The basic income: Can it really work or is it all just a pipe dream?

The idea of a universal basic income has been floating around the political horizon in recent times with increasing energy. But what is it and how could it work in practice? Anas Hassan speaks to two academics to gain an extended insight

WOULDN'T we all love to be given money for free, even if we weren't working? What a utopian concept. But within the reality of life, many people have to work to sustain a living.

However, with the unstoppable advance in technology, to what extent will automation impact upon people's working lives in the future? Will robots push us into the instability of unfulfilling obscurity and joblessness?

Will new kinds of jobs emerge quickly enough to satisfy people's aspirations and replace work that becomes out of date? And if that doesn't happen, how will people be able to continue earning and spending money?

Read more – The evolution of universal basic income

The idea of a universal basic income, also known as a citizen's income, has been gaining prominence recently in a bid to answer those questions. The basic concept of such the policy is that all citizens should be guaranteed a minimum amount of money as part of their income, without any need to be means tested.

You'd be forgiven for thinking that it is just the left which champions the idea of citizens receiving a guaranteed income, but in more recent times support for a universal basic income has come from other sources.

Technology entrepreneur Elon Musk, founder of SpaceX and Tesla, told delegates at the World Government Summit in Dubai earlier this month that a universal basic income will become "necessary" in the future.

When addressing the issue of mass unemployment, the entrepreneur said: "This is going to be a massive social challenge. And I think ultimately we will have to have to have some kind of universal basic income. I don't think we are going to have a choice."

Technology entrepreneur Elon Musk, founder of SpaceX and Tesla, told delegates at the World Government Summit in Dubai earlier this month that a universal basic income will become "necessary" in the future.

He added: "There will be fewer and fewer jobs that a robot cannot do better. And I want to be clear, these are not things that I think that I wish would happen. These are simply things that I think probably will happen."

And he went on further to address the potential future implications for human beings: "The much harder challenge is how do people then have meaning? A lot of people derive their meaning from their employment. So if you're not needed, if there's not a need for your labour, what's the meaning? Do you have meaning? Do you feel useless? That's a much harder problem to deal with."

This coming March at the Scottish Parliament, the social security committee will take evidence on whether a universal basic income can be sustainable. And Glasgow and Fife could see pilots launched to see how the policy works in practice.

But will the idea of a universal basic income be cost effective for all citizens? Or will it be harder to implement in reality? We spoke to a couple of academics to find out the strengths and the weaknesses of the basic income.

Professor Michael Danson 

Professor Danson is based at Heriot-Watt University in Edinburgh and is a trustee of the Citizen's Basic Income Network Scotland. He specialises In enterprise policy, and believes there are potential future implications for Elon Musk and other technologists as well as for people in work who could be affected.

The traditional arguments for a universal basic income or a citizen's basic income have been around coherence, solidarity, addressing poverty, into means testing and so on. 

In the last few months, we have seen this rise of a recognition that automation is going to start making quite a lot of jobs redundant in traditional professions like accountancy, to an extent health services, the law and the like.

These are the very areas that these technologists - it's not only him [Elon Musk], it's others - think is their main market. They are realising that big redundancies could come through automation, but for them to realise the benefits of what they are doing, they need a market. They need effective demand, therefore they need people to have money in their pockets to spend. The real challenges are for them as much as for these professions.

Read more – 5 ideas from the launch of Scotland's Basic Income Network

Jobs always evolve and they have done for millennia. But definitely since the industrial revolution, we have seen jobs come and go. It's interesting to look through the census of population, beginning last century and before. There are occupations there where we don't have a clue what they were. They've totally disappeared. The economy made and had to make new jobs to employ people.

What we are seeing now is this move which may be accelerating as we go forward, though some of the circles there are not squaring very well. Resources are still required - like fiscal resources to build and make things. 

It's not just certain professional services and occupations that are becoming redundant, but this idea that manufacturing can continue to grow in terms of its output is also questionable.

Can we trust what automatic software would do with regard to auditing of companies' accounts of health services and the like? It won't be a linear and accelerating model of job loss which will quickly come to a conclusion. It'll be progressive. It'll undermine certain jobs at different rates and so forth.

In Europe, we are more likely to talk about a citizen's basic income, and it is about solidarity and cohesion.

The threat of automation will be there regardless. What a universal basic income might do is ensure that there is a level of effective demand in the economy, i.e. people have money to actually spend in the areas that have been automated. If they don't then there is a problem.

Or if the market falls mostly into business services and is more a case of corporations buying in services from companies that run automated services themselves, then we are going to see the elites drifting higher and higher. However, again there will be a lack of effective demand below as people are being made redundant.

