Basic income is not a panacea

Many praise it as a radical solution to poverty. By itself, it will be no such thing.

Filed under: Essays

I’ve recently seen a lot of excited talk about basic income. A bit over a year ago, it was announced that the Swiss would soon hold a referendum for its citizens. Then we were confronted with exciting stories of a small Canadian town that had experimented with the idea back in the 1970s. A couple of weeks ago, Finland’s government made it known that it would seek to implement it in the near future, with backing from the Right, Left, and the Greens. Then the Dutch city of Utrecht pitched in, claiming that they would give it a try. And now both mayors of two of the most conservative cities in Canada, Calgary and Edmonton, are trying to give it a go.

Each piece of news has been greeted with great enthusiasm. I’ve seen the words radical and progressive used many times to describe these announcements.

The idea of basic income–also referred to as guaranteed minimum income and universal income–isn’t new, but it is starting to see a large following. It is appealing for those on the right, who want to minimize the role of the state and end the abuse of welfare. Others think it is the best economic solution to the increasing replacement of workers by robots, and the simultaneous onslaught of bullshit jobs in the economy. It is attractive to the left because it would mean access to income for the most marginalized, and it would allow people to pursue their own interests, furthering democratic society. It would also help support those who mostly do care work, especially women, which is less economically valued in Western society. Because it is appealing to both conservatives and progressives, it is seen as a compromise even the far right and far left could agree on. Largely because of this, it is hoped that, if implemented, it could become a catalyst for a more just economic system.

And so major news sources are responding to this general excitement by publishing articles like “A guaranteed income for every American would eliminate poverty — and it wouldn’t destroy the economy“, “What you should know about the idea that could revolutionize the 21st century“, “Universal basic income, something we can all agree on?“.

As it is being proposed currently, basic income can make things worse: it can strengthen racist policies, increase environmental impacts of our current economic system, and increase wealth inequality between the rich and poor globally. Right now, at best, it seems more like a poor compromise–one that’s slanted toward the benefit of the elite.

But I’m not that excited. I agree that a compromise, if it is strategic, can help us get closer to our goals. But I don’t think this is a strategic compromise. Basic income can only be a strategic compromise if it is  proposed along with a host of other policies that would limit its negative effects. But it doesn’t seem like that’s what’s happening. To illustrate this, it might help to briefly provide some basic facts:

  • Yes, Switzerland is moving toward a basic income referendum. But Switzerland’s main business is providing a tax haven for the world’s richest people. It is also one of the most racist countries in Europe, with leading parties pursuing actively discriminatory electoral campaigns, and even green parties taking anti-immigration positions.
  • In the Canadian town, Dauphin, the experiment was cancelled when faced with an economic recession, caused by the collapse of Canada’s lumber and mining industries, which were predicated on the over-exploitation of one of the world’s largest forested areas–significantly driving climate change.
  • The party proposing basic income in Finland is centre-right, with neoliberal leanings. Other parties supporting the proposal are the Fins’ Party, which is anti-immigration and conservative.
  • Calgary and Edmonton make most of their money from the tar sands, one of the most environmentally catastrophic and socially unjust extraction projects in the world. This would fund their basic income schemes.

In each situation, it’s worth asking where the wealth that would sponsor it comes from, who it will benefit, and who it will exclude.

As it is being proposed currently, basic income can make things worse: it can strengthen racist policies, increase environmental impacts of our current economic system, and increase wealth inequality between the rich and poor globally. Right now, at best, it seems more like a poor compromise–one that’s slanted toward the benefit of the elite.

In this essay, I argue that current proposals of basic income can be problematic and help to further the goals of the elite. I also provide some suggestions of ways to address this problem while keeping the positive effects of basic income proposals intact.

 

Basic income: a tool for economic, social, and environmental exclusion?

J. M. Keynes’ ‘welfare economics’ was seen as the only satisfying compromise between the capitalist class and the increasingly powerful workers’ unions. But this was by no means a radical compromise–it guaranteed continued profits to the market system while making a deal with the poor. In this way, it remained in line with liberal economic thinking.

Liberal economics is based on the idea that the state ought to make it easier for the market to operate. The main way to do this is to build infrastructure that makes it easier for enterprises to conduct their business. A secondary role for the state is then to regulate the market’s negative impacts. Welfare liberalism is the extension of this role: to redistribute market surplus to, on the one hand, improve the livelihood of those who cannot participate in the market, and to further bolster the market by giving lower classes sufficient capital so that they too can become consumers, further driving economic growth.

