Investing in People: The Economic Case for Basic Income
Basic Income is a wonderful idea, that could eradicate worldwide poverty, and especially in the west would turn economic policy upside down.
Give People Money is a complete guide to how it works.
In a nutshell, it means getting rid of complicated benefits systems. It gives everyone a set amount each week, then you can care for a loved one, be a volunteer dog walker, raise children, work part-time, pursue your dreams or work full-time, all while still receiving an income to help eliminate benefit fraud and debt.
Basic Income is paid to individuals (not households) and children also get it, but on a lower scale. Only legal citizens and legal immigrants receive it, but there’s no check on jobs, wealth and no forms. Payments cover food and rent, and there are extra benefits for housing if needed, and disability.
Examples of Basic Income worldwide
- Alaska, USA: Everyone who has lived in Alaska for over a year gets a yearly dividend from oil revenues (ok, not eco-friendly but we’re giving an example of how it works), called the Permanent Fund Dividend. It usually lands between $1,000 and $2,000. People use it for bills, education, or just cushion against surprises.
- Iran: In 2011, Iran replaced fuel subsidies with direct cash payments to almost all citizens. While the amount changes with inflation, the structure sets a real precedent.
- Taiwan: Though not a full UBI, Taiwan pays every citizen a yearly “Citizen Dividend”. The sum depends on government profits from national resources.
- US Pilot Projects: Cities like Stockton, California started giving $500 a month as part of Mayors for a Guaranteed Income. Dozens of other US cities have tried similar pilots.
Why give money to rich people?
This is an argument often touted. As mentioned above, the reason is that the cost of means-testing, is usually more than just giving a set income to everyone, saving billions of pounds in hiring out staff, and billions of hours in no-longer needed paperwork and checks.
And who knows – some of the rich receiving the money may give it to small charities. Stranger things have happened.
Why give money to ‘do nothing?
This is usually an argument touted by idiots, who have no idea how much people struggle on the bottom rung of the financial ladder. Most people who are very poor (whether homeless, single parents, people with health problems, cash-strapped pensioners etc) rarely ‘do nothing’.
They are struggling to survive, visiting different food shops to seek produce on sale to pay the bills, walking miles to food banks, using libraries to search for jobs.
Or more commonly, raising children or caring for elderly relatives. Giving people money helps provide financial stability for the ‘backbone people’ of England, who prop everyone else up.
Voices calling for Basic Income
- Martin Luther King Jr.: Long before UBI entered the mainstream, King called for a guaranteed income as the surest way to “abolish poverty.” He believed dignity started with meeting basic needs, and cash in hand gave everyone a real shot at stability.
- Andrew Yang: Running for US president in 2020, Yang turned UBI into a household phrase with his “Freedom Dividend” plan—$1,000 a month for every American adult, no strings attached.
- Mayors for a Guaranteed Income.: More than 100 mayors in the US, from big cities to small towns, formed this network to explore pilot programmes. They say direct cash works better than any bureaucratic maze of rules.
- The Green Party and SNP both include UBI or guaranteed income schemes in their official policies. They see UBI as a modern answer to rising insecurity and low pay.
Why shorter working hours benefit all
Basic Income encourages more people to work part-time. Sweden has switched to six-hour workdays for staff, while still paying for eight. If that sounds mad, it isn’t. Shorter and flexible working weeks are proven to produce better life/work balance, more productivity and better health (which reduces NHS costs).
Nurses in Gothenburg work fewer hours but report more energy, less stress and fewer sick days. Workers use the extra time off for family walks, hobbies or just a slower coffee break at home.
Iceland followed suit and took the step to try a four-day work-week in government offices and some private companies, by dropping weekly hours from 40 to 35, without cutting pay. Again, workers reported feeling much better. 86% of the country’s workforce have now adopted shorter working weeks.
In Poland, parents can start at 7am and leave earlier, or arrive at 10am and stay later. This helps people to skip rush hours and walk children to school, and care for older parents.
Bologna, often called Italy’s co-operative capital, puts people first at work. Local co-ops sometimes cut hours in exchange for slightly lower pay or profit-sharing.
Often in Italian cities, stores open early morning, pause long mid-day lunch breaks, and stay open later in the evening. This matches daily life and is good to go inside and rest, during hot afternoons. It also means shopkeepers can share child-caring for other relatives.
