What is the UMI and how this post came to be?
During the 2016 Disruptive Innovation Festival there was a talk by Terence Tse, PhD and Mark Esposito, Ph.D., concerning their DRIVE framework. At the end of the live talk there was a round of QA that, at some point, touched the subject of UMI, or Universal Minimum Income (in some cases Basic instead of Minimum), debating if it can effectively help people. I replied to this by proposing an alternative, via the help of Terence Tse, PhD, since I believe that UMI is in itself ineffective.
So what is the concept of UMI and why it’s not a solution to everything?
The concept behind Universal Minimum ( or Basic) Income is that there is a fixed sum of money, unconditionally given by a country (or state) to its citizens. There are several proposals and initiatives for this, like the European Citizen’s Initiative for an Unconditional Basic Income. This is a way to alleviate the lower income people/families, to provide access for all to basic necessities and to revitalize the market. But this by itself is not enough. If there is no regulation to the market, and there will not be since we live in the free-market age, then the prices will go up on all basic necessities, to begin with, and then to the rest of the products/services.
Inflation and pay-rise go hand in hand after all.
This will have the effect of essentially canceling out the benefit of UMI and will maintain the income disparity, or even make it worse. As for the beneficial effects on the market this will have, it will also be short lived and create life expectancies that will not be sustainable once the prices start to rise. So there will be a new recession to the market and the cycle of short-term planing to remedy this situation will start anew. To sum this up, the concept is quite appealing, but cannot solve the real problem by its own. More complementary corrections system-wide must be made for it to shine.
What is this UML then and how can it be better than UMI?
Based on the name of UMI, UML stands for Universal Minimum Living. Instead of giving people a fixed income, that they could spend on anything they want, even if it is the latest version of a Smartphone that they don’t really need to meet their basic needs, we should instead aim to provide those basic needs. My proposal (as I had proposed in the aforementioned talk) is that we should provide housing, electricity, water and internet to all. This way everyone will have what is needed for sleeping, cooking, cleaning and
reading this blog access to a vast pool of knowledge and job opportunities that is the web (with its own problems as well). Now I don’t propose this to be given to all instantaneously, but to start with the lowest income groups and gradually move up. Also a fixed term of 5 years of use should be established, with a renewal if the person is still in dire need of these basic necessities. That said there must also be a way to regulate and protect the use of such houses, so that there will be no abuse or damage done to them from their beneficiaries. Additionally if there is the need to extend the 5 year period, it must be examined as to why was this the case, for example: is the person educated or capable in a field that in this country there is limited or no demand? Can we ask them to relocate to another country where her/his skills are needed, under the same protected arrangement? Can we re-educate this person, via the internet? Or is it a case where the person does not want to do anything? This last example is the hardest to solve, or to propose something to counter-balance it. There are so many reasons why a person would want to do absolutely nothing, that will exceed the scope of this post, so I will leave it for latter examination.
Universal Minimum Living should aim to provide the basic needs of sleeping, cooking, cleaning and access to the web.
So the question that lingers is why is this better than UMI? If you have observed in the UML proposal there is in it no mention of the market, prices, salaries or inflation. This is because they are obscured inside UML. If you don’t pay the rent, power, water and web you use then you will have more money to spend on other things you want, but not on other things you need. Let me explain my belief on this matter a bit further. If you have an excess of 30% of your income and your basics covered, most probably you will use approximately a 5% of this for more basic needs (increased food quantity and/or quality, better clothing, etc.) and the rest for luxuries such as a new PC, Smartphone, romantic diner, vacations and similar stuff.
Let’s be honest. Humanity craves for indulging itself in luxuries and useless stuff.
That eventually will lead to a small price raise to base needs and a bigger one to luxuries, superficial needs and entertainment. So why do I insist that this is better than UMI? Besides the lower predicted increase in basic goods, if you have followed my train of thought you will nod knowingly when I say: because it will provide the base of social equity needed to elevate our societies and our world to be a better place. The inherent problem of price raising is created by the economic system itself, but with accords such as the UML, we can start correcting it and guiding it to a more humane and discrimination-free model.
We will discuss how to implement UML and some recent news concerning an UMI experiment in Finlad in the Second Part of this post due next week.