The Case for UBI
By Horace Choi
What would you do if you received £1000 in cash every month? Would you invest a large part of it? Would you stop working? Or would you pursue your dream that was previously too much of a risk? You might want to start considering these options, as it may become a reality in the not-too-distant future. This policy of handing everyone a set amount of money every month is known as Universal Basic Income (UBI). It is increasingly making its name as a mainstream concept in the American and European political and economic worlds: its supporters include Facebook’s Mark Zuckerberg and the First Minister of Scotland, Nicola Sturgeon, among many more.
You might ask, well, wouldn’t everyone stop working if they can get paid without contributing anything? This doubt is indeed shared by the Conservatives’ London mayoral candidate Shaun Bailey: he claimed that people would lose the incentive to work and instead ‘buy many drugs’ if UBI were introduced. We mustn’t forget that this is not a one-off payment; once people become accustomed to this monthly allowance, they will be less likely to spend it at once like they’ve won the lottery. The size of the UBI payment is also designed to be just enough to live on – it is not simply extra disposable income like it may seem superficially. Moreover, the reality now is that hard work does not equate to wealth, as many people are stuck in the vicious cycle of poverty despite working long, gruelling hours. A UBI would give them a realistic chance to escape from the process: ‘the American Dream’, for example, no longer has to be a dream; it is now ‘the American achievable target’.
By offering this light at the end of the tunnel of poverty, UBI would bring more incentive to work, not less. This can be backed up by one of the most extensive UBI experiments globally, which is an ongoing project carried out by GiveDirectly, an American non-governmental organisation in Kenya. Villagers who had been living in extreme poverty receive roughly $0.75 a day for twelve years. There is evidence that the villagers tend to spend the income on goods that would increase their output, such as horses, which help on farms massively, and motorcycles, which connect them to nearby cities. This would allow their income to increase by a more significant margin than the amount of UBI itself, which means that receivers are not living on the UBI allowance but using it as a springboard to change their lives entirely.
Another way in which UBI would help alleviate poverty is its unconditionality. Current welfare states across the Western world focus on conditions: people can only receive payments if they qualify in specific complex requirements. For example, in the UK, the unemployed must prove that they actively seek work to receive an unemployment benefit, suitably named the ‘Jobseeker’s Allowance’. This has several effects: the complicated paperwork and red tape put off many people who may be eligible; many people who need help are denied it because they do not meet the specific requirements – what if you are unemployed, but this hardship is causing so much depression that you are not capable of seeking work? Under the welfare state now, you would be left to fend for yourself. Crucially, this conditionality also creates a sense of pity: beneficiaries are often seen – perhaps even seen by themselves – as failures who rely on their government’s mercy to survive. When you receive benefits, it is almost as if you are dumped into a lower caste of society.
An unconditional UBI would ensure that the same treatment applies to all members of society, giving everyone a sense that they are equal participants of society. This would change the general public’s mindset regarding poverty and increase motivation for more impoverished people to climb up the social order. This is a less materialistic view on UBI but crucial in the argument.
Hopeful changes for society
There is currently a lack of real-life evidence of the long-term and broader social impacts of UBI because many large-scale trials have only started recently and are ongoing. However, we can still be hopeful about what a UBI can bring to society. It can offer more choices to low-income households. With a certain amount of income in their bank accounts every month, parents who are previously forced to work long hours to earn enough to live on may decide not to work and focus on nurturing their children. Children will also feel less pressure to start working and instead focus on their education. These impacts can mean that children will have better opportunities in life than they previously would have. Workers now also have more leverage to ask for better wages: because it is not a matter of life and death whether they have a job, employers need to offer higher wages to attract employees.
This increased freedom in choices would even lead to a society that is less money driven. Many jobs are incredibly high-skilled but not particularly well-paid because they do not contribute directly to the economy. For example, musicians arguably put in more hard work than investment bankers, but the gulf between their salaries are massively in the bankers’ favour. During the coronavirus pandemic, many professional musicians even had to work in supermarkets and delivery services due to a lack of support from the government. This low job security and low reward for challenging work turn many people away from the creative arts sector; the same situation also applies to many other industries.
A universal basic income would mean that people can devote their lives to where their passions lie, without these worries. As a result, industries such as the creative arts would grow. The general public would appreciate the full scale of their importance, which may have been ignored previously because they do not directly contribute to the economy. In other words, with UBI, we would hopefully live-in a less money-minded and materialistic society.
Many people, however, are hesitant about implementing a UBI because it is too vast a scheme to fund. For example, if the UK government were to hand out £1000 to every adult citizen every month, it would cost about £650 billion a year. This would undoubtedly be an enormous figure, but it is not as difficult to fund as it may seem. Major parts of the existing social welfare system can be demolished – for example, there will no longer be a Jobseeker’s Allowance or Universal Credit in the UK. The money previously spent on these benefits can be spent on the UBI. The remaining parts can be funded through a new series of progressive taxes, such as a carbon tax; it is essential to ensure the taxes are not regressive, which would only decrease the effectiveness of the UBI.
The universal basic income’s popularity has grown massively during the coronavirus pandemic, with a secure job almost becoming a luxury for many. In the UK, the third, fourth and fifth largest parties, namely the Liberal Democrats, Scottish National Party and Green Party, all support UBI; there is also supporters from the US’ Democrats, including outspoken congresswoman Alexandria Ocasio-Cortez, and New York mayor hopeful Andrew Yang. It would transform what people understand about welfare states and provide a much fairer chance for everyone to live a comfortable life. With political support constantly increasing in the next few years, we will likely see more trials or policies similar to a UBI or even a full-scale UBI across an entire country. So maybe it’s time to start thinking about how to allocate your monthly payments.