Universal Basic Income still has a lot of questions to be answered, says new IEA report

30 Dec 2019 10:46 AM

Universal Basic Income (UBI) is gathering increasing support from both the political left and right but there is no clear consensus over what the best model might look like, argues a new report from the Institute of Economics Affairs.

‘Universal Basic Income: The State of Play in the UK Today’, written by IEA Head of Education Dr. Stephen Davies, is a timely analysis of the different UBI proposals being put forward by those across the political spectrum.

With austerity and rapid technological advancement in automation and artificial intelligence driving a new wave of interest in UBI, the idea is seen as a potential solution to an over-stretched welfare system and mitigating disruption in employment patterns and has been adopted in some form by several political parties, including the UK Labour and Green parties.

The report highlights the extent to which their proposals differ: while some have proposed using UBI to replace all other benefits and income supplements, and to ultimately trigger a radical transformation towards a ‘post-capitalist’ economic system; others advocate a far more limited scheme.

The report also categorises UBI schemes and those who tend to support them into four broad categories:

The report notes that there are alternative proposals coming from the political left, including the idea of Universal Basic Services (UBS), which involves the state providing a whole range of essential services and goods either free of charge or at nominal cost and so providing the means for a minimum standard of living for all as a right. This is, however, rejected by left wing and liberal advocates of a UBI as being paternalistic, potentially coercive and antithetical to individual liberty, and confused in terms of the detail.

The author concludes that the state of the contemporary labour market and welfare system mean that the argument over UBI is not going to fade away quickly and that it is very likely that some kind of compromise or combination of the different ideas for reform will become popular. In that context there is a pressing need for those who are sceptical of both UBI and UBS to come up with not only criticisms and objections but their own ideas for reform, however radical.

Practical challenges to a Universal Basic Income:

Political or moral challenges to a UBI:

Commenting on the report, IEA Head of Education and author of the report Stephen Davies said:

“Universal Basic Income is becoming more popular across many developed and developing nations, with political parties beginning to include some version of UBI in their policy platforms.

“However, the UBI’s move from niche idea transition to serious policy proposal would require a number of questions to be answered, including how much the benefit would be, how UBI would sit alongside or replace existing welfare systems, and how much the system would cost to set up. 

“UBI may be a rare idea that unites some socialists and libertarians but it will take more than popular support to bring it to fruition.”

Notes to editors:

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To download ‘Universal Basic Income: Is it a good idea?’ click here.

Further IEA reading: Should we support a Universal Basic Income?  and Universal Basic Income – do the sums add up?

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.