Joe Chrisp is a PhD student at the IPR. His doctoral research is on the feasibility of a universal basic income
How has basic income – an issue at the margins of social policy and politics for decades – suddenly become such a hot topic? And why has it captured the attention of so many political actors, in a number of different countries, in recent months?
One of the most common explanations of this surge of interest in basic income is that it transcends the political divide: that it is “beyond left and right”. In the UK, the Adam Smith Institute – a libertarian think-tank – sits alongside the left-leaning Compass in backing basic income proposals. In Finland, the country where basic income has had perhaps the most consistent political support in recent decades, the Left Alliance and Green League have historically been keen supporters of the idea – together with the Centre Party, which currently leads a right-wing coalition government. This kind of broad political interest can be found in France, Canada and other countries around the world. Although it is tempting to accept this eclectic mix as a given, there are at least three reasons why the reality is more complex than ‘anyone can support basic income’.
Is it basic income?
The first explanation for the diversity of support is simply that basic income is being misrepresented. If we define basic income as ‘an income paid by a political community to all its members on an individual basis, without means test or work requirement’ (Van Parijs, 2004), many of its so-called ‘advocates’ are actually proposing schemes that do not meet the criteria. For example, Italy’s 5 Star Movement has adopted the term to designate a policy that is better described as means-tested unemployment benefit or social assistance for the uninsured. The Fabian Society’s proposal for an ‘individual credit’ has often been touted as a basic income, yet is more closely related to a ‘participation income’ (A.B. Atkinson, 1996), as it includes work- or education-related conditionality.
The vast majority of those on the political right who are said to support basic income, from Milton Friedman to the Canadian Conservative MP Hugh Segal to the Adam Smith Institute, actually advocate a negative income tax. Although negative income tax is capable of producing identical distributional outcomes to basic income, the payment mechanisms and underlying logic differ substantially, particularly in relation to the role of the state. Even the basic income experiments in Finland and the Netherlands fall short of Van Parijs’ definition because they are not universal; they are currently limited to unemployed individuals. While the focus in the Finnish case is on testing the impact on labour market participation, in the Netherlands the drive seems to be related to municipalities’ concern about the cost of enforcing work conditionality on the unemployed. All of these deviations lend themselves to the argument made by Declan Gaffney that basic income is most useful as a thought experiment for the sort of reforms we want to implement within the welfare state, as there will be adjustments made to the ‘pure’ version that reflect the different political positions held by advocates in constrained political and fiscal environments.
How do we fund a basic income?
Another reason why basic income appears to find support across the political spectrum is that its advocates don’t cohere around a specific set of proposals for funding its introduction. Were they to do so, they would confront significant ideological or normative choices that would divide them. Luke Martinelli lays out many of these fiscal trade-offs in his recent IPR blog and in a forthcoming working paper, but it is worth reiterating some of his arguments in light of Malcolm Torry’s response. The first crucial point to make is that choosing to abolish the tax threshold to fund a basic income is not, as Torry comes close to implying, an apolitical decision. Putting national insurance aside, if the tax-free allowance of £11,000 was abolished, the UK government budget would increase by roughly £72 billion. That would amount to a 10% increase in government revenue and, if all of it was used to fund a basic income without offsetting cuts, government spending would shift from 43% of GDP to roughly 47%.
Given that attitudes to the size of the state are one of the most fundamental expressions of one’s ideological position, it is unsurprising that this way of funding a basic income does not elicit support from all parts of the political spectrum. Regardless of whether the revenue is earmarked for basic income in the short-term, such a reform empowers the state with resources that could be used for different ends. This fact explains the preference for negative income tax over basic income among libertarian advocates, as it would not necessarily increase the size of the state. If accompanied with cuts to social security, a negative income tax could reduce government expenditure. Indeed, precisely the opposite logic to the Torry and Compass basic income models has defined recent Conservative and Coalition tax and welfare reforms. The policy of increasing the tax free allowance – and, to a lesser extent, the minimum wage – while cutting tax credits has been at the core of Conservative plans to reduce the proportion of income provided by the government to low-income households.
This is not to say that the basic income models laid out by Torry or Compass are flawed, but simply that they are inherently political. Attempts to coalesce around a single “feasible” proposal may be tactically sound, but these cannot be abstracted from their ideological assumptions. There is no ‘common sense’ or technocratic basic income proposal. It is also worth adding that these models are all very UK-centric. The apparent simplicity of reducing means-tested social assistance and abolishing the tax threshold to fund a basic income cannot be applied so readily to countries that have entrenched contributory systems of social insurance and comparatively low tax-free allowances. Existing welfare state architectures will affect both the political and administrative complexities that basic income will have to negotiate in different countries.
