Forums → WEPR → Unconditional Basic Income
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An unconditional/universal basic income is a certain amount of money that is paid to everyone, regardless of age, status or whether you actually work or not. The expected benefits of such a system vary from getting rid of thievery or poverty to allowing everyone a certain minimum living standard and a right to a dignified life.
The idea itself is old, but despite a number of local experiments (see link below) it hasn't been consistently adopted so far. In June, Switzerland will be the first country to vote on a popular initiative aiming to establish an unconditional basic income for everyone. On this occasion I thought it might be interesting to discuss it here.
The project is not without issues, mainly of financial and economic nature, but do the social benefits outweigh those, or is it pure utopia?
Further Reading:
Basic income: A 500-year-old idea whose time has come?
- 10 Replies
I am extremely skeptical about this, personally. First of all, like the article mentions, the source of the funds is going to be a problem. Exactly how will the government secure the funds necessary for such an endeavor?
Is it taxing? If so, doesn't that basically mean that whatever money average citizens are paying is simply returned to them?
Will it be based on a more complicated taxing system that charges the people based on their wealth? If so isn't that basically forcing a purely financial kind of charity?
The second issue I see with this (though it is of course related to the first, being financial in nature as well) is the global debt. All the first world countries are whacked by debt. According to the economist global debt clock, it is worse than you can imagine. While the US and Japan by themselves can account for almost half of the global debt, it doesn't mean other countries should rest easy.
Finally, it seems to be making things...easy, in a way. Don't get me wrong, I like the idea and the initiative, it shows a lot and is admirable from an ethical point of view. But, really, 2500$ a month for everyone (to talk with the numbers I've seen), isn't it a lot? My key talking point about this is the word 'everyone'. That means even unemployed people. And that amount sounds (I don't know about costs in Switzerland, so this is just speculation) more than enough to live comfortably even without working. This is not encouraging anyone to be more productive. And while normally I would disagree with the alternative policy (which is technically blackmailing people by asserting control on salaries in order to push productivity up to the limit), in a system like Capitalism, the cycle for the working class is this. In simple terms, you work, you get paid. You offer to the system to be rewarded. So, my point is that this idea doesn't really seem feasible without even bigger changes in the system.
That said however, I am in favor of a toned down version of it. A certain income from the government to the unemployed citizens is absolutely necessary while they are searching for a job, as unemployment is definitely not a choice for most people. Even a decent income if some criterias are met or just the most basic income, the one necessary to live in a country. But this idea is maybe bit too much, if you ask me. In a better world it could be possible but we are not ready for it in my opinion
Addressing your last point first...
That said however, I am in favor of a toned down version of it. A certain income from the government to the unemployed citizens is absolutely necessary while they are searching for a job, as unemployment is definitely not a choice for most people.
We do have social services that pay compensations under certain criteria, financed through a percentage of your salary to obligatory insurances. You need to prove your efforts of trying to find a job, or prove your medical condition that prevents you from working. It works well, though it's not without certain issues, like how some persons can feel stigmatized, or problems of abuse. The initiative gets rid of those procedures altogether.
Is it taxing? If so, doesn't that basically mean that whatever money average citizens are paying is simply returned to them?
Will it be based on a more complicated taxing system that charges the people based on their wealth? If so isn't that basically forcing a purely financial kind of charity?
There are two proposed means of funding the UBI:
- One idea is to use the money from the services that would become obsolete under the new legislation (you don't need to pay unemployment compensations when everyone receives a basic income, for example).
- The other idea is to basically restructure the way salaries work. This is what the initiative proposes: everyone gets the base amount, 2500CHF per adult and 625CHF per child (keep in mind the final amount is not fixed and will be decided by the councils), unconditionally. People who currently earn more than that amount also get the difference between the UBI and their old salary. Example: say you currently earn 6000CHF, you would therefore get 3500CHF directly from the employer and 2500CHF from the state - sum which the employer pays to the common fund used to redistribute the UBI. All thing considered, you earn as much cash as you used to.
Basically, the initiative aims at redistributing the money slightly more evenly by restructuring the system. The big issue is that we would still need some additional funding. According to the calculations of the government, roughly 84% of the basic income could be financed by the two points mentioned above. That still leaves a considerable cleft to be financed by other means, which is why the government does not support the initiative as it might mean less money for sectors like education, military etc. But a bit of fine-tuning and creative solutions might help closing that gap.
The second issue I see with this (though it is of course related to the first, being financial in nature as well) is the global debt.
I'm not sure to understand your point. We would not increase our debt; if anything, we pay more taxes, or have to cut some expenses.
