Universal basic income

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Universal basic income (UBI), also called basic income, citizen's income, citizen's basic income, basic income guarantee, basic living stipend, guaranteed annual income, or universal demogrant, is a theoretical governmental public program for a periodic payment delivered to all citizens of a given population without a means test or work requirement.[2]

On 4 October 2013, Swiss activists from Generation Grundeinkommen organized a performance in Bern in which roughly 8 million coins, one coin representing one person out of Switzerland's population, were dumped on a public square. This was done in celebration of the successful collection of more than 125,000 signatures, forcing the government to hold a referendum in 2016 on whether or not to incorporate the concept of basic income in the federal constitution. The measure did not pass, with 76.9% voting against changing the federal constitution to support basic income.[1]

Basic income can be implemented nationally, regionally, or locally. An unconditional income that is sufficient to meet a person's basic needs (i.e., at or above the poverty line) is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income. The transfers effected by basic income are the same or similar to those produced by negative income tax.

Some welfare systems can be regarded as steps on the way to a basic income, but because they have conditions attached they are not basic incomes. An example is the wage subsidy, which is a similar but less ambitious proposal; another is a guaranteed minimum income, which raises household incomes to a specified minimum.

Policies based on basic income have widespread support from professional economists. A 1995 survey found that 78% of American economists supported (with or without provisos) the proposition that ‘the government should restructure the welfare system along the lines of a negative income tax’.[3]

Several political discussions are related to the basic income debate, including those regarding automation, artificial intelligence (AI), and the future of work. A key issue in these debates is whether automation and AI will significantly reduce the number of available jobs and whether a basic income could help alleviate such problems, as well as whether an UBI could be a stepping stone to a resource based economy or post scarcity.[4]

HistoryEdit

The idea of a state-run basic income dates back to the early 16th century when Sir Thomas More's Utopia depicted a society in which every person receives a guaranteed income.[5] In the late 18th century, English radical Thomas Spence and American revolutionary Thomas Paine both declared their support for a welfare system that guaranteed all citizens an assured basic income. Nineteenth-century debate on basic income was limited, but during the early part of the 20th century, a basic income called a "state bonus" was widely discussed. In 1945, the United Kingdom implemented unconditional family allowances for the second and subsequent children of every family. In the 1960s and 1970s, the United States and Canada conducted several experiments with negative income taxation, a related welfare system. From the 1980s and onward, the debate in Europe took off more broadly, and since then, it has expanded to many countries around the world. A few countries have implemented large-scale welfare systems that have some similarities to basic income, such as Bolsa Família in Brazil. From 2008 onward, several experiments with basic income and related systems have taken place.

Governments can contribute to individual and household income maintenance strategies in three ways:

  1. The government can establish a minimum income guarantee and not allow income to fall below levels set for various household types, maintaining these levels by paying means-tested benefits.
  2. Social insurance can pay benefits in the case of sickness, unemployment, or old age, on the basis of contributions paid.
  3. They can create universal unconditional payments, such as the United Kingdom's Child Benefit for children.[6]

A means-tested benefit that raises a household's income to a guaranteed minimum level is unlike a basic income in that the income delivered under a system of guaranteed minimum income is reduced exactly as other sources of income increase, whereas income received from a basic income is constant regardless of other sources of income. Johannes Ludovicus Vives (1492–1540), for example, proposed that the municipal government should be responsible for securing a subsistence minimum to all its residents "not on the grounds of justice but for the sake of a more effective exercise of morally required charity." However, Vives also argued that to qualify for poor relief, the recipient must "deserve the help he or she gets by proving his or her willingness to work."[7]

The first to develop the idea of social insurance was Marquis de Condorcet (1743–1794). After playing a prominent role in the French Revolution, he was imprisoned and sentenced to death. While in prison, he wrote the Esquisse d’un tableau historique des progrès de l’esprit humain ("Sketch for a Historical Picture of the Progress of the Human Mind"; published posthumously by his widow in 1795), the last chapter of which describes his vision of social insurance and how it could reduce inequality, insecurity, and poverty. Condorcet mentioned, very briefly, the idea of a benefit to all children old enough to start working by themselves and to start up a family of their own. He is not known to have said or written anything else on this proposal, but his close friend and fellow member of the U.S. Constitutional Convention Thomas Paine (1737–1809) developed the idea much further, several years after Condorcet's death.

The first social movement for basic income developed around 1920 in the United Kingdom. Its proponents included:

  • Bertrand Russell (1872–1970) argued for a new social model that combined the advantages of socialism and anarchism, and that basic income should be a vital component in that new society.
  • Dennis and Mabel Milner, a Quaker married couple of the Labour Party, published a short pamphlet entitled "Scheme for a State Bonus" (1918) that argued for the "introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom." They considered it a moral right for everyone to have the means to subsistence, and thus it should not be conditional on work or willingness to work.
  • C. H. Douglas was an engineer who became concerned that most British citizens could not afford to buy the goods that were produced, despite the rising productivity in British industry. His solution to this paradox was a new social system he called social credit, a combination of monetary reform and basic income.

