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How to one-up the universal basic income

Economics
welfare

The idea of a ‘basic income’ as a social fix has gained unprecedented prominence across the political spectrum in recent years. But now there may be a new kid on the block.

A universal basic income (UBI) is a flat cash benefit paid to everyone, regardless of wealth (or need), proposed as everything from a way to save humanity from robot-induced unemployment and/or labour drudgery to a means of replacing ‘inefficient’ welfare states. The new proposition is ‘universal basic services’ (UBS) – an attempt to beat UBI at its own game.

The fullest formulation of the idea comes from University College London academics who costed the notion of expanding the core services provided for free by the welfare state (what is left of it).

As with a basic income, this could reduce the pressure on people to accept any job they can get to survive. With free services meeting basic needs, it would also free up income to spend elsewhere.

But, they argue, UBS would also avoid many drawbacks of a UBI: most importantly the risk that its introduction could be used by rightwing politicians to dismantle existing public services such as healthcare and education.1 And while their model is costed and designed for Britain, the core debate – universal basic services versus universal basic income – is relevant for countries, rich or poor, around the world.

The British model

Academics Andrew Percy, Jonathan Portes and Howard Reed suggest four new essential services: information services, local transport and – more complicated – food and shelter, as well as including the costs of a super-charged local democracy needed to deliver them.

With a net cost of £45 billion ($57 billion, approximately 2.2 per cent of the UK’s GDP), services would include free broadband and mobile packages, as well as TV licences and local bus passes for all. It would provide 2.2 million British households who experience food insecurity with a third of their meals; build 1.5 million new homes to be provided rent-free to the most needy; and cover the cost of utilities (gas, electricity, water) and council tax for everyone in low-rent social housing. They model the value of new services from an average £76 a week for the poorest 10 per cent to £17 a week for the most wealthy, who would use fewer services. Were the proposed total of £45 billion distributed as a universal income, the payout per person would average at £12.47 ($15.90) per week.

UBI proposals in Britain show a very different set of – higher – figures, varying from £61 to £80 each week for adults. (To put this into perspective, the UK poverty line for a single individual is £148 – $188 – per week after housing costs.) UBI would thus cost anywhere between £177 billion and £331 billion ($225 billion to $422 billion) each year – necessitating not only tax rises but also, in most models, the abolition of most other cash benefits. None of this is to say that UBI is intrinsically unaffordable. States can raise money in a variety of ways, where the political will exists; the question of how that is best spent remains. While these basic income models would not eliminate poverty on their own, UBS would at least meet the basic needs of the poorest. And whereas UBI models have complicated, mixed impacts across different income groups, UBS is likely to be strongly redistributive as take-up, particularly of food and shelter, will be concentrated among those with less; and all for a fraction of the cost.

At your service

‘There’s something important about public services in terms of building a connection between us – I don’t think income does that,’ says Cat Hobbs, founder of UK campaigning group We Own It. She believes public services act as ‘part of the fabric of society’.

There are other benefits too – such as reducing carbon emissions by encouraging public transport usage or through energy efficiency measures.

More prosaically, there are potentially huge cost savings from providing services in bulk and publicly, rather than through the market. ‘We can see this from sectors like healthcare... where the UK spends something like 10 per cent where the US spends something like 20 per cent,’ says Andrew Percy. ‘One bit of modelling that we did… would suggest that if you take all of these services... the cost of providing them is 30 per cent less than the value [to the recipients].’ These savings would not be available with a basic income scheme – and would potentially make UBS even cheaper.

But critics question whether the scheme is truly universal. ‘It turns out,’ writes Anthony Painter of the Royal Society of Arts, which has its own UBI proposal, ‘that “universal” basic services is actually “targeted living cost support”.’ These critics have a point. Neither the food nor the shelter elements seem large enough to provide for everyone who might want them. (The UCL academics do suggest for £17 billion – $21 billion – more, a ‘beefed-up’ food service which would be able to provide 21 meals a week for half the population – or, if taken up more widely, most meals for anyone who wanted them.)

But this is due to the attempt to enter into the basic income debate on its own, limited, terms – fully costed and without wider shifts in ownership. In any case, their proposal offers more of a solution to a shortage of affordable housing than UBI schemes, which run the risk of simply allowing landlords to hike up rents further. A comprehensive solution to the housing crisis is likely to require, at a minimum, some combination of rent caps, a land value tax and bringing empty homes into use. But 1.5 million rent-free homes would at least help bring prices down for everyone. The deeper question here though is what we mean by universal – and of the different sorts of choice and freedom embodied in these different policies.

