How Uber and I, Daniel Blake make the case for a Basic Income

A citizens' income would create a real gig economy and replace a failing welfare system

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Two apparently unrelated recent events have something in common: they both highlight the case for a citizens’ basic income.

The first is the ruling that Uber drivers are not self-employed and so are entitled to the Living Wage and other employment rights.

The logic for this ruling has been expressed by Jolyon Maugham QC. Uber drivers, he says, must accept the terms and conditions of their employer: unlike the traditional self-employed, they cannot set their own prices. They lack market power, and so the law should protect them.

But this protection comes at a price. The higher cost of employing Uber drivers means either higher prices for Uber users, thus reducing consumer welfare, and/or less demand for such drivers thus depriving some of much-needed work.

We have therefore a dilemma. How can we protect workers who lack bargaining power while at the same time not stifling new businesses and flexible forms of work?

This is where the citizens’ income enters. In giving people an outside income, it empowers them to reject bad jobs. But it also gives them the flexibility to work a few hours as they please.

We thus get the best of the gig economy – proper entrepreneurship and flexibility – without the worst: egregious exploitation. As the great Philippe van Parijs says:

“[Basic income] provides a flexible, intelligent form of job sharing. It makes it easier for people who work too much to reduce their working time or take a career break.

It enables the jobless to pick up the employment thereby freed, the more easily as they can do so on a part-time basis, since their earnings are being added to their basic income.

And the firm floor provided by the basic income makes for a more fluid back and forth between employment, training and family.”

The second development is the film I, Daniel Blake which has highlighted that the welfare state is costly, inefficient and dehumanizing, even driving people to suicide. As critic Max Dunbar says:

“Welfare in the UK doesn’t work. Claimants aren’t winning – they get messed around with sanctions, crap placements and form filling, all of which takes time and energy away from the jobsearch.

Frontline DWP staff aren’t winning – they have no discretion, they have to deal with claimants presenting complex life issues, and they take a lot of shit from claimants.

The public is not winning, because more and more public money is wasted on job centres, Work Coaches, civil servants, the crap Universal Jobmatch system, tribunals, appeals, and the wider social costs of a dysfunctional welfare system.”

Again, this highlights the merits of a basic income. Its unconditionality would sweep away a lot of bureaucracy. Welfare recipients win because they no longer face harassment. Taxpayers win because the deadweight cost of redistribution is diminished.

None of this is to say that a citizens’ income is a fix-all. It’s not. It should be accompanied by other policies to improve workers’ job opportunities and bargaining power such as expansionary macro policy, a job guarantee and stronger trades unions.

And important questions remain: how do we best overcome the objection that a citizens’ income is ‘something for nothing’? How do we deal with the problems of especially high needs among the severely disabled and differences in housing costs? And does a state that has been unable to introduce Universal Credit competently have the capacity to implement such a big and important reform?

If we had serious political discourse, these questions would be properly discussed. But that of course is a big ‘if’. I used to think a basic income was too much to hope for. Now I fear that intelligent debate about one might be.

Chris Dillow is an economist and author of The End of Politics. He blogs at Stumbling and Mumbling, where this article first appeared. Follow him on Twitter @CJFDillow

See: Why don’t Uber drivers and Deliveroo workers form their own co-operatives?

3 Responses to “How Uber and I, Daniel Blake make the case for a Basic Income”

  1. Michael WALKER

    “This is where the citizens’ income enters. In giving people an outside income, it empowers them to reject bad jobs. But it also gives them the flexibility to work a few hours as they please.”

    “And important questions remain: how do we best overcome the objection that a citizens’ income is ‘something for nothing’”

    Man proposes Citizen’s income in a specific case… and then shoots it down..

  2. Mick

    Absolutely, Mr. Walker! Even the Cloud Cuckoolanders can sometimes realise their absolute stupidity in the middle of talking.

    And who would pay for this legalised benefits cheating? The very same entire population who get it!

    (What, and you leftists thought the rich would be squeezed? The money couldn’t be raised, not least because there isn’t enough cash to seize from the start. And not also because ‘the rich’ would put their own money out of reach of Labour as soon as their government looked certain!)

  3. Michael WALKER

    The UK average salary is £27.500 for a full time employee.23.23 Million of them.
    There are 8.58 million part time employees. http://tinyurl.com/zrwnl3v
    There are 1.66 million unemployed..

    Suppose the employed and unemployed are all paid a basic income of £10,000..For the 33.47million above, the annual cost would be £330Billion.
    Current UK Government spending is around £784Billion. a year. Welfare is £113Billion
    http://www.ukpublicspending.co.uk/government_expenditure.html

    Now I assume a basic income would be taxable.. so the net tax revenues for the full time employees.. at 20% would be £233B at 20% = £27Billion..

    So the sums go like this:
    Cost of UB £330B
    Savings -£113B
    Tax revenues £-27B

    Net cost: £190B.

    The full time employees of 23.3M would have to pay that .. £8,150 each..

    So their sums would be:
    average income from work £27,500 Net after income Tax..£21,667
    UB £10,000
    Gross income £37,500
    Income tax payable: -£8,800 Net income after tax.before UB £28,700
    see..http://tinyurl.com/z5xzntu

    Extra costs of UB -£8,150

    So net income after tax.. and UB= £28,700 – 8,150 = £20,550 (was £21,667)

    So the conclusions are ;
    IF the UB was £10k and it replaces ALL welfare spending, the full time taxpayers will be around £1,000 a year worse off.

    This is optmistic. Not all welfare spending could be cut.

    Not going to politically popular..in fact it’s political poison..

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