In 1944 and 1945, the Beveridge Committee, led by the British economist William Beveridge, developed a proposal for a comprehensive new welfare system of social insurance, means-tested benefits, and unconditional allowances for children. Committee member Lady Rhys-Williams argued that the incomes for adults should be more like a basic income. She was also the first to develop the negative income tax model.[8][9] Her son Brandon Rhys Williams proposed a basic income to a parliamentary committee in 1982, and soon after that in 1984, the Basic Income Research Group, now the Citizen's Basic Income Trust, began to conduct and disseminate research on basic income.[10]

In the 1960s and 1970s, some welfare debates in the United States and Canada included discussions of basic income. Six pilot projects were also conducted with the negative income tax. President Richard Nixon proposed a massive overhaul of the federal welfare system, replacing many of the federal welfare programs with a negative income tax – a proposal favored by economist Milton Friedman. Nixon said, "The purpose of the negative income tax was to provide both a safety net for the poor and a financial incentive for welfare recipients to work."[11] Congress eventually approved a guaranteed minimum income for the elderly and the disabled, not for all citizens.[11]

In the late 1970s and the 1980s, basic income was more or less forgotten in the United States, but it started to gain some traction in Europe. Basic Income European Network, later renamed to Basic Income Earth Network, was founded in 1986 and started to arrange international conferences every two years.[2] From the 1980s, some people outside party politics and universities took an interest. In West Germany, groups of unemployed people took a stance for the reform.[12]

In 2002, a green paper was commissioned on the topic by the Government of Ireland.[13]

Since 2010, basic income again became an active topic in many countries. Basic income is currently discussed from a variety of perspectives, including in the context of ongoing automation and robotization, often with the argument that these trends mean less paid work in the future. This would create a need for a new welfare model. Several countries are planning for local or regional experiments with basic income or related welfare systems. For example, experiments in Canada, Finland, India, and Namibia have received international media attention. The policy was discussed by the Indian Ministry of Finance in an economic survey in 2017.[14]

So far, no country has introduced an unconditional basic income as law. The first and only national referendum about basic income was held in Switzerland in 2016. The result was a rejection of the basic income proposal in a vote of 76.9% to 23.1%.

Fundamental principlesEdit

 
Two ways of looking at basic income

The normal working of basic income/NIT is illustrated by the diagram. The orange line shows a person’s take-home pay y' as a function of the pre-tax salary y paid by his or her employer. The relation between pre- and post-tax pay can be described in two different ways.

In the red description, y'  is obtained from y by the deduction of a tax proportional to the pre-tax pay, compensated by the payment of a fixed stipend. This is the viewpoint of basic income; the stipend is the total income of someone who has no salary.

In the blue description, y ' is obtained from y by the deduction of a tax proportional to the excess of the pre-tax pay over a breakeven point; if the pre-tax pay is less than the breakeven point, then the excess (and so the tax payable) is negative. This is the viewpoint of negative income tax. If the pre-tax pay is zero, the negative tax paid is the same as the basic income stipend.

The advantage of the red description is that it is the size of the stipend, rather than the location of the breakeven point, which is the critical parameter of the system.

The advantage of the blue description is that it makes clear that the payments can be made for most people through the income tax system, streamlining administration. When the name ‘negative income tax’ is used, it is always assumed that this will be done; but the same assumption is often made when the system is described as basic income.

It is not essential that the orange line should have constant slope: Milton Friedman proposed a system in which the marginal tax rate would be 50% below the threshold and 14% above it.[15] Other people might expect the taxation rate to be an increasing function of income. It is also not essential that the parameters of an existing system (ie. the thresholds and marginal rates) should be preserved unchanged.

Moreover it is possible to fund basic income in ways not equivalent to taxation. An example is a state whose revenue comes from the sale of exploitation rights, and which hands out its surplus as a per capita bounty. Most discussion of basic income addresses the more controversial issues which arise when the funding needs to be raised specifically.

Possible distinctions between UBI and NITEdit

  • Psychological. Philip Harvey accepts that “both systems would have the same redistributive effect and tax earned income at the same marginal rate” but does not agree that “the two systems would be perceived by taxpayers as costing the same”.[16]:15, 13
  • Tax profile. Tony Atkinson made a distinction based on whether the tax profile was flat (for basic income) or variable (for NIT).[17]
  • Timing. Philippe van Parijs states that “the economic equivalence between the two programs should not hide that the fact that they have different effects on recipients because of the different timing of payments: ex-ante in Basic Income, ex-post in Negative Income Tax”.[18]

Perspectives in the basic income debateEdit

AutomationEdit

 
Entrepreneur and 2020 Democratic candidate Andrew Yang has advocated for a basic income to counter job displacement through automation.

