- An expert considers the economic feasibility of UBI, arguing that the time is right for such a system as we have large levels of wealth and can collectively afford such a social policy.
- With automation disrupting the workforce, we must rethink the current structure of capitalist society, asking ourselves how we can achieve our desired social outcomes in this new era.
Income for Everyone
Much has been said, both in favor of and against, universal basic income (UBI). Those who don’t agree with the system dismiss it as a socialist idea. Those who are in favor see it as a chance to reform social welfare programs and a viable solution to the problem of job displacement due to automation and digitization. What is clear, though, is that a UBI program would present a significant change in public policy.
UBI can be summed up as a regular, unconditional cash payment to each individual in a society. It is universal because it considers nothing beyond the person’s belonging to that society; their economic status, employment state, and even level of education are of no relevance. Various schemes of implementation are available, such as whether the payment is distributed monthly or yearly or as a lump sum. For example, in the case of Finland’s pioneer UBI program, the basic income is given monthly.
A unique compilation of papers discussing UBI, “Can Less Work Be More Fair?,” prepared by Australia-based think tank The Green Institute, offers many perspectives into how UBI could be beneficial. Among these papers is one written by Frank Stilwell, a professor emeritus in political economy at the University of Sydney. Stilwell is the coordinating editor of the Journal of Australian Political Economy and is on the editorial boards of Regional Studies, Social Alternatives, and Australian Options, among other things.
Can We Afford It?
One of the primary things UBI critics often bring up is funding. Is funding a UBI program feasible? In his article, Stilwell provides an answer by considering the economic ramifications of implementing a UBI program.
For starters, Stilwell notes that the time is right for UBI:
We have wealth on a scale unknown to previous generations, but we now need to distribute it more equitably and use it more wisely. We can collectively afford social policies, such as a UBI, that would have been impractical in previous eras. The current low-inflation environment is propitious because it does not have the macroeconomic stresses that were evident when UBI was previously being widely discussed in the 1970s and 80s.
Stilwell also mentions that technological changes, i.e., automation, are making UBI a necessity as these changes challenge “conventional assumptions about continuous full-time waged employment as the principal means of generating income.” UBI can also help solve the unequal distribution of income as it “would help provide the necessary income floor.”
To the question of costs, Stilwell provides an answer as well:
The question of how to fund a UBI is fundamental. General taxation is the obvious revenue source. Depending on the level at which the UBI were set and the extent to which it replaced other welfare payments, it would comprise a substantial share of total government spending, probably somewhere in the $100 billion to $300 billion range annually. Consideration could be given to funding it out of a particular earmarked revenue source. Inheritance tax is one such possibility that might be appropriate (as a means of establishing more inter-generational equality of opportunity).
Stilwell goes on to talk about the cyclical nature of capitalist economic systems, with those governments regularly experiencing periods of deficit:
Because a UBI would be an expenditure commitment that is on-going whatever the state of the economy, there is a potential problem of funding it from more cyclically volatile revenue sources. Cyclical variations in budget deficits are already a feature of public finance but could potentially become more pronounced with a UBI.
He sees that situation as being both a positive and a negative, though, as it would provide citizens with a short-term cushion during times of recession, but also put into question whether a UBI system could be sustained for a longer period of time.
Implementing a UBI system isn’t impossible, really, if one puts an effort into it. Certainly, such a program would require a great deal of planning and careful implementation, which is why the countries that are considering it have opted for pilot programs first. As Stilwell concludes in his article, however, discussing UBI might be just as important as actually reaching a decision on whether or not to implement such a system: “The UBI proposal is important to consider because it … directs our attention to the all-important questions of ends and means: ‘What sort of society do we want?’ and ‘How should we restructure our economy so that the desired social outcomes can be achieved?’”