Our Recent Posts

Tags

No tags yet.

Is basic income still universal if not everyone receives it?


Doesn't calling a benefit universal imply that everyone receives it? Similarly, can a benefit be called unconditional if it is income-tested (and not means-tested), that is, if certain conditions apply? And isn't a conditional benefit by its very nature not available to everyone, therefore not universal?


I have explored the meanings of universal, unconditional, means-testing and income-testing elsewhere, using the Canada Child Benefit to illustrate my take on these concepts, which are tightly bound up with the general problem of allocating a scarce resource. I will expand, here, on the last point and its implications for UBI.


I don't intend to contest the definitions of the terms nor the BIEN definition of basic income. I do wish to frame the question differently from the orthodox interpretation laid out in Basic Income: A Radical Proposal for a Free Society and a Sane Economy by Philippe Van Parijs, from which all the quotes in this article are taken.


I will explain why an income-tested basic income is not means-tested. Even if the terms mean the same thing, they have a completely different significance in the real world. For the sake of simplicity, I am assuming that the UBI is funded from tax revenue even though I think the MMT intuition that government spending is not tax-funded is correct, let's accept, for argument's sake that perception is reality. In that context, as soon as you fix a benefit level there will be a transfer from the haves to the have-nots such that not everyone will receive the same net benefit. Where you fit with respect to the demarcation between net beneficiaries and net contributors will serve as the condition which determines how much net benefit, if any, you receive. Unless it is funded by some external source, any benefit scheme will run up against this limitation to universality and unconditionally, which are just two sides of the same coin.


Let's start with a few comments on the classic BIEN definition of Basic Income which is:


A periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement


Notice, first, that the word “all” is left undefined. Yet so many qualifications are left unsaid. Rabelais used to poke fun at these omissions: When quoting an impossibly large and ridiculously precise number he would usually add not counting women and little children. Ironically, “all” is usually taken to exclude children. This doesn't seem to pose a problem whereas including children and excluding adults does. So “all” can be a rather porous concept. Another example: "It also excludes people serving prison sentences, whose upkeep costs more than a basic income"(p. 9). How is that different from excluding the rich on the grounds that they have enough money to live on already?


Secondly, the syntax indicates that unconditionally applies to both means-testing and the work requirement. The lack of a work requirement is the absence of coercion. Means-testing is at worst an abuse of power. It seems misleading to lump them together. Slavery and mistreatment are quite different.


Third, although universality is not mentioned explicitly it is definitely part of the definition.


Fourth, no guideline is provided for the amount of the basic income benefit nor any guidance as to its uniformity.


Income testing

Means testing and income testing both mean the same thing and are significantly different. They both involve inquiring into how much you earn. However, the first subjects recipients to "intrusive and humiliating procedures" and entitles them "to continuing handouts on the condition that they remain destitute, and can prove it is involuntary," and turns them "into a class of permanent welfare claimants"(p. 7). The second, on the other hand, is routine and impersonal. Means-testing involves bureaucrats probing to ensure that the poor don't receive too much, often lowering take-up rates, whereas income testing is the tax system making sure that everyone pays their fair share. Using the tax system to distribute UBI is transparent and fair and perceived as such—at least in Canada.


The principal difference between means-testing and income-testing is that with the former the default situation is no benefit and you must apply to qualify, that is to fill out a form justifying your need. With income testing, the default is receiving a benefit. You don't apply for it, you enrol to receive it. Qualification is automatic. Van Parijs makes much of the fact that means-tested benefits are not received automatically. This criticism does not hold for income-tested benefits.


Income-testing involves reducing benefits as income rises. It directly affects the well-off while applying the same rules to everyone. Means-testing focuses only on the most vulnerable in society, to their detriment. To illustrate using a metaphor we owe to Sarath Davala, income-testing is when a tailor measures you in order to determine what size suit will fit. Means-testing is when he measures you to decide whether you deserve a suit at all.


