Basic Income, for a Free Society and a Sane Economy. PART 1: THE INSTRUMENT OF FREEDOM  – Philippe van Parijs, Yannick Vanderborght. 

To rebuild confidence and hope in the future of our societies, in the future of our world, we shall need to subvert received wisdom, shake our prejudices, and learn to embrace radical ideas. One of these, simple but crucial, is that of an unconditional basic income: a regular cash income paid to all, on an individual basis, without means test or work requirement.

The idea is not new. Since the end of the eighteenth century, it has occurred to any number of bold minds. Today, however, the conjunction of growing inequality , a new wave of automation , and a more acute awareness of the ecological limits to growth has made it the object of unprecedented interest throughout the world.

Yes, a better world is possible, and in order to achieve it, it is necessary to be imaginative and enthusiastic. But intellectually honest discussion that does not elude inconvenient facts and embarrassing difficulties is just as indispensable.

A basic income is not just a clever measure that may help alleviate urgent problems. It is a central pillar of a free society, in which the real freedom to flourish, through work and outside work, will be fairly distributed. It is an essential element of a radical alternative to both old socialism and neoliberalism, of a realistic utopia that offers far more than the defense of past achievements or resistance to the dictates of the global market. It is a crucial part of the sort of vision needed to turn threats into opportunities, resignation into resolution, anguish into hope.

1: The Instrument of Freedom

Action is urgently needed on many fronts, from the dramatic improvement of our cities’ public spaces to the transformation of education into a lifelong activity to the redefinition of intellectual property rights. More than on any other front, action is needed to restructure radically the way in which economic security is pursued in our societies and in our world. In each of our societies and beyond, we need a sturdy floor on which we can stand as individuals and as communities. If we are to stem our anxieties and strengthen our hopes, we must dare to introduce what is now commonly called a basic income: a regular income paid in cash to every individual member of a society, irrespective of income from other sources and with no strings attached.

In the past, a broad consensus existed between the right and the left that continued growth would keep unemployment and precariousness in check. Today’s unprecedented interest in basic income in the more affluent parts of the world is evidence that this consensus has ended.

Thus, the expectation that meaningful work will be lacking easily leads to the conviction that the growing jobless population must be provided with some means of livelihood.

But there are two very different ways of fleshing out this conviction, and one of them is very unattractive. It consists of expanding the old model of public assistance first born in the sixteenth century and instantiated by today’s guaranteed-minimum-income schemes of a conditional sort.

People are entitled to continuing handouts on the condition that they remain destitute, and can prove it is involuntary.

Thus, if conditional minimum-income schemes are the only way of addressing the expected lack of meaningful jobs, it seems that the technological progress that is meant to liberate us is going to enslave in poverty a growing part of the population instead.

The proper way of addressing today’s unprecedented challenges and of mobilizing today’s unprecedented opportunities does require a minimum-income scheme, but of an unconditional sort.

It is strictly an individual entitlement, as opposed to linked to the household situation; it is what is commonly called universal, as opposed to subjected to an income or means test; and it is obligation free, as opposed to tied to an obligation to work or prove willingness to work.

Basic Income remains however conditional in one important sense. Recipients of it must be members of a particular, territorially defined community. In our interpretation, this condition must mean fiscal residence rather than permanent residence or citizenship. This excludes tourists and other travelers, undocumented migrants, and also diplomats and employees of supranational organizations, whose earnings are not subjected to the local personal income tax. It also excludes people serving prison sentences, whose upkeep costs more than a basic income, but who should be entitled to it from the minute they get out.

A basic income does not only need to be paid regularly. Its amount must also be stable enough and, in particular, immune to sudden declines. This does not mean that it should be fixed. Once in place, it can meaningfully be linked to a price index or, even more meaningfully, to GDP per capita.

A basic income cannot be mortgaged; its beneficiaries must not be allowed to use its future stream as a guarantee for loans. This requirement flows naturally from viewing basic income not as a top-up on other incomes but rather as the bottom layer for every person’s income, which current legislation usually protects against seizure.

The word “basic” in basic income is meant to convey the idea of a floor on which one can stand because of its very unconditionality. It is a foundation on which people can build their lives in various ways, including by topping it up with income from other sources.

A basic income should not be understood as being, by definition, a full substitute for all existing transfers, much less a substitute for the public funding of quality education, quality health care, and other services.

Unconditional Basic Income means far more than existing conditional minimum-income schemes. It does not operate at the margin of society but affects power relations at its very core. Its point is not just to soothe misery but to liberate us all. It is not simply a way of making life on earth tolerable for the destitute but a key ingredient of a transformed society and a world we can look forward to.

Fundamental to the concept of a basic income is that it is paid in cash and not in the form of food, shelter, clothes, and other consumer goods. a fair and efficient distribution of cash, especially in an era of electronic payments, requires far less bureaucracy than a fair and efficient distribution of food or housing. Cash distribution is also less prone to clientelistic pressures, lobbying of all types, and waste through misallocation. Furthermore, when cash is distributed rather than food it creates purchasing power in the areas where poor people live, boosting local economies rather than depressing them, as the distribution of imported free food tends to do.

