In an era of rising inequality and rapid technological change, a Universal Basic Income (UBI) seems to many a worthy solution to the rampant unemployment and underemployment gripping the developed world.

A UBI works as an unconditional payment for all working adults, regardless of age, ability, gender, skills or employment status, so that they can continue to consume even while jobs disappear.

While sovereign governments (those that issue their own currency) can certainly afford a UBI, simply throwing money at a problem, instead of addressing its root cause presents serious concerns.

Firstly, it ignores overwhelming psychological evidence regarding the impact employment has on our physical and mental wellbeing. We derive our sense of self-worth from work. It is where we meet many of our friends, partners. Income replacement does not sufficiently offset the impacts of involuntary unemployment.

Second, a UBI is designed to work as a partial or complete substitute for existing welfare and social security programs.

It was only a matter of years ago politicians were railing against handouts. But former tech executive, and Presidential candidate, Andrew Yang told the New York times that a UBI is necessary for capitalism to continue.

Andrew Yang – in his words “I’m not a career politician… I’m an entrepreneur who understands the economy.” Oh, and he is running for US president in 2020.

If the Silicon Valley suite love the idea, you can bet your socks it’s one that works against the interests of most people.

Here are four reasons why a UBI is a bad idea:

1. A UBI is a smokescreen for the destruction of the social safety net

The godfather of neoliberalism himself, Milton Friedman, argued in his book Capitalism and Freedom that a UBI is an efficient way to eliminate and privatise public sector programs including welfare, social security, the minimum wage, public health, housing, hospitals, pensions and aged-care.

“If enacted as a substitute for the present rag-bag of measures directed at the same end, the total administrative burden would surely be reduced,” he wrote.

Paying out of pocket for things once provided by the public sector means it is not a Universal Basic Income at all, but a poor tax by another name.

 2. A UBI has the potential to further drive down wages

Some advocates claim a UBI empowers workers to reject jobs with insufficient compensation. To the contrary, a UBI that covers the cost of living creates zero incentive for employers to provide wages that do the same and encourages the continuation of outsourcing.

3. Tax implications may render the UBI redundant

Economist, Ian Gogh has described a UBI as a “powerful new tax engine that pulls along a tiny cart.” Particularly for the middle and working class (who already pay more than their fair share proportionally), a UBI risks driving workers into higher tax brackets, meaning their “free money” will inevitably land back in government coffers, defeating the purpose of a UBI in the first place.

4. A UBI is expensive & barely makes a dent in working-age poverty

Experts have predicted a UBI could cost anywhere between 6.5% (UK), to 35% of GDP (France and Finland), but barely makes a dent in working-aged poverty which would decline by less than 2%, according to a report by Compass, by less than 1% for pensioners.

Though child poverty could decline from 16-9%, a UBI still doesn’t deliver the necessary bang for the government’s buck.

If we’re going to spend that kind of money, it is not unreasonable to demand an ROI that equips current and future workers with transferable skills capable of earning them a lifetime’s worth of income.

This is why a job guarantee program is essential not only for eradicating poverty but ensuring the future health of the global economy.

Why a job guarantee trumps a UBI any day

Even the most ardent neoliberal recognises that for capitalism to continue, more people need to afford to buy, lease or invest in non-essential items.

A job guarantee ensures a permanent pool of skilled workers the private sector can call on when their need for staff increases, and creates an employer of last resort in lean times to keep the economy ticking over. If the private sector has a problem with a job guarantee, it can defeat it entirely by employing more people.

There are plenty of industries within the public sector badly in need of both human and financial resources. The Department of Child services comes to mind, along with mental health, domestic violence services and shelters, police resources for sexual assault investigations (including provisions for rape-kit testing) and white collar crime (hello RBS), not to mention skills training, the sciences and education.

While some small-scale UBI experiments have been trialed in countries like Finland and Canada, no economy-wide tests have been conducted.  The same cannot be said about a Job Guarantee which has already been proven to work in the US, UK and Australia whose post-war full-employment policies were responsible for the creation of the middle class and the subsequent prosperity that lasted all the way-through to the late ‘80s, early ‘90s.