Finally, it seems to be making things...easy, in a way. Don't get me wrong, I like the idea and the initiative, it shows a lot and is admirable from an ethical point of view. But, really, 2500$ a month for everyone (to talk with the numbers I've seen), isn't it a lot? My key talking point about this is the word 'everyone'. That means even unemployed people. And that amount sounds (I don't know about costs in Switzerland, so this is just speculation) more than enough to live comfortably even without working. This is not encouraging anyone to be more productive. And while normally I would disagree with the alternative policy (which is technically blackmailing people by asserting control on salaries in order to push productivity up to the limit), in a system like Capitalism, the cycle for the working class is this. In simple terms, you work, you get paid. You offer to the system to be rewarded. So, my point is that this idea doesn't really seem feasible without even bigger changes in the system.
2500CHF is enough to live more or less decently without working, at least depending on where you live. Though you need to define 'live'. According to this website, in 2010 the median salary, all factors considered, was around 6000CHF. Poverty level was apparently considered to be salaries of 2300CHF or less. So while you can easily live with 2500CHF, as soon as you want to keep a certain living standard you will be motivated to work.
Though again, the actual amount is open. It's more the principle that I'm interested in.
There are several long term arguments in favour of the idea, though. One being that, as indicated by previous experiments, it is likely to reduce working hours and increase employment rates. More people work, and they work less; meaning also less work-related health issues, for instance.
Also, it is preparing our society to the automating of various work areas that is bound to increase in the future. Some people are afraid to lose their job to a robot. You don't really have that problem with a basic income, unless you really love your job.
A claim the initiative committee also makes is that there will be more voluntary help, since you already get money. This might counterbalance those that stop working simply because they can. Certain areas might face personnel issues, others might gain a lot. It is very difficult to predict and I can see why it is risky, but I think it will ultimately be worth it.
If it means businesses have to stump up more, then I'm not really liking it. My family has a small business and I tend to see things from the perspective of business people as well. Not all businesses are large shady corporations.
Hmm... that's a tricky question. In the case of employees earning more than the UBI, nothing changes for the business either, it just pays parts of the salary directly and parts to the common UBI fund, as I explained above. Whether or not certain social charges would also become obsolete or not I don't know.
Now who pays those who work and earn less than the UBI? It seems clear to me they are funded by the common UBI fund; the question is, is it from money the employer has to contribute, or from other sources? Depending on the answer, the employer will either pay more, or nothing at all for such an employee.
Honestly I cannot imagine that a business would be forced to contribute 2500CHF for someone doing, say, 2000CHF worth of work, considering that person would be paid that money anyway even if unemployed, just from different sources. I would claim that businesses would not have to contribute to people working for less than the UBI, meaning they would actually spend less. The downside of this is that it leaves more charges for the society to pay.
To be honest, I don't know, as the funding is purposely left open for the parliament to discuss. It's a good point though.
Regarding the wage issue, the country where I'm from has a system where the employer pays abit more monthly, but into a central government fund (Coupled with the employees contributing some of their own wages). This the government takes, saves, and invests. When you hit somewhere around retirement age, they give it back to you with interest. It's not exactly lighting up the world, given that employees contribute themselves, and the employer/government increase is not over the top, but in some ways it helps the less well off.
I'm unfamiliar with CHF and I'm not sure at which frequency these amounts would be paid. If you mentioned the frequency of payment, then I apologize for missing your statement. For argument's sake, I'm going to assume these are monthly payments.
So while you can easily live with 2500CHF, as soon as you want to keep a certain living standard you will be motivated to work.
Though again, the actual amount is open. It's more the principle that I'm interested in.
Let's say you make 2,500 per month without working. That's 30,000 per year, divided by 52 weeks. And let's assume 40 hour work weeks, which is just shy of 14.50 per hour.
If someone chooses to work for 3500 more per month (for a total of 6000 per month), that 20.19 earned per hour for labor.
"But hey, the person working 160 hours a month is also making 14.50 for doing nothing! We can look at it as if they're making 34.69 per hour!", you might be thinking to yourself.
Although this is technically true, 2500 is guaranteed whether or not they choose to work. So it's not coming from their labor. Therefore it does not count when calculating the value of labor vs. non-labor.
So if you decide to work for an added 20.19 per hour, your labor is only worth 39% more than it would be if you didn't work at all! For your labor to be equal to the value of not working the same number of hours, you would need to make 29 per hour. This means your employer would need to pay you 5026 per month just for you to make the same amount of money working as you would not working! Plus the government would be footing 2500 on top of that making it 7526!
This is only calculating the value of labor. That's not to mention how such a system will create inflation or the total cost. Just think about the population of your country and multiply it by the UBI and realize that we would have to find a way to cover that cost!
If someone chooses to work for 3500 more per month (for a total of 6000 per month), that 20.19 earned per hour for labor.
