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Universal Basic Income or universal basic poverty?

Covid has changed the landscape of employment out of all recognition. Around two million people have lost their jobs, millions more are on the government’s furlough scheme. Indeed, if you add in the public sector, some ten million people are now on the state payroll – nearly half the UK workforce. 

So, why not just keep going and add the rest of us?. 

Advocates of a Universal Basic Income say that Covid-19 is laying the groundwork for a future in which every citizen will be given an income whether they work or not. They believe this will allow a the creative energies of the people, ground down by the nine to five, to be released. 

New ideas will flourish. Voluntary work will become the norm. We’ll all become poets and musicians. Only worthwhile jobs will remain because no one need do any work don’t want to do – like empty bins or sell stuff. 

It is a pleasant fantasy, and taken seriously by many visionaries, including tech billionaires like Facebook’s Mark Zuckerberg and Tesla’s Elon Musk, who wonder what is going to be done with all the surplus people once everything is automated. 

Nicola Sturgeon is an advocate of Universal Basic Income and has more or less promised it in an independent Scotland. There are trials underway in Scottish councils.  

Most fans of UBI regard themselves as being on the left, like Barak Obama and Yanis Varoufakis. However, the idea has a long history on the right.

The libertarian economist Friedrich Hayek advocated guarantee minimum income in “The Road to Serfdom”, Margaret Thatcher’s favourite book. Ditto Milton Friedman in the 1980s.

The famous Alaskan scheme, the Permanent Fund Dividend (PFD), was introduced by a Republican Governor, Jay Hammond, in 1976. The recently-completed UBI experiment in Finland was initiated by a right wing government including the True Finns in 2015. 

Now, I’m not playing the Twitter game here of guilt by association. An idea can be worthwhile no matter who supports it. However it is not an accident that Universal Basic Income is attractive to tech plutocrats and small state visionaries. 

To those on the left, UBI seems like an exercise in humane wealth redistribution, and to a certain extent it is. But those on the right see it very differently: as a means of undermining the big state. Citizen’s income becomes a lever against spending policies. 

In Alaska, the Independent Democrat governor, Bill Walker, recently tried to reduce the PFD in order to improve education funding. Last year he was defeated by the Republican Mike Dunleavy who promised instead to double the UBI, and cut public spending in the state by £1.8bn. 

Public services being sacrificed in order to put more free money in peoples’ pockets isn’t quite what advocates of UBI envisage. But there is a logic here: if people’s incomes are determined exclusively by the state, politics will become about the level of that distribution.

Imagine a system in which everyone receives £5,200 a year, as proposed by the Reform Scotland think tank. Leave aside the increase in taxes required to pay for it. Rich or poor old or young, you get the same chunk of change from HM Govt.. 

First off, this is not enough to live on and is the same as the current level of Universal Credit, currently £100 a week. It is a mystery to me why this is seen as a boon to humankind. A whole raft of means-tested benefits would have to be added on top, like housing benefit disability benefit, child benefit. 

UBI advocates say: well, it’s only a start. Anyway, people can top it up with a job. But think of what happens at election time? 

Along comes the Real Income Party of Fiscal Fortitude (RIPOFF) led by a charismatic populist who says, like Dunleavy in Alaska: “This isn’t a universal income; it’s universal poverty. Vote for me and I’ll double it”. 

Since taxes will already be sky high to pay for UBI phase one, he or she will promise to pay by making the state more “efficient”. Get rid of bureaucrats. Cut waste. End subsidies. Get rid of immigrants trying to grab our money. 

This populist aspect of UBI hasn’t been considered because most of the existing UBI experiments are not UBI. In Finland, 2000 long term unemployed were given €550 a month for 2 years subject to a means test. The results were indifferent, though most of the recipients said they felt better. But this was not UBI, which is meant to be given to everyone, working or not. 

Spain is about to introduce another NonUBI. The Socialist-Podemos government is planning a non-contributory cash payment of around €1000 a month restricted to families who fall out of the existing means-tested social safety net.

Neither the Spanish nor the Finnish schemes are individual, unconditional or universal, the three key criteria for UBI. Politicians hailing these schemes, like Labour’s Rebecca Long Bailey, appear to be unaware of this. 

Other schemes exist in the developing world. The biggest, in Kenya covering 20,000 villagers and paid for by the US charity GiveDirectly, has been under way since 2016. It has been praised for not constituting a disincentive to work. But since the UBI there is only $22 dollars a month, that is perhaps not surprising. 

Any UBI worth the name in a country like the UK would have to be set at something close to average wages. Otherwise, what is the point? I simply don’t see the sense in offering people a UBI at the same poverty level as Universal Credit. 

And to give a living UBI to everyone, wealthy included, and then tax everyone massively to pay for it, seems to be a perverse form of redistribution. 

UBI is addressing a serious issue. Think tanks claim that automation will kill a third of all routine jobs. Capitalism doesn’t need big work forces any more because it has evolved beyond industrialisation. 

But UBI is not the way. The benefits of automation should be spread by taxation, shorter hours and higher pay, not by creating a society of serfs living on a miserable stipend.

About @iainmacwhirter

I'm a columnist for the Herald. Author of "Road to Referendum" and "Disunited Kingdom". Was a BBC TV and radio presenter for 25 years - "Westminster Live" and "Holyrood Live" mainly. Spent time as columnist for The Observer, Guardian, New Statesman. Former Rector of Edinburgh University. Live in Edinburgh and spend a lot of time in the French Pyrenees. Will that do?

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