In Europe, we are more likely to talk about a citizen's basic income, and it is about solidarity and cohesion. It is about having an income, because you are a citizen. And that is offered as part of, and on top of, all the other aspects of social security, welfare and so forth.

Professor Paul Spicker 

Professor Spicker is with Aberdeen's Robert Gordon University. He is an emeritus professor of RGU and a writer and commentator on social policy. He isn't necessarily opposed to the concept of a basic income, but does have some concerns around the practicalities of the policy.

In terms of principle, morality and the basic practicality of giving  people an income, I have no objections to basic income at all. But I do have concerns about it.

Let's get an example of a scheme of that sort which works in practice - child benefit. What happens in principle there is that every family responsible for a dependant child receives a sum of money which is available to the child on a regular basis.

For many years, unfortunately, that benefit was essentially taken away from people on the lowest incomes. That changed around 12 or 13 years ago, and once that happened child benefit really came into its own as being a stable and secure part of people's income that would continue even though everything else around them was changing.

Read more – Holyrood to look at Universal Basic Income as calls rise to emulate Finland

So in those terms, basic income has a lot going for it and a lot in its favour. So where is the problem?

The nature of child benefit initially was that it was being taken away from the poorest people because while they were receiving the benefit, but the value was being directly knocked off the other benefits that they received. The effect of that was that in most cases, child benefit wasn't delivering any monetary value to millions of people.

So at the same time as we were getting reports in to tell us that families were running out of money and unable to feed their children, we were knocking the value of this off their benefits and they were not benefiting.

If you look at nearly all schemes for a basic income, they start from a proposition that you'll pay for this by getting rid of existing benefits. It means that the people who are currently receiving benefits will be no better off. 

On a number of the schemes, the people currently receiving benefits will actually be worse off. Now what is happening when you are introducing a scheme on that basis? Unfortunately, what it means is that the whole purpose of basic income becomes to extend incomes to people who are not currently in receipt of benefits. 

If you look at nearly all schemes for a basic income, they start from a proposition that you'll pay for this by getting rid of existing benefits. It means that the people who are currently receiving benefits will be no better off. 

It means that we are proposing here to spend really a very large amount of money, not on making poor people better off, not on trying to deal with many of the social problems that we have, but on extending a system which is almost exclusively for the benefit of people on higher incomes.

There are ways of absorbing the loss of jobs. As it happens, I think that there are lots of jobs that we ought to be providing and we ought to be doing. Many of those jobs are public in one sense or another - either they are paid for publicly or they are directly employed in the public sector.

Examples might be police, nurses, people involved in fire and rescue, gardeners. We need a massive number of carers both for older people and for younger people. We need more road menders. We need more people protecting the civic environment. It carries on and on like this.

We also have countries that simply employ more people doing things that are socially useful. My model for that would be some of the Nordic countries, but particularly Norway.

And what we find is that the number of people who are involved in public service is directly associated and related to the amount of residual poverty that then remains in that economy, because what you are giving people is respected, worthwhile jobs. We could do that.

Government has created many jobs. They are worthwhile jobs. They're important jobs. And it could create an awful lot more if we had the will to do so. 

That's the answer to this question of what happens to people not having jobs.

Pictures courtesy of YouTube, Mike Danson and stanjourdan

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Comments

RadioJammor

Tue, 02/28/2017 - 16:52

I'd like to see Professor Spicker's basic income proposals that leave poor people no better off, as I have seen none-such that do that.

Addendum
Reform Scotland Proposals: https://reformscotland.com/wp-content/uploads/2016/02/The-Basic-Income-G...

Scottish Greens: https://greens.scot/news/greens-publish-citizens-income-plan-for-fairer-...

UK Greens: https://policy.greenparty.org.uk/assets/files/Policy%20files/Basic%20Inc...

Mairic

Tue, 02/28/2017 - 19:29

I believe Universal basic income would also fill the gap regarding pension crisis. Example, Waspi women being denied pension until 66 years old. Also heard people saying they are unsure if they will ever get a pension, one person was a Keep fit teacher working in the community...

Paul Spicker

Tue, 02/28/2017 - 21:24

RadioJammor asks whether there can really be proposals that leave poor people no better off. Reed and Lansley, authors of the Compass schemes, do their best to hold losers to the minimum (7% of the second income decile for their Scheme 1, while about a third are no better off.) They explain: “it is not possible to design a scheme that is revenue neutral, pays a decent sum and withdraws most means-tested benefits without significant numbers of losers.” Find their schemes at http://www.compassonline.org.uk/wp-content/uploads/2016/05/UniversalBasi... .

