Universal Basic Income: A brief overview of a support for intelligent economies, quality of life and a caring society

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Universal Basic Income: A brief overview of a support for intelligent economies, quality of life and a caring society

Apr 17, 2013 3 Comments by Anne Ryan

Introduction

The system for social security as it has developed in Ireland and many other European countries is not working. It was designed for a different era, to provide income security for the relatively small numbers of people who became temporarily unemployed from standard jobs. Efforts to patch it up in response to new needs have been piecemeal. On the other hand, some EU countries, such as Italy and Greece, have no social security system in place. We need a proactive new system, building on the old system’s principles of security and social solidarity, but far more inclusive. Basic financial security should be a right for all members of society. A system that could achieve this is universal basic income, sometimes called a citizens’ income or dividend, and referred to as basic income in this short introductory paper.

Basic income is a regular and unconditional distribution of money by the state to every member of society, whether they engage in paid work or not. Basic income is always tax-free and it replaces social welfare payments, child benefit and the state pension as we currently know them. It also extends to all those who currently receive no income from the state. Ideally, a basic income would be sufficient for each person to have a frugal but decent lifestyle without supplementary income from paid work.

Basic income would bring into the security net all those not served by the current system: casual and short-contract workers who get no or limited sick pay, holiday pay or pension rights; self-employed people and business owners; those doing valuable unpaid work, including care, which adds value to society and economy. Basic income would increase everybody’s capacity to cope with financial shocks and uncertainties and would improve general quality of life, while supporting many different kinds of work, with or without pay.

Currently, those receiving welfare are badly served by the system: if they take paid work, especially low-paid or temporary, they often lose out financially, in a ‘benefits trap’. With basic income, there would always be a financial incentive for people to earn a taxable income, should a job be available. Employers would also welcome the ending of the benefits trap.

For those in sporadic or seasonal employment, a basic income would eliminate the need to sign on and off and the payment delays that often occur. The possibilities for welfare fraud would be minimised, with everyone playing by the same rules in a simpler system. This would also eliminate the current bureaucracy and intrusive scrutiny of claimants’ circumstances.

Advantages to business

Running a business would be a different kind of experience. The income from it would be a top-up to a basic income. This would be a boost to existing businesses. It would also free people to try out business ideas, and the businesses would be viable as long as they made some small profit. They might even be able to carry losses for a short time while the business got established. There would be no harm done if the business failed, because the people involved would have their UBI to fall back on. It would also allow social entrepreneurs, who are not motivated by profit, to thrive. It would be a particularly good support for cooperative and partnership ventures.

It is often difficult in the present climate for small businesses to act ethically and survive. Fair trade is not always as profitable as so-called free trade. A UBI, by providing basic financial security for self-employed people and all involved in a business, would help truly ethical businesses to survive.

A basic income would also allow businesses to run a natural life cycle, fulfil a purpose and then die off naturally. Businesses that are successful often reach all their potential customers, serve them well, and then go out of business because their market has been saturated. They have cycles, like everything else in nature. However, in the modern growth mindset, a business is not regarded as successful unless it is constantly expanding; we find it hard to accept that businesses come to an end. A basic income would also mean that businesses that don’t want to grow can function at the same size for a long period.

A basic income would allow for the enforced closing of businesses (of any size) that are socially or ecologically harmful, such as weapons producers or big polluters. With their basic incomes to provide basic financial security, if a business was threatened with such closure, owners and employees could work (together or separately) to devise an alternative plan for the company. At the same time, all workers have financial security and greatly increased individual choices.

Basic income is a necessary part of any coherent state strategy for fostering private-sector business and entrepreneurship in the future. By providing basic securities for those wishing to start a business, it would create a supporting scaffold on which enterprise, creativity and inventiveness can flourish.

Employees

All employees would get increased bargaining power (individual and collective) within their jobs, because they would not be reliant on income from work to supply basic needs. Those who were dissatisfied with their type of work or with their work conditions would have better chances to negotiate other ways to live and work.

Young people

Young people, who currently face a very precarious future, would have much more meaningful choices and possibilities available if they had a basic income. Pressures to emigrate for financial reasons would be reduced. Basic financial security opens up possibilities for creativity, employment, entrepreneurial and educational pursuits and voluntary work.

