Should The UK Introduce A Universal Basic Income?

There’s been much excitement among some of my more politically-minded friends recently over the upcoming vote in Switzerland on a universal basic income. The poll concerns a guaranteed income for all legal residents – whether rich, poor, or in the middle.

Famed for its direct democracy and regular referendums, the Swiss have voted on issues such as bonuses, ‘golden handshakes’ and can call nationwide votes on issues that concern them. Now they’re ready to put the idea of a universal basic income (or negative income tax) to the popular vote (date to be announced).

The idea has garnered support from both the Left and the Right alike in Switzerland. While it has a distinctly socialist overtone from the point of view that such a policy would indeed redistribute wealth; it also gives individuals power over their own welfare and therefore their lives. Freedom-loving Libertarians may well ask “Who distributes it; who decides how much?” as it’s clear that inevitably someone is going to have to make these decisions, so some kind of government would be required (in terms of the amount, an eye-watering £1700 a month is being proposed).

Libertarians may well be sceptical as to whether the UBI (as I shall call it from now on) could ever become a reality in the UK. However, let’s view it from a practical point of view. Right now, the UK government’s spending accounts for practically 50 percent of GDP, with much of it wasted on bureaucratic, self-serving and bloated welfare services.  A UBI would mean the abolition of the welfare state, state education system and minimise the government’s role to administration and defence – a ‘minarchist’ system of government.

Interestingly, the UBI is by no means a new idea. Originally proposed by Thomas More in his famous work Utopia in the 16th century, it has continued to gain approval from all sides of the political spectrum. Even Liberty-loving political theorist Thomas Paine wrote in the 18th century that “The earth in its natural, uncultivated state is the common property of the human race”. The moral and ethical argument for the UBI according to Paine, was that as private land ownership deprives others of their ‘natural inheritance’ they must be compensated in the form of a permanent grant (similar to that old MoneyWeek favourite, a land value tax).

I’ve been speaking to people who feel it’s economically viable too – they’ve done the figures and have worked out that it actually would work if there was a flat rate of tax paid on everything earned over that to pay for the UBI of future generations. The tax rate (apparently) could be as low as a 15 percent flat rate to be able to provide for this. I don’t want to quote the figures as I haven’t checked them myself, but if they are accurate it shows that the idea could really work. Common questions that may be posed by sceptics include “What if someone needs surgery that costs way over the yearly amount?”, or “What if someone spends it all on crystal meth and loose women/men and ends up dying in a ditch?” (ha ha). One way to combat the former question would be to offer people who have large costs a loan on their future UBI to cover them – but this would have to be carefully assessed obviously so the latter scenario wouldn’t become commonplace!

The other question is whether people would be motivated to work. I believe they would, as no one can really live off 15 grand a year (or whatever the income level may be). I also believe all of the menial jobs would be provided by voluntary groups, communities getting together to provide their own solutions for their areas. This is because contrary to statists believing a Hobbesian hell would ensue if we were left to our own devices; the truth is that no one wants to live in squalor.

However, I’m a realist. I know that in the current political climate a UBI is wishful thinking. With all the interest groups; people relying on the government for jobs; rent seekers and other victim groups; it would be catastrophic to those who make a cushy living ordering everyone else around. It would also change democracy as we know it, as no one could bribe anyone in exchange for votes. It would surely take a real disaster or radical change of government to introduce such a policy, but for now all we can do is sit and hope that Switzerland introduces it. Oh, and book a one way ticket to Geneva if they do…

  • Q46

    Your comments about Switzerland are not correct. In March 2013 Swiss voted to give shareholders more power over executive pay, so bonuses are not ‘limited’ and nothing was banned.

    In September 13, voters rejected caps on executive pay.

    • Libertarian Girl

      It seems that they did back the limits back in March but now things have changed. I’m not entirely familiar with the complexities with the Swiss voting system, so will amend.

