- A basic income (also called basic income guarantee, citizen's income, unconditional basic income, universal basic income (UBI), basic living stipend (BLS) or universal demogrant) is typically described as a new kind of welfare regime in which all citizens (or permanent residents) of a country receive a regular, liveable and unconditional sum of money, from the government. From that follows, among other things, that there is no state requirement to work or to look for work in such a society. The payment is also, in such a pure basic income, totally independent of any other income.
The idea of a state-run basic income dates back to the late 18th century when English radical Thomas Spence and American revolutionary Thomas Paine both declared their support for a welfare system in which all citizens were guaranteed a certain income. In the 19th century and until the 1960s the debate on basic income was limited, but 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 onwards 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 are related to basic income, such as the Permanent Fund in Alaska and Bolsa Família in Brasil. From 2008 and onwards there has also been several experiments with basic income and related systems. Especially in countries with an existing welfare state a part of the funding assumably comes from replacing the current welfare arrangements, or a part of it, such as different grants for unemployed people. Apart from that there are several ideas and proposals regarding the rest of the financing, as well as different ideas about the level and other aspects.
The idea of an unconditional basic income, given to all citizens in a state (or all adult citizens), was first presented near the middle of the 19th century. But long before that there were ideas of a so-called minimum income, the idea of a one-off grant and the idea of a social insurance (which still is a key feature of all modern welfare states, with insurances for and against unemployment, sickness, parenthood, accidents, old age and so forth).[citation needed]
The minimum income, the idea to eradicate poverty by targeting the poor, is in contradiction with basic income given "to all", but nevertheless share some underlying ideas about the state's or the city's welfare responsibilities towards its citizens. 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 grounds of justice but for the sake of a more effective exercise of morally required charity". However, to be entitled poor relief the person’s poverty must not, he argued, be undeserved, but he or she must "deserve the help he gets by proving his willingness to work."[6]
The first to develop the idea of a 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 (published posthumously by his widow in 1795), whose last chapter described his vision of a 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 Convention Thomas Paine (1737–1809) developed the idea much further, a couple of years after Condorcet’s death.
The first social movement for basic income developed around 1920 in the United Kingdom. Its proponents included Bertrand Russell, Dennis Milner (with wife) and Clifford H. Douglas.
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 Milner, a Quaker and a Labour Party member, published jointly with his wife Mabel, a short pamphlet entitled “Scheme for a State Bonus” (1918). There they 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.
Clifford 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 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 and selective grants. Committee member Lady Rhys-Williams argued for basic income. She was also the first to develop the negative income tax model.[7][8]In the 1960s and 1970s, there were a welfare debates in United States and Canada which included basic income. Six pilot projects were also conducted with negative income tax. Then US president Richard Nixon once even proposed a negative income tax in a bill to the US Congress. But the Congress eventually only approved a guaranteed income for the elderly and the disabled, not for all citizens.[9]
In the late 1970s and the 1980s, basic income was more or less forgotten in the United States, but on the other hand it started to gain some attraction 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. From the 1980s, some people outside party politics and universities took interest. In West Germany, groups of unemployed people took a stance for the reform.[10]
From 2005–2010 and onwards, basic income again became a hot topic in many countries. Basic income is nowaday discussed from a variety of perspectives. But not least in the context of ongoing automation and robotisation, often with the argument that these trends will mean less paid work in the future, which in turn would create a need for a new welfare model. Several countries are planning for local or regional experiments with basic income and/or related welfare systems. The experiments in India, Finland and Canada, for example, have received international media attention. There has also been several polls about basic income, investigating the public support for the idea in different countries, and in 2016 a basic income proposal was rejected in Switzerland by 73% of the voters in a national referendum.
Arguments for, against and around basic income
Transparency and administrative efficiency
Basic income is potentially a much simpler and more transparent welfare system than existing in the welfare states today.[11] Instead of separate welfare programs (including unemployment insurance, child support, pensions, disability, housing support) it could be one income, or it could be a basic payment that welfare programs could add to.[12] This could require less paperwork and bureaucracy to check eligibility. The lack of means test or similar bureaucracy would allow for saving on social welfare, which could be put towards the grant. The Basic Income Earth Network (BIEN) claims that basic income costs less than current means-tested social welfare benefits, and has proposed an implementation that it claims to be financially viable.[13][14]However, other proponents argue for adding basic income to existing welfare grants, rather than replacing them.
