The Development and History of Universal Basic Income
Andrew Yang

The Development and History of Universal Basic Income

By CryptoCelt97 | LegalArticles | 30 Mar 2021


 

The development and history of UBI as a socio-legal theory

 

To understand Universal Basic Income and why it is relevant, we must explore its history. Exploring the history of the concept will provide the context necessary to see why it might be a solution to the societal problems we will face in the forthcoming years and show that it is achievable both economically and legally.

Universal basic income has been defined as an idea that the state should provide its citizens with an income or fixed sum unconditionally, and that it will be provided at regular intervals to the recipients irrespective of the beneficiary’s financial or societal status[1]. Not only does UBI intend to be universal to who receives the payments, but it also proposes that the payments be unconditional. The state would not require the recipient to be employed or that he is even actively seeking employment, an income would be granted regardless. Thus, it is commonly characterised as a periodic cash payment eligible to the entirety of the society unconditionally[2]

 

Origins of UBI

 

The idea of a system of UBI in our legal system seems to have garnered momentum only over the recent years due to the rising inequality and fears of automation. Yet in reality, scholars have been debating and theorizing a system of unconditional payments to its citizens for generations. The idea has a long colourful history dating back to Sir Thomas Moore in the 16th century[3] and then further investigated by the philosopher Thomas Paine in the 18th century. Paine was a radical thinker who proposed a fixed payment to all adult members of society. The state would provide its citizens a financial support system that would be both unconditional and universal[4].  Growing wealth inequality is at the core of the debate to implement a UBI system; this is as true today as it was when Paine encouraged the idea of an unconditional periodical payment. His idea was that the state owed its citizens a fixed sum as a reimbursement for the public land that had been appropriated by the wealthy landowners, it was a way to allow farmers to buy land and embody the values of personal freedom and autonomy of the newly established country[5]. In his seminal work ‘Agrarian Justice’, Payne argued that poverty is a preventable infection plaguing society. That the state should and can prevent widespread poverty and the harm it brings to individuals and society as a whole by providing them with a universal and unconditional payment. The process of a periodic payment would encourage greater economic equality and mobility, resulting in lower-income individuals being able to own property, increase their wealth and thusly have more disposable income to part with. Thereby creating a healthier economy in which the lower classes have more capital and can engage with the economy more. Consequently, Paine created the idea of distributive justice by advocating for universal instalments to be provided to combat poverty, which he thought was a preventable injustice[6]. Not only did he theorise that a system of UBI would increase economic equality, but Paine also believed that it would be consistent with his theory of rights. That the people who live on the land should be able to benefit from the land being cultivated by the landowners. Essentially, his thoughts were that all members of society should be equal under the eyes of the law and should have the equality of opportunity. Delivery of sufficient subsistence should help achieve this goal of economic and legal equality[7].

 

Development of UBI in a legal framework

 

While Paine was one of the founders of the idea of UBI, we must look to James Tobin to get a more contemporary version of the theory that is relevant to our socio-legal systems of governing. Following a lull in discussions for the universal welfare implementation, Tobin rejuvenated the discourse in the 1960’s arguing for a distributive guaranteed income. Tobin conceptualised an idea of a ‘demogrant’ that would aim to confront and overcome the symptoms of poverty rather than the causes[8]. This idea constituted a system of wealth re-distribution sourced from taxing the wealthy to raise the income of the poor so that they may afford sufficient subsistence to live. He insisted that the state implement these tax reforms to break the cycle of poverty by targeting its symptoms. Thereby allowing for greater social and economic mobility, amplifying a healthy economy. Providing a consistent divided into more impoverished families and individuals would grant them access to more significant resources leading to potential educational and health benefits. Not only would this battle the stagnation of economic mobility and rising inequality, but it may also bring the benefit of solidifying one of the core principles of our socio-legal system – that of the equality of opportunity. Distributing a dividend to the populace, especially impoverished ones, would allow them to overcome the pitfalls of poverty and grant them broader access to better resources, which would help them mobilise to higher social classes. Freedom from debt, better access to high-quality healthcare and greater access to education could break the cycle of poverty, leading to less pronounced economic inequality.

