Universal income: a radical idea or a feesible solution?

Calum Atkinson

The economic impact of the coronavirus crisis has been catastrophic. All around the globe, stock markets have plunged and unemployment has surged.

Governments have been considering various radical measures to lessen the hit on the economy and society. One idea that has gained traction in many places is an emergency form of universal basic income.

Universal basic income (UBI) is a monthly or weekly payment from the government to all. Everyone receives the stipend, whatever their gender, employment status, family structure, contribution to society, housing costs, or anything else. This payment would be a legal right to all citizens and would not be means-tested.

With the coronavirus crisis, the idea has become mainstream but it has already been growing in popularity for many years.  As we try to grapple with major problems facing society like an aging population, the future of work in the age of technology and a capitalist system in crisis, UBI has been put forward as part of the solution.

“It’s an incredibly simple idea, a monthly allowance of enough to pay for your basic needs: food, shelter, education. And it’s completely unconditional: not a favour, but a right,” Dutch historian, author and UBI advocate Rutger Bregman explains.

Bregman thinks that UBI is the most effective way to combat poverty. He explains that while well intentioned, most common schemes to help those in poverty are not effective.

“When it comes to poverty, we should stop pretending to know better than poor people. The great thing about money is that people can use it to buy things they need instead of things self-appointed experts think they need,” Bregman argues.

The idea is often dismissed as pie in the sky as it’s seen as completely unaffordable. But Bregman argues against this, explaining that poverty is already hugely expensive. “The costs of child poverty in the US are estimated at $500 billion each year, in terms of higher healthcare spending, less education and more crime,” Bregman says. In addressing poverty effectively, massive savings would be made.

This idea is not a new one. The general idea of a basic income has been around for centuries. As far back as the 18th century, Thomas Paine wrote about payments to all people, “rich or poor”.

Over the years many others from left and right have advocated for a form of UBI. Figures as diverse as the civil rights leader Martin Luther King to the economist Milton Friedman have spoken in general support of the idea. The idea has broad appeal in that many believe it is effective in tackling poverty while others find it attractive because it could replace a complex and bloated welfare system.

In fact, the policy almost came to fruition in 1969 under the Nixon administration. President Nixon wanted every American family of four to receive, from the state, at least $1,600 dollars a year. However, late in the day, Nixon was dissuaded from the idea after advice from others.

But more recently, just this year in fact, UBI was a key tenet of Democratic candidate Andrew Yang’s platform. He called his form of UBI, a freedom dividend and it would pay $1,000 a month to every American adult over the age of 18.

“This would enable all Americans to pay their bills, educate themselves, start businesses, be more creative, stay healthy, relocate for work, spend time with their children, take care of loved ones, and have a real stake in the future,” Yang argues. “Putting money into people’s hands and keeping it there would be a perpetual boost and support job growth and the economy,” he says.

Various forms of UBI have been trialled in many towns and counties around the world over the last number of decades. These trials have had varying degrees of success.

Results of an experiment in Finland were released recently. The trial involved nearly 2,000 unemployed residents receiving a regular monthly stipend. After two years many of the recipients remained jobless but they were healthier and happier than other unemployed people. The experiment was widely declared a failure.

On the other hand, Alaska is a success story and often put forward to show the merits of UBI. Since 1982, every man,woman and child has received money from the state government. This usually falls between $1000 and $2000 a year and the program has been lauded far and wide.

Many object to UBI as they believe it disincentivizes work but the contrary has proven to be true in Alaska. “The notion that people are going to take this money and lay around, I don’t buy that,” former UK Labour leader Ed Miliband said in a recent interview.

Miliband argues that UBI would be liberating and allow more and more people to start their own business or explore further education. “The middle class already take this for granted,” he explains but having money to fall back on would massively help others.

Another example held up by supporters of UBI is an experiment in Dauphin, Canada in 1974. Everybody was guaranteed a basic income ensuring that no one fell below the poverty line.

The school performance of children improved substantially. The hospitalisation and crime rate were down. People didn’t quit their jobs, the only people who worked a little less were new mothers and students, who stayed in school longer.

The results of the many experiments that have been conducted into this policy paint a complex picture but there is certainly enough promise to justify further exploration. This is especially true when we consider the complex problems the modern world faces.

In the modern world, “the danger is greater and greater inequality, this idea, that every citizen has a stake in the growing wealth of the country is very attractive,” Miliband said.

Calum Atkinson

Image Credit: PxFuel