published (extract) in Greenweb (July 1998) as "What does UBI Mean?"

Defining Universal Incomes

Keith Rankin, 12 May 1998


One barrier which inhibits both the analysis of and the promotion of Universal Basic Income (UBI) is the confusion over definition. This arises in part because UBI systems can vary considerably in their level of generosity, and people who identify with the political left are suspicious of "inadequate" versions of universal income.

The problem can be resolved by carefully separating the generic from the specific, and by also distinguishing between the analysis of universal income systems from the political advocacy of specific levels of benefit and/or tax revenue. Here it is important to distinguish between examples (which include specific numbers for illustration) and proposals (which represent actual policy).

The term Universal Basic Income was introduced into the New Zealand debate by me in 1991 (The Universal Welfare State; incorporating proposals for a Universal Basic Income), and was intended as something reasonably specific that would be attractive to the centre-left, in contradistinction to the prevailing right-wing direction of increased targeting of benefits. My article mixed advocacy with analysis, and was successful in convincing a wide range of people that it contained the basis for a way out of the welfare mess.

Today we need a term that is more generic than UBI; "Universal Income" (UI) seems to be the term that is evolving. It is any form of unconditional socially-derived income.

To draw an analogy with the electoral reform issue, UI is the analogue of "proportional representation" (PR), whereas UBI is more analogous to particular forms of PR, such as MMP or STV. The UBI is a proposal for the integration of income taxes and benefits, incorporating a two-tier benefit structure. It is not supported by all advocates of a universal income, and tensions have arisen because UBI has been doubling as both a specific and a general concept.

There are in fact three levels of specificity. There can be variants of UBI, just as there can be variants of MMP. Each UBI proposal will differ in structural detail and in the levels of payment provided for. That is the third level.

With three levels of specificity, there are three levels of debate, and each level has analytical and political dimensions.

At the first level, the political dimension is the advocacy of an unconditional social income, per se. At this level, preference is based on subjective valuation. On the other hand, the analytical dimension contrasts the efficiency and equity advantages of a universal income over other approaches to public finance.

Subjective valuation of the benefits of a UI system over fully conditional and/or means-tested social income systems can be enhanced by an understanding of the ways that the private and public sides of modern capitalist economies interact, and in defining the boundary between the two sides. (The political Left is characterised by a belief that the public side of the economy is undervalued in our national and public accounting systems, with the result that income distribution at present excessively favours those most endowed with marketable private resources: eg financial assets and particular forms of human capital.)

At the second level, specific forms of universal income are compared, contrasted and contested. At the third level, specific costed proposals within the favoured form are contested.

It is at the third level that the process enters the domain of practical politics. It is here where the real trade-offs between taxation levels and benefit levels takes place. Given the existence of a UBI, for example, the parties would contest over the key parameters: the level of universal income, the tax rate required to fund it, and the design of the second tier benefit system.

In New Zealand at present, the public debate needs to be conducted at the first level, at the level of raising public awareness of the problems to which a universal income might address; and advocating the universal income concept as a broad-brush solution.

Within organisations of proponents, such as UBINZ, the key debate is at the second level. What forms of universal income best solve these problems. At the heart of this debate is the disagreement between revolutionary forms of universal income which bring about huge changes to the distribution of income in a very short space of time, versus forms of UI that seek to evolve out of the present tax system. I see the UBI, my preferred form of UI, as a form very much in the evolutionary camp. It is a form that depends more on changes to public accounting and little on immediate one-off changes to income distribution.

The debate is stifled when discussions of form (the second level) get confused with discussions about the "correct" settings of the core parameters (the third level). In discussions at the second level, numbers serve as means of illustration only. It is for the people to decide at what level a UI should be set, not me or any other UI advocate.


© 1998

Rankin File | 1998 titles