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Mainstream, VOL LVII No 25 New Delhi June 8, 2019

Universal Basic Income: A Debate or Conundrum?

Sunday 9 June 2019

by Atanu Sengupta, Sanjoy De, Sayantan Mukherjee

Introduction

In recent times, there has been quite a hue and cry about the implementation of the universal basic income (UBI). In short, it has meant an unilateral transfer of an ‘equal’ amount of income to each and every citizen of India. The idea has become a major poll issue this year with each party trying to vie with each other in taking the credit of promulgating this scheme to its catchment area. In the debates, of course, the UBI has often been transferred into a basic income for the poor. In an ideal sense, however, no distinction should be made between the poor and non-poor since that could be the basis of contradiction, corruption and all types of harassments involved in the identification and implementation procedure. Theoretically at least, the UBI is free from such problem of identification.1

In this simple note, we consider only the broad trajectories in the debate of the UBI with the various questions that may arise in this regard. We are also concerned with its applicability in the context of India both as an all-exclusive or co-ordinated programme.2 We also briefly comment on some broader implications of UBI on the macroeconomic performance of the country.

Historical Evolution

To cut the history short, the UBI is a very old concept. In Bible, we have the mention of God’s food or the manna that fell from the heaven to the hungry people of Israel. Plato, in his book, Republic, argued for a basic minimum pay to the selected men and women who would be trained to rule the country. The Chinese travellers to ancient India mentioned about free food house (langar khana) and hospitals that existed in the Mauryan period. Fa-Hien visiting India in the Gupta period gave it a reason for low rate of crimes in India while people slept with their doors open and the customary criminal laws were lenient. The Utopian socialist Thomas More (1516) argued for the UBI as a basic tool for providing a minimum decent mode of living to everybody. They felt that this should also cut social discontent and disharmony. The Rightists believe that the UBI would help to save the free society from the clutches of a totalitarian danger. (Hayek, 1994) Modern macroeconomists (Friedman 1962; Tobin, 1966) also supported the UBI which he defined as negative income tax. Sengupta and Mukherjee (2017) have stated that economic impoverishment of the socially excluded section has prevented them from raising their voice. In India, economic impoveri-shment is strangled with social exclusion. They opine that the UBI can open up new opport-unities for this excluded section.

In India, the idea of the UBI was first proposed by Subhas Chandra Bose in the Haripura Congress in 1938.3 He argued that in free India, the UBI should be provided to each and every citizen. After a long break, the issue was again put up by the Economic Survey (2016-17). In this document, the UBI was proposed as an all-exclusive measure

Numerous economic experiments were conducted to test the efficacy of the UBI—both in India and abroad. Most of these studies yield no negative effects of the UBI. In some cases, the UBI improved the performances of families in matters of human development—an increased expen-diture on health, education and other social issues. It is argued that the UBI helped to control the pangs of poverty.

Standard Logic

In the case of India, an additional reason for the UBI is the leakages that are a concomitant part of the standard government support system. Also, the quality checks, problems of constraint choice,4 inefficiency in deliveries and other such factors make it a more compelling reason for this grandiose social scheme. The UBI, by transferring income, relieves of this problem. Contrarily, there has been the question of motivational work attitude of people who may tend to be lazy after the UBI. Also, the budgeting of the UBI is also a major problem as cited by experts.

Ethics and the New Questions

However, the real neglected issue of the UBI is ethical. The logic comes from the libertarian debate proposed by Nozick (1974) and others. Following this school, there is huge difference between the government providing some goods and services (education, health and infras-tructure) and the government transferring some cash to an individual. In the former case, it is the efficiency of the delivery system and quality that is crucial. Individuals have full freedom to avail or not to avail these services. For the UBI, the concern is different. The government has to see the way the income is used. The state becomes paternalistic and like a patriarchal head, it enters into the kitchen and bedroom of the individuals. This is a dangerous pathway to societies where all individual decisions are dictated by some standard social norms and strictures.5

But more dangerous is that the simple logic of public prudence that is acceptable to all of us may be transferred into all-coercive paterna-listic societies—a logic that we do not wish to support. UBI may be a dangerous gateway to what we ought to and what we do not. This makes UBI so dangerous from the libertarian perspective. The problem arises because unlike Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), UBI is not an earned income. It is the alms that is transferred to the people by the government. Given the macro prudence and budget constraint, this scrutinisation of the alms leads to the scrutinisation of the people’s lives.

The second ethical concern is the definition of the UBI itself. It is generally supposed that an UBI infers transfer of an equal amount of money to each and everybody’s account. It would be very outlandish to call this transfer income as the UBI. The contradiction lies in the first two terms. Universalisation of basic need is a concern of a debate between Rawls’ (1971) ‘theory of justice’ and Sen’s (2009) ‘idea of justice.’

Rawls and his follower, Nussbaum (1974), argued in tabulating the basic needs into a well formulated category. To the belief of Sen (1989) such tabulation is neither complete nor necessary. Basic needs widely differ across individuals.6It may vary across times. New basic needs may arise and old may die up. To Sen (1989), this list is always open and susceptible to vigorous debates and argumentative differences. The incompleteness of the list is itself a testimony to its vitality and democratic nature. UBI, by valuing it into a sum does a great injustice to the very concept of basic needs itself. Valuation of basic needs requires standardisation and quantification in terms of worthiness. Hence, summing up the various categories into a unique value does not do justice to the difference in basic needs across individuals.

Since the issue of basic needs is unanswered, so it is difficult to fix any amount as the UBI that is singularly applicable to all types of situations. 

