Universal basic income, an ethical option (The Hindu)

Mains Paper 2: Governance
Prelims level: UBI
Mains level: Welfare schemes

Context

• The idea of a Universal Basic Income (UBI) captured headlines in the UK as a study, presented to Britain’s Labour Party, concluded that the country ought to introduce pilot schemes to test such a system, as part of efforts to tackle high levels of inequality and poverty.

• The study, commissioned by the Progressive Economy Forum, a Left-leaning group of economists and which the Labour party said it would give serious consideration to focuses on the concept proposed by the Congress Party and which has been trialled in other parts of the world that would give members of the public “modest regular payment” to “help them feel more secure and able to purchase necessities for living.”

Key highlights of the report

• The report advocates a system that would have a number of essential features involving a basic amount that provided basic but not total security, and a form of payment that was not paternalistic and enabled individuals to do as they wished with it.

• It also had to be regular and predictable, paid equally to all individuals, and unconditional, with no behavioural or other conditions attached.

• The report has come at a time of rising concern about poverty and the economic sustainability of life in the UK and the rest of the world.

• Despite reforms over the years including an increasing minimum wage, and the raising of the threshold for personal tax allowance, the level of in-work poverty has remained high in the country.

• Nearly 60 per cent of people living in poverty in the UK live in a household where at least one person works.

• According to a recent report this is a substantial rise from the level of 35 per cent in 1994-95, and is something that the Institute of Fiscal Studies has attributed to the stagnation in house earning earnings since the early 2000s.

In-work poverty

• This in-work poverty has been manifested in many ways: the homelessness charity Shelter has estimated that over half of homeless families in the UK have a person in work, while the use of food banks places that provide food and other basic goods to those in need has risen sharply.

• People’s problems have, to a degree, been exacerbated by reforms currently being introduced to Britain’s welfare system, with a system of universal credit set to replace the existing benefits system.

• While pegged as a system that would simplify a very complex system of benefit payments and incentivise work, it has come under much criticism, with charities warning that in some instances it was worsening the plight of people and forcing them to turn to charity and food banks.

• Across Europe the concept of a Universal Basic Income has been gaining traction, not least because of the changing nature of society, and warnings about the impact of widespread use of Artificial Intelligence and robots could have on society and jobs.

The political factor

• Part of the problem with the trials that have been taking place so far, the report notes, are the political pressures that have sought to make things like the promotion of employment the primary goal, rather than other factors such as reduced stress or better attitudes to work and job-seeking.

• It is notable that a trial system in Canada was ditched despite showing signs of success because of a change in government.

• There were also risks that its potentially high costs could result in the rolling back of public and social services, which would be very detrimental to vulnerable sections of the public.

• On the Right has come the argument that the system in addition to place huge pressures on the public purse would disincentivise people from working.

Conclusion

• It’s an argument, swiftly rejected by Standing who, in his report, notes that while the pilots that have taken place so far provide no indication that it would lead to a disincentive to find work,

• The criticism that such payments would amount to something for nothing was hypocritical, given the widespread acceptance of the right of individuals to inherit family wealth.

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General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) Consider the following statements about Periyar E.V. Ramasamy:
1. He opposed Brahmanical domination.
2. He participated in the non-cooperation movement, offered satyagraha and defended khadi.
3. He gave full support to the scheme for Pakistan after Lahore resolution of Muslim League.

Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: D
Mains Questions:
Q.1) What do you mean by the Universal Basic Income? How Britain’s economy will affected?