Unfortunately, permanent  poverty is no longer seen as a problem to overcome but a policy tool to maintain price stability, which is why we are unlikely to see any similar guarantees anytime soon.

A UBI is an ideological surrender to capitalism. It should be renamed ‘Not My Problem’: because it formalises the complete abdication of the government’s responsibility for employment.


Claire Connelly

Claire Connelly

Claire Connelly is the lead writer of Renegade Inc. An award-winning freelance journalist, speaker, and founder of subscription journalism experiment, Hello Humans.

Specialising in economics, technology and policy, Connelly is working on her first book due out in 2018.

With more than a decade of experience under her belt, Claire has written for leading publications including The Australian Financial Review, The Saturday Paper, ABC, SBS, Crikey, New Matilda, VICE & others. She is the co-host of The Week In Start-Ups Australia, and features regularly as a commentator on TV and radio shows including Radio National's Download This Show, ABC's The Drum, Ten's The Project, and more.
Claire Connelly

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9 thoughts on “A Universal Basic Income is capitulation to capitalism

  1. In a truly democratic society it wouldn’t be a question of UBI versus a jobs guarantee, there’d be a hybrid system best calibrated to tackle socio-Economic challenges. But then in a truly democratic society natural monopolies would be in (truly democratically elected) government hands, there would be no corporate funding of political parties.. the
    Ist is long.

    1. The political party could also be an investment AI vehicle with a co operative structure. The InterAct party will be that …. eventually. not even open yet. I will always be needing help – hence co-operative structure. The money for the political party will come from every member as it will be sharing any profit and discussing decisions to to be taken on-line. Massive project, and beyond my present capabilities.

  2. ‘a job guarantee’?
    But who guarantees jobs-for-all? Oh yes, of course the government.
    Haven’t we had a scheme like this called ‘workfare’?
    Mind you, there have been some highly successful job guarantee regimes. East Germany was one. There’s still what they call ‘Ostalgie’ for those good old days. It sure must have been fun to have one of those make-work jobs, where you pretend to look busy all day!

    1. America, Australia and the UK all have job guarantee programs already: The military. A job guarantee program would simply be a way to expand the public service in areas that are massively under-resourced, without forcing kids to go to war. (Let’s not forget how the US treated its first responders during 9/11 and continues to treat its veterans. Many are not even getting the benefits already being promised under such a scheme).

      Department of child services, education and the sciences, come to mind. Not to mention the fact that there are Americans that still do not have access to running water, all of which could be fixed with some resources and political will. There are plenty of deficiencies within the system that could benefit from a job guarantee, and ensure that the public sector is not the cushy home of mediocrity where nepotism thrives. A strong government and strong public sector needs fresh ideas and talent working within it, even if it does have high turnover (and you would hope that would be the case, as the private sector becomes incentivised to poach the best talent). In any case, the government should always be the employer of last resort, and if the private sector has a problem with a job guarantee program, it can defeat it by hiring more people.

  3. Then there’s those of us who consider living on the street the best future possible.

    It might be an interesting story to write up and share one day but it hits hardest with the most resistant attitude which is proven to be genetically wired in the majority of humans. Optimism.

    So many solutions to a better future with just as many designers tearing down the opposition. And then there’s the true realists, which optimists consider to be ‘slightly depressed’ because we tear all the ideas apart.

  4. As a lay-person, I’m presently of the opinion that UBI is the only way to go if we want to reduce and mitigate social suffering. Corporations won’t hire more people unless forced under penalty of sanctions. The government can’t at the present time, (although it could under truly thoughtful and compassionate management), create enough jobs that truly do give people as sense of purpose, meaning and recognition. The pay will be too low and the work will more than likely be make work project. How is that supposed to create pride of employment? There are exceptions of course but not for the majority. We need to reform our education format from industrial type education to practical and personal education. Teach us and our children to find the gifts within each of us, how to develop those gifts so that we can find our true happiness and purpose in our work, whatever it may be.

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