Thursday, May 07, 2020

Fixing the Poor Laws...again

We're swamped by pro Universal Basic Income messages on progressive websites

The Finnish government on Wednesday released its evaluation of the two-year experiment in which 2,000 randomly selected unemployed people were paid 560 euros per month. The researchers summed up results as “small employment effects, better perceived economic security and mental well-being.”  Participants in the experiment said they “had fewer health issues, fewer experiences with bureaucracy, and better financial well-being than the people in the control group. They experience fewer issues related to mental stress, depression, melancholy, and loneliness. They also estimated that their functional ability was better.” The UBI recipients also “felt that their financial situation and their ability to influence it was better. Their trust in other people and different institutions was higher, and they were more confident in their own future and their ability to influence societal issues.”

It is what one would expect — that with a hassle-free payment people would feel less stress in terms of financial security (relative, of course) and not having to prove to the authorities that they were not looking for work all the time. It’s simpler and cheaper for the authorities to administer too.

The trouble is that, while paying the same amount to every citizen whether working or not avoids means testing for the unemployed, this would be hugely expensive and have a perverse effect on the wages of those in employment. It is also politically difficult as the unemployed are not a group that is universally popular (which might explain why when UBI was put to a referendum in Switzerland 70% voted against).

UBI would only work if you took the U out (or made it stand for Unemployment rather than Universal) and so as a reform of the welfare system (poor law). To avoid means testing it would have to be paid to anyone not working even if voluntarily. The rate would have to be minimal (€560 is only about £125 a week) so as not to undermine the wages system by encouraging too much voluntary unemployment. £125 a week would seem low enough for that but nobody could live on that amount unless their housing was free or subsidised (and so back to means testing!). Such a reform might work if a government could get the political support to bring it in (which is not automatically evident).

Capitalism always produces panaceas for all its problems. UBI or what the Spanish call more accurately, the “minimum vital income” has its enthusiasts on both left and right.
Lets be brutal in analysing why many capitalists approve, a scheme that President Nixon at one time pushed for.

A basic income scheme, as a government handout to everyone, would be a subsidy to all employers. They would use its existence in negotiations to cut back on pay rises. UBI advocates must be so naive in economics as to think it would have no effect on wages. A UBI would tend to depress wage levels. Don’t they understand how their much-vaunted law of supply and demand works? They fail to comprehend that economic laws of capitalism don’t work like that.
In the name of realism “radical” supporters of UBI want to end capitalism while presupposing its continued existence. If people are free from any compulsion to work for a capitalist company, this would destroy the capitalist mode of production which relies on the workers to produce the products which are turned into profits. It also relies on the exclusion of workers from these products so that they can become profits. However, at the same time, UBI supporters also ask the same capitalist firms to produce the profits to pay for freedom from them in the form of a UBI. They want both: the continued existence — for now — of the capitalist mode of production where the reproduction of each and everyone is subjugated to profit and the end of this subjugation by providing everyone with what they need. They want companies to make profits, which relies on and produces the poverty of workers, while at the same time ending mass poverty. They want to maintain the exclusion from social wealth through the institution of private property and end this exclusion by giving everyone enough money. Not possible of course.

The SNP have been promoting UBI for quite a while, but never ever quite fully committing itself to it. The Socialist Courier blog as far back as 2017 reported that Glasgow and Fife local authorities were intending to carry out an experiment with it. 

The Institute for Public Policy and Research has warned “our modelling shows that far from being an anti-poverty measure, a UBI could increase relative child poverty in Scotland.”

The Joseph Rowntree Foundation also projected a similar consequence

But to be specific to the Finnish experiment. Kela randomly selected 2,000 Finns between 25 and 58 years of age who were already getting some form of unemployment benefits. The subsidies were offered to people who had been unemployed for about one year or more, or who had less than six months of work experience. Participants in the trial would receive €560 (about $645) a month from January 2017 to December 2018, whether or not they came to earn any additional income. The trial size was cut to one-fifth of what had originally been proposed, and is now too small to be scientifically viable. Instead of giving free money to everyone, the experiment is handing out, in effect, a form of unconditional unemployment benefits. In other words, there is nothing universal about this version of universal basic income.

The Finnish government decided not to expand a limited trial in paying people a basic income, which has drawn much interest. It will not be extended after this year, as the government is now examining other schemes for reforming the Finnish social security system.
Kela researcher, Miska Simanainen, said “reforming the social security system is on the political agenda, but the politicians are also discussing many other models of social security, rather than just basic income”.

Finland has also now embraced a different approach to the problem, imposing tougher new sanctions on unemployed people who choose not to accept jobs while receiving benefits.

The German trade union movement has rejected UBI as a solution to automation such as Andrew Yang promotes.

We can’t agree with all his reasoning but the American political commentator, Chris Hedges, came out against it, calling it an oligarch’s scam

Another credible opposition to the concept is the Ontario Coalition Against Poverty.

Another sceptical article on the UBI idea can be read here

As well as a global trade union group, Public Services International, which throws more cold water over the schemes in their report.

All rather a dampener on UBI but we doubt the progressives will heed. We can perhaps sadly concluded that all those who propose the UBI are people unwilling to think really big but would seek simply to redesign the poor laws that has gone on since the Middle Ages.

 The rich want wish a citizens’ wage as a bribe for the workers’ docility. The Left want it because they no longer need to seek social change and the revolutionary transformation of our economic system - they don’t want the arduous task of building a movement for socialism

 There is nothing wrong with the idea that everybody should have access as of right to things they need for a decent life — that’s the basis for distributing goods and services in socialism — but it is of limited applicability under capitalism. And even under capitalism doing this directly by providing something free is probably better than doing this via a monetary payment such as the proposal the Universal Basic Services (UBS) put forward by the likes of the New Economics Foundation (NEF) and UCL’s Institute for Global Prosperity (IGP), who see basic income as too individualistic. They want to meet people’s needs, but needs as they define them and as they provide for them; this is why they prefer the idea of (UBS), for it maintains existing power structures and it enables a centralised definition of public good. It is Statism and the public sector all over again. 

Also see UBI: Redistributing Poverty

No comments: