The economist behind Universal Basic Income: Give all citizens free money to help combat a ‘neofascist wave of populism’

“I call one of those groups atavists: people who have fallen out of old working class communities into a life of insecurity. They tend to look backwards into an imaginary past — if not a real one — and this part of the precariat is not very well-educated.”

“So they listen to the sirens of neo-fascist populism, and their current trumpeteer is [US president-elect] Donald Trump. He’s been playing on their fears.”

Not just Trump: Standing says that similar forces have driven the UK’s vote to leave the European Union, and the rise of far-right European populists such as Marine Le Pen and Geert Wilders.

Universal Basic Income: The solution?

Standing, now professor of development studies at the School of African and Oriental Studies (SOAS), believes he has at least part of the solution. In 1986 he co-founded the Basic Income Earth Network (BIEN), one of the earliest groups to advocate Universal Basic Income (UBI) in its modern form.

In the last few years there has been a deluge of conversions among economists, commentators, and politicians — on the right and the left

The idea is simple: a regular state payment to every adult (some variations also involve payouts to children), regardless of working status. Advocates say it would provide a vital safety net for all citizens and remove inefficient benefit systems currently in place; critics say it is unaffordable and would serve as a disincentive to work.

Standing says that for a long time, he and his fellow proponents were considered “crazy,” and advocating the idea was “quite a lonely struggle,” but no more. “In the last few years there has been a deluge of conversions among a huge number of economists, other commentators, and politicians, on the right and the left,” he says.

Insurgent left-wing politicians from Bernie Sanders to Jeremy Corbyn have voiced tentative support for the idea, Nobel Prize winners have called for its introduction, huge pilot studies have been rolled out in countries including the USA and Finland, and Standing reports that the Indian government will endorse the idea — as a principle — within a few weeks, after a series of successful pilots which Standing was closely involved with.

“Basic income is a matter of social justice”

Standing says that he supports the idea for three principal reasons. Primarily, he believes it is a matter of social justice.

“People like me go back to Thomas Paine, who argued that the land is owned by everybody, that the wealth created by generations should be shared to some extent, and that everyone should have social dividends,” he says (Paine argued in 1795 for a “citizen’s dividend” paid to all US citizens as compensation for “loss of his or her natural inheritance, by the introduction of the system of landed property.”)

We are in an era of chronic insecurity and growing inequality. We need to have new mechanisms for income distribution

Secondly, Standing says, “it would enhance individual liberty. It would give people a sense of control over their lives and would provide them with freedom.”

Finally, “we are in an era of chronic insecurity, and growing inequalities. In that context, we need to have new mechanisms for income distribution which give people a sense of security.”

If those arguments sound like left-wing orthodoxy, it is interesting to note that the concept is also attracting growing support from other ideological factions. Some of them are on the libertarian right, particularly in the USA, arguing that it would minimise state involvement with welfare payments and replace the illiberal system of means-tested benefits.

Others drawn to UBI believe that exponential improvements in new technologies — such as machine learning, driverless cars, and artificial intelligence (AI) systems — will drive an age in which “robots will replace everybody,” and think UBI could serve as an effective form of income distribution if wealth is concentrated by the process. Standing does not subscribe to that argument, but is happy for others to because it has “galvanised a lot of support” for the idea.

Cost — the sticking point?

Standing acknowledges two arguments often made by opponents of UBI. The first is affordability: how to fund a scheme which would cost a significant chunk of any country’s GDP.

Take the US. According to the 2013 census, its adult population was 242 million. If UBI provided each American adult with a yearly stipend of $10,000, as libertarian political scientist Charles Murray has proposed, the annual cost of the programme would be $2.42 trillion — almost three times current US welfare spending, a figure that is unpalatable to many.

The argument that basic income is unaffordable is quite easily refutable

Standing says the cost argument against UBI is “quite easily refutable.” Firstly, he says it would replace a number of other forms public spending, including means-tested benefits and “the huge number of regressive subsidies” that are paid out in both advanced and developing economies. That would account for a portion of the new spending figure.

Secondly — perhaps inevitably — it would mean raising taxes.

Standing puts most faith in a third approach: the establishment of capital funds, sometimes known sovereign wealth funds. He mentions the Alaska Permanent Fund, a huge capital fund set up in 1976, derived mostly from oil revenue. It has gradually been built up through investments and pays out to every legal resident of Alaska each year a basic income. He also mentions Norway’s sovereign wealth fund, which in 2014 made every Norweigan citizen a “krone millionaire” when the country’s oil revenues ballooned.

How would countries without oil fund such a system? Standing believes other revenue streams could be tapped. The subject of his latest book, “The Corruption of Capitalism,” is the “rentier” class. It critiques the growing number of wealthy citizens who live on rental income from property — including copyright and patents — and investments. This, he believes, is a root cause of the growing gap between the rich and the poor in OECD countries.

Standing fleshed out his ideas in a Reddit AMA two years ago. “It is not yet realised to what extent global capitalism has become rentier capitalism,” he said. “Last year [2013] was the first year ever when more than two million new patents were registered, each guaranteeing a rental flow that lasts, on average, 20 years.”

He believes that states could finance those rental flows for the creation of capital funds, and supplement it with revenues from natural resources, including emerging processes like fracking.

Would a basic income remove the incentive to work?

Many believe that UBI would remove the incentive to work, an argument that Standing describes as “ridiculous.”

“In every industrialised country, we currently apply means-tested benefits. That means you’re targeting the poor. Means-tested benefits have one incredible feature, in that they impose huge poverty traps. That means anybody going from low benefits, if they get them, into low-wage jobs face marginal tax rates of over 80%.”

In every industrialised country, we currently apply means-tested benefits. That means you’re targeting the poor

The “welfare trap” argument is the idea, more commonly advanced by the right, that means-tested benefits systems keep people on social insurance, because the withdrawal of benefits that comes with entering low-paid work causes there to be little increase in overall income.

Standing says it is this system, not basic income, which is a disincentive to work. “If you had a basic income, it would mean that everybody would have a base, on top of which their earned income would be taxed at the standard rate of tax. That would increase the incentive to take low-wage jobs. The claims that it would act as a disincentive is the actual opposite.”

Standing says the numerous pilot schemes he has worked on have borne out this theory. “From our pilots in various places, we have found that people who have basic security work more, not less. And they’re more productive when they work, not less.” In particular, Standing cites the pilot schemes he helped to set up and run in India.

What next?

Standing has come a long way since his lonely advocating of basic income in the 80s. Last year he spoke at the Bilderberg Group, a secretive conference attended by the global political elite.

The old system has broken. Wages will continue to decline. Insecurity will continue to grow. That is a recipe for economic instability

In January, he will deliver a speech on UBI in Davos before a similarly elite group of world leaders and financiers, and he continues to advise on an ever-expanding number of pilot studies.

“I don’t see basic income as a panacea, but we must have a new income distribution system,” he says.

“The old one has broken down irretrievably. Real wages will continue to decline in OECD countries, insecurity will continue to grow, and rental incomes will continue to go to the top. That is a recipe for economic instability, political extremism, and a lot of other nasty things.”

He is now “genuinely optimistic” about the prospect of basic income being rolled out. “I don’t know where it’s going to come first, that’s one we just can’t predict. But I think it’s reached the point where we desperately need it,” he says.

“I see no reason why we will not have it within the next ten years — and maybe sooner.”