In theory, a system of universal payments to all without regard for need – like UBI or Universal Basic Income – seems to have a lot going for it.
On the one hand there is significant uncertainty about what technology and globalisation mean for the future of the ‘good job’. On the other we continue to stigmatise most income which does not originate in one way or another from paid employment – the very income that an increasing proportion of people in and out of work are relying on in the form of ‘top-ups’ from the state.
The – now rather long in the tooth – idea of UBI promises to address this, and to improve distribution in an unequal society. It is also receiving renewed attention; in the recent Scottish election for example, three of the four parties all featured it in one form or another in their manifesto pitches.
But it has long been known that UBI doesn’t work financially.
Or does it? Well, yes and no.
Yes – one can construct something which provides a modest (£60) weekly amount to all those of working age with no conditionality attached and requiring only £25-30bn a year of tax increases.
But no – that does not really deliver very much of what has driven such support as there is for UBI:
- Unless one is willing to accept that the new arrangements will actually make things worse for many low income families, existing benefits arrangements need to stay in place and few people will actually move off means testing, and;
- Many committed advocates and new adherents to UBI alike tend to respond to a UBI at this level with something close to derision – they wanted a proper income rather than something which amounts to less than two thirds of the current standard allowance under Universal Credit.
So what else can we do that takes the simple idea of a universal payment to all regardless of need (with no loss of esteem attached to receiving it) and develops this into something with a narrative and funding proposal which work.
We came up with three ideas – a carbon dividend for those aged 16-30 (who will live long enough to see the effects of climate change, and, coincidentally, are also those who are most in need of a financial boost following the covid epidemic), a permanent mandate for the Bank of England to pay all citizens a specified sum directly whenever inflation is below its target range, and a regular payment to all of working age based on the total sustainable GDP of the economy.
At one level these are simple ideas that are easy to communicate and pull together some important current issues:
- The young should be paid £650 a year to compensate them for the damage that is being done to their future – funded by those responsible for the damage.
- We all get £300 from the Bank of England whenever inflation is under 2 per cent – because that is how money works in a modern economy.
- Everyone is entitled to a small slice of the overall sustainable output of the economy, because we all contribute to it in some way, and these contributions are not fully captured in what we get from a job – particularly if we are not employed full time in paid work.
They make a modest, readily affordable, contribution to improving the distribution of income – similar in scope (though very different in shape) to an additional £20 a week on universal credit.
And they do this in a way which sidesteps the traditional objection that people should not get ‘money for nothing’.
At another level the proposals attempt to develop our political discourse. Citizens are too distant from many of the technicalities of a modern economy. It affects them too remotely and it is not worth their while to engage. These proposals give everyone a more direct and visible financial stake in the costs of climate change, in monetary policy and in economic growth. In so doing, we might hope to give them more reason to pay attention to these issues and end up with more robust society in the long run.
I look forward to hearing what you think.
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