Will Basic Income Hurt the Cause?

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The left has lost its identity and is in a state of electoral and political crisis across the developed world. A basic income appears to offer a way out of the abyss for center-left parties since it creates the possibility of forging new coalitions of support between the “winners” and “losers” of globalization. The economic historian Robert Skidelsky insists that the two pillars that historically guaranteed stable incomes for the working class—full employment and comprehensive social security—are now glaringly inadequate. Moreover, a basic income purports to address a series of structural challenges, from automation and the growth of the precariat to demands for greater work-life balance and gender equality. In short, basic income offers a comprehensive vision for social welfare beyond the models that John Maynard Keynes and William Beveridge proposed in the late 1970s.

Nonetheless, the basic income schemes that are currently exciting political actors are scarcely a panacea. We need to be clear about a basic income’s merits and its drawbacks. Brishen Rogers argues that economic security guarantees have to be combined with an expansion of the public sector and with rules that promote collective bargaining, increasing the relative power of labor in the wage-setting process. But while a basic income might be a big idea whose time has come, there are alternative strategies that stand a greater chance of winning over the public. And in the political struggle to create more egalitarian structures of work and welfare, it is reasonable to go further than Rogers, arguing that a basic income might actually hurt the cause.

Portrait of German American businessman Frederick Trump (Donald Trump's grandfather) and his family.

First, basic income could set back the public debate about how to create more egalitarian societies, giving succor to the forces of state retrenchment. Indeed a basic income could amplify tax resistance and increase hostility to the welfare state. As Donald Hirsch has inferred, basic income involves “a very different tax settlement to the present one.” In a climate of austerity marked by declining real wages, a basic income could well entail higher taxes on average incomes. Raising taxes is never politically popular, but to add insult to injury, these taxes would be used to fund a proposal that contradicted many citizens’ notion of what is fair, flipping the concepts of contribution and reciprocity on their head. This is even more likely in countries such as the United States and the UK where there is a higher level of diversity and less sympathy for a universal social safety net.

In most western European countries, after all, voters agree that benefits and services should be directed toward those who need them most, especially children and pensioners. Moreover, work is valued as a social institution; it is widely accepted that a key function of the welfare state is to promote employment, a goal that is met very effectively in the Scandinavian countries. In other words, politically and culturally, Western societies are a long way from arriving at a “post-work” future. As long as paid work continues to be ascribed social value, those outside formal employment will be more vulnerable to isolation, poor health, and lower levels of well-being. A basic income or any measure that was perceived to promote worklessness would struggle to achieve public legitimacy. More importantly, it would risk souring the political discourse about radical measures to advance a more equal society—at a time when voters may be more amenable to it than at any point since the 1970s.

Second, a basic income could increase unemployment among vulnerable constituencies, exposing them to even greater precariousness. Research by Evelyn Forget in Canada and the United States in the 1970s showed that guaranteed income schemes reduced the working hours of “secondary earners,” usually women, who were then more dependent on the principle breadwinner in the household. Feminist critics fear that basic income would lead to greater numbers of women dropping out of the labor market, or significantly reducing their working hours. Women would end up doing more unpaid domestic labor relative to men, making the household division of labor even more unequal.

Third, while a basic income has seemingly radical potential, it could be insufficiently transformative. Indeed basic income would simply trap the most disadvantaged in a cycle of inequality and precariousness from which there would be little prospect of escape. For an individual with an insecure job, trapped in low-paid work, and living in poor quality urban housing, it is hard to envisage how a basic income would substantively improve life circumstances. A basic income would compensate individuals for the effects of inequality, but it would absolve governments of responsibility for taking active measures to help those most exposed to “new” and “old” social risks.

Nor is a basic income a coherent answer to address the labor market inequalities that arise from technological change. The divisions that exist between high-skilled, high-wage workers doing non-routine jobs; non-automated workers employed in the low-wage services sector; and routine workers more exposed to the risk of unemployment remain intractable with or without basic income. A basic income would do little to address the unequal distribution of insecurity and precariousness. Because basic income is essentially a compensatory measure, it scarcely confronts the longstanding pathology of capitalist economies: vast inequalities in the distribution of assets, wealth, and ownership rights that are set to grow worse with the advent of new technologies.

Finally, a basic income could have a detrimental impact on existing social policy. The cost of basic income would mean that credible and evidence-based reforms of the welfare state and the labor market might become unaffordable. Most benefits and subsidies already in place would have to be renegotiated. Neoliberal advocates of basic income celebrate the idea because, in the words of Charles Murray, it would be a “replacement for the welfare state.” Market liberals argue individuals could use their basic income to purchase services currently provided through the state: education, pensions, healthcare, unemployment insurance, childcare, and so on. Thus perversely (and contrary to the intentions of many of its advocates on the left), basic income might end up encouraging the marketization of the public sector, while limiting the funding available for social investment.

Basic income promises to cure a vast range of social ills through a single policy intervention. In reality a variety of carefully designed social policy programs are likely to have the greatest long-term impact. Rogers is correct to highlight the positive example provided by the Nordic welfare states offering high-quality provisions such as childcare, job training, and employment activation alongside relatively generous cash benefits. Those who seek a more egalitarian distribution of welfare and work in the advanced capitalist countries need to envision a “social investment” state that emphasizes high-quality, publicly funded services accompanied by more generous income subsidies to those in greatest need. And if they are going to be tempted by radical measures, they should focus instead on those proposals that explicitly challenge the unequal concentration of capital, wealth, and power.

The growing emphasis on “predistribution,” for example, offers a fertile alternative to the basic income strategy. Like basic income, predistribution is a label for an idea with a long lineage in the radical tradition, stretching back to the eighteenth-century political philosopher Thomas Paine. The objective is to drastically reform markets to empower the wage-earning classes, “treating the root causes of inequality rather than attending only to the symptoms,” as Jacob Hacker explains. The predistributive approach promotes the ideal of a property-owning democracy in which every individual has a stake in the market economy by virtue of being a citizen. Its aim is to provide a decent minimum income for all; to guarantee universal access to high-quality public services; and to create an equitable distribution of assets, capital, and wealth.

Centuries after Paine published The Rights of Man (c. 1791), Western economies are still characterized by intractable inequalities in the distribution of wealth and inheritance. As Paine argued: “For all men being originally equals, no one by birth could have the right to set up his own family in perpetual preference to all others forever, and tho’ himself might deserve some decent degree of honours of his contemporaries, yet his descendants might be far too unworthy to inherit them.” Basic income has a Panglossian appeal, but the key task remains to find new routes to social justice and to fashion a more equal society by better understanding the world we are living in.