An assessment of Basic Income

Luke Martinelli’s assessment of Basic Income is a serious, wide-ranging consideration of several of the arguments: among them, affordability, distributive effects, work incentives and political feasibility.  There is more to say about administration, implementation and the relationship to existing benefits, but no-one ever covers everything.

He characterises the opposition to UBI as saying that “an affordable UBI would
be inadequate, and an adequate UBI would be unaffordable.”  That’s not the whole story, either.  I put the case like this in a video interview:

“If you limit the level of benefit you are still dependent on other benefits, so you’ll get all the problems of the tapers, the poverty trap, the intrusion into people’s lives and the complexity.  If you increase the cost, then you can float people off those benefits – but what will you have achieved if you do that?  … those people who were formerly on benefits will find themselves on the equivalent in Basic Income, and you’ll have spent nearly all the money to the benefit of people who weren’t on benefits – to people who are better off.  So you have really got to decide, is it worth putting large amounts of money into a scheme which isn’t going to benefit the people you most want to help?”

5 comments

    • Paul Spicker

      This is a perfectly good argument about the total cost of UBI, but it doesn’t address the point I’m making about distributive consequences. Virtually all schemes in the UK start from the premise that UBI will be paid for by abolishing benefits and by increasing tax on the lowest earners. That means that UBI will, in most cases, leave poor people no better off and in many worked examples it will leave them worse off. Neither theoretical arguments, nor arguments from countries introducing benefits for the first time, can be generalised to the UK or to most European welfare states; bringing benefits into the equations changes everything.

    • Paul Spicker

      Please don’t imagine that no-one has thought about that. If UBI is too low, existing benefits have to be retained; if high enough to displace benefits, the money will have gone to everyone *except* those on benefit now. No scheme has yet resolved the problems.

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