Off-Topic: Universal Basic Income

1. Introduction

This is a topic very close to my heart that I've wanted to write about for years. I've discussed it with friends, of whom some agreed with me and some didn't. Maybe minor details of my plans can be changed, but I believe that a Universal Basic Income is the only viable solution for today's problems. It might be seen by some as a form of radical socialism, but if you listen to me with an open mind you'll see that I'm right.

For those who have never heard of it, the concept behind Universal Basic Income, which I'll refer to henceforth as UBI, is that everyone should be paid an amount of money, the same amount of money, regardless of his wealth or social standing. Is it fair that people should receive something for nothing? I say Yes. Everyone is put on this Earth against his will. Everyone has three basic needs:

1. Food
2. Clothing
3. Somewhere to live

I'll add a fourth category, which I'll deal with separately:

4. Healthcare

These four things are basic human rights. In my opinion it's immoral that any of these should be withheld from anyone who is incapable of paying for them because he's unwilling or unable to work. Everyone should be given enough money to pay for the first three items before the question of work is even raised. Healthcare is different, because the needs vary greatly. Some people are healthy, while others aren't, so the amount needed is different for everyone. The money given for the first three items can be the same for everyone.

UBI has to be dealt with on a national level, not globally. Some countries might implement UBI quickly, while others wait to see the results in foreign countries. Some countries might have political systems which refuse to implement UBI under any circumstances. I'm writing my thoughts with my home country, England, in mind, but they can easily be adapted to any other country.

2. The Past

There have always been differences between the rich and the poor. In the past there were systems of slavery and serfdom. A slave was a poor person forced to work for his rich master without any payment, simply to make his master even richer. In most cases the slave's basic needs (1 to 3, as listed above) were provided, but at such a low level that he enjoyed no comfort.

Serfdom was one step above slavery. The serf was given freedom to earn his own money, of which he had to give an amount to his rich master. He was allowed to own property, but the master could reclaim the property from him if he didn't pay enough. It was very difficult for a serf to leave his master and move to a different place. In theory, he was allowed to buy his freedom, but in practice it was impossible to earn enough for this privilege, so families were locked into serfdom under a single master for generations.

3. The Present

Today people are free to live and work wherever they want. That's what we're told. But is it true? Those of us who have been blessed with above average intelligence or other capabilities can apply for jobs anywhere in the country, or even abroad. But what about the rest of us? People are stuck in towns or villages with no way to get out. Many young people carry on in their parents' careers, because they have no chance to do anything else. Others accept jobs they don't enjoy for poor wages. Worst of all are the towns dominated by a single large employer, such as a coal mine or a steel works. People know from an early age that they'll either work for this employer, or at best they'll work in a service industry working for the employees of the big company.

When a person is forced to do a job he doesn't want to, because the alternative is starvation, it's little more than slavery. The big companies and their rich owners have all the power.

4. The Problems

Things are getting worse from year to year. Ironically, the problems are being caused by scientific and technological progress. The biggest problem is overpopulation. In past centuries, the population was culled by sickness. Medical advances have prevented the plagues that wiped out millions, and minor illnesses are less likely to be fatal. Fifty years ago the average life expectancy in the UK was 68 years, today it's 81. People are being kept alive longer, boosting the population. In previous centuries there were also wars that served to cull the population, but today there's peace, adding to the problem of overpopulation.

Another problem that can't be underestimated is the demise of heavy industry. It's not just a question of automation. Today's jobs are becoming ever more complex and need more intelligence to master them. Don't just think of the more capable ones among us, think about the rest. Half of the population has below average intelligence, by definition. Those in the lower half have to fight over an ever-diminishing number of unskilled jobs.

5. The Present Solutions

Countries like England have a safety net for those unable to find jobs because they lack skills. There is unemployment pay for those who are without a job, whether it's because of bad luck or a lack of skills, but this payment is conditional on the person actively looking for a new job. The assumption of the government is that there's a job for everyone if you look hard enough. This is an assumption that I disagree with. I say that whenever someone accepts a job, he's taking the position away from someone else who could have done the job. There aren't enough jobs to go round, and the lack of jobs is giving the employers power to make ever more unreasonable demands.

There are also people who are unable to do a job for health reasons. It might be a temporary illness or a long term medical condition. Short term illnesses aren't usually a problem, because sick pay is offered, either by the government or the employer, and when you're healthy again you can return to your job. Illnesses that last for years or even permanently are a bigger problem. The current slogan of the British government is "Let's get people back to work". The theory is that everyone is capable of doing something, whatever illness he has. It's true, there are blind lawyers and physically disabled news reporters, but those are bad examples. They're people who have talents great enough to compensate for their disabilities. They're a small minority. The vast majority of people who lose their legs in a car accident never work again, unless it's an act of pity from the former employer. Even then, jobs are scarce, so every disabled employee is taking a job away from someone else.