 

An idea fit for all the political spectrum

 

Alongside Tobin, the late 20th century also had the famed right-wing economist vouch for a system of UBI to be implemented by the state to facilitate economic equality and mobility. Prominent economist Milton Friedman developed his conception of UBI through the scope of a negative income tax in his book ‘Capitalism and Freedom’[9]. It is important to note that there is no uniform theory of how UBI should apply in a practical setting. The negative income tax scheme might not directly be UBI under every definition. However, it is undoubtedly a practical and achievable method of reforming the United Kingdoms’ current welfare system to combat inequality effectively. Milton’s method is a scheme to distribute money to low-income families that are struggling to get out of the poverty cycle. His theory in practice would not be a revolution of our tax and welfare system, merely an evolution by adding new negative tax brackets. In our current system in the UK, people pay a certain amount of tax to the government based on their income bracket. Individuals who have an income of £37,500 will pay a basic tax of 20% to the government. The next bracket up is for those who are earning more than £50,000, individuals who are in that income bracket will have to pay tax at a rate of 40%. Furthermore, individuals who have a personal income amounting to more than £150,000 will have a tax rate of 45%. As previously mentioned, a negative income tax would work in complete contrast to this system. Those who are considered low-income families who might struggle for sufficient subsistence would no longer have a duty to pay HMRC tax on their earnings; instead, they would be owed additional income in the form of a subsidy. New tax brackets running in contrast to the current brackets would be added into the tax law system, allowing those who qualify to receive tax pay-outs. As previously mentioned, this would differ from the universality aspect of UBI, but it would allow those of low income to receive a periodic cash payment. Theoretically, using this system, HMRC could introduce a new tax bracket at £28,500 with a negative tax percentage of 10%. Resulting in the individual who qualifies under this bracket to receive a payment of £2,800. The negative tax system would work similarly to the standard system but inverted. Meaning lower incomes would gradually result in receiving a higher percentage of subsidy from the government. Consequently, it would alleviate poverty while maintaining the incentives to work and seek employment. Friedman perceived that current welfare systems are mostly ineffective at combating poverty and that it results in the imprisonment of the recipient of the subsidies to the taxpayers’ whim. It is essentially subverting the true ideals of our western capitalist democracy. Another criticism of the traditional welfare system is that it removes citizens' incentives to seek and maintain employment, thereby hindering people from climbing the social ladder and contributing to society. To reiterate, a negative income tax would subvert this problem and keep the incentives to work and promote economic mobility ideals.

 

Where are we today?

 

So far, we have discussed the conceptualisation of UBI as a viable system of welfare, to the development of the idea as a practical and legal framework with the ‘demogrant’ and negative income tax. Many contemporary thinkers consider Philippe Van Parijs as one of the figureheads for the implementation of UBI and that he helped develop the modern ideals of the theory. That is; The state should pay an income to all members of society without a means-test or requirement for work. He essentially developed the idea of UBI being universal, unconditional, and periodic[10]. He is also one of the founders of the Basic Income Earth Network, an organisation that gathers and provides information on UBI and has been influential in shaping the debate in contemporary politics.  One area they have been looking at is the level of income needed to cover an individuals' basic needs since their normal wages do not cover what is required to sufficiently live and thrive[11]. There is much debate on the exact amount an individual should receive from a UBI scheme with some suggesting higher amount and other suggesting more modest payments. Van Parijs indicates that the policy should ensure that the amount is enough to eliminate abject poverty and ensure that every member of society can participate both economically and socially in the national community[12]. So, today if a system of UBI were to be implemented, it would need to provide an amount sufficient for the recipients’ subsistence. The subsistence here means the recipient’s ability to pay for the basic everyday amenities that include food, water, and housing utilities – and perhaps even education and a surplus to invest may be covered as well. Which would help facilitate the growth of the economy and the private wealth of the individual. The modern conception of UBI under BIEN and Van Parijs also clarifies that the payment would be individualistic. Meaning, it would be paid to the citizen and not the household[13]. Which would allow for greater individual freedoms and financial independence. This differs from both Friedman and Tobins’ concepts since their ideas would apply to households. Again, by restricting UBI to households, you would be restricting the system’s effectiveness, making it harder to combat poverty. It would not be available to all who would need it and would limit an individual's financial freedom by giving it to households. In addition to Thomas Paine, modern scholars have also suggested a form of UBI that would allow for a single endowment only instead of a periodic payment[14]. While a potential option, BIEN and others have preferred the option of periodic payments. A single endowment could lead to financial instability and short-term thinking on behalf of the individual. Periodic payments would be much more efficient in dealing with the roots of poverty.

