Universal Basic Income and Sarah Palin’s starring role.

 

Having attended a recent lecture on Universal Basic Income (UBI) – otherwise known as Citizens’ Income (the two are interchangeable) – by Bill Jordan, Professor of Social Policy at Plymouth University, I offer a summary of what I took from the evening, both from the lecture and the ensuing discussion.

First, the idea has been around for much longer than is often supposed. The core of the concept is probably attributable to Thomas Paine, whose pamphlet Agrarian Justice of 1797 proposed pension payments to all 50 year olds or older, and £15 to everyone at the age of 21 to give them a fair start in life. The Speenhamland system is sometimes also cited but this was really a system of family credits although it, too, dates from the 1790s.

In more modern times significant contributions to development of the idea came from a Scheme for a State Bonus published in 1920 by the Quaker, Dennis Milner, who proposed a minimum income for everyone which would vary with national productivity. At approximately the same time a scheme called the national dividend was proposed by Major Douglas, who made it a part of his New Economics, which was influenced by his engineering background and experience in the First World War. His ideas – including the principle that ‘systems were made for men, and not men for systems’ – were very much ahead of their time and continue to be radical proposals today. Morover, in Canada in particular these ideas found support, with the Social Credit Party retaining power in Alberta for about 20 years.

The polymath and cartoonist of the London Evening News John Hargrave took Douglas’s ideas up in the 1930s when his “Greenshirts”, who were demanding a National Dividend, were pitched against Mosley’s Blackshirts. The idea of a National Dividend was seen as a financial stabilisation system in the 1930s recession and received the approval of several economists, including James Meade, who subsequently won the Nobel memorial prize in economics.

With the coming of the Beveridge welfare state the Universal Basic Income faded from relevance and was largely forgotten. But by the 1970s, with new technology leading to redundancies in many labour intensive industries, whilst also signalling the prospect of less work (e.g. a shorter working week) the idea began to resurface. Thus, in the 1980s Sir Brandon Rhys Williams, the Conservative MP for Kensington and Chelsea (no less) and son of an enthusiast for UBI, sponsored the economist, Hermione Parker, to research the idea and a paper, Instead of the Dole, was the result. This suggested that as tax and benefit systems were beyond repair there was a strong case for integration and that the outcome – a form of Universal Income – would lead to a better functioning capitalism.

In 1986 the Belgian Philosopher, Philippe Van Parijs, published a paper The Capitalist Road to Communism in which he proposed that once everyone had a decent basic income they would be likely to work for free, which would lead to ‘free economic exchange’ and a communist society. And in the UK the Citizens’ Income Trust now promotes discussion on a Universal Basic Income.

The most prominent instigators of a Citizens’ Income that have so far emerged are those societies that have windfall wealth from reserves of natural resources, such as mineral deposits. Alaska is one of the most long standing examples, where distribution was approved after a referendum by a Republican governor. A recent retiring governor (Sarah Palin, no less) doubled this distribution to $2,000 annually. This is not referred to as Citizens’ income of course – simply as a payout from the oil wealth trust fund. But if you’re not a citizen of Alaska you don’t get it, so it would appear to be a Citizens’ Income in all but name. Yet even this relatively tiny annual amount has made Alaska a more equal society, with the lowest poverty of any state in the US.

Such research studies as have been conducted suggest that with a Citizens’ Income more people are educated to higher levels, mental health improves and even that there is less prostitution. And on the grounds that we should always be ready to use a crisis to improve things UBI would certainly be a much more rational response if or when we experience our next banking crisis.

With continuing decline of manufacturing in many countries, and the ever rising numbers of insecure service jobs, UBI has come into the spotlight once again. Even skilled service jobs in professions such as accountancy and law are now considered likely to be under pressure from new and emerging technologies. For the majority of people, working is much less financially rewarding than it has ever been, whilst means testing of benefits and coercion towards work are both widely used to punish those not in employment, despite being both morally questionable and administratively costly and inefficient.