6. The Future is UBI

The problem in England and most other western countries is that people who don't want to work are forced to work just so that they can survive. If those who don't want to work are given the freedom to stay at home, no questions asked, there will be more jobs available for those who do want to work. There are many valid reasons why a person might not want to work. A single mother with two small children might think that her time is better spent with her children. A man in the middle of his life might decide he wants to change direction by entering full time education. Yet another man might want to spend all day writing a film blog.

Most importantly, a person might not want to work because no job is being offered that he wants to do. Instead of the virtual slavery of being pressured into an unpleasant, underpaid job he can wait for a better offer. He can sit at a job interview and say, "You can't seriously expect me to work for a salary like that. Increase your offer by 25% and I'll take the job".

7. The Advantages of UBI

At its simplest, UBI is a replacement for unemployment pay, and this would create huge savings. A large part of the work at job centres is checking whether the clients are actively searching for jobs and sanctioning them if they're not doing so. Most job centres could be closed, because companies would be searching for employees by themselves. Government-run job centres could be replaced by private organisations that work as head hunters, seeking candidates for specialised jobs.

Child support could also be abolished, because children would receive UBI. Some might suggest a lower rate of UBI for young children, but I would recommend the full rate, because as soon as children are born a larger house is necessary.

State pensions can be abolished, because people receive UBI when they stop work. In fact, the concept of a retirement age can be forgotten, because people can stop work whenever they want to, early or late. A uniform retirement age is impractical, because everyone is different. Some people feel too weak to carry out their job at 60, while others feel fresh and want to continue working till they're 80. UBI is the safety net. Nobody should be forced to continue working when he's sitting in an office, aware that he's only functioning at 70% of his previous performance.

Student loans can be restructured. No student needs a loan to pay for his living costs while at university, because that's covered by UBI. Some countries like Germany offer free universities, while other countries like England have extortionate tuition fees, which obviously can't be covered by UBI. Student loans for tuition would still be necessary. I have an opinion on tuition fees, but it isn't relevant to this essay on UBI.

There would no longer be a need for a legal minimum wage, sometimes called a living wage. Not many countries have a legal minimum wage. England is one of them, and its purpose is to protect desperate employees from being coerced into jobs that don't pay them enough to survive. UBI itself would make sure a person can survive, so companies can offer wages as low as they like. The only disadvantage of low wages is that people might refuse to do the jobs, because they're no longer desperate. The wages would have to be high enough to make people want to do the jobs.

Income tax rates can be flat. This is an idea that might sound unpleasant to those who call themselves socialists, but I'm willing to defend it. At present, income tax runs in a curve. Low earners pay little or no income tax, medium earners pay more, and high earners pay a very high rate of income tax. Why is this?

The medium earners pay what I would call the normal rate of income tax. Low earners pay less to protect them from poverty, i.e. they need to keep hold of the small amount of wages they receive. The high earners need to pay more taxes to compensate for the taxes not paid by the low earners. Usually there are more low earners than high earners, so the high earners have to pay much more to balance the taxes that the government needs. If low earners are receiving UBI there's no danger of poverty, so low taxes aren't needed for protection. They can pay the same tax rate as the medium earners, and there's no need for high earners to pay more to compensate.

A flat tax rate can make job interviews much easier. If a person is offered 10 pounds an hour, and the standard income tax rate is 30%, he knows immediately that he'll have seven pounds an hour in his pocket.

Sick pay and long term disability pay can also be replaced by UBI, but there are certain problems. Some forms of disability require additional equipment, such as machines, which are too expensive to be purchased from the standard UBI. Increased payments would contradict the concept of removing means testing, so it's important that this equipment is supplied free of charge. This is best discussed in the next section.

8. Healthcare

Everyone needs to go to the doctor. Sometimes it's cheap, sometimes it's expensive, and in the case of certain illnesses the costs are astronomically high. In some countries this is dealt with by private health insurance companies, which may or may not be paid for by employers. In other countries, such as England, there's a compulsory health insurance which costs more depending on your wages, i.e. it's a health insurance tax. The system with private health insurance companies is obviously immoral, because it turns healthcare, a basic human right, into an object to be bought and sold. Paying more for healthcare based on your earnings is a fairer system, but it's contrary to the principle of UBI. A person who earns a high salary shouldn't be expected to pay a large amount for his healthcare, while a person who earns nothing (apart from his UBI) pays nothing. Everyone should receive free healthcare as an add-on to his UBI. Indirectly, high earners would be paying more for their health insurance anyway, because it would be financed by their higher income tax payments.

