The following information on the concept of the "basic income," or Universal Guaranteed Adequate Income, is from two articles by Guy Standing, published over the November and December issues of the CCPA Monitor newsletter. Standing is Director of the Socio-Economic Security Program for the Geneva-based International Labour Organization, a branch of the United Nations.
Trade unionists, as well as all those who count themselves as egalitarians and advocates of social solidarity, should support a basic income as a right of a good society in which dignified work could flourish. Traditionally, there has been reluctance to go in that direction. But times have changed.
In 1984, a group of young social scientists, all supporters of trade unions, set up an organization called the Basic Income European Network (BIEN). Since then, it has attracted a wide cross-section of members from all over the world. Membership does not oblige anybody to adhere to a particular view. But in practice most members believe in the desirability of moving towards a society in which everybody has a right to basic income security. Although some members might disagree on details, the following defines roughly what we mean.
Most importantly, we are talking about basic security as an economic and social right. This is essentially a republican or claim right, developed by Rousseau, Thomas Paine, and others. A claim right implies that policies and institutions should move towards a realization of that right. A rightăand this is important given the way social policy debates have evolved in recent yearsăis unconditional in behavioural terms. You do not have a right if you have to do x, y and z in order to have an entitlement. That is not a right. A right is a right, period.
Second, we are talking about basic security. Basic means it must be meaningful, not a gesture, but not so much that it leads to indolence and loss of motive to function. Above all, it must be enough in order to be able to make rational choices. It must be basic and it must be meaningful.
Third, for basic income security, the income must come in a form that is non-paternalistic. It should not be given to you as a discretionary gesture, in the goodness of someone's heart; it is not charity. It must be in a form that you can decide how best to use it. It must be individual and must be equal, with supplements for those with special needs, for disabilities or frailties. It must be in a form to enable people to make rational choices.
Fourth, the basic income should be regarded as the base of a system of social protection, on top of which should be supplements for special needs, social insurance, and social security, as well as collectively bargained occupational benefits.
Fifth, the move to a basic income should be seen as evolutionary, a form of continuity, not nearly as radical as some enthusiasts convey and many critics seem to believe. In many countries, many of the elements exist already and others are emerging. A key factor is the integration of the tax and benefit systems, which is fast being achieved. Most of those who believe that a basic income should underpin a redistributive strategy advocate a step-by-step approach, weaving the patchwork of existing schemes into a universal base. Several transition routes have been proposed, and some see it coming "through the back door."
Some advocates believe the amount paid should be low initially, building up to a decent level as it became accepted. Others believe that the basic income should be paid initially to selected social groups deemed particularly vulnerable to poverty and insecurity, then gradually extended to others. That is the route that has been taken in Brazil, with its renda minima and bolsa escola schemes that have evolved into the bolsa familia under President Lula. Others, such as Sir Tony Atkinson, have advocated a participation income as an intermediate step towards a full basic income, in which some community work would be a condition for entitlement to the basic income, thereby helping to legitimize the concept with the middle class. The key point is that policy-makers can take a gradualist approach, befitting the cautionary nature of modern politicians and their advisors.
Finally, the name should not distract from the essentials of the idea. The point is that we are talking about a fundamental economic right. Other names sometimes used include "citizenship income grant" and "social dividend." In South Africa, where the trade union confederation COATSU is actively campaigning for it, the term Basic Income Grant has been adopted.
With these definitional elements in mind, there are also two policy principles that should guide us in thinking about redistributive and protection policies. The first, drawing on John Rawls, is what might be called the "security difference principle": A policy or an institutional change is socially just only if it improves the security of the least secure groups in society.
The second principle is what I call the "paternalism test principle." This has been neglected by social policy advisors and politicians in the last 10 years in Europe and elsewhere. The paternalism test principle goes like this: A policy or institutional change is just only if it does not impose controls on some groups that are not imposed on the most free groups in society. That, of course, relates to workfare and a number of other policies that have been evolving.
