Basic income would make growth more inclusive: Guy Standing

There couldn’t be a fiercer proponent of basic income than British economist Guy Standing, who has authored many books on the subject. In an interview with Praveena Sharma, Standing said that India should take advantage of the current rapid economic growth to get into motion universal basic income, which will guarantee a basic income to every Indian without any condition.    

What is your interpretation of basic income or universal basic income (UBI)?

A basic income is a regular payment to an individual and it would be equal. Men and women would receive it individually, with a smaller payment for children, which would be paid to the mother. It’s not a very high amount. It might be Rs 500 a month for an adult. Whether it is feasible or not, we have been addressing that with our pilots in Madhya Pradesh and our works around the world.

Why has it gained traction lately?

The biggest single factor is the fact that we’ve now had more than 30 years of globalisation, but the problem with it is that while it stimulates growth, it spurs greater inequality as well.

Does it in some ways marry the capitalist and leftist ideas?

There is a right wing, libertarian interpretation of basic income. Certain people say let us give people a modest income and then we could wash away welfare system. I disagree with that. In my view, we need public services. We need to give compensation to people who have particular needs or extra cost of living, like the disabled, women with children, frail and elderly and so on. I also dislike certain leftist opposition to basic income that if there is basic income there would be no defence for the welfare system. It’s like if you are having bananas, you must be against oranges. I think subsidies contributing to inefficiency and inequity can be abolished. You gain a lot of the money you need to help pay for a basic income by abolishing such subsidies.  

Most of the pilots around the world are works in progress. How conclusive are they?

The evidence is pretty strong. We did our pilots in Madhya Pradesh. The evidence is very strong in our books and reports. They result in welfare improvements, increased equity and emancipation. There are opponents, particularly on the left, who dismiss it. They claim to be champions of poor and the insecure and yet they are opposing a policy that quite clearly benefits the poor and insecure. I worry that they don’t want to allow people to have a sense of freedom. A prominent man in this country, at one meeting, said all your schemes show that this makes people happy. What’s wrong with that?

What economic gains could accrue from UBI? What are the political challenges?

What would happen is that if you rolled out a basic income, you would change the character of economic growth in India to extend the localised development, which is what is required – raising the production and income levels for having a multiplier effect in local areas. And increasing utilisation rate of assets like land, petty agricultural implements and things like that. That would make growth more inclusive. But the political challenge is a certain sophistry in political establishment discussions saying that it is not fiscally feasible.

Which side do you tilt to in the argument over targeted and universal basic income?

It should be universal. People who object would say why to give it to a rich person as well? Why not target it on the poor? My argument is India has been trying to target their welfare for the last 70 years and it has been inefficient, subject to corruption and most of the money doesn’t reach people. Targeting is very costly to administer. It would be easier if you paid everybody and you had a better tax system so that the rich would pay a slightly higher tax so you get it back anyhow.

In your discussions with policymakers, economists and others, what is the reaction you get regarding basic income?

The resistance to the idea of basic income is very distinct. Ten years ago, the resistance was huge. You couldn’t have a sensible conversation with high-powered economic policymakers or politicians, not just in India but in most places. They said it’s Utopian. In the last five years, that has changed dramatically. There’s now overwhelming research and evidence from all over the world that cash transfers have positive effects. There is now realisation that inequalities and insecurities are not going away. The financial crisis of 2008 has woken up all the people. And now the new thing around the world is sudden fear of populist, neo-fascist politics coming, where people are voting for populist government which promises them some nirvana. The election of Donald Trump in the US has been a big wake-up call. This sense of political development goes with the economic crisis. Now, India may be a long way from that but it isn’t. It is a rapidly transforming economy and therefore social policy should not be guided by yesterday’s problems. They should be guided by what’s coming tomorrow. Basic income is a response to that perspective.