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Basic Income or Basic Services

Author: Simon Duffy

This piece is a reflection on a debate between Barb Jacobson of Basic Income UK, the campaigning group for basic income and Anna Coote, of the London-based think tank NEF. In theory the debate is a discussion of the merits of two supposedly competing models:

  • UBI or Universal Basic Income - giving every person cash so that they can afford to live, versus
  • UBS or Universal Basic Services - giving people services to meet their needs 

In practice the conflict between these two models was rather hard to evaluate.

For, as Jacobson noted, many advocates of basic income would also welcome an extension of free public services - so it is quite possible to support UBI and UBS. Moreover, when it comes to income security, it is hard to see how UBS offers any significant real world alternative to UBI. For example, when it comes to food, would the government really replace the current system with:

  • nationalised foodbanks?
  • state controlled farms?
  • meals on wheels?
  • soup kitchens?

As Coote admitted, UBS is really just ‘kite-flying’ and her examples (education, childcare and healthcare) were for services that already exist and which do not significantly overlap with the tax-benefit system that UBI seeks to reform.

In reality this podcast was more of an opportunity for Coote to offer some of the reasons that she is opposed to UBI. Jacobson did a good job at parrying these argument, but Coote made numerous points that I think are worth considering in more detail than the time allowed.

Criticism 1 - UBI is too individualistic

UBI provides a cash payment to every individual which they can use as they think best. Alternatively UBS provides cash to some citizens (public servants), who then provide services to others. Coote suggests that UBS is inherently more collective and public than UBI, and her evidence for this is that public services have survived austerity better than have benefits.

There is much that is peculiar about this argument. Historically the fight for social justice has often focused on the importance of people receiving a secure income - from the democratic reforms in Athens in the 5th century BC to the fight for state pensions at the beginning of the 20th century. Advocates of social justice have usually been very aware people need some basic economic security, in the form of money, in order to exercise their citizenship and to take part in democratic and community life as an equal.

Moreover, Coote is surely factually wrong to use the evidence from austerity to support her argument. In fact the evidence suggests that it is universality - not public service delivery - which is the most most important factor in explaining relative invulnerability to Tory cuts. Social care, which is a public service, has been savaged by cuts (50% less people get publicly funded social care now than in 2009), whereas the NHS has been rather better protected from cuts (although it has still been cut). Meanwhile pensions, which is a cash payment, has been very well protected from cuts (by the so-called triple-lock policy), whereas the benefits received by disabled people and by the poorest have been subject to severe and ongoing attack (dressed up as ‘welfare reforms’).

The critical dividing line here is not service versus cash, the dividing line is universal versus marginal. The NHS and pensions are universal and non-means-tested; social care and low-income benefits are means-tested and in the public imagination are treated as if they were relevant only to some marginal groups.

In short, the Tories have found it easy to cut something when it is perceived as being just for ‘some people’. It is much harder to cut what is perceived as being for ‘everyone’. So, the logic of Coote’s argument actually supports the case for UBI.

Stalinist fallacy: collective means state-controlled

If income security is an obvious collective good, and one that has been central to the fight for social justice throughout history, then it is worth considering why someone as well-informed as Coote might want to narrow the definition of the collective to ‘public services’.

There is a always a temptation for a powerful individual or group to identify their own interests with the interests of the whole. Stalin thought his interests were identical with those of the USSR and Louis XIV famously said “L’Etat, c’est moi.”

Partly this confusion may also be a hangover from Marxism. Marx assumed that direct state control of industry was a natural stepping stone towards social justice. However Stalin (together with the neoliberals at the heart of the UK state) have successfully proven that the state and its organs are not identical with the common good. The state can work for the common good, or it can serve narrower interests; we certainly cannot assume that the state always works in harmony with the principles of justice.

This may also be partly a social phenomenon. In practice public services are run by very well-paid middle class people, who generally surround themselves with other people like themselves. There is a tendency for the well-heeled Left to think they know best how the poor should live. As the leading Fabian, Beatrice Webb put it:

“We have little faith in the 'average sensual man', we do not believe that he can do more than describe his grievances, we do not think he can prescribe the remedies.”

Public services are characterised as ‘collective’ by some, but they do not necessarily feel ‘collective’ to those who use them. Benefit sanctions leave people hurt and bruised, treated as worthless. Councils threaten to take children into care if their parents present as homeless. Changes to the NHS are made by mandarins, hundreds of miles from the communities they impact. Teachers, parents and children bemoan an increasingly regulated and industrialised education system, totally unaccountable to local communities.

UBI is an antidote to the kind of meritocratic elitism that continues to dominate the welfare state. It says that everyone matters and that everyone is entitled to the economic security they need to participate in public life. UBI distributes power, UBS centralises power.

