The Finance Ministry’s economic survey estimated that a modest sum of $4 per person per month could reduce India’s poverty level from 22 percent at present to seven percent. The cost would be a mere two percent of GDP, or $42 billion, which is approximately the same amount the government spends in total on food, fuel, and fertilizer subsidies.
In 2015, according to PSZ, the richest 1% of people in America received 20.2% of all the income in the nation. Ten points of that 20.2% came from equity income, net interest, housing rents, and the capital component of mixed income. Which is to say, 10% of all national income is paid out to the 1% as capital income. Let me reiterate: 1 in 10 dollars of income produced in this country is paid out to the richest 1% without them having to work for it.
India is nearly done building the plumbing to enable such a system by connecting the Aadhaar-based biometric ID system to individual bank accounts. It’s already replaced LPG gas canister subsidies with cash, a program that has 150 million beneficiaries and is the now the world’s largest cash transfer program. So could India take this example to its logical conclusion and replace all welfare benefits with UBI? (GiveDirectly is asking a similar question in a bold 10-year $30 million experiment in Kenya.)
The Survey’s assessment begins with quotes from Mahatma Gandhi suggesting both support and objection to the principles of UBI. The chapter then methodically addresses the conceptual pros (e.g., justice, equity, agency, efficiency) and potential cons (e.g., labor disincentives, moral hazard, political objections). It attempts various modeling, including a rough estimate that cutting national poverty in half via UBI would cost just 1.5 percent of GDP, less than the subsidy bill in the 2016-17 budget. For the data nerds, there are seven (!) appendices explaining all the estimates and calculations. Continue reading
Recently, there have been increasing calls for dialogue on a universal basic income (UBI) from political parties, think tanks (including the Royal Society for the Encouragement of Arts, Manufactures, and Commerce (RSA)), civic activists, trade unions, and leading entrepreneurs such as Tesla chief executive Elon Musk. These calls are a response to growing income insecurity, some sense that welfare systems may be failing, and as a preparation for the potential effects of automation and artificial intelligence on employment prospects in industries that might be better served by machines.3 UBI-style pilots are planned in Finland, the Netherlands, and Canada as a potential answer to these questions and concerns.4
In the UK, growing interest is being driven by two deep-seated structural trends: the growing fragility of the jobs market and the inadequacies of the existing, increasingly punitive, intrusive, and patchy benefits system. With its built-in income guarantee, a universal basic income (UBI) would help relieve both problems. It would bring a more robust safety net in today’s much more precarious working environment while boosting the universal element of income support and reducing dependency on means-testing. A UBI also offers a way of providing income protection as the robotic revolution gathers pace, and could be used to help ensure that the possible productivity gains from accelerated automation are evenly shared rather than being colonised by a small technological elite. Continue reading
The provincial government of Ontario confirmed it is holding public consultations on the $25m (£15m) project over the next two months, which could replace social assistance payments administered by the province for people aged 18 to 65.
People with disabilities will receive $500 (£292) more under the scheme, and individuals who earn less than $22,000 (£13,000) a year after tax will have their incomes topped up to reach that threshold.
The argument goes that because we currently target money to those in need, by spreading out existing revenue to everyone instead, those currently targeted would necessarily receive less money, and thus would be worse off. Consequently, the end result of basic income could be theoretically regressive in nature by reducing the benefits of the poor and transferring that revenue instead to the middle classes and the rich. Obviously a bad idea, right? …
Basically, this particular argument would only make sense if we in no way altered our tax system to achieve UBI, and if our programs worked as we assume they work because that’s how they should work. The problem is they don’t work that way.
In the United States today, on average, just about one in four families living underneath the federal poverty line receives what most call welfare, which is actually known as Temporary Assistance for Needy Families, or TANF. It gets worse. Because states are actually just written checks to give out as they please in the form of “block grants,” there are states where far fewer than one in four impoverished families receive cash assistance. Continue reading