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Guaranteed Basic Income Is Not a Panacea

Many praise a basic income guarantee as a radical solution to poverty. But global inequalities must be taken into account.

(Photo: Money and Frayed Edges via Shutterstock; Edited: LW / TO)

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Excitement is growing around the idea of a minimum income granted unconditionally to all citizens. We’ve been seeing a barrage of articles claiming that a basic income guarantee alone could “revolutionize the 21st century” and “eliminate poverty.” The list of governments seriously considering basic income is getting longer: Switzerland, Finland, and the cities of Utrecht, Calgary and Edmonton.

People across the political spectrum have reason to support the campaign for a basic income because it could address the increase in unemployment caused by the automation of the economy. Those who lean to the right can support basic income as a way to help minimize state bureaucracy; leftists, for their part, can support it as a way to provide benefits to the people most marginalized by the current economic system and help support those who do uncompensated care work in the home (disproportionately women). Basic income could give people the chance to pursue work that they want to do, or even not have to work – challenging the ever-increasing drive of economic growth. It seems that giving everyone a baseline salary, regardless of their occupation, could be the golden ticket to a brighter future, and a win-win scenario for all.

But there’s also reason to be skeptical. Current proposals could actually increase inequality between the global North and global South. To be successful, basic income would need to be complemented by a wide platform of diverse policies around consumption, environmental pollution, labor and immigration.

Where Does the Wealth Come From?

Take Switzerland. Its basic income proposal would distribute 2,500 Swiss francs (about $2,600) to each resident per month, to be funded through cutting existing social services and increasing taxes on high-income residents and corporations. If the proposal were to succeed, the Swiss would actually be redistributing the profits from their banking system (which are derived from providing tax havens to the world’s richest people) to a small and already privileged society. This, by definition, excludes others. Switzerland is, after all, one of the more vocally racist countries in Europe, with leading parties pursuing actively discriminatory policies.

At the same time, basic income could also increase consumption by the population, driving up the costs unloaded on to society and the environment. Effectively, basic income in Switzerland would enclose the world’s riches for the benefit of a small community that just happened to be born lucky and Swiss.

The same holds for other existing proposals. In Finland, the party proposing basic income is center-right, with a soft spot for privatization and the free market. Another party supporting it is the Fins’ Party, which is conservative and against immigration. In Canada, Calgary and Edmonton – two contenders for a basic income package – make most of their money from the tar sands, one of the most environmentally catastrophic and socially unjust extraction projects in the world. In each case, it’s important to ask where the money funding basic income would come from, whom it would go to and whom it will exclude.

The Problem With National Welfare Policies in a Global Economy

All this comes down to a much wider problem with nationally based approaches to welfare and wealth redistribution. When economist John Maynard Keynes proposed welfare as a new social compromise between capital, the state and the poor, he argued that by redistributing wealth to the unemployed, those excluded by capitalism’s profits could still participate in the economy, helping to drive economic growth. But it was a compromise limited to the nation itself; it did not take into account the global scale of injustice.

To believe that one policy can, by itself, fix the economy is magical thinking.

Half a century later, we’re seeing the results. Even though welfare is not the primary driver of global economic growth, it did, as Keynes predicted, democratize consumption, allowing a greater percentage of citizens to buy in to a high-input, high-waste economy. And while institutions that redistribute wealth are necessary, they are only truly just if they take into account the broader social and environmental effects of wealth generation. Unfortunately, untrammeled economic growth in rich countries has led to offloading of environmental costs onto the global South – in the form of pollution, contamination and climate change.

Welfare programs really did improve the standard of living for people in wealthy Western countries. But it also helped drive material and energy consumption at a rate never seen before, further driving uneven development between the North and South.

Without adequate policies addressing this, the same would be true for basic income. It would be a godsend for the lucky citizens of the countries that implement it, and it would increase redistribution within these states, but it may also drive consumption and further offload costs of the current economic system onto the people of the South.

There’s another reason why basic income could be a big problem. Let’s say existing proposals do come into effect. Would they also extend a basic income to migrant laborers and undocumented migrants?

If not, one could well imagine a scenario where corporations just hire cheap migrants, since legal citizens would start making demands for better working conditions once they have basic income. This would be at the expense of these migrants, who are often forced to move from their own country because their livelihood has been destroyed by development practices, and then are forced into terrible working conditions with no legal representation. To a certain extent, this is already happening in the Gulf states. There, citizens receive unconditional benefits of the oil economy and migrant workers – predominantly Bangladeshis and Filipinos – do all the work.

In this scenario, basic income is simply a tool for more efficiently redistributing wealth generated by an exploitative migrant labor system to the citizens of rich countries.

Beyond Basic Income

The potential of basic income to help reform the current economic system can’t be overstated. But without adequate measures, basic income guarantees will simply redistribute the profits of an unjust economic system within rich countries’ borders.

So what would an actually exciting basic income policy proposal look like? It would need to include policies that limit consumption of resource- and energy-intensive goods, as well as ones that regulate environmental impacts, especially by Western companies operating in poor countries. To prevent basic income guarantees from further institutionalizing the exploitation of migrants, we’ll need policies that limit exploitative labor practices and provide migrants access to adequate financial and legal resources.

Creating a more just world is hard work. To believe that one policy can, by itself, fix the economy is magical thinking. Every basic income proposal should be accompanied by a wide platform of complementary policies to address its potential negative effects, both within countries and outside of them.

Anything less would just help further cordon off the West and drive the exploitation of the global South. Current proposals seem to be no more than a poor compromise between left-wing and right-wing parties, the elite and the lucky few who happen to be born in a rich country. And that’s nothing to be excited about.

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