Fighting Poverty with Universal Basic Income

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The progressive left is perpetually locked in a dynamic of competition between idealism and pragmatism. Normally these two mindsets sit uneasily alongside one another, each nudging the other. However, in the past few years, across Europe and now in the US too, these two political strategies have begun to go their separate ways. We now have one left that is versed in the language of technocratic resolution and is almost disdainful of imagination and ideas, and another left that is willing to hurl itself at political headwinds – with inevitable consequences. Both strategies have been and will continue to be defeated. I will leave it to the reader to decide whether this is tragedy or farce.1

The debate around a universal basic income has come to prominence at just the same time as this divergence, and as a test of the current state of the left it represents a useful political experiment. Explanations for why the basic income discussion has emerged only now are well-rehearsed: concerns about the brutal nature of the low-pay-no-pay sanctioning welfare state; anxieties about the impacts of automation and other technological change on employment; questions about how we can meet social needs such as caring for relatives; and the prospect of a number of basic income trials in at least two countries. This debate poses interesting challenges for both the left’s idealists and its pragmatists.

‘Nice idea, but this isn’t Utopia’ The idea of a basic income is as old as philosophy itself. At a simple level, the basic income is an unconditional payment to every citizen (and in some models, such as that adopted by the RSA, children too). That it has only ever happened in a limited form is indicative of the challenges of both implementation and legitimacy. In philosophical terms, basic income has some considerable merit (and has advocates among many on the free- market right as well as liberal centrists). Basic income’s appeal is that it provides a platform from which people can plan and improve their lives: whether through work, learning, caring, performing or entrepreneurship.

1 This essay, with those by McLean and Steiner, forms part of a set of articles on basic income in this volume.

Opinion

Pragmatism, idealism and basic income A transformative investment in human potential

Far from being a utopian pipedream, a basic income has been successful whenever it has been trialled. Anthony Painter argues that those on the left who pride themselves on their pragmatism should consider the evidence: a basic income is not only a sound investment, but a new approach to progressive statecraft capable of responding to the needs of our times.

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Some denounce it as welfarist, statist universalism. This misses the point. It is a basic support that enables people and society to flourish. Basic income systems are not ‘welfare’ as traditionally understood; rather, they are about investment in human potential, just as education is. If we were to put the case for basic income in terms of Roberto Unger’s wider philosophy, it would be one support for people to live a ‘larger life’.

It is not surprising that the more idealistic left has warmed to basic income more than the pragmatists have. It largely does not compute with the pragmatists at all. There is little doubt that basic income would represent an ambitious change to the social contract. Yet so was the Beveridgean welfare state, the Turner commission on pensions, the foundation of the NHS, the expansion of tax credits in the 2000s, the introduction of the minimum wage and its extension towards a living wage, and the expansion of universities from the 1960s onwards. The point here is that ambitious changes to the social contract can and do happen.

So the ‘nice idea, but this isn’t Utopia’ critique is not a convincing one. A basic income will be trialled in Finland and the Netherlands, and possibly elsewhere too (Quebec is a possibility). A form of basic income already exists in Alaska (and is wildly popular). Everywhere it’s been tried – in the US, Canada, India and Namibia – the results have been very encouraging. It basically does all the things its proponents say it will: it fosters entrepreneurialism, has minimal or positive impacts on work incentives (other than for some very particular groups), has positive impacts on equality and health outcomes (including mental health), and improves educational engagement and outcomes.

There is, therefore, enough core evidence to support the hypothesis that basic income has a significantly beneficial social and economic impact. Once this is established, the argument quickly turns to cost. Figures of 40–50 per cent tax have been thrown around without much (or any) justification. The RSA’s proposed scheme2 has been estimated as costing up an additional 1 per cent of GDP which, if funded purely out of income tax, would imply a 4–5 per cent increase on current rates. However, as was the case with tax credits, it is likely that a basic income would be partly funded by positive ‘fiscal drag’ (increased tax revenues arising from growth). The additional sum could be funded by some increase in the basic rate of tax for those earning over £20,000 (who will themselves certainly benefit from basic income, as it is significantly higher than the total personal allowance). There are, of course, other forms of taxation that could contribute towards funding a basic income: consumption, wealth and corporate to name just a few. So the cost issue is vastly overstated – unless, of course, the basic income were to be very much higher than the £3,900 or so proposed by the RSA on current prices.

2 See Painter A and Thoung C (2015) Creative citizen, creative state: The principled and pragmatic case for a Universal Basic Income, RSA. https://www.thersa.org/discover/publications-and-articles/reports/basic-income/

Opinion

“It basically does all the things its proponents say it will: it fosters entrepreneurialism, has minimal or positive impacts on work incentives, has positive impacts on equality and health outcomes (including mental health), and improves educational engagement and outcomes.”

