Why a Basic Income in Australia and why now?

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Published
29 September 2016
Topics
Essay
Wages and Wealth

This article was prepared by John Tomlinson to accompany his address to Victorian Fabians forum on 'Meaningful work and its alternatives' held in November 2016. 

 

The existing system

Our system of categorical / means tested social security is allegedly paid to those in greatest need. But not everyone who is in need is paid. Young people who are unemployed, who don’t own houses and have no other income or savings, if they are lucky, are paid Newstart at a rate far less than age pensioners who own a home, have some savings and may also have some superannuation. Unemployed people who are married to someone who is working are not paid. Their partner is presumed to support them.

The superannuation system is a “do it yourself” welfare state. Those with the greatest wealth gain the most from superannuation.

 

Why pay a Basic Income?

Canadian writer William Clegg in August this year wrote:

For many people today, especially modern day economists, a guaranteed, basic income is believed necessary to address the rapidly changing job market due to the automation and ‘robotization’ of labour intensive jobs.

For others a basic income is required to provide much needed reform of patronizing and often small-minded, or even mean-spirited welfare programs.

Before he went on to argue “the fundamental purpose of a basic income is really about furthering freedom of the person over their own lives.” Certainly being in a position to take control of one’s own life – having what sociologist call “agency” is vitally important.

Phillipe van Parijs entitled one of his many books on Basic Income Real Freedom for All.  Professor Sir Michael Marmot, President of the World Medical Association, Director of the Institute of Health Equity in his first Boyer Lecture 2016 revisited the work of Kate Pickett and Richard Wilkinson’s 2009 book The Spirit Level wherein they provided empirical support for the belief that egalitarian societies are better and healthier societies. They point to increased personal control over life choices in more equal societies as a major reason for better health outcomes. Pickett and Wilkison’s multi-country analysis has been reinforced by the experience of the Namibian Basic Income trial (Haarmann et.al. 2009).

Some argue that a universal Basic Income will promote sound environmental programs because people will not be able to be conscripted to work in environmentally destructive jobs. Others suggest that a universal Basic Income will result in increased productivity because the presence of a guarantee income will free the entrepreneurial spirit of many. Both may occur simultaneously because the freed entrepreneurial spirit can invent more ecologically sound methods of production thereby easing the pressure created by the carbon emissions ceiling that must eventually restrain many of productive operations in action today. See  Murphy (2016) for an interesting discussion of these issues.

Clause Offe (2008) has reasoned that the presence of a universal Basic Income will mean that workers wont be forced to engage in socially or physically dangerous employment or to take low wages and thus a UBI will lead to more socially just societies. He notes that in extreme situations a universal Basic Income provides a permanent strike fund.

 

Will paying a Basic Income just increase inflation?

There is evidence that when childcare is subsidised by the State private childcare providers can charge more for childcare. However, if there are sufficient community / public childcare places provided such inflationary effects are mitigated.

The introduction of a Universal Basic Income is not necessarily going to add to inflation for a number of reasons. A Basic Income redistributes money from the affluent to the less well-off. Poorer people spend most of their money on necessities rather than luxuries. They tend to buy local produce, except where international products are dumped on the local market.

Paying a living Basic Income creates employment in the local area. Whereas pandering to the rich allows them to save a substantial part of their income and that decreases local employment.  The super rich tend to buy expensive imported products and holiday overseas. The shoddy accounting practices of firms such as Mossack Fonseca allows corruption of our tax / banking / financial services to flourish and in addition encourage the local black economy.  Overseas banking in tax havens undermines the local economy (Standing 2016).

 

Can we afford a universal Basic income? 

In September the Basic Income Earth Network NewsFlash reported that:

One of the biggest objections to the universal basic income, especially from right wing libertarians and conservatives, is that it is far too costly to implement. Among OECD countries, however, this is largely untrue.

The Economist recently unveiled a Basic Income Calculator that can illustrate how much each person could receive under a UBI by scrapping existing non-health related welfare.