To take an example, consider a person suffering with chronic disease that requires an expenditure of Rs 10,000 per month. A transfer of, say Rs 6000 per month to him or her by the government would at best be a cruel jest to his/her financial disability. For a normal student, on the other hand, this amount may be a good outlet for spending on the goods and services that he/she likes. Thus the term, UBI, loses its meaning if it merely means a transfer of a uniform sum from the public authority.

If the UBI is declared as a minimum sustainable income, then there has to be an individualistic revaluation of the minimum basic income. We cannot shirk from this basic and necessary evaluation for the fears of corruption and leakages. Corruption will still exist even when equal amount is transferred to all. This arises due to information asymmetry and or lack of technical knowledge that makes a poor to depend on others in transferring this income into cash.

If we still wish to treat the UBI as a form of right to gain some amount from the government, then it transpires to a more symbolic or ceremonial right. Such rights can be found in the right to contest elections from anywhere in India. Addition of such ceremonious ornamentation might be of little value to those for whom it is dearer.

The authors are grateful to the panel discussants

—Prof Goutam Gupta, Prof. Anjan Chakraborty and Dr Subhanil Chowdhury—who took part in the panel discussion on Universal Basic Income held at the Department of Economics, Burdwan University, Burdwan, West Bengal, India on March 27, 2019. However, the usual disclaimer applies.

 

References

Akerlof, George (1976): “The Economics of Caste and of the Rat Race and Other Woeful Tales”, The Quarterly Journal of Economics, Vol. 90, No. 4, pp. 599-617.

Economic Survey (2016-17), Ministry of Finance. New Delhi: Government of India.

Friedman, M. (1962): Negative Income Tax: The Original Idea in K.Widerquist, Y. Vanderborght, J. Noguera, and J. De Wispelaere (eds.), Basic income: an anthology of contemporary research (398-401), Chichester, West Sussex: John Wiley & Sons Inc.

Hayek, F.A. (1994): Hayek on Hayek: An Autobiographical Dialogue, edited by Stephen Kresge and Leif Wenar. University of Chicago Press, Chicago.

More, Thomas (1516): Utopia, The International World History Project.

Nehru, Jawaharlal (1946): The Discovery of India, Oxford University Press. Jawaharlal Nehru Memorial Fund.

Nozick, Robert (1974): Anarchy, State, and Utopia, John Wiley and Sons Ltd.

Nussbaum, Martha (1974): Frontiers of Justice, Harvard University Press.

Rawls, John (1971): A Theory of Justice. Cambridge, MA: Harvard University Press.

Sen, Amartya (1989): “Development as capability expansion”, Journal of Development Planning, 19 (1).

—— (2009): The Idea of Justice, London: Penguin.

Sengupta, Atanu and Mukherjee, Sayantan (2017): Social Deprivation and Universal Basic Income, in Barman, Bedadyuti (eds.), Economic Development, Environment and Backward Communities in New Era (350-358) Ranar Sahitya Prakashan, Kolkata.

Srinivasan, T.N (2016): “Minimum standard of living for all Indians”, Livemint, Retrieved from: https://www.livemint.com/Opinion/Lcyz2vC1qSJJOGtHM0HVWN/Minimum-standard-of-living-for-all-Indians.html

Tobin, James (1966): “On the Economic Status of the Negro”, Daedalus, 94:4, pp. 878—98.

Footnotes

1. There may however be corruption in the implemen-tation procedure that we discuss below.

2 In the all-exclusive attitude, the UBI should largely replace the current schemes of substitution of subsidies and government support that are meant to alleviate poverty (Economic Survey, 2016). In the co-ordinated program, UBI is to be continued with the current subsidisation and support policies. They are not meant to be exclusive but complementary to each other.

3 In a write up in Livemint, Srinivasan (2016) claims that “Lump sum income distribution would have been India’s basic income program well before it was thought of and implemented anywhere else.” Srinivasan traces the first idea of the basic income program of modern India to Subhas Chandra Bose, who was president of the Congress in 1938. He set up a national planning committee under Jawaharlal Nehru. The committee felt that to eradicate poverty, national wealth had to be augmented. “The irreducible minimum, in terms of money, had been estimated by economists at figures varying from Rs. 15 to Rs. 25 per capita per month. Compared to the western standards this was very low, and yet it meant an enormous increase in the existing standards in India”. (See Discovery of India, centenary edition 1989, sixth impression, 1994, pages 395-397).

4 By constraint choice, we mean that an individual is forced to choose among the alternatives offered by the public institutions. A poor people has to choose between public schools and public hospitals etc.

5 The situation is akin to pure caste-based society depicted by Akerlof (1976). In the caste equilibrium of Akerlof, people’s actions are dictated by caste laws that have some pre-prescribed forms. Anyone who defies this form is punished. Hence, they all conduce to the caste laws. The equilibrium can be broken only if a sizable portion breaks out from the society so that they can sustain as a separate entity.

6 The individual capabilities and functionings are greatly different. This creates a difference in their basic needs. To a blind person, text in the Braille mode is essential for gaining knowledge while electricity is not. To a person who can see, on the other hand, electric light is essential for reading.

Atanu Sengupta is a Professor, Department of Economics, Burdwan University, Burdwan, West Bengal.

Sanjoy De is a Research Scholar, Department of Economics, Burdwan University, Burdwan, West Bengal.

Sayantan Mukherjee is a Research Scholar, Department of Economics, Burdwan University, Burdwan, West Bengal.

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