Malcolm Torry is Director of the Citizens Income Trust and has produced three schemes for them, labelled A, B and C. (The RSA scheme is also based on the CIT models.) He explains: " A feasible way to implement a Citizen’s Income showed that in 2012/13 a Citizen’s Income of £71 per week (with less for children and young people, and more for elderly people) could have been largely funded by abolishing the Income Tax Personal Allowance and means-tested benefits (except for Housing Benefit and Council Tax Benefit), but that at the point of implementation such a scheme would have imposed losses of over 10% of disposable income on 21.12% of low-income households (defined here as households in the lowest disposable income decile). ... In relation to schemes A and C, while it is true that the high losses imposed on households at the point of implementation are the result of the complexity of the current tax and benefits scheme, and not of the Citizen’s Incomes, such losses would make the schemes impossible to implement." Scheme A would leave 28% of the lowest paid households worse off by more than 10% of current income, Scheme C would leave 29% worse off. Scheme B is the one that leaves existing benefits in place, and takes BI off them; while scheme B largely avoids losers, the poorest who currently receive benefits will remain in the means tested system. Source: https://www.iser.essex.ac.uk/research/publications/working-papers/euromo...

That's six schemes so far. Neither Reform Scotland nor the Green scheme do the same kind of modelling, but while they aim to be more generous do please note that both abolish Tax Credits. There will be losers as well as gainers.

Alisdair McKay

Wed, 03/01/2017 - 14:54

The question is, whether the resource is water money or any other, are we willing to let ourselves believe, that there is not enough of it to sustain everybody? The citizens income debate seems to centre around can we afford to have all these people on it?. Is there enough of this finite resource, money, to go around in this way? Yet the question is not asked about the rich in the same way, can we afford them? The question arises be
cause we do not recognise the neutrality of money. It might be easier if we look on money in the same way as we do water. Is everyone entitled to enough water to live? Yes of course they are, and if a small number of people built giant water storage tanks to the point where the lack of flow became detrimental to the rest of us we would very quickly blow them up. The supply of water is neither finite or infinite, it is cyclic and as long as the cycle keeps flowing there is enough for everyone to survive. Money is no different. It is when we attach labels to people and designate their entitlement to money according to their label that the problems with the flow arises. Until now the most significant broadly used label to gain entitlement to access the supply of money has been labour, physical or mental, and it is becoming an increasingly un-tradeable commodity as a result of the diminishing number of endeavours ('labels') to which financial reward is attachable. Fortunately it is recognise that we cannot simply write off all the people to whom a 'value label' cannot be attached and indeed their participation is vital to the keeping the whole circulation system flowing. The challenge for us all is to recognise that everyone is of equal value and have equal entitlement whether or not their 'label' gives them a 'revenue value'. This might be easier to achieve if we take all the labels off all the people and stop seeing the accumulation of money as the mark of worth or success. Accumulating it would no longer lead to gaining the attribution of disproportionate power, a system which is letting us down so very badly at present. Lets not kid ourselves, individuals will still seek to gain hold of 'power', but we could at least seek to attribute it through other means such as gaining public esteem in recognition of a useful contribution. The question is do we trust those of us whose label does not have a 'revenue value' attached to play a useful role towards the well being of us all, though no such question is currently asked of the rich, such as bringing up children, looking after others or gardening? For when we require some identifiable task to be completed in order for basic sustenance to be available the concept of entitlement as a right is removed, and we once again ghettoise those who do not have a 'revenue' label by removing the freedom to make their contribution as creatively and fully as they chose and along with it their means of gaining acclaim through previously unidentified means such as writing a play. Again lets not kid ourselves, some people would abuse and take advantage of such a system, yet is this not happening any way at present at all parts of the spectrum. To gain some insight into how people would respond we could perhaps take a look at the vast range of creative and useful activities which retired people undertake without coercion. Lined up without our clothes, can anyone tell who is the brain surgeon and who the park keeper, who the corrupt shopkeeper, who the dedicated labourer, the footballer or the playwright, with a clear conscience we can, through a citizens income, attribute the means to sustain all of these in their basics needs. The question arises how can we do better than our current system of disproportionate financial reward to recognise everyone's contribution, above and beyond the basic, appropriately?

