Universal Basic Income: an introduction

September 2019

Source: Bill Waterson ‘The Revenge of the Baby-Sat’ 1991

Source: Bill Waterson ‘The Revenge of the Baby-Sat’ 1991

These last few years we see the idea of a (universal) basic income mentioned. It’s not all over the news, but it’s certainly something you’ve probably heard mentioning somewhere or read in passing. Not daily, but once in a while. In a think piece somewhere probably, and probably by someone progressive. But it has been defended by lots of great thinkers, including nobelprize winning economists, civil rights leaders like M.L. King, philosophers like Bertrand Russell, and many others. It’s a fascinating idea that makes you think. Some people are revolted by it, others think it’s a panacea to all society’s problems. It’s a lot more nuanced of course, but it’s worth delving into.

Back in 2015 I wrote my master’s thesis on the subject of distributive justice, basic income and libertarianism. Ever since I’ve wanted to translate and maybe expand a little on the work I did, and share it with the world. This post is based on the first chapter.

In this blog post I will try to define and describe what a basic income could (and maybe should) be. What is and isn’t a basic income, what some of the intended effects would be and some basic criticisms leveled against it. In a later blog post I’d like to go deeper into the history of the idea.

What is a basic income?

First of all I should elaborate a little on the term ‘basic income’. In the past, there have been different names for this idea, as it has been repeatedly and independently been argued for over the course of the last 200 years. Other names include ‘social dividend’, ‘state bonus’, ‘citizen’s wage’ and multiple variations on these. (Universal) basic income often gets abbreviated to UBI or BI.

I’ll start by giving a working definition of what I think a universal basic income is. I’m aware that this definition will be contentious, but I hope to make clear that these different elements are helpful in differentiating between what is and what isn’t a BI and between different interpretations of BI proposals.

A basic income is an income, paid to all individual residents of a political community, unconditionally and sufficiently high for a humane existence.

Lets look a little deeper into the constituting elements of the definition and bring some of them into sharper focus.

Income

First the obvious: a basic income is an income. This means that it’s a monetary payment, and not a payment in kind. This is because money can be exchanged easily and universally for other goods and services. Unlike, for instance, vouchers (as proposed by Milton Friedman) that can only be exchanged for a defined good (food, education, and so on). Money gives more options and freedom to the individual in question, although they could act complimentary.

Besides that, it also implies that the income gets paid regularly, be it weekly, monthly, years or something else. In other words: it’s not a one-time thing or a privilege that’s been extended by a benevolent government, but something that can be relied on.

Individual

It’s important to stress the individual as the basic unit to think about. The basic income is paid out to any single individual resident of a given community (see below) and not the (head of) a family or another configuration of people. The composition of the family isn’t taken into account, in contrast to a subsistence income where people living together get less per capita since living costs get lower when living with two (or more).

In principle the basic income shouldn’t vary with any parameter (see unconditionality, below) except, practically, maybe with age, depending on the implementation of the basic income. For instance, it could be argued that older people need a little more because of rising medical costs and maybe it’s complemented with an existing basic pension that’s already in place. None the less, the basic income shouldn’t prevent people from working longer if they are so inclined.

Community

The basic income gets paid by certain political community to all residents of that community. I’m using these vague terms on purpose here, since these factors can change drastically according to the scale of the proposal. The political community could be a lot of different things, the most obvious one being the (nation)state. But a lot of different kind of communities could act as a executive level to manage and distribute a basic income, both above as below the state. Communities like cities, provinces, sub-states, regions, but also international cooperative initiatives. Think European Union or even the United Nations!

While a basic income could be associated with citizenship, I’d argue for resident-status as being enough to qualify, since there are more people part of a certain community than just those that are formal citizens. Think about refugees, expats, exchange students, asylum seekers, and others. People that could be understood as being long-term members of the community in question.

Unconditional

The most radical element is the demand for the basic income to be unconditional. It’s also the most important part of the definition, the one that makes it stand apart from other social security measures or other proposals (see below) that are conditional in nature. It’s a necessary one.

This unconditionality has two parts. The first being the lack of a means test. This means that the income gets paid to everyone, regardless of their means, income or any other (conditional) benefits. So both rich and poor get their basic income. In the current social security systems, the persons has to actively request assistance and then gets scrutinized in a whole range of aspects of their live. Their household conditions, if they have children, a job, their assets, the other benefits they receive, and so on. It’s on the basis of this background check that the amount of income they are entitled to under the scheme is calculated and doled out. In a basic income scheme, these are all skipped, and no formal request is needed to receive it.