Low-paid work

Basic income would make low-paid work more financially viable than at present, since the pay would be a top-up to the basic income. A great deal of caring, artistic and political work is low-paid, but of direct social benefit. If a low-paid job were also dead-end work, a person would have a genuine exit possibility. Anybody, in any kind of paid work (high- or low-paid), who considered the work to be personally, socially or environmentally harmful, would have improved choices about staying or going.

A shorter work-hours culture

Basic income would also make shorter hours in paid work financially viable for greater numbers of workers. If more people chose shorter hours of paid work, this would create employment opportunities for others. There is a growing body of evidence that working shorter hours on the job has environmental benefits, since stressed workers in a hurry consume more high-carbon goods and services. Personal health and wellbeing, time for family, household, community and civic engagement also benefit when people are less engaged with the demands of ‘full time’ jobs.

Government would ideally support this by legislating for practical changes in administration and taxation practices, to make things easier and simpler for employers. They should not be penalised and should ideally be rewarded for taking on more employees, working shorter hours.

Paying for basic income

It is possible to pay for basic income in Ireland, with our existing revenue system. It would replace almost all existing social welfare provisions (top-ups would be put in place for people with special needs), so the amount currently spent on welfare is immediately available. Employers would make a social-resources payment, to replace the present employer’s PRSI. The rest would come from an increase in income tax, which would be paid on all personal income over and above the UBI.i

Talk of increased income tax generates strong reactions, usually negative. But most people ignore the fact that the extra revenue taken in tax would be returned as UBI. In other words, the extra tax we would pay to finance basic income would be offset by the UBI received.

The income-tax source of funding is the simplest and most do-able right now. But ultimately, there is a need for a fairer tax code, more compatible with goals of sustainability and resilience. Such a tax code would keep taxes on labour low and charge high taxes (or economic rent) on resource use. Site- and land-value taxes would be an excellent start. There is also a need for democratic monetary reform, a shift to treating money as a social resource and a public good. And there is a need to start creating regional currencies and local currency commons.ii There is also the possibility of part-funding a global basic income through the Cap and Share or Cap and Dividend frameworks.iii
The important point for now, however, is that any Irish government making a priority of basic financial security for all could afford to introduce it.

Savings would arise from eliminating the bureaucracy of the present social security system. With better quality of life, thre would be less demand on public services such as hospitals, courts, mental health services and prisons.

Conclusion

Basic income would undoubtedly financially benefit some people more than others. Those who would benefit most are the most vulnerable in the current work-welfare system: people doing valuable unpaid work, including care, political and social activism and all kinds of cutting-edge pioneering projects. It would also help those caught in the ‘benefits trap’, people in precarious employment, the self-employed and young people. It would give people financial support to avoid high-carbon and other polluting and damaging work, and to devise low-carbon lifestyles. It would increase the contribution made by those who are already very well off. But if the well-off did fall on hard times, the basic income would provide basic financial support, without welfare applications or delays.

Basic income is not a panacea; it will not solve all our social, ecological or debt problems, nor does it claim to. But it creates the conditions for creative solutions, rather than blocking them, as much of our present social security system does. It is an immediate injection of liquidity into the ‘real economy’ of everyday goods and services and it is an essential investment in a resilient and positive future for all. It would work best if combined with a fairer tax code, especially site- and land-value taxes, and accompanied by democratic monetary reform and the creation of diversity in local and regional currencies. But even standing alone, it would release many talents and energies that are constrained by the present work-money system.

The social inclusion and care for each other that underpins basic income would foster solidarity and tolerance and reduce the resentment, divisiveness and cynicism that can occur when people experience wildly different levels of security. Increased social inclusion creates conditions for greater civic participation and deeper democracy. It deflates the claims of far-right groups, who play on the fears and insecurity of populations, and claim that their undemocratic methods can provide a better life. With basic income, the state functions to pre-distribute money, it provides a basic security at the broad parameters of society and economy and allows unlimited creativity and diversity in the ways people choose to live and work.

Get involved

There is an active international basic income network (BIEN) on all continents. Visit the international website at http://www.basicincome.org/bien/
The Irish network is one of the oldest affiliates and has recently launched a website at www.basicincomeireland.com.
You can find many resources and links on the various websites.
The European Citizens Initiative for an Unconditional Basic Income is a campaign to collect one million signatures to call on the European Commission to encourage cooperation between the Member States to explore Unconditional Basic Income (UBI) as a tool to improve their respective social security systems.