One central rationale for basic income is the belief that automation and robotisation could lead to a world with fewer paid jobs. U.S. presidential candidate and nonprofit founder Andrew Yang has stated that automation caused the loss of 4 million manufacturing jobs and advocated for a UBI (which he calls a Freedom Dividend) of $1,000/month rather than worker retraining programs.[19]

Bad behaviorEdit

Criticism of a basic income includes the argument that some recipients would spend a basic income on alcohol and other drugs.[20][21] However, studies of the impact of direct cash transfer programs provide evidence to the contrary. A 2014 World Bank review of 30 scientific studies concludes: "Concerns about the use of cash transfers for alcohol and tobacco consumption are unfounded."[22]

Basic income as a part of a post-capitalistic economic systemEdit

Harry Shutt proposed basic income and other measures to make most or all businesses collective rather than private. These measures would create a post-capitalist economic system.[23]

Erik Olin Wright characterizes basic income as a project for reforming capitalism into an economic system by empowering labor in relation to capital, granting workers greater bargaining power with employers in labor markets, which can gradually de-commodify labor by separating work from income. This would allow for an expansion in the scope of the social economy by granting citizens greater means to pursue non-work activities (such as art or other hobbies) that do not yield strong financial returns.[24]

James Meade advocated for a social dividend scheme funded by publicly owned productive assets.[25] Russell argued for a basic income alongside public ownership as a means of shortening the average working day and achieving full employment.[26]

Economists and sociologists have advocated for a form of basic income as a way to distribute economic profits of publicly owned enterprises to benefit the entire population, also referred to as a social dividend, where the basic income payment represents the return to each citizen on the capital owned by society. These systems would be directly financed from returns on publicly owned assets and are featured as major components of many models of market socialism.[27]

Guy Standing has proposed financing a social dividend from a democratically accountable sovereign wealth fund built up primarily from the proceeds of a tax on rentier income derived from ownership or control of assets—physical, financial, and intellectual.[28][29]

During the COVID-19 Pandemic of 2020, U.K. Chancellor of the Exchequer Rishi Sunak rejected calls for the implementation of a basic income, stating that the government were "not in favour of a universal basic income,"[30] whilst Business Secretary Alok Sharma said[when?] that the UBI has been "tested in other countries and hasn't been taken forward" [31]

ChildrenEdit

It is usually assumed that a stipend will be paid in respect of dependent children equal to roughly a third of the sum given to adults of working age.[16][32] This would increase the marginal tax rate needed to support UBI by about 2½% over the figure implied by the costing below, offset by any saving in child benefit (roughly ⅔% in the UK[33][34]).

Costing UBIEdit

It is possible to express the cost of a ‘demogrant’, ie. UBI, in a simple formula.

The story goes that he [George McGovern] made the announcement [of a basic income programme] on the campaign trail, before returning to ask his economic advisor what tax rate would be required. The advisor, James Tobin... , is said to have replied that, if you need an x per cent tax rate to finance the rest of government, then a demogrant equal to y per cent of average income means that the tax rate has to be (x+y )... with a 20 per cent rate of tax needed to finance other government purposes,... even a 50 per cent flat tax rate would only finance a basic income set at 30 per cent of the average.[35]

Atkinson (just quoted) refers to a study which indicates that the revenue-maximising tax rate for the UK would be about 40%.[36] With 20% of government spending needed for other purposes, this would allow a basic income of at most 20% of the average salary.

Tobin’s formula assumes that the people eligible for the basic income are essentially the contributors, and therefore makes no allowance for additional payments needed if the basic income is unconditional, in which case it will be paid (for instance) to non-working spouses. If a proportion z of the eligible population is not working, then the formula becomes x + y / (1–z ); so assuming that z is 20% and that 20% of expenditure is needed for other purposes, it follows that an average taxation rate of 40% can fund a basic income of only 16% of the national average; an average taxation rate of 60% would fund a basic income equal to 32% of the average (pre-tax) income.

Adjustments need to be made both ways for effects on employment. Removal of the ‘welfare trap’ may reduce the number of people involuntarily out of work, while an unconditional stipend may lead to people withdrawing from the workforce.

Economic critiqueEdit

In 2016, the IGM Economic Experts panel at the University of Chicago Booth School of Business was asked whether they agreed with the following statement: "Granting every American citizen over 21-years old a universal basic income of $13,000 a year — financed by eliminating all transfer programs (including Social Security, Medicare, Medicaid, housing subsidies, household welfare payments, and farm and corporate subsidies) — would be a better policy than the status quo." 58 percent of participants disagreed or strongly disagreed, 19 percent were uncertain, and 2 percent agreed.[37] The cost was an issue for those who disagreed as well as a lack of optimization in the structure proposed. Daron Acemoglu, professor of economics at the Massachusetts Institute of Technology, expressed these doubts in the survey: "Current US status quo is horrible. A more efficient and generous social safety net is needed. But UBI is expensive and not generous enough".[37] Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare".[38] Simeon Djankov, professor at the London School of Economics, argues the costs of a generous system are prohibitive.[39]

