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Peter Whiteford is a Professor in the Crawford School of Public Policy at The Australian National University, Canberra. He has worked in the Organisation for Economic Co-operation and Development in Paris, as well as other universities in Australia and the United Kingdom.
Is Universal Basic Income The Solution? (What Are The Problems We Are Trying To Solve?)
The idea of a universal basic income (UBI) has captured attention across the world. Enthusiasts include Silicon Valley’s Elon Musk, former Clinton labour secretary Robert Reich, Benoît Hamon, the French socialist presidential candidate, and South Korean presidential candidate Lee Jae-myung.
Finland has become the first country to experiment with giving some of its unemployed citizens a guaranteed, unconditional monthly wage for doing nothing - even if they get a job. Other experiments are under consideration in the Netherlands, Scotland, Canada and the US.
So what is a UBI? Well, it means different things to different people, but the basic idea is that all citizens would be paid a guaranteed income (each fortnight, month or year) that would be completely unrelated to their income or earnings. It would provide a floor below which no one would fall, encouraging entrepreneurship and risk-taking, and it would simplify the existing tax and social security systems.
So what are the objections? Superficially, there would be a very large increase in government spending, but this is an appearance in many respects, because for most low income households, they would be effectively receiving a large tax cut. But even if financed by a flat rate of tax on all income apart from the UBI, tax rates on high income earners would have to rise. We don't have to pay for a UBI only through income tax increases, but if we want the rich to pay, then ultimately the effects are going to be equivalent. Would tax increases and giving benefits without conditions reduce labour supply?
Last year Switzerland held a referendum on the UBI issue, but the proposal was rejected by 75% of the voters.
This is an issue likely to remain on the public agenda for years to come. The strength of this article is that it is a very well-balanced analysis of the pros and cons of the UBI idea. Its one of the best places to start to understand the many sides of this argument.
