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Universal Basic Income – A Challenge for Social and Economic Policies

Universal Basic Income – A Challenge for Social and Economic Policies Economy Near Us (XIV)

The purpose of this article is to draw the reader's attention, perhaps even initiate a debate on the Universal Basic Income (UBI) as a policy instrument for economic and social policies. It is not a comprehensive scientific study of all current problems, rather an introduction to research into a possible revolutionary social change, correlated with the fourth industrial revolution. In terms of economic growth, income inequality and the possible effects on the labour market, two important issues need to be taken into account. UBI establishes a direct causal relationship with human life. The revolutionary aspect comes from eliminating economic and legal causation between income and labour. Its global implementation or a differentiated implementation at the level of all states would require new ways of individual thinking, new systems of economic and social thinking, new institutions or even states. So far, some approaches to the concept are known, especially in the form of social experiments, different in size and coverage, that have attracted the attention of researchers and theorists, as well as of political decision makers. 

The actual economic and social context 

The economic context created by globalization is characterized by high geopolitical and economic instability and pressure, with various crises and aspects that provoke man's ability to adapt to changes in the economic and social environment, to innovate and effectively use knowledge in generating welfare and reduce of poverty.

In this context, the challenge of strategic policies is to develop man in a healthy ecosystem, transform patterns of production and consumption, eliminate subsidies for unsustainable practices and replace them with financial measures that bring wealth to everyone. The concept of sustainable development, a concept that supports life, future generations and social justice, is increasingly relevant. Is it the exclusive task of governments to give opportunities to live our lives in full? Are there other actors in society who can offer life opportunities? What is the role and nature of work in acquiring fulfilment and satisfaction in life? What are the economic costs of political decisions? How do we obtain protection against evil in the world?

Government policies on work and the right to work focus on individual well-being, poverty eradication and social inclusion, especially European policies as collectively defined through the European social model.

Technical and technological progress, innovation and human capital are the pillars of economic growth and development from the individual to the global level. Work brings new dimensions: a competition between technological development and the development of new skills (new knowledge, skills and attitudes) through education, controversies about national minimum wages and their change, illusions of aid and social assistance, new indicators, access to health, inequality of earnings and non-recovery of gaps, and so on. As a possible solution to all these and other labour market issues like employment, unemployment, new forms of work, job insecurity, wage inequality, social dialogue, some are advancing the policy of a Universal Basic Income.

Definition of Universal Basic Income 

The synthetic and logical definition of UBI is income that covers the basic needs of a person, paid individually, to all people. The accepted definition in literature or scientific and empirical studies is that of financial income to cover the basic needs of a person, paid individually, to all citizens of a state.

Various other names are found in the literature: guaranteed income for life, basic income, basic income of the citizen (in the United Kingdom), citizen's income, basic income guarantee (in the United States and Canada).

The synthetic and logical definition of UBI is income that covers the basic needs of a person, paid individually, to all people.

UBI has emerged as a proposal in many political discussions at local, national, regional, Union level, or international bodies. It is not a new idea, but has seen renewed impetus in recent years as a social experiment. It can be said in a bold way that it could change the world if it goes beyond simple proposal. It is necessary to responsibly back a political decision proof of success through testability of the system and replicability of results. Thomas More (who, in Utopia, promotes the idea of ​​common property as well as access to education) and other philosophers have, since the 16th century, proposed minimum incomes to guarantee social justice in solving social problems. In later years, Bertrand Russell argued that basic income should be a vital component in the new society.

During the Second World War, the Beveridge Committee (led by economist W. Beveridge, known for his labour market concerns and the curve that bears his name, expressing the relationship between job vacancies and employment) made proposals on a system of assistance and social protection, and some members of the committee have researched and argued that adult income should be in the form of basic income. They have proposed the negative income tax model, which was also advocated by Milton Friedman, who believes that discrimination between different levels of earners is eliminated in this way, thereby maintaining the impetus for self-improvement.

Between 1960 and 1970, it was experimented in the US and Canada through pilot projects (six of which were better known, e.g. Manitoba Province, Canada) with negative corporate tax, but ultimately approved minimum guaranteed income for the elderly and those disabled. Between 1970 and 1980, the concern for Universal Basic Income came to Europe, where a basic income network called BIEN, Basic Income Earth Network, was set up.

