Everyone’s Talking About Basic Income. Here Are 8 Problems It Could Fix

In America, and around the world, there has been a surge of interest in basic income. Under a basic income scheme, a government gives a fixed amount of cash, without strings attached, to every citizen. Democratic presidential candidate Andrew Yang is campaigning on the promise of a $1,000 basic income for all Americans, India’s opposition Congress Party pledged a basic income for the poor, and Finland recently completed a two-year basic income trial.

Critics dismiss it as unaffordable, that it would be un-American to giving something for nothing, that would be silly to give to the rich as well as to the poor, or that it would reduce work and make people lazy. Such reactions are unfair. There are sensible ways of funding it; the wealthy already obtain a lot of something for nothing (they just call it inheritance); it would be more efficient to pay to everybody and tax back from the wealthy rather than rely on inefficient, expensive means-testing; and the evidence from pilots shows that it would not make us work less.

We should consider basic income from the perspective of what it would do for individuals and society. Let’s start by admitting social policy is in crisis — not unlike the mess it was in during the late 1930s in the U.S. and Western Europe.

Then in 1942, as the U.S. entry into World War II helped turn the tide in favor of the Allies, the British government commissioned a report on post-war social protection that went on to influence thinking on both sides of the Atlantic. Its author, the respected economist William Beveridge, said it was “a time for revolutions, not tinkering,” in which the challenge was to slay “five giants” on the road to social progress: Disease, Idleness, Ignorance, Squalor and Want.

In America and Western Europe, the income distribution system built in the post-war era went a long way to slaying those giants, helping to put the horrors of fascism and state communism in the past. But today we face another crisis, in which the distribution system has broken down. One way of putting it is that we are confronted by eight modern giants blocking the path to a Good Society. Let’s consider each in turn.

Inequality

The first giant is inequality. Within almost all countries, income and wealth inequalities have increased hugely, partially concealed by wealth stashed in tax havens. We have morphed from an era of liberalized financial markets to one of rentier capitalism, when more income is captured by owners of financial, physical and intellectual property, leaving average wages to stagnate. Governments have increased subsidies and tax cuts for the wealthy, while cutting social benefits and making them harder to obtain.

Inequalities breed resentment, foster social illnesses and slow economic growth. If most of the gains go to an elite, governments must boost growth more to see any gain for lower-income households. But higher economic growth brings other problems, such as more environmental damage, including pollution.

We need something to reverse growing inequality — something compatible with a free market economy. By recycling the rental income now taken by the elite to everybody in society, a basic income could be the anchor of a reformed distribution system and modestly reduce inequality, if only because a flat-rate regular payment represents a larger share of a low-income person’s income than it would for wealthier people.

Economic Insecurity

The second giant is economic insecurity. Most welfare states insured most male workers and their families against contingency risks such as unemployment, illness and accidents. But social insurance has withered in the face of flexible labor markets and technological disruption. Worse, today’s economic insecurity is characterized by chronic uncertainty. People feel threatened by “unknown unknowns,” which cannot be covered by insurance. And everywhere governments have shifted to a “targeting” approach for the poor, through means-testing and behavior-testing. That has made access to benefits much more uncertain for people in need and those worried about becoming so. In an open, globalized economy, a basic income would provide basic economic security — simply because it would be guaranteed as a right.

Debt

The third giant is debt. This stems from the inequality, stagnant wages and insecurity, and is central to rentier capitalism. More people are living on the financial edge, with unpaid housing rents, utility bills, high-cost credit cards and even higher-cost short-term loans. Globally, total global debt is three times the size of the global economy, with household debt in the U.S. and U.K. at record levels. A rise in interest rates or a recession would trigger an avalanche of distress.

A basic income would not solve the debt problem, but pilot projects around the world show that when people know a predictable amount is coming regularly, they are likelier to pay debts and gain more control of their finances.

Stress

The fourth giant is stress. This is a global pandemic, with millions suffering from depression, mental illness, suicidal tendencies and physical ailments linked to insecurity, debt, job pressures and feelings of inadequacy. Again, while it would not cure the stress pandemic, pilots show simply the guarantee, rather than the size, of a basic income reduces the intensity and prevalence of stress, giving people more control over their lives.

In Ontario, the initial results of the pilot launched in 2017 that was ended prematurely by a new right-wing government pointed to a sharp decline in domestic violence and depression. Similar result were found in the recently completed pilot in Finland.

Precarity

The fifth giant is precarity. This is associated with the growing precariat – the millions who face a bits-and-pieces life of unstable labor, doing work that is not recognized or remunerated, without a secure occupation, relying on volatile wages, without non-wage or rights-based state benefits. The key is that they have to rely on favors and discretionary decisions by bureaucrats, occasional employers and relatives. They lack what sociologists call “agency.” For them, a basic income would offer much-needed respite, making them feel less like beggars.

Robots

The sixth giant is the dreaded robot. Many commentators fear robots will displace humans, creating mass unemployment. To be sure, we should be skeptical about the more alarmist predictions, since such predictions have accompanied every technological revolution, and since each one tends to generate new forms of work and labor.

Yet the current technological revolution is proving very disruptive, intensifying insecurities and worsening inequality, since the income goes mainly to those owning the patents. A basic income would share the gains more widely, cushioning the disruption. It would also create a preparatory mechanism for distributing more income if the dramatic predictions of human displacement were to materialize.

Extinction

The seventh giant is the most savage. Global warming and pollution have a new name associated with a spreading protest movement – extinction. I predict the onrushing environmental catastrophe will prove to be the decisive factor in mobilizing support for a basic income. We need high eco-taxes to deter fossil fuel use. The drawback is that taxes are unpopular and a fuel tax is regressive, because the poor pay proportionately more. As President Macron in France found, high fuel duty can spark riots, as shown by the ‘Yellow Vest’ protests in France.

Read More: This Presidential Candidate Wants to Give Every Adult $1,000 a Month

The solution is relatively easy, and is the route being taken in Canada and Switzerland. This is to impose high fuel and other eco-taxes and to return the proceeds to the citizenry in the form of “carbon” or common dividends. A similar plan has proved popular in British Columbia, and in the U.S. a cross-party group of politicians in alliance with 27 Nobel-Prize winning economists and four ex-heads of the Federal Reserve have advocated a similar policy in the United States.

There is a more subtle advantage of a basic income. Experiments have shown that it leads people to doing more work that is ecologically and socially desirable, rather than resource-depleting labor. Basic income leads to more care work, more community work and more resource-preserving activity.

Populism

The eighth giant is sinister. It is populism, verging on neo-fascism. Support for populism stems from insecurity, inequality, stress and a precarity in which those in the precariat see no future in today’s economic system. The less educated group often listens to the sirens of populists, who play on fears of strangers and “the elite.” Those like President Donald Trump, Brazil’s Jair Bolsonaro, France’s Marine Le Pen and others appealing to racism and xenophobia across Europe are harbingers of a new unenlightened age unless reforms can blunt their appeal. A basic income would give people basic security, and make many more feel valued citizens with a stake in democracy.

And while the primary reasons for wanting a basic income for our citizens is that it would improve social justice, enhance individual and community freedom and provide basic security, the eight giants blocking our road to a Good Society make reform in that direction a matter of urgency. It is again a time for revolution, not patching.

Standing’s new book Plunder of the Commons: A Manifesto for Sharing Public Wealth is out August 2019.