Poverty reduction
Advocates of basic income often argue that it has a potential to reduce or even eradicate poverty.[15]
Freedom
Philippe Van Parijs
Several advocates of basic income have argued that basic income promotes freedom.Right-leaning supporters have argued that policies like basic income free welfare recipients from the paternalistic oversight of conditional welfare-state policies.[citation needed]
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".[16] 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.[17] The theory goes like this:
If some other group of people controls resources necessary to an individual's survival, 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. But today, resources necessary to 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, this argument goes, 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.[18] Under this argument, personal, political, and religious freedom are worth little without the power to say no. In this view, basic income provides an economic freedom, which—combined with political freedom, freedom of belief, and personal freedom—establish each individual's status as a free person.
Arguments from different ideologies
Georgist views: Geolibertarians seek to synthesize propertarian libertarianism and a geoist (or Georgist) philosophy of land as unowned commons or equally owned by all people, citing the classical economic distinction between unimproved land and private property. The rental value of land is produced by the labors of the community and, as such, rightly belongs to the community at large and not solely to the landholder. A land value tax (LVT) is levied as an annual fee for exclusive access to a section of earth, which is collected and redistributed to the community either through public goods, such as public security or a court system, or in the form of a basic guaranteed income called a citizen's dividend. Geolibertarians view the LVT as a single tax to replace all other methods of taxation, which are deemed unjust violations of the non-aggression principle.
Right-wing views: Support for basic income has been expressed by several people associated with right-wing 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. Others have contended that it could also act as a form of compensation for fiat currency inflation.[19][20][21]
Feminist views: Feminists' views on the basic income can be loosely divided into two opposing views: one view which supports basic income, seeing it as a way of guaranteeing a minimum financial independence for women, and recognizing women's unpaid work in the home; and another view which opposes basic income, seeing it as having the potential to discourage women from participating in the workforce, and to reinforce traditional gender roles of women belonging in the private area and men in the public area.[22][23]
EmploymentOne argument against basic income is that if people have free and unconditional money, they will "get lazy" and not work as much as before.[24][25][26] Less work means less tax revenue, argue critics, and hence less money for the state and cities to fund public projects. If there is a disincentive to employment because of basic income, it is however expected that the magnitude of such a disincentive would depend on how generous the basic income were to be.
There have been some studies around the employment levels during the experiments with basic income and negative income tax, and similar systems. In the negative income tax-experiments in United States in the 1970s, for example, there were 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. It was also a higher reduction in hours working when the benefit was higher. The participants in these experiments, however, knew that the experiment was limited in time.[25] In the Mincome experiment in rural Dauphin, Manitoba, also in the 1970s, there were also a slight reduction 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.[27] Under Mincome, "the reduction of work effort was modest: about one per cent for men, three per cent for wives, and five per cent for unmarried women."[28]
Another study that contradicted such decline in work incentive was a pilot project implemented in 2008 and 2009 in the Namibian village of Omitara; the assessment of the project after its conclusion found that economic activity actually increased, particularly through the launch of small businesses, and reinforcement of the local market by increasing households' buying power.[29] 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.[30]
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 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.[31]
If there is a disincentive to employment because of basic income, it is however expected that the magnitude of such a disincentive would depend on how generous the basic income were to be. Some campaigners in Switzerland have suggested a level that would only just be liveable, arguing that people would want to supplement it.[32]
Tim Worstall, a writer, blogger and Senior Fellow of the Adam Smith Institute[33], has argued that traditional welfare schemes create a disincentive to work, because such schemes typically cause people to lose benefits at around the same rate that their income rises (a form of welfare trap where the marginal tax rate is 100 percent). He has asserted that this particular disincentive is not a property shared by basic income, as the rate of increase is positive at all incomes.[34]