The most publicized projects were the Namibia Basic Income Grant (2008-2009) and an independent pilot project, Give Directly, in Nairobi, Kenya (2017). The Netherlands, Canada, Finland started pilot projects in 2017 for 2 or 3 years to test the proposal.

Various other names are found in the literature: guaranteed income for life, basic income, basic income of the citizen (in the United Kingdom), citizen's income, basic income guarantee (in the United States and Canada).

Other attempts were in Germany, where, in 2008, a petition was forwarded to the parliamentary base but, after the petitioner's hearing, was closed with the "unrealizable" resolution at EU level. The European Commission received a petition from 280,000 citizens to study the unconditional basic income concept. Switzerland's first universal income referendum was rejected in 2016. Also, since 2016, the World Economic Forum discussed in Davos the future of labour in relation to the fourth industrial revolution and the risk of elimination of many jobs and the redundancy of the skills required, and the need for proposals to present want.

There are currently many variations of basic programs launched as government policies such as the welfare state or supported by different non-governmental organizations to eliminate discrimination, inequality etc. I only emphasize them because a careful analysis would highlight arguments for or against UBI.

The variety of approaches generates some confusion in terms of concepts, especially those on social protection and social security, social assistance, state-guaranteed minimum income, and minimal guaranteed salary in pay, with different objectives, potential beneficiaries, institutional mechanisms and funding. It is important to distinguish between the different concepts because, under conditions imposed, the anticipated economic and social impact may change. 

Characteristics of Universal Basic Income 

The characteristics or criteria necessary to define the Universal Basic Income are:

  • Universality - "UBI is assured to all people";
  • Legitimacy - "The right to UBI is given by living human life";
  • Individualization - "UBI belongs to the individual, without influence from his social relations (of couple, family, household)";
  • Non-conditioning - "UBI rejects the condition of any kind";
  • Automation - "UBI automatically rolls on a regular bank account";
  • Definitive - "UBI is absolute and irrevocable".

Does the guarantee criterion generate a series of questions? Who is sure he can assume the guarantee? How do you get the guarantee? At what costs? What is the impact? Is the state forced to find the solution? Can there be other actors involved?

The answers to these questions determine the arguments for or against the establishment of UBI, as well as a number of followers or opponents, and an analysis of these will be the subject of another work.

The variety of approaches generates some confusion in terms of concepts, especially those on social protection and social security, social assistance, state-guaranteed minimum income, and minimal guaranteed salary in pay, with different objectives, potential beneficiaries, institutional mechanisms and funding.

If we introduce any condition, it will violate at least one of the criteria outlined above and, consequently, we will have another concept. Ex.: the condition of nationality or the restriction of legal residence on the territory of a state determines the violation of the principle of universality. But on the same principle of universality there are social policies as legal, political and moral engagements of a state through the nationally promoted system of values, integrated into a wider context in European Union regulations or in world agreements. These, through the transfer of financial resources to the population, provide minimal guarantees in the form of family allowances, social benefits, pensions and other social security benefits, allowances and facilities for the unemployed, provide a guaranteed minimum income, protection for mother and child, support for people with disabilities.

We must distinguish between social benefits and social assistance. Social protection through social benefits presupposes the principle of own contribution and is achieved through redistribution measures for individuals or families according to their basic needs and their income. Social assistance implies a set of measures that meet the social needs of individuals, families, communities in situations of difficulty, vulnerability or dependence, aiming at social inclusion and increasing the quality of life. Minimum wage policies are implemented in most countries of the world (90%), with the minimum gross wage, weekly or monthly wage that employers are forced to give employees.

Minimum guaranteed income is a form of social assistance that is ensured by granting social assistance under the law, by reference to the Social Reference Indicator. 

