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Jun 22, 2020 | Ireland | 1 comment

How can we get to Basic Income?

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Stephen Moynihan

Written by Stephen Moynihan

In IrelandIreland

A discussion with John Baker of Basic Income Ireland on how we can deal with some of the perceived issues with basic income and garner more support.

15min Read

Stephen Moynihan

Written by Stephen Moynihan

In IrelandIreland

15min Read

A discussion with John Baker of Basic Income Ireland on how we can deal with some of the perceived issues with basic income and garner more support.

What is basic income?

There are several defining characteristics of basic income – commonly defined as a universal, unconditional, periodic cash transfer. From Basic Income Ireland’s point of view, basic income should be paid to everyone; it should be paid unconditionally regardless of employment status, need or income; paid to individuals, not households; and should be sufficient to live with a life of dignity.

How can it be funded?

The model that has been most developed within an Irish context is a model based on income taxes, but we are very much at pains to emphasise that there are alternative funding models. Globally, a lot of attention has been paid to a version of a sovereign wealth fund, the most prominent example being the Alaska Permanent Fund which is based on oil royalties. There is also the idea to use other forms of taxes such as VAT, a model which has gained traction in Europe based on the idea of a European Basic Income.

Basically, the funding of a basic income depends on what you think are the right taxes to apply across your political perspective. This is open to discussion amongst basic income advocates. In our advocacy, we point out the models that have been developed in Ireland have been based on income tax, but that there are other sources of funding. Detailed work would have to be done on the distributive consequences of these other models, however – any system will have to be progressive in terms of the impact on people’s wellbeing.

Some people have concerns with basic income. For example, inflation is often cited as a potential issue, do you feel this is valid?

No, I don’t. The simple answer is that the amount of income in the country will not change – UBI is a distributive measure. The total impact on prices should be negligible, although some economic effects may be seen if the redistribution is done all at once, as the goods purchased by poorer people with a basic income payment may be different to those that would have been purchased by those who are better off. A lot of this depends on how the market would react to UBI, but there would not be any major inflationary effect.

The more complicated answer is that banks create money all the time to issue loans to well-off people. In the situation we are in now, facing into a massive recession, the mainstream view amongst most economists is that what we need to do is massively increase the amount of money in the economy. In situations like this, a lot of basic income advocates would like to see the European Central Bank give money to individuals in the form of basic income to increase demand. In this way it could stimulate the economy, an argument which basic income advocates raised in light of the 2008 financial crisis – instead of giving money to the banks and waiting for them to put it into the economy, it could have been put into individual’s bank accounts. It would be a very direct way of stimulating the economy in a recessionary context.

A lot of people view ‘welfare’ as a dirty word. Others, including the mainstream media, say that basic income represents giving people ‘money for nothing’. These present potential problems for the popularisation of basic income. How can supporters of basic income challenge these narratives?

One way of challenging these narratives is to think of basic income as an individual’s share of the collective wealth of the society that they live in. Most of the productive capacity of a modern economy is based on generations of investment and innovation, there’s a reason for thinking that this is a collective good which should be collectively owned – one way of giving people their share of this is by giving everyone a basic income. In this way it can be thought of as a dividend from the overall productive capacity of the economy.

From a more philosophical perspective we can ask what kind of society we want to live in. Do we want to live in a society where everyone is guaranteed that they can meet their basic needs? The implication of saying ‘no’ to this question is that we are happy for some people to live in destitution because they are not in a position to work or don’t meet some other arbitrary condition. A much more generous and human rights-based argument is that everyone has a right to a decent standard of living, similar to how education or healthcare is often thought of. When you run up to a guard or a doctor and ask them for help, they don’t stop and say, ‘oh sorry are you available for work?’. Similarly, we see the right to a basic income as part of an unconditional package of human rights.

According to mainstream thinking, it is possible that basic income could be seen as a failure if it slows down economic growth. However, a lot of the benefits of basic income, in terms of creating a more caring or equitable society, may not be captured if benefits are viewed through the narrow lens of GDP or GNI*. Do you think we require new thinking in society should we wish to implement basic income?

I wouldn’t see UBI as ‘new thinking’, it’s been around for a long time, but it does take a critical stance compared to the dominant view that all that matters is economic growth and GDP. For generations critics of capitalism have said that even at an economic level what matters is the distribution of income, and not just the total amount of income. We always have to look at the economy in terms of its distributive effects and not just its aggregate effects.

For example, if we have to choose between two economies, one of which has a higher GDP but does not secure all the needs of its citizens, and another with a lower GDP but does secure all its citizens basic needs, then clearly the second economy is better from an ethical point-of-view. This is not a new idea – it’s been around for centuries – but it challenges the dominant currents of thought which view societal or economic improvement only in terms of GDP. Similarly, the idea that an economy should be a caring economy is not a new idea, it’s been around since the dawn of capitalism and especially in feminist critiques, which have been especially prominent over the last fifty years or so.

How can Basic Income Ireland convince those who are ‘better off’ in society that it is worth considering if they won’t necessarily benefit? It will likely be very difficult, politically speaking, to implement basic income if those who consider themselves part of ‘the squeezed middle’ haven’t bought in to the concept.

