The Merits of a Basic Income

Chris Dillow writes:

Two apparently unrelated recent events have something in common: they both highlight the case for a citizens’ basic income. 

The first is the ruling that Uber drivers are not self-employed and so are entitled to the Living Wage and other employment rights. 

The logic for this ruling has been expressed by Jolyon Maugham QC. 

Uber drivers, he says, must accept the terms and conditions of their employer: unlike the traditional self-employed, they cannot set their own prices. 

They lack market power, and so the law should protect them. 

But this protection comes at a price. 

The higher cost of employing Uber drivers means either higher prices for Uber users, thus reducing consumer welfare, and/or less demand for such drivers thus depriving some of much-needed work. 

We have therefore a dilemma. 

How can we protect workers who lack bargaining power while at the same time not stifling new businesses and flexible forms of work? 

This is where the citizens’ income enters. In giving people an outside income, it empowers them to reject bad jobs. But it also gives them the flexibility to work a few hours as they please. 

We thus get the best of the gig economy – proper entrepreneurship and flexibility – without the worst: egregious exploitation. 

As the great Philippe van Parijs says: 

“[Basic income] provides a flexible, intelligent form of job sharing. It makes it easier for people who work too much to reduce their working time or take a career break. 

“It enables the jobless to pick up the employment thereby freed, the more easily as they can do so on a part-time basis, since their earnings are being added to their basic income. 

“And the firm floor provided by the basic income makes for a more fluid back and forth between employment, training and family.” 

The second development is the film I, Daniel Blake which has highlighted that the welfare state is costly, inefficient and dehumanizing, even driving people to suicide. 

As critic Max Dunbar says: 

“Welfare in the UK doesn’t work. 

“Claimants aren’t winning – they get messed around with sanctions, crap placements and form filling, all of which takes time and energy away from the jobsearch. 

“Frontline DWP staff aren’t winning – they have no discretion, they have to deal with claimants presenting complex life issues, and they take a lot of shit from claimants. 

“The public is not winning, because more and more public money is wasted on job centres, Work Coaches, civil servants, the crap Universal Jobmatch system, tribunals, appeals, and the wider social costs of a dysfunctional welfare system.” 

Again, this highlights the merits of a basic income. 

Its unconditionality would sweep away a lot of bureaucracy. 

Welfare recipients win because they no longer face harassment. 

Taxpayers win because the deadweight cost of redistribution is diminished. 

None of this is to say that a citizens’ income is a fix-all. 

It’s not. 

It should be accompanied by other policies to improve workers’ job opportunities and bargaining power such as expansionary macro policy, a job guarantee and stronger trades unions. 

And important questions remain: how do we best overcome the objection that a citizens’ income is ‘something for nothing’? 

How do we deal with the problems of especially high needs among the severely disabled and differences in housing costs? 

And does a state that has been unable to introduce Universal Credit competently have the capacity to implement such a big and important reform? 

If we had serious political discourse, these questions would be properly discussed. 

But that of course is a big ‘if’. 

I used to think a basic income was too much to hope for. 

Now I fear that intelligent debate about one might be.