Bad behaviour
There are concerns that some people will spend their basic income on alcohol and drugs.[18][35] 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 that "concerns about the use of cash transfers for alcohol and tobacco consumption are unfounded".[36]Wage slavery and alienation
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.[37] Gorz saw basic income as a necessary adaptation to the increasing automation of work, but also a way to overcome the alienation in work and life and to increase the amount of leisure time.[38]Economic growth
Some proponents have argued that basic income can increase economic growth because it would sustain people while they invest in education to get interesting and well-paid jobs.[39][18] However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth.[40]Automation
The debates about basic income and automation are closely linked. For example, Mark Zuckerberg argues that automation will take away many jobs in coming years, and that basic income is especially needed because of that. Concerns about automation have prompted many in the high-technology industry to argue for basic income as an implication of their business models.Many technologists believe that automation (among other things) is creating technological unemployment. Journalist Nathan Schneider first highlighted the turn of the "tech elite" to these ideas with an article in Vice magazine, which cited Marc Andreessen, Sam Altman, Peter Diamandis, and others.[41][42][43] Some studies about automation and jobs validate these concerns. The US White House, in a report to the US Congress, estimated that a worker earning less than $20 an hour in 2010 will eventually lose their job to a machine with 83% probability. Even workers earning as much as $40 an hour faced a probability of 31%.[42] With a rising unemployment rate, poor communities will become more impoverished worldwide. Proponents of universal basic income argue that it could solve many world problems like high work stress, and provide more opportunities and efficient and effective work. This claim is supported by some studies. In a study in Dauphin, Manitoba, only 13% of labor decreased from a much higher expected number.[44] In a study in several Indian villages, basic income in the region raised the education rate of young people by 25%.[45]
Besides technological unemployment, some tech-industry experts worry that automation will destabilize the labor market or increase economic inequality. One is example, Chris Hughes, co-founder of both Facebook and Economic Security Project. Automation has been happening for hundreds of years; it has not permanently reduced the employment rate but has constantly caused employment instability. It displaces workers who spend their lives learning skills that become outmoded and forces them into unskilled labor. Paul Vallée, a Canadian tech-entrepreneur and CEO of Pythian, argues that automation is at least as likely to increase poverty and reduce social mobility than it is to create ever-increasing unemployment rate. At the 2016 North American Basic Income Guarantee Congress in Winnipeg, Vallée examined slavery as a historical example of a period in which capital (African slaves) could do the same things that human labor (poor whites) could do. He found that slavery did not cause massive unemployment among poor whites, but instead increased economic inequality and lowered social mobility.[46]
Economic critique
Daron Acemoglu, has expressed doubts about basic income with the following statement: "Current US status quo is horrible. A more efficient and generous social safety net is needed. But UBI is expensive and not generous enough."[47] Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare".[48]
Basic income as a part of a post-capitalistic economic system
Erik Olin Wright, 2013.
Harry Shutt proposed basic income and other measures to make all or most enterprises collective rather than private. These measures would create a post-capitalist economic system.[49]Erik Olin Wright characterizes basic income as a project for reforming capitalism into an economic system by empowering labor in relation to capital, granting labor greater bargaining power with employers in labor markets, which can gradually de-commodify labor by decoupling work from income. This would allow for an expansion in scope of the "social economy", by granting citizens greater means to pursue activities (such as the pursuit of art) that do not yield strong financial returns.[50]
James Meade advocated for a social dividend scheme to be funded by publicly owned productive assets.[51] Russell argued for a basic income alongside public ownership as a means to shorten the average working day and achieve full employment.[52]
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.[53]
Herman Daly, considered as one of the founders of ecologism, argued primarily for a zero growth economy within the ecological limits of the planet. But to have such a green and sustainable economy, including basic economic welfare and security to all people, he wrote a lot about the need for structural reforms of the capitalistic system, including basic income, monetary reform, land value tax, trade reforms and higher eco-taxes (taxes on pollution and CO2). For him, basic income was thus part of a larger structural change of the economic system, towards a more green and sustainable system.