Some nations and lawmakers are looking at the data provided by BIEN and others and are starting to implement these ideas into their national legislation and legal framework.  The state of Alaska encapsulates some of the core principles of the modern conception of UBI that has been provided above in what they call a permanent fund dividend. The state has gone as far as instituting the permanent fund dividend into their constitution[15], it provides that a dividend be paid to residents of Alaska who have lived there for the requisite period of a year. The state sets aside some of the revenue earned by the oil companies into a fund; money is then apportioned from this fund and paid out to its citizens annually. Evidently, Alaska’s method has similar principles to some of the earlier theories of UBI. Especially Thomas Paine’s wish that the citizens benefit from the produce of the land. Alaska’s experiment is an example of UBI in practice in contemporary society, but it is prudent to note that the payment granted to its citizens is not remarkably high. In 2019 each resident that qualified received a sum of £1,606,00[16], hardly enough for combating poverty and providing sufficient subsistence.  While it is an unconditional payment, it would not be considered enough to live off and can thus only be considered as a partial basic income model and not a full-on example of a comprehensive system of UBI. However, it is one of the rare examples of legislation that attempts to implement a UBI system, and it presents a model of a potential legal framework for the UK. Later Chapters will explore these real-life examples in greater detail and discuss how the UK can implement legislation to achieve the goals of a basic income model. A system of apportioning profits from public property (oil etc.) to be used as a dividend for citizens could be a viable and popular method of achieving UBI while being financially practical.

 

[1] Phillipe Van Parijs, ‘Basic Income: A Simple and Powerful Idea for the Twenty-First Century’, Politics & Society, 32(1), pp. 7–39, 2004, doi: 10.1177/0032329203261095.

[2] Jurgen Wispelaere, & Lindsay Stirton, ‘The Many Faces of Universal Basic Income’ (The Political Quarterly. 75. 261 - 274. 10.1111/j.1467-923X.2004.00611, 2004)

[3] Bryce Covert, ‘What Money Can Buy: The promise of a universal basic income – and its limitations’, (The Nation, vol. 307, no. 6, 2020), p. 29-36.

[4] King, J. E., and John Marangos. ‘Two Arguments for Basic Income: Thomas Paine (1737-1809) and Thomas Spence (1750-1814)’ History of Economic Ideas, vol. 14, no. 1, 2006, pp. 55–71. JSTOR,

[5] Thomas Paine, ‘Agrarian justice’ (London: repr. for J. Ashley and Hughes, 1798)

[6] Elizabeth Anderson in ‘Thomas Paine’s “Agrarian Justice” and the Origins of Social Insurance’ Ten Neglected Classics of Philosophy by Eric Schliesser, (New York: Oxford University Press. Chapter 3, 2016)

[7] Ibid (King and Marangos)

[8] James Tobin, (2020) ‘The case for an income guarantee’ [online] Nationalaffairs.com. Available at: <https://www.nationalaffairs.com/public_interest/detail/the-case-for-an-income-guarantee> [Accessed 24 Jan. 2020].

[9] Milton Friedman, ‘Capitalism and freedom’ (Charlottesville: University Press of Virginia, 1976)

[10] Philippe Van Parijs, ‘Basic Income: A Simple and Powerful Idea for the Twenty-First Century’ (Politics and Society, 32 (1), 2–34, 2004)

[11]Philippe Van Parijs, ‘Basic Income Capitalism’ (Ethics, vol. 102, no. 3, pp. 465–484. JSTOR, 1992) <www.jstor.org/stable/2381835> [Accessed 13 Dec 2020]

[12] Ibid (Van Parijs, 2004)

[13] Basic Income Earth Network, (2014) ‘FAQs’, Louvain-la-Neuve, Belgium, BIEN, Available from: <http://www.basicincome.org/bien/contact.html> [Accessed: 10/12/2020]

[14] Anne Alstott, and Bruce Ackerman, ‘The Stakeholder Society’, (USA, Yale University Press, 1999)

[15] Alaska State Constitution, Article 9, Section 15. State of Alaska (Online) <http://www.legis.state.ak.us/basis/folioproxy.asp?url=http://wwwjnu01.legis.state.ak.us/cgi-bin/folioisa.dll/acontxt/query=*/doc/{@121}?next> [Accessed Jan 21, 2020]

[16] Gilbert Cordova, (2020) ‘2019 PFD amount officially announced at $1,606’ [online] Ktuu.com. Available at: <https://www.ktuu.com/content/news/2019-PFD-amount-announced-by-the-Department-of-Revenue-561544941.html> [Accessed 26 Jan. 2020].

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