Welfare in the minority world guaranteed consumption and production at a level never seen before. And while this really did raise the standard of living, many of the costs were eventually off-loaded onto the backs of the majority world.

A half-century later, and we now know the impacts that this has had. Welfare in the minority world guaranteed consumption and production at a level never seen before. And while this really did raise the standard of living, many of the costs were eventually off-loaded onto the backs of the majority world. Sweatshop labor, mining disasters, pollution, and now migration due to climate change–these are all rife in ‘Third World’ countries. Countless people are now forced to move from their land because it has either been privatized or their basic means of subsistence has been destroyed through free trade agreements.

These people will often strive for better lives and migrate to the ‘First World’, where they are faced with systemic racism, terrible working conditions, and a legal system that regards them as second-class citizens. At the same time, the increased political and financial power of the growing class gave rise to the ‘Not In My Backyard’ phenomenon, pushing polluting industries to the Global South, where states had less regulatory power and poor people have less ability to resist environmental injustice.

Add to this the fact that the money that made welfare programs possible was already derived from centuries of colonialism, which involved dispossession and resource-grabs backed by violence.

And even within countries welfare can be exclusive. Frances Fox Piven and Richard A. Cloward have argued that welfare in the US was designed primarily for quelling dissent in times of unrest, and for forcing the lower classes to enter the workforce in times of political stability. In this way, it can be seen as a mechanism for perpetuating the current economic system, not fixing it.At first sight, welfare liberalism might seem like a positive way to address the inequality inherent in capitalism. But if you zoom out, it starts to look more like a tool to placate the poor within rich countries, all the while justifying continued exploitation of the rest of the world. In this way, it remains simply a compromise, legitimating the power of the elite, while externalizing the costs of the economic system to those who don’t have the privilege of being citizens of a rich country.

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Source: Katoikois

Let me use an example to illustrate why basic income can be a continuation of this. It is telling that the country that has advanced the most in bringing basic income into the policy discussion–Switzerland–is also one of the most racist and migrant-unfriendly places in Europe. In this case, the Swiss try to redistribute the profits from their banking system (which are derived from providing tax havens to world’s richest people) to a small and already privileged society, while excluding others. At the same time, as it would increase the finances available to the poorest Swiss, it would also increase spending and therefore consumption, driving up the costs unloaded on to society and the environment. These costs will mostly not be borne by the Swiss, but by people in the Global South, who are the most affected by climate change, work in far more dangerous conditions, and are forced to migrate when their land and livelihood is destroyed. Effectively, basic income in Switzerland would entail closure of the world’s riches, for the benefit of a small community.

As it is currently proposed, basic income simply redistributes the profits of already rich nations to its poorer classes. It keeps in place, and strengthens, the divide between the Global North and South.

In most policy proposals for basic income that I’ve seen so far, the pattern is the same. As it is currently proposed, it simply redistributes the profits of already rich nations to its poorer classes. It keeps in place, and strengthens, the divide between the Global North and South.

It’s true that basic income, if it were designed right, could potentially address Piven and Cloward’s concern that welfare has been inherently exclusionary within nations. In fact, they themselves supported basic income as a solution. But while it seems like basic income might create some sort of level economic playing-field, it could also be blind to any kind of structural inequality that already exists. That is, if black people in the US received basic income, they would still have to contend with a history of racism, which continues to be embedded within the US legal structure, housing, education, and financial system. And it wouldn’t necessarily take into account the fact that the money funding basic income schemes has been made mostly through unequal trade with the rest of the world.

There’s another reason why basic income could be a big problem, which I have rarely seen discussed by its proponents. Let’s say these countries and cities do end up creating such a program. Would they also extend it to migrant laborers and undocumented migrants?

Because if they don’t, one could well imagine a scenario where corporations just stop hiring legal citizens (because they would start making demands for better working conditions once they have basic income) and instead hire cheap migrants, who have very little legal support. They would also pressure their governments to change regulations to facilitate their reliance on precarious migrant labor. In this scenario, basic income would simply be a tool for more efficiently redistributing the profit from the exploitation of secondary citizens to rich countries.

I do acknowledge the potential of basic income to help reform the current economic system for the benefit of those who are the most affected by the current economic system–women, people of color, indigenous people, people with disabilities, and so on.