Please visit their site and sign their petition at: http://basicincome2013.eu.

Endnotes

i. Seán Healy, Michelle Murphy, Seán Ward, and Brigid Reynolds (2012) ‘Basic Income Why and How in Difficult Times: Financing a BI in Ireland’, paper presented to BIEN (Basic Income Earth Network) Congress, Munich, Sept 14th. http://www.bien2012.de/sites/default/files/paper_253_en.pdf
ii. Emer Ó Siochrú (2012) (ed) The Fair Tax. London: Shepheard-Walwyn
Feasta Liquidity Network http://www.feasta.org/documents/liquidity_network/2009_liquidity_network.html
Margrit Kennedy (2013) Occupy Money: Creating an Economy Where Everybody Wins. London: New Society.
Mary Mellor (2010) The Future of Money: From Financial Crisis to Public Resource. London: Pluto
Prosper Australia (2012) http://www.youtube.com/watch?v=bnznB2g_La0
Smart Taxes, www.smarttaxes.org
Sensible Money, www.sensiblemoney.ie
Positive Money, www.positivemoney.co.uk
iii. http://www.capandshare.org/
http://www.ilsr.org/instead-cap-and-trade-cap-and-dividend/

Related posts:

1. Basic Income Ireland: first public event
2. Cultivating sustainable and ethical prosperity with basic income
3. Citizen’s Dividends: Basic Income from your Share of the Commons
4. Support for Land Value Tax in the UK from an unlikely quarter
5. Basic Income from Commons : letter to Obama

Briefing Papers, Slideshow

 http://www.feasta.org/2013/04/17/universal-basic-income-a-support-for-intelligent-economies-quality-of-life-and-a-caring-society/

A UNIVERSAL BASIC INCOME

If you know someone who is unemployed, underemployed, or without job security, you may want to look into an idea whose time is coming: the idea of a universal basic income or UBI.� Polls have shown that a majority of the general population in a number of countries find themselves unable to accept the idea of a UBI.� Raised to revere the work ethic they fear that a UBI, if set at a level to permit a decent life, would reward idleness and create legions of free riders.� The fact that empirical studies undertaken in Canada and the U.S. suggest that the incentive to work is not significantly weakened by income security hardly seems to make a dent in such entrenched attitudes.� These attitudes often find expression‎ in the phrase, “I don’t believe in handouts.”

It’s essential to understand that a UBI in no way rules out full-time, adequately paid employment, but rather softens the loss of its availability to all.� A UBI provides the security of a bare living.� Moreover, if it could be shown that the well-to-do receive “handouts”—although they’re not called handouts, and they take forms that disguise their true nature even from most of those who benefit from them—far in excess of anything describable as a UBI, would you be prepared to reconsider your opinion?� On what basis would you deny to the poor what society unquestioningly, though without fully understanding, grants to the rich?

At www.basicincome.com you will find the case for a UBI, as well as a summary of the simple UBI model for Canada presented in the book Basic Income: Economic Security for all Canadians by S. Lerner, C. M. A. Clark, W. R. Needham, 1999.� You will also find a fact sheet entitled ‘Canadian Economic Data.’� A study of this data should convince you that the rich receive very generous handouts indeed (courtesy of tax loopholes and, more subtly but more importantly, the system of money creation known as fractional reserve banking).

The English journalist G. K. Chesterton said that too much capitalism doesn’t mean too many capitalists, but too few capitalists. Unregulated capitalism and state socialism are twin blunders, capitalism because it concentrates wealth in the hands of the few thereby undermining democracy, and socialism because it concentrates power in the hands of a class of state officials who proceed to appropriate the lion’s share of the meagre output of a socialist economy for themselves. Of the two systems capitalism is infinitely preferable, firstly because the chief safeguard of personal freedom in a democratic society is the anarchy and disorder of capitalist individualism, and secondly because capitalism produces so much more wealth. Nevertheless, the great and growing economic inequality in the world today, both within nations and among nations, should be seen as a very dangerous ongoing crisis.� But we must be very careful to avoid the blunder of blaming the rich instead of the true culprit—human nature. We have no reason to suppose, if rich and poor could trade places, that the poor would behave any better. They might well behave worse, as commonly happens when the exploited suddenly find themselves in a position to exploit.� No, the rich take full advantage of the fact that our economy and tax system are organized and managed to their advantage—most of them don’t lose a moment’s sleep over it either—because that’s a very human thing to do. It was ever thus, and it’s a sign of maturity not to be scandalized by it.

