Basic Income Is A Welfare Strategy

In the latest issue of Jacobin, Shannon Ikebe has a piece on the pitfalls of a universal basic income. The piece provides a helpful backdrop to clarify what I think the UBI should be about, which I do below.

Ikebe argues that there is a fundamental tension in the UBI idea. If you set the UBI too low, the argument goes, it won't be able to emancipate the working class because people will still need to work to meet their basic needs. If you set the UBI high enough to emancipate the working class, then that will put so much of a squeeze on capital that you'll have capital flight and this flight (in coordination with a reduction in the size of the labor force) would reduce the national income so much that you can't even fund the UBI.

On the first point, Ikebe is basically right, just given how "emancipate the working class" is defined. On the second point, I think Ikebe moves too quickly. The purpose of a high UBI is to give people the ability to quit. Seeing as you need a decently sized labor force to produce enough national income to keep everyone materially secure, the goal of the UBI should never be to radically reduce the size of the labor force (at least not until full blown robotization has arrived). Having a guaranteed income gives people the ability to get out of toxic employment situations and find better matches, and that is, at least, liberation to a certain degree.

It's Welfare, and That's Fine

The discussion of the UBI as emancipation, though helpful, seems to consume far more attention than it ought to. To me, the UBI is not going to provide some secret back-door to socializing capital and that sort of thing. If you want to do that, you just need to do that directly through sovereign wealth funds and the like. The UBI's main function is to bolster the welfare state, and that's perfectly fine.

When thinking about the UBI in the welfare state context, it's helpful to place into a broader welfare income scheme. To me, the best welfare income scheme starts by dividing the population into three age-based groups.

  1. Children. Monthly per-child benefit paid to parents.
  2. Elderly. Monthly old-age pension.
  3. Adults. ???

For children and the elderly, the welfare income solution is pretty simple. Just pay each of them a monthly sum. For adults, it's more complicated because, unlike children and elderly people, we expect (and need) adults to work. We don't need all of them to work, but we need enough of them to work.

In current welfare states that aren't terrible, adults receive welfare benefits based on their life situation. Roughly speaking, adults are broken down as follows:

  1. Students. Loans and grants.
  2. Disabled. Monthly disability payments.
  3. Carers. Paid parental leave and family leave. Caretaker allowances.
  4. Unemployed. Monthly unemployment payments.
  5. Employed. Usually nothing. Some may get wage supplements.
  6. Others. Last-ditch cash assistance often with case workers and such.

The UBI comes in as a way of possibly shaking up the adult welfare benefits. There are two basic ways a UBI could be incorporated.

First, you could have total replacement of adult benefits. So you'd have the child allowance for children, the old-age pension for the elderly, and the UBI for adults. Under this approach, the benefits for the six adult statuses iterated above would be eliminated and there would only be the UBI.

Second, you could keep the adult benefits but reduce their amounts. Under this approach, every adult would get a UBI. But then some adults would also get other benefits in addition to the UBI based upon their status. Thus, disabled people would also receive disability benefits (though the amount of their disability-specific benefits could be cut since they'd also have the UBI payments). Carers and the Unemployed might also receive certain supplementary amounts in order to keep their income somewhat smooth when they are out of work. You'd have to strike some balance between the UBI amounts and the supplement amounts to make sure everything worked fiscally. This would probably mean somewhat lower UBI than the complete-replacement option above in order to make room for the status-based supplements.

Which of these two approaches is better is something that I think needs to be empirically evaluated. I suspect the pure UBI is going to be problematic, especially for disabled people and so you are going to need to go with some form of option two instead. But like I said, this is an empirical question.

In any case, the point here is that the UBI should be welcomed as a worthwhile approach to adult welfare benefits. This is how Finland seems to be thinking about it right now and this is probably the UBI's most likely frontier in the near term.