But basic income policies in countries like the Netherlands, Canada, Switzerland, and Finland could, potentially, make many of the world’s problems worse. By raising the average income, it would also help increase GDP and the spending power of the lower classes, as happened with welfare. Without adequate policies limiting environmentally destructive and socially unjust consumption, we would see a repeat of the negative effects of welfare, creating uneven burdens on the Global South. While it could give many a boost, because it gives everyone an equal amount of money, it would help make the system blind to existing oppressive institutions. It could help further the exploitation of migrants. In short, it would simply redistribute the profits of ongoing colonialism within the rich countries’ borders.

This may be due to the fact that basic income is, in each case, proposed by alliances between right, centrist, and leftist governments. But while this may look like a strategic compromise by the left, it can also become a way to further the goals of racist, neoliberal politicians, as well as the corporate elite. So when I see the news that Finland wants to experiment with basic income, I’m not that excited, because I know that it may just as well pave the way for more conservative policies shutting out, and legitimizing the exploitation of, the Global South.

As it stands, basic income is not a radical, progressive policy. It is more of a compromise between Keynesian welfare and neoliberalism, under the guise of economic equality within a nation’s borders. So no, it wouldn’t “eliminate poverty”, and it wouldn’t “revolutionize the 21st century”, but it would certainly help keep the current economy intact–with disastrous consequences down the line.

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Source: PBS

Beyond basic income: a more just proposal

So what would be necessary for basic income to be successful? It would mean not assuming that simply redistributing capitalism’s surplus will solve our problems. It requires a host of policies to be implemented, without which it may increase inequality globally. Here are some criteria for a more just basic income:

  • First and foremost, it should be seen as an end, not a golden ticket. It cannot substitute existing public services. For example, it cannot replace health insurance, since the key to a low-cost healthcare system is collective bargaining of medicine and equipment costs, which would no longer happen if it were assumed that basic income would replace this.
  • Limit environmental exclusion and externalization. This would require policies limiting consumption, specifically resource-and energy-intensive goods, as well as policies regulating environmental destruction and addressing environmental and social injustice, especially in the Global South.
  • Limit economic exclusion. Provide support for alternative economic enterprises that are less exploitative, especially in the Global South. Limit exploitative labor. Limit excessive working days, especially for low-income people. Raise minimum income. Put in place policies that allow (but not force) women, migrants, and people of color to be more involved in the economy.
  • Limit social exclusion. We need policies that guarantee accessibility of basic income for migrant workers, and/or ensure legal and financial support to migrants and refugees without status. In addition, policies must be put in place that better support historically marginalized groups within countries, such as black, indigenous people, or ethnic minorities. This would help address the social exclusion that would likely happen along with a basic income policy, which tends to be ‘blind’ to existing inequality.

As you can see, these are big demands. None of these can be implemented very easily, let alone at the same time. But, importantly, the list shows that basic income will not, by itself, bring about all the changes that the left is hopeful for. This requires strategic implementation of a wide platform of policies that are complementary and respond to existing inequalities, both within countries and outside of them.

When I’ve raised these concerns to others, many have responded that basic income might not be the be-all end-all, but it can get us a lot closer. People see it as a strategic stepping-stone, arguing that basic income could help facilitate a transition to these other policies.

But take again the example of Switzerland. These same proponents might argue that basic income could, potentially, free up time for people to get involved in politics and caring activities. In this way, it could be a crucial step toward a more democratic and just society.

But this is magical thinking. Without adequate research, it cannot be assumed that it would automatically lead to more democracy rather than, for example, an increase in protectionism, racism, and consumption. Creating a more just world is a lot of work, and there is no one policy that, somehow, paves the way for others. To do this, it must come hand-in-hand with other policies that limit its potential negative effects.

I want to stress that I’m hopeful for this policy to be part of a platform that may change our economic system for the better. But considering the type of parties that have proposed it so far, I’m worried that it could actually increase inequality between the North and the South and help drive economic growth and climate change. In particular, I would like to challenge basic income advocates to think a lot more about issues of citizenship and migration, and how basic income could contribute to the exploitation of migrants. This means that it can only be proposed as a part of a wider platform of policies.

I would like to challenge basic income advocates to think a lot more about issues of citizenship and migration, and how basic income could contribute to the exploitation of migrants.

Anything less would just help further close off the minority world–and drive the exploitation of the majority world. Getting excited about progressive policies is great, but only if they are actually progressive, not half-assed compromises between the existing elite and the middle and lower classes who already profit the most from the current economic system.

Thanks to Adrian Turcato for the title.

Thanks also to people at the Social Costs of Automation and Robotics group and the Degrowth reading group for the discussions on this topic.