A basic income is not meant to replace all services provided or funded by the state. A combination of mild paternalism, awareness of positive and negative externalities, and concern for the preconditions of competent citizenship can easily override the argument for cash in the case of some specific goods such as basic health insurance and education at the preschool, primary, and secondary levels. Such provisions in kind can be defended in terms of the long-term interests of the individuals concerned, and also in terms of societies’ interests in maintaining the healthy and well-educated workforces and citizenry that are crucial to well-functioning economies and democracies. Analogous arguments can be made for provisions of safe and enjoyable public spaces, and some other public goods and services. For all these reasons, making a strong case for a basic income paid in cash is consistent with supporting public provision of various services in kind.

UBI is paid to each individual, and at a level independent of that individual’s household situation. Direct payment to all individual members of the basic income to which they are entitled can make a big difference insofar as it affects the distribution of power within the household. For a woman with low or no earnings, control over the household’s expenditures will tend to be greater and exit options will tend to be less forbidding if she receives a regular income as an individual entitlement for herself and her children than if her existence and that of her children entail a higher net income for her partner.

Under existing, conditional minimum-income schemes, how much an individual is entitled to depends on the composition of the household. There are two reasons why the amount to which an individual is entitled should be independent of the size of the household to which he or she belongs.

The first is that cohabitation is hard to confirm. The more general the trend towards informality and volatility in the formation, decomposition, and recomposition of households, the more that competent authorities are stuck in a dilemma between arbitrariness and unfairness on one side and intrusiveness and high monitoring costs on the other, and consequently the stronger the case for a strictly individual transfer.

Differentiating according to household composition also has the effect of discouraging people from living together. While it might seem paradoxical, a more strictly individual tax or benefit scheme is a more community-friendly one. The degressive profile of a household-based scheme creates a loneliness trap: people who decide to live together are penalized through a reduction in benefits.

Other negative effects follow. The mutual support and sharing of information and networks stemming from cohabitation is weakened. Scarce material resources—space and energy, fridges and washing machines—are underutilized. And the number of housing units for a given population increases, leading to less dense habitats and hence greater mobility challenges. As concern for the strengthening of social bonds and the saving of material resources intensifies, the argument against household differentiation grows stronger by the day. In the pursuit of sustainable freedom for all, cohabitation should be encouraged, not penalized.

UBI is unconditional in the sense of being universal, not subjected to a means test. The rich are entitled to it just as much as the poor. And it is unconditional in the sense of being obligation free, and not being subjected to a willingness-to-work test.

The combination of these two unconditionalities is crucial. The former frees people from the unemployment trap, the latter from the employment trap. The former facilitates saying yes to a job offer, while the latter facilitates saying no. The former creates possibilities, while the latter lifts obligations and thereby enhances those possibilities. Without the former, the latter could easily foster exclusion. Without the latter, the former could easily foster exploitation. It is the joint operation of these two features that turns basic income into a paramount instrument of freedom.

A basic income operates ex ante, with no means test involved. It is paid upfront to rich and poor alike, regardless of the income they derive from other sources, the property they own, or the income of their relatives.

With a basic income paid automatically to all legal residents, access to benefits does not require any particular administrative steps. Moreover, society is then no longer visibly divided between the needy and the others, those who need help and those who can manage on their own. There is nothing humiliating about receiving a basic income granted to all members of society. This does not only matter in itself for the dignity of the people involved. It also enhances effectiveness in terms of poverty alleviation. Thus, by avoiding complication and stigmatization, a universal scheme can achieve a high rate of take-up at a low information cost.

The fact that one remains entitled to the basic income irrespective of any other income one may be earning, is important not only for freeing people from a lack of money. It also matters for freeing them from exclusion from work.

Under a means -tested scheme, even precarious earnings cancel the entitlement to part or all of the benefits. Rational avoidance of uncertainty contributes to trapping welfare recipients in situations of unemployment. The risk is compounded by the very nature of many of the jobs the most disadvantaged would qualify for: jobs with precarious contracts, unscrupulous employers, and unpredictable earnings. If they are unsure about how much they will earn when they start working, about whether they will be able to cope, or about how quickly they might lose the work and then have to face more or less complex administrative procedures in order to reestablish their entitlement to benefits, the idea of giving up means -tested transfers holds less appeal.

The contrast between a means-tested minimum-income scheme and a basic income should be clear. The former provides a safety net that fails to catch a great many people it should catch, and in which many others get trapped; the latter provides a floor on which they can all safely stand.

This difference may be of little significance as long as the trap catches only a small minority of people suffering from various handicaps. It becomes of central importance when, for the reasons sketched above, a large and growing proportion of the population is at risk of getting trapped. One reason often given for not raising the level of means-tested benefits is precisely that it would catch even more people in the unemployment trap.

It is true, indeed self-evident, that universality is achieved at a far higher level of public expenditure. Paying a given sum of money to all costs far more money than paying it only to the poor. But there is cost and there is cost. Much of the cost, if the scheme is funded by taxation, consists in taking money with one hand and giving it back with the other hand to the same households. The rest simply represents a redistribution of private spending between different categories of the population. This is quite different from a budgetary cost that involves the use of real resources, such as to build infrastructure or employ civil servants.

