4 reasons cities should embrace Universal Basic Income

This article is brought to you thanks to the strategic cooperation of The European Sting with the World Economic Forum.

Author: Viva Dadwal, Deputy Editor, Globalisation and Health

Projected rates of urbanization, alongside increasing levels of urban poverty and inequality, are forcing more and more cities to invest in anti-poverty measures such as affordable housing and childcare. There is no doubt that these help individuals. However, more often than not, such programmes are inadequately equipped to predict the full spectrum of human behaviour. Ultimately, they are administratively incapable of catering to all the diverse wants and needs of citizens.

The freedom to make one’s own choices is an essential component of human dignity and autonomy. Some may even regard this freedom as a form of wealth. Conversely, poverty is the absence of choice. People who are living in poverty have fewer choices when it comes to controlling even the most basic areas of their lives, including their health, living conditions, employment and education.

If cities truly wish to be inclusive and ensure that their citizens benefit from the promises of urban life, they must facilitate the choice-making capabilities of their citizens in both the short and the long run. This means putting choices back in the hands of individual citizens.

As an unconditional money transfer, the advantage of Universal Basic Income (UBI) is its ability to change deep-rooted incentive structures. A true alleviation of poverty requires shifting the motivations that drive the rest of society. Our notions of work and welfare are informed by the deep-rooted norms and cultures of individuals who are often full-time, wage-earning, insured members of society – most of whom have never faced a lack of alternatives.

Consequently, the one-size-fits-all approach to work and income has done little to advance the overall choice architecture for individuals trapped in poverty. In short, UBI can maximize choice for those living in poverty by minimizing the choice-reducing behaviours of those who are not.

Firstly, UBI encourages the decommodification of human labour by changing the way in which the majority conceives work. It does so by distinguishing the manner in which human labour manifests itself in our lives, i.e., through paid and unpaid work. We perceive hours spent in paid and unpaid work as competing with each other. However, the right to work for pay and the right not to work for pay should be entirely compatible with each other. In this regard, UBI has the power to reimagine our work culture and remove existing biases found in labour markets in four main ways.

From a human rights perspective, unconditionally providing income outside of employment allows the realization of a full right to work, since it gives people protection against unemployment, and consequently the ability to refuse precarious employment.

From a sociological perspective, providing people with a secure economic base revitalizes personal and societal relationships, by giving people who wish to work for pay the choice to seek a job they find meaningful.

From a gender lens, UBI supports those choosing to undertake unpaid work such as domestic work, caregiving for the vulnerable and volunteer work. Often, unpaid work sustains other types of socially useful work but goes undervalued and uncompensated.

From a free market perspective, UBI produces a more competitive labour market by reducing the monopoly that paid work has over unpaid work. This balances the playing field between employers and workers, since employers must compete to attract talent – for example, with better wages and more flexible hours.

Secondly, UBI operationalizes the principle of equality of opportunity and equal treatment under the law, ensuring that equal choice is available to all. We live in a system in which large sums of financial resources predominantly stem from, and are perpetuated by, theft, fraud and what Warren Buffet has called the “ovarian lottery“.

Under a true UBI model, everyone legally receives the same amount of money every year. However, in practice, those who are worse off will benefit more than others. For example, an annual income of $30,000 will enhance the choice-making ability of someone living in the absence of choice significantly more than that of someone earning, say, $500,000 per year, all else being equal.

Such egalitarianism is already reflected in many societies. For example, despite the fact that some individuals can afford their own health and education costs, public institutions nevertheless recognize the importance of universalism as a way of raising the floor for all. Moreover, the inclusive nature of universal programmes helps reduce the social stigma of receiving government handouts, increasing solidarity. And by replacing the patchwork of cash transfer programmes currently in play, such as old age security, universal childcare benefit and employment insurance, UBI decreases the administrative costs of operating and delivering separate schemes.

Finally, it is no secret that cities are first and foremost poised to benefit from technological innovation. Investment in inclusive prosperity is a necessary goal in a future where paid work is scarce and people struggle to earn enough to meet their basic necessities. Five million jobs will be lost by 2020 as the Fourth Industrial Revolution (4IR) continues to disrupt labour markets. Indeed, today’s accelerated rates of technological innovation, globalization, climate change, demographic shifts and geopolitical transformations make the landscape of the 4IR unpredictable and ruthless in urban centres.

At the same time, there exist entire populations that have yet to benefit from the First (manufacturing), Second (technology), and Third (digital) Industrial Revolutions. We have already seen civic unrest in cities where rates of poverty and inequality are rising. In addition to reimagining the culture of work, cities must look to adopt UBI as a preventative strategy to assuage existing mass frustrations resulting from skills shortages, unemployment and systemic inequalities. Both cities and businesses must come together to create inclusive economic development.

Our urban centres lie at the nexus of industry, finance, technology and human capital. They are a place to live, but also a place to grow, through work, education and social interaction. Cities have become test beds for government to experiment with innovative technologies for the design, delivery and operation of smart and resilient infrastructure and urban services. In order to be liveable, cities must next become experimental grounds for civic engagement models that embrace social and economic inclusion, including through UBI programmes.

While money cannot ensure self-reliance and prosperity for everyone, UBI promises to improve collective opportunities for choice-making by transforming the culture of work, introducing equality and solidarity back into civic dialogue, and protecting people against anticipated labour market disruptions.

To the extent that money is part of the answer to urban poverty, UBI offers two options to the cities of our future. Will they have “work, with or without equality”, or “equality, with or without work”? Cities vying to be both smart and inclusive should aim for the latter.