What is UBI?

The idea of a Universal Basic Income (UBI) paid to everyone (or every adult?) in a particular country, without any preconditions, has been floating in the political ether for many years. But in many countries it has recently moved higher up the political agenda.

Ubi is not a panacea, but it could ease a number of social problems

Indeed the concept has been partially implemented in a number of countries, including Brazil and Namibia. And several pilot schemes on a limited scale have been tried, for example in Finland. But the conclusions from such pilots are inevitably unreliable either because the trial was not unconditional, or it was just for a limited period or was for a small delimited community. I believe the only place where such a scheme actually operates at a modest level, typically around €1000 a year, is the Alaska Permanent Fund dividend paid to all long-term residents in Alaska.

UBI has to be paid to everyone. If a means test were to be imposed it would eventually fail to receive continued political support and would in due course be watered down as (I understand) happened in the UK with Child Benefit, which was originally a universal unconditional scheme. UBI would however have to be taxable; thus for wealthier recipients the benefit would be partially withdrawn through taxation.

However, ‘universality’ immediately raises the most widespread objection: that UBI is unaffordable and would demand such high rates of taxation as to be unacceptable. Various detailed studies attempt to refute this argument. However, I’m more inclined to say: ‘Where there’s a will (which for the moment there isn’t) there’s a way’. The fact is that we live in a society of abundance and it is intolerant, and indeed sinful, that some members of western society are rich beyond the dreams of Croesus, while others struggle to put a roof over their heads or to feed themselves or their families. For me this is more a moral than a political issue.

Another difficulty is how to draw a boundary around those who are entitled to receive the benefit; should they be residents or citizens? And how would one deal with the inevitable pressures of economic migration towards a country which offered UBI? There is no easy answer to this one, except that the geographically larger the ‘eligible’ community the smaller the problem. So, for instance, I support the campaign for an EU-wide UBI. A modest sum, say €500, a month would have little impact in Luxembourg but could be hugely important in Greece. But that would involve the EU becoming a ‘Transfer Union’ which is anathema to many prosperous northern EU Member States.

Then, the question arises: wouldn’t an unconditional payment, especially if set at an amount sufficient to live off, reduce the incentive to work and thereby lead to a community of skivers? Well: No and Yes. Most people would still want to work for a higher income. But if a UBI reduced the incentive to do mindless, menial or dirty jobs for poverty wages – cleaning toilets for example – it could have the desirable effect of driving up the wages for this type of work. And indeed there’s a fundamental human desire to contribute to society in some way or another, either through paid ‘socially useful[1]’ work, or through unpaid (and undervalued) work such as caring for a family or for elderly relatives – which is now most commonly done by women. A UBI even at a modest level would, at the margin, increase the incentive for many to opt out of the ‘paid’ economy and contribute to society and the common good in the unpaid economy. (Look for example at the amount of unpaid work done by retired people in our Church communities – including by the editor of Lumen!)

Finally, it is worth noting that UBI is often supported on the right of the political spectrum as well as on the left. But the right wing politicians that do so tend to view the concept as a panacea that would replace all other forms of social assistance. UBI might replace a basic state pension. But it is obvious that people who are, for example, severely disabled in one way or another would continue to need additional support beyond that of other members of society.

UBI is not a panacea but it could help to overcome the obscene inequalities of the society in which we live.

This article was originally published in Lumen, the magazine of the Anglican Chaplaincy in Luxembourg, in November 2019

[1] David Graeber in his book ‘Bullshit Jobs’ has pointed out how much paid work in our society is not socially useful. This includes many bullshit jobs in, say, the financial sector, but does not include ‘dirty jobs’ such as cleaning toilets which are indeed socially useful.