Universal basic income (UBI) means replacing means-tested benefits with an unconditional regular payment that everyone, rich or poor, receives. While there are risks, UBI has the potential to be significantly more sustainable than current welfare systems, largely due to its ability to combat poverty.
This is the conclusion of our new briefing paper, which looks at the sustainability of implementing UBI in the UK.
While there are obvious important moral reasons to address poverty, poverty is also a significant problem from a sustainability perspective. There are three reasons for this: the first is that poverty tends to cause increased population growth. The second is that even though those in poverty consume less, a great deal of resources are often required to cover the costs of poverty; child poverty in the UK, for instance, is estimated to have cost the government £29 billion. The third reason is that poverty motivates governments to pursue an unsustainable perpetual economic growth as a tool to fight poverty, resulting in long-term environmental degradation.
The main strength of UBI is its ability to combat poverty more effectively than conditional welfare. For instance, conditional welfare perversely incentivises some on welfare to not seek work, because working more would mean benefit withdrawal. UBI, by contrast, allows workers to keep all of their basic income no matter what they earn.
Furthermore, UBI would significantly increase the bargaining position of low-paid workers: instead of being forced to take the first job they can find, they could look around for better-paid work.
In one of the few basic income pilots that has been performed, in Manitoba, Canada, it has indeed been found that UBI appeared to have a significant effect in reducing poverty.
Some worry that UBI will be prohibitively expensive to implement on the required scale. While this is a concern, the RSA has published a basic income plan for the UK that would have a net cost of only one per cent of GDP — a cost which is not at all unprecedented for social spending.
UBI is no panacea, however — it does have its problems: many worry that UBI will lead to a significant decrease in the amount people are willing to work, and it is difficult to know the seriousness of this concern based on current evidence. Others worry that UBI may precipitate dangerous flows of migration, and hence it is crucial that if UBI is implemented, it is done so in conjunction with well-constructed migration policies.
These concerns are valid, and there is certainly a need for more evidence. Hopefully some of this will come from the upcoming basic income experiment in Finland.
Nonetheless, UBI may be an invaluable tool for combatting poverty and moving towards a more sustainable society.