Universal Basic Income

Universal Basic Income

A complete list of books in this series can be found online at https://mitpress.mit.edu/books/series/mit-press-essential-knowledge-series.

Universal Basic Income

Karl Widerquist

The MIT Press | Cambridge, Massachusetts | London, England

© 2024 Massachusetts Institute of Technology

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Library of Congress Cataloging-in-Publication Data

Names: Widerquist, Karl, author.

Title: Universal basic income / Karl Widerquist.

Description: Cambridge, Massachusetts : The MIT Press, [2024] | Series: The MIT press essential knowledge series | Includes bibliographical references and index.

Identifiers: LCCN 2023018043 (print) | LCCN 2023018044 (ebook) | ISBN 9780262546898 (paperback) | ISBN 9780262376808 (epub) | ISBN 9780262376792 (pdf)

Subjects: LCSH: Basic income. | Income.

Classification: LCC HC79.I5 W53 2024 (print) | LCC HC79.I5 (ebook) | DDC 339.2—dc23/eng/20230912

LC record available at https://lccn.loc.gov/2023018043

LC ebook record available at https://lccn.loc.gov/2023018044

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publication supported by a grant from The Community Foundation for Greater New Haven as part of the Urban Haven Project

Contents

Series Foreword

1 Introducing Universal Basic Income

2 The Mechanics of UBI

3 The History of UBI and Related Policies

4 Evidence about UBI’s Effects

5 Alaska’s Experience with UBI

6 The Choice between Mandatory and Voluntary Participation: Arguing for (and against) UBI

7 Automation and UBI

8 The Future of UBI

Acknowledgments

Glossary

Notes

Bibliography

Further Reading

Index

Series Foreword

The MIT Press Essential Knowledge series offers accessible, concise, beautifully produced pocket-size books on topics of current interest. Written by leading thinkers, the books in this series deliver expert overviews of subjects that range from the cultural and the historical to the scientific and the technical.

In today’s era of instant information gratification, we have ready access to opinions, rationalizations, and superficial descriptions. Much harder to come by is the foundational knowledge that informs a principled understanding of the world. Essential Knowledge books fill that need. Synthesizing specialized subject matter for nonspecialists and engaging critical topics through fundamentals, each of these compact volumes offers readers a point of access to complex ideas.

1

Introducing Universal Basic Income

The vast majority of people aren’t allowed to use any resources except air and public spaces without the permission of an owner. We can’t build a shelter, hunt, gather, fish, farm, start a cooperative, or start our own business without serving (i.e., providing some service for) the people who own the resources we need to do these things. Except for the wealthy few, we are effectively required by law to get a job to earn the money to buy the right to use the resources that were here before any of us and that we’re all evolved to depend on.

There is no formal penalty for violating this legal requirement, but the informal penalties include poverty, economic destitution, homelessness, malnutrition, and hunger. If you want to live, you can’t just work for yourself, for the needy, or for other nonwealthy people: you have to spend a substantial amount of time serving at least one member of the group of people who own the resources you need to keep you alive.

Throughout this book, I’ll use the term external assets to mean natural resources and the things we make out of them other than our own human bodies. It’s a little broader than the term physical capital (which includes only external assets used in the production process) and a little narrower than the term property (which might include your body and abilities). I presume we all agree that people have special rights over their own bodies, but I think people have substantial disagreements about whether, how, and under what circumstances natural resources and the external assets we make out of them should become property.

The division of the earth’s resources into property has many benefits, but we’ve done it in a way that gives some people huge shares and others little or nothing. Under the rules we have, the property system has many cruel aspects, including fear, stress, alienation, poverty, burnout, homelessness, and hopelessness. Because most of us have no alternative to some form of paid labor, we are generally willing to accept lower wages, longer work hours, and less appealing work conditions than we otherwise would, and we all go through life with more fear and anxiety than we would need to if we had direct access either to the natural resources we need to survive or to cash compensation large enough to buy access to the external assets we need.

In some situations, people are forced to accept dangerous jobs, sexual harassment, and other forms of abuse from employers or spouses because they need someone with money to keep them alive. That need is artificial. It is created by the way our governments choose to allocate access rights to the earth’s resources. Many different rules are possible.

