Since the beginning of 2020, countries have implemented large-scale assistance policies to directly distribute cash to individuals and families due to the consideration of epidemic blockade and isolation measures in the early stages of the response to the new crown epidemic.
At present, the epidemic has been initially brought under control, but the interest in such cash distribution policies has not subsided, and it has stimulated the ideal solution behind such policies - "Universal Basic Income" (UBI, hereinafter referred to as "UBI"). ”) extensive political and social discussions.
On July 18, 2020, in his annual Nelson Mandela speech, UN Secretary-General António Guterres talked about the changing world calling for a new generation of social security policies, which should include possible achievable UBI.
Now, there are signs that this solution is becoming a new trend of social governance for countries to participate in the wave of globalization and digitization, which deserves attention and tracking.
The ideal picture of the UBI solution
UBI, is the "unconditional" regular payment of a lump sum of cash income to all individuals (not families).
The so-called "unconditional" includes two characteristics: universality and non-obligation. The former means that there is no review of the beneficiary's income and economic status, and the latter means that it is not required to prove that he or she has the will to work.
The prototype of the UBI scheme can be traced back to 1797, when the founder Thomas Paine proposed that a national fund should be established to issue "lifetime annuities" for people.
After a lengthy and heated academic debate, in 1972, U.S. Presidential Democratic candidate George McGovern turned UBI into a formal political proposition to create a "head fund" that would pay all Americans $1,000 a year, But it was attacked by many people at the time.
After the 1980s, the discussion of the UBI scheme gradually became a global trend. In 2004, the Barcelona Conference further established an international UBI research network, the "Basic Income Earth Network" (BIEN).
Nowadays, a large number of UBI program seminars, news and reports are not only available from it, but also frequently published in mainstream global newspapers.
Regarding the basic content of the UBI plan, the setting of the amount of payment will vary depending on factors such as the age of the recipient, the time of receipt, and the geographical location of the recipient.
At the age of collection, the amount of UBI may vary by age.
Some UBI programs are expressly limited to adults and are reasonably supplemented by universal child benefit programs.
For example, in the UBI program of the Swiss referendum in 2016, the UBI of minors was one-fourth of that of adults, while in the UBI program of Gyeonggi-do in South Korea in 2019, it only provided UBI for 24-year-olds.
In terms of payment time, it may be once a year, such as the Alaska Division of Labor program that began in the 1980s, but most UBI programs are recommended to pay monthly.
The setting of the UBI amount may vary from place to place in the geographic location of the claim.
But when UBI operates at a supranational level, geographic differences can be considered.
At the same time, the amount of UBI must also be stable enough, but may change over time.
One of the main advocates of UBI, Van Paris, a professor at the University of Leuven in Belgium, believes that the level of UBI should be a quarter of the current per capita GDP.
The essence of the UBI concept is that it is paid in cash, not in the form of food, housing, clothing or other consumer goods.
Of course, UBI is also considered to be the lowest level of personal income and cannot be a supplement to other income, so recipients are not allowed to use this future cash flow as loan collateral.
Also, UBIs are best designed to be tax-free.
Different from general social security schemes, UBI has the ideal pursuit of personal freedom.
UBI's ambition is to fundamentally improve the bargaining position of low-income groups, thereby liberating all individuals, and is touted as "a powerful tool for realizing freedom".
On the one hand, UBI does not examine the economic conditions and income status of recipients, so it is different from the living security policy conditioned on low income.
It enables everyone to receive a basic guarantee, rather than a benefit that is handed out only to specific low-income groups.
Professor Guy Standing of the University of London believes that the implementation of UBI will make "the stigma and stigma associated with receiving government benefits will no longer exist".
This also makes it less intrusive and more respectful for the individual by eliminating the need for the government to monitor specific information about individuals.
On the other hand, the UBI scheme does not have job requirements, so it can improve the bargaining power of laborers, get rid of the unequal relationship to a certain extent, and make people have the right to say no to low-paying and unattractive jobs.
In addition, on the premise of satisfying the basic life, the workers can get rid of the labor for earning a living, and start more from themselves, taking into account their willingness and interests to choose a development path that is more suitable for themselves, so as to move towards independent labor, Fundamentally improve the quality of labor.
By contrast, implementing employment guarantees can lead to forced labor, ignoring the significance of work in terms of personal fulfillment.
Realistic portrayal of UBI scheme
Although UBI has been conceived as an ideal social solution for a century, it is once again showing extremely important practical value in the current context of increasing global inequality and digitalization.
1. The realistic background of UBI.
On the one hand, the global income gap has widened significantly.
The epidemic has catalyzed and exacerbated inequality. Some countries have proposed to adjust and regulate the high income and accumulated wealth of the rich by increasing the top marginal tax rate of personal income tax and introducing a progressive wealth tax.