Another critique comes from the far-left. Douglas Rushkoff, a professor of Media Theory and Digital Economics at the City University of New York, suggests that universal basic income is another way that "obviates the need for people to consider true alternatives to living lives as passive consumers". He sees it as a sophisticated way for corporations to get richer at the expense of public money.[40]

Some conservatives have contended that universal basic income could act as a form of compensation for fiat currency inflation.[41]

Economic growthEdit

Some proponents of UBI have argued that basic income can increase economic growth because it would sustain people while they invest in education to get higher-skilled and well-paid jobs.[42][20] However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth.[43]

EmploymentEdit

One argument against basic income is that if people have free and unconditional money, they would "get lazy" and not work as much.[44][45][46] Critics argue that less work means less tax revenue and hence less money for the state and cities to fund public projects. The degree of any disincentive to employment because of basic income would likely depend on how generous the basic income was.

Some studies have looked at employment levels during the experiments with basic income and negative income tax and similar systems. In the negative income tax experiments in the United States in the 1970s, for example, there was a five percent decline in the hours worked. The work reduction was largest for second earners in two-earner households and weakest for the main earner. The reduction in hours was higher when the benefit was higher. Participants in these experiments knew that the experiment was limited in time.[45]

In the Mincome experiment in rural Dauphin, Manitoba, also in the 1970s, there were also slight reductions in hours worked during the experiment. However, the only two groups who worked significantly less were new mothers and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling.[47] Under Mincome, "[t]he reduction of work effort was modest: about one per cent for men, three per cent for wives, and five per cent for unmarried women".[48]

A 2018 study of the Alaska Permanent Fund Dividend, which has paid out an average of approximately $1,600 annually per resident (adjusted to 2019 dollars),[49] and considered the largest scale universal basic income program in the United States, running from 1976 to the present, seems to show this belief is untrue. The researchers, Damon Jones and Ioana Marinescu, show that although there is a small decrease in work by recipients due to reasons like those in the Manitoba experiment, there has been a 17 percent increase in part-time jobs. The authors theorize that employment remained steady because of the extra income that let people buy more also increased demand for service jobs. This finding is consistent with the economic data of the time. No effect was seen when it came to jobs in manufacturing, which produce exports. Essentially, the authors argue, macroeconomic effects of higher spending supported overall employment. For example, someone who uses the dividend to help with car payments can cut back on hours working as a cashier at a local grocery store. Because more people are spending more, the store must replace the worker who started working less. Meanwhile, the distribution of the dividend doesn't affect the international demand for oil and the jobs connected to it.[50][51] Jones and Marinescu found instead that the larger scale of the program is what allows it to work and not dissuade people out of the workforce.[52]

Another study that contradicted such a decline in work incentive was a pilot project implemented in 2008 and 2009 in the Namibian village of Omitara. The study found that economic activity actually increased, particularly through the launch of small businesses, and reinforcement of the local market by increasing individuals' buying power.[53] However, the residents of Omitara were described as suffering "dehumanising levels of poverty" before the introduction of the pilot, and as such the project's relevance to potential implementations in developed economies is unknown.[54]

James Meade states that a return to full employment can only be achieved if, among other things, workers offer their services at a low enough price that the required wage for unskilled labor would be too low enough to generate a socially desirable distribution of income. He therefore concludes that a "citizen's income" is necessary to achieve full employment without suffering stagnant or negative growth in wages.[55]

If there is a disincentive to employment because of basic income, the magnitude of such a disincentive may depend on how generous the basic income was. Some campaigners in Switzerland have suggested a level that would be only just liveable, arguing that people would want to supplement it.[56]

FreedomEdit

Philippe van Parijs has argued that basic income at the highest sustainable level is needed to support real freedom, or the freedom to do whatever one "might want to do".[57] By this, van Parijs means that all people should be free to use the resources of the Earth and the "external assets" people make out of them to do whatever they want. Money is like an access ticket to use those resources, and so to make people equally free to do what they want with world assets, the government should give each individual as many such access tickets as possible—that is, the highest sustainable basic income.

Karl Widerquist and others have proposed a theory of freedom in which basic income is needed to protect the power to refuse work[58]; in other words, if the resources necessary to an individual's survival are controlled by another group, that individual has no reasonable choice other than to do whatever the resource-controlling group demands. Before the establishment of governments and landlords, individuals had direct access to the resources they needed to survive. Today, resources necessary for the production of food, shelter and clothing have been privatized in such a way that some have gotten a share and others have not.

Therefore, the argument is that the owners of those resources owe compensation back to non-owners, sufficient at least for them to purchase the resources or goods necessary to sustain their basic needs. This redistribution must be unconditional because people can consider themselves free only if they are not forced to spend all their time doing the bidding of others simply to provide basic necessities to themselves and their families.[20] Under this argument, personal, political and religious freedom are worth little without the power to say no. Basic income therefore may provide economic freedom which, combined with political freedom, freedom of belief and personal freedom, establish each individual's status as a free person.

