Universal Basic Income: A Viable Policy Option for Poverty Alleviation?

04 Aug 2017


By Patrick Haverman - Technological breakthroughs and innovations have been changing the way we live since the invention of the steam engine. They have changed the way we live and disrupting business models while challenging old systems to make them better, faster and more efficient in a challenging future.

My interest and search into the “future” started 2 years ago when I participated in the World Government Summit in Dubai, an annual event bringing together prominent leaders from the public and private sectors, as well as globally-recognized thought leaders and pioneers. During the summit, I also took time to visit the Museum of the Future.

The Museum of the Future takes you into a world where mankind has grasped the real value of innovation, re-inventing existing technologies and transforming the world into a place where everybody’s lives have improved dramatically. It is a future where we have challenged norms and found solutions for long-term sustainability.

The future of work is a hot topic at the moment. According to Jack Ma, 30 years from now people will work a 16 hour week, while Kai-Fu Lee, founder of venture capital firm Sinovation Ventures, predicts that Artificial Intelligence could replace 50% of all jobs over the next decade.

Basically any job that involves repetition could be at risk of replacement by automation, with firms around the world already replacing lawyers with Artificial Intelligence, and the potential for replacement of doctors with machine learning computers. These effects may lead to less human work opportunities and wide-scale technological unemployment, and in policy debates about poverty and inequality we should be preparing for these possibilities.

Linked to these trends is the idea of a Universal Basic Income (UBI) – an unconditional cash payment paid to everyone. UBI has been gaining a lot of attention recently, and influential figures including Ray Kurzweil, Elon Musk, Andrew Ng and Mark Zuckerberg have all stated that UBI could be a future policy option to consider.

Some societies are already starting to provide their citizens with a social safety net, including the launch of a two year UBI initiative in Finland that questions traditional approaches to welfare. Could a new form of safety net, provided to everyone regardless of their work status, be the answer to global challenges?

Pilots across the world are supporting governments to begin thinking more creatively about long-term policies, promoting an open platform for political engagement. Some developing countries, including India and Namibia, even see UBI as an alternative approach for eradicating poverty.

With this question in mind, UNDP China decided to carry out some basic initial research into UBI and its possible potential in China, producing a working paper from which we hope to trigger more in depth discussion in the future.

The paper asks us to review the current policies involved in delivery of welfare support to vulnerable groups, and more broadly the Sustainable Development Goals (SDGs), and emphasizes the advantages of rapid developments in technology in China, especially mobile payment services, for ensuring that payments can reach a wider target base. The ultimate goal is to explore alternative options for providing support to those in need as technological innovations change the nature of the global labor market, and the role ‘work’ will play in all of our lives.

China has one of the world’s most advanced technological platforms. I hardly use cash anymore and do most payments directly on my mobile through We-Chat. Everyday millions of people make billions of financial transactions through the simple scan of a QR code, bringing those with limited access to traditional financing into the economy. The technology is there.

Worldwide, and across the political spectrum, the potential of UBI has not been ignored for a long time. More left-wing arguments emphasize the fact that all people should have a minimum to live from, feasible under UBI, whilst a common theme from the right supports the concept of a UBI reducing the size of government administration, and promoting more effective provision of payments to large populations.

UBI is not a new concept, and was almost introduced in the United States during the Nixon administration. It has primarily been discussed as a concept, an ideal situation but without the feasibility of scaling up. There is still a long way to go, and many questions to be answered. How do we define ‘Universal Basic Income’? How much should be given, what will it cost, and how will governments pay for it?

UBI has the potential to address the challenges linked to a jobless and unequal future. This is critical in the post-2015 era, where all UN Member States have signed up to the SDGs and committed to their implementation by 2030.

Just like the Museum of the Future, the working paper asks us to think about how a future world might look, challenging norms and taking the initiative to find out what works and what doesn’t.

Eradicating extreme poverty is still top priority, and all efforts must not be spared in ensuring this happens as soon as possible. An effective welfare system could achieve that and so much more, promoting inclusive growth and the creation of decent jobs that transform our societies for decades to come.

I hope that through this working paper we can move forward the discussion and start bringing together stakeholders from the private sector, academia and government. If you want to join the discussion, please do let us know!