Social Europe

politics, economy and employment & labour

  • Themes
    • Global cities
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter
  • Membership

Universal Basic Income: Definitions And Details

Malcolm Torry 11th December 2017

Malcolm Torry

Malcolm Torry

On November 23, Social Europe published an article by Bo Rothstein entitled ‘UBI: A bad idea for the welfare state’. It sets out from a definition of ‘Unconditional Universal Basic Income’ (UUBI) as ‘every citizen will be entitled to a basic income that frees them from the necessity of having a paid job’; and it adds the details that the level of UBI would be £800 per month, and that ‘all means-tested programs for those who cannot support themselves through paid work can be abolished’.

Rothstein correctly identifies as an advantage of such a reform that it ‘would force employers to create more acceptable and less demeaning types of work because people would not take jobs they consider unsatisfactory. Releasing people from the compulsion to have a paid job would, according to the proponents, also mean strengthening the voluntary/civil society sector and cultural life’. He equally correctly identifies as disadvantages that it ‘would be unsustainably expensive and would thereby jeopardize the state’s ability to maintain quality in public services such as healthcare, education and care of the elderly’, that it would lose political legitimacy, and that ‘people who can work [would] choose not to work’.

Rothstein’s verdict is that ‘the basic error with the idea of ​​unconditional basic income is its unconditionality’, because that threatens ‘the principle of reciprocity […] Breaking with this principle is most likely to lead to the dismantling of the type of broad-based social solidarity that built [the] welfare state.’

No. The main problem with the UBI that Rothstein discusses in his article is not its unconditionality: it is the detail and the flawed definition.

The definition of a Basic Income (also called a Universal Basic Income, a Citizen’s Income, or a Citizen’s Basic Income) offered by BIEN (the Basic Income Earth Network) is this:


Become part of our Community of Thought Leaders


Get fresh perspectives delivered straight to your inbox. Sign up for our newsletter to receive thought-provoking opinion articles and expert analysis on the most pressing political, economic and social issues of our time. Join our community of engaged readers and be a part of the conversation.

Sign up here

A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement’; and the definition offered by the UK’s Citizen’s Basic Income Trust is ‘an unconditional and non-withdrawable income paid to every individual.

The consensus – and, after all, consensus is what definitions are about – is that a UBI is an unconditional income paid to every individual. The definition implies neither a particular amount, nor that means-tested benefits would be abolished, and it does not imply that the UBI would free people from paid employment.

So instead of a UBI scheme that pays £800 per month to every individual, and that abolishes means-tested benefits, let us instead pay £264 per month to every individual (with different amounts for children, young adults, and elderly people), and let us leave means-tested benefits in place and recalculate them on the basis that household members now receive UBIs. Instead of leaving undefined the funding method for a UK-based UBI, as Rothstein does, let us choose to fund it by abolishing the Income Tax Personal Allowance and the National Insurance Contribution (NIC) Primary Earnings Threshold (so that Income Tax and NICs are paid on all earned income), let us apply a flat rate NIC of 12% to all earned income (rather than the current two-tier 12% and 2% structure), and let us increase Income Tax rates by just 3%.

According to research published by the Institute for Social and Economic Research at the University of Essex, the effects of such a UBI scheme would be interestingly different from the effects of Rothstein’s. Far from being ‘unsustainably expensive’, it would require no additional public expenditure, and so would not affect expenditure on public services. Rothstein cannot show that his scheme would not impose significant losses on low-income households. This alternative scheme would not impose significant losses on these households, it would impose few losses on households in general, and it would still take a lot of households off some of our existing means-tested benefits. Rothstein cannot tell us how his scheme would redistribute disposable income, or how it would affect poverty or inequality indices. This alternative scheme would redistribute from rich to poor, it would reduce every poverty index and significantly reduce inequality. Rothstein tells us that his scheme would reduce the incentive to seek employment. This alternative scheme would reduce some important marginal deduction rates (or the rate at which additional earned income is reduced by taxation and the withdrawal of means-tested benefits) and it would therefore incentivize employment, self-employment, and new small businesses.

Far from compromising the reciprocity on which our society is built, it would enhance it. And this alternative scheme would not lose the advantages that Rothstein mentions. Because everyone would have a secure financial platform on which to build, this UBI, like Rothstein’s, would give workers greater ability to seek the employment or self-employment that they wanted, and would therefore encourage employers to supply better jobs in order to attract workers; and because this UBI would give to each household more choice over its employment pattern, it would still encourage both caring and community activity.

