Few people had heard of it until this year. Now, several governments are running small-scale trials into the viability of Universal Basic Income, typically with the unemployed. The most notable trial is in Finland where residents receive the equivalent of £560 per month to do with as they see fit. A similar trial later began in Ontario, Canada. But what is it and what purpose does it serve?
What is Universal Basic Income
It is simply what it sounds like – giving money to people with no strings attached, to spend as they please. The Finnish trial is specifically for unemployed people, but advocates say it won’t be true Universal Basic Income unless it applied to everyone no matter how much they earn. We won’t know the results from Finland until the trial ends at the end of next year. The government agency responsible for its administration refuses to publish its findings until the trial is over.
It may sound like a radical policy supported by only those with the strong left leaning principles – such as the Green Party and Bernie Sanders – but it also has support amongst some prominent business leaders. Mark Zuckerberg (Facebook founder) and Elon Musk (inventor) and the Adam Smith Institute, a body promoting Free Market Economics, are all strong advocates of the system.
The arguments in favour are certainly intriguing.
What are the Advantages of UBI?
True Universal Basic Income, say the advocates, offer several advantages. The first is that it’s much cheaper to give everyone a certain sum of money than to invest time, money, energy and government resources into means testing for unemployment benefits. This would allow the government to cut its own costs in administering these systems.
The second advantage is economic. It will lift the poorest out of poverty, especially if it’s as much as the Finnish trial is presently paying. We do know that some unemployed recipients have used the money to small start-up businesses. Something that would have been out of the question on the small amount of benefit money they received and the requirement to make a full-time job of looking for a job. Putting the money in the bank and letting it accumulate increases the amount of cash stock available. Spending it on goods and services provides an economic cash boost. Whichever way you look at it, a UBI is good for the economy.
What are the Arguments Against UBI?
We would expect the type of right leaning government that presently exists in the UK and US to oppose it. After all, even though we are less religious we still have the Calvinistic view of the world. This view is that the poorest in society are the masters of their own destiny and will come to rely on welfare with no incentive to find work if it was too high. However, the Finnish government is right wing by most standards and there are arguments from the left and the right for not using UBI. This is not necessarily a left vs right issue.
Some feel that such a system in the UK would create an excuse for the government to abolish all other aspects of the welfare state. This would include government funded systems such as the state pension, schools, and National Health Service – the result being privatisation and the expectation for users to fund services from their UBI. It’s argued that UBI will replace public services, not complement them.
Thirdly, most people are hard-wired to earn rather than expect for free. This is a social issue, but it would require a fundamental change in thinking for everyone. Not impossible, but most of us take meaning from our lives in the work that we do. UBI provides little incentive to work, even though some in the Finnish and Canadian trials are putting it to work, it may not be enough.