NSW Left member and Deputy Chair of the NSW Labor Economics Committee, Luke Whitington, explains Universal Basic Income
What is an unconditional/universal basic income?
A ‘UBI’ is a simple idea – that everyone, without qualification deserves a basic income, to survive, whether you work or not.
Free money! Yay! Wait, won’t that cost a lot of money?
It depends. For example, a UBI can work like a negative income tax, where the Government tops you up if you don’t earn enough to get a basic level. A UBI could replace some welfare payments. The money spent policing the welfare system would also be saved. Governments could also tax (or own) the companies that own the technology that make a UBI necessary in the first place.
Why would we need a UBI?
Automation and mechanisation are accelerating, causing permanent large scale unemployment and under-employment. This is partly responsible for a crisis of demand in advanced economies which is causing a permanent low-growth, low wage, deflationary environment. When artificial intelligence takes off it’s likely there won’t be enough new jobs to replace the old ones. A UBI solves many of the problems that arise from technological change while ensuring all people have the financial security to reach their potential.
Why would anyone go to work if everyone got a UBI?
To get more than just a basic income. Experiments have shown that some people, particularly students and new mothers, do work less, but then often spend their time studying, or doing other socially and personally productive activities instead. The overall productive performance of the economy doesn’t fall, it’s just that the labour necessary for production is paid for in a different way.
Threatening unhappy workers with unemployment and poverty would also be less effective, improving productivity. Employers would need to attract workers with good jobs, not just the threat of poverty.
Sweet! So how much will I get?
Hold your horses comrade. Many conservatives like it because it reduces complex state apparatuses, but it’s no done deal yet. There are experiments being conducted in Utrecht (Netherlands) and Finland, but of course there is opposition to it. The Swiss held a referendum and it got 23% of the vote, not bad for a first attempt, but a long way off winning. There are also a lot of details to work out. How much should it be? What mechanism should we use to pay it? Who gets it? All residents? Just citizens? Kids?
What kind of moron doesn’t like free money?
The ones that think they’ll have to pay for it. Many people assume that taxes will have to rise to pay for a UBI. That actually may be the case, but of course the question is – taxes on whom? And what? A UBI paid for by taxes on multinational corporations that own the very machines that are displacing thousands of jobs seems like a good idea to many. A UBI paid for by a broad based progressive land tax is another, rather neat method. Land taxes are just about the best taxes it is possible to levy, and as long as they are progressive, they are paid by the wealthiest landowners. The idea that humans deserve to have enough to live on, paid for by the value of the land on which they live, is revolutionary but also has a ring of common sense about it.
There are also strong cultural values that go against the idea of everyone getting something to live on just because they’re a human being. Protestant work ethic, Catholic guilt, Confucian discipline – you know the drill – ‘You have to suffer first in order to receive the rewards’. Once the economic arguments are dealt with (and they’re actually pretty straightforward), the real fight over perception and politics begins. The task is to show that UBI addresses the fact that the value our society creates is collectively created, and therefore everyone deserves a share of it.
What’s the first step?
As Deputy Chair of the NSW ALP’s Economic Committee, and as convenor of the Progressive Economic Policy Network, I’ll be pushing for a motion like the one that got up recently at the Unite (the UK’s largest union) conference in the UK, to investigate a UBI.
A motion? Great! Where else can I find info on this?
Loads of websites, such as QUT’s, and Basic Income Earth’s. Yanis Varoufakis’ speech on it is particularly good. But if you just want to get on with it, here’s a motion for your party unit. I would be very happy to come out and speak to it.
Universal Basic Income to be investigated
[Party unit] calls upon the ALP, either via the Policy Forum or by special committee, to investigate a universal basic income, ie. how much it will cost, who would be eligible and the mechanism for payment.
[Party unit] notes the crisis of entrenched poverty, insecure work, low wages and a labour market increasingly characterised by short-term contracts and casualised forms of employment.
[Party unit] notes the threat to living standards of low wages growth, deflation, low aggregate demand and aggregate demand funded mostly by private debt.
[Party unit] notes the acceleration of automation in many industries contributing to structural unemployment, under-employment and low wage growth.
[Party unit] further notes the evident inability of our social security system, with its complex and intrusive means-testing, activity-testing and arbitrary sanctions, to provide an adequate income for all.
[Party unit] believes that a universal basic income, an unconditional, non-withdrawable income paid to everyone, has the potential to offer genuine social security to all while boosting economic growth and productivity.
[Party unit] notes the exploration of the concept of a universal basic income by NZ Labour and welcomes the planned practical experiments in Finland and Utrecht, Netherlands.
I want a UBI not just an investigation!
I thought you’d never ask! Here’s another motion that your party unit could also pass if you’re already convinced.
Universal Basic Income
That the ALP replace the current inadequate social welfare system with a universal basic income.
A universal basic income would not need to replace all targeted social security payments, such as disability support, but any such payments would be in addition to a universal basic income.
A universal basic income would be non-withdrawable and unconditional, and would not be means-tested or activity-tested.
A universal basic income should be paid for via progressively levied taxation and other progressively raised government revenue.