Before considering the advantages of a basic income, and the reasons for unions to take a leading role in its advocacy, it is worth dealing briefly with the main objections that have been made over the years. Since this has been done in depth elsewhere, this section will be relatively brief, reviewing the objections in summary form.
This objection has been made to every progressive reform. Claims of futility (it will not work), jeopardy (it will endanger other goals), and perversity (it will have unintended consequences) have almost always been made--until the reform has been introduced, after which those claims somehow evaporate. In the months before Mitterand introduced the Revenue Minimum d'Insertion in France, for example, all his advisors and commentators said it could not be introduced; but a few months later it was accepted by almost everybody.
Moves towards a basic income have been introduced. Besides the RMI in France and elsewhere, there is the Alaska Permanent Fund, which pays out an annual dividend to every resident of the State, and there are the bolsa familia and similar schemes in several Latin American countries.
A basic income would replace many existing schemes, implying that to a large extent it would be merely a matter of substitution of expenditure.
Part of any increase in net public spending would be due to the fact that, while all governments have a public commitment to the eradication of income poverty, they actually operate schemes that underspend, in that there is a low take-up of monetary benefits supposedly available. This is the case with almost all means-tested benefits.
The cost argument usually comes down to a matter of priorities.
The claim that spending on a basic income would raise public spending that would lower international confidence in the national economy is often disingenuous, as in South Africa. Cutting poverty effectively would be a good way of inducing lower crime and more social stability, so inducing greater foreign confidence.
Various costings have been made, in both affluent and developing countries. They have shown that, even on restrictive assumptions, a basic income is affordable, and would at most involve a small increase in public spending or/and a modest rise in tax rates on above-average incomes. For instance, in South Africa a modest basic income could be paid by simply reversing the tax cuts to upper-income groups since the ANC came to power. In Turkey, a basic income could be paid from merely an extra 1% of GNP being allocated to social protection expenditure.
Most existing social security schemes, such as unemployment benefits, produce "poverty traps" and "unemployment traps," by which legal income-earning work is deterred because the recipient of the means-tested benefit would gain little or nothing by taking a low-paying job. A consequence of the spread of such schemes has been a growth in the extent of the underground economy, resulting in lower tax takes. A basic income would almost certainly reverse that tendency, resulting in more tax revenue, thereby lowering the net cost of the change.
Most of the responses to the cost argument would apply here, too.
A basic income would induce a switch in the structure of demand towards domestically produced wage goods, away from imported goods, thus tending to raise the exchange rate, dampening inflation.
This "principle" is arbitrary, never being applied to the idle rich or to those with inherited wealth, who are never required to put anything back into society.
There is no reason to suppose that only paid labour is "making a contribution;" other forms of work, such as care and community work, should count, even if one thought such a principle was justifiable.
It is a paternalistic claim: Who determines what count as duties, and to whom should they be provided to count?
The vast majority of people want to work and better themselves; it is an insult to think they would be satisfied with a modest basic income.
A basic income would put pressure on firms to make jobs more attractive, rather than rely on fear and the necessary to accept poor working conditions.
It would facilitate labour force participation by lowering the cost of job search. An instance is the experience with the Brazilian bolsa escola. Evaluations show that what amounted to a basic income for women with young children led to an increase in their labour force participation, as well as a reduction in child labour and female poverty.
As noted with respect to the cost claim, by reducing "poverty traps" and "unemployment traps," a basic income could increase legal labour supply from among the unemployed and those on the margins of the labour force.
In the U.S. some years ago, a negative income tax (NIT) was introduced experimentally in pilot communities. Political prejudice soon intervened to end them, before the pilot tests could be evaluated, reflecting the apparently liberating effects of the policy among the poor, which certain conservative groups disliked. But the political killing of the experiments did not occur until a large amount of data had been gathered on the effects of the NIT on workers and their families. It was a shame that trade unions were insufficiently interested to mobilize in defence of the experiments, which possibly reflected their fear of the liberating potential of giving workers real economic freedom. Anyhow, the data were later subject to an extraordinary number of separate evaluations. The results showed that the cynics were wrong. A review of 345 studies found that there was no significant overall effect on labour supply, one way or the other.