Debates in national parliaments
Germany
A commission of the German parliament discussed basic income in 2013 and concluded that it is "unrealizable" because:
it would cause a significant decrease in the motivation to work among citizens, with unpredictable consequences for the national economy
it would require a complete restructuring of the taxation, social insurance and pension systems, which will cost a significant amount of money
the current system of social help in Germany is regarded as more effective because it is more personalized: the amount of help provided depends on the financial situation of the recipient; for some socially vulnerable groups, the basic income could be insufficient
it would cause a vast increase in immigration
it would cause a rise in the shadow economy
the corresponding rise of taxes would cause more inequality: higher taxes would cause higher prices of everyday products, harming the finances of poor people
no viable way to finance basic income in Germany was found[54][55]
Funding strategies
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The affordability of a basic income proposal relies on many factors, such as the costs of any public services it replaces, required tax increases, and less tangible auxiliary effects on government revenue or spending (for example a successful basic income scheme may reduce crime, thereby reducing required expenditure on policing and justice).[citation needed]Reducing or removing of the current welfare systems
Basic income would substitute to a wide range of existing social welfare programmes, tax rebates, state subsidies and work activation spendings. All or a lot of those budgets (including administrative costs) could, at least in theory, be reallocated to finance basic income.[citation needed]Income tax
Although basic income is paid to everyone universally, people whose earnings are above the mean income are net contributors to the basic income scheme, mainly through an income tax. In practice this, means that the net cost of basic income is much lower than the raw cost calculated as a sum of monthly payments to the whole population.[citation needed] A 2012 affordability study in the Republic of Ireland by Social Justice Ireland found that basic income would be affordable with a 45% income tax rate. This would lead to an improvement in income for the majority of the population.[56] Charles M. A. Clark estimates that the United States could support a basic income large enough to eliminate poverty and continue to fund all current government spending (except that which would be made redundant by the basic income) with a flat income tax of 39%.[57]
Tax on consumption (VAT)
Other taxes
Other taxes that have been mentioned to finance basic income include tax on capital, carbon tax and financial transaction tax.
Monetary reform
C.H. Douglas, an early British proponent of basic income and monetary reform.
Major C.H. Douglas argued in the 1920s and 1930s for a political philosophy called Social Credit. Central in this philosophy was a combination of basic income and monetary reform. In the 1990s and onwards, his ideas has been reintroduced by some authors. Among them Michael Rowbotham in The Grip of Death: A Study of Modern Money, Debt Slavery and Destructive Economics (1998)[58] and Richard C. Cook in We Hold These Truths: the Hope of Monetary Reform (2008).There are also economists and political scientists who have argued for the combination of basic income and monetary reform with inspiration from the original Chicago plan and the 100% money proposals from the 1930s. Among them Joseph Huber and James Robertson.
In the 2010s there have also been proposals about a different kind of "quantitative easing". British Labour Party leader Jeremy Corbyn, for example, has talked about a “People’s QE”, in which the Bank of England would channel money directly to the government, which then would use it to stimulate the economy through different projects. Another model was suggested by a group of economists in an article in Financial Times. They proposed that quantitative easing money from ECB should be given directly to citizens of the eurozone countries, instead of to the banks but also instead of giving it to the government. Economist Milton Friedman once called that kind of payments “helicopter money”.[59] The monetary reformist Ellen Brown thinks the same. In an article named "How to Fund a Universal Basic Income Without Increasing Taxes or Inflation" she starts off by noting an Oxford-study which predicts that many, indeed most, jobs will be done by robots with artificial intelligence in the future, and that this kind of research has contributed to the recent interest in basic income. She also notes that if the entire welfare budget were split among the country’s 50 million adults, each of them would get £5,160 a year. That, however, is not enough to cover for basic survival in a modern economy - she says. To pay for the rest, to be able to raise the basic income to a reasonable level, one could either increase other taxes and/or reduce other programs, or one could go for "quantitative easing". The main objection to "any form of quantitative easing in which new money gets into the real economy", she explains, is that it would cause hyperinflation. But the quantitative easing in the form of money from central banks to the British economy via the banks, $3.7 trillion according to Brown, has not increased inflation so far. She also thinks that the velocity of money would change with quantitative easing directly to the people, and that this would reduce any tendences to inflation.[60]
Contemporary political parties that include both basic income and monetary reform in their political platform include: New Economics Party (New Zealand)[61] and Enhet (Sweden).