Gender equalityEdit

The Scottish economist Ailsa McKay has argued that basic income is a way to promote gender equality.[59][60][61] She noted in 2001 that "social policy reform should take account of all gender inequalities and not just those relating to the traditional labor market" and that "the citizens' basic income model can be a tool for promoting gender-neutral social citizenship rights".[59]

Women perform the majority of unpaid care work around the world. In fact, if unpaid care work performed by women were compensated at even just minimum wage around the world, this would boost measured global economic output by 12 trillion USD, which is 11% of global economic output and is equivalent to the annual economic output of China, according to a study by the McKinsey Global Institute.[62] Thus basic income would be a way to compensate women for the essential care services they already perform and to raise the standard of living for women who devote a substantial portion of their time to unpaid care work.

Some feminists support basic income as a means of guaranteeing minimum financial independence for women.[63] However, others oppose basic income as something that might discourage women from participation in the workforce, reinforcing traditional gender roles of women belonging at home and men at work.[64]

Health and medical costsEdit

The first comprehensive systematic review of the health impact of basic income (or, in other words, unconditional cash transfers) in low- and middle-income countries included 21 studies, of which 16 were randomized controlled trials. It found that unconditional cash transfers may not improve health services use. However, they lead to a large, clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers may also improve food security and dietary diversity. Children in recipient families are more likely to attend school, and the cash transfers may increase money spent on health care.[65]

The Canadian Medical Association passed a motion in 2015 in clear support of basic income and for basic income trials in Canada.[66]

British journalist Paul Mason has stated that universal basic income would probably reduce the high medical costs associated with diseases of poverty. According to Mason, stress diseases like high blood pressure, type II diabetes and the like would probably become less common.[67]

MoralityEdit

It has been argued that UBI is immoral. In contrast to traditional wealth redistribution programs, which seek to give resources to those who demonstrate need, UBI does not make a distinction between the "deserving" (involuntary unemployed individuals, low-income persons, the disabled) and "undeserving" (lazy individuals who choose not to work, the wealthy). Thus, UBI is counter to the Protestant work ethic, which maintains that a strong work ethic is better than idleness. Instead, UBI advances the idea that all individuals should be supported without asking for anything in return. In contrast, the universality of the benefit has been noted as one of its strengths. As everyone would receive UBI, there would be no stigmatization for recipients; stigma prevents many eligible individuals from applying for benefits for which they are eligible.[68]

Poverty reductionEdit

Advocates of basic income often argue that it has the potential to reduce or even eradicate poverty.[69]

According to a randomized controlled study in the Rarieda District of Kenya run by the Abdul Latif Jameel Poverty Action Lab at the Massachusetts Institute of Technology (MIT) on the Give Directly program, the impact of an unconditional cash transfer was that for every $1,000 disbursed, there was a $270 increase in earnings, a $430 increase in assets, and a $330 increase in nutrition spending, with no effect on alcohol or tobacco spending.[70]

Economist Milton Friedman supported UBI by reasoning that it would help to reduce poverty. He said: "The virtue of [a negative income tax] is precisely that it treats everyone the same way. [...] [T]here’s none of this unfortunate discrimination among people."[71]

Martin Luther King Jr. believed that a basic income was a necessity that would help to reduce poverty, regardless of race, religion or social class. In King's last book before his assassination, Where Do We Go from Here: Chaos or Community?, he said: "I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income."[72]

Theoretical basisEdit

Transparency and administrative efficiencyEdit

According to Guy Standing's theories, basic income may be a much simpler and more transparent welfare system than welfare states currently use.[73] Standing suggests that instead of separate welfare programs (including unemployment insurance, child support, pensions, disability, housing support), social support systems could be combined into one income, or could be one basic payment that welfare programs could add to.[74] This may require less paperwork and bureaucracy to check eligibility. The Basic Income Earth Network claims that basic income costs less than current means-tested social welfare benefits, and has proposed an implementation that it claims is financially viable.[75][76]

A real-world example of how basic income is being implemented to save money can be seen in a program that is being conducted in the Netherlands. The city councillor for the city of Nijmegen, Lisa Westerveld, said in an interview: "In Nijmegen, we get £88m to give to people on welfare, but it costs £15m a year for the civil servants running the bureaucracy of the current system".[77] Her view is shared by Dutch historian and author Rutger Bregman, who believes the Netherlands' welfare system is flawed, and by economist Loek Groot, who believes the country's welfare system wastes too much money. Outcomes of the Dutch program will be analysed by Groot, a professor at the University of Utrecht who hopes to learn if a guaranteed income might be a more effective approach.[78] However, other proponents argue for adding basic income to existing welfare grants, rather than replacing them. [check quotation syntax] Support for basic income has been expressed by several people associated with conservative political views. While adherents of such views generally favor minimization or abolition of the public provision of welfare services, some have cited basic income as a viable strategy to reduce the amount of bureaucratic administration that is prevalent in many contemporary welfare systems.[79][80]

