Guy Standing, Basic Income: And how we can make it happen

Guy Standing, Basic Income: And how we can make it happen, Penguin Random House, 2017, xiii + 374 pp, 0 141 98548 0, pbk, £8.99

This book describes itself as an ‘introduction and reflective guide’ (p. xii). It might have been better described as a comprehensible introduction, a comprehensive guide, and a cumulative argument. There is much that will be familiar to readers acquainted with Guy Standing’s voluminous output: rentiers, the owners of capital, reap increasing financial rewards, while the rewards to labour fall; inequality is rising; a ‘precariate’, resentment and populism are the consequences; and a Basic Income is therefore a ‘political imperative’ (p. xii). What is new is the onward rush of an accumulating and all-embracing argument.

Chapter 1 outlines some of the history of Basic Income, discusses terminology, and asks about the breadth of current support. Chapter 2 outlines the argument for Basic Income that throughout the book Standing regards as the most important: that social justice requires a social dividend on collective wealth, marginal deduction rates for the poor no larger than those for the rich, and individual financial security, and therefore a Basic Income.

Chapter 3, on freedom, finds a libertarian perspective to be paternalistic, and recommends a more ‘republican’ liberty as ‘non-domination’: which again requires financial security to be provided without behavioural conditions attached.

Chapter 4 pursues the social justice theme in relation to the precariat. Means-testing results in stigma, low take-up, and poverty, whereas Basic Income abandons an unevidenced deserving/undeserving distinction, offers the kind of financial security that we shall need during a period of disruptive technological change, and overcomes both the poverty and precarity traps (the latter describing the payment delays and complex administrative and other requirements that disincentivise short-term employment).

Chapter 5 offers economic arguments, and it is here that it might be appropriate to offer some additional suggestions. There are Basic Income schemes that would generate additional economic growth, but a revenue neutral scheme that paid for Basic Incomes out of changes to the current tax and benefits system would not necessarily do so. There are illustrative schemes that would redistribute from rich to poor, and which would therefore result in additional consumption of more local goods, but there are also schemes that would redistribute from poor to rich, which would of course not do so. A Basic Income on its own would be less of an economic stabiliser than means-tested benefits, because the latter rise as wages fall and unemployment rises, whereas Basic Incomes would not do so: hence Standing’s suggestion of a varying additional stabilisation payment. What the agenda of the first part of chapter 5 adds up to is an argument for Basic Income schemes that redistribute from rich to poor and that leave in place means-tested benefits and recalculate them on the basis of households’ Basic Incomes.

Standing studies a variety of funding proposals, such as quantitative easing and a Euro dividend paid for by Value Added Tax. He is rightly sceptical about predictions of a jobless future, but foresees a continuing rise in inequality to which a Basic Income would be a solution, which of course it might be if the scheme were to be designed to be redistributive. Standing might have offered the additional argument that a Basic Income would cohere with any future labour market configuration, whereas the current tax and benefits system is only appropriate to the labour market of the 1950s.

Chapter 6 replies to a series of frequently made objections, often with brief responses that invite further reflection. In relation to affordability, we might add that in the absence of additional public funds a Basic Income could easily be funded by adjusting the current tax and benefits system; in relation to the suggestion that a Basic Income might provide a pretext for demolishing public services, we might suggest that there are different kinds of unconditionality (the NHS is characterised by unconditional access to services, whereas Child Benefit is unconditional equal provision) and that the different kinds cannot be substituted for each other; in response to the objection that a Basic Income would be something for nothing, we might argue that reciprocity can occur in either direction, and that a Basic Income, by providing financial security, and ameliorating labour market disincentives, would enhance our ability to contribute to society; and we might frame the argument against the objection that a Basic Income would depress wages in terms of Basic Income as a static subsidy that does not rise as wages fall, as opposed to means-tested benefits that rise as wages fall and therefore act as a dynamic and more significant subsidy. The reader might like to think through their own extensions of the responses that Standing offers to the objections that less work would be done, that Basic Income would be inflationary, that inward migration would rise, that the level of Basic Income would be politically manipulable, that the rich don’t need it, and that Basic Income would be a distraction from trying to achieve full employment. The book as a whole is constantly thought-provoking: this chapter in particular.

Chapter 7 tackles in detail the affordability question. Before I noticed, the author honourably owned up to the mistake at the bottom of page 136 (my most recently illustrative scheme is for a Basic Income of £60, not £50, per week) – but I have some further questions: Is it a good idea to call illustrative schemes that retain and recalculate means-tested benefits ‘hybrid’? Their Basic Incomes are genuine Basic Incomes: unconditional, nonwithdrawable, and individual. And perhaps saying that the Royal Society of Arts’ illustrative scheme ‘attempts to minimise the number of low-income losers by redistributing resources to families with pre-school children’ (p. 142) does not sufficiently recognise that the RSA has not done the microsimulation research required to quantify the losses that would be suffered by low-income households. The current state of the Basic Income debate, which is as interested in feasibility as it is in desirability, surely requires such work to be done. But these are minor points. The chapter is a thorough discussion of affordability; and if you haven’t before seen the teaser on p. 147, then you should read it, and then try it on your friends. The significant unsolved problems that the chapter reveals are the cost of housing ( – no, Basic Income does not solve the housing crisis, and neither does any other conceivable reform of the benefits system); and the fact that illustrative schemes tend not to take into account the behavioural changes that a Basic Income would generate. Research that would quantify feedback effects would be most welcome.