The second part is the lack of any work requirements. This could be seen as an extension of the abolition of other background checks, but it’s more than that. Having a job or even the willingness to work is irrelevant. This is probably one of the more controversial demands, since it means paying people who, according to some views, might not want to reciprocitate the efforts of others or don’t deserve their solidarity.

High enough

A last distinction I’d like to make it that between a sufficient and insufficient basic income, because there are some differences between them further down the road that I’d like to point out. This isn’t necessarily a commonly accepted distinction.

A sufficient basic income is one that is sufficient to live a decent, worthy human life. What this means is debatable, but I’d like to suggest the following: at least all the basic needs should be covered (food, a roof over one’s head, clothing, access to education and healthcare) - basically everything needed to guarantee the fulfillment of our human rights. A good shorthand way to define this more practically would be the poverty line as the minimum level needed to secure these. Note that this is a suggestion for a minimum needed to talk about a sufficient basic income, it could be higher than that and secure more possibilities, such as more opportunities for personal and social development, political participation, certain luxuries and indulgences, and more. There is no formal upper bound to this interpretation, but “[i]f the real freedom of those with the least real freedom is to be maximized, then the basic income must be pitched at the highest sustainable level, subject to the protection of everyone’s formal freedom.” (Philippe Van Parijs, Real Freedom for All, p. 31, my emphasis) Anything between the poverty line and this highest sustainable income, would count as sufficient.

Anything that does not meet this requirement would constitute an insufficient basic income (but a basic income nonetheless). This is not to say that a insufficient basic income would be inherently undesirable or unjust, but there are certain differences between the two that could impact the (moral and practical) desirability of one over the other.

Things left out

There are a few specific questions I left out because they fall out of the scope of this post but I recognize as important and interesting questions.

There’s the issue of children: do they get their own basic income? Would it be a full basic income from the first day or something that scales up? Do the children receive it themselves (according to the principle that it gets paid to individuals rather than families) or does it get paid to the parent(s), just as child benefits are paid now.

What about criminals? Should it be possible to lose your right to your basic income as a punishment? What about prisoners, maybe their stay should be paid for by their own income, in part of in full. This is a subject of retributive justice, and not distributive justice, which is what I’m concerned with here.

If the basic income would be limited to citizenship, what would constitute that citizenship?

There is no work requirement, but what if someone doesn’t have the ability to work? Do these people have a right to additional compensation, possibly even having precedence over the basic income? (Philippe Van Parijs suggests they do)

What about other social security schemes? Does a basic income take precedence over them? If so, which ones and why? Do we remove certain ones? Should we stop subsidizing thing like education, healthcare, public works…? In other words: what are the duties and priorities of the political community?

Variations on BI

There are a few proposals with similar goals and methods that aren’t necessarily real basic incomes.

Negative income tax

One of the most well known alternative social security schemes is the negative income tax. This is a system of taxation where people under a certain threshold don’t pay taxes but get benefits, payed for with the taxes collected from those above that threshold. Those beneath the threshold get a tax break to guarantee a minimum.

While the actual wealth transfers would be significantly smaller than in the case of a BI, it still requires a system of background checks to evaluate eligibility for these tax breaks and thus uncertainty about one’s income (see below).

Abstract graph comparison of different social security schemes source: Van Parijs, Philippe ‘Real Freedom for All’ p.57, 1995)

Abstract graph comparison of different social security schemes source: Van Parijs, Philippe ‘Real Freedom for All’ p.57, 1995)

Stakeholder grants

Another proposition is that of the stakeholder grants as first proposed by Thomas Paine (together with a basic pension), more recently elaborated upon by Bruce Ackerman and Anne Alstott and proposed by Thomas Piketty. The idea here is that every person under the scheme gets a share in the wealth of the community in the form of a one-time lump-sum payment at the age of majority. Just as in a BI scheme, there won’t be any conditions to receiving this grant or any limitations on the way someone can spend their allotted money. They can invest, they can spend, they can gamble, gift it way. The potential and risks are all their own responsibility. The fact that this grant would consist of a much higher sum than a basic income would means that larger endeavors are possible. That’s why Ackerman and Alstott call it a “launching pad for success”.

Although this radical anti-paternalist vision has merits, there are some problems with it. Besides irresponsible behavior, things like changing character (what I’d do with such a grant could be different as a 40-something than a 20-something) or plain bad luck could mean the grant is wasted, with an undesirable outcome, independent of effort and merit. Answers to these problems are to split up the grant in multiple payments to spread out the risk, but this defeats part of the purpose of this proposal. Another idea is to have the option to forego the grant and opt for a basic-income, and thus a steady income, instead.