All of these models of funding also rely on income tax, but alternative taxes on consumption, land, natural resources or wealth are possible. Torry cites the fact that “the proceeds of production will continue to accrue to capital rather than to labour” as one of the reasons why a basic income is a necessity. Yet, a basic income funded by income tax, by its very nature, cannot address this disparity. It redistributes income from labour without touching capital income, explaining why advocates such as Yanis Varoufakis insist on basic income being linked to capital rather than (labour) income taxes. If the purpose of basic income is to valorise unpaid work and allow workers to drop out of the labour market or move towards a post-work economy, then income tax cannot be the sole source of funding. Here again, the choice of tax relates to a basic income package that reveals a wider ideological position. It is telling that the basic income experiments currently avoid most of these thorny issues because they do not involve the question of funding on a wider scale.
Does basic income highlight a new distributional conflict?
The previous two reasons why we find support from both left and right relate to different visions of basic income. However, it is also becoming increasingly difficult to reduce the politics of the welfare state more widely to a left-right axis. Since at least the 1950s, it has been argued that cultural or post-materialist issues influence voters and parties as much as distributional issues (Inglehart, 1977), and it has become relatively common to understand politics as (at least) two-dimensional, with a libertarian-authoritarian axis as well as a left-right axis (Kitschelt, 1994). This manifests itself in questions related to law and order, immigration, the environment, the emancipation of women and national identity. These questions are perceived as distinct from economic issues that represent the left-right axis such as government intervention or redistribution.
However, the boundaries between distributional and cultural issues are becoming increasingly blurred, as distributive deservingness has become a central theme of political debate (Hausermann & Kriesi, 2015). Particularly in an era of austerity, the restriction of social security to “deserving” as opposed to “undeserving” groups such as immigrants, unemployed people or disabled people has come to the fore in welfare state politics (van Oorschot, 2000, 2006). In many countries in continental Europe, where pronounced differences in entitlement to social security based on levels of contribution are an important component of insider-outsider politics, the size of government spending again masks a more nuanced picture of unequal distribution (Palier & Thelen, 2010). So the politics of welfare entitlement, whether welfare chauvinism, deservingness, misuse or contribution, does not sit easily on a left-right axis of more or less state intervention. Beramendi et al. (2015) propose a universalist-particularist dimension that indicates corresponding attitudes and policy positions on these issues, largely mirroring the libertarian-authoritarian axis, with restrictive immigration attitudes correlating with narrow conceptions of welfare deservingness.
The obvious question then is to ask where basic income fits on this axis. In the sense that it is the antithesis of restricting social security to deserving groups or linking benefits to a history of contribution, basic income would seem to represent a fundamentally universalist policy. Libertarians on the right that advocate negative income tax are as likely as the New Left to subscribe to notions of equal treatment, understood in this sense. Green parties across Europe that often support a basic income tend to siphon off votes from social democratic parties by emphasising issues on this cultural or post-materialist axis. A leading contender for the French Socialist Party’s presidential candidacy who won the first round of voting, Benoît Hamon, has made basic income his flagship policy alongside calls to legalise cannabis and maintain an open immigration policy. In the current political climate, with Brexit, Trump and far-right gains across Europe, it appears that culture matters as much, if not more, than economics – even if culture is still related to social class. Perhaps, then, interest in basic income is an expression of this trend.
One interesting complication could be the extent to which basic income, if tied to restrictive notions of citizenship, may turn this on its head and act as an instrument of welfare chauvinism. With the rise of the Far Right, the question of entitlement – particularly in reference to immigration – may come to dominate the basic income debate if it develops beyond the recent flurry of interest. Another contentious point relates to Beramendi et al.’s (2015) assertion that the universalist-particularist axis can be applied to government spending trade-offs between social investment and more traditional consumption-based policies of social security. Understood as a passive form of income transfer, basic income would appear to be a policy of consumption, lending itself to particularism rather than investment-centred universalism. Yet, as with employment-conditional earnings subsidies such as Working Tax Credits in the UK, it may be that under the banner of activation (as basic income is understood in the Finnish experiments, for example) basic income could be conceived of as a form of social investment.
Is it too simplistic to imply that the underlying cause of political interest in basic income is competition on a universalist-particularist axis? Undoubtedly. Yet, it is also clear that essential components of basic income – such as its universality and unconditionality, as well as the fact it is a flat-rate, non-contributory benefit – relate to questions of distribution that deviate from a simple question of more or less state. At the same time, attitudes to these principles are fundamentally ideological and perhaps likely to cluster around other ‘universalist’ policy positions. All in all, it is important not to downplay the fact that, in the midst of talk about automation, economic necessity or just bureaucratic simplicity, any process that led to the implementation of basic income would require agreement on its contested features, as well as an accompanying package of cuts and taxes. This means that even if we accept that it is beyond left and right in the sense that it draws support (as well as opposition) from both, it is not beyond ideological or distributional conflict.
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