Capitalism is based on the principle of competition.� People must work hard in order to succeed.� But many people, through no fault of their own, are ill-equipped to live in such a competitive world.� If we think it wrong to discriminate on the basis of race, creed or colour, why do we tolerate economic discrimination on the basis of energy, academic aptitude, or the motivating desire for wealth?� It’s up to the victims of our economy, and their sympathizers in the middle class, to point to the obvious injustice in much of modern economic practice, as well as to the historic change underway in the nature of work.� Though it may be delayed the day is coming when our society will agree with John Kenneth Galbraith, ‘Everybody should be guaranteed a decent basic income.� A rich country...can well afford to keep everybody out of poverty.’

http://www.basicincome.com/

The Case For a Universal Basic Income

1. While some new types of jobs are emerging, it is a myth that in developed societies such as Canada secure, adequately paid employment is available for all. Therefore the risks of fragile work should be socialised rather than being borne increasingly by the individual.

   Headline: STUDY PAINTS BLEAK JOB SCENE IN CANADA: JOBLESS FIGURES DON'T MEASURE UNDEREMPLOYMENT, REPORT CONTENDS

   Canadian workers are underpaid and underemployed, says a report released yesterday by Ryerson Polytechnic University. The study, conducted by the Ryerson Social Reporting Network, observes that 52% of Canadians are paid less that $15 an hour, and that 45% of the country's workforce is engaged in "flexible" work, with people unable to find full-time or permanent jobs... The Ryerson study estimates that as many as 20.3% of Canadians are underemployed or otherwise lack employment security and an adequate level of wages.

   James Cudmore,

   The National Post�(June 3,1999)

   Politicians praise training together with some type of on-the-job experience as the ultimate cure for unemployment and poverty. Bureaucratic insiders laughingly call this the "field of dreams" solutions – train the people and the jobs will come! Training may be the key in the short term for matching suitable people and some types of jobs, such as those that involve the latest high-tech skills or hands-on personal service. But there is some suspicion, even among those responsible for designing and implementing each new round of skills training, that over the longer term the hottest job market to emerge may be for job trainers.
    

2. It is a violation of human rights to stigmatize and penalize people who cannot find enough paid work to support themselves and their families, and to participate fully in community life.

   Article 25 of the Universal Declaration of Human Rights states: Everyone has a right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
    

3. There is no real moral or socially viable alternative to some form of UBI if society cannot ensure secure, adequately paid jobs for all who want them.

4. If a few people withdraw from the competition for jobs, this will benefit rather than damage society, since there are not enough jobs to go around anyway. A UBI would make this possible.
    
5. For people with no post secondary education or training, the prospects for earning an adequate living are especially bleak. A UBI would reduce the discrimination experienced by those with low academic aptitude.
    
6. Since we cannot continue growth that degrades the environment, employment should no longer be tied mainly to production for the market. A UBI is needed to prevent a win-lose polarization of society and avoid creating a permanent underclass during this fundamental transition.
    
7. "Economic democracy" requires that all citizens have sufficient resources to make uncoerced economic decisions. This requires a UBI so people can turn down undesired jobs.
    
8. A UBI facilitates the growth of different kinds of useful non-market work and of productive time for personal development; both activities complement paid work in the era of the flexible workforce. The fact that more people will choose to study or pursue idealistic or artistic endeavours will benefit society in the long run.
    
9. A UBI maintains consumer demand in the face of unemployment, part-time employment and inadequate wages.
    
10. A UBI substantially reduces transaction costs and increases transparency by allowing most of the complex and costly welfare bureaucracy to be dismantled.
     
11. The earth and its resources (as well as such achievements of humanity as the wheel, the mother tongue, the decimal system, etc., which have made so much wealth creation possible) are the common heritage of all mankind. Therefore everyone has a right to a share in this heritage in the form of a UBI, financed from the wealth created by those who have made use of these resources.
     
12. An UBI is best adapted to an economy in which knowledge has become the main productive force.
     
13. Canada needs a UBI because no social responses currently under serious discussion in Canada are fully adequate to deal with long-term structural unemployment, underemployment and the private sector's insistent demand for a flexible workforce.