Participation income

The idea that people would get an income even if they refuse to work (and thus reciprocate the scheme) is a major moral problem to some people. Accordingly it has been proposed to at least require the beneficiaries to participate in society by showing a willingness to work at the very least. The problem here is that including a (willingness to) work requirement would be the (re)introduction of background checks and could possibly be used as a coercive scheme to force people into low paying, unworthy jobs.

Existing forms of BI-like systems

There a few payment schemes already in place that share some characteristics with a BI.

Many countries have a system of child benefits in place to which the parents of the child (in lieu of the child itself, in some cases it may be possible for the child itself to receive the benefit). This benefit is often means-tested and linked to family situation, but besides that is unconditional: each child has a right to it, nothing is expected in return.

Some old age pensions are modeled on this where a retiree receives a fixed pension from a certain age, regardless of their income.

There’s also the Alaska Permanent Fund that has payed out a yearly dividend to all Alaskan residents since 1982. It was started in 1976 and funded with oil revenues of the state. The original intent was for it to pay a dividend to each Alaskan resident, scaled with their years or residency (up to 20 years), but a Supreme Court decision ruled against this and since then the dividend is payed out without accounting for the years of residency.

Why a BI?

Why would it be worthwhile to switch to a BI system instead of the current means-based benefits type of social security? There are multiple expected advantages where a BI would do more or do things better than the traditional social security systems.

Overhead and the nanny state

One aspect that would appeal to adversaries of ‘big government’ would be the reduced state overhead. Less background checks means less resources spent towards a large supervisory apparatus. The whole spending side of a social security system could be minimized, only maintaining the taxation part.

It also reduces the meddling of the state in people’s private affairs. People should (and can) decide how to spend their lives themselves, how to spend their money. The state has no business in decideding which people are or are not deserving of help. This is the critique of the so-called ‘nanny state’ that decides what is best for their citizens. But in a diverse, pluralistic society, there a multitude of different things could be best for different individuals. And who better to decide what that is than the people themselves?

Unemployment trap & uncertainty

One of the biggest problems with many current systems of unemployment is the unemployment trap (also called welfare or poverty trap). This problem arises from the situation where the cost of going to work is actually bigger than when staying unemployed. If the wage of the potential job is not much higher than the benefits, the added income doesn’t compensate for things like the commute or the lost hours you could spend doing something else (such as looking for a better payed job!).

Another part of this problem is the element of uncertainty introduced with losing your benefits when starting a new job. If the job turns out to be unworkable (because of any number of possible reasons), the person needs to reapply and possibly wait for their much needed benefits, and thus be without any income for an uncertain period of time.

A basic income would solve both sides of the unemployment trap, since any income earned above the BI would be substantially higher than the BI alone, and because the BI is guaranteed before, during and after employment, there is no element of uncertainty that would disincentivize any attempts at finding a job.

Poverty and human rights

Giving people at least the minimum to secure their basic needs, you are effectively eradicating poverty. While it wouldn’t prevent wasteful spending, it does give people the means to make more meaningful decisions towards it. If you don’t have to worry about your income, you can think more long term in your investments.

If we take our interpretation of the poverty line as a minimum for a sufficient BI, than we could also say that we’re guaranteeing human rights. And by not patronizing the poor and unemployed, we’re also treating them with human decency.

Lifestyle and ecology

Since a BI is payed to invididuals, regardless of their family situation, it facilitates different ways of living. People can decide to stay on their own or pool their resources together in any way they please. It could act as an incentive for communal living and level the field for a plurality of different modes of family life.

A BI could give people a better choice in how to organize their work-life balance. Working less would become a viable option, so people could spend more of their time towards their own pursuits and goals. They could make time for more creative endeavours or just slow down more, avoiding stress and live a healthier, happier life.

Working less is also an ecological measure. It drastically reduces CO2 emissions by producing less and could disincentivize consumerism.

Autonomy, power and alternatives

Another central argument for a BI is the redistribution of power. In the sense that people who don’t need to worry about their income are more independent. In other words: people become truly autonomous and can make real decisions on how to live their lives.

One way to see this redistribution of power is giving people the power to say ‘no’ to a job. This equalizes the power between employer and employee, making the playing field of labor negotiations level.

There’s also the feminist view: a BI gives people the power to leave a bad situation. A woman can leave her abusive partner for instance, without the fear of falling on hard times because of the lack of a job.

Redress and reparations

An often overlooked use of a BI is that of redress and reparations of past, inter-generational injustice. This type of injustice leaves real harm in its wake, but makes it difficult or even impossible to trace where the guilt lies, what the damages are or who is deserving of how much compensation. A BI could be the best way to manage this discrepancy: the society at large bears the responsability of past mistakes and those who profit the most of those past injustices in our time, would contribute to those whose ancestors were harmed or otherwised disadvantaged by it.