Because the effect on higher-income groups could be at most a small decrease in hours worked for income, the measure could actually induce some work-sharing, to the benefit of workers and the labour market.
Wages are determined mainly by bargaining power, and, if a person is insecure, he or she will put up with pathetically low wages. A basic income would at the very least improve a person's sense of security, and thus strengthen his or her bargaining position. Moreover, "efficiency wage" considerations mean that, if an employer pays sub-standard wages, workers will adjust their effort and commitment accordingly. There is no reason to assume that a basic income would have any negative effect on wages; it could help to raise them, particularly at the bottom end of the labour market.
In most countries, there is not much pressure!
Jobs should be generated by the proper demand for labour and by the ability of ordinary people to demand goods and services that generate income-earning opportunities. Jobs created for their own sake are artificial, demeaning, usually unsustainable, and often likely to induce inefficiency and "substitution effects" (displacing others not in job schemes).
There is always some churning taking place, but this would simplify the process and make it more transparent and equitable. Currently, much of the churning results in "middle-class capture" of the benefits, because they are more able to operate the complex schemes that characterize social security systems.
The increasing integration of tax and benefits systems is a global trend, even in many developing countries, making the churning arguments increasingly irrelevant.
This is a governance issue that could be dealt with by making the level independent of government through the establishment of an independent authority, as with monetary policy these days. Or it could be tied automatically to movements in national income or average earnings, as is the case with many state pension schemes.
In sum, the claims made against moving towards a basic income can be answered, if one wishes to do so. What is important is that prejudiced hostile reaction should be avoided, and that we should think of what sort of "decent-work" society we want to foster in the coming years.
There are several advantages of a basic income that trade unionists and progressives should surely wish to promote. They can be summarized, in no implied order of significance. A basic income would be a socially just measure, giving substance to the UN Declaration of Human Rights, especially Article 23. It would give substance to that egalitarian principle mentioned at the outset, giving equal basic economic security. It also corresponds to what we have found to be the most widely supported feeling among people of all levels of social background: that everybody should receive an income adequate to enable them to survive. A basic income appeals to people's sense of fairness.
By providing basic security, it would also tend to strengthen a sense of social solidarity.
The need to strengthen this bond cannot be over-emphasized at this historical point. Arguably, it has never been more threatened or fragile. Unless the means can be developed to strengthen various forms of social solidarity, all collective bodies, including trade unions, will have the greatest possible difficulty in appealing to potential members.
A series of psychological experiments was conducted in Canada, the U.S., and Poland, in which people were asked to choose which principle of justice they most favoured. A large majority chose "the floor constraint"--a basic income. And the majority grew when groups deliberated on the options, highlighting the importance of "deliberative democracy."
A basic income would also enhance real freedom. In the true republication tradition, to which most egalitarians (and, therefore, trade unionists) belong, freedom is not possible without independence for individuals. It would strengthen individual rights, which was why Thomas Paine supported it. What should be understood by all those Third Wayists is that real freedom is the only feasible and equitable way of inducing socially responsible behaviour.
A basic income would also be a very suitable policy for responding to one of the major crises of the globalization era and for redistributing one of those key assets identified in the introduction: It would encourage people to gain greater personal control over how they use time. Anybody who counts himself or herself as on "the left" should be keen for the poor and the vulnerable gaining more control over the key assets of society, and time is one of them.
By the same token, granting a basic income would help to legitimize forms of work other than labour, such as care work and community work. This is particularly important if we wish to see societies emerge in which more and more people can be workers in the richest sense of that term, combining a variety of types of work in a variety of work statuses.
By the same token, it would facilitate the more desirable forms of labour market flexibility.
One way it would do so is by enabling those on the margins of the labour force taking low-productivity, and thus low-paying, jobs. It would also, as noted earlier, encourage employers to make jobs more attractive, because workers could bargain with greater confidence over working conditions and pay.
