hertog2_(Xinhua Asad via Getty Images)_kuwait market Xinhua/Asad via Getty Images

The Case for an Arabian Universal Basic Income

For now, a generous universal basic income remains unaffordable in Western countries. But in the oil-producing states of the Middle East and North Africa, some form of direct wealth sharing might be the only politically feasible way to reform bloated public sectors and avoid a long-term fiscal crisis.

LONDON – The notion of a government-provided universal basic income (UBI) has been gaining traction throughout the developed world. Although UBI policies face significant political and fiscal obstacles in the West, the idea is catching on in a region where conditions for introducing a universal cash-grant system are more favorable: the wealthy, oil-exporting Arabian Peninsula.

The Gulf oil monarchies, though largely authoritarian, already provide their citizens with very generous benefits, including free education and health care, cheap energy, and, most important, an implicit public-employment guarantee. Some two-thirds of employed citizens in Gulf Cooperation Council (GCC) countries hold a public-sector job.

This system has created both a sizable middle class and extreme economic distortions. Energy subsidies are environmentally damaging and disproportionately favor richer households, while excess public employment is unproductive and takes nationals out of the private-sector economy. Although today’s new entrants to the labor market often do not have access to public employment, it nonetheless distorts their expectations about wages and working hours.