A practical example could be reparation for slavery in the USA. Slavery was a horrible crime against human rights and has still real, measurable effects to this very day. But why would a white person who’s ancestors were slaveholders be held accountable to the choices of those ancestors? The answer that they still profit from the exploitation of slaves may be true, but that doesn’t confer some sort of guilt on those people. A BI could be an abstract way of going about this issue, because it would mainly advantage those that are worse of, including those worse-off because of these past injustices like slavery.

Other reasons?

One reason that has been used a lot is the impact of automation on our economic division of labor. But hile there has been some speculation of the impact of robots and artificial intelligence on jobs, this type of scare is not new. While certain jobs are definitly under threat by this economic development, and some people will suffer from it, it’s unsure it’s really the big threat it is made out to be. Diana Coyle calls it “an answer to the wrong question” in this regard (“Work, Inequality, Basic Income” Boston Review / Forum 2, p.64)

A BI as proposed here would hopefully imply a huge shift in appreciation of labor and an accompanying reevaluation of certain jobs.

A last, but very important justification for a basic income, that I neglected to cover here, is that of justice. That is: the argument that justice demands for a basic income to be implemented, regardless of the practical reasons. I hope to elaborate on these more deeply in a later blogpost., but suffice it to say that I personally am very much a proponent of these types of philosophical arguments, rather than some of the more opportunistic arguments from the economic right. As Frederick Douglass said:” Power concedes nothing without a demand. It never did and it never will.” So we should be wary when the hegemonic powers start suggesting these progressive measures out of what seems to be the goodness from their hearts. An analysis of their motives is certainly in order.

Possible problems with a BI

Cost, financing and economics

High costs,

Financing

Economic impact

Globalisation and migration

Will a BI attract more economic migrants?

Feasible on anything other than global scale?

Laziness

One of the greatest, intuitive fears that people have when hearing about BI is that people would become lazy. They’d stop working and mooching on their BI, because why work when you’ve got a livable income? This goes against the prevailing values of merit through (hard) work, entitlement and pre-philosophical ideas about property or rights. These could come into conflict and breed resentment.

But people seem to have a low opinion of their fellow men, thinking them to be opportunists and of lower moral fibre than they regard themselves. But when asked what they personally would do with such a guaranteed income, if they would act like their caricature of the parasitic other, the answer will almost invariably be “no”. Of course not, since if you’re basic needs are met, other needs arise, and more specifically: the need for meaning. A BI would help people to look for meaningful work or other ways to make their work fulfilling. Does this mean that people would work less? Probably. Would people stop working entirely? Unlikely. There may be some people, but what would they do instead? Would they do nothing of importance (to themselves) or would they try to follow their passions? And could those things not be seen as work in another form, even though it couldn’t help finance the BI scheme?

In Western society, the social security system is built on the presumption of reciprocity. You contribute to the system before having a right to its help. But why should they? Western society also embraces, at least on paper, universal human rights. To fulfill those completely, people should be getting quite a lot of help to give them the means to secure those human rights. These rights should be decoupled from the duty to work.

But even if laziness would turn out to be a problem, why wouldn’t those lazy people be entitled to an income? Lazy vs crazy People from rich background entitled to income without work? why not others? Moral problem

Bad actors and the wrong reasons

BI: a “neither left nor right issue”? A lot of potential, but also lots of possibilities to abuse the idea. To destroy the welfare state, to keep hierarchies in place, etc. A truly progressive interpretation should be

Individualism

Will a BI facilitate an egotistical society by focussing too much on individuality?

Is a BI sufficient to protect individuals from the power of corporations? Should unions and worker-rights be protected?

Conclusion

BI is certainly not the panacea that some people try to make of it. It needs advocates on the left to defend it from being hijacked by people who’d use it to destroy social security.

Further Reading

  • Agrarian Justice - Thomas Paine (1797)
  • Real Freedom for All - Philippe Van Parijs (1995)
  • Real Freedom Assessed: political theory after Van Parijs - ed. Reeve & Williams (2003)
  • Redesigning Distribution - Ackerman, Alstott & Van Parijs, ed. Wright (2006)
  • Basic Income: an anthology of contemporary research - ed. Widerquist, Noguera, Vanderborght & De Wispelaere (2013)
  • Work, Inequality, Basic Income - Boston Review / Forum 2, ed. Joshua Cohen (2017)


Categories:

Philosophy , Politics , Basic Income