Let’s consider a way to divide resources that isn’t so cruel.

In 1918, Bertrand Russell argued that a certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income . . . should be given to those who are willing to engage in some work which the community recognizes as useful. On this basis we may build further.¹

Russell’s proposal is very much what we know today as Universal Basic Income (UBI)—that is, a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.² Russell adds that the income is large enough to live on and that the UBI plan will be structured so that people who do things like paid labor end up with more than people who live solely off UBI. Both of these stipulations are important but not always included in the definition of UBI. Ahead, I define UBI in more detail and slightly differently, but Russell’s description gives you a very good idea of what it is.

Under a UBI system, we may divide the resources of the earth unequally, but the people who get large shares of resources and the external assets we make out of those resources compensate the people who have gotten little or no share. Compensation has to be unconditional; otherwise, it’s not compensation at all—it’s a wage.

As Russell mentions, UBI is not all there is to social justice, but it removes one cruel feature built into our economic system. A UBI economy does not use fear as a motivator. A UBI of sufficient size removes the fear of poverty, homelessness, and economic destitution that is built into our system and into most familiar alternative systems. With a UBI of sufficient size, you will always know that no matter what, you will have enough income to cover your basic needs, including housing, food, clothing, and so on.

In many ways, UBI is a mild reform. On its own (without other major changes to the existing system), UBI simply creates a market economy where income doesn’t start at zero. It establishes a gapless safety net while leaving the many opportunities of the market in place.

But this mild reform has far-reaching effects.

A UBI large enough to live on necessarily creates a voluntary-participation economy. If we stop using fear as a work incentive, we give everyone the power to say no to paid labor, self-employment, or any other active form of economic participation if they so choose. This aspect makes any economy with a UBI very different from the existing economic system and from most well-known alternatives. Unfettered capitalism puts most people in the position in which they have no other choice but to sell their labor to the people who own physical capital. Karl Marx’s vague solution (from each according to their ability, to each according to their needs) seems to imply a fixed work requirement. The nominally Marxist state of the Soviet Union interpreted it that way when its leaders wrote a work requirement into its first constitution. Welfare capitalism and social democracy sometimes have generous benefits, but those benefits are usually conditional on economic participation or on proof that beneficiaries are unable to participate.

UBI simply creates a market economy where income doesn’t start at zero.

That is, all of these very diverse economic systems include mandatory-participation requirements. I start with this issue because it calls attention to the question behind the question of whether to introduce UBI. Should we have a mandatory-participation economy or a voluntary-participation economy? Should everyone get an income—even people who could take jobs but choose not to?

I think that question immediately divides most readers into two groups even if their answers are only tentative: Yes, because no one deserves to live in poverty or homelessness. No, because everyone who can work must work, or—more realistically—everyone who isn’t wealthy and can work must work. The (sometimes almost instinctive) commitment to mandatory participation is, I believe, the central source of opposition to UBI, and so the choice between mandatory and voluntary participation comes up repeatedly throughout this book in one form or another.

A voluntary-participation economy is possible. Later chapters show that UBI isn’t terribly expensive, and it leaves plenty of room for incentives. The market system won’t fall apart the moment we stop using the threat of economic destitution to keep low-income people working. If jobs need doing, we have enormous ability to get people to work by offering good salaries, good working conditions, advancement opportunities, respect, and access to the many luxuries our economy is capable of producing. If you need the background threat of homelessness and hunger to get people to do the job you want them to do for the wages you’re willing to pay, maybe your job doesn’t need to be done at all.

A livable UBI eliminates poverty. Poverty is not the failure to meet one’s basic needs, it is the inability to afford to meet one’s basic needs, and this book will argue that only UBI—or something very similar—can eliminate poverty.

We define homelessness as the mere fact of not being housed, rather than the inability to afford housing, but very few of the half-million homeless people in the United States are on the street for any other reason, and so I tend to use homelessness synonymously with the inability to afford housing. In that sense, UBI can eliminate homelessness. The few remaining rough sleepers will probably fall into two categories: either they are making a rational choice and should probably be left alone, or they have a mental disability and should probably be helped in a way appropriate for their condition.