Justifying the renewed interest in UBI Firstly, we have the increasing economic precariousness of the individual (lack of job security, non-assurance of transition from one job to another, instability of income and lack of predictability).Reflecting on the characteristics of man and his everyday life, some risks can be identified:·         Illness (Temporary work incapacity = sick leave, medical care, long-term incapacity for work (invalidity) = temporary sickness retirement, definitive incapacity (disabled) = retirement from permanent illness);·         Unemployment;·         Accident or occupational disease;·         Maternity;·         Responsibility for family care;·         Aging;·         Death of the legal supporter.Covering these risks is a matter of personal security and is resolved through social security policies delivering social benefits. Ensuring employee security comes under his own responsibility, but also that of the employer and the state.John Rawls includes free time on the list of basic needs. Freelancers are a form of showing the need for free time without giving up work, but whose income instability is high.Could UBI be the guarantor of full coverage of basic, psychological security and free time needs, and increase the possibility of advancement to development?

The second is poverty, comprised of the poverty trap, the welfare state's inability to remove poverty, debts etc.

Poor people are increasingly at the centre of society in any world economy, as statistics show. Poverty and the relative poverty line are constantly in the attention of economists and political decision makers. UBI may not be able to eliminate people's debt, may not succeed in eradicating poverty, but can draw attention to the re-establishment of the poverty line and the level people think it should have. The poverty line is used to establish benefits and grants as an eligibility standard but is not upgraded in line with developments in global economies and does not determine a satisfactory or at least decent living standard, so it remains an open problem.

The third issue is inequality, expressed by increasing disparities in income and wealth and lack of perspective on the recovery of gaps.

Income taxes are the essence of revenue policy, and progressive income taxing is a permanent controversy between the political left and right, reliant on redistribution and social transfers. UBI can trigger a new revenue sharing system that does not distort the market economy.

Stress is also an issue, a stigma with implications in labour productivity, motivation and health (unemployment and shame of stigmatization, prejudices and exclusion, feelings of inappropriateness for declared physical and mental illness, suicidal tendencies).

Here are some less visible but relevant aspects of job security, and I refer to work stress, daily stress, physical and mental exhaustion, harassment, aggression, lack of satisfaction, lowering self-confidence, anxiety and depression. Perhaps UBI will not cure what we can already call a stress pandemic, but it would help reduce intensity and incidence.A fifth issues is automation (robots, artificial intelligence, disruptions created by the 4th Industrial Revolution). People have a long formation cycle (until they reach the legal age for work) and work cycle (until they retire from the active population). They are trained and instructed or self-instructive throughout their lives (up to certain levels that influence how they can respond to a job demand or to levels of self-development that correspond to Maslow's superior levels.) In his theory on the hierarchy of human needs, Abraham Maslow added to the original pyramid two more levels of growth needs, namely cognitive needs (to know, understand and explore) and the aesthetic (for beauty, order, symmetry).

As far as technological development is concerned, new skills are needed that a person may acquire should the educational system in its larger sense provide it. Hence, the impression that the main factor of equilibrium or breakthrough on the labour market is this race between new and innovative technologies and appropriate education. Our own conviction is that future jobs will be modeled, but not eliminated by technical progress. The current technological revolution is undoubtedly disruptive to the labour market and, although it can accelerate economic growth, will continue to exacerbate inequalities, including labour incomes. UBI would lead to broader wage sharing and widen access to education.

Last, but not least, we have the evolution of the environment.

Sustainable development implies, alongside the social and economic pillar, the pillar called ecosystem and we can agree that all environmental issues will impact human evolution. 

Conclusions 

I believe that all of the above mentioned scenarios are intertwined and there remain risks of economic realities that require increased attention of governments and of civil society. I believe in the need to change priorities and put more emphasis on people because the measures provided by the various public policies can become contradictory or cancel each other out if they are only determined by figures.

I do not consider UBI the absolute freedom solving tool, nor the ideal tool for eliminating poverty. I support the benefit of the return of UBI to the attention of politicians, theorists, the general public because it involves changes in mentality and behaviour at all levels of society.

A conceptual reconstruction of work and income may lead to a new paradigm.

Unitary criteria are considered to be essential. I refer to the single poverty line that can be the universal benchmark, but it is necessary to use an equitable and fair calculation methodology without exchange rates or the same standard exchange rate.

The conclusion at this point cannot be definitive and perhaps life itself will find the solution or will demand a solution before the political decision or even the theoretical solution is explored.

 
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OEconomica No. 1, 2016