A civil servant’s guide to… universal basic income

Written by Tom Graham on 24 January 2018 in Feature
Feature

More and more governments are looking at the potential of universal basic income schemes, says Tom Graham. But there are many factors that need to be considered if any projects are to get off the drawing board and into people’s pockets

Utrecht Photo: AdobeStock

Universal basic income is a simple, radical idea. In essence, it is that a government should give each of its citizens enough money to live on, with no strings attached. What people do with it is entirely up to them.

Some say it could end poverty at a stroke, while making mincemeat of red tape and regulations. Others say it could hobble the economy by sapping people’s will to work – and it’s clearly unaffordable in the first place.

Either way, universal basic income has people’s attention. Labour’s shadow chancellor John McDonnell is investigating the idea. The governments of Finland, Ontario, and numerous municipalities in Holland are launching experiments to test it. And just recently Scotland committed to several local basic income tests.


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At Apolitical, we collated the research and spoke with advocates around the world to find out what civil servants need to know.

What are the arguments for it?

The usual argument from the left is that a universal basic income is a fair and elegant way to eliminate poverty. They see it as radical redistribution, likely funded by a progressive tax scheme, that would help narrow inequality. It would also put a value on all the unpaid labour that goes into our society, such as caring for children and the elderly. Most concede it would replace some, but not all, of the welfare state.

By contrast, for those on the right a universal basic income is attractive precisely because it could replace the welfare state. A universal basic income would require far less bureaucracy than the overlapping welfare programs that many states have today. It could reduce the size of the state and be more efficient too.

Then, sitting strangely between left and right, you have the tech visionaries of Silicon Valley. Their argument is less ideological, and more of a logical end point to their sector’s business. They foresee a future where technology leaves most people unemployed and a few companies with unimaginable riches. In this equation, a universal basic income is simply necessary to keep the unemployed masses clicking, consuming – and content.

What are the arguments against it?

On the left, the argument boils down to a question of how effective it would be. Assuming that having both a universal basic income and a generous welfare system would be unaffordable, would it be better to provide a universal basic income or to simply pump extra money into the existing safety nets in the way that the Nordic social democracies have done?

For those on the right, there are several objections to a basic income, not least the fact that it is likely to be, at heart, a huge redistributive programme. Many also fear its effect on the family unit and the incentive to work. It could end up hurting both the wellbeing of individuals and that of society as a whole.

Both sides have one concern in common: how would it be paid for? Most acknowledge that paying for it would require some combination of tax hikes and cuts to the welfare state. And that runs the risk of leaving some worse-off than they were before.

Has anyone actually tried it?

This is the question Apolitical has been researching to develop a global set of case studies – and an associated community of practitioners and innovators –  for governments considering a universal basic income. Yet while a number of trials have been run, only a handful bear any relevance to universal basic income in a developed country.

The first experiments took place in North America in the 1960s and 1970s. They trialled a negative income tax: a form of basic income in which those who are earning pay back some of their basic income through taxes. The findings were mixed, and politicised. In general, though, they did not see the feared collapse in people’s motivation to work. Where work hours did decrease, it was mostly among adolescents and new mothers, who appeared to be staying at school and with their children respectively. People were not permanently dropping out of the workforce for the Malibu surfer lifestyle.

However, the closest thing to the principle of a universal basic income that exists can be found in Alaska. The Permanent Development Fund has been running since 1982, when the government decided to put the proceeds from a portion of their oil and gas resources into a fund. Since then, every year they have split the dividends from that pot equally between every resident of Alaska. The amount is not enough to live off – it has ranged from $300 to over $2,000 – but it may have had an effect: inequality in Alaska decreased during the 1990s and 2000s, making it the only US state where this was the case.

What’s next for universal basic income?

A new wave of trials has appeared across the world. Finland is testing whether a basic income for unemployed people works better than its existing unemployment benefits. Municipalities in Holland such as the city of Utrecht are experimenting with removing the various conditions from their unemployment benefit, with some groups effectively receiving a basic income. Ontario is trying a negative income tax to see whether it improves job prospects and quality of life, with a particular interest in how it helps those in the gig economy. And in Kenya, the charity GiveDirectly is running perhaps the most ambitious trial, giving a basic income to 30,000 people for up to 12 years. It will be fascinating to see the behavioural changes that come about in a 12-year trial compared to the usual two-year span – although it’s debatable how far findings in Kenya can be translated to the developed world.

At this stage, the discussion around universal basic income is interesting, but academic. It’s unlikely a government will roll out a universal basic income any time soon. But a few decades down the line, their hand may be forced. In the meantime, more experiments are welcome.

 

About the author

Tom Graham is the lead writer on inclusive growth at Apolitical and tweets as @Tajg92

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