The case against Universal Basic Income (UBI)

Continuing with the review of the GIMMS criticism of Universal Basic Income (UBI) and their proposals in favour of what they call a Job Guarantee (JG), which is in fact, more accurately, a Job Offer. RegrettabIy I consider that their criticsm of UBI to be ill thought through.

I take issue with “the problem of the unemployment that government taxation creates“. Even if this may be strictly true, this is a bit fast and loose. Government creates unemployment through taxation really only as much as inflation would in itself, create it. Tax, after all stops inflation.

And so, as the excellent calculations of Daniel Nettle of Newcastle University demonstrate – in spite of them being based on tax and spend –  the effect of Basic UBI is able to be completely non inflationary,  He doesn’t believe in tax and spend (I’ve checked) but his UK costings have indicated the non inflationary effect.

Now I’m aware that the US, unique amoung Western Countries, has little free healthcare. But when you have a job you have usually, free ish healthcare.

Thus it is true that UBI is more ‘dangerous’ in America with little social security and no Universal Basic Services by comparison with Europe. And so many Americans see UBI as a danger to such social payments or medical aid that the US has. The partially insured also see it as a problem – and probably most unthinking capitalists see it as a danger to their own ‘freedom’.

In Europe and Australia there is usually an (almost) entirely free healthcare system as the right of residence. It is not job dependant.

In contrast US jobs are seen as a sort of right of passage. Get a job and get health. This, I fear, is the Protestant work ethic writ large. And for US thinkers who compare JG and UBI, though it is clear that the JG is always counter-cyclical, diminuitive and restricted unemployment benefits (something that is prevalent in the US – and, regrettably, increasingly in the UK) are not regarded as promoting the same stability.

UBI would, however, be paid regardless, though, clearly not in the overtly counter cyclical way of the JG or unemployment benefit, but certainly in the sense of a regular payment into the economy. This could actually mean there was more stability and fewer ‘cycles’ with UBI.

So we arrive at a standoff between UBI and unemployment benefit (or even the JG). It seems that the basic difference between that and supporters of basic income lies either in rigid USA economics, or in the European idea of human nature.

I reckon that we can be assured that people who are paid to live will in all likelihood to some extent also live to pay. This sounds surprising but it means only that there will be sufficient taxes around in order to ‘reflect’ any Universal and Basic Income. Otherwise said – it is unlikely to be inflationary. And the wellbeing engengendered by the security of a Basic Income would be good for everyone.

Reverting back to GIMMS, I don’t believe their (UK) heart is really in the Job Guarantee –  for I actually find much to agree with in the final paragraph:

As a final thought, why not think about an employment guarantee combined with a basic, living wage income for those unable to work for whatever reason along with access to universal basic services such as education and health and social care free at the point of delivery? And that should be just the start for creating a better, kinder and more sustainable world to ensure the common good and the future survival of our species. The challenges we face are not insurmountable we just need those with the real political will to act for change.

Comments

  1. Mel -

    It might be that the counter-cyclical action could be more important than we’ve been saying.
    I take it as given by Minsky that the private sector can and will create cycles all by itself.
    So it might be that in boom times, the constant UBI spending gets taken for granted and factored into the ordinary prices. Then comes the bust, the people who are thrown back on the bare UBI will see their benefit “cut” by the higher prices that were acceptable before.
    In the other case, the JG spending would not exist during the boom, and the increased spending after the bust would be, proportionally, a greater stimulus.

    My mission, should I choose to accept it: study Minsky, and maybe, with a lot more work, try to guesstimate some numbers for my two cases up there.
    (Huh. Can’t even scroll back over comment to proofread. OK. Here goes.)

  2. Peter May -

    No, we’re often not good at proof reading at PP!
    Agreed that JG is countercyclical but so, too,is unemployment benefit of course.
    I don’t think however that JG is fit for pupose (See accompanying MMT logically inconsistent with JG).
    It would have to be something like more infrastucture spend/ maintenance that would be the ‘counter cyclical’ expenditure.

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