There’s a better way out of this . . . Update

Much has happened since I wrote the first post with this title (1). Because the earlier post appears to have interested quite a number of you, I am now posting an update.

For those that have yet to read it, the first post argued that Universal Basic Income (UBI) could help resolve some of the issues governments face in trying to keep their economies afloat at the same time as keeping their citizens safe from this novel coronavirus. By ensuring all people are secure financially, rather than just some, as at present, UBI would help bolster demand, enabling those not at work to purchase what they need to live, while staying safely at home. UBI might not answer every problem, but it would give governments and societies the time to work out better ways to manage the current challenges.

Since I wrote it, the idea of UBI seems to have taken on a life of its own. An opinion poll conducted by an Oxford University research team and published on the 6th May found that 71% of Europeans are now in favour of introducing a Universal Basic Income. This is astonishing. Even in Britain, a bastion of free enterprise and neoliberalism, the figure saying they are in favour is 68% (2).

That the idea of UBI is even gaining traction within the UK parliament is made clear in a great article by John Harris in The Guardian. John reports, “Ten days ago, the left-inclined pressure group Compass organised a letter, signed by more than 100 MPs and peers from seven parties, calling for a ‘recovery basic income’ that would be ‘sufficient to provide economic security’. An accompanying paper sets out the case for these short-term measures being followed by a permanent basic income – set at a starting rate of £60 a week per working-age adult and £40 per child (or £10,400 per year for a family of four), with additional unemployment, housing and disability benefits maintained. Over time, this ‘income floor’ could rise to £100 per adult.” While this is not a princely sum, it would be a great start.

What is interesting to me is that this letter shows that a large number of MPs now support the idea of UBI. I cannot imagine this being the case before the coronavirus. This change in perspective has come about quietly, almost under the radar. There has been little or no media publicity given to it, no major campaigns, no demonstrations in the street. Normally it takes a massive groundswell to cause such a shift in popular opinion. The enthusiasm of our MPs and the results of the Oxford poll suggests that such a groundswell is already well underway.

John Harris goes on to say in his article, “UBI’s advocates insist the tax system could be remodelled to ease the cost. Besides, this might not be quite the hard sell some would suggest: after the bailing-out of the banks and the government’s munificent response to the current crisis, radical spending plans are surely not the political taboo they once were.” Too true.

From my point of view, even more encouraging for the proponents of UBI is the outcome of a major pilot study conducted in Finland. The study, conducted between 2017 and 2018, has attracted widespread interest around the world. Some 2,000 unemployed people were randomly selected from across Finland. They were each provided with a regular monthly income of €560 (£490), somewhat more generous than the UK proposal. The Guardian article of May 7th reports the results of this experiment of providing citizens with a basic income (3).

Researchers at Helsinki University conclude, “The basic income recipients were more satisfied with their lives and experienced less mental strain than the control group.” Unsurprisingly, “They also had a more positive perception of their economic welfare.”

Professor Helena Blomberg-Kroll, the lead researcher of this study says, “The scheme also gave some participants the possibility to try and live their dreams.” This transformative effect was seen most clearly among those whose ambitions are inherently financially insecure: “Freelancers and artists and entrepreneurs had more positive views on the effects of the basic income, which some felt had created opportunities for them to start businesses.” In other words, UBI could tap into creative energies that currently lie dormant in our society. Just the sort of creativity we will need to deal with the challenges that lie ahead of us in the climate crisis.

The trial’s impact might be even more profound than appears at first sight. The researchers report that UBI also encouraged some participants to become more involved in the society in which they live, undertaking voluntary work, for example. “Some found the guaranteed income increased the possibility for them to do things like providing informal care for their family or their neighbours.” According to researcher, Christian Kroll, “The security of the basic income allowed them to do more meaningful things, as they felt it legitimised this kind of care work. Many of the people who performed such unpaid activities during the two-year period referred to it as work.” It is often work, of course. And usually it goes unpaid, as many carers are all too well aware. Could UBI also be a way of giving recognition to caring, the glue that holds our society together? Could it be one way to promote a better society?

This is certainly the view of Scott Santens. Scott, a long-term advocate of UBI, has been given a platform by the World Economic Forum. (That in itself is a good sign, as the WEF always want to get a good sense of what they think they are likely to be up against next.) Scott, in making his case to the assembly of billionaires who assemble in Davos, argues, “Humans need security to thrive, and basic income is a secure economic base – the new foundation on which to transform the precarious present, and build a more solid future. That’s not to say it’s a silver bullet. It’s that our problems are not impossible to solve. Poverty is not a supernatural foe, nor is extreme inequality or the threat of mass income loss due to automation. They are all just choices.” (4)

They are indeed. But no government is presented with infinite choices. The impact of the pandemic means that every government will need to make tough choices in these extremely precarious times. They already know there is no easy way to recover the economy and there is no cheap way to protect people. This is a key reason why UBI is suddenly centre stage: no longer a wild idea on the fringes of economics, it is quickly becoming mainstream.

It might not be Britain that takes the lead in UBI – it could be Spain . . . or some other country elsewhere in the world. But, what is eminently clear is that this is the moment when this idea makes eminent sense.

UBI is an idea whose time has come.

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2 thoughts on “There’s a better way out of this . . . Update

  • There is a hint in the sixth paragraph of the widespread notion that somehow the State’s finances work like that of a household – which has to have an income before anything can be bought – that taxes pay for spending.

    The lens with which Modern Money Theory has now provided us (ably explained and supported by the Gower Initiative for Modern Money Studies – GIMMS), makes it abundantly clear that sovereign currency issuers like the UK and the USA – and many others, do not have incomes; they add the appropriate numbers, agreed by the government, to the “national spreadsheet” so that spending can take place.

    Taxes represent the removal of money from “the system” after it has done its work – the “Delete” button is pressed.

  • Ivan, you and your readers might be interested in the young historian Rutger Bregman – a fellow proponent of UBI. A couple of talks by him explain his assertion:
    ‘Utopia for Realists: The Case for Universal Basic Income’ –

    and his short TED talk ‘Poverty isn’t a lack of character; it’s a lack of cash’ –

    He’s also just published a book ‘Humankind: A hopeful history’ that sounds like it would be worth a read

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