This talk by feminist economist Prue Hyman was on  the Sunday Supplement programme,  National  Radio  June 21, 1998

In May I advocated a Universal Basic Income and offered to explain how it could be afforded - so here goes.

But first, what do we mean by a Universal Basic Income? Well, just that - a living income to all, at a basic, not princely level, which would reduce poverty and be simple and cheap to administer and understand. It would help remove the stigma, dependency labels and policing of the current system, and reduce the poverty traps and incentive problems over entering or increasing paid work.

For most of its advocates it should be tax free, with other income taxed, and recipients should include children, though probably at a lower level than adults. Including children in UBI, with this replacing or supplementing targeted family support, acknowledges collective responsibility for the costs of bringing up the next generation. It recognises the collective returns that will result from investment in their futures. It says that children too are citizens, contributing both when young and later.

We already have a prototype UBI for older people in the form of New Zealand superannuation. A UBI is about citizenship, community, and interdependence, and it puts a value on the contributions to society made in the form of unpaid household, caring, voluntary and community work. It also recognises that it’s largely arbitrary what work is paid and what unpaid.

So how do we afford a UBI? The question needs answering on two levels, a gut/general one and a more technical one. And there are, of course, many alternative versions and ways of financing it.

On a gut level, few would argue that New Zealand is incapable of providing a basic standard of living for all its people. It’s a matter of the will to do it and to eradicate poverty. That doesn’t mean that full time paid jobs are there for all if only they’d look. On the contrary, victim blaming of those unable to find paid work is a smokescreen. But replacing people by capital has been profitable, with job shedding from restructuring, increasing productivity, and technological breakthroughs. I don’t even mind this. Reducing shit work and replacing it by both other more useful activity and by some leisure is fine, but it means that the resources from the profitable enterprises can and should be available and able to be distributed more evenly across the population.

And both the paid and unpaid work should be more evenly spread, generally and between women and men. People doing 70 plus hours paid work per week in one, two or three jobs, while others have no paid work or too little, is absurd. The overworked are only able to survive because others look after them and their children or other dependents.

On a more technical level, it can be argued that, in one way of looking at things, we already all have a UBI or social dividend - for those on top incomes. Keith Rankin’s discussions of UBI are based on the current tax scales and he notes that those earning over $38,000, where the 33% top marginal tax rate now starts, enjoy an implicit benefit of $5,130 per year through paying a rate under 33% on the first dollars of their earnings. Benefits contained within the income tax scale, he argues, are just as much (or little!) a payment or concession as benefits paid by the social welfare system. He advocates the integration of these two kinds of benefits through a flat tax/UBI system, with some supplementary benefits for those in greatest need.

Others prefer a more hybrid system, with progressive tax rates still imposed on higher incomes. There are also other ways of raising revenue, both to finance UBI and for current purposes, which have not yet been adequately explored in New Zealand.

Respected economist James Tobin has long advocated both an internationally uniform tax on all cross-border financial transactions and a similar one within the United States. Internationally such a tax could go to the World Bank and be used to help the poorest countries. These taxes would be economically useful, increasing the weight given to long-range fundamentals relative to speculative opportunities. With the New Zealand dollar falling faster than logical criteria dictate, and currencies and futures trading a largely unproductive but profitable activity, a New Zealand tax of this type would be lucrative and make economic sense.

Other ideas include trying to shift the emphasis to taxing ‘bads’ such as pollution and other activities destructive of land or environment, away from taxing ‘goods’ including useful work.