Will Universal Basic Income have its day?

The Swiss electorate rejected a proposal on the fifth of June to introduce a universal basic income of £1700 a month or £20’400 a year. The outcome was decisive with 78% voting against after none of the country’s political parties came out in favour of the idea.

So why this outcome? Was it because, as opponents claimed, that implementation of UBI would have produced a society of indolents collecting their handout from the state? Or was it simply because no one could be sure where all the money to pay each adult living legally in Switzerland £1700 a month, as well as £440 for each child, was going to come from?

Universal Basic Income isn’t a new idea, and the arguments surrounding it have an equal vintage. A trial has been underway in parts of the Netherlands while Finland will also soon enact the idea on a trial basis. In the United States, the Cato Institute, which generally argues for a smaller state, has come out as a surprise proponent of the idea, seeing it as the fairest and least punitive form of economic redistribution.

That fairness is both UBI’s biggest strength and it’s greatest weakness. On the one hand everybody received the same amount of money regardless of circumstances, whether they are a CEO or the person who cleans his office. On the other though, it opens a can of worms. For some UBI is a way out of having to earn your daily bread. For others it seems grossly unfair to give the richest in society yet more money. That in turn leads to other questions, such as who or what pays for all this?

Now the Swiss proposal seems to have been short on such details, and that may have been why so many of the Swiss rejected the idea. Another could have been the largesse required of the state. After all £20’400 is not a bad income, a typical family earning around £40’000 a year, with many in the Western world on far less. If the state is willing to pay you more simply for breathing than your employer will for a hard day’s work, why should you choose to remain employed?

Had the proposal only suggested half that amount it would still have been generous, and likely still have lost out. The Dutch trial pays around £600 a month and while I have no data on the amount the Finnish are planning to pay I’d be surprised if it reaches four figures. You see the sting in the tail with UBI is that the more the state gives the more it has to take in return. At £600 a month governments could probably still justify spending money on welfare payments. This would not be the case at £1700. So the more you give the farther that money has to go.

The result is almost paradoxical, with the state becoming both bigger and smaller, hence the Cato Institute’s support for the idea. After all if people are forced to take more responsibility with their money then they’ll take more responsibility for themselves and their families, becoming better citizens, or so goes the idea. At the same time there would be no stigma since everyone was now a recipient of money from the state. Furthermore it would allow some people the freedom to study more, spend more time with family or simply follow their dreams or their conscience by developing creative ideas, starting businesses or doing volunteer work.

However as I said the more you give the more you have to take. Reducing or even eliminating welfare payments would hurt the poorest and most vulnerable while it would be a bitter irony if the poor had to keep working while those better off could devote more time to indulging passions and dreams. And what of those who would waste this money. It is a sad fact of life that there are those who would abuse the UBI, spending the money on drink or drugs, and becoming no more responsible.

The answer to the question of what would happen then is probably that we would see elements of both the outcomes outlined above come to pass. There would be those who set up businesses or took their first steps to new careers with this money; and there would be those who misused it, to a vocal public outcry, the heeding or ignoring of which would depend on how tolerant a society was. Either way if UBI is to become a widespread reality, there are many questions which need detailed and well considered answers, which form a focus to a debate in which all are given a chance to have their say.

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