Reduction of medical costs
The Canadian Medical Association passed a motion in 2015 which clearly signed the organisations support for basic income, and for basic income trials in Canada.[62]Paul Mason, a British journalist, has stated that universal basic income would probably reduce the high medical costs associated with diseases of poverty. The stress, diseases like high blood pressure, type II diabetes etc. would according to Mason probably become less common.[63]
Taxing the data giants
The Guardian has speculated and vaguely suggested, in an Editorial published in September 2017, that basic income could be financed by taxing data giants like Google and Facebook. The editorial writes: "Mrs Clinton tried, and failed, to make the numbers work by looking at spectrum levies. But if data is the new oil, why not tax the Googles of this world for the use of customers’ data? These could capitalise a fund that makes annual payouts. Citizens could then see they had collectively traded their privacy for something more tangible than tweets. Tech firms might squeal. But one of the fund’s biggest contributors would be Facebook – its founder, Mark Zuckerberg, backs UBI as an idea. He, and others, could now do so with their cash."[64]Specific funding proposals
Scott Santens, United States
Scott Santens, an American basic income activist has suggested a yearly basic income of $13,266 ($1,105/mo) per adult citizen and $4,598 ($383/mo) per citizen under 18 in the United States. He proposes among other things the following reforms to achieve this:[65]Food and nutrition assistance programs ($108 billion) and temporary assistance for needy families ($17 billion) is removed.
Likewise the following are also replaced with basic income: The earned income credit ($73 billion), the child tax credit ($56 billion), home ownership tax expenditures ($340 billion), married filing jointly preferential tax treatment ($70 billion), the tax break on pensions ($160 billion), fossil fuel subsidies ($33 billion), and treating capital gains differently than ordinary income ($160 billion).
A carbon tax starting at $50/ton with annual increases of $15/ton. That would, according to his calculations, add $150 billion to the basic income fund the first year, and thereafter grow annually. In five years it could grow enough to provide everyone with a basic income at about $100 per month.
A financial transaction tax starting at 0.34% (based on a microsimulation by Urban-Brookings). It would raise an estimated $75 billion.
Seigniorage reform, or monetary reform, by which he means public money creation instead of money creation through bank loans. Such a reform could according to Santens annually contribute with about $2.22 trillion dollar to basic income.
Land-value tax (LVT)
Existing basic income and related systems
Main article: Basic income pilots
See also: Basic income around the worldOmitara, one of the two poor villages in Namibia where a local basic income was tested in 2008–2009.
The Permanent Fund of Alaska in the United States provides a kind of basic income, based on the oil and gas revenues of the state, to (nearly) all state residents.Bolsa Família is a big social welfare program in Brazil that provides money to many poor families in the country. The system is related to basic income, but also has some differences.
There are also several smaller experiments, which have been labeled as "basic income pilots". The best known are:
Experiments with negative income tax in United States and Canada in the 1960s and 1970s.
A town in Manitoba, Canada experimented with Mincome, a basic guaranteed income in the 1970s[66]
The Basic Income Grant (BIG) in Namibia, launched in 2008[67]
An independent pilot implemented in São Paulo, Brazil[68]
Several villages in India participated in basic income trial,[69] while the government has proposed a guaranteed basic income for all citizens.[70]
The GiveDirectly experiment in Nairobi, Kenya, which is the biggest and longest basic income pilot as of 2017.[71]
The city of Utrecht in the Netherlands launched an experiment in early 2017 that is testing different rates of aid.[70]
Ontario, Canada was to implement a basic income trial in summer 2017.[72]
The Finnish government implemented a two-year pilot in January 2017 involving 2,000 subjects.[73]
Eight, a nonprofit organisation, launched a project in a village in Fort Portal, Uganda in January 2017, providing income for 56 adults and 88 children through mobile money.[74]