Net Universality

When measuring the impact of basic income, the focus is usually on the recipients: everyone, rich or poor. However, no tax-based scheme is possible if everyone is a net recipient. Some recipients must also be net contributors, or as Van Parijs puts it "high earners and big spenders will fund their own benefit (and more)" (p 17).


It follows that a universal basic income can never be truly universal in the sense of unconditionally providing the same net amount to everyone. If I am funding my own benefits through taxes, I will not be duped by seeing the full benefit amount appear on my bank statement every month.


Van Parijs argues that there is no stigma attached to accepting UBI when everyone receives it. I don't think this is the case. Stigmatization comes from the fact that you have to beg for a means-tested benefit. I think it is more likely that the average beneficiary would be angered to learn that the wealthy receive the benefit and get to keep it (which they don’t).


In an income-tested scheme, the curve of the benefit amount is flat (and maximum) at lower incomes and then starts to drop off at higher incomes, eventually trailing off to zero. For the classic UBI model, this violates unconditionality: what you get depends on how much you earn, thus deviating from "the principled preference for an unconditional basic income which anyone committed to freedom for all should share"(p. 40).


I think, on the contrary, that this will strike most recipients as evidence of fairness. Even the rich, who may not be happy, know all about progressive taxation. This is just one instance where there are no loopholes to avoid the consequences.

The classic (gross) universal scheme represents the benefit amount with a straight line. It acknowledges the clawback without actually showing it. For the classic universal model, the clawback is an embarrassment, an inconvenient truth.


Rights vs. Duties

Much attention is devoted to the free-rider problem and very little to the redistributive effect of UBI. In fact, the latter is an embarrassment obscured by the definition of UBI delivered to all. Surely it's not a minor detail that's some beneficiaries receive the full amount while others pay for their own benefit and then some. Better to focus on the solidarity between classes and egalitarian values.


When there isn't enough to go around and you have to rob Peter to pay Paul, an important part of this transaction is Peter's responsibility although we tend to focus exclusively on Paul's needs and rights.


Even if we agree that the Malibu surfers should be fed, it doesn't follow that we should be the ones to feed them. The fact that it falls to us inevitably doesn't strike me as a sufficient moral justification. Some form of debt that the wealthy and the privileged owe to society as a whole, who bestowed the gifts they enjoy, contributed far more to their success than individual effort ever could?


Anyway, my argument doesn't depend on the moral justification for the transfer of resources from rich to poor. When resources are scarce, the redistribution function of UBI is inevitable. The restrictions on universality and unconditionality follow directly from scarcity.


"Scroungers Are Rare"

"If one can expect only an insignificant minority of really lazy scroungers, there is no big clash between basic income and justice as reciprocity to get worked up about." (p 102)


This argument fails to take into account the attitude of the public towards the poor. They face even more prejudice than racial minorities and immigrants. Studies demonstrate that fraud accounts for a negligible amount of welfare overpayment. The budget to root out this fraud can be an order of magnitude larger than the cost of the fraud itself. The suggestion that it would be cheaper to ignore the problem offends most people's sense of fairness. They will get worked up about it and prefer pointless witch hunting.


Income Inequality

The impression of universality ("delivered to all") and the claim to uniformity is supposed to have a double effect. The poor are to feel less stigmatized and not feel as though they are receiving charity because the rich also get the same benefit. Similarly the rich won't resent having to give "handouts" to the poor because they themselves get the same benefit. I find both arguments completely unconvincing and no amount of hand-waving can hide what is really going on: a reduction of income inequality. It’s counterproductive to try to fool anyone about this.


Conclusion

Just as light can be both a particle and a wave, controlling income can be both means-testing and income testing, the same but different, simultaneously. Skeptical? Welcome to quantum Basic Income!


Income testing does not violate the BIEN definition. It simply takes into account the limitations on universality and unconstitutionality that follow from the scarcity of resources. Income testing is the tacit recognition of UBI’s retribution effect. You can't escape the fact that there are people with great wealth and others without nor quietly accept the fact that there are net contributors and net recipients while loudly proclaiming that it makes no difference.


There are empirical limitations to which the classic view of UBI must adapt and not the other the way around. It's time for a paradigm shift.