That isn't how the proposed mechanism works. You couldn't do just 3500 worth of labour and get paid 6000. You would get 3500, just as you do now. The 2500, as I explained above, are not simply added to your salary, it merely guarantees that everyone gets at least that. In the example I used, you still actually work for a monthly 6000 salary, the only thing that changes is that your employer pays only 3500 directly, the rest is paid via government funds. The value of your labour will be exactly the same as now.
Where it does change, is when you do less than 2500 worth of labour a month. In this case, whether you work or not makes no difference, so you are basically doing volunteer work.
That isn't how the proposed mechanism works. You couldn't do just 3500 worth of labour and get paid 6000. You would get 3500, just as you do now. The 2500, as I explained above, are not simply added to your salary, it merely guarantees that everyone gets at least that. In the example I used, you still actually work for a monthly 6000 salary, the only thing that changes is that your employer pays only 3500 directly, the rest is paid via government funds. The value of your labour will be exactly the same as now.
You're being inconsistent.
Where it does change, is when you do less than 2500 worth of labour a month. In this case, whether you work or not makes no difference, so you are basically doing volunteer work.
At first, you said that a person isn't working for 3500, he's working for 6000. The government merely pays for 2500 of that. But we still count it as working for 6000 a month. You're treating it like a minimum wage.
But then you turn around and say that when a person only works for 2500 or less, they're practically volunteering since they would receive that amount from the government anyway had they chose not to work. You're no longer treating 2500 as a minimum wage but instead an UBI that they'll receive for not working.
That's why a person who makes 6000 a month isn't actually working for the full 6000. They're only working for 3500 because 2500 of that is UBI!
Consider the following:
Let's say you don't have a job, so you're living off of 2500 per month.A friend comes up to you and says "Hey, there's a restaurant opening and they're looking for a dishwasher. They pay 3000 per month." Would you take the job? Of course not!
You aren't going to look at it as if you're making 3000 a month if you take the job. Why? Because you make 2500 for doing nothing! Instead, you're going to look at it as if you're only making 500 per month because that's what you're actually WORKING for. You would be working about 160 hours a month just to make 500 more than you would just sitting around at home.
That's why, when you said a person can work for 6000 a month, I rebutted that they're actually working for 3500. They're already guaranteed 2500 for not working, so the only purpose for them to work for 6000 a month is to obtain 3500 a month more than they would earn by doing nothing!
Keep in mind that I'm not talking about a purely hypothetical problem. This is an issue that exists in America. Many people on welfare refuse to get a job because they actually make more money from welfare than they would if they chose to work for minimum wage! People DO abuse the system, and even though it's easy to look at something such as military spending and to conclude that welfare recipients aren't a burden to the economy - there are other consequences that have a much more notable impact. There's a good reason why the most dangerous towns in America consist primarily of welfare recipients.
Mhm. I see what you mean now. Maybe it would be better termed 'unconditional minimum wage' then. Though one could argue whether this is purely semantics or actually relevant. Either way, the Swiss project was more nuanced than a pure and simple cash check to everyone; not only because it focuses on those who need it more, but also because it is more realistic to finance.
Maybe your work really has less economic value because part of it could also be earned by doing nothing. But I can't help but thinking that the notion of economic value is an aspect the project wanted to change anyway. Don't forget that the project's goals are primarily social, i.e. getting rid of poverty and preparing society for the future (think automation of jobs).
Besides, you still work exactly as long as before and get as much money as before; and your work is actual work, which has value beyond conceptual economic value (unless you're a trader, I guess). Say you are a carpenter, you still produce as many items of furniture than you used to; or you provide services, which actually help people; in that aspect at least your work is worth the same.
As for abuse, yes there would be people who would stop working, and that was certainly a major argument for most people who voted against. Though the freedom to decide whether you work or not, and more freedom to do what they want for people who otherwise are forced to do any job to gain their life, is part of the project; and many people when asked claimed they would do some work no matter what.
There's a good reason why the most dangerous towns in America consist primarily of welfare recipients.
Assuming you mean people in gangs and the like, I claim that they are welfare recipients because they are in a gang/criminal/whatever, not otherwise. I am not impressed by your argument because I don't think that welfare/potential UBI is the direct cause of such problems.
EDIT: I forgot to mention that the initiative was declined with only 23.1% of votes in favour of it. I'll be looking at Finland next, see how they fare with their pilot project in 2017. (naturally, the discussion here is still open the Swiss project was just the inspiration for the thread)
I am hypothetically very in favor of a UBI system. I also think that with the future automation of jobs, there will be a necessary change in the way we structure our society and economy. Consequently, here is a really good video about automation and why almost all jobs will eventually be taken overVideo
That said, the numbers (how to pay for it) seems to be a major stumbling block. The 2015 US federal spending was 3.7 trillion. If you paid ~300million citizens 30,000 each, that would be ~9 trillion. So... how do you square that circle? Since clearly the appropriation of all other programs would be ludicrously insufficient.
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