Criticism 2 - UBI is untargeted

The second criticism is that UBI is untargeted and so, if we want to do the best we can by the poorest, we should target extra spending on those in most need: whereas UBI wastes money by giving extra money to the wealthy.
Interestingly, if this were true, then this would also be an argument against many public services, like the NHS. By this logic we could provide better services for the poorest if we excluded the rich or if we means-tested beneficiaries. However, we know very well, that the opposite is true - targeting is bad for the poor because the rich will still take care of themselves and will then reduce their support for the ‘targeted’ services which are now only provided to those who can’t afford them. (This is one of the reason why social care is in such a mess - extreme means-testing undermines wider public support.)

Is Coote seriously suggesting that it would be better to target Child Benefit rather than maintaining it as universal benefit?

Would it really be better to provide free education only for those children whose parents could not afford private education?

Moreover, not only is targeting a dubious goal, but UBI already makes appropriate provision for the fact that people have different incomes, for we can use of the income tax system. If the rich do gain by receiving a basic income then they will also lose by paying higher taxes. However they would still gain - not financially - but psychologically - because then would now be part of a collective system of income security which ensured they, and those loved, had a basic income in all circumstances. In fact this new level of universal income security might help the rich be more generous, as they would no longer have to fear penury.

The problem with the current benefit system, and one its defenders rarely mention, is that not only does it provide people with only an inadequate income but it also imposes multiple and extreme taxes on people, with no rationale or fairness:

  • The high level of indirect taxes in the UK, like VAT and Council Tax, means that the poorest already pay nearly 50% of their income in taxes. 
  • The poorest not only pay income tax when they do find work, but they often overpay because they do not know how to reclaim overcharged PAYE.
  • The benefit system itself also includes a series of hidden taxes, in the form of tax credit and benefit reduction rates, which often mean people lose as much money as they earn.

UBI takes income tax out of the early stages of securing an income. It does not solve every problem associated with inequality and poverty - but it does provide a much stronger foundation for tackling poverty.

Fabian fallacy: we really do know better

It is not lack of generosity that drives some on the Left to mistrust the principle of universality - rather it is mistrust of the poor and unemployed. It should not be forgotten that many on the Left were very supportive of increased benefit conditionality and the use of sanctions to punish and control people who need benefits.

The fact that someone describes themselves as ‘progressive’ does not mean they either know or trust people who are poor, unemployed or disabled. Amongst some on the Left there is a long-standing mistrust of ordinary people who, it is assumed, will laze around, smoke fags, drink beer and refuse to work.

The fact that this prejudice against ordinary people is pure nonsense doesn’t seem to matter. This prejudice persists despite the fact the poor work harder and longer than the rich. This prejudice persists despite the fact the rich spend more on drink, drugs and other luxuries than the poor. This prejudice persists despite the fact that the poor are more generous and more caring than the rich. This prejudice persists because it serves a useful purpose for those who hold it - it makes them feel superior.

Criticism 3 - UBI will be inadequate

A further paradoxical criticism of UBI made by Coote is that current benefit levels are too low for people to live on and therefore UBI will not be enough to live on. This is a confusing criticism because people clearly are ‘living’ (just about) on the current benefits levels. If (rightly) you think current benefits are too low then the real question should be what is the best strategy for increasing them. Advocates of UBI at least have a plan for tackling this problem:

  • Increase the popularity of the lowest income level (the basic income) by ensuring that everyone benefits when it is increased (i.e. universality)
  • Make it easier for people to earn extra money if they want to without losing the current income (i.e. no means-testing below the basic income)
  • Extend benefits to non-working partners to reduce exploitation and domestic violence within the family (i.e. individual rather than household-based entitlement)
  • Make it easier for people to do things to experiment, learn, grow, care or contribute without losing their income (i.e. no conditionality)

In this way UBI is transformational on many levels. Unlike the post-War benefit reforms, UBI does not assume that current social, economic and industrial structures will remain static. UBI encourages us to see that we are each dependent, not on the boss, not on the state, but on each other. For UBI can only exist in a society that commits itself to the principle that everyone should have enough to contribute, flourish and connect, and that we all must contribute as best we can to ensure everyone has this right.

It is the current paradigm of welfare reform, targeting and paternalistic control that is increasing poverty for ordinary people. It is the current sanctioning regime for JSA and ESA, and the demeaning, tick-box assessments for ESA and PIP, which are forcing people to either avoid applying for these benefits at all or leaving people cut off from any income as they try to ‘prove’ their entitlement. This usually means having to live off family and friends, or going to payday lenders; and is the biggest reason for the increased use of food-banks.

