Universal Basic Income - A Cure or a Worse Disease?

David A. Preston

In Issue Nine of the Social Policy Journal of New Zealand Michael Goldsmith and Keith Rankin revived the idea of a Universal Basic Income (UBI). Goldsmith promotes the concept of an unconditional transfer of money from state to citizen, with no requirement on the recipients to work or contribute in any way. However, the failure to distinguish between activities the taxpayer can be asked to support because of wider social benefits (such as child care) and those where there is no social return is a fundamental weakness in the UBI approach.

Rankin approaches the topic through the more promising perspective of the importance of developing social capital, and tackles the economic problems in more detail than Goldsmith, but overall fails to disprove the contention that the UBI systems are likely to lead to higher average tax rates, as well as other negative social and economic effects.

In short, both articles suffer from a failure to demonstrate that their remedy is a cost-effective cure for the problems they wish to solve: the abolition of poverty and the distribution of the share of national prosperity.