Yet Bologna has a better economy than the rest of Italy, despite working less hours. Extra time isn’t just for family or fun. Some workers use their added hours to help their communities, volunteer, or support local events. It’s common for people to help at food banks, join neighbourhood clean-ups or care for elderly relatives.
Reasons to pay employees a Real Living Wage
The Real Living Wage is recommended over the ‘minimum wage’, which is leaving people in full-time having to visit food banks in some cases. Iceland’s manager recently said that some people are even not buying potatoes or root veggies, as they can’t afford to boil them, once they get home.
You can’t just ‘roll up at a food bank’ as some MPs suggest. You usually have to prove income. Jack Monroe (who created the Vimes Food Index) says that the true cost of supermarket goods is making champagne cheaper in comparison than apples. Which have gone up by way more in recent years.
At present, the government’s Living Wage (minimum wage) is less than the Real Living Wage (and is voluntary, though many employers choose to use it). It costs less long-term, as staff on good pay and conditions stay longer, so it saves having to re-hire and advertise for new staff.
Reasons to pay a real living wage
Staff that are well looked after (including paid well) are happier and healthier, and have a better life/work balance. They can buy nice things for their homes, eat better and afford child care.
The legal living wage is around £1.48 less than the voluntary Living Wage. That works out around an extra £60 a week, if working full-time. This can cover the cost of a dental check-up, a couple of pairs of quality vegan shoes, or calling someone out to fix a leaky appliance or dodgy boiler. Or the cost of a train fare to visit a relative.
Think of the difference that £60 a week can make to one employee’s life.
In February 2024, the government named 500 companies that were not even paying minimum wage (including high street brands who have been ordered to pay millions in backdated salaries). Most said it was due to ‘genuine errors’.
Clean for Good (London) pays all employees the voluntary Living Wage, in an industry (housekeeping for hotels) known for low salaries, while guests pay eye-popping prices for luxury suites.
Living Income says the two-child benefit cap was plunging families into poverty, 60% of whom worked. It also wants an end to five-week waits for universal credit.
This does not encourage a benefits-dependent society. It means parents, carers, volunteers and pensioners (the latter of who make up most of the welfare bill) are protected. Just like they are in Denmark (the happiest nation on earth, where people are protected financially from cradle to grave).
Together these make up the Social Guarantee, that basically means everyone’s needs are met. Everyone has enough food to eat, enough money to live on and a place to call home. Others get access to social care, affordable public transport, childcare and Internet access (this can help to find everything from medical care and mental health support to good jobs).
On the contrary to ‘making people lazy’, the evidence is the opposite. People who have good food and nice homes and access to affordable transport, tend to go out and work (if not volunteering) as they feel better physically and mentally, have ways to get to work, and money to buy interview clothes etc.
Which supermarkets pay a real living wage?
German-owned Aldi and Lidl do (as does IKEA, due to be Swedish-owned).
Manchester’s Unicorn Grocery pays a proper Living Wage, with casual staff paid 80% of that (or the real Living Wage, whichever is higher).
Do MPs know prices of everyday goods?
Some do, others don’t. The ‘basket of goods’ is how the government’s Living Wage is calculated. It includes ‘everyday items’ like bread, milk and vegetables, with new items added yearly (this year’s additions were an air-fryer and hand gel).
Based on average earnings, the Real Living Wage (voluntary) is calculated by real people, not quangos at Whitehall on high salaries.
MPs present receive a salary of around £93K (plus expenses). When he was Prime Minister, David Cameron famously got cornered when asked if he knew the price of a loaf of bread.
He got out of it by saying that he baked his own bread using granary flour. Then made things worse, by recommending a £100 bread-maker and premium flour (that cost over £30 for a bulk bag).
Similarly, Rishi Sunak when asked replied that as a health-conscious family, they all have different Hovis ‘seeded breads’. Both answers are fine – but not when they are then cutting benefits from the poorest in society, who then can’t afford to buy bread.
You can look up how your MP voted to cut or retain welfare benefits. There’s something that sticks about multi-millionaires cutting benefits of the poorest in society. At least they should try to live on them for a while.
To give him credit, former Tory MP Matthew Parris did try years ago in Tyneside. He spent £11 on food, and 62p for a bus to a £2 football game.
And when he had 61p left, he ran out of money for the meter and could not even afford to buy a drink at the local working men’s club. He soon gave up politics, and now writes (often excellent) articles for newspapers on society.
If you do not ensure that people are being paid a living wage, then you are going to have people who rely on government assistance. It’s that simple. Ron Crumpton
