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Universal Basic Income

Cash grants to the poor are better than many traditional forms of aid when it comes to reducing poverty. They are considered one of the fairest, most cost-effective and most impactful ways to alleviate poverty and stimulate economic growth. Cash transfers given directly to poor families will enable them to decide on the most effective ways for them to escape poverty.

Moin Qazi | New Delhi |

Covid-19 has caused unprecedented crisis and disruptions around the world. It has inflicted the greatest pain on those who had already been rendered most vulnerable, spurring great hardship and growing unease among low-income families and microbusinesses. It has uncovered existing inequities and created new ones. A basic income ~ an unconditional regular payment distributed by the government ~ has been strongly advocated by economists, industry captains and policy makers across all ideological hues. It is considered an important tool to stave off largescale hunger, destitution and social unrest in times of crisis like pandemic as also during normal times so that people are not left helpless when a crisis strikes them.

We have already seen smaller versions of pandemic during the last hundred years and a case for better preparedness need not be overemphasized. Denis Goulet argues that the concept of development is best expressed in the phrase, “the human ascent” and in the ascent of all men in their quintessence of humanity, including the economic, biological, psychological, social, cultural spiritual and transcendental dimension. The idea of a Universal Basic income (UBI) has made recurrent appearances in history ~ starting with Thomas Paine in the eighteenth century.

UBI is premised on the idea that the government would pay a flat fee to every adult citizen, regardless of his or her engagement in skill-building activities or the paid labour market, as a partial or complete substitute for existing social security and welfare programmes. UBI is gaining traction as governments look to revamp their social safety nets. India is the most serious new aspirant. In a UBI system, the government gives citizens a regular infusion of free cash with no strings attached. These efforts intend to provide a lifeboat to help lowincome families and microbusinesses survive this pandemic, and importantly, to continue to cope with daily emergencies as normal economic life stutters through the slowdown.

The proliferation of social benefit transfer programmes in India has already resulted in inequalities and inefficiencies ~ while some households receive multiple benefits, others   receive none. One of the reasons why despite so many decades of aid work, social disparities have continued to widen is that India lack databases with information on populations. UBI is a broad, non-targeted periodic cash payment (Cash Transfer-CT) unconditionally delivered to all, rich or poor, on an individual basis. The idea is to ensure that every person in society has the means to live with a modicum of freedom and dignity, independent of one’s capacity to earn or the availability of employment.

Cash transfers are not tied to the recipients’ behaviour, and they are free to spend the money as they wish. In contrast, an example of a conditional, in-kind transfer in India would be the mid-day meal scheme, where the meal ~ an in-kind transfer ~ is conditional upon attending school. UBI guarantees that people will not be impoverished, will not go hungry, and will be protected from job loss due to automation while cutting the need for many other forms of social security. A basic monthly income can also replace a string of welfare subsidies for the poor that India currently has in place.

Getting a guaranteed, regular infusion of cash can certainly make people happier and less stressed (even if that cash isn’t enough to cover all their needs).   Yet most countries aren’t doing it. The philosopher Michel Foucault, exploring the ideological foundations of neoliberalism in lectures at the Collège de France in 1978-79, argued that neoliberal logic regards the economy as a game in which the state makes the rules and guarantees their application.

A guaranteed income “should make it impossible for one of the participants in the economic game to lose all he has and so be unable to continue playing.” Nobody should have anything to lose; the state establishes a safety net for everyone. This system of universal income is “based on the need to help those who are poor, without enquiring whose fault it is that they are poor” and differs from traditional social policies in that it makes no distinction between the ‘deserving’ and ‘undeserving’ poor.

“After all,” said Foucault, “we take no interest, and it is quite proper that we should take no interest, in why people have fallen below the level at which they can take part in the social game ~ we don’t care whether they are drug addicts, or voluntarily unemployed.” The state is content, “without looking any farther and therefore without the need for investigations by civil service (national insurance officers), police and judiciary, to pay them a subsidy, under rules which encourage them to rise above the threshold once more. But it doesn’t matter at all if they don’t want to: they will still receive the subsidy “. This is the essence.

The basic objective of UBI is to reduce inequalities on account of distribution of wealth and other assets. Inequalities of income arise from: (i) inequalities in human capital (levels of literacy, skills health, etc.), (ii) inequalities in opportunities (in education, jobs, etc.), and (iii) inequalities in living conditions. The four main goals of UBI are security and social protection (for the young, old, disabled, women); development and economic growth give poor people the security they need to invest in higher risk/return options like new crops, or upgrading their livelihoods; breaking intergenerational poverty (though better nourishment and education for children) and rights and equity (narrowing income inequality and promoting the status of girls and women).

Cash grants to the poor are better than many traditional forms of aid when it comes to reducing poverty. They are considered one of the fairest, most cost-effective and most impactful ways to alleviate poverty and stimulate economic growth. Instead of relying on an expensive and complex aid industry, and by bypassing NGOs and governments, cash transfers given directly to poor families will enable them to decide on the most effective ways for them to escape poverty.  Even when assistance programmes accomplish things, they often do so in a tremendously expensive and inefficient way. Part of this is due to overhead.

But more worrisome is the actual price of procuring and giving away cows, gas stoves, sacks of foodgrains, and the like. The experiences of most development agencies suggest that delivering stuff to the poor is a lot more expensive UBI can significantly reduce losses to corrupt intermediaries. Moreover, the digital payment mode leaves no scope for middlemen to sponge funds. But it may not simply overhaul the sometimes-corrupt decisionmaking process that determines who is eligible for benefits in the first place.

The late French philosopher Charles Pguy remarks, in his classic essay on poverty, “The duty of tearing the destitute from their destitution and the duty of distributing goods equitably are not of the same order. The first is an urgent duty; the second is a duty of convenience. When all men are provided with the necessities what do we care about the distribution of luxury?” Envy should not be the motive for equalization of wealth. We need to have a more nuanced understanding of the issue.

But two areas remain the subject of intense debate: targeting and making this income subject to specific conditions. Should recipients be asked to satisfy conditions such as sending their children to school or make them take vaccinations? There is often a conflict between the technocrats’ urge for tight targeting to ‘maximise efficiency’ and public rejection in favour of universality. Targeting appears particularly divisive because there is only a small gap between poor and non-poor in many low-income countries.

There are several downsides: recipients might misuse the money they receive; it will induce people to work less or create a disincentive to work. In the words of Thomas Piketty, the renowned French economist “the cost of substantial fiscal redistribution would be considerable, because it would decrease the return on investments (for individuals) in human capital and thus decrease the incentives for individuals to make such investments …” The great American President Franklin D. Roosevelt gave us a wonderful mantra way back in 1937.

It is more relevant today than ever before: “The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little.”

(The writer is the author of Village Diary of a Heretic Banker. He can be reached at [email protected])