A livable UBI eliminates poverty.

We can point to many proximate causes of poverty and homelessness: this person made foolish decisions; that person ran away from an abusive home. But there is only one ultimate cause of the inability to afford the resources one needs for a decent life: rules that limit access to resources. We can change those rules, if we’re ready to introduce a voluntary-participation economy.

A voluntary-participation economy is a humane economy. It ends the cruel treatment of people at the bottom and relieves the fear of people in the middle. It invites everyone to participate in our productive system by offering access to the luxuries it can create.

UBI has inspired a growing worldwide movement, which is stronger as I write these words than it has been since Thomas Spence wrote the oldest-known argument for it in 1797. Although UBI isn’t the only reform that the existing economic system needs, millions of people are coming to believe that it is one of the most important and fundamental reforms we need right now.

The UBI movement grows out of frustration with increasingly precarious employment; with growing inequality and uncertainty; with increasingly unaffordable housing; with stagnant wages and salaries; and with persistent hunger, homelessness, and poverty. Perhaps most important of all, the UBI movement grows out of frustration with the ineffectiveness and political vulnerability of conventional policies that attempt to address our economic and social problems without eliminating mandatory participation.

The primary goal of this book is to explain the essentials of UBI: what it is, how it works, the state of research into it, the most popular arguments for and against it, how much it costs, how it can be financed, its likely effects, its history, and its possible future.

But, as I’m sure you’ve already guessed, I am a strong supporter of UBI. And so, this book’s secondary goal is to convince readers that UBI is a good, workable idea that should be enacted all around the world. I will make this argument in a way that explains and addresses both sides of the debate over whether to introduce it. Whether you agree with my position on UBI or not, I think you can learn more from a passionate and honest attempt to argue the strongest points for it and refute the strongest points against it than from a dispassionate list of points on either side.

With this in mind, I proceed to a more thorough definition of UBI.

UBI Defined by Five Essential Characteristics

UBI—also called Unconditional Basic Income, Basic Income, citizen’s income, citizen’s basic income, the social dividend, demogrant, and many other names—is defined by the Basic Income Earth Network (BIEN; formerly the Basic Income European Network) as a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement. I was a cochair of BIEN when that definition was adopted. I thought the negotiations that produced it were a great example of positive compromise. BIEN’s definition includes the following five essential characteristics:

1. Periodic: UBI is paid at regular intervals (e.g., daily, weekly, or monthly). A one-time grant is not a UBI.

2. In cash: UBI is paid in the appropriate medium of exchange for the community so that people can decide what to spend it on. It is not, therefore, paid in-kind (such as in vouchers for food or other goods and services).

3. Individual: UBI is paid separately to each person rather than jointly to a household. It remains the same whether individuals form households or live separately. Although the UBIs of young children or people with severe mental disabilities would be entrusted to their parent or guardian, neither spouse is given control of the entire family’s UBI.

4. Universal: UBI is paid to every member of a political community (such as a nation or a region) or every resident of a geographic area without any means-test. People get the same UBI regardless of income, wealth, earnings capacity, family composition, and so on. Although financially better-off people might pay more in taxes than they receive in UBI, they receive the same UBI as everyone else.

5. Unconditional: UBI is paid without a requirement to work, to demonstrate willingness to work, to demonstrate the inability to work, or to meet any requirements other than membership in a political or geographic community.

Strictly speaking, the conditions of universality and unconditionality are synonymous. If a program has any conditions, some people will not receive it, and therefore it will not be universal. If a program is nonuniversal for any reason, there are some conditions under which people fail to receive it. For that reason, Universal Basic Income and Unconditional Basic Income are used interchangeably as names for this idea, but the emphasis of the two terms provides clarification. Unconditionality emphasizes UBI’s lack of work- or desert-based requirements. Universality emphasizes its lack of means testing. A means test is any restriction on a payment based on an assessment of whether the recipient needs it or not. Traditional redistributive programs often deny payments because people have high income or wealth or earnings capacity.

Later chapters discuss why UBI has these characteristics.

Three More Desirable Characteristics of UBI

Most UBI supporters believe that a desirable UBI would also have at least three additional characteristics: it would be