China’s minimum living standard guarantee, named dibao, is receiving fresh interest in the region as countries from Korea to India turn to universal basic income (UBI) to boost their economies and combat the coming automation-induced job crisis.
UBI, or the regular distribution of free money to all citizens as a form of social security, has been on the fringes of economic policy debate since the late 18th century, and gained credence in the 1960s after Milton Friedman advocated a minimum income guarantee in his book Capitalism and Freedom.
It is now gaining traction in the Asia-Pacific region, as pilot projects turn in data showing its benefits exceed those of existing social welfare policies.
India, for example, is considering implementing a far-reaching form of UBI after trials showed an income of as little as US$5 per month had a powerfully positive effect on health and investment decisions in target communities.
In Taiwan, which recently played host to the first conference devoted to UBI in Asia-Pacific, plans are afoot to pioneer an independent trial of basic income in the island’s south-eastern Hualien county. The idea has been welcomed by the community and is receiving tentative support from politicians further afield.
In South Korea, UBI came to national attention after the Basic Income Earth Network (BIEN), a body that connects people and groups interested in the concept of unconditional cash payouts to individuals, held their 16th congress there last year. Support from mainstream politicians followed after the successful implementation of a so-called “youth dividend” in Seongnam city, under which every person aged 19-24, who has lived at the city for at least three years, receives about US$230 each quarter.
The Basic Income Korean Network has since proposed funding a national version of the scheme financed by a combination of income tax, a land ownership levy and a carbon tax.
But it is not just the success of UBI trials that is forcing the issue into the in-trays of economic policymakers. Many see implementation of a UBI not just as a welcome option, but a necessary one in light of the widely publicised prediction by Oxford University academics Carl Frey and Michael Osborne that up to 40 per cent of all current jobs will fall victim to automation within 15 years.
“UBI is inevitable. We have relied on labour and wages to drive consumption and we’re not going to have that – in terms of technological unemployment, even if it gets close to the predictions it would be catastrophic,” Gregory Marston, head of the School of Social Science at the University of Queensland, said at a recent conference in Taiwan.
For its part, China has been operating a form of basic income since 2007, when it implemented dibao, a minimum income guarantee, nationwide. The scheme tops up recipients’ income to a basic level below the minimum wage. The actual amount is set independently at the municipal level and is required to be higher in urban areas than rural ones. As of 2010, there were 50 million mostly low-skilled, disabled or unwell people in China receiving the stipend at a cost equivalent to 0.14 per cent of GDP – tiny by any measure of global social welfare spending.
World Bank data indicates that the policy has helped lower poverty by 6.5 per cent, representing a solid return on investment for a scheme that took 17 years of experimentation to finalise.
Yet the programme has drawn criticism both from those who suggest the money is ending up in the hands of richer households due to official corruption, and others who say the households themselves are scamming the system by claiming dibao when they do not qualify.
The system is open to such criticism in part because assessment depends on highly subjective non-monetary standards. These include the appearance of one’s home, the health of the household or whether or not one owns a car or other “luxury” products.
World Bank data suggests only one in 10 poor households in China’s rural communities receive dibao, and of those, three quarters are not actually poor.
“They set up a massive bureaucracy to exclude the rich, but in fact most recipients are still above the poverty line,” said Tyler Prochazka, who wrote his thesis on the economics and impact of the dibao in Tianjin and is an advocate for UBI with BIEN.
Prochazka urged China to create areas similar to its special economic zones in which to experiment unconditional forms of basic income. After all, a key reason UBI found support among such champions of free market economics, such as Friedman, is that it encompasses the eradication of the bureaucracy required to assess means, and with it potential for corruption.
“If we look at the Indian context, where we saw people were realising their dreams – starting businesses and going out and getting an education. That is what UBI is about, fulfilling your passions. We do have to construct this narrative in a Chinese context,” Prochazka said.
That work began with the Taipei conference, which was attended by experts and academics from across Asia-Pacific.
“This is a landmark event in APAC,” Sarath Davala, co-author of Basic Income: A Transformative Policy for India, told delegates.
“A working committee should emerge from this conference, share information and ideas and perform political advocacy to promote UBI across the Asia-Pacific.”