However, although it is imminent to "raise" excessively high incomes, the adjustment effect of "replenishing lower" income transfer policies represented by social security is actually more important.
From international experience, the realization of the effect of income transfer and personal income tax on the redistribution policy accounts for 80% and 20% respectively.
The International Monetary Fund (IMF) released an evaluation of UBI in addressing income inequality in its 2017 report "Solving Inequality". The IMF believes that UBI will improve inequality in all countries. It is estimated that UBI will make The Gini coefficient fell by an average of 5 percentage points.
In addition, since UBI does not require review of income and working conditions, it can avoid the leakage of the poor in terms of policy coverage compared with targeted poverty reduction programs, showing a sustainable advantage.
In India's 2012-2013 pilot, the reason why UBI was chosen as a tool for poverty reduction is that it can relieve the government of the task of identifying eligible beneficiaries under the welfare program, thereby greatly reducing administrative costs.
The advantages of this scheme have also been confirmed in the response to the epidemic.
The OECD’s 2020 policy brief “Sustaining Livelihoods in the COVID-19 Crisis: Closing the Gaps in the Safety Net” states: “Universal transfers can be rolled out quickly because they do not depend on recipients’ Income, assets or previous contributions, avoiding costly and time-consuming means tests.”
On the other hand, a technical unemployment crisis lurks.
Digital transformation is now becoming the focus of attention in various countries.
However, increasing numbers of people with low-skilled and repetitive jobs may be displaced by artificial intelligence and automation, and a wave of technological unemployment is looming.
The World Bank said in its World Development Report: Digital Dividend published in 2016 that two-thirds of jobs in developing countries are vulnerable to automation.
The World Employment and Social Outlook Trends Report released by the International Labour Organization in 2022 emphasizes that the outbreak has further accelerated the development trend of digitization and automation.
Recently, some global technology giants have expressed their support for the introduction of the UBI plan, including Facebook CEO Zuckerberg, Tesla founder Elon Musk, Microsoft founder Bill Gates and others, which shows that UBI is a digital society. It is a guarantee scheme that has gradually formed a basic consensus among the promoters of global digitalization.
The lockdowns imposed by the outbreak of the new crown epidemic look like a "rehearsal" of a mass loss of jobs.
However, compared with the rapid outbreak and cyclical ebb of the epidemic, the impact of technical unemployment caused by automation is far more far-reaching and difficult to reverse, and UBI will become a "financial lifeline for many people to maintain their basic living conditions in the case of involuntary unemployment." ".
2. Realistic advancement of universal basic income.
Existing UBI pilots show good results.
The earliest UBI program in the world was the oil field profit sharing program in Alaska in the mid-1970s, and the common feature of more UBI pilots since then is to improve the lives of low-income people.
In developed regions, such as Finland's UBI pilot proposal adopted in October 2016, it has only been piloted on a small scale.
In its 2020 report on the results of the Finnish pilot, McKinsey & Company pointed out that UBI greatly improved the well-being of many indicators, and the participants in the trial showed higher levels of memory, learning, and concentration. UBI also allowed people to were more secure about their financial situation, even though their income was no higher than that of the control group.
In some developing regions, such as the UBI pilot that started in Kenya in 2016 (until 2028), as well as the pilots in Namibia in 2008-2009 and India in 2012-2013, their phased results and final results It shows that crime and indebtedness rates have fallen in participating areas, women have more control over their bodies (eg, sexual freedom, marriage, labor), and school attendance and use of health clinics have increased.
Post-pandemic, the global UBI political agenda has been pushed further.
Under the epidemic, many countries have adopted a large-scale cash assistance policy of "helicopter money".
For example, the US passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March 2020, the largest amount in modern history at $2 trillion, creating a large-scale direct A first for the cash distribution, according to the American Tax Foundation, a whopping 93.6% of taxpayers received aid.
Large-scale cash assistance expands the coverage of existing welfare policies, but still requires a review of the recipient's income status, not a true UBI.
However, the implementation of the cash assistance policy has indeed greatly increased the social heat of the discussion of the UBI program, making it faster to enter the center of political debate in various countries.
The 2020 U.S. presidential candidate Yang Anze proposed the implementation of the "Freedom Dividend Program", which will distribute $1,000 a month to every U.S. citizen over the age of 18.
Although Yang Anze eventually dropped out, the UBI plan is gaining more and more support in the United States.
The 2021 Progress Data and two UBI polls conducted by Skynova in the United States show that indicators of support for UBI have increased six-fold compared to 2011, while opposition to it has fallen by three-quarters.
