Basic income


Basic income, also called universal 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.
Basic income can be implemented nationally, regionally, or locally. An unconditional income that is sufficient to meet a person's basic needs is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income. The expression 'negative income tax' is used in roughly the same sense as basic income, sometimes with different connotations in respect of the mechanism, timing or conditionality of payments. Some welfare systems are sometimes regarded as steps on the way to a basic income, but because they have conditions attached, they are not basic incomes. One such system is a guaranteed minimum income system, which raises household incomes to a specified minimum. For example, Bolsa Família in Brazil is restricted to low-income families, and the children of recipients are obligated to attend school.
Several political discussions are related to the basic income debate, including those regarding automation, artificial intelligence, 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.

History

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. 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 1946 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. Universal unconditional payments, such as the United Kingdom's Child Benefit for children.
A means-tested benefit that raises a household's income to a guaranteed minimum level is unlike a basic income in that 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, 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."
The first to develop the idea of social insurance was Marquis de Condorcet. 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, 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 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:
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. 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.
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." Congress eventually approved a guaranteed minimum income for the elderly and the disabled, not for all citizens.
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. 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.
In 2002, a green paper was commissioned on the topic by the Government of Ireland.
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.
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%.

Perspectives in the basic income debate

Automation

The debates about basic income and automation are closely linked. 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 of $1,000/month rather than worker retraining programs.
Some technologists believe that automation, among other things, is creating technological unemployment. Some in the "tech elite" support the idea of a UBI. has advocated for a basic income to counter job displacement through automation. His basic income policy, the Freedom Dividend, proposes to give every American adult $1,000 a month.

Bad behavior

Criticism of a basic income includes the argument that some recipients would spend a basic income on alcohol and other drugs. 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."

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

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.

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 that do not yield strong financial returns.

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

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.
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.
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," whilst Business Secretary Alok Sharma said that the UBI has been "tested in other countries and hasn't been taken forward"

Economic critique

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 — 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. 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". Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare". Simeon Djankov, professor at the London School of Economics, argues the costs of a generous system are prohibitive.
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.
Some conservatives have contended that universal basic income could act as a form of compensation for fiat currency inflation.

Economic growth

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. However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth.

Employment

One argument against basic income is that if people have free and unconditional money, they would "get lazy" and not work as much. 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.
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. Under Mincome, "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".
A recent study of the Alaska Permanent Fund Dividend -— 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 from the University of Chicago Harris School of Public Policy and Ioana Marinescu from the University of Pennsylvania School of Public Policy and Practice, 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. 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.
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. 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.
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.
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.

Freedom

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". 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; 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. 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 equality

The Scottish economist Ailsa McKay has argued that basic income is a way to promote gender equality. 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".
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. 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. 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.

Poverty reduction

Advocates of basic income often argue that it has the potential to reduce or even eradicate poverty.
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 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.
Milton Friedman, a renowned economist, supported UBI by reasoning that it would help to reduce poverty. He said: "The virtue of is precisely that it treats everyone the same way. here’s none of this unfortunate discrimination among people."
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, , 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."

Reduction of medical costs

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

Transparency and administrative efficiency

According to Guy Standing's theories, basic income may be a much simpler and more transparent welfare system than welfare states currently use. Standing suggests that instead of separate welfare programs, social support systems could be combined into one income, or could be one basic payment that welfare programs could add to. 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.
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". 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. However, other proponents argue for adding basic income to existing welfare grants, rather than replacing them.
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.

Wage slavery and alienation

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. 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.
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. 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 trap

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%.
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.

Pilot programs and experiments

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

Alaska Permanent Fund

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 and is not a fixed, guaranteed amount. For these reasons, it is not considered a basic income.

Quasi-UBI programs

Nimses is a concept that offers universal basic income to every member of its system. The idea of Nimses consists of a time-based currency called Nim. Every person in Nimses receives nims that can be spent on different goods and services. This concept was initially adopted in Eastern Europe.
Electroneum is a cryptocurrency project which uses a mobile application to pay users. The first KYC/AML compliant cryptocurrency, Electroneum enables users to mine using their mobile phone through a simulated mining system. The system pays up to $3.00 per month to its users, with the goal of enabling the world's unbanked population with financial freedom. The cryptocurrency can currently be used to purchase mobile top-ups from the South African telecommunications company The Unlimited as well as to transact with any business that has integrated the Electroneum API, or directly between individuals.

In response to COVID-19

Democratic politicians Andrew Yang, Alexandria Ocasio-Cortez and Tulsi Gabbard were early advocates for universal basic income in response to the COVID-19 pandemic. On 17 March, the Trump administration indicated that some payment would be given to non-millionaires as part of a stimulus package. This amounts to $1,200 per adult and $500 per child in the CARES Act, which passed unanimously in the Senate and House and was signed into law by President Trump in late March.
Mayors in 11 U.S. cities plan to establish basic income pilot programs in response to the economic downturn brought by the pandemic.

Public opinion

Support for a universal basic income varies widely across Europe, as shown by a recent edition of the European Social Survey. 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. 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. 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.
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. Support for universal basic income spans the political spectrum, with conservatives, progressives, and libertarians all having camps both for and against basic income.

Petitions, polls and referendums

Prominent contemporary advocates include Economics Nobel Prize winners Peter Diamond and Christopher Pissarides, tech investor and engineer Elon Musk, political philosopher Philippe Van Parijs, former finance minister of Greece Yanis Varoufakis, Facebook founder Mark Zuckerberg, eBay founder Pierre Omidyar, 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.
On 13 March 2020, Democratic representatives Ro Khanna and Tim Ryan introduced legislation to provide payments to low-income citizens during the COVID-19 crisis via an earned income tax credit. On 16 March, Republican senators Mitt Romney and Tom Cotton stated their support for a $1,000 basic income, the former saying it should be a one-time payment to help with short-term costs. Senator Bernie Sanders has called for $2,000 in monthly basic income to help "every person in the United States, including the undocumented, the homeless, the unbanked, and young adults excluded from the CARES Act." House Speaker Nancy Pelosi has also suggested that a basic income could be "worthy of attention."
On 12 April 2020, Pope Francis called for the introduction of basic income in response to coronavirus.

Prominent critics