Wage slavery and alienationEdit

Frances Fox Piven argues that an income guarantee would benefit all workers by liberating them from the anxiety that results from the "tyranny of wage slavery" and provide opportunities for people to pursue different occupations and develop untapped potentials for creativity.[81] André Gorz saw basic income as a necessary adaptation to the increasing automation of work, yet basic income also enables workers to overcome alienation in work and life and to increase their amount of leisure time.[82]

These arguments imply that a universal basic income would give people enough freedom to pursue work that is satisfactory and interesting even if that work does not provide enough resources to sustain their everyday living. One example is that of Nelle Harper Lee, who lived as a single woman in New York City in the 1950s, writing in her free time and supporting herself by working part-time as an airline clerk. She had written several long stories, but achieved no success of note. One Christmas in the late fifties, a generous friend gave her a year's wages as a gift with the note: "You have one year off from your job to write whatever you please. Merry Christmas". A year later, Lee had produced a draft of To Kill a Mockingbird, a novel that subsequently won the Pulitzer Prize.[83][84] Most proponents of UBI argue that the net creative output from even a small percentage of basic income subscribers would be a significant contributor to human productivity, one that might be lost if these people are not given the opportunity to pursue work that is interesting to them.

Welfare trapEdit

The welfare trap, or poverty trap, is a speculated problem with means-tested welfare. Recipients of means-tested welfare may be implicitly encouraged to remain on welfare due to economic penalties for transitioning off welfare. These penalties include loss of welfare and possibly higher tax rates. Opponents claim that this creates a harsh marginal tax for those rising out of poverty. A 2013 Cato Institute study claimed that workers could accumulate more wealth from the welfare system than they could from a minimum wage job in at least nine European countries. In three of them; Austria, Croatia and Denmark; the marginal tax rate was nearly 100%.[85][86]

Problems associated with the welfare trap may be aggravated by workplace automation: this is discussed in the article on wage subsidy.

Proponents of universal basic income claim that it could eliminate welfare traps by removing conditions to receive such an income, but large-scale experiments have not yet produced clear results.[87]

Pilot programs and experimentsEdit

 
Omitara, one of the two poor villages in Namibia where a local basic income was tested in 2008–2009

Since the 1960s, but in particular since 2010, there have been a number of basic income pilot programs. Some examples include:

  • Experiments with negative income tax in United States and Canada in the 1960s and 1970s.
  • The province of Manitoba, Canada experimented with Mincome, a basic guaranteed income, in the 1970s. In the town of Dauphin, Manitoba, labor only decreased by 13%, much less than expected.[88][89]
  • The basic income grant in Namibia, launched in 2008 and ended in 2009.[90]
  • An independent pilot implemented in São Paulo, Brazil launched in 2009.[91]
  • Basic income trials in several villages in India.[92] whose government has proposed a guaranteed basic income for all citizens.[93]
  • The GiveDirectly experiment in Nairobi, Kenya, the longest-running basic income pilot as of 2017.[94]
  • An experiment in the city of Utrecht in the Netherlands, launched in early 2017, that is testing different rates of aid.[93]
  • A three-year basic income pilot that the Ontario provincial government, Canada, launched in the cities of Hamilton, Thunder Bay and Lindsay in July 2017.[95] Although called basic income, it was only made available to those with a low income and funding would be removed if they obtained employment,[96] making it more related to the current welfare system than true basic income. The pilot project was canceled on 31 July 2018 by the newly elected Progressive Conservative government under Ontario Premier Doug Ford.
  • A two-year pilot the Finnish government began in January 2017 which involved 2,000 subjects[97][98] In April 2018, the Finnish government rejected a request for funds to extend and expand the program from Kela (Finland's social security agency).[99]
  • A project called Eight in a village in Fort Portal, Uganda, that a nonprofit organization launched in January 2017, which provides income for 56 adults and 88 children through mobile money.[100]
  • Social Income started paying out basic incomes in the form of mobile money in 2020 to people in need in Sierra Leone. The international initiative is financed by contributions from people world-wide, who donate 1% of their monthly paychecks.[101]
  • In a study in several Indian villages, basic income in the region raised the education rate of young people by 25%.[102]
  • In August 2020, a project in Germany started that gives a 1,200 Euros monthly basic income to 120 citizens, which will last three years and be compared against 1,380 people who do not receive basic income.[103]
  • In Spain, the ingreso mínimo vital is an economic benefit guaranteed by the Social security in Spain [104]

Examples of payments with similaritiesEdit

Alaska Permanent FundEdit

The Permanent Fund of Alaska in the United States provides a kind of yearly basic income based on the oil and gas revenues of the state to nearly all state residents. However, the payment is not high enough to cover basic expenses (it has never exceeded $2,100) and is not a fixed, guaranteed amount. For these reasons, it is not considered a basic income.