Conservative fallacy: money is filthy

It is ironic that Coote, a leading thinker from NEF, seems to be in the position of defending the socio-economic status quo, for the central insight, at the heart of NEF’s work, is that standard economic theory tends to underestimate the importance of the Core Economy: it is the planet, our communities, family and the state, that underpins the world of business and commerce. Moreover, as Jacobson and Coote agreed, one the most profound problems today is that society does not sufficiently value our basic humanity, nor our roles as carers or citizens.

Advocates of UBI feel that distributing money differently will help us get a better balance and are happy to see existing social and economic structures change and evolve around that shift. People who want to take care of their children, relatives or neighbours will find this easier with UBI. People who want to create art, volunteer, run for office or develop new forms of community action, will find this easier with UBI. And what is more, all of this will reduce the pressure on public services.

For instance, Jacobson tried to make the point that UBI would facilitate informal networks of care sharing, as many women on income support used to do, both for each other and for other mothers who had (often irregular) jobs. This is now almost impossible since the welfare reforms force mothers with children as young as six months to look for work. Coote seemed not to think this worth consideration, instead state-funded child care was seen as preferable to a more cooperative and community-based approach.

It is surprising that NEF, as an advocate of the Core Economy, does not want to see people getting unconditional cash so that they can support the activities of the Core Economy. Is this a discomfort with the idea that cash can be used to nurture and sustain the Core Economy? Is there a fear that filthy lucre will contaminate the Core Economy?

Criticism 4 - UBI undermines the workers

In this discussion there was only a cursory mention of another important criticism of UBI, one that often comes from the Left: UBI will undermine the power of organised labour.

It this were true this would be an important criticism. For we know that weaker trade unionism is correlated with growing social injustice and inequality. However, as the benefit system has become more vicious, more controlling and less like UBI, we have certainly seen no increase in union power. So again, the empirical evidence for Coote’s argument seems poor.

Moreover, conceptually, it is surprising to see UBI presented as a threat to the trade union movement. Marx rightly observed that current labour markets are inherently unfair because people need money to survive and so can effectively be forced into work at almost any price. Exploitation feeds on the fear of poverty and starvation. 

In theory UBI should increase the supply of people into the labour market, but it should also radically reduce the ‘elasticity of supply’ or in other words: more people will want to work, but they will be pickier about what work they will do and at what price. So there is nothing inherently threatening to the trade union movement about UBI. Quite the opposite - there will be more people who will benefit from collective action, support and representation. And these people will be much better able to exercise their power by withholding their labour, without fear of poverty or starvation.

Of course UBI will not automatically lead to advances in worker’s rights. Trade unions will need to adopt new techniques to organise and to recruit their members and employers may still seek to influence the political system in order to undermine workers’ rights. UBI does not kill capitalism, but it does represent a major collective advance in the battle for social justice.

Technological fallacy: robots are bad

In this regard the issue of robotics and AI is a very interesting one. Certainly some use the fear of robotics (‘robots are going to take your jobs’) as a negative incentive to promote the case for UBI. I am not so sure about this. It seems, from an economic point of view, to be equivalent to the ‘lump of labour’ fallacy - the assumption that there is a certain volume of paid work out there and what matters is how it is distributed.

What is certain is that the growth in robotics and in particular AI, will change how we live and work and in unpredictable ways. The challenge is, as it has always been, to ensure that a potentially positive technological change does not end up damaging our society and our planet. UBI helps because it treats the provision of the basic income, what we need to live on, as a collective responsibility. We cannot be sure who will gain or who will lose as we go through the next technological revolution, but if we make income security central to the welfare state and to a democratic society, then we would be in a better position to ensure that nobody is exploited by these changes.

Conclusion

This UBI-UBS debate reminded me of the debate between the Fabians and the Distributists which took place at the beginning of the twentieth century. George Bernard Shaw, representing the Fabians, argued that the state needed to control the lives of ordinary people, for their own good. On the other side, G K Chesterton argued that power, rights, income and land should all be redistributed so that ordinary people could build lives of meaning together.

Chesterton may have won the debate, but historically there is no doubt that the Fabians won the war. After World War II it was the Fabians who designed the new welfare state and ensured that power was shared between the state and big business. Ordinary people did get some important new services, and saw some improvements in their income security, but they were largely treated as units to be managed - not as citizens with rights, roles and responsibilities.

This time the debate is different. This time it is the Fabians who lack a coherent alternative to UBI. Their arguments may persuade the powerful and the affluent; but I am not persuaded that ordinary people will prefer nationalised food-banks over a guaranteed income, free from stigma, sanctions and control.

UBI is not a silver bullet in the fight for social justice - but it is at least a real and definable bullet. UBS - at least presented as an ‘alternative’ to UBI - looks like a blank.


The publisher is the Centre for Welfare Reform.

Basic Income or Basic Services © Simon Duffy 2018.

All Rights Reserved. No part of this paper may be reproduced in any form without permission from the publisher except for the quotation of brief passages in reviews.