There are two other advantages that would be gained from a basic income. It could actually boost economic growth, by shifting the structure of demand so that spending on local goods and services would be increased and, in low-income areas, by improving health, nutrition, and worker morale, and thus improving productivity. And it would save on administrative costs because it would be a simple system to operate, with less form-filling, no discretionary judgments to be made by local bureaucrats, no appeals processes, and a greater individualization of transfers that would reduce the complexity of the tax-benefit system.
These latter considerations may be of minor significance in the overall strategy. The key points are that it would enhance real freedom, equalize basic security, and facilitate a more flexible pattern of work.
Thus far, I have emphasized the broader appeal of moving towards basic income security as a right. The link with the great challenge of unemployment is fundamental. The image of unemployment is still the one that crystallized in the Great Depression, of men made redundant and walking the streets forlornly, being humiliated and desperate. That still happens almost everywhere. But the image has been jumbled with many others, ranging from a dubious one of teenagers lying in bed playing music, to "housewives" not really wanting a full-time job, to alcoholics and socially ill "layabouts" who are "unemployable." All these images have been used by politicians and commentators to belittle unemployment and to justify transforming social policy into increasingly paternalistic and judgmental actions.
Unemployment benefit systems are being whittled away. In their place, "workfare-type" schemes have proliferated. Many forms of inequity have come with them. Unemployment traps have been pervasive, and many people have been put into short-term jobs that may not be in their longer-term interest. Of course, many local civil servants do a good job and may have the best interests of their unemployed "clients" in mind. But as long as those schemes are coercive or punitive--you lose benefits if you do not do as we "advise"--they are or should be seen as eroding freedom.
Having policies to assist the unemployed is obviously desirable. But they must be genuinely voluntary and not be paternalistic or punitive. Having a basic income as a right would not "abolish unemployment" or lead to a neglect of the need for policies to lower unemployment. It would help to improve rational job search and give people a greater sense of dignity and calm in which to make rational long-term career decisions.
This could be a wonderful time for the progressives of the world. Some periods are when defeat follows defeat, when the forward march is halted or temporarily turned back. Some eras see a rush forward, when new movements spring to life, fear changes sides, the rich and the powerful make concessions, and a vision of something like Utopia enthuses progressives almost everywhere.
Some eras are like those eerie stillnesses at sea as the tide is about to change. The strength of the tide going one way has run its course, but the run the other way has yet to gather strength. The cagey fisherman knows this is when the fish begin to bite.
We are at such a moment. Progressives made the running, intellectually and politically, between the late 1940s and early 1970s. The 1970s were a lull, in which reactionary ideas crystallized into a coherent strategy. The period between about 1980 and late in the 20th century was one of progressive retreat, when Thatcherism and Reaganism ushered in a period dominated by "neo-liberalism," "the Washington consensus," and "supply-side economics."
Social democrats eventually responded, but did so in a lukewarm, defensive manner, characteristically calling their modest agenda "the Third Way," which generated the response of "compassionate conservatism."
The anti-progressive tide has run its course. It may still win some elections, and will be pushed further. But the insecurities and inequalities have become both revolting and corrosive, fostering instability and social reactions that threaten economic growth and human development.
Intellectually, the progressive voice is becoming stronger, because those who want to speak are no longer afraid of being swept away. The timidity that produced the tinkering and euphemisms of social democrats in the 1990s is inadequate to the challenges of the present era.
The lull between the tides is still there. Yet there is a huge opportunity to develop a new progressive vision--if we have the courage to take it and have open minds, even about views that have long been part of the progressive rhetoric. In particular, for the future of unions, we must rethink what it is about work that we want to promote and what form of security would best promote that vision. To do this, we must think radically. This is a historical moment, one that comes only every few decades. There is a risk that opportunities for progressive thinking will be missed. I have no doubt we are about to see a new spurt forward. A basic income should be part of that forward leap.