Universal Citizens DividendEdit

John Moser has proposed a Universal Citizen's Dividend, essentially a basic income bolted onto an existing tax system as a revenue-neutral social insurance by taking a percentage of productive income—gross personal income and net corporate profits—as the social insurance premium and dividing that into uniform, frequent payments made among a class of the whole. For example, the proposed American Citizens Dividend[105] restructures the United States Social Security retirement and disability insurance benefits on top of a twice-monthly payment, adjusted once per year based on the balance of a Trust specifically for the Dividend, paid to all adults. If the flat-rate Dividend FICA is subtracted from the flat Dividend benefit, the net benefit payment is linearly related to the recipient's gross income, with a defined zero point related to nominal per capita income.

Quasi-UBI programsEdit

  • Pension: A payment which in some countries is guaranteed to all citizens above a certain age. The difference from true basic income is that it is restricted to people over a certain age.
  • Child benefit: A program similar to pensions but restricted to parents of children, usually allocated based on the number of children.
  • Conditional cash transfer: A regular payment given to families, but only to the poor. It is usually dependent on basic conditions such as sending their children to school or having them vaccinated. Programs include Bolsa Família in Brazil and Programa Prospera in Mexico.
  • Guaranteed minimum income differs from a basic income in that it is restricted to those in search of work and possibly other restrictions, such as savings being below a certain level. Example programs are unemployment benefits in the UK, the revenu de solidarité active in France and citizens' income in Italy.

ExamplesEdit

  • Bolsa Família is a large social welfare program in Brazil that provides money to many low-income families in the country. The system is related to basic income, but has more conditions, like asking the recipients to keep their children in school until graduation. As of March 2020, the program covers 13.8 million families, and pays an average of $34 per month, in a country where the minimum wage is $190 per month.[106]
  • The Rythu Bandhu scheme is a welfare scheme started in the state of Telangana, India in May 2018, aimed at helping farmers. Each farm owner receives 4,000 INR per acre twice a year for rabi and kharif harvests. A budget allocation of 120 billion INR (1.6 million USD as of June 2020) was made in the 2018–2019 state budget. The scheme offers financial help of 8,000 INR (105 USD as of June 2020) per year to each farmer (for two crops), holds no cap on money disbursed to the number of acres of land owned, and does not discriminate between rich or poor landowners.[107] Preliminary results in 2018 were promising for getting farmers funding they need to invest in farming — procuring fertilizers, seeds, pesticides, and other materials. The first phase of the survey concluded that 85% of farmers received checks for amounts ranging from 1,000 INR (13 USD as of June 2020) to 20,000 INR (262 USD as of June 2020) for farmland comprising less than an acre to about five acres, and about 10% of farmers received checks for amounts between 20,000 INR to 50,000 INR (654 USD as of June 2020). Only 1% of farmers got amounts more than 50,000 INR. The spending pattern revealed that 28.5% of farmers opted to buy seed, about 18% spent the money on fertilizer, 15.4% on new agricultural assets including farm equipment, and 8.6% on pesticides. Only 4.4% of beneficiaries said they utilized it for household consumption and an insignificant percentage for repayment of loans.[108] The scheme received a high satisfaction rate of 92% from farmers since other forms of capital investment like welfare or loans had many strings attached to it and would not reach the farmers before the cropping season starts. Other states and countries are following the development of the program to see if they can implement it for their farmers.[citation needed] This is a new type of program that is considered an embryonic UBI or quasi-UBI to replace traditional systems of agricultural support.[109]
  • Citizen Capitalism is a supplemental income program proposed by legal scholar Lynn Stout and her co-authors Tamara Belinfanti and Sergio Gramitto of the book Citizen Capitalism: How A Universal Fund Can Provide Influence and Income to All, published in 2019. In the book, the authors propose building a not-for-profit universal fund composed of shares donated by corporations and philanthropists in which every American would receive one share. These shares could not be sold, donated, or borrowed against. However, each "citizen shareholder" would receive an even portion of the net dividends paid out by shares in the fund, therefore contributing to the amelioration of income inequality. Each shareholder would also receive additional influence in the form of a vote (corresponding to their shares in the fund), potentially providing for a significantly expanded degree of citizen engagement in the role of public corporations in American society.[110]

In response to COVID-19Edit

Democratic U.S. politicians Andrew Yang, Alexandria Ocasio-Cortez and Tulsi Gabbard were early advocates for universal basic income in response to the COVID-19 pandemic.[111][112][113] On 16 March, Republican senators Mitt Romney and Tom Cotton stated their support for $1,000 payments, the former saying it should be a one-time payment to help with short-term costs.[114] On 17 March, the Trump administration indicated that some payment would be given to non-millionaires as part of a stimulus package.[115][116] This amounts to $1,200 per adult and $500 per child in the CARES Act, which passed unanimously in the Senate and House of Representatives and was signed into law by President Trump in late March.[117][118]

