Imagine a world where everyone has a universal basic income that provides for their food, shelter and health care, so that they will be more equipped to spend their time on projects they care about and create a sustainable world.
That is essentially, the utopian argument for proponents of universal basic income. However, the reality is that what US and UK economists are actually proposing is not exactly that. Instead, the actual distribution of basic income would be limited to $12K/ year or $1K/month in the United States and £7K/ year in the UK for each resident. Of course, everyone wouldn't mind a bit more money, but I think the theory of universal basic income is actually covering up a complex, dynamic problem by attempting to throw meagre funds at the facade of social inequality, hoping to somehow, magically make it all work out in the end.
There is also concern that if nations adopted universal basic income, it would become one of the structural disintegrating factors that would lead to an economic situation of hyperinflation, and the basic things that seem affordable today will become luxury items, called the "New Zero Argument".
However, some proponents argue that a basic income wouldn't cause hyperinflation, and because it is simply the redistribution of existing funds, it would also correlate to higher pay. However, I found this argument a bit specious. Exactly how would one's salary increase by 50% from a private corporation simply because one is receiving $12K/ year from the US government?
A more progressive idea would be to allow each individual to receive a 200% tax refund for anyone who makes £100K or less. The UK already has a 200% tax refund in place to help small businesses and startups. However, since startups rarely make a profit in the first 3 years, why not transfer this tax refund to individuals who work for small businesses? Surely that would be a more practical solution to the goal of creating an ecosystem of entrepreneurship then merely writing someone a cheque for a meagre £7K/ year which would probably just cover the cost of transportation and a laptop and mobile phone.
If the point is for people to not worry about their basic needs- food, water, shelter, then why not focus on those services instead of thinking that a maintenance allowance of $1K/ month will actually do anything to help anyone?
The UK has universal health care, and also a programme for weekly allowance for job seekers. What about giving each resident a food credit card that they can use at participating grocery shops and restaurants? Why not subsidize UK farmers? UK farmers would be able to deliver weekly boxes of fresh, organic fruit and veg to each citizen, impacting the health of citizens and also creating a sustainable model of food consumption.
As for housing, the UK also has a programme in place in which seniors can purchase real estate for less than 50% the market value along with other programmes. In addition, new developments allow a number of flats in upscale neighbourhoods to be available for a fraction of the price for rent for low-income earners.
In comparison, low income housing is concentrated in urban areas in the United States, which have become areas of active criminal activity. Although the UK has similarly allotted council flats, in recent years the UK has attempted to address this issue by mixing up available housing in different areas, therefore, avoiding the concentration of low income families in any one area. Although there are still pockets of areas, Knightsbridge, Kensington, Chelsea, Notting Hill et al that probably will remain privately owned residences by residents with a surplus of disposable income who are interested in raising the value of their homes through underground basement remodeling, called "iceberg homes", other residential areas and developments that are being built are integrating people with a mix of incomes.
In the UK, students with dyslexia also receive free Mac laptops, and University tuition fees, although rising, have not yet reached the exorbitant prices of attending American universities.
UK residents are very lucky to already have Universal Healthcare, but what about Universal Transportation, Universal Nutrition Plans, and Universal Education?
Free public transportation or Universal Transportation for people attending university or learning a new trade or volunteering their time for a charity or cause will give people tools of mobility. The basic income proposed of £7K/year for UK residents will be just enough to cover an oyster card for 1 year which comes out to £3336/ year from zones 1-9 on the London Underground. That leaves £3664 in which one might be able to purchase a laptop and mobile phone along with a phone subscription to be able to have the basic tools for work.
Providing for a free education, eg, Universal Education, would guarantee opportunities in areas where otherwise people might not be able to afford. I like the German model of free education; University is free for residents and foreigners who are accepted into their programmes (with the exception of people pursuing MBA degrees). The rising cost of University is actually what is crippling America's youth, and perhaps the tech elite in the US should consider reverting back to the halcyon days of free education from the 1950s-70s (which they probably took advantage of before becoming heads of corporations) before thinking that social inequality problems could be solved by throwing a meagre $12K/ year to all citizens. After all, $1000 a month would not even cover a studio flat the size of a closet in Silicon Valley.
Also a Universal Nutrition Plan would allow citizens to enjoy sustainable agriculture. As I mentioned before, if the UK utilised farm subsidies for weekly deliveries of fresh boxes of organic fruit and veg for people who are learning new skills in their further development of education and for people who choose to volunteer 2 days/ week for charities and non-profits, then that would create the right kind of ecosystem for people to focus on doing what they love, instead of people focusing on working jobs they hate just to simply pay for their food, education and transportation costs.
It could be that I am missing a convincing key argument for universal basic income, but I think this model has already been tried before- in Communist Russia and the former Eastern Bloc. Instead of creating a society of innovative leaders and social programmes, people became desperate and propagated a society of underground criminal activity and human trafficking of prostitutes. Instead of equality, the government became corrupt (what a surprise) and nearly everything became unaffordable for many, including items of food, such as a single egg. I remember the first time I went to Prague- 10+ years after they had long separated from the Soviet Union and became a representative democratic republic and was astounded to see that their McDonald's was a 5-star restaurant with marble floors and a grand piano. It was the most anachronistic sight I saw, a celebration of wealth, which was derivative of the new money coming into the former Eastern Bloc, after years of oppression from a regime that gave all its citizens a universal salary and basic income.
Of course, there are key differences between the Universal Basic Income Theory and the universal salary given to people in the Communist Soviet Union or even in Communist China, such as ownership of real estate and businesses deferred to the state instead of to private individuals and businesses, however, the examples in both nations further exacerbated the wealth gap and accentuated inequality as opposed to adhering to the Marxist ideal. I'll be curious to see if Communism 2.0 receives traction outside of Utrecht's ongoing experiment on the welfare population in their society, however, I think a more effective way for any government to close the wealth gap is via innovative social programmes that do not rely on the transfer of money to cover up a larger, dynamic problem. What people need are more resources available to them that cover their basic living needs: healthcare, education, food, transportation, and housing are the foundations that enable people to do what they love and contribute to society, and currently in our global world, $12K or £7K/ year does not nearly cover all of it.
By Sierra Choi, Director of Marketing