Why a Universal Basic Income is a bad idea

Henry Lui

Don’t assume that giving everyone a basic income is a good thing – it’s a line that the right are using to protect their own interests

Henry Lui |

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Finland and Canada are trialling systems which distribute unconditional income to every citizen.

It seems to be the “in thing” for countries to have a Universal Basic Income (UBI) these days. Finland and Canada are trialling systems which distribute unconditional income to every citizen, and US politician Hillary Clinton has recently indicated her support for such a programme. But, while the idea of granting everyone an income sounds great, UBI will only lead to greater strife, less social protection, and more gains for the ruling elite.

We should first dispel the myth that having a universal basic income will make everyone lazy. Although every citizen would be granted a certain sum irrespective of their employment status, current models put that sum at a bare subsistence level – just about enough to live a frugal life. There are, therefore, clear economic incentives for people to continue to work. UBI is not a substitute for employment.

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A look at the roots of UBI will expose the “real” reasons for why it is so harmful. In economist Milton Friedman’s book Capitalism and Freedom, he said a guaranteed income would replace all welfare programmes in one mighty stroke, forcing recipients to spend the money they receive on private-sector substitutes. In times of recession, UBI would help private businesses by allowing people to sustain some of their spending. So, rather than being a tool of the left to ensure basic standards of living, UBI is a Trojan horse being used by the right to deregulate and privatise massive sectors of the economy.

To understand why mass privatisation is a bad idea, one simply has to look at the natural outcome of it: increased costs to the consumer. Although it is true that consumers would be able to choose the best services on the market, this means nothing if it costs a literal arm and a leg to cure a fever. This is an inevitable outcome, as the profit-incentive that is innate in private businesses means that privatised services will squeeze every single penny out of its patrons. Surely the freedom to access essential services provided by the state is far more important than the freedom to choose.

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The common response to this is that deregulation and privatisation does not have to follow: we could have a “left” UBI which adds guaranteed income without changing anything else in the status quo. But, bearing in mind the lack of political will for this to happen, it is almost impossible for the left to bargain for such a programme. In a neoliberal economy such as Hong Kong, the only way to compromise with businesses is to cut spending elsewhere and reduce the guarantees which workers would have. Even if businesses got behind the idea of a “left” UBI, current numbers indicate that this would necessitate cuts in state provision – a trade-off that we should not be willing to make.

Current universal basic income models might be presented as an olive branch to the poor, but they are designed to bolster private interests instead of helping the disadvantaged. For now, we must be sceptical of proponents of UBI, and throw our support behind continued state provision.

Edited by Ginny Wong