Further plans have been introduced in U.S. Congress, but have not been signed into law. On 13 March 2020, Democratic representatives Ro Khanna and Tim Ryan introduced legislation to provide payments to low-income citizens via an earned income tax credit.[119][120] Democratic senators Bernie Sanders, Ed Markey and Kamala Harris presented a plan for $2,000 payments to Americans making less than $120,000 annually for up to three months after the crisis ends,[121][a] which Sanders said would help "every person in the United States, including the undocumented, the homeless, the unbanked, and young adults excluded from the CARES Act."[123] House Speaker Nancy Pelosi has endorsed basic income during the crisis,[121][124] and on 15 May, the House passed a $3 trillion bill which would provide one-time $1,200 payments for individuals making less than $75,000 annually,[125][126] but Republicans pegged it as "dead on arrival" in the Senate.[127] On 27 July, a $1 trillion Republican bill including payments for individuals meeting the same criteria was presented in the Senate,[128] but has so far failed to gain bipartisan support.[129]

Mayors in 16 U.S. cities[b] plan to establish basic income pilot programs in response to the economic downturn brought by the pandemic.[130] Twitter founder Jack Dorsey is set to help fund the program. The program is expected to launch in Pittsburgh with $500 monthly increments being awarded to people who qualify, including those who are struggling and of diverse backgrounds so the pilot program can be effectively studied.[131]

Spain introduced minimum basic income in response to Covid19 in May 2020 "to fight a spike in poverty due to the coronavirus pandemic". "The scheme […] aims to guarantee an income of 462 euros ($546) per month for an adult living alone, while for families, there would be an additional 139 euros per person, whether adult or child, up to a monthly maximum of 1,015 euros per home. It is expected to cost state coffers three billion euros ($3.5 billion) a year."[132]

Public opinionEdit

Support for a universal basic income varies widely across Europe, as shown by a recent edition of the European Social Survey.[citation needed] A high share of the population tends to support the scheme in southern and eastern European Union countries, while enthusiasm tends to be lower in western European countries such as France and Germany, and even lower in Scandinavian countries such as Norway and Sweden. Individuals who face greater economic insecurity because of low income and unemployment tend to be more supportive of a basic income.[133] Overall, support tends to be on average higher in countries where existing unemployment benefits are not generous or the receipt of benefits is conditioned on certain job search behavior. [134] An April 2020 public poll by YouGov found that the majority of the public in the United Kingdom supported a universal basic income in response to the 2020 COVID-19 pandemic, with only 24% unsupportive.[135]

A poll conducted by the University of Chicago in March 2020 indicated that 51% of Americans aged 18–36 support a monthly basic income of $1,000.[136] Support for universal basic income spans the political spectrum, with conservatives, progressives, and libertarians all having camps both for and against basic income.[41]

Petitions, polls and referendumsEdit

  • 2008: an official petition for basic income was launched in Germany by Susanne Wiest.[137] The petition was accepted, and Susanne Wiest was invited for a hearing at the German parliament's Commission of Petitions. After the hearing, the petition was closed as "unrealizable."[138]
  • 2013–2014: a European Citizens' Initiative collected 280,000 signatures demanding that the European Commission study the concept of an unconditional basic income.[139]
  • 2015: a citizen's initiative in Spain received 185,000 signatures, short of the required number to mandate that the Spanish parliament discuss the proposal.[140]
  • 2016: the world's first universal basic income referendum in Switzerland on 5 June 2016 was rejected with a 76.9% majority.[1][141] Also in 2016, a poll showed that 58% of the EU's population is aware of basic income, and 65% would vote in favor of the idea.[142]
  • 2017: Politico/Morning Consult asked 1,994 Americans about their opinions on several political issues including national basic income; 43% either "strongly supported" or "somewhat supported" the idea.[143]
  • 2019: in a September poll conducted by The Hill and HarrisX, 49% of U.S. registered voters support basic income, up 6% from a similar survey conducted six months earlier.[144]
  • 2019: In November, an Austrian initiative received approximately 70,000 signatures but failed to reach the 100,000 signatures needed for a parliamentary discussion. The initiative was started by Peter Hofer. His proposal suggested a basic income of 1200 EUR for every Austrian citizen.[145]
  • 2020: A public poll by YouGov in 2020 has found that the majority of people in the United Kingdom support a universal basic income, with only 24% unsupportive.[135] In March 2020, over 170 MPs and Lords from all political parties signed a letter calling on the government to introduce a basic income during the COVID-19 pandemic.[146]

Prominent advocatesEdit

Prominent contemporary advocates include Economics Nobel Prize winners Peter Diamond and Christopher Pissarides,[147] business magnate and engineer Elon Musk,[148] political philosopher Philippe Van Parijs,[149] entrepreneur, inventor and futurist Ray Kurzweil,[150] political philosopher Karl Widerquist,[151] economist Guy Standing, former finance minister of Greece Yanis Varoufakis,[152] Facebook founder Mark Zuckerberg,[153][154] eBay founder Pierre Omidyar,[155] and entrepreneur and nonprofit founder Andrew Yang, who ran for the Democratic nomination for the 2020 United States presidential election on a platform of instituting a $1,000-a-month universal basic income.[156]

On 12 April 2020, Pope Francis called for the introduction of basic income in response to COVID-19.[157]

Prominent criticsEdit

See alsoEdit

ReferencesEdit

Footnotes

Citations

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