The Basic Income Europe Fanpage on Facebook gathers more than 41 thousand enthusiasts. Among the greatest supporters of the UBI are Silicon Valley’s technical titans like the head of Tesla Elon Musk and the head of Facebook Mark Zuckerberg. Ray Kurzweil, futurist and engineering director at Google, is very hopeful about the UBI as well. According to the famous British entrepreneur Richard Branson, the UBI “is really important” and “that it will come about one day”. In 2016, he said that “inequality is probably the biggest prohibitor that we face to creating a sustainable and equitable future for all of us”. What are the advantages of the UBI according to its advocates?
Getting a job – more and more often a temporary, unreliable, “junk” job – is associated with a huge opportunity cost. Besides having to pay income tax, when you become employed you lose the social benefits you were getting earlier. As you are required to exert yourself working, you may earn scarcely more money.
In contrast to many existing social benefits, the UBI would be much more transparent and there would be no need to give it up after getting a job. The UBI could lead to a reduction of poverty rate and of inequality and insecurity. Money for nothing could give some leeway to the employees whose job is threatened by automation. It would increase their social security by reducing their dependence on the labor market situation.
The UBI is considered to be one of the simplest tax models that can reduce bureaucracy. It could help simplify taxes as well as reduce the red tape associated with circulation of tax documents.
The UBI could remove the adverse incentive for mere formal adherence to the administrative requirements needed to obtain specific benefit. Defrauding disability benefits with fake documents could become a thing of the past. There would be no need for bureaucrats to control whether any conditions were met by people receiving benefits, because basic income would be unconditional.
Thanks to the UBI, many professionally inactive people could start their own small businesses.
People would no longer have to accept the first available job offer, and this could increase their “socioeconomic independence” and bargaining power on the labor market. They could take time to look for a job, invest in their education and development, set up their own business, or work less and use the time for other purposes.
The main arguments made by the UBI’s advocates are ethical ones. For them the arguments pertaining to the economic efficiency are not as important. Social and ecological justice and the elimination of poverty remain their primary concerns. As they say: Giving money to everyone unconditionally puts moral pressure on people to act responsibly.
The UBI would increase everyone’s individual human potential and social capital. As some studies show, feelings of insecurity reduce cognitive ability.
But are there any disadvantages and risks associated with the UBI?
The biggest objections to the UBI are its costs and impact on the labor market. Even conditional social benefits put a considerable burden on the budget. Moreover, redistribution is a rather flimsy foundation for human dignity.
The UBI could weaken employees’ motivation to work, thus reducing their productivity. If the UBI discourages people to work, then how will society produce wealth? From the perspective of employers, the UBI’s harms their interests in two ways: it increases wage pressure put by the employees, making them less inclined to work at the same time. In addition, as employers usually earn higher incomes, they would also be particularly affected by the tax progression.
Another argument against the implementation of the UBI is the lack of observed negative impact of automation on employment. When some jobs are made obsolete by automation, other professions, often more pleasant ones, are created in their place. Similarly, far from being a job destroyer, globalization is a job creator. Concerns about automation leading to rising unemployment seem unfounded. In the last century, technological progress has created more jobs than it has eliminated – and the scale of the progress was historically unprecedented. An increase in the wealth of society increases its demand for more luxurious services, such as those fulfilled by artisan chefs, craftsmen, artists, interior decorators, or private teachers. Among the least vulnerable to automation are social workers, choreographers, doctors, psychologists, computer system analysts, anthropologists, and archaeologists.
The widespread implementation of the UBI could also lead to increased migration to countries with the highest basic income, which in turn could further increase the tax burden on those who work and produce wealth. Because economic migration is a significant threat to the UBI, ensuring effective protection against people coming from abroad only to receive the basic income would become a necessity. As such protection has its own cost, the uncontrolled access to basic income could further threaten the financial security of the country.
Designed as a response to already ineffectual social welfare systems and overregulated labor markets, the UBI itself only furthers government intervention in the market (and requires more taxation).
Besides, one of its more serious drawbacks is that once implemented it becomes very difficult to withdraw from. The result could be a stagnation that lingers on until the complete shutdown of the economy.
Let us summarize our knowledge about the UBI. In this socio-political model of public finances, the government unconditionally pays every citizen an equal and lawfully defined amount of money regardless of their financial situation. The arguments of the supporters and opponents of the UBI focus on improving the quality of life. However, both sides have different ideas on how this goal can be achieved.
For the UBI to make sense at all, two fundamental assumptions must be met simultaneously. 1) The UBI must be high enough to ensure economic existence for all. If it is too low, it will become just another way of pumping demand on the market. 2) In order for basic income to actually influence the economic emancipation of citizens, it also must be unconditional. In other words, people simply have to be entitled to it. The fulfillment of both of these conditions, however, will not make the defects and threats we have mentioned disappear, nor make certain that the BDP is the solution that is needed or most appropriate.
The author of the script is Justyna Ziobrowska from the University of Wrocław