Well, if we look strictly at the distributive effects, then the general trend would be that people at the top of the income distribution would have less income, people at the bottom would have more, and people in the middle would have more or less the same income. Purely for example, say someone in the middle of the distribution may pay an extra €500 in income tax should basic income be introduced, they would get this back in a €500 basic income payment.

If we look at it from a more dynamic point of view, we can see basic income as a generalisation of the overall idea of social insurance – a way of insuring everyone against unexpected blows to their financial situation. The most obvious example here is the Coronavirus pandemic, which has had a massive impact on those in the middle of the income distribution.  Imagine if we had basic income before all this started; from day one everyone would have had a basic income payment going into their bank account, without having to wait for the government to make up their mind about how they are going to deal with the mass unemployment.

In this way, people who are in the middle of the income distribution have an economic reason for supporting basic income, because it’s a way of protecting the fundamental economic security of themselves, their children and their parents in light of a loss of employment income. However, the benefits extend beyond a job loss due to an economic downturn. For example, say someone in your family gets sick, it would allow a family member to give care without worrying as much about their financial situation. Similarly, if someone wishes to make a career change which requires reskilling, or they simply wish to return to education, they are given a much greater opportunity to do this. This would be transformative for those in the middle of the income distribution in terms of economic security and flexibility regarding life choices.

The only people who will end up paying more tax are those at the top of the income distribution. We can convince them of the merits of basic income by appealing to the idea that basic income would be good for society as a whole, and would help society avoid the dire impacts poverty can have on the economy, as outlined in a recent report by the Society of Saint Vincent de Paul. Ethical considerations can also be appealed to, and at the end of the day if we can get a majority to be in favour of basic income then those at the top of the income distribution can get outvoted regardless.

Do you welcome the Programme for Government’s aim to allow the ‘low pay commission to examine UBI and a pilot to be implemented during the lifetime of government’?

Yes, this is something we would welcome.

There is a lot of discussion within the basic income community about the value of pilots. They certainly draw attention to basic income and can test certain limited hypotheses, but there are always ways they fall short of testing the full effects of basic income. For one thing, they are always limited in time, so you cannot test the impact on people’s behaviour in terms of having a guaranteed income for life. Who is chosen for the pilot is also an issue, along with the level of payment. The Finnish pilot for example didn’t change the tax situation of anybody, so there was no impact measurable in terms of how people responded to being faced with different levels of taxation. Our view overall is that we have already learned quite a lot about the impact of basic income from pilot schemes – it might be a better option to just start taking steps towards the introduction of basic income.

It is our view that if there is a pilot scheme, it should be designed in a way that can be scaled up to a full basic income rather than something which is by its very nature temporary.

Would it be the position of Basic Income Ireland that a partial rollout would be preferable over a pilot?

Of course! Our view is that the sooner that steps are taken to actually introduce basic income the better. There are various roadmaps towards the introduction of basic income, particularly the work done by Social Justice Ireland which says that it could be introduced within five years – the lifetime of a government. But also, you have to go with what you can get. As no Irish government has ever given a commitment to the introduction of basic income in any way, the idea that there is a government that wishes to introduce another study of it is better than nothing.

Have Basic Income Ireland a broader vision for society?

Aside from basic income, there are other piecemeal changes which could be made to improve the social welfare system. Conditionalities could be changed for Jobseekers Allowance for example, and the amount of time needed to wait for illness benefit could be reduced. Social Justice Ireland have long advocated for ‘refundable tax credits’ which would take the form as a payment from the State for those who don’t pay enough in income tax to use all of their tax credits. This would be a welcome change.

Some people on the left suggest that if people like Mark Zuckerberg or Elon Musk are advocating basic income then it must be some kind of right-wing conspiracy. Our answer to that is that there are, indeed, right-wing versions of basic income where people are simply given money but will still have to pay for expensive public services – that’s not the model we’re in favour of. We see it as part of a broader, progressive programme that also includes all the other things that people on the left and egalitarians have been fighting for over generations.

Due to this some people have started using the term ‘universal basic services’ as an alternative to basic income, but our view is that this isn’t an alternative at all – you couldn’t even have an adequate basic income without having universal basic services such as education, healthcare, and a massive increase in social housing. All this is part of a progressive agenda, it shouldn’t be presented as a choice between decent public services or a basic income. Both are necessary in creating a fair and equitable society, and this is the vision Basic Income Ireland advocates.

Basic Income Ireland is the Irish affiliate of the Basic Income Earth Network (BIEN), formed in the 1990’s but becoming particularly active in the past ten years.

John Baker is an Emeritus Professor in Equality Studies at University College Dublin and is one of three joint-coordinators of Basic Income Ireland.

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1 Comment

  1. Caroline Whyte

    Thanks for this very interesting and thoughtful interview. One comment: despite what’s said in the interview I’d be wary of a basic income potentially triggering inflation in certain circumstances, particularly in rents and property values. In order to forestall this, I would argue that a Land Value Tax should be introduced alongside Basic Income. Revenue from this tax could also contribute to the basic income.

    Reply

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