    • Hannah L

      Yeah it seems they did back in March, but apparently in the second vote things changed. I’ve amended.

  • http://free-english-people.blogspot.com/ Paul Perrin

    This was UKIP policy in the 2010 manifesto. UBI (or citizens income, or basic cash benefit etc) and flat tax go hand in hand.

    I’ll give you a logical underpinning to it as well… for their lifetime a citizen should receive the average rent for an equal share of their countries land (about one acre in the UK currently). All land ownership originates in conqest, so citizens ‘own’ their country by virtue of being willing to risk their lives to defend it – so the whole country, collectively belongs to them all. A citizen could choose to use ‘their’ share of the land (rent it back with their UBI) or rent it out directly, or rent it to a national (or other) pool. Receiving a share of the rental back as their UBI.

    And flat tax, would mean no welfare trap – you take home 80%(?) of everything you earn from the first penny to the last – UBI replacing welfare for the unemployed and ‘tax allowance’ for the employed.

  • Rocco

    Seriously?

    From the ‘About’ section of this very blog, my emphasis: “Bogpaper is a blog written by a global team of LIBERTARIAN volunteers who believe that the AUSTRIAN SCHOOL OF ECONOMICS has the answers to today’s problems.”

    So let me put this as clearly and succinctly as possible: Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard. Murray Rothbard.

    • DanV

      Thanks for that Rocco, being a fairly recent convert to the Austrian School and Libertarianism, that article was making me start to wonder if I hadn’t misunderstood the whole thing…

      • Rocco

        Don’t mention it, Dan.

    • Hannah L

      Er…the article was meant to throw an alternative economic idea out there. In fact, flat taxes and UBI have been promoted as a more simplified, straight forward system by many who lean towards the ‘Right’ if we have to call it that. There are many also who support UKIP who regularly frequent these pages. They too have floated the idea in the past as someone below points out. The idea is it is the only ETHICAL form of tax if one works from a logical perspective. Also, that it could be an alternative to the messy system we have now.

    • Hannah L

      Oh and btw I’m not completely bought on it either. But unfortunately one has to be practical. If one looks at the Swiss model, if it were to work, it would be easier to promote it as a viable option here in the UK. Or, would you prefer the system of progressive tax we have now? I wouldn’t. It’s just an idea – albeit not ideologically pure.

      • Rocco

        There is nothing austro-libertarian about either a negative income tax, or a flat tax. Nor do libertarians have any business offering helpful suggestions on how to make government more efficient, or less messy. We aren’t interested in making robbers better at robbing people.

        Another austro-libertarian insight that you seem to be unaware of is that there can be no such thing as an “ethical” tax.

        As for people on here calling for such things, they are wrong plain and simple. And the fact that this gibberish was a ukip policy only demonstrates how ridiculous is the claim that ukip is a libertarian party.

        If you’re interested in austro-libertarianism, you could always try reading something by Murray Rothbard.

        • Hannah L

          I’m not unaware of any of these insights. Obviously tax is, logically theft. The ethical tax idea has many flaws – I have said this. I would just like to get this straight though: articles are not wanted by yourself that discuss any other system that is being floated currently in the UK, by political parties or overseas. That is forbidden or, if you prefer, frowned upon? If we’re going down the very pure route that’s fine. I will not write about anything that deviates from this. However, that strikes me as a little…totalitarian dare I say it?

          • Rocco

            I don’t make editorial decisions for Bogpaper. But if I did – given that we are supposed to be a blog dedicated to promoting austro-libertarianism – I wouldn’t publish outright anti-libertarian articles. I would also make sure that writers for Bogpaper knew the difference between private institutions and the State, so that they didn’t mis-apply the concept “totalitarian”.

      • Rocco

        And regarding “ideological purity”, I know it’s not terribly fashionable, or ‘practical’, but without it we end up with articles like this. Where self-described libertarians writing on self-described libertarian blogs “throw out alternative economic ideas” about the benefits of redistributive taxation.

