Universal Basic Income has gained a lot of popularity recently. High-profile figures, like M. Zuckerberg and R. Branson and have supported the idea, and pilot programmes are being tested (or soon will be) in Helsinki (Finland), Utrecht (The Netherlands), Ontario (Canada), and Barcelona (Spain), among other places.
I personally think there are more merits to alternative programmes, such as Job Guarantee Programmes. Two of my favourite economists, Bill Mitchell and Pavlina Tcherneva, have written extensively about the greater capacity to advance social and economical prosperity by JGPs relative to UBIs. I won't repeat their arguments here, but will admit that basic income is a very simple, hands-off (laissez-faire) solution to the stagnant economies we have got after the global financial crisis of 2008.
One bad approach to develop a UBI program would be to use it as a substitute of the existing welfare systems that have been built over the previous decades. A meager basic income would be a cheap substitute for the comprehensive support that the estate offers in most of our nations today. It would be insufficient to adequately compensate the most disadvantaged groups in our societies, and just like our economic policy, would fall pray to the misleading household-budget analogies that neoliberalism touts. The program would be easily eroded because those that need it the most are less influential politically.
Alternatively, one good approach to develop a UBI program would be to use it as an economic tool to achieve real outcomes that are positive. For example: a nominal GDP growth, of say, 5 percent per annum; or a combination of low unemployment & underemployment, and a high labour participation rate.
Nominal GDP level targeting is itself a relatively novel idea in macroeconomics. Given the difficulty with which inflation and productivity are measured, nominal GDP targeting would be a simpler way to conduct monetary / econ. policy than inflation targeting. It would also be more straight-forward to measure and to use as a policy target.
The combination of NGDP and UBI couldn't be easier: The income payment level could be easily adjusted in real time depending on the state of the economy. If the economy was above full capacity and the readings came above target, the UBI payments could be dialed down. That would be noticed immediately by the population, and who knows ... maybe rational expectations might hold --for once! Conversely, if the economy lost momentum and nominal GDP was falling below the 5% mark, the UBI payments could be increased until they average their intended average levels.
It would also have an additional advantage: to make economic matters more understandable by the many, and not only by the few -- the technocrats and experts. I think it is time for Real Economics: the trade-offs that our real resources face, to be one of the core areas of debate in a modern democracy. This should be open to feedback and scrutiny across the social spectrum. I mention this because economics has been captured by neoliberal ideas that have sought to obscure even the most basic concepts. It seems only technocrats can take economic decisions and even when their prescriptions err miserably, they take no responsibility. They argue that it's like blaming the doctor for not being able to predict when the patient would die (hats off for Ricardo Reis, for a great argument in defense of how contemporary economic models and equations have advanced our knowledge -of applied maths?-- and also welfare across the world.)
In summary, it's game over for the obscure neoliberal ideas that assume markets are perfectly and instantly elastic and always in equilibrium at full capacity. That looks nothing like the societies we live in. It's time for our democracies to demand a return to the Keynesian paradigm of full-employment (and more leisure time). Economics should be at the mercy of the preferences of our democracies, and not the other way around. A Universal Basic Income program that targets nominal GDP growth has the capacity to reduce the volatility of the business cycle, reduce the uncertainty of our financial lifes, and keep our economies around full-employment most of the time. But the private sector won't fix potholes or spend in clean-tech research. Those are much better uses of human effort than boosting farther the hospitality industry; and to really make progress in those it seems we need our Governments to create more jobs to that end. UBI targeting NGDP isn't bad at all, but JGPs look much more promising.