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Overcoming moral-political objections The stronger arguments against a basic income are moral-political (concern about free-riders), and the end of welfare ‘conditionality’ that it implies. This latter critique has been articulated very effectively by Declan Gaffney.3 He makes the very sound point that work is usually a good and should be encouraged. While it can be argued that basic income encourages work by ensuring that people keep a greater amount of additional earnings than universal credit will allow (other than at the very bottom end – although those working very few hours per week who are usually a dynamic group in any case), research has shown that the introduction of ‘conditionality’ has increased employment rates for certain groups – the rate for single parents, for instance, increased by 4 percentage points outside of London, and by 12 percentage points within London.4 This is a very real challenge to those who advocate a basic income.

It is precisely for this reason that a basic income trial is necessary. Until we put basic income up alongside the current system it will be very difficult to be certain of its relative impacts. Employment rates are important, but a short-term boost can quickly be reversed (as, indeed, research on the universal credit trials and other welfare-to-work programme has found). We don’t yet know the impact that the ‘national living wage’ will on the system. Basic income and living wages go very well together in terms of work incentives.

There are wider considerations. What is the impact of conditionality on career progression? Does it help people escape the no-pay-low-pay trap? What longer term impacts does it have on family life, mental health and educational achievement? Are there other means of encouraging work other than the blunt and often coercive tools of sanctions and conditionality? It is only by initiating a basic income trial – with design knobs on – alongside wider research on the current system that we will gain satisfactory answers.

At this point the pragmatists reach for their trump card: moral politics. This is less simple than it might first appear. The obvious critique is that basic income isn’t aligned with the moral impulse of contribution and reciprocity (you should get out what you put in). No system of income support that is at risk of moral hazard – which is to say all of them, including tax credits – can fully align itself with that impulse.

The counterargument in favour of basic income takes us back to Unger’s concept of a ‘larger life’. Basic income is designed to support a greater contribution – contributions of all types, from caring to entrepreneurship – from all individuals than any other system can support. It is also more honest about moral hazard. Every system is gamed. The current state response is to erect an enormous welfare bureaucracy armed with arbitrary power. Yet that system isn’t working – it is still gamed. Basic income calls time on this mad state of affairs. It asks, ‘How can we

3 Gaffney D (2015) ‘Even in Finland, universal basic income is too good to be true’, Guardian, 10 December 2015. http://www.theguardian.com/commentisfree/2015/dec/10/finland-universal-basic-income-ubi-social-security

4 Ibid.

Opinion

“Basic income is designed to support a greater contribution – contributions of all types, from caring to entrepreneurship – from all individuals than any other system can support. It is also more honest about moral hazard.”

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support people as they endeavour to live a larger life?’ It models itself upon empowering universal institutions such as education or the NHS, rather than on law and order as the current system does.

A new model of statecraft for the left A basic income trial would present an opportunity for a ‘democratic experimentalism’. There is a bigger goal here, and that is an ambitious recasting of our institutions to meet the needs of our times. It is not enough to simply default back to Beveridge as a safe harbour. Technical fixes are important, but insufficient. In the words of Roberto Unger:

‘This programmatically empty and deenergised politics fails to solve the practical problems for whose sake it renounced larger ambitions.’5

Yes, basic income is idealistic in spirit, but there are practical pathways towards its realisation too. Neither idealism nor pragmatism alone are convincing as a statecraft for an ambitious left. Yet the left is asking electorates to choose between the two, and has become split as a result. A smart statecraft would look at our rapidly changing economy and society and set its own ambitious goals while accepting that political impediments are real.

Advocates of basic income need to be very alert to the real and significant impediments to its coming to fruition. But if every ambitious policy is given up on before it even reaches the first hurdle, what is left? If there is one set of values that unites the left, it is the desire to redistribute power from the few to the many. If there was ever a time to be open to new and practical ways of thinking, it is now. Basic income combines principle and pragmatism. It is one example of how a new left statecraft might evolve.

Anthony Painter is director of policy and strategy and leader of the development team at the RSA (the Royal Society for the encouragement of Arts, Manufactures and Commerce). The report Creative Citizen, Creative State: the principle and pragmatic case for a Universal Basic Income by Anthony Painter and Chris Thoung (2015) is published by the RSA.

5 Unger RM (1998) Democracy Realized: The Progressive Alternative, Verso: 4.

Opinion

“Basic income combines principle and pragmatism. It is one example of how a new left statecraft might evolve.”

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