Guaranteed income for all: Utopian or useful?

JON VAN HOUSEN and MARIELLA RADAELLI

It sounds like another utopian ideal that defies common sense: Governments should provide a basic income to citizens whether they work or not. To capitalists, the notion flies in the face of fundamental facts of human nature. Hard-working people should be rewarded, they say, and those who don’t will bear the consequences.

Yet a surprising range of governments and even some of the wealthy see merit in the idea. They think it could help immunize against a range of social ills and also prime the economic pump.
Universal basic income in Europe
Proponents of UBI made their point on a plaza in Hamburg.

Universal Basic Income (UBI), a fixed income to be granted to all citizens unconditionally, has actually begun with some pilot projects in Europe. Finland started a two-year trial with a guaranteed €560 a month paid to a selected 2,000 unemployed Finns. The Netherlands also launched a program with 250 Dutch citizens in Utrecht, while Scotland could become the first in the UK to launch a trial system. A few days ago the Scottish think-tank Common Weal released a policy paper suggesting that universal basic income could be the best option for Scotland to become independent from Britain.

Last week Spanish economists and intellectuals discussed the possibility of a pilot program for a neighborhood in Madrid that is riddled with poverty, while a national political party in Germany named Bündnis Grundeinkommen is campaigning on the introduction of UBI. Germany already has private donors and crowd-funding for micro-projects offering universal income.

In January, the Italian government will grant a “reddito di inclusion”, a substantial monthly income, to 400,000 families. The annual cost is about 2 billion euros.

But how could society come up with “free money” for all? Certainly money, like energy, cannot be created from nothing. Paradoxically, some think such funding would actually energize economies and creativity.

Martin Ford, a futurist focusing on the impact of artificial intelligence and robotics on society and economies, says that UBI is “market oriented.”

“It encourages entrepreneurship and creativity — if you have a parachute, you can afford to risk a little more. The alternative is angry and frustrated with people who vote for angry people,” he says.

Even high-profile tech entrepreneurs such as Tesla founder Elon Musk and Facebook founder Mark Zuckerberg have come out in support of the idea.

The European Union thinks the concept has enough validity that it is co-financing a range of groups of that are studying basic income schemes.

Advocates argue the approach would have positive effects on labor supplies, education and job selection as it increases individual freedom. They also say it protects people in a rapidly changing world by helping mitigate the negative effects of automation, computer technology and robots that eliminate jobs.

It also has the potential to reduce bureaucracy and its costs dramatically while promoting entrepreneurship. And it could replace the need for complex welfare systems.

Naturally there are plenty of skeptics. Matt Bruenig, a lawyer at the think-tank Demos, says “money partially motivates people to work, so UBI gives you slightly less motivation”, yet its effects might play out differently in various cultures. “The French, for instance, don’t seem to like to work that much,” he says. “So UBI in France might create a larger drop in the labor supply than in Japan, which seems to be very hard-working.”

Henning Meyer, a German social scientist and analyst, argues that the social value of work should not underestimated. “People should be paid for working, and not for not working,” he says. He thinks the EU should focus on national job guarantees instead.

Another criticism is that basic income would require a complex restructuring of the taxation, social insurance and pension systems.

A recent survey by Dalia Research found that 68 percent of Europeans would vote for basic income, while 31 percent want it immediately. Support is highest in Italy at 75 percent, where the populist Five Star Movement is the main proponent. The study found that support for UBI grew the most rapidly in the UK, where it increased by 7 percent last year.

Some 52 percent of people in the survey think basic income would provide better financial security, 42 percent think it would create more equal opportunities and 52 percent it might encourage people to stop working. But 37 percent said UBI would not affect their work choices.

The idea has been around for a long time, dating back to at least one of theorists in the founding of the United States, Thomas Paine. In the 20th century, Milton Friedman, an American free-market economist, favored the idea of guaranteed income in his 1962 book “Capitalism and Freedom”. Former US President Richard Nixon actually floated the idea back in 1969 with some unsuccessful experiments. Today the Alaska Permanent Fund distributes revenue from the state’s oil wealth fund to all permanent residents of Alaska. Hawaii has just passed a form of pro-UBI legislation.

Neoliberals in Europe advocate UBI to create a safety net for all that would bring not only fairness but calm to a continent roiled by immigration and a rapidly changing social landscape. One day the utopian ideal might also be the most pragmatic.

A version of this story appeared in the Khaleej Times of Dubai.