Basic Income: A Radical Proposal for a Free and a Sane Economy
The idea of unconditional basic income has recently entered the mainstream and it is now “trending” in the Global North and the Global South. Basic income has often been viewed as a potentially efficient remedy for economic and social distress following financial crisis and most recently, the Covid 19 pandemic. The latest crisis opened up the space for critical examination of the efficiency of current social security programs and their ability to provide an adequate support to people in the context of today’s complex health and work conditions.
Advocating for basic income has a long history. Since the early twentieth century, basic income and similar progressive policies, gained support from different parts of the world and across the political spectrum. Despite the fact that early conceptions of basic income were slightly different to the contemporary ones, they played an important role in legitimizing the idea of “publicly funded and publicly provided poor relief”.
What all basic income proposals have in common is that they involve cash payments, made to individuals on an unconditional basis. The main purpose of such programs is to provide a guaranteed minimum level of income to all persons thereby ensuring or improving their economic security. It is a modest amount of money paid regularly and automatically.
This book was written and published in pre-Covid 19 times, but the global crisis has increased its relevance. It represents an impressive synthesis of philosophy, economics and public policy. This highly sophisticated and comprehensive study aims to provide an extensive analysis of the very nature of basic income, its relationship with similar policies, the wider historical context that allowed this way of thinking to thrive, the main ethical dilemmas attached to it, and of course, of its economic sustainability and political feasibility. Basic income has been seen by van Parijs & Vanderborgt as an instrument of freedom, a real freedom for all not just for the rich.
At the very beginning, while making the argument for this “radical intervention”, Phillipe van Parijs & Yannick Vanderborght shed light on the new wave of technological changes that fundamentally affect the way we live and work. Technological change will inevitably drive the polarization of earning power within countries, while globalization will additionally amplify it. Unemployment and precariousness will become massive and persistent, even in the Global North. In the past, there was a broad consensus between the right and the left that continued growth would keep unemployment and precariousness under control. Today’s unprecedented interest in basic income in the more affluent parts of the world is evidence that this consensus has come to an end. We need a floor on which we can stand as individuals and as communities and the role of basic income is to provide that floor.
The jobless population, they argue, must be offered some means of livelihood. And even though there is an option of expanding the traditional model of social assistance, the only way to address today’s unprecedented changes appropriately and to mobilize today’s opportunities is actually through unconditional transfers. Van Parijs & Vanderborght acknowledge that traditional schemes make major contributions to eliminating extreme poverty, but due to their conditionality they also tend to contribute to turning their beneficiaries into a class of permanent welfare claimants.
One of the most controversial elements of the unconditional basic income is related to the fact that it carries no obligation for its beneficiaries to work or to be available to the labor market.
In existing, conditional schemes this was their sine qua non. Typically, those who are unable to prove that they are actively looking for a job, or those who decline a job are denied a benefit. A common worry is that the supply of labor will be adversely by the combination of obligation free minimum income and increased taxation of the productive activities required to fund it.
There are many and varied motives for working well apart from earning an income, and van Prijis & Vanderborgt rightfully quote P. Townsend and his position on work and man’s need to work to prove this point: “A man works to preserve respect of his wife, children, friends and neighbors, to fulfil the psychological needs induced by the customs and expectations of a lifetime and to… replenish the stock of information, cautionary tales and anecdotes which he requires to maintain his participation in the web of social relations.”
This is why the unconditional grant is often deemed so controversial. It breaks with both patriarchal conceptions of welfare and, indeed, with normative conceptions about how welfare receipts should behave and spend their money. On their terms, though, a universal basic income grant provides an unconditional floor to help unleash entrepreneurship by better buffering the self-employed, worker cooperatives, and capital-labor partnerships against the risk of uncertain and fluctuating incomes. “A basic income can be viewed as an intelligent, emancipatory form of “active welfare state” – liberated from its repressive elements.”
Authors further admit that there are few alternatives to basic income with basic endowment, negative income tax and wage subsidies being some of them. Some of them can be usefully combined, although to a modest degree, with a basic income. And in the absence of a basic income, they would readily concede that their implementation would, in many circumstances greatly improve the status quo. But in the end, authors prefer basic income to its “cousins”.
The way forward, according to the authors of the book is by introducing a “transitional” solution before implementing basic income in its pure and full form. They propose two possible scenarios. First one would include the introduction of a categorical basic income, restricted to some categories of the population. The second scenario involves introducing a partial basic income grant, preserving the administrative simplicity of the grant but not setting it at a level too low to actually to live on.
How do they propose to pay for basic income?
Part of the answer involves a variety of new funding sources, mostly through introduction of new taxes. The authors consider an introduction of a land tax, a carbon tax, a financial transaction tax and a host of other mechanisms that might ease the cost of basic income. But still, all of these new taxes, even if they were easy to implement, are not enough. Given the highly constrained fiscal environment in South Africa, it is unlikely that this is a realistic proposal here.
van Parijs & Vanderborght also propose that fiscal space for the grant would require cutting back on government expenses. One way that authors propose to do is to use basic income as a replacement for some other welfare programs that provide a lower level of comparable benefits. This is a promising suggestion in South Africa, though with the number of priorities competing for government financing, advocates of the UBIG will need to mobilize effectively to ensure that any fiscal space is not filled something else.