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Killed by Kindness? UBI and the Lessons of an Ancient King



King Mansa I of Mali
King Mansa I of Mali

I have recently become a proponent, in principle at least, of universal basic income (UBI). Before I delve into why this appeals to me – and why it might have terrible consequences – let’s take a brief look at what it is, and what it intends to do.

    

The Principle

    

The idea is that every single person in a society, who meets the basic criteria, receives a certain amount of money each month, with no obligation or restriction against it. Social security in all other forms would be terminated.

    

The amount of money given as a UBI would be enough for a single person to acquire shared accommodation and basic living expenses, even without any employment. Adding employment income would not affect UBI at all, so a single person with modest employment could secure a single-occupancy home. The more money a person made through employment or other income would increase the standard of living achievable by the individual, but the UBI would be unaffected. The richest UBI recipient and the poorest UBI recipient would receive the same amount.

    

That’s the principle.

    

There are, however, details to be considered.

    

The Criteria

    

In most cases that this has been brought up or tested, the criteria are that the recipient must be an adult (usually 18+ years of age), a citizen (and resident) of the country or body that provides the UBI, and not incarcerated at the time of receiving the funds.

    

UBI would not be given to minors, in an effort to prevent people from having many children in an effort to amass multiple UBIs in a single household, under the control of a single adult.

    

Residence is necessary, to prevent people from taking their UBI and living in a poorer economy, such as parts of SE Asia or Africa, and draining the economy of the providing country without contributing (financially or otherwise) as a citizen.

    

Finally, UBI would not be paid to incarcerated people, as the state would be providing for their care via the prison system, and UBI would therefore constitute a double payment. Upon release from incarceration, however, the individual would resume collection of UBI providing the other criteria are met.

    

These make sense. There are other considerations to be made, however.

    

Considerations

    

A country may decide that there are situations in which UBI is not quite equal, or not quite universal.

    

It may be that certain individuals receive a higher UBI than others, such as persons with minor children, or who have additional healthcare needs, if the country they live in does not provide health care (such as the United States). It may be that UBI is available to people under 18 years of age, who live on their own as emancipated minors, or ‘independent living’ minors (I was one of these and it would have given me a very different early adulthood). It may also be that individuals who are not citizens, but have the right to remain in the country permanently, also can receive UBI.

    

Although there is nothing stopping a country from enacting any of these modifications, some of them would exponentially increase the complexity of administration and oversight – such as different amounts given to different people. This problem is not an issue in areas with socialised healthcare, but becomes more of an issue if additional funds are provided on a per-child basis. Other modifications, such as extending it to people with permanent permission to remain, would be more easily enacted and fit well with the overall principle of UBI.

    

The overall principles and goals of UBI is (usually) economic stability and cash flow, simplicity of regulation administration, and the removal of inefficient, admin-heavy social support.

    

UBI-topia?

    

The hoped-for result would be a stable, regular infusion of wealth to the base of the national economy. This would, according to some experts and laypeople, have very beneficial results.

    

People would not hoard their money, or be afraid to spend on simple luxuries in addition to their regular needs. Rent would be paid, groceries purchased, and fear would not move people to hold back to a strict degree.

    

No one would be (completely) devastated by the loss of a job, or suffer the indignities of having to apply for social welfare payments. Each and every citizen could rely on a basic income, and therefore a great deal of stress and uncertainty would be removed from daily life and from the economy as a whole.

    

Students could work less and focus more on academic and training success.

    

The resulting economic stability would fuel national economic growth and development. The administrative savings would further strengthen the national coffers, and the government, too, would have a more predictable national economy within which to plan schemes and programs designed to increase the safety and quality-of-life of its citizens.

    

Individuals who chose to work would not lose their UBI, but would simply add to it – without a penalty for their effort. There would be no situations in which an individual chose to stay on benefits because taking a job would mean a net decrease in income. Any industrious activity would benefit the worker financially and immediately.

    

Likewise, parents wishing to care for children at home would be better able to do so, while still contributing to household expenses. Caregivers could assist aged parents, or family with special needs, without devastating the household’s financial stability.

    

Society would be more stable, more motivated to be a productive part of their communities, and better able to care for those who need it.

    

That’s the blue-sky version.

    

Or not UBI-topia?

    

There is another possible version.

    

A cautionary tale exists in the true story of King Mansa I of Mali, still thought to have been the richest person of all time. The estimates of his wealth, mainly recorded by his contemporaries, may have been exaggerated, but the fact remains that his actions with his personal wealth – his simple generosity in fact – crippled the economy of an entire region.

    

He was a military conqueror of twenty-four cities, risen to power in 1312 CE. The areas he conquered were thriving in precious metals mining while most of Europe was facing a decline in gold and silver production. His 2000-mile empire was booming with wealth and the lion’s share went, of course, to Mansa himself.

    

One more thing: He was a grateful devotee to Islam.

    

This is important because it spurred him on to make a pilgrimage to Mecca, the spiritual heart of Islam, nearly four thousand miles away. Along the route, he threw lavish, daily feasts for local dignitaries and showered gifts and food on the poor as well. He gave so much to the people he met along the way that mass inflation resulted, plummeting the value of gold to record lows. It is even said that he built a mosque at each spot they stopped for the night. This last claim is exaggerated… but not by much.

    

So why is this important?

    

This is the main danger, as I see it, of UBI. I am not an economist, but it seems to me that the sudden economic stability – the substantial influx of ‘free money’ – might have the same effect as the influx caused by King Mansa. It may be that businesses would see the increase in disposable income as a green light to raise prices a little bit. Rents may go up – not that they aren’t doing so already – and the real-world value of the pound, or dollar, or Euro, might plummet as a result. Perhaps a solution to this economic shock might be a slow transition into UBI, staring with perhaps 20% of the final goal, and increasing it over a period of years alongside measured decreases in traditional social welfare pay-outs.

    

Necessary Limitations

    

There are other dangers that would need to be addressed prior to widespread adoption of UBI. In order to ensure that the core principles behind UBI are maintained, there are some limitations that must be placed upon the persons receiving the income.

    

Primary among these is that the UBI cannot be allowed to function as collateral or as a stable income against which loans can be made.

    

Currently, individuals receiving regular pay-outs from large settlements can receive loans or lump-sum payments from a third party, in exchange for regular transfer of the instalments. There are companies whose primary business model is based on paying out a percentage of a settlement or judgment, in one lump sum, in exchange for the full amount of the settlement received over time. The result of this may be that many people would sell their UBI and when the lump sum ran out, be in a position of need – but no longer with the option of the traditional social safety net.

    

Likewise, judgments against individuals could take up any percentage of earned income seen as reasonable by the state, but the UBI could not be touched. This prevents people from being placed in a position of severe financial need due to negligence, civil suit, or bad luck. Their riches could be in jeopardy, but their basics would be sacrosanct. In the case of criminal action in which incarceration was the result, UBI would cease, as discussed above.

    

Finally, UBI only works to its potential (in theory, at least), in societies with universal health care. If a recipient’s UBI can be wholly spent in care of an illness or injury, it no longer functions as a regular economic stabiliser.

    

Conclusion

    

So there they are, my basic thoughts on UBI. On balance, I am in favour of increased trial runs and the honing of how it might work. It could be the best response to increased automation and AI, and the resulting extinction of jobs. It might also take the sucking power out of an ever-more-expensive (but necessary) social welfare system, replacing it with a version that functions more like an economic engine, than a parachute.

    

Those are my thoughts… but what do you think? Paradise, or apocalypse?

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