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Musing #17: Universal basic income

On the face of it, who wouldn’t like free money? However, as the recent referendum in Switzerland has shown, if nothing else, people are skeptical of this concept for the time being for the additional expense it will entail. But a concept that had the backing of Thomas Jefferson, Abraham Lincoln, Franklin Roosevelt, Martin Luther King Jr., Peter Drucker, Milton Friedman in some form is bound to hold some weight.

The primary reason stated in its favour is the rise of automation, its inevitable takeover and outsourcing. The irony of the latter is not lost on me for it is what is driving the economy of the country I live in and hence this concept wouldn’t see the light of the day over here for decades to come. However, it doesn’t prevent one from having an opinion on it.

If this argument on the loss of jobs sounds familiar, then you are acquainted with the story of the Luddites from the 19th century. It suffices to say that it ended with the epitaph “resistance is futile”. Hence, the dogma of embracing change rather than fighting it. With self-driving cars and robotic assembly, one can definitely see the writing on the wall. It would be naive to think otherwise.

To counter it, one can refer to previous revolutions where someone’s job loss was someone else’s job gain. It only meant a reshuffle to a higher skill level. The same can be said of the next revolution where people equipped with AI and robotics skills will lead the way. It would simply be a question of skill readjustment.

However, the question here is whether such roles would be too much of a niche so as to cause large scale disruption in the general population. The fact is that automation will simultaneously impact multiple facets of life and maintenance of these machines might not require as much manpower as machines of the past have required. This doesn’t imply sentient machines that will take over the world but rather that the efficiency of developing and maintaining machines would have reached such a level that the job of not hundreds, but thousands, if not millions can be replaced by one person tending to the machines.

Turning heads to the benefits of universal basic income, it all boils down to social security. The premise is that secure people are happy people. There would hardly be anyone who isn’t anxious of the vagaries of the everyday job. This undoubtedly tends to impact personal life as well. The idea is that a basic income would substantially change the outlook of a person towards life. If you have a safety net, you are bound to engage yourself in much more meaningful tasks. To most, that would imply taking up jobs that supplement you happiness rather than income and being able to spend more time with loved ones. Also, government subsidies are a fact of life in most parts of the world and the basic income can only be seen to be a more inclusive extension of that concept.

On the other side is the possibility that any sort of guaranteed money will only beget laziness. It will result in a more self-indulgent society that partakes in anti-social activities. There simply won’t be an incentive to work for those who are not inclined to do so. It will end up creating a more bipartisan society than ever before. Then, there is the elephant in the room – who will pay for it?

When you weight the two sides, you can realize how much it relies on trust. Is trust in citizens a good or a bad thing? The fact that we need the police and judiciary would imply that inherently trusting people may not be a good idea. But then, various pilot projects around the world have indicated an upliftment in the lives of those strucken with poverty. The fact of life is that everyone wants a better life and most people will grab the opportunity of getting one. A safety net is as safe as what you do with it. You can’t protect a person who cuts a hole in the net and then takes a leap of faith.

This gives rise to the question – just how much is enough? Surely, it just needs to be enough to alleviate poverty and most countries already have a poverty line to determine this limit. Perhaps, the basic income needs to be just about survival for the incentive to live a better life will be in the offing for those engaging in paid jobs. After all basic income is about security and not luxury. Whichever way you cut it, basic income will undoubtedly have an enormous social, political and economic impact.

The Indian context:

As I mentioned previously, I don’t expect basic income to become a reality in India for quite a few decades due to the social, political structure and population of the country. However, since then I searched for it online and came across the ‘Basic income in India’ article on Wikipedia which presents a positive picture. So even if it is hypothetical, can India afford such a scheme? Let us delve a bit in to the numbers and see what comes out of it.

Assuming the same per capita tax payment and not considering indirect taxes, it would be possible to meet the basic income expenditure if the tax base is increased to 21%. In the face of reality, that seems improbable. However, at the same time, it is not impossible. So, as we move towards being a more progressive and inclusive society, one can imagine that the target should be within reach in the next decade or so.


Who wouldn’t like to be paid more? Who wouldn’t like to work less? The answer to these questions summarizes the utopian nature of this concept. The fact is that as a society, the need for longer working hours is purely derived from a need for higher economic output. If machines can provide much higher productivity and economic output, then it certainly de-emphasizes the need for manual labour. At the same time, the society, based on its consumption patterns, would ensure that the money flow isn’t impacted. This then leaves humans to focus a lot more on living and enjoying their lives. At a fundamental level, this is what humanity is about and the basic income only goes some way in ensuring that. As humans, we have always been suspectful of parting with money that does not seem to directly benefit us and in a way that forms the basis of income inequality. Hence it is a question of the correct mentality as much as it is about the economics of funding such an initiative. Hence, it is inevitable that some country would pave the path for others not too far ahead in the distant future.

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