From Fiction to Reality: Universal Basic Income Gaining Traction in Asia

From Fiction to Reality: Universal Basic Income Gaining Traction in Asia
Photo Credit: Corbis/達志影像

What you need to know

The idea is gathering global popularity after a landmark trial in India showed a basic income of as little as US$5 per month had a powerfully positive effect on health, community action and investment decisions in target communities.

Despite being lambasted as a utopian fiction, the idea of a universal basic income (UBI) is gaining traction in Asia with new trials set to start and the concept garnering interest among lawmakers in the region.

UBI, or the notion of regularly distributing free money to all citizens as a form of social security, has been on the fringes of economic policy debate since the late eighteenth century, but gained credence in the 1960s after U.S. President Richard Nixon advocated the idea as part of his Family Assistance Plan.

The idea is now gathering global popularity after a landmark trial in India showed a basic income of as little as US$5 per month had a powerfully positive effect on health, community action and investment decisions in target communities.

Experts and academics from as far afield as Australia, China, India, Japan and South Korea met in Taipei last week to discuss UBI, the first time the idea has been discussed in a solely Asia-Pacific context.

The conference, organized by the Basic Income Earth Network, an advocacy group that connects individuals and organisations in favour of UBI, featured speakers including Enno Schmidt, the tall, charismatic leader of the failed Swiss referendum on UBI, Sarath Davala, co-author of “Basic Income: A Transformative Policy for India,” and Cheng Furui, a lead researcher on the topic with the China Academy of Social Sciences.

“This is a landmark event in Asia-Pacific. Looking ahead 10 to 20 years, the whole question of employment is bleak,” Davala told the conference via video link, referring to widespread predictions that 40 percent of current jobs will be automated out of existence by 2030. “A working committee should emerge from this conference, share information and ideas, and perform political advocacy,” he said.

A panacea for China?

Interestingly, China already has experience with differing forms of basic income. Conference organizer Tyler Prochazka introduced his thesis work analyzing the largely inefficient and often subjective application of China’s own nationwide minimum income guarantee, or “dibao,” since it came into force in 2007. Prochazka showed that the non-monetary standards used to assess whether a household qualifies for “dibao,” which included such subjective judgements as whether or not it possesses “luxury" goods, left the program open to corruption and ultimately ensured that only one in 10 rural households received the stipend, and of those only a quarter actually qualified as poor.

While “dibao” is acknowledged by the World Bank to have reduced the poverty gap in China by 6.5 percent in 2009, Prochazka suggested China should now experiment with an unconditional form of basic income. “China should take the lead and create an economic zone similar to what they have done with free trade zones and see how 'dibao' has reorganized society,” he said, adding that implementation should happen rapidly and at scale. “I don't think that we should be treating this like an economic policy where we can adjust around the edges and base it on empirical data.”

Cheng Furui of the China Academy of Social Sciences shared her experience studying the impact of a cooperative social dividend policy in operation at the village level in Huaidi, close to Shijiazhuang, capital of Hebei province. Cheng highlighted the success of Huaidi’s universal social dividend, which gives each villager an equal share of revenue generated from collective ownership of the land – crucially retained in village hands after Huaidi transitioned from village to countryside. “A month ago we received a new report about this kind of successful transition of citizens from country to city. They gave a list of 300 ‘star’ villages and Huaidi was ranked 78,” Cheng said.

Who gets the money and how do you pay for it?

Finland received widespread media attention for its January decision to rollout a basic income of roughly US$600 a month for its unemployed citizens, though the scheme falls short of being a genuine instance of UBI because its recipient must be jobless. However, Finland’s limitation of its basic income to the unemployed nearly sidesteps a leading criticism of UBI, namely that universality ensures even rich people who can afford their own social welfare would receive payments.

Yet the absence of means testing, for income or otherwise, is also the reason UBI receives support from both sides of the political spectrum. In its purest form, UBI entirely eradicates the bureaucracy necessary to assess means to receive social welfare, and with it the potential for this system to be abused.

“Often it is misunderstood that it is the unconditional element that is the new idea,” Schmidt, the Swiss campaigner, said in his keynote address. “It stops class struggle and stops the exclusivity of society, regardless of race religion because no circumstances are asked.”

Another obvious argument to throw at UBI is that poor countries cannot afford to fund it, and here the waters grow muddy. There are myriad arguments around how such a scheme might be funded, ranging from the negative income tax model favored by economist Milton Friedman, to sovereign wealth fund dividends, as is currently the case in Alaska.

The Asia-Pacific UBI community appears resistant to linking funding of UBI to income tax for the simple reason that UBI is a potential solution to a shrinking tax base, itself a result of accelerating technological unemployment.

However, amid all the talk of applications and funding models, there was danger of losing sight of the essence of what adopting a UBI really means.

At root, it involves a fundamental rethinking of the paid work ethic, a notion sacrosanct since feudal times, according to Gregory Marston, director of Basic Income Guarantee Australia. “What we have is an understanding of laboring. We don't really have a concept of work being all the socially productive things that people do that contribute to their lives, the care of others and to society itself,” he said.

UBI manifests differently depending on the problem it is trying to address.

“Asia is a diverse continent – Japan is very wealthy but Cambodia is very poor. Each country needs to work its own ideas out,” Davala said in his opening remarks, at a stroke nailing how difficult it is to talk about a UBI in anything other than the specific context that it is being trialed.

In India, that problem is terrible poverty. In Australia, UBI is promoted as a solution to widening inequality. While more broadly, it is seen as a panacea to joblessness amid the rapid uptake of automation and inefficient social welfare policy.

“Nobody is safe from the automation cliff,” said Tyler Prochazka, a Master’s student at Taipei’s National Chengchi University, which hosted the conference. “If we want to avoid this enormously disruptive trend then the time is now to start the process of implementing something like UBI,” he added.

As to whether or when we might see UBI implemented on a larger scale in the Asia-Pacific region, trials are beginning in Taiwan, and the idea is gathering traction among policymakers in South Korea. As for Australia, Marston is unequivocal. “UBI is inevitable. We have relied on labor and wages to drive consumption and we’re not going to have that anymore,” he said. “Unfortunately, the reaction to trends of inequality, growing anxiety and uncertainty is a very populist movement, which we see par excellence in the form of Trump. We don’t yet have political leadership that are prepared to harness that concern and turn it into a politics of hope.”

Editor: Edward White