Is a universal basic income a workable answer?

A safety net to give people a buffer while re-skilling or changing careers or starting a business sounds like a nice idea. The RSA announced a proposal for a £10,000 p.a. UBI: http://www.bbc.co.uk/news/business-43078920

Similar schemes have been piloted in Canada and Finland too.

But is it really sustainable or effective? Hard to see where this free money is practically going to come from, and two lump payments a year may make financial management more challenging.

  • This proposal isn't really for a UBI is it? Its for a transitionary arrangement to help people through the potential huge job market disruption of the next 10-15 years as technology and transformation factors take hold. £5K a year over two years for "retraining" "resettlement" etc may be a sensible idea.

    But actually the whole idea of a UBI isn't that stupid or far fetch an idea. We have gone further and further down that route wit tax credits and the like but at a huge bureaucratic cost and personal disengagement. If you were a business looking at the most efficient way to ensure a minimum standard of living to people you certainly wouldn't start with the byzantinely complex range of benefits, allowances and means tested payments that we have that cost an absolute fortune to run.

    I understand the labour party are seriously considering some form of UBI as their big idea for the next election - and given the state of play we may well be seeing an experiment in this far sooner than we expect.
  • In reply to Keith:

    For those interested in the history and wider thinking around this there are some pretty good resources out there. You could start here

  • This subject also was very much to the fore in the French presidential elections last year.

    As can be expected, the debates focused on minor details as opposed to the fundamental question of "what items that currently are paid out of public funds will not be paid in the future, because the universal income payment covers it". Things like unemployment benefit, medical cover, state pensions, housing assistance, mobility allowances - the list is endless.

    Typical simplistic assumptions were :

    • Lower social security and taxation for everyone because a lot of services would disappear (but where does the universal income funding actually come from?)
    • Lower state costs because the number of civil servants could be divided by 3, 4, 5 (choose your number) - but what will these people actually do in an employment  market that is stagnant and not showing any signs of growing so as to be able to absorb them
    • A miraculous leisure society would spontaneously exist, where people would work less (25 hours per week) in order to share the existing, stagnant workload
    • Everyone would miraculously agree to their annual salary being reduced by a sum larger than the universal allowance, because the allowance would be paid tax free. this would make companies richer and they could therefore increase employment (but would it create demand for products?) Equally, will salary related benefits cover (life insurance, pensions) have to drop because the reference salary is lower?

    One of the estimation carried out by a reputable thinktank put the annual cost at about 60% of French GDP

    I remain very sceptical and have yet to see some press coverage that goes beyond "it makes life easier for people in hard times", and move into the realms of "is it sustainable?"