In 2021, new UBI pilots will continue to be launched in Wales, England, Catalonia, Spain and other regions.
And South Korea's 2022 presidential candidate Lee Jae-myung has promised an annual basic income for young people and rural residents.
This UBI political program is not a tree without roots. It started with the 2019 Youth Basic Income Program in Gyeonggi-do, South Korea (Lee Jae-myung was the former governor of Gyeonggi-do), providing about 1 million won per year for about 175,000 24-year-old young people ( A basic income of about $900) to help young people who are facing enormous pressure find their way and find a job as quickly as possible.
But unfortunately, Lee Jae-myung lost the election by a narrow margin on March 10, which is only one step away from the practice of national UBI in South Korea.
Three Challenges to the Implementation of Universal Basic Income
Challenge 1: If UBI is to be implemented, will society fall into the trap of “raising lazy people” by welfareism?
Regular unpaid cash handouts to all individuals, especially without work requirements, can protect the basics of personal life, but it sounds like it contains high moral hazard, for example, it may weaken people's investment in education and training, and even make young people People are greedy for pleasure.
However, UBI cannot be reduced to just short-term and immediate effects on the labor supply market, but its long-term impact on human capital should also be recognized.
From the perspective of economic sustainability alone, UBI has also been proven to help workers develop their vocational skills and expand employment.
A 2016 study by Professor Johannes Haushofer of Princeton University shows that UBI has indeed increased the degree of retraining of residents, and the proportion of R&D capacity and innovation has also increased.
From the UBI pilot, in Finland's two-year pilot, UBI even led to a small increase in employment.
Even in India, the pilot found no negative impact of UBI on labor supply.
Therefore, instead of viewing UBI as a cost of "raising lazy people", it should be understood as a long-term investment in human capital.
Challenge 2: If UBI is implemented on a large scale, the biggest obstacle is still the issue of funding.
Many opponents of UBI believe that regular income distribution to the whole population will result in extremely high fiscal expenditure, and if the fundraising is too low, the income transfer setting is too low, it will be difficult to really alleviate the problem of poverty.
At the same time, the large-scale implementation of the UBI scheme will undoubtedly require taxation of high-income groups, such as raising capital income tax and introducing progressive personal wealth tax and other taxation channels.
Although UBI has little negative impact on the labor of low-income earners, raising taxes still cannot rule out the impact on labor supply for middle- and high-income groups, and may lead to a series of "sequelae" such as human and capital flight.
In Switzerland's UBI referendum, the proposal was rejected by 78% of the vote because it would cause immigration and financial problems.
In the Finnish pilot, although nearly 70% of Finnish residents supported the UBI plan, once it was explained to them that the personal income tax rate might need to be raised to a uniform level of 55%, the support rate of residents for UBI plummeted to 35% .
Immediately after the pilot, Finland implemented a new round of reforms, raising the threshold for receiving unemployment benefits to alleviate short-term financial difficulties caused by the implementation of UBI.
Challenge 3: From a longer-term perspective, even if UBI can be successfully implemented within a country in the future, its sustainability is still challenged by globalization.
The global flow of population and capital will bring dual threats to the implementation of UBI. First, it may produce a “welfare magnet” effect to attract a large number of UBI net beneficiaries to selectively move in. Selective removal of contributors.
Therefore, although UBI takes "unconditional" as its basic feature, it is also necessary to limit UBI recipients to financial residents who have lived for a certain number of years or more due to population mobility issues.
At the same time, it is also necessary to pay attention to the immigration of the wealthy and the outflow of assets caused by tax increases. In fact, developed countries with high taxes tend to levy targeted abandonment taxes or exit taxes to curb the loss of the tax base.
From a longer-term perspective, to completely solve the problem of UBI globalization, it is appropriate to implement UBI solutions on a global scale, but from the current stage, this seems to be a more distant ideal.
In China, UBI has been discussed and recommended by representative scholars from Professor Cui Zhiyuan of Tsinghua University and Zhang Zhiyong, President of China International Taxation Research Association. Some voices even described it as "a realistic road to communism".
As an ideal solution that has been controversial for a century, UBI is gradually releasing its theoretical and practical value under the new era of change. Further research on it will certainly help enrich and improve China in the new era. Characteristic social security theoretical system.
(Liu Qichao is a researcher at the International Taxation Research Center of the Central University of Finance and Economics, Xue Haotian is a doctoral student at the School of Civil, Commercial and Economic Law, China University of Political Science and Law, Zhang Yajie is a master's student at the China-Europe Law School, China University of Political Science and Law, and Li Xinran is a master's student at the China University of Political Science and Law School of Civil, Commercial and Economic Law)
Authors: Liu Qichao, Xue Haotian, Zhang Yajie, Li Xinran