Distinctions matter. A Universal Basic Income is always an unconditional income paid to every individual, without means test and without work test. A UBI scheme specifies the rate at which the UBI would be paid for each age group, and the funding mechanism. There are many possible UBI schemes. As Rothstein correctly suggests, his chosen scheme would have many disadvantages. As I have shown, an alternative scheme might exhibit none of those disadvantages, and might offer many additional advantages.

The increasingly mainstream UBI debate is important. It is therefore vital that the debate should be rational. Rationality requires attention to definitions and details. So, definitions and details matter.

Malcolm Torry

Dr. Malcolm Torry is Director of the Citizen's Income Trust and a Visiting Senior Fellow in the Social Policy Department at the London School of Economics.


Support Progressive Ideas: Become a Social Europe Member!


Support independent publishing and progressive ideas by becoming a Social Europe member for less than 5 Euro per month. You can help us create more high-quality articles, podcasts and videos that challenge conventional thinking and foster a more informed and democratic society. Join us in our mission - your support makes all the difference!

Become a Social Europe Member

You are here: Home / Economy / Universal Basic Income: Definitions And Details

Most Popular Posts

Belarus,Lithuania A tale of two countries: Belarus and LithuaniaThorvaldur Gylfason and Eduard Hochreiter
dissent,social critique,identity,politics,gender Delegitimising social critique and dissent on the leftEszter Kováts
retirement,Finland,ageing,pension,reform Late retirement: possible for many, not for allKati Kuitto
Credit Suisse,CS,UBS,regulation The failure of Credit Suisse—not just a one-offPeter Bofinger
Europe,transition,climate For a just and democratic climate transitionJulia Cagé, Lucas Chancel, Anne-Laure Delatte and 8 more

Most Recent Posts

Barcelona,feminist,feminism Barcelona: a feminist municipalism now at riskLaura Pérez Castaño
Spain,elections,Sánchez Is Spain on the right track?Bettina Luise Rürup
CBI,Confederation of British Industry,harassment Crisis at Britain’s CBI holds lessons for othersMarianna Fotaki
central and eastern Europe,CEE,renewable Central and eastern Europe: a renewable-energy win-winPaweł Czyżak
Cape Town,inequality Tackling inequality in the city—Cape TownWarren Smit

Other Social Europe Publications

Bildschirmfoto 2023 05 08 um 21.36.25 scaled 1 RE No. 13: Failed Market Approaches to Long-Term Care
front cover Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis

Eurofound advertisement

Unaffordable and inadequate housing in Europe

Unaffordable housing is a matter of great concern in the European Union. It leads to homelessness, housing insecurity, financial strain and inadequate housing. It also prevents young people from leaving their family home. These problems affect people’s health and wellbeing, embody unequal living conditions and opportunities, and result in healthcare costs, reduced productivity and environmental damage.

This new report maps housing problems in the EU and the policies that address them, drawing on Eurofound’s Living, working and Covid-19 e-survey, EU Statistics on Income and Living Conditions and input from the Network of Eurofound Correspondents.


DOWNLOAD HERE

Foundation for European Progressive Studies Advertisement

The spring issue of the Progressive Post magazine from FEPS is out!

The Special Coverage of this new edition is dedicated to Feminist Foreign Policy, to try to gauge its potential but also the risk that it could be perceived as another attempt by the west to impose its vision on the global south.

In this issue, we also look at the human cost of the war in Ukraine, analyse the increasing connection between the centre right and the far right, and explore the difficulties, particularly for women, of finding a good work-life balance and living good working lives.


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ETUI advertisement

The four transitions and the missing one

Europe is at a crossroads, painfully navigating four transitions (green, digital, economic and geopolitical) at once but missing the transformative and ambitious social transition it needs. In other words, if the EU is to withstand the storm, we do not have the luxury of abstaining from reflecting on its social foundations, of which intermittent democratic discontent is only one expression. It is against this background that the ETUI/ETUC publishes its annual flagship publication Benchmarking Working Europe 2023, with the support of more than 70 graphs and a special contribution from two guest editors, Professors Kalypso Nikolaidïs and Albena Azmanova.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube