Is a universal basic income really so bonkers?

by Virginia Larson / 12 September, 2017
Could a Universal Basic Income be key to eliminating poverty? Illustration / Siranaam Wong, Getty Images

With rising levels of inequality, is it time to start seriously thinking about radical solutions?

“Barking mad” was John Key’s response whenever he was asked about the viability of a universal basic income.

And, until recently, he’d have been right in step with most politicians and economists. Something has changed, though: across the Western world, the UBI has broken out of its confines within the loony left and finds itself on conference agendas in the most unlikely places.

I can’t say that was the case on a spring night at Auckland University’s Epsom campus, where the Fabian Society hosted a presentation by Guy Standing, UK professor of development studies and co-founder of the Basic Income Earth Network. The 120 or so scattered about the lecture room were mostly the beanies, beards and woolly jumpers band you’d expect to find anywhere Sue Bradford might also be an invited speaker (as she was).

But Standing has been championing the basic income in front of some very different audiences over the past couple of years: “I’m worried I’ve suddenly become respectable,” he told us.

“Last year, I was invited to speak at the Bilderberg Meeting. At first, I thought the invitation was a prank by one of my socialist friends.” (Often described as a kind of shadowy capitalist cabal of global luminaries, the Bilderberg Meeting is an annual, secret conference of mostly North American and European business and political leaders.)

Protesters outside a Bilderberg meeting in Virginia in 2012. Photo / Getty Images

Standing said he was disturbed to find himself addressing this elite audience and looking right into the eyes of an “owlish, 93-year-old Henry Kissinger”. Other attendees included “IMF head Christine Lagarde, two presidential candidates, a couple of kings and the head of Google... Ten minutes into my presentation, they were all taking notes.”

Since then, Standing has also been invited to Davos (the World Economic Forum annual meeting in Switzerland) to talk about his vision for a universal basic income and how it might solve the problems of the precariat: a word used to describe an emerging class of people whose employment and income are chronically insecure.

Those taking notes at Bilderberg in early June last year would also remember Standing telling them, “Don’t be surprised if the precariat vote for Brexit and Trump.” He was one of few social commentators who predicted both events. But then, he’s been peering into the heads of this growing underclass for many years.

“People who live in a constant state of economic insecurity can be socially dangerous,” he told us in Auckland, “like those who voted for the neo-fascist populist Trump. He successfully played on their fears.” Living in a state of insecurity also chips away at people’s intelligence, he said; it causes IQ levels to drop.

I haven’t read Standing’s book Basic Income: And How We Can Make It Happen; nor Utopia for Realists by Rutger Bregman, who takes his lead from Standing, arguing that giving people “free money” isn’t a bridge to fecklessness, but a sure way to alleviate poverty and encourage enterprise – in its widest sense.

But the universal basic income pops up in Tim Harford’s new book, Fifty Things That Made the Modern Economy. He names the welfare state as one of those 50 things, and ponders whether it will be further undermined if, as envisioned, robots and artificial intelligence make large numbers of people unemployable.

A universal basic income does seem “fantastically unrealistic”, he writes. Also enormously expensive. Harford says if you gave every American adult, say, $12,000 a year, it would cost 70 per cent of the entire federal budget.

Standing would argue it’s no more expensive than the billions doled out as “quantitative easing” during the global financial crisis, or tied up in regressive subsidies.

There are encouraging UBI pilots in play in India. Harford also describes a basic income trial in a Canadian prairie town in the 1970s. For five years, thousands of residents got cheques every month, no strings attached. Among the results of this social experiment: fewer teenagers dropped out of school and fewer people were hospitalised for mental health problems. And hardly anyone gave up work.

So, is a universal basic income bonkers? Besides the cost of such a scheme, targeted help for the poor and needy seems to make more sense. And behavioural psychology shows humans favour reward following proportionate effort.

But many middle-class Kiwis are alarmed by rising inequality. I don’t want to live in a country where people sleep in their cars and rheumatic fever stalks the children of the poor. We’ve been at the forefront of ambitious programmes for the common good before. Our Old-age Pensions Act was a world first in 1898. The universal family-benefit payment changed Kiwis’ lives in 1946.

And as Standing says: “When the likes of [Tesla’s] Elon Musk, multinational CEOs and church leaders start talking favourably about the basic income, you realise it has new legitimacy.”

This was published in the October 2017 issue of North & South.

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