Basic income is a simple, radical idea. In essence, it is that a government should give every one of its citizens enough money to live off, no strings attached. But now it feels closer to reality than ever before.
Professor Guy Standing, one of the longest standing champions of basic income, has had a hand in many of these. He also led the experiment that came closest to testing a true basic income, in Madhya Pradesh, India, in 2011.
A quarter of a century earlier, he co-founded the Basic Income Earth Network, an NGO that promotes basic income as a human right around the world. Since then, he’s written numerous books on the topic, as well as on “the precariat”, the emerging social class defined by its lack of economic security. And with the future of work increasingly uncertain, it’s this class that basic income needs to appease.
Here we publish an edited transcript of a conversation with Professor Standing.
Basic income feels like an idea whose time has come. What’s changed?
There’s a perfect storm of factors that has made basic income more attractive to a lot of people, and almost an imperative if we are going to address the inequality, insecurity and social injustices that are multiplying with this model of globalisation.
The first factor is that the income distribution system of the 20th century has broken down. For a long time, the shares of national and international income going to capital and to labour were roughly constant. But in the last thirty years that has changed: all over the world, the share going to capital and to forms of rent has been rising, while the share going to labour has been shrinking. In the process, many of the traditional norms of economics have also broken down. It used to be the case that when profits went up, wages went up, but that’s no longer true. It used to be the case that as you approached anything close to full employment, wages would be rising quite strongly. In many countries, that’s no longer happening, either.
The second factor is the political backlash of the precariat. In 2011 I wrote a book about them, and on page one I said that unless the insecurities and aspirations of the precariat are addressed as a matter of urgency, we’re going to see the emergence of a political monster. A lot of people have been contacting me to say the monster has arrived. This has accelerated the legitimisation of basic income in the corporate world and among centrist intellectuals, who had been a bit distant from the debate but now realise that something must be done about insecurity.
And the third factor is the fear that robots and automation are going to displace millions of people in the near future. I personally don’t believe that a lot of us are going to be made redundant, but I do think the new technologies are making the income distribution even more unequal—and that means they are relevant to the basic income debate.
How do you propose we introduce a basic income?
I think we will make more political progress if we present it as a social dividend. We have all participated in the production of our wealth, so we should present it as a way of sharing capital and the rental income from assets and property and so on, rather than as a replacement for social welfare.
That means that we will have to gradually build the basic income up, alongside phasing out parts of social security—in particular means-tested social assistance. Basic income should become the universal anchor, on top of which there are supplements for disabilities, for special needs, for the elderly and so on.
You suggest building it up. What would the end point be?
I’m always cautious when talking about a level. Because then people immediately rush to do a back-of-the-envelope calculation and start talking about the huge cost and how impossible it is. We have to create a sovereign wealth fund type of institution, and as that fund grows it will pay out a rising social dividend. So the end point is not written in. And that’s nothing to worry about, because our research has found that a basic income close to subsistence level actually makes people work more, not less.
That’s quite a controversial view: most economists do worry about the labour supply effect of a basic income.
Those economists haven’t actually done the research to back up that view. Our pilots have shown that it increases work, if you consider work to include things like care and community work, and it has a minimal effect on labour supply—or it increases it. That’s empirical evidence.
The other criticisms that economists often level at a basic income are that, aside from being unaffordable, it would drive wages down and push inflation up. What do you make of those?
It’s one-sided economics. If you provide people with a basic income, you are empowering them to say no to exploitative conditions. It’s people who are vulnerable, because they can’t pay their rent, they’re in debt, who have to accept low wages and bad working conditions. Now if that’s the case, a basic income won’t have a downward pressure on real wages. The problem we’ve got is that our existing system of tax credits, which have been built up over successive governments in the UK, the US and elsewhere, subsidises employers paying low wages. That is what pushes wages down.
The point about inflation is rather strange. What we are talking about is diverting money from one use to another. So there wouldn’t be an increase of money in circulation. In addition, our pilots in India and Africa showed that if you give low-income people basic security, they spend on local goods and services. This induces supply effects—in other words, it induces producers to invest in supplying those goods and services. This means the total supply of goods goes up—and that makes unit prices go down. The price of staples actually decreased.
Another economic point you’ve made in the past is that a basic income would act as an economic stabiliser in times of recession.
What I’ve proposed is that there should be a base and a supplement that would vary cyclically. An independent basic income committee would determine the state of the economy and, if there’s a recession, they would raise the supplement. Alternatively, if there’s a boom and close to full employment where there might be inflationary pressure building up, you could lower the supplement. The Keynesian idea was that a universal social welfare system would act as a stabiliser because expenditure went up during recessions. A basic income with a stabilisation component would do the same thing.
To your eyes, what are the most plausible objections to a basic income?
The biggest challenge will be making the transition in a way that maintains political support, because a basic income will involve shifting expenditure, so some groups, in relative terms, will be losers. If it’s done as I suggested, your losers are your affluent, your plutocrats, your elites—those who are making money out of property, intellectual property, financial assets and so on. If they are the losers, I’m not going to weep about it, because they have been ridiculous gainers in recent times.
There’s a new wave of basic income trials—what are they going to tell us?
Most of these experiments are not really proper basic income pilots. In fact, the only proper basic income trial that’s happened was the one we did in India, where we provided an unconditional, subsistence level income to every individual in a community.
The Finland experiment is only giving money to 2,000 randomly chosen unemployed people. That’s not a basic income—it’s not universal. But that doesn’t mean the evidence won’t be valuable, because what they’re really testing is whether taking the conditions off social assistance changes outcomes. That will be useful to see, because lately most governments have been moving in the opposite direction: they only give money to people if they constantly jump through hoops.
The Canadian pilots in Ontario are a bit closer to a proper basic income. Only one of the four is actually a community level one; the other three are based on random samples again. For me, this is an important limitation, because you get network effects that can’t be ignored. If you give a basic income to one person in a family, or to one neighbour but not another, you get all sorts of pressures that put a negative bias on your testing of its effectiveness.
What would policymakers need to see to be convinced of basic income?
For me, the justifications are the social justice, freedom and security that come from having a basic income—and pilots don’t test those. They test things like whether it affects labour market behaviour or mental stability. Those are important, but they’re not the fundamental reasons why we should support a basic income.
I think the biggest challenge is to give politicians a stronger moral backbone. Many politicians, some very prominent, have said to me over the years that they agree with basic income, but they don’t know how to come out and say it. And you basically want to punch them in the nose, because they’re lacking courage.
But the political climate is changing. And it’s only going to continue changing as inequalities worsen—and in Britain, Brexit will bring heavy financial and economic costs that will be borne very regressively, through declining living standards and cuts to welfare. As I said at the beginning, it’s a perfect storm.
(Picture credit: Guy Standing)