Meanwhile, traditional political parties are now mostly in long term decline and single issue and authoritarian ideas are in the ascendant. At a time when ideas against authoritarianism are desperately needed, a Citizens’ Income would enhance freedom for everyone and give people time for independant thought and the potential to participate more easily in the many activities and features of the societies and communities in which they live. Forcing people to work would be unnecessary. The minimum wage would also be unnecessary because inadequate wages would not attract people to work (if they did, one could presume it was a highly desirable job). The coercive power of the state would be reduced in an important – perhaps the most important – area, and the likelihood is that, as a consequence, citizens may feel better disposed towards the state. Crucially, as there would no political capital associated with work or unemployment, the political process would be freed up to focus on more pressing and fundamental issues, such as the future of our planet and fate of humankind.

Of course, there are objections to UBI, mainly revolving around how it would be paid for. However, since the financial crisis we know that governments really can create money out of “thin air” so in reality that argument is a non issue. UBI would perhaps lead to problematic inflation but the best guard against this would be to introduce it gradually. Additionally, government creation of money for UBI would be from a non debt source and thus banks’ money and credit creation could be more substantially controlled with much less effect on the economy, with the added advantage of less indebtedness to create the same amount of money overall. We then have what’s apparently the “Jeremy Corbyn objection”. This is that work is life affirming and offers value and respect. The assumption here being, it seems, that those who do not work would otherwise become slovenly and idle, or drunk or dissolute, and thus that those who don’t do paid work are apparently worthless and have little self respect. I’d suggest this is not the case as it’s at variance with what evidence we have. Then again, if the introduction of UBI were gradual we could see what the outcomes were and revise policy accordingly – couldn’t we?

The last objection stems from the so-called Protestant work ethic: that it is somehow immoral to pay people for doing nothing. Landlords and bankers (and rentiers in general) appear to have been forgotten in this understanding of societal structure. But it would seem prudent to be careful with our vocabulary. So I’d suggest that, whilst still being paid monthly, the terminology should probably be tweaked to Citizens’ Capital or Universal Basic Capital to emphasise that it’s a potential capital resource and thus really harks back to Thomas Paine’s idea of a fair start in life for everyone (or even Gordon Brown’s Child Trust Fund). Red in tooth and claw capitalists should have a good time objecting to ‘Citizens Capital’!

As with any major change in social and economic policy, the transition to a Citizen’s Income would be tricky, though most of those attending Bill Jordan’s lecture seemed to think that starting with school leavers and students – exactly those whose life prospects are currently the most difficult – would offer the best route to reform. Perhaps I’m mistaken, but I certainly came away from the event thinking that, for once, there seem to be few if any downsides to this long overdue proposal for policy development that really is fit for purpose for the the 21st century.

Comments

  1. Michael Christian -

    . UBI would perhaps lead to problematic inflation but the best guard against this would be to introduce it gradually.

    Maybe a better way than devaluing the spending power of the currency would be to divert the public sector spending on education, health and pensions to the UBI. That would give every single household in the UK about £15,000 per year (extra) income.

    1. Peter May -

      This is the thinking which is common amoung UBI proponents in the USA.
      But it doesn’t work and undermines the Mutuality Principle mentioned in Andrew Dickie’s piece above.
      So if I don’t have children to send to school or am not ill I just keep the money. On the other hand I might be so ill that £15,000 wouldn’t cover it.
      Pensions where they are not entirely contributory are of course already a form of Citizen’s Income.

  2. Ms Christine Bergin -

    May not happen but I suspect that some people would use the UBI to upgrade their lifechances by more education or Training. Strongly suspect that some with strong handicraft or personal care skills would be able to start their own businesses. I am quite sure that people are a lot more inventive and capable than our present push-button world allows them to be.

    1. Peter May -

      I agree. And there is a likelihood that they could start a business certainly with less debt and possibly without debt at all and that can only be an advantage!

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