Universal basic income: an alternative to social welfare?

“The purpose of welfare is not to make us thralls to the state; rather it is to provide a safety net that catches us when we fall and helps us get back up again”


Last month, Switzerland voted on a proposal that would give every adult citizen and permanent resident of that country a monthly salary of 2,500 Swiss francs (about €2300), with an added 625 Swiss francs (€575) per child – a universal basic income (UBI). Though the proposal was voted down by an overwhelming majority (77% voted against), the referendum has piqued public interest in an idea that is gaining traction among activists and policymakers throughout the world – the belief that all members of a state should be entitled to a cash payment from that state, regardless of their income level or employment status.

Though certainly a radical concept, it is actually a superior form of welfare than existing alternatives; a UBI would allow everyone in our society to live their lives with dignity, while at the same time reducing government bureaucracy and ensuring that our taxes are spent more efficiently.

An income for all

So what is UBI? All members of a state would receive an unconditional cash transfer from the government, with no strings attached. A form of this actually already exists in the US, where senior citizens receive cheques every month from a programme called Social Security. A UBI scheme in states with a universal pension system could be implemented simply by removing the age requirement for receiving the payment. Furthermore, in most UBI schemes, the cash transfer is taxed just like any other income. This means that middle- and upper-class individuals, who fit into the top brackets of the income tax system, end up paying the money back into the state’s coffers. The economist Milton Friedman proposed a version of a UBI as part of what he called ‘negative income tax’ – essentially that those earning less than a certain threshold would actually receive money from the state, in the same way that those earning more than the threshold give money to the state in the form of tax. Accordingly, the lower an individual is below the threshold, the more money they are entitled to receive, with those with an income of zero receiving the maximum amount.

Economists and policymakers from across the left/right divide have come out in support of a UBI. Those on the left see the UBI as an addition to the existing welfare system, whereas those on the right see it as a replacement. Given that European and American welfare states are already groaning under the weight of supporting entitlements for their ever-aging populations, it is difficult to see a politically or economically feasible plan in which a UBI could be implemented with no corresponding reduction in welfare spending.

There are good reasons for supporting the UBI at least as a partial alternative to the welfare state, however. Transferring money directly from the ‘haves’ to the ‘have-nots’ removes inefficiencies of the current welfare system, while making sure that those who have less can live with dignity and are not subjected to the variances of the state apparatus. Means-testing benefits is expensive due to the amount of paperwork and interviews involved, and always has the risk that people will fall through the cracks. Contrast this with a simplified UBI system where everyone just gets a cheque in the mail every month, and the benefits are clear.

Helping those who are left behind

Opponents of the policy argue that a UBI would create a society of idlers who get paid to sit around and do nothing. This, however, rests on the assumption that those who do not make money are just ‘sitting around.’ Paid labour is not the only kind of work that is required for an economy to sustain itself: domestic work, child-rearing, caring for elderly and sick relatives – these are all essential for the proper functioning of a cohesive society, yet because the beneficiaries of this work tend to be children or close family, home-makers (who tend disproportionately to be women) are not rewarded with financial capital. In the same way that we pay taxes for the building of roads and the maintenance of law and order – the essential services that support our lives – so also must there be a recognition of the hours of work that go into running households. It is therefore just that we ensure those homemakers have a basic income.

Additionally, the increased rate at which manufacturing and agricultural jobs are being automated means that many workers will find themselves out of work for protracted periods and will need time to reskill. A UBI will give these workers a cushion to amortise the shock of unemployment and ensure that they do not have to jump at the first menial job that makes itself available to them. In the current system, benefits are often variable and dependent upon a claimant seeking employment, which makes taking time out to reskill difficult.

Work is something that means a great deal to a great number of people. Though the media likes to demonise those who do not work as ‘benefit scroungers,’ more often than not it is the case that these individuals are not employed because they are systematically shut out of employment opportunities due to poor economic conditions created by the state. People derive great pride from working and feeling like they are contributing to society, even when their jobs are difficult and dangerous. It is implausible that a UBI would cause the collapse of capitalism and usher in an age of universal ennui, given that currently many people work hard to make more money than they require to subsist on.

The purpose of welfare is not to make us thralls to the state; rather it is to provide a safety net that catches us when we fall and helps us get back up again. A UBI would create a system that ensures that everyone has a decent standard of life and is also as simple and accessible as possible. Let us do away with labyrinthine means-tested programmes and enable our fellow citizens to live with dignity.

Illustration by Maha Sultan