A Wage for Living?
By Rory Clarke | Oct 13 2017With the concept of a Universal Basic Income gaining global popularity, Rory Clarke explores how it could affect Ireland todayThe idea of a Universal Basic Income (UBI) is not a new concept. From 19th century industrial England to modern Finland this controversial social experiment has been trialled to varying extents. The basic premise is that the state gives a regular payment to every citizen within its borders. This payment, which is enough to live sufficiently, would be universal, unconditional and automatic. The government commits to giving every one of its citizens enough money to survive, from cradle to grave.One argument for the introduction of a UBI is that it would free workers from low-paid, menial and often pointless jobs, allowing them to make valuable contributions to society, such as working with children, charities, the disadvantaged, or the elderly. Thousands of people sacrifice valuable time each year to contribute to worthy causes, giving up the opportunity to earn money at the same time.Ms. Anne Ryan, of Basic Income Ireland explained that they “are very keen on promoting the idea that UBI would really support artistic and creative work” as “the benefits that [such work] brings to society are great.” By forgoing schemes such as UBI, the prevalence of charity work may well decline as people are forced to take practical decisions to survive. Conversely if it was implemented, these people would be able to live a decent, if frugal, lifestyle while finding fulfilment and satisfaction.
“Theoretically the government commits to giving every one of its citizens enough money to survive, from cradle to grave.”Rebutting this argument many people claim that UBI would result in crippling labour issues for industries which require such workers to survive (restaurant, hotel, or service industries). Dr Christopher Jepsen, of the UCD School of Economics, argues that if UBI payments were “more generous than minimum-wage jobs, then employers would struggle” as even under current social welfare “employers find it hard to hire minimum wage workers”.An interesting perspective offered by Ms. Ryan is that UBI would be a hugely beneficial “investment in rural Ireland.” She argues that introducing UBI would do much to tackle the “geographical imbalance” in our country as people previously forced to move or commute to urban hubs could set up enterprises in their own localities. Furthermore, consistent financial support would be of great benefit to small rural farmers or fishermen who are often overlooked by targeted government programs.Another benefit, enumerated by Ms.Ryan, is that with UBI “the benefits trap is gone.” Currently, unemployed people living on social welfare payments see a decline in income upon their return to the workforce, their wages being less than social welfare. Therefore “sometimes it’s not worth their while financially.” The core difference between UBI and social welfare is that it is unconditional and constant. It does not decline or disappear with the procurement of employment. Therefore, there would be no overt incentive to intentionally remove oneself from the workforce. In fact, it is argued that the security that UBI would provide would lead to an increase in entrepreneurship and new ventures. As Ms.Ryan says, “it would put a floor of support under people for taking risks.”
“UBI would be a hugely beneficial “investment in rural Ireland”For those who argue against UBI, migration is an important issue upon which they base one of their foremost arguments. Living in a world where UBI is not the norm, early pioneers could face a significant influx of people wishing to avail of their generosity. “Welfare Tourism,” as it is termed by Ms.Ryan, has been seen before. With the introduction of the ‘Welfare State’ in the UK in the second half of the 20th century, immigration from foreign countries grew exponentially. While Dr. Jepsen points out that “the government would have to clarify residency rules for UBI eligibility,” it would nevertheless be difficult to differentiate people coming to this country for genuine reasons from those looking for residency to benefit from a theoretically generous UBI schemeA prevailing argument against such a scheme is its potentially enormous cost. Already burdened by our existing social welfare system, increasing the scope of income payments could lead to high taxes (Basic Income Ireland proposes a 45% flat tax) and reduction in public services. That being said, as Dr. Jepsen highlights the cost of “UBI may not be nearly as large as people think, assuming that UBI replaces a lot of social welfare rather than being an add on to it”, to which Ms.Ryan adds “the way that it would be financed is all the current social welfare payments would go into it”.The arguments and counter-arguments in respect of this issue are varied and complex. While UBI remains a theoretical concept rather than a detailed plan it may be impossible to adopt clear positions regarding it. While its financing and other details remain uncertain its impact may be impossible to accurately determine. The devil is in the details.