Chapter 8 is a good discussion of the diverse meanings of ‘work’. It compares the employment disincentives of the current benefits system with the lack of such disincentives that would characterise a Basic Income; the ‘paid work’ / ‘unpaid work’ distinction is employed to understand how work-enhancing the US and Canadian Negative Income Tax experiments really were; and the useful consequences that Basic Income’s financial security would have for productivity, the precariat, and women, are well put. The Participation Income proposal (which perhaps ought to have been in the next chapter) is quite properly demolished; and although Standing does not discuss proposals for a household-based variant of Basic Income, a similar argument could have been used to demolish that.

On the basis of five ‘social justice principles’ chapter 9 evaluates a variety of ‘alternatives’ to Basic Income – a National Minimum Wage, means-tested benefits, social insurance, subsidised food, workfare, and tax credits (here meaning in-work means-tested benefits). There is a useful table on p. 214 showing that none of the alternatives pass more than two of the five social justice tests. But maybe ‘different’ would have been better than ‘alternative’ in relation to two of the proposals evaluated, because, in the context of a Basic Income, a National Minimum Wage and social insurance could be more useful than they are now. Standing lists ten failings of means-tested benefits. He could have added more: high error rates, high fraud levels, and the fact that fraud can be rational. Some of the detail of this chapter might have been more thorough. There are significant differences between the US Earned Income Tax Credit and the UK’s Working Tax Credits; and the Universal Credit taper is applied to net income, so after Income Tax and National Insurance Contributions have been taken into account, not before. The problem with Negative Income Tax is not that it is calculated and paid annually – it can be applied weekly or monthly if administered by employers – but that its administration is significantly more complicated than that of a Basic Income. But those minor problems apart, this is a useful chapter that might encourage anyone wondering whether one of the alternatives might be preferable to Basic Income to think again.

Chapter 10 is about Basic Income and development: and it is here that Standing is the world’s expert. If anybody is in any doubt about Basic Income’s potential to achieve the best possible development, then they should read this chapter. (One minor correction is needed on p. 223. ‘Unconditional cash transfer schemes’ presumably means ‘cash transfer schemes not conditional on school attendance’.)

Chapter 11 is full of useful information on pilot projects and other initiatives. We might wish to be more positive than the author about the usefulness of the current Finnish experiment, but otherwise it is difficult to fault the descriptions and evaluations. (One update: What is being tested in Ontario is not in any sense a Basic Income. [1] ) Standing’s proposal for regional Basic Incomes as steps on the way to a national one would unfortunately suffer from considerable boundary problems. The only schemes for sections of the population that would not suffer from such problems would be schemes for individual age cohorts.

What this chapter makes clear is just how important it will be to insist on the definition of a Basic Income: unconditional, nonwithrawable, individual. We are still in awe of the fact that the only genuine pilot projects ever to have been undertaken have been those in Namibia and India organised by Guy Standing. The appendix on how to carry out a pilot project is based on deep experience, and should be pinned to the wall above the desk of anyone thinking of running a Basic Income pilot project.

Chapter 12 [2] discusses the political challenges. The book’s subtitle, ‘How we can make it happen’, is not a question. Standing believes that the way to do it is to argue for Basic Income on the basis of ‘social justice, freedom, … basic security’, and ‘strategic preparedness’ for possible technological disruption of the employment market (p. 286). The book as a whole suggests additional arguments, and in particular that Basic Income would begin to sort out the dreadful effects of our current benefits system.

The chapter is full of some interesting speculation about how the debate might now evolve. Yes, Basic Income might now be a ‘political imperative’: but another possibility is that it will yet again disappear from the political agenda for a generation. If it does, then a new generation of interested individuals will need to keep the research and debate going until the next upswing in interest. They will find Standing’s book an ideal introduction and guide, and an essential inspiration. However, I agree with Standing that the debate is now deeply embedded in the public and political consciousness – and a significant reason for that of course is Guy Standing’s own passionately argued books and lectures. I would extend Standing’s suggestion that social justice and financial security arguments will now be central to the debate by suggesting that it is the cumulative weight of a large number of different arguments that will in fact carry the debate along. The book under review contains a multitude of arguments, and they all matter. If a Basic Income is implemented in the UK in the near future then it will be for very practical reasons to do with the current system’s chaos and inappropriateness as well as for reasons of social justice: and because ‘financial security’ coheres with both the social justice and the more pragmatic streams of the argument, it will be ‘financial security’ that will be at the heart of the debate.

The book has a thorough set of notes (although I noticed some unreferenced material, such as the TUC motion on pp. 228-9, and evidence cited on p. 287). The book contains an index of authors cited as well as a subject index, so the lack of a bibliography isn’t a problem.

This review is considerably longer than usual because this is a hugely significant book. It distils the wisdom and experience of the most influential global advocate for Basic Income. There are plenty of individuals who have influenced individual national debates, but Guy Standing is something else. If a developing country implements a Basic Income then it will be mainly his doing; and if a developed country implements one, then everyone involved will have benefited from Guy’s research and advocacy. Basic Income: And how we can make it happen is a book that you must read.

 

Notes

[1] https://news.ontario.ca/mcss/en/2017/04/ontarios-basic-income-pilot.html

[2] Unfortunately there is an understandable but significant error in chapter 12. The motion that Standing prints on pages 228-9 was never put to the Trades Union Congress in September 2016. It appeared in the preliminary agenda, and from there it found its way onto a variety of websites: but as often happens at the congress, a composite motion was debated instead, in which Basic Income appears in only the final two paragraphs of the eleven-paragraph motion:

Congress believes that the TUC should acknowledge Universal Basic Income and argue for a progressive system that would be easier to administer, easier for people to navigate, paid individually and that is complementary to comprehensive public services and childcare provision.

The transition from our current system to any new system that incorporates these principles should always leave people with lower incomes better off.

www.tuc.org.uk/sites/default/files/Congress_2016_GPC_Report_Digital.pdf

Footnotes