Universal Basic Income: Fantasy or Possibility?

There is an astonishing disparity of wealth in the world.  This year, the richest person alive, Bill Gates, is worth approximately £52bn, while 896 million people worldwide live on less than £1.32 a day. This is not a problem that is restricted to a certain socio-economic ideology: capitalists, communists and variations thereupon all seem to experiencesome form of economic inequality. For the purposes of argument, the UK will serve as an example of a capitalist system, and China for a communist one.

The Chinese Communist Party is the biggest political party in the world, and has held power in the country since 1949. The communist ideology “…aims to  replace private property and a profit-based economy with public ownership and communal control of at least the major means of production…”, however it is noted that, in the 21st century, “the remaining communist countries…are now allowing greater economic competition while holding fast to one-party rule.” This might explain, therefore, China’s current high level of income inequality despite its communist credentials. The richest 1% own a third of the country’s wealth, whilst the poorest 25% share only 1% of it. Accordingly, a capitalist society such as the UK is not immune to this inequality. Capitalism is defined as follows: “…a system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state…”. In the UK, the richest fifth of the population have 40% of the wealth, while the bottom fifth share just 8%. Although less severe than China, this should not be taken as a judge of each system’s effectiveness: both isolated examples. What it does demonstrate is that systems currently in place are ineffective in curbing inequality – in fact presumably they create it – inequality that leaves people homeless and hungry. A possible solution to this, highlighted recently by software engineer Marc Andreessen, amongst many others, is Universal Basic Income.

Universal Basic Income, a system whereupon each citizen of a country is paid a liveable amount by the government, is compatible with both capitalist and communist systems, at least by the broad definitions outlined above, as it does not interfere with the ownership of a country’s industry. Thus, it is an at least theoretically viable solution to the inequality described above.

Nonetheless, it has its opponents, and many of their arguments are related to cost and logistics. For example, one UK critic argues that the system would either deprive the most vulnerable of the money they need by effectively lowering the benefits they would already receive or, to avoid this, would be extremely expensive and provide the richest with money that they do not need. They conclude that if one tries to counter this, by tapering income up or down depending on individual circumstances, one is left with a very similar idea to the current welfare system. And yet, evidently, the current system is not working.

However, another critic of UBI refutes the claims of high cost, noting that: UBI is a scheme of income redistribution where gains and losses across the population add up to zero”. However, they do agree in more detail with the argument that it is the logistics of implementation – and making that implementation plausible and non-disruptive to the economy – that is the problem with the proposal. For example, unconditional income removes the incentive to work, and even if further financial incentives are available for people in work, there is still a lower likelihood of a person actively seeking employment. Worklessness has been associated with poorer academic progress in young dependant children, as well as lower levels of education, employment and training in older dependants (15-18). Of course, arguably, academic success might not be the most important factor to consider in terms of UBI, particularly when the UK education system has been so heavily criticised recently for new, narrower, more target-based policies. Furthermore, one must also consider other factors that might be negatively affecting workless households: being from a deprived area, lack of parental education and being part of an ethnic minority. All of this considered, it cannot be definitively argued that worklessness is always a negative thing, and thus it cannot be argued that this would be a negative side-effect of UBI.

Other arguments are more compelling. The most interesting of these is housing cost. UBI would have to allow for housing cost within the money distributed. Citizens with low or no cost for their housing would thus be comparatively better off than those with higher housing costs. This might be acceptable if affordable housing was available across the country and higher costs merely a matter of choice, but this is not the case. For example, in Pendle, Lancashire, the average rent for a two-bedroom house is £368pm, but in Kensington it is £2970pm. Per year, that is a difference of £31,224. Of course, theoretically, those relying solely on UBI could simply move, but given that moving is also costly, the original critic predicts that the reality would be urban poverty.

However, there are also plenty of positive arguments for the idea: re-evaluation of the value of work by individuals, better working conditions, less bureaucracy surrounding welfare, less inequality, financial reward for unpaid roles such as parenthood. Furthermore, experts also cite the staggering advancements in AI as reason enough to consider UBI, with machines increasingly able to perform human jobs, and thus declining levels of available employment. Since the 1990s, routine labour has been being conducted increasingly by technology, and it looks ever more likely that non-routine jobs could go the same way. This might seem like a threatening eventuality, but in reality, it also might remove the high social value placed on employment, instead allowing people to choose their ‘occupation’ – paid or unpaid – more freely, based upon their own interests and beliefs.

Furthermore, on top of this idealism, it has also been considered by legitimate political parties and organisations. The Green Party, for instance, included a “citizens income” in its policy outlines in its election bid in 2015. This was costed at £240bn, although party leader Natalie Bennett said the £72.40pw would be reduced for high income individuals, and thus the costing could be wrong. The Finnish government, meanwhile, are currently courting plans to introduce a basic income of 800 euros in the country; the pilot system could begin in 2017. Despite the fact that some commentators believe it to be more an attempt to remove bureaucracy than reduce poverty – as the payment is not sufficient to live on – it would still make Finland the first country in the world to have a form of basic income.

It seems, therefore, that Universal Basic Income in its purest form is rather idealistic and, perhaps, unrealistic in today’s world. However, that is not to say that it will always be so, particularly as some political leaders make steps towards implementing it in a diluted form, in conjunction with other forms of welfare. It might be a fantasy, but it is a positive one, and one which is having real impact on the world. Its critics surely are not against the effort being made by its advocates to lessen hardship.

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