This week I’ve been reading Guy Standing’s book Basic Income: and how we can make it happen, which answers just about any question one might have about the basic income. Among the many useful things in the book is a description of the variants on the idea, and the many different names associated with the central theme of a guaranteed basic income.
For a start, I’ve generally used the term ‘citizen’s income’ in the past, as that’s what it was called when I first encountered it. At Standing’s suggestion I’m going to start using ‘basic income’ instead, to avoid the immediate distraction of citizenship. But those are both broadly the same thing. Other variations do have differences though, and here are five different forms:
Unconditional Basic Income – let’s start with the baseline. The basic income is a non-means tested, universal and unconditional payment to residents of a country. Not enough to live on, but enough to guarantee survival and independence. This is the gold standard. If a scheme isn’t universal, if there are conditions on how you can spend it or on who can get it, then it’s not the real deal. It might still be a good idea, as we shall see below, but it’s not a bona fide UBI.
Participation Income – some people object to giving everyone unearned money, and think that a basic income might encourage laziness and scrounging. That all depends on how big the grant it is and what other welfare architecture there is around it, so it’s far from a given. Nevertheless, that perception is a big obstacle. One way to gain political support for a basic income is to tie it to participation, a compromise suggested by economist Tony Atkinson. In order to qualify for the Participation Income, you would need to be making some kind of social contribution. That may be caring for someone, volunteering, or you could be in education, so it’s fairly broad.
Social Dividend – a dividend implies a share in wealth created, and for many advocates this is the essence of the basic income – not a form of welfare, but a rightful share in what we own or create together. A dividend could be a share in oil revenues, as Alaska and a few others have already. You could also tax fossil fuels and distribute the revenue as a dividend. A land value tax could also be distributed this way. Since nobody made the land, we all have a right to a share in any profits made from it. I’m a big fan of this concept, and am interested in how a basic income could be used to lower carbon emissions.
Negative Income Tax – not a basic income, but related. Perhaps a cousin in the policy family. Under negative income tax, the government would set a tax baseline. If you earned more than the baseline, you would pay income tax with the usual brackets for your level of income. If you earn below it, you would receive a payment instead, of different sizes depending on how little you earn. And if you’re right on the line, you’d neither pay nor receive anything. This is a simpler formulation of tax policy that’s been much discussed but never implemented as far as I know. Systems that tax people and then give some back in tax credits are often a more complicated and bureaucratic way of achieving the same thing.
Stabilization Grant – An ingenious ‘automatic stimulus’ idea from Guy Standing. In this form, a basic income is paid with a variable rate set by an independent body. If the economy slumps, the size of the grant goes up, helping people out as their budgets are squeezed. This would prop up demand and help to deal with recessions, as a fairer and more effective alternative to quantitative easing. Britain spent £375 billion on QE during the financial crisis. If it had given that money to ordinary people instead, says Standing, everyone in the country could have had £50 a week for two years. Since that would be going to those on lower incomes, it would actually have been spent in the real economy and done more good.
There are more, and I won’t go into any more detail. Perhaps the main point is that there is a diversity of ideas around the basic income. There are lots of different ways to construct a basic income scheme, depending on what we want to achieve with it.