Universal Basic Income Is a Wolf in Sheep's Clothing, New Analysis Finds

Will universal basic income improve lives and reduce inequality, or should campaigners continue to focus on how to better provide basic services like healthcare and education instead? For Anna Coote, a principal fellow at the New Economics Foundation think tank, the evidence that basic income is the best way to ensure a minimum quality of life in an increasingly fractious and unequal economy, is shaky.

Instead, Coote argues that the money could be better spent on building higher-quality public services.

“Money spent on cash payments cannot be invested elsewhere,” Coote wrote in an opinion story for The Guardian published Monday. “The more generous the payments, the wider the range of recipients, the longer the scheme continues, the less money will be left to build the structures and systems that are needed to realize UBI’s progressive goals.”

It’s part of a wider debate around whether giving everyone a fixed monthly income, free from any means testing, is the best way to help people who are increasingly likely to lose work to A.I. and robots. Recent research has suggested that the job displacement being driven by automation may have been severely underestimated so far.

"“She has a weird belief that UBI and UBS are antagonistic ideas, when in fact many UBI supporters, myself included, see services as existing on top a foundation of UBI."

The impact of automation is part of what has helped make UBI seem increasingly less radical, so much that the policy is even anchoring a surprisingly successful long shot bid for president of the United States. Scott Santens, a prominent campaigner for basic income, dismissed Coote’s characterization to Inverse as a false dichotomy.

“[Coote] has a weird belief that UBI and UBS are antagonistic ideas,” Santens says. “When in fact many UBI supporters, myself included, see services as existing on top a foundation of UBI.”

Would UBI Undermine Other Services?

Coote’s findings are based on a report she authored Edanur Yazici entitled “Universal Basic Income: A Report for Unions,” which looks at how trade unionists should engage with the basic income debate. It argues that the policy is “the expenditure equivalent of a flat tax and as such is regressive,” and that giving cash payments to boost purchasing power in a free market does not resolve all of the issues caused by neoliberal market economics.

To arrive at these findings, the new report also assessed the success of trials conducted around the world. Finland, for example, gave about 2,000 unemployed people €560 ($627) per month for two years, and found that the policy and found some benefits, for example that UBI improved trust in institutions. A trial in Ontario involving 4,000 people found that participants improved their health by enabling them to buy higher-quality food. Candidates like Andrew Yang are now pushing for a basic income as part of their policy platform.

"“”Collective provision offers more cost-effective, socially just, redistributive and sustainable ways of meeting people’s needs than leaving individuals to buy what they can afford in the marketplace."

The problem, Coote argues, that these limited trials don’t provide enough evidence to justify spending somewhere around 20 to 30 percent of gross domestic product on a sufficient scheme as suggested by the International Labour Office. That money could instead be spent on providing services so they’re free at the point of use, like healthcare and education. It could also extend to areas like transport, housing, information and more — all services required by the average person.

“Collective provision offers more cost-effective, socially just, redistributive and sustainable ways of meeting people’s needs than leaving individuals to buy what they can afford in the marketplace,” Coote wrote.

Basic income campaigner Scott Santens was notably scathing of the report. He tells Inverse that some of her claims are questionable, like that basic income would not increase bargaining power. He notes that Coote also questions whether some women would choose to stay at home and do unpaid care work under a basic income, which he highlights as “an example of greater bargaining power.”

“I think the ‘study’ is not a study at all, and after reading it in full, would compare it more to a High School paper about UBI written by someone who doesn’t like UBI,” Santens says.

Santens also notes that Coote’s argument that spending on basic income would reduce spending on services is undermined by another report from her own think tank. That report, which came out in March, advocated scrapping the United Kingdom’s tax-free personal income allowance of £12,500 ($16,363) per year and instead proposed giving £48.08 ($62.94) per week to every adult.

Coote previously admitted in April 2018 that her examples of services were more the sort already offered by governments. Instead of advocating for a new economic model as Santens and others propose, Coote and others are arguably more focused on highlighting the benefits of existing structures and bringing them more funding.

Calling on people to improve social services is a worthy goal in its own right, though, to be sure, unlike a radical proposal like basic income, “invest more in existing services” is not exactly a blood-pumping rallying cry. But when crucial services aren’t free at the point of service, for example like healthcare in the United States, providing universal basic services would perhaps be more enticing.

It’s a debate we may see play out further in Yang’s presidential campaign.