Universal Basic Income (UBI): Free Market Welfare


Universal basic income (UBI) has been a hot topic across the political spectrum with supporters and opponents of the concept on all sides of the political aisle.

At first glance, a UBI may seem like another money for nothing welfare scheme, but advocates of free markets and limited government should not just dismiss the idea right off the bat.

A UBI would entail a yearly or monthly amount that is paid to a citizen by the state. The reason many free market advocates support the idea of a UBI is that it shifts power from state bureaucracies to civil society. By putting cash into the hands of individuals, they are able to decide for themselves how to spend their money. Roughly speaking, this replacement social welfare policy cashifies welfare and increases the amount of money able to be spent.

The obvious first objection almost all people will immediately have against a UBI is that many rich and middle-class people do not deserve income from the state because of their existing wealth.

A UBI could as a political compromise, however, have a threshold and means test which has to be met or passed for individuals to receive the payment. Setting conditions on receiving the social welfare support would also go both ways. Individuals could be subject to fulfilling some obligation, whether it is work, training or getting treatment for addictions or illness.

It is also arguably less condescending to trust adult individuals to decide how they wish to spend their money and to not treat the poor like toddlers who do not know any better. While a UBI won’t solve the inherent and ever present problems that plague social welfare, it will go a long way in giving more power to individuals and less to the state.

A UBI would be cheaper to administer, simpler to supply and more transparent than the vast variety of anti-poverty programmes that we, for example, see in South Africa. This is a considerably better system than the current social welfare mishmash that we see all over the world.

A national basic income would hold many free market advantages. Not only does it increase the amount of money that could be freely spent by individuals and possibly protect against a supposed inevitable robot take over, but a UBI would render something like a minimum wage obsolete. In no way does this mean that workers will suddenly be paid way below what they should be, but rather this will see the free market properly and without restraint functioning in terms of salaries.

Just as school vouchers enable and empower learners to decide on their own educational future, a UBI would enable and empower the poor to decide on their own future. By giving each individual the opportunity and freedom to decide on their own economic standard, we further develop the economy. Unlike traditional social welfare that disincentivises individuals from increasing their income, because of the risk of losing social welfare benefits by exceeding certain criteria, a UBI does not threaten the additional income of individuals. A UBI won’t punish any person for seeking income additionally.

We should, however, be cautious that this may seem like a cross-ideological solution.

While some rightly see it as a replacement of a burdensome welfare system, others would rather have it be added to already-existing welfare. A UBI that supplements already-existing welfare promises none of the advantages of a basic individual income and just further pushes social welfare down the spiral it is currently on.

Although many wish that social welfare is scrapped completely, it simply is not politically viable, not only in South Africa but in the world. A UBI presents an opportunity to do away with the current mess that social welfare faces, an opportunity that might even be tempting to those who do not see the failures of social welfare.