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Could Basic Income really be implemented?

There has been growing interest in the basic income. In 2013-4, a Citizen’s Initiative managed to achieve almost 300,000 signatures. In 2016, Switzerland will vote on whether to implement a basic income. Finland is considering a basic income experiment. Parties across the world take up the banner of basic income, as the idea seems to gain political currency.

The idea of a universal basic income is that everyone should unconditionally receive a grant, regardless of their income or labour supply. Several adaptations exist, most notably what level is basic, however in its purest form, it should be enable people to “live without work”, as Robert Skidelsky says.

Professor Lord Robert Skidelsky

In a recent article for Project Syndicate, Skidelsky calls for a basic income as a means to aid the ‘working poor’. Minimum wages and tax credits, Skidelsky argues, are insufficient, as they have left 38% of working families without a living wage. This result is not uniquely British – Portuguese researcher Alfredo Bruto da Costa also demonstrated workers to be a large share of the poor.

In the spirit of fiscal consolidation, the UK government is seeking to partially replace tax credits with a higher minimum wage. Skidelsky warns that not only does this policy fail to protect the living standards of the poor, it shifts labour costs from government to businesses. In the face of worldwide automation, rising labour costs could well accelerate a process that could shed up to 50% of current jobs.

For Skidelsky, basic income prepares us for a post-employment economy. Skidelsky not only opposes the fashion of policy reform to increase labour supply among net receivers, he supports the opposite – encouraging people not to work. This idea is not new – Gorz (1999), McKay (2001), Foster (2011) and others defended less employment, for different reasons, before him. However, it is perhaps not yet ripe in a world where desert and contributive principles occupy a central place in understandings of tax justice.

Cartoon from Citizens' Income Trust

Cartoon from Citizens’ Income Trust

If political and equity problems could be put aside, could we afford basic income? Skidelsky’s “surely” is insufficient. Malcolm Torry has been struggling to find a strictly revenue neutral way to fund basic income without radical changes in income tax or the incomes of the poor. His working papers in EUROMOD, the latest of which in 2015, lay out fiscal plans for introducing a Basic Income in the UK.

It is clear from these working papers just how monumental the cost of implementing Basic Income is. Torry, who is a Basic Income activist, allows for a small increase in income tax, but does not restrict rises in social security contributions. Therefore, his ‘feasible’ way to implement revenue neutral Basic Income includes a 12% rise in national insurance contributions, and that is for a Basic Income far below minimum income standards.

In summary, while automation adds to a long list of reasons why discouraging employment might not be a bad idea, politically basic income is still unpopular and, more importantly as we are concerned, very hard to finance. Its time has not yet come.

Miguel Costa Matos – 872

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Author: studentnovasbe

Master student in Nova Sbe

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