Alisdair McKay

Wed, 03/01/2017 - 14:54

The question is, whether the resource is water money or any other, are we willing to let ourselves believe, that there is not enough of it to sustain everybody? The citizens income debate seems to centre around can we afford to have all these people on it?. Is there enough of this finite resource, money, to go around in this way? Yet the question is not asked about the rich in the same way, can we afford them? The question arises be
cause we do not recognise the neutrality of money. It might be easier if we look on money in the same way as we do water. Is everyone entitled to enough water to live? Yes of course they are, and if a small number of people built giant water storage tanks to the point where the lack of flow became detrimental to the rest of us we would very quickly blow them up. The supply of water is neither finite or infinite, it is cyclic and as long as the cycle keeps flowing there is enough for everyone to survive. Money is no different. It is when we attach labels to people and designate their entitlement to money according to their label that the problems with the flow arises. Until now the most significant broadly used label to gain entitlement to access the supply of money has been labour, physical or mental, and it is becoming an increasingly un-tradeable commodity as a result of the diminishing number of endeavours ('labels') to which financial reward is attachable. Fortunately it is recognise that we cannot simply write off all the people to whom a 'value label' cannot be attached and indeed their participation is vital to the keeping the whole circulation system flowing. The challenge for us all is to recognise that everyone is of equal value and have equal entitlement whether or not their 'label' gives them a 'revenue value'. This might be easier to achieve if we take all the labels off all the people and stop seeing the accumulation of money as the mark of worth or success. Accumulating it would no longer lead to gaining the attribution of disproportionate power, a system which is letting us down so very badly at present. Lets not kid ourselves, individuals will still seek to gain hold of 'power', but we could at least seek to attribute it through other means such as gaining public esteem in recognition of a useful contribution. The question is do we trust those of us whose label does not have a 'revenue value' attached to play a useful role towards the well being of us all, though no such question is currently asked of the rich, such as bringing up children, looking after others or gardening? For when we require some identifiable task to be completed in order for basic sustenance to be available the concept of entitlement as a right is removed, and we once again ghettoise those who do not have a 'revenue' label by removing the freedom to make their contribution as creatively and fully as they chose and along with it their means of gaining acclaim through previously unidentified means such as writing a play. Again lets not kid ourselves, some people would abuse and take advantage of such a system, yet is this not happening any way at present at all parts of the spectrum. To gain some insight into how people would respond we could perhaps take a look at the vast range of creative and useful activities which retired people undertake without coercion. Lined up without our clothes, can anyone tell who is the brain surgeon and who the park keeper, who the corrupt shopkeeper, who the dedicated labourer, the footballer or the playwright, with a clear conscience we can, through a citizens income, attribute the means to sustain all of these in their basics needs. The question arises how can we do better than our current system of disproportionate financial reward to recognise everyone's contribution, above and beyond the basic, appropriately?

RadioJammor

Thu, 03/02/2017 - 13:39

I appreciate the response. As far as I was aware, those earlier proposals were the CIT 'getting their feet wet' in trying to determine how a UBI would work in the UK, because of the complexity of the benefits system and welfare state. I regard them as earlier drafts of more recent proposals, but I suppose that's a point of view and you don't share it. Fair enough.

As for the tax credits issue, I believe this relates only to child related tax credits, not all tax credits, because of the child's UBI.

The Greens also propose free child care, as a separate policy, therefore negating the need for child care tax credits.

Are you sure there would be any losers, therefore?

Paul Spicker

Thu, 03/02/2017 - 20:12

It's not certain that there have to be losses; that depends on how high the rate of Basic Income is set. What has to be true is that if some people lose benefits, they will get less out of BI than other people who don't. The distributive problem is a consequence of any scheme that pays for BI by letting it replace existing benefits. However, this wouldn't apply to increases in Child Benefit, because that has been decoupled from the rest of benefit system. It also wouldn't apply in the same way to a Citizens' Pension, because that would mainly benefit about 4m pensioners who don't get a full pension, don't get an occupational pension or should get Pension Credit instead.

The CIT schemes are a genuine attempt to acknowledge and work through the problems, but they still fall foul of several stumbling blocks - for example, the intrusive tax regime and the downgrading of National Insurance. There really ought to be ways around the problems I've identified - I haven't found a way of doing it yet, but I suspect the answer lies in the combination of tax and benefits. In the meantime, I'd argue that the best case that's been made is not for full UBI but for a partial BI to cover children and older people.

tralfamadoran777

Sat, 03/04/2017 - 03:14

Please consider the global problem, and a small change to international banking, that will include each adult human on the planet in the financial foundation of the global economic system, and provide a surplus of sustainably priced credit to each deposit bank holding the individual Shares in trust

There simply isn't enough money.

In order for each to receive an income of £1,000/month, there would need to exist a corresponding £1,000,000 in capital returning a sustainable 1,25%, and seven quadrillion £ of capital does not exist in the world... the highest estimate is almost one quadrillion

So no matter how hard or cleverly each works, there is not enough even for this...

But since money is created by loaning it into existence, we can distribute this right to loan money into existence to each, by simply allowing each to claim a Share, for deposit in trust with their bank, as part of an actual social contract

Each then will own a secure trust with the right to loan, say, that £1,000,000 into existence to finance sovereign debt, at a fixed and sustainable rate, and each will receive an equal share of the interest paid on global sovereign debt

https://en.m.wikipedia.org/wiki/User:Tralfamadoran777

Thanks so much for your kind indulgence

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