of up to £460 and access to housing, education and soabour market “in any appreciable way”, researchers found.

In Barcelona, the B-MINCOME project is giving families a minimum income of up to £460 and access to housing, education and social enterprise support services.

In 2016, Switzerland became the first country to hold a referendum on the policy. But no party supported it and three-quarters of voters rejected the proposal of an unconditional monthly income of £1,755 for all adults.

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