From each according to ability...

Does universalism mean everyone needs to get an identical slice of a monetary pie? The key point, argues Percy, is universal access. As with universal healthcare, he points out that ‘not everyone needs it most of the time’.

Put like this, universalism begins to look like a much older idea – the socialist assertion of: ‘From each according to ability, to each according to need’. And what if people don’t want to take up these services? Take broadband, which enables people to communicate and participate in society, says Percy. ‘If they don’t want to use that choice, is that a choice we are interested in enabling? People always have a choice about how they use the internet; surely that is the choice that matters.

‘Assuming the services were delivered by responsive local democracies that designed services that met people’s needs appropriately, and effectively... then the difference is that we are removing bad choices,’ he says. ‘We don’t want people to have to choose between eating and sleeping, transport and school or healthcare.’

This is about empowering individuals ‘through a social mechanism, not an individual cash handout’, argues Anna Coote, head of social policy at the New Economics Foundation.

A global challenge

Similar policies and proposals are gaining ground around the world.

Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives, wrote in 2017 that ‘for half the annual cost of a poverty-eliminating basic income (CAD$15 billion [US$11.3 billion]) we could permanently expand the stock of affordable housing, childcare and public transit, as well as almost eliminate user costs for pharmacare, dental care and post-secondary schooling’. ‘After a decade,’ she noted, ‘we would have greater access to more high quality, affordable necessities of life – not just for the poor, but for everyone.’

In the US pressure is coming from an unexpected quarter. ‘We have a quite robust movement to have a public broadband system,’ says Thomas Hanna, research director at The Democracy Collaborative in Washington DC. In fact, dozens of US cities already provide public broadband (and electricity) but, in the face of heavy lobbying, are banned from providing this at less than cost price. Many campaigners – including Bernie Sanders and the Democratic Socialists of America – are now also fighting for public healthcare; ‘a Medicare for All’, says Hanna.

Global South countries – where welfare options are often lacking – could be seen as a greater challenge. In fact, there have been several basic income pilots in the Global South; basic services are also being pioneered. Many of these countries have threadbare public services, the legacy of ‘structural adjustment’ policies forced on them by the International Monetary Fund and World Bank, who insisted on charging for schooling and healthcare. ‘In developing countries – Malawi, Kenya and so on – [UBI] has had quite good results but [recipients] are using this to buy services; such as healthcare and education,’ says Coote.

Nonetheless, there are still remarkable services addressing people’s most basic needs – lifelines for the poor.

In Selangor, Malaysia, the Inisiatif Peduli Rakyat (People’s Care Initiative) provides free water, medical check-ups for women (including mammograms), education support, buses and internet access (Wi-Fi) at 300 spots. Meanwhile Delhi’s municipal government has plans to set up 1,000 mohalla (community) clinics (after three years of the programme, 180 were operational as of December 2018). These clinics provide doctor consultations, medicines and laboratory tests free of charge to all patients. The government claims more than 2.6 million of the city’s poorest residents gained free healthcare through the scheme. The Aam Aadmi (Common Man’s [sic]) Party also plans to provide free water, a 50-per-cent power subsidy and free Wi-Fi.

Basic income proposals in India – where pilots have already taken place – may offer more immediate dangers than in richer countries with developed welfare systems. ‘A close look [makes] it clear that these are financially as well as conceptually [intended] for replacing existing programmes of delivering public services to citizens by a direct cash transfer,’ writes Himanshu, an assistant professor of Economics at Jawaharlal Nehru University, which would further cement market-based systems. Instead, he argues for universal access to basic services.

He has calculated that the cost of providing UBI at the poverty line in India would be more than total government revenues – and argues it would still not meet needs. ‘Given the level of deprivation and lack of availability of basic services, what is required is an increase in provision of basic facilities such as education and health. There is now innumerable evidence that [leaving] basic services such as health and education to market forces leads to… exclusion of the poor and vulnerable.’

The choices

The UBS proposal may have its faults – it could go much further – but it’s a provocative contribution to an ongoing debate so far dominated by ‘tech bros’ like Elon Musk and Mark Zuckerberg.

Rather than take their word for it, we should ask: what choices do we want to make collectively? What options do we believe will empower us individually? And are those best served by a seemingly simple basic income, or by embracing the complicated, messily collective – but vital – challenge of implementing basic services?

 

New Internationalist issue 518 magazine cover This article is from the March-April 2019 issue of New Internationalist.
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