In Defence of a Universal Basic Income


The British (or more accurately, the English and the Welsh) decided this year, against the economic wisdom of experts everywhere, to leave the European Union. In Australia, Pauline Hanson successfully convinced enough Australians that the source of their plight was immigration from Muslim countries. Donald Trump did the same in the US, despite the prevalence of economic wisdom that suggests immigration can actually be an economic benefit to a country, especially one with an aging population. My point is not that economic wisdom is wrong, but that people don’t care, because it isn’t helping them to live better lives.

The McClure Review of the welfare system, handed down in 2015, says that “without reform, the fiscal, economic and social sustainability of the system will be compromised”. The Australian Social Services Minister, Christian Porter, recently announced a plan to overhaul the system, and to reduce the amount of people on welfare with targeted interventions into their lives. The Australian system is already fairly surgical, relative to the rest of the world, in terms of explicitly targeting and means-testing welfare. Maybe, therefore, it is time to start thinking about the opposite approach – rather than reducing the number of people on welfare, we should put everybody on it.

This is the idea of Universal Basic Income, which has for a long time been advocated by certain pockets of economists across the political spectrum. The idea is that all people, no matter where they fit in the spectrum of poverty, will receive a basic wage. The most recent high profile example of this was the rejected referendum for a monthly payment of the equivalent of $2,756USD to all citizens in Switzerland. More success, however, has been had elsewhere, with Finland to become the first country to introduce a variant of the system at the start of next year.

The main criticism of a Universal Basic Income is that it will violate that basic principle of economic thinking: the profit motive. Critics argue that without having to work to support their lifestyles, no one will. While this is intuitive, perhaps, the studies that have been done on Universal Basic Income have found that there is, at most, a modest reduction in work hours of between 1-2%, in exchange for a vastly happier life.

The post-employment era is not a utopian dream, rather, it is a sad reality. Roy Morgan Research estimated in April this year that almost 20 percent of Australians are underemployed (working fewer hours than they would like). Slovenian Marxist, Slavoj Zizek, predicts the rise of a new class, which he calls the ‘educated unemployed’. These young university graduates will find that there is no work available for their education level, and become increasingly radical in their agitating for change. This is not science fiction – the role of youth in the Arab Spring is well documented, as well as the potential for conflict within nations hosting a young, unemployed population with little opportunity to earn a living. Universal Basic Income, thus, helps us address another pertinent: what will people do when their jobs are taken over by computers and robots?

Another criticism of basic wage comes from the fact that it appears to make little sense to give money to the wealthy for no reason. To this, there are two interesting responses. The first is that it is a price worth paying on account of the savings made by eliminating the machinery needed for more specifically targeted welfare payments, which are a clunky and often inefficient use of government resources. The second defence, is perhaps more controversial…

Bloomberg writers have for some time advocated for a tax on wealth rather than on revenues. This, they claim, would result in money flowing to those people using it for productive ends, and away from people that aren’t. The losers would be those with inherited wealth and the winners would be entrepreneurs.

Now, a wealth tax, on its own, does nothing to address inequality, in fact it only allows it to continue, albeit in a more meritocratic form. But what if you combined a wealth tax with Universal Basic Income?

Well, the money that pays for everyone to have a basic wage would come from the most unproductive members of society, and the money paid to the already wealthy (i.e. the Elon Musks of the world) would be being channelled towards productive ends. The Trump family would have the chance  to live a normal life without the risk of running their inherited wealth into the ground. If they do not use it well, it gets taken off them. A little unfair? Maybe. Unjust? Not really.

Let’s, for a second, ignore the potential meritocratic advances. As there have been no large scale studies performed, this becomes a bit more speculative, but nonetheless, let’s begin with the fact that job security has a big effect on the electoral cycle. It would be amazing to hear of a leader of a democratic society being elected in recent times without some explicit mention of ‘jobs’. Malcolm Turnbull is a prime (ministerial) example.

Think too of the crossbench in the Senate: are the constituents of Xenophon and One Nation not similarly afraid of the threats to their livelihoods – the former from liberalised trade and the latter from immigration? Job security is important, because it is the only way people can live securely. No one in their right mind would choose to abandon their ability to provide for themselves or their families for novel, difficult, and necessary political reforms, such as in the environment and in education. A basic wage, however, would soften the blow on people’s livelihoods.

Universal Basic Income will not be talked about in Australia. Turnbull is in a tough position within his own party, let alone the parliament as a whole (although at least ‘universal basic income’ works as a three-word slogan, if a bit of a mouthful). This is a shame. Universal Basic Income is not a radical proposal – this is not the post-capitalism of Zizek or the plethora of other neo-Marxist and radical economic thinkers that have been appearing over the past several decades.

In fact, it might be capitalism’s last chance. To provide universal suffrage once seemed absurd, just as it now it would be absurd not to have basic political rights. A Universal Basic Income is the natural progression to ensure some level of economic justice in a changing world.