New Delhi: Income support is the big economic idea of the season. While the ruling BJP government announced a limited money transfer scheme targeted at farmers in the recent interim budget, the Congress has proposed to solve the country’s chronic poverty with a minimum income guarantee for every Indian.
Some consider these pre-election proposals to be too ambitious. But, Guy Standing,71, an economist at the School Of Oriental and African Studies, University of London, thinks that the real concern may be that these schemes are not ambitious enough.
A proponent of giving people cash since the early 1980s, Standing has built himself a reputation as the global guru of universal basic income. He disapproves of words like “limited” and “targeted”. India’s existing social welfare schemes must be completely overhauled in favour of a basic income for every citizen, Standing argues, and with such passion that he sometimes manages to send pens flying off from the interview desk.
Being the co-president of the Basic Income Earth Network, his ardent belief in the transformative power of a modest guaranteed monthly income is not that much of a surprise. What is somewhat of a surprise is that some of the world’s wealthiest people are buying into his idea.
“I keep getting invited to speak at Davos and multi-billionaire’s clubs in the US, as the superrich are keen to understand the consequences of rigging the system and find ways to avoid resentment,” Standing quips.
Contrary to popular belief, income support does not make the poor lazy, but instead motivates them to improve their material and psychological well-being, he argues, based on evidence from India and elsewhere.
But how can a country like India, with its stretched finances, fund a basic income scheme that may cost over 5% of the GDP? By replacing a slew of regressive subsidies on food and fertilizers, Standing says, in a recent interview to Mint. Edited excerpts:
Why do you advocate a basic income?
The idea of basic income is that every individual would receive a regular cash payment, monthly or weekly, and it would be paid by the state… so it’s a right. The unconditional aspect is important because it is not paternalistic; in other words, it allows the person to use the money as they decide. That is different from many forms of conditional schemes—for instance Narendra Modi’s new scheme for Indian farmers or (Congress president) Rahul Gandhi’s proposed scheme for low income groups which requires targeting and selection. When you do that, you have high exclusion errors. Basic income involves direct transfer to an individual, which reduces a whole lot of administrative costs, is transparent and minimises corruption. The debate about welfare (policies) in India is intellectually corrupt due to the pretense that complex schemes can actually work.
You can think of basic income as a modest payment or as an alternative to social welfare schemes. My own preference is to see them as a matter of social justice: the reasoning is both ethical and philosophical. First of all, the wealth and income of all of us has far more to do with the efforts of generations before us than anything we did ourselves. We allow private inheritance of wealth, but in a sense this is also a public inheritance… the collective inheritance, the commons, (from where) everybody should earn an equal dividend. The second ethical reason is that it enhances the freedom of individuals to say no to exploitative and oppressive relationships. It also emancipates people to take control of their lives to a certain extent. The third ethical reason is that it provides basic security, a human right. Studies have shown that when people know that they won’t be starving tomorrow, their mental abilities increase, their capacity to be rational improves. There are also economic reasons—that it gives to the community and to individuals the capacity to make decisions about work, investments, and savings, and so on.
In a universal scheme, how can you justify a poor woman and well-off individual receiving the same income transfer? Where will the money come from?
I think there are good reasons that everybody should receive it… that’s part of the social inheritance and social justice argument. I think you can give it to someone well-off and then say, okay, we will also raise taxes, so, in effect, that person is not better or worse off. What I think is important is that you give it to an individual and not to a family because families change all the time. A household may have five or eight people and it is not fair to give the same amount to every household. On funding, we have calculated that India spends about 8% of its GDP on regressive subsidies. Most of that money does not reach the poor. So, potentially you have up to 8% without raising tax rates at all to reallocate toward a basic income scheme. However, I am not advocating the dismantling of social welfare schemes like health services and education. They are essential.
But why dismantle an existing welfare infrastructure in India which includes, among others, food subsidy and employment guarantee, in order to promote basic income?
I am an economist. I don’t like paternalism, whether it is from the state or anyone else. I don’t like schemes where the state implicitly decides what you need. I start from that presumption. What I don’t understand is why most of the subsidy schemes (in India) are chronically inefficient and regressive. I don’t believe the welfare state of Europe of the 1960s is the answer for India in the 21st century. You don’t have a full employed industrialized economy and you’re not going to have one. I think we are going to have a fundamentally different labour market in the next decade. With the growth of the precariat, cloud labour, the gig economy, and platform capitalism, where people are doing odd jobs with Uber and Amazon, we are seeing people without a regular full-time stable job. As incomes become volatile from one month to the next, how can you work out a support system based on income levels? In flexible and open labour markets, insecurities will increase dramatically and you cannot have the old welfare system…….Read More>>