        • Hannah L

          That’s great you’re ideologically pure. Respect to you. Maybe you’re right – if I’m going to even mull over these ideas I shouldn’t call myself a Libertarian. I do know what you mean as I have friends who think they’re Libertarian yet they support the EU and national health, human rights, this that and it drives me insane. They think there are lots of Libertarian titles. I guess the UBI to me seems better than the alternative. Which perhaps makes me a pragmitist.

          • Hannah L

            Pragmatist rather.

  • silverminer

    I expect the Swiss will reject this proposal. All taxation is theft, whatever it’s purpose but to use it for redistribution on a massive scale just adds insult to injury, I mean it’s not like you’re even getting any services back for what’s been stolen from you.

    This idea of a flat income tax wants binning as well. Income tax, whether flat or otherwise, is the worst of all taxes as by consenting to it we are admitting that the State owns our labour and hence that we are slaves! How often do you hear Cameroon et al saying we have to “LET the people keep more of THEIR money”. Well, if it’s OUR money, Dave, then how come you get to deduct a slice of it before we even receive it?! We should get the whole of our earnings then we should decide whether OR NOT we want to give you a slice to pay for services that we may require.

    A more realistic road from where we are now to where we would like to be, is through some kind of selective opt out from State services and from contributing to the revenue streams that fund them. We have to restore the link between paying for things and receiving the benefits. When you do that it is possible to start dismantling the State gradually one man or woman at a time. For example, designate part of NI as National Health Insurance and if you want to make your own provision you don’t have to pay the NHI and you’re out of that part of the system. Expand that principle to other areas.

    Incidentally, as it’s been mentioned, I’m not opposed to a levy on land values as it isn’t a tax, it’s just a retrospective payment to the community for the value that the community has created which has manifested itself in the value of the land you own, i.e. it’s an unearned gain and it’s the least worse way to fund anything which the market cannot provide (but the funds would have to be controlled by the community locally I think or it would just turn into another trough for the parasites to feed from).

    • Hannah L

      Great comment. Yeah, I hate it when Dave says that stuff too. It’s just so WRONG! It’s like, thanks mate, thanks for letting us have our cash back! I think you’re idea’s a very good one. It’s occurred to me the slowly slowly approach could work. I think this is much more likely than UBI which would realistically involve a massive restructuring of everything. Whereas your way is by stealth – a method’s that been used by the state to expand its largesse over time. I also think the technological revolution will mean that the big state will naturally die. The younger generation are massively pro free market so I can’t see them putting up with bad service and lack of choice when it comes to education, health etc.

  • http://free-english-people.blogspot.com/ Paul Perrin

    Most comments seem to entirely miss the point that this is about property rights. Receiving rent due on your owernship of land, to which you are entitled by accident of your birth.

    Who owns land?

    The only rational argument I have seen is either everyone, or noone – which amount to the same thing.

    Anyine who doesn’t like UBI – fine, just allow the owners of the land free use of their share. Job done – if they choose to use it productively, let it etc.. that is their business.

    To get there from here, a UBI based on a share of the land is a good step.

    • Andy

      I have never figured out how most libertarians can rationalise their opposition to all intellectual property with their belief in homesteading.
      Most of the worlds land is owned by people who inherited it and if you go back far enough you will find that their forefathers stole it. At least my intellectual property was secured through my ideas and hard work not accident of birth.

      • http://free-english-people.blogspot.com/ Paul Perrin

        I am with you on that Andy – ‘homesteading’ is an irrational justification used by those with land to keep it.

        It also plays into the states hands as it is the primary beneficiary of land being used ever more intensively.

  • Redmond Weissenberger

    Lol! How would the imposition of a UBI mean the end of the welfare state???

    As Ludwig von Mises reportedly said when he stormed out of a meeting led by Milton Friedman at the Mont Pelerin society wherein the negative income tax was proposed:

    “you are all a bunch of socialists!”