"Handouts" to the Wealthy

THE TAX SYSTEM:� The principle of a progressive tax system holds that the level of taxation should be related to the ability to pay. In 1998 the average Canadian family paid total federal and provincial tax of $12,490 or 20.1% of its income. If our tax system was progressive in practice a family with income over $300,000 would pay more than 20.1%. In fact, families with income in excess of $300,000 paid, on average, 14.4%, or 5.7% less than the average family. Even with a flat (i.e. non-progressive) tax this amounts to a handout of $17,100 per family (i.e. 5.7% of $300,000).

FRACTIONAL RESERVE BANKING:� In 1984 Statistics Canada found that the richest 20% of Canadians held 75% of the nation's financial wealth (stocks, bonds, etc.). A more recent survey found that the richest 1% now hold 40%. Let's take 75% as a reasonable current estimate of the financial wealth held by the richest 10% of Canadians. As of 1999 Canada's chartered (i.e. private) banks have created – out of thin air please note – about 95% of our money supply ($557 billion) as debt, otherwise known as bank credit. The interest on this debt is at least 6% every year. If we assume that those banks are 75% owned by the richest 10% of Canadians, it follows that our government, by allowing privately owned banks to create most of our money supply under the fractional reserve system of banking (see `Fractional Reserve Banking or Usury' under General Economic Data), paid or "handed out" $25 billion to well-to-do Canadians (6% of 75% of $557 billion). Although the banking class would never admit it, this amounts to a $8,300 ($25 billion divided by 3 million well-to-do Canadians) "handout" for every man, woman and child in the richest 10% of the population.
        It should be understood that the public debt (federal, provincial, and municipal) is overwhelmingly owned by wealthy individuals, both Canadian and non-Canadian. The interest paid ($77 billion in 1998) on this public debt, not to mention the interest paid (?) on private debt is the consequence of having a debt economy, i.e. a system by which private corporations called banks create about 95 percent of our money supply in the form of interest-bearing bank credit. Now, allowing banks to create a nation's money supply is neither an economic necessity nor an enlightened social policy. Could we not then consider those debt payments as a disguised "handout," a sort of tribute paid to the financial elite that has been built into the economic organization of modern societies so skillfully that it is rarely detected, much less questioned? We think that you can, in which case the handout in question amounts to (using our earlier assumptions) $57.75 billion (75% of $77 billion), or $19,250 ($57.75 billion divided by 3 million well-to-do Canadians) for every man, woman and child in the richest 10% of the population. That's quite an impressive handout. Of course there's private debt too, but we won't belabour the point.

What Can You Do?

If you find the case we have made for a UBI persuasive, you can indicate below (by clicking only one of four buttons) whether you would be prepared to take some positive action to advance the cause of a UBI. Please click the button that corresponds to your level of enthusiasm and resources.

Check the Button that Corresponds
to Your Level of Commitment

Level 1:� I am convinced of the justice and wisdom of a UBI and I extend my moral support and best wishes to those who are engaged in the effort to make a UBI a reality in Canada and abroad.

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Level 2:� In addition to the above I will print out a dozen handouts (print out six pages of the printed-one-side version, or three pages of the printed-both-sides version) and distribute them. One easy way of distributing them is to place them under the windshield wipers of cars parked on a street or in a parking lot. However, it is far preferable to post them in TTC shelters or on other public property where they are likely to attract the attention of those who are seriously interested. It's important always to keep in mind that one's audience is that small fraction of the population capable of understanding the issue, and sufficiently motivated to take a position. The great majority of people will follow those among their relatives or friends that fall into this category.

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Level 3:� In addition to the above I will print out some of the arguments and economic data provided here and ask two people I know to read the material and give me their reactions. (Don't try to convince anyone against their will. Remember that a new idea is often resisted for no other reason than that it is unfamiliar; also that a powerful idea communicates some of its power even to the person who contradicts it.) I will challenge anyone convinced of the justice and wisdom of a UBI to repeat the process with two people in their turn.

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Level 4:� In addition to the above I will write a letter (see example letter) indicating my support for a UBI, enclose any material from this web site that seems appropriate, and send it to four members of government, the Prime Minister, my federal MP, the Premier of my province, and my provincial MPP.

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http://www.basicincome.com/basic_case.shtml