Don’t Buy The Hype, Universal Basic Income Won’t Tackle Poverty Or Inequality

"It will not, in fact, disturb a hair on the head of modern capitalism."
The idea of no-strings-attached cash through a universal basic income is gaining momentum.
The idea of no-strings-attached cash through a universal basic income is gaining momentum.
Jose Luis Gonzalez / Reuters

When an idea stirs the popular imagination, pundits and politicians find it hard to resist.

Never mind if there is no evidence to support it. Never mind if closer scrutiny suggests putting it into practice will be counterproductive or plain impossible.

What matters is the platform it provides for its champions, the energy it generates and the votes it wins. Brexit is one example. President Donald Trump’s Mexican wall is another. And I would add a third: universal basic income (UBI) – the idea that every citizen receives a weekly or monthly lump sum from the government, whether they’re employed or not.

The case against UBI is building rapidly. But so is the clamor to try it out in states and cities around the world. That the latter seems immune to the former is alarming. And the fact that it’s promoted by radicals at both ends of the political spectrum should ring alarm bells.

As Daniel Zamora argues in Jacobin, this is an idea “whose time has come,” not because it is good or practicable, but because it is a creature of the moment.

“As politics move to the right and social movements go on the defensive, UBI gains ground ... not as an alternative to neoliberalism, but a capitulation to it,” he wrote.

We have to assume, as do almost all of its protagonists, that a basic income could only be implemented in very small amounts. The most generous UBI scheme envisaged in a 2017 study by the Roosevelt Institute falls below the poverty line.

This means a range of additional benefits would need to be paid to people unable to work – wiping out the much-vaunted promise that UBI simplifies the social security system and removes the stigma of claiming benefits.

In fact, all it offers is a small rise in the floor above which conditional benefits are required. And even at that level, we would need massive tax hikes to pay for it. In a nutshell, “an affordable UBI would be inadequate and an adequate UBI would be unaffordable.”

Why bother to construct what British economist Ian Gough called a “powerful new tax engine to pull along a tiny cart?” Whose interests are really at stake here?

UBI is an individualistic, monetary intervention that undermines social solidarity and fails to tackle the underlying causes of poverty, unemployment and inequality.

These are systemic problems that need to be addressed by people getting together and building shared control over local economic development, wage bargaining and decisions about national investment in industry and infrastructure, not by governments giving individuals small amounts of money.

Leftist advocates of UBI, like Nick Srnicek and Alex Williams, claim that it “overturns the asymmetry of power that currently exists between labour and capital” by partially de-commodifying labor and loosening the coercive aspects of paid employment.

But here’s the catch: It will only happen, they say, if UBI “provides a sufficient amount of income to live on.” As we have seen, this is not remotely possible. If UBI isn’t generous enough to let you refuse work, it can only suppress wages and support a multiplication of lousy jobs (that you still can’t refuse).

The idea of giving money to individuals sits comfortably with the neoliberal claim that services are better when markets provide and customers choose. Indeed, where UBI has been piloted in countries without free public services, it is often used to buy such essentials as education and healthcare.

One of the most dangerous aspects of this “radical” idea is that it can help to dismantle welfare states – both by supporting the ideology of privatization and monetization, and by draining huge amounts of money from the public purse.

But collectively provided public services, available to all according to need, give far better value for money than commercialized services. They are more likely to be inclusive and egalitarian, and to encourage solidarity. They represent a very substantial virtual income that is also highly redistributive. It is estimated that this “social wage” reduces income inequality by 20 percent.

Far more compelling than UBI is UBS, or the idea of universal basic services currently being developed by economists at London University’s Global Prosperity Institute. Their goal is “public services that enable every citizen to live a larger life” by ensuring access to security, opportunity and participation. This means reaching beyond education services, to provide health, transport, access to information, shelter and food, free according to need at the point of access.

Their technical analysis found that access to services can be financed through fairly modest adjustments to the tax system. UBS will meet needs more directly for those with the lowest incomes and will “always deliver greater value for the same expenditure as a cash distribution.”

Many left-wing supporters of UBI claim they also want to defend public services. However, they pay no attention to how these services can be strengthened or improved, and ignore the very obvious danger of robbing Peter to pay Paul. As the UBI fan base grows, it is capturing political energy that is urgently needed for more serious causes.

There are viable alternatives that have far stronger claims – in philosophical, economic and political terms – to address the challenges of poverty and inequality.

For example, it is worth building a campaign for a minimum income guarantee, combined with more generous child benefits and a system of credits for carers based on the principles of time banking, so that time spent on caring for others earns a reciprocal contribution to one’s pension or care costs later in life. But the snake oil of a deceptively simple idea is charming the public gaze in another direction.

Implemented in any remotely viable form, UBI will do nothing to help workers gain more control through collective bargaining – the ability to negotiate their salary and working conditions. It will do nothing to encourage employers to pay a decent living wage or narrow the gap between the top and bottom of the workplace hierarchy. And it will do nothing to alter power relations between labor and capital.

A no-strings-attached payout will not eliminate poverty or insecurity. It will only harm the hard-won social democratic tradition of public services available to all according to need. It will not, in fact, disturb a hair on the head of modern capitalism.

No wonder UBI is popular with the moguls of Silicon Valley. In their world, where automation is the name of the game, they think their interests are best served by a docile population who cannot hold their bosses’ feet to the fire but may have just enough money to keep on shopping.

What could be more attractive than a government prepared to spend more public money to subsidize low wages and a dwindling supply of precarious jobs?

Anna Coote is head of social policy for the New Economics Foundation (NEF).

*A version of this article originally appeared in International Politics and Society

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