There is sufficient wealth available in Australia to pay a universal Basic Income to each and every permanent resident at above poverty line levels. It is not a question of affordability but one of willingness (Mays, Marston and Tomlinson 2016, Coelho 2016).

 

Is there a meaningful existence outside of paid employment? 

Perhaps the most succinct way of addressing the question about meaningful existence outside paid employment is to look at the work of two feminist economists Katherine Gibson and Julie Graham.

Most economists concentrate upon the “tip of the iceberg” which consists of capitalist markets and wage labor. Above the “water-line”, we have the sort of things that our market economy sees. But if we look at the other 90% of the economic activity below the economists’ water line then we see something like this:

 

IceBerg.jpg

 

When Scott Morrison thinks about social welfare spending he does not envisage a supportive floor capable of sustaining people at a time of adversity. He does not see anything as peaceful and majestic as an iceberg floating on still ocean. His mind’s eye conjures up an image of a mothballed iron ore mine – a hole in the ground surrounded by the tailings of lost opportunity, forlorn hope, malingering and the absence of production. He has no sense of the ever-present desire to achieve, frustration at impediments, the frequent lack of opportunity and a struggle to survive against the odds.

 

Basic Income may end the idea of work as we know it but it won’t end work.

There are still people who worry that if a universal Basic Income were introduced, at an above-the-poverty-line level, then many people would not work. Indeed there may be some people who would voluntarily decrease the number of hours they engage in paid work in order to care for relatives. For a detailed 15 year time span look at Basic Income pilots and other income support programs - see Hagen-Zanker et al (2016). Prochazka (2016) provides a brief summary of this report.

There is overwhelming evidence refuting the idea that the workers will leave work in droves from studies conducted in India, Brazil, Namibia, Canada and even from the Brotherhood of St Lawrence’s 1970s study of low-income earners in Melbourne. The Brotherhood clients, who were a sample of non-affluent Melbournians, were provided with a guaranteed minimum income and that did not decrease their work effort.

Some pessimists even suggest that paying a universal Basic Income creates a moral jeopardy. That it encourages people to leave the workforce.  This leads those holding such views into workhouse mindset where they want to force applicants for working age benefits to “work for the dole”, engage in compulsory “get work-ready” programs and meet other government-imposed obligations.

Such a workhouse mindset is debilitating for employees who are forced to impose it on unemployed people as well as those who are forced to sing for their supper. Such policies erode community trust and demolish unemployed people’s agency.  They evoke a meanness of spirit; create downward envy and sap individual initiative.

 

Why pay millionaires?

I have had discussions with many on the left of the political spectrum who dismiss the idea of a Universal Basic Income on the grounds that the rich do not need it and that such wasteful extravagance means that the poor would receive less from the State than if all available moneys were paid only to the poor.

There are a number of reasons why I think they are wrong. The first being, as Robert Goodin and Julian Le Grand pointed out in 1987 in a book entitled Not only the poor, that social protection paid universally trumps poverty relief measures because of the widespread support that universal policies generate when compared with the diminished public support for measures directed only at the poor.  If everyone is entitled there will be greater support for maintaining perhaps increasing the level of social protection paid.

Because everyone will have the same entitlement to a universal Basic Income we won’t need an army of social security operatives chasing diddly squat amounts from pensioners and beneficiaries when they are paid more than they are entitled. 

If everyone is paid, and presumably by the taxation department as was the case with social security in Australia until 1927, then there will be a more efficient oversight of the income-generating activities of all Australians. Tax compliance by the rich will improve.

 

Once a Universal Basic Income is in place...

Ashwin Desai describes what has been a major failure of the income support system in much of the English-speaking world when he suggests that:

The bureaucratic, service-led welfare state really did fail to connect with ordinary people, allowing them no role in policy-making or practice. Combine this with its inherent minimalism, which provided benefits only to meet ‘reasonable human needs’ at subsistence level, and you have a system that existed to prevent citizens from total impoverishment (and Disease, Ignorance and Idleness), only to discipline, isolate and stigmatise them.

Shortly after a livable Basic Income is introduced the prerequisites will be in a position to reinvigorate society. The capacity to create a more caring community will emerge, where the organising principles will allow a mutuality of spirit, cooperation and sharing. 

Cooperatives will have many opportunities to develop and flourish. There will be the potential to create a real sharing economy – not along the lines of Uber, Task Rabbit or Airbnb. Of such firms Guy Standing 2016 says:

It is a misnomer to call this the ‘sharing economy’. These digital platforms are rentier entities; they control the technological apparatus but, unlike great corporations of the past, they do not own the main means of production. Rather they are labour brokers, often taking 20 per cent (sometimes more) from all transactions p.213.

As well as cooperatives and other mutually agreed forms of organisations there may develop truly altruistic economic forms yet to be envisaged. By this I don’t mean charities or welfare agencies but organisations totally committed to mutual support. In the years that follow we may find that we can regain and revitalise the things that we own communally.

 

Acknowledgement: I thank Penny Harrington for her editorial advice and ongoing encouragement.

 

Bibliography

 

Clegg, W. (2016)“Basic income and the pursuit of freedom.” Leaders and Legacies August 24, http://leadersandlegacies.com/2016/08/24/basic-income-and-the-pursuit-of-freedom/

 

Coelho, Andre (2016) “Response: Money for nothing .” BIEN NewsFlash No. 99 September. http://basicincome.org/news/2016/08/response-money-for-nothing/

 

Desai, A. (2016) “Book Review: All our Welfare: Towards Participatory Social Policy by Peter Beresford.” Posted 11th June. London School of Economics. http://blogs.lse.ac.uk/politicsandpolicy/

 

Haarmann, C., Haarmann, D., Jauch, H., Shindondola-Mote, H., Nattrass, N., van Niekerk, I. & Samson, M. (2009) Making the Difference! The BIG in Namibia. Basic Income Grant Coalition, Windhoek.

Gibson, Katherine and Graham, Julie publish under a combined name of “J.K. Gibson-Graham” and their work can be found at a website called “Community Economies.” 

 

Hagen-Zanker, Jessica, Bastagli, Francesca, Harman, Luke, Barca, Valentina, Sturge, Georgina and Schmidt, Tanja. “Understanding the impact of cash transfers: the evidence”, Overseas Development Institute. July 2016. https://www.odi.org/sites/odi.org.uk/files/resource-documents/10748.pdf

 

Goodin, R. & Le Grand, J. (1987) Not only the Poor: The Middle Classes and the Welfare State. Allen & Unwin, London.

Mays, Jennifer, Marston, Greg and Tomlinson, John (eds.) Basic Income in Australia and New Zealand: Perspectives from the Neoliberal Frontier. Palgrave Macmillian, New York.

Murphy, Jason Burke (2016) “Basic Income, sustainable consumption and the ‘DeGrowth’ movement.”  13th August.

Pickett, K. & Wilkinson, R. (2009) The Spirit Level: Why More Equal Societies Almost Always Do Better. Allen Lane (Penguin), London.

Prochazka, Tyler (2016) “Massive cash transfer study shows ‘impressive’ results.” BIEN NewsFlash No. 99 September. http://basicincome.org/news/2016/08/massive-cash-transfer-study-shows-impressive-results/

Standing, Guy (2016) The Corruption of Capitalism: Why Rentiers Thrive And Work Does Not Pay.” Biteback, London.  

The Economist (2016) “Universal basic income in the OECD” June 3rd, http://www.economist.com/blogs/graphicdetail/2016/06/daily-chart-1

van Parijs, P. (1997) Real Freedom for All. What (if anything) can justify capitalism. Oxford University Press, Oxford.

 

 

The Fabian society was founded in 1884 by Edward Pease, Frank Podmore, and Hubert Bland, joined later by Bernard Shaw and Sydney Webb. In Australia, the first Fabian group was formed in 1891; the now Australian Fabian society is a national organisation.

The Fabian tradition is one of achieving social progress through research, education and debate. The Society has no policy beyond that implied in a general commitment to social democracy, and issues its publications as the opinions of their authors not of the organisation. The publishing program is designed to promote informed discussion on issues to further the goals of social democracy.

 

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