Medical equipment needed at home should be provided as part of the healthcare, free of charge. This includes the payment of bills for changes to a house, such as the construction of a ramp for wheelchair access.

9. Technicalities of UBI

Who receives UBI? Every citizen of the country. Maybe some people would say that they're so rich that they don't need UBI. Being given the opportunity to decline UBI would contradict the system. It works both ways. Citizens receive UBI, and receiving UBI is the proof of citizenship. If any millionaires don't think they need their UBI, they can donate it to a charity of their choice.

How much should UBI be? That's a question that I only want to answer in general terms, not with an exact figure. It should be enough to survive. Everyone who receives UBI should have enough to eat and live in appropriately sized accommodation. It shouldn't be enough to live with unnecessary comfort. What I mean is, it shouldn't be enough to buy a car or go on holiday. It shouldn't be enough to afford expensive hobbies like smoking. UBI is only meant to supply a person's basic needs. If he wants more he should consider getting a job. If UBI is too high, it removes the incentive to work.

How can the system be protected from abuse? The only problem I can see is that UBI might be paid to a person who is deceased, then spent by a friend or relative. There should be checks on people who seem to be idle, i.e. there's no record of them doing anything. In today's age of mass surveillance it shouldn't be difficult to tell who is no longer active.

Should UBI be paid to citizens who live abroad? That's a difficult question. My gut feeling is that they should, but I can foresee problems. UBI should only be paid into a UK bank account. Applications for UBI should only be made in the UK. People who live abroad are more likely to be "idle", as far as the UK is concerned, so they would need to be checked more often.

10. Problems with UBI

The biggest problem with UBI isn't food or clothing, it's living costs. Housing property has always been considered a form of investment rather than a basic human need, but in the last 30 years things have deteriorated badly. Let me give an example. My previous landlord in Birmingham bought 30 houses in the late 1980's for £5000 each. They were all formerly council houses. He's now charging £500 rent per month, which means he's making 120% profit per year on his initial investment.

UBI can only function in combination with strict rent control. The housing market should be left unregulated, i.e. people can pay whatever they want for a house, but there should be limits on what can be charged for rent. There are two possibilities. One is that there should be a maximum price per square foot living space that can be charged for rent, for instance £0.25 per square foot. This would prevent landlords from charging higher rents in places like London. The other possibility would be to use the house's market value as a basis and allow a yearly rent of 1% of the value. This would allow higher rents in London, but still much less than they are now.

This would lead to an initial drop in housing prices, when people with multiple properties realise it's no longer a good investment to own houses for rental purposes, but when an equilibrium is reached in which more people live in their own houses, the prices will stabilise.

11. Additional Advantages of UBI

If at any time in the future military service is re-introduced, the army wouldn't have to pay conscripts, because they receive UBI.

UBI would help to fund the prison service, because in the case of prisoners serving long sentences the UBI could be used to pay for their food, clothing and accommodation.

People who want to do unpaid charity work could rely on their UBI.

Britain's borders could be opened to anyone who wants to live in the country. Foreigners wouldn't receive UBI, so they would need to be in constant employment to be able to survive in England. Large non-British families would receive no child support or other assistance after the introduction of UBI and would consider returning to their home country.

12. Support Centres

Some people will have problems with UBI. That's a foregone conclusion. I'm talking about those who are unable to work, because those able to work can get a job if they have financial problems.

Some people have problems budgeting. The support centres can give advice on how to spend money better. A person should take all his receipts into the centre to show why his UBI payment isn't enough, and the support personnel can tell him what he's doing wrong.

Others might be drug addicts and waste their UBI as soon as they get it. People like that need help. There should be medical centres where they can be kept indoors away from the temptation of drugs.

One thing that the support centres shouldn't do is give more money. UBI should be enough for everyone. The job of the support centres is merely to give advice.

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Afterthoughts

I'm hoping that what I've written will provoke an active discussion. Please leave comments below. It's possible that I've forgotten something, so I might go back and edit part of this essay. I might change my mind in minor details, but I doubt I shall change my mind altogether, because these are thoughts I've been weighing for years.

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Addendum on 28. December 2019

I've received a few comments about this post on Facebook. The general opinion was positive, although nobody went into any detail about my thoughts. One interesting comment was that UBI would assist people who want to begin working on a free-lance basis. That's something I'll probably add when I make a second draught of this post. UBI would remove the risk by taking away the danger of a potential entrepreneur not having anything to eat. Depending on the business plan, an entrepreneur might need to invest in his new business, but I assume he would have saved money from his previous employment. UBI would merely cover the basics of his survival, if he's not successful at first.

Please leave comments in this blog itself. They're easier to answer, and they're visible to a wider audience.