A basic income is a regular cash income that is individual and universal. It further differs from conditional minimum-income schemes in having no strings attached; it carries no obligation for its beneficiaries to work or be available on the labor market. It is paid without any such conditions. Homemakers, students, and tramps are entitled to it no less than waged workers and the self-employed, and those who decided to quit no less than those who were sacked. No one needs to check whether its beneficiaries are genuine job seekers or shirkers.

Work quality can be expected to get a big boost as a result of both today’s existing jobs’ being improved and many non-existing jobs’ becoming viable. In particular, the average quality of the jobs performed by the most vulnerable can safely be expected to increase. This is why so many people committed to freedom for all like the combination of universality and freedom from obligation. This is why they want a basic income.

It seems hard to deny that basic income, owing to its multidimensional unconditionality, constitutes a powerful instrument of freedom. But is it sustainable?

A common worry is that the supply of labor will be badly affected by the combination of an obligation-free minimum income and increased taxation of the productive activities required to fund it. It would be wrong, however, to reduce the economic impact of a basic income to its immediate impact on the supply side of the labor market. By providing an unconditional floor, a basic income can be expected to help unleash entrepreneurship by better buffering the self-employed, worker cooperatives, and capital-labor partnerships against the risk of uncertain and fluctuating incomes. Even more important is the expected longer-term effect on human capital.

Coupled with a redirection of the educational system towards lifelong learning, such a more flexible and relaxed labor market should be far better suited to the development of twenty-first-century human capital than a market that makes a rigid division between young students and mature workers.

This positive impact concerns not only the human capital of the present working population, but also that of their children. Like other ways of making family income more secure, basic income can be expected to have a beneficial effect on children’s health and education.

To the extent that it addresses the unemployment trap, it reduces the number of children whose eagerness to work is negatively affected by their growing up in households without anyone employed. Above all, by facilitating chosen part-time work and promoting a smoother conciliation of work and family life, it enables parents to devote more attention to their children when this is most needed.

Making an economy more productive, sensibly interpreted, in a sustainable fashion is not best served by obsessively activating people and locking them in jobs that they hate doing and from which they learn nothing.

It is arguably not only fair but also economically clever to give all, not just the better endowed, greater freedom to move easily among paid work, education, caring, and volunteering. This intimate connection between the greater security provided by a basic income and the expansion of a desirable form of flexibility makes basic income an investment rather than a cost. It also explains why a basic income can be viewed as an intelligent, emancipatory form of “active welfare state” and an emancipatory interpretation of what an active welfare state could be.

In this case, activation is a matter of removing obstacles such as the unemployment and isolation traps, and empowering people with easier access to education and training, in order to give them a wider spectrum of options for paid or unpaid activities. It consists of freeing them to work rather than forcing them to work. It forms the core of an emancipatory active welfare state, in sharp contrast also to the means-tested minimum-income schemes typical of “passive” welfare states that focus their transfers on the inactive and thereby keep them inactive.

True, by providing an obligation-free income, a basic-income scheme can be viewed as desacralizing paid work: it legitimizes pay without work for all, not just for the disabled and the rentiers able to live on income from property or securities. But by providing a universal floor to which income from other sources can be added, it can nonetheless also be viewed as an instrument of activation that will help other instruments, such as retraining or social work, do a better job. Being obligation-free, basic income can help to “de-commodify ”human labor; but being universal, it also helps to “commodify” the labor of people who would otherwise remain excluded.

A basic income is fully compatible with the view that recognition and esteem are not earned by self-indulgence, but by service to others. A basic income is there to facilitate the search by all of us for something we like to do and do well, whether or not in the form of paid employment. Many at some stages in their lives might best contribute to the well-being of those close to them or of the human community as a whole through unpaid activities, from running voluntary childcare initiatives to contributing to Wikipedia. However, most people at the “working age” stages in their lives will best contribute through some sort of paid work, whether or not within a firm, whether or not on a full-time basis. A social norm that values this—a work ethic in this sense—is consistent with a basic income, indeed contributes to its sustainability, without cancelling the liberating impact associated with the expansion of the range of ways in which this social norm can be met.

Involuntary unemployment is a major issue for people committed to freedom for all. Growth has routinely been offered as the self-evident remedy for unemployment. But strong doubts have emerged as to the possibility and desirability of sustained growth in rich countries and about its ability to provide a solution to unemployment. A basic income offers an alternative solution that does not rely on an insane rush to keep pace with productivity growth, subsidizing low-paid work with low immediate productivity and by making it easier for people to choose to work less at any given point in their lives. At the expense of material consumption? In developed countries, certainly. And deliberately so—because our economy not only needs to be efficient. It must also be sane. And sanity requires us to find not only a way of organizing our economy that does not make people sick but also a way of living that is sustainably generalizable. An unconditional basic income is a precondition for both.

Philippe van Parijs & Yannick Vanderborght

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