Why we need a universal basic income

The feature below was written by Steve Hart and first appeared in the NZ Herald during September 2015.

In addition to the feature below, you may be interested in my audio reports on pay disparity (recorded in 2014 for the Steve Hart Radio Show).

Part 1: London with Deborah Hargreaves of the High Pay Centre (April 2014)

Part 2: New Zealand with Paul Barber, policy advisor NZ Council of Christian Services (April 2014)


Campaign for a universal basic income

The country’s beneficiary system could be scrapped if everyone was given enough money to live on by the government. That’s the pitch of Lowell Manning of Basic Income NZ.

He advocates giving every man, woman, and child a no-obligation weekly payment – plus something toward the cost of housing – that could give them real choice about how they spend their lives.

Lowell manning or Basic Income NZ.
Lowell Manning of Basic Income NZ.

For example, he says a starving artist need not push trolleys at a supermarket to make ends meet, they’d have the money to follow their passion and develop their skills knowing the basics are covered.

The concept of giving people enough tax-free money to pay their bills and take part in society isn’t new – it can be traced back more than a century to philosopher Bertrand Russell’s 1918 book Roads to Freedom.

While the idea gained some popularity in the 1980s, Manning says it was the 2008 recession and the Occupy / One per cent movement that caused people – including some governments – to look at the idea more seriously.

One reason for the renewed interest is that as companies rely on more automation, such as robots on factory floors and self-service checkouts at supermarkets, there will increasingly be fewer jobs. And with some people having less to spend, they stop being an active consumer of the products made by the robots.

Manning says about 12 per cent of the money earned by the country (GDP) is spent on unemployment, welfare benefits, and superannuation etc. Manning reckons the funding for a full basic income scheme is somewhere in the region of 24 per cent of GDP.

“The shortfall will need to come from other sources, such as an increased tax rate on earned income. It means those in work won’t be much better off, but there is a whole range of benefits that come from a basic income over above any physical increase in the money people get.

“It will empower people without work and change the system we currently have, from one of punishment and reward, to one that’s based on worth and dignity.

“There is a fundamental disconnect between work, income and welfare. And that has occurred over the last 40 years, but the difference now is that the entire system is based upon maintaining a substantial level of unemployment to keep wages and incomes down.”

Manning says that disconnect is because labour is no longer essential for production. Companies, he says, have the choice between investing capital in machines or people.

But, given enough money to get by, will people bother to even look for a job or turn up for the one they have?

“It is a deep rooted thing…people want to participate in society,” says Manning. “There will always be a small proportion who choose not to, but with a basic income it will still be worthwhile going out to work. And you’ll have a huge choice around the types of things you do because you are no longer tied to the wage offered by employers. You can go off and do your own thing.”

He says trials of the system have taken place in Namibia. It saw productivity go up, but work participation decreased because people have the money to work fewer hours each week.

“And that’s simply because you want to go to work, you don’t have to go to work.”

In Holland, a trial of a basic income scheme in Utrecht – where people were given €900 (NZ$1600) a week – is to be expanded into neighbouring Tilburg.

“Under my plan you can get rid of WINZ altogether, you wont need it,” says Manning. “Think about the empowerment that will create for people. It will give a huge boost to people’s self-esteem.”