Universal basic income can be defined as “a modest amount of money paid unconditionally to individuals on a regular basis; intended to be paid to all, regardless of age, gender, marital status, work status and work history” (Standing, 2017 cited in Bliss, 2020). Advocates for universal basic income highlight the benefits such as eradicating poverty, increasing efficiency, freedom to pursue one’s interests and in some cases benefit the environment while arguments against universal basic income are based on the fact that it may discourage people from working, is unaffordable for most governments and risks being spent irresponsibly on vices.
The motivation for universal basic income has been steadily gaining momentum during the past decades. In 1516, Thomas Moore published Utopia, where the first reference to this idea was made as the inhabitants on his island were provided with some means of livelihood. In contemporary affairs, inequality has been steadily increasing, while, as Branko Milanovic notes, the income of countries’ middle and lower-middle classes has stagnated; the richest one per cent have seen a wealth increase – earning twice as much as the bottom 50 per cent. In a global economy threatened by COVID-19, debates surrounding this modest income floor have increased and it is salient for governments and citizens to consider the advantages and disadvantages before pursuing such a scheme.
The pandemic has caused financial difficulty for a vast number of people especially those who are self-employed and small business owners which has led to an unprecedented level of government spending. Government pandemic programs are supporting 11.5 million jobs at a cost of £27 billion. As a result of this, a fair and just economic system with a certain level of security for all may be the change the country needs to undergo and according to a YouGov Poll, 51 per cent of the British public favour universal basic income due to “the context of the current public health and economic crisis” (Spencer, 2020).
Pros and Cons
Arguments before the pandemic focused on the freedom and efficiency of universal basic income. It would essentially remove all other forms of financial assistance such as housing vouchers and food stamps which would result in a simple straightforward process that minimizes bureaucracy. Governments would spend less to administer the program as it would eliminate the costly income-verification paperwork that is used to assess benefits. A certain degree of freedom would arise as people would have the choice to pursue their interests – work for enjoyment rather than survival, return to school or care for relatives. They would also have the autonomy to wait for a better job with higher wages or one that is more suitable for their field of work which would allow people to take risks and enhance their productivity. Even the environment might benefit as when we work less, we consume less, whether this is in the form of travel, food or other work-related expenditures.
In the United Kingdom, people were more supportive of a universal basic income policy for the pandemic and its aftermath than they would have been in normal times according to a study carried out by Nettle (2020) in May. His studies found that the public was able to assess the costs and benefits of universal basic income. They thought that the simplicity of the policy to administer was a positive, as was its potential to reduce stress and anxiety by providing universal security. It would be good for stopping people from falling between the cracks and would also be effective when people’s life situations were subject to rapid change when means-tested assistance schemes would struggle to keep up.
According to public opinion (Nettle, 2020), citizens are also concerned about whether universal basic income is the best way to reach those most in need, the effects on the supply of labour and giving money to the rich who have enough to sustain their chosen lifestyle. One of the major problems with universal basic income is what it entails in the specifics. The broad definition and conditions for this proposal are that it can mean anything to anyone. This vagueness makes finding coherency in proposals difficult, and the role of the government in our daily lives may be questioned. The government is not like a free market where the forces of demand and supply determine the optimum outcome. Each individual has their basic requirements and it is a strenuous task to fulfil all of them. Reaching a consensus on the proposed amount of a universal basic income will always be open to debate and it will be hard to settle on a number to cater to everyone’s basic needs. This approach also limits our freedom to a certain degree as we are allowing the government to decide what is sufficient enough and to an extent decides what we should spend it on e.g. housing, food and necessities. What happens if we spend it on undesirable goods which could lead to an increase in substance abuse or other harmful consequences? Will the government have the power to curb that?
The next criticism is based on funding. There is not enough evidence to suggest that one can have a generous welfare state and a solid social infrastructure alongside universal basic income. Few countries have been able to achieve such a system but in Alaska, there is a guaranteed income program since 1982. In 2019 each resident received an average of $1606. It is called the Permanent Fund Dividend and is funded by a share of the profits from the state’s oil industry. Many economists consider it to be the best example of a universal basic income and it is worth exploring such a scheme in the United Kingdom. By giving everyone a universal basic income the incentives for people to get jobs may reduce and perpetuate the falling labour force participation rate.
The overall cost to the economy is a major obstacle for the implementation of such a scheme and the total costs to the taxpayer remains a debate between economists on both sides of the political divide. However, as Standing (2020) observes that ‘people with basic security are more altruistic, energetic, innovative and more tolerant of the other’ and ultimately the decision depends on public opinion and whether citizens want a more equal and just society.
Adeena Nisa Khan is a keen linguist and politics enthusiast, and a postgraduate student at Durham University.
Picture of the City of London by Ana Gic via Pixabay.
Sources
Amadeo, K. (2020) ‘What Is Universal Basic Income? Pros and Cons of a Guaranteed Income.’ Available at: https://www.thebalance.com/universal-basic-income-4160668#citation-46 (Accessed 23 July 2020).
Bliss, D. (2020) ‘Universal Basic Income is gathering support. Has it ever worked – and could it work in the UK?’ Available at: https://www.nationalgeographic.co.uk/history-and-civilisation/2020/05/universal-basic-income-is-gathering-support-has-it-ever-worked-and (Accessed 23 July 2020).
Meakin, L. (2020) ‘Universal Basic Income Is Key to U.K. Recovery, Think Tank Says.’ Available at: https://www.bloomberg.com/news/articles/2020-06-09/universal-basic-income-is-key-to-u-k-recovery-think-tank-says (Accessed 23 July 2020).
Nettle, D. (2020) ‘Why has the pandemic increased support for Universal Basic Income?’ Available at: https://blogs.lse.ac.uk/politicsandpolicy/covid19-support-ubi/ (Accessed 23 July 2020).
BBC (2020) ‘Has coronavirus changed the basic income debate?’ Available at: https://www.bbc.com/news/uk-scotland-52967720 (Accessed 23 July 2020).
BBC (2020) ‘Basic income of £48 a week in UK urged.’ Available at: https://www.bbc.com/news/business-48185806 (Accessed 23 July 2020).
