Universal basic income

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In 2013, eight million 5-cent coins (one per inhabitant) were dumped on the Bundesplatz, Bern to support the 2016 Swiss referendum for a basic income (which was rejected, 77%-23%). Basic Income Performance in Bern, Oct 2013.jpg
In 2013, eight million 5-cent coins (one per inhabitant) were dumped on the Bundesplatz, Bern to support the 2016 Swiss referendum for a basic income (which was rejected, 77%–23%).

Universal basic income (UBI), also called unconditional basic income, citizen's basic income, basic income guarantee, basic living stipend, guaranteed annual income, universal income security program or universal demogrant, is a sociopolitical financial transfer concept in which all citizens of a given population regularly receive a legally stipulated and equal financial grant paid by the government without a means test. [2] [3] A basic income can be implemented nationally, regionally, or locally. If the level is sufficient to meet a person's basic needs (i.e., at or above the poverty line), it is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income.

Contents

There are several welfare arrangements that can be viewed as related to basic income. Many countries have something like a basic income for children. Pension may be partly similar to basic income. There are also quasi-basic income systems, like Bolsa Familia in Brazil, which is conditional and concentrated on the poor, or the Thamarat Program in Sudan, which was introduced by the transitional government to ease the effects of the economic crisis inherited from the Bashir regime. [4] The Alaska Permanent Fund is essentially a partial basic income, which averages $1,600 annually per resident (in 2019 currency). [5] The negative income tax (NIT) can be viewed as a basic income in which citizens receive less and less money until this effect is reversed the more a person earns. [6]

Several political discussions are related to the basic income debate, including those regarding automation, artificial intelligence (AI), and the future of the necessity 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 prevent or alleviate such problems by allowing everyone to benefit from a society's wealth, as well as whether a UBI could be a stepping stone to a resource-based or post-scarcity economy. [7] [8] [9] [10] The economic impact of the COVID-19 pandemic prompted some countries to send direct payments to citizens.

History

Antiquity

In an early example, Trajan, emperor of Rome from 98–117 AD, personally gave 650 denarii (equivalent to perhaps US$260 in 2002) to all common Roman citizens who applied. [11]

16th to 18th century

In his Utopia (1516), English statesman and philosopher Sir Thomas More depicts a society in which every person receives a guaranteed income. [12] Spanish scholar Johannes Ludovicus Vives (1492–1540) 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." 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." [13] In the late 18th century, English Radical Thomas Spence and English-born American philosopher Thomas Paine both had ideas in the same direction.

Paine authored Common Sense (1776) and The American Crisis (1776–1783), the two most influential pamphlets at the start of the American Revolution. He is also the author of Agrarian Justice, published in 1797. In it, he proposed concrete reforms to abolish poverty. In particular, he proposed a universal social insurance system comprising old-age pensions and disability support and universal stakeholder grants for young adults, funded by a 10% inheritance tax focused on land.

Early 20th century

Around 1920, support for basic income started growing, primarily in England.

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. [14] [15] 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. [16]

Late 20th century

In his 1964 State of the Union address, U.S. President Lyndon B. Johnson introduced legislation to fight the "war on poverty". Johnson believed in expanding the federal government's roles in education and health care as poverty reduction strategies. In this political climate the idea of a guaranteed income for every American also took root. Notably, a document, signed by 1200 economists, called for a guaranteed income for every American. Six ambitious basic income experiments started up on the related concept of negative income tax. Succeeding President Richard Nixon explained its purpose as "to provide both a safety net for the poor and a financial incentive for welfare recipients to work." [17] Congress eventually approved a guaranteed minimum income for the elderly and the disabled. [17]

In the mid-1970s the main competitor to basic income and negative income tax, the Earned income tax credit (EITC), or its advocates, won over enough legislators for the US Congress to pass laws on that policy. In 1986, the Basic Income European Network, later renamed to Basic Income Earth Network (BIEN), was founded, with academic conferences every second year. [18] Other advocates included the green political movement, as well as activists and some groups of unemployed people. [19]

In the latter part of the 20th century, discussions were held around automatization and jobless growth, the possibility of combining economic growth with ecological sustainable development, and how to reform the welfare state bureaucracy. Basic income was interwoven in these and many other debates. During the BIEN academic conferences there were papers about basic income from a wide variety of perspectives, including economics, sociology, and human right approaches.

21st century

In recent years the idea has come to the forefront more than before. The Swiss referendum about basic income in Switzerland 2016 was covered in media worldwide, despite its rejection. [20] Famous business people like Elon Musk [7] and Andrew Yang have lent their support, as have high-profile politicians like Jeremy Corbyn. [21] (For a list of popular supporters and proponents of UBI, see List of advocates of basic income .)

In the US Democratic Party primaries, a newcomer, Andrew Yang, touted basic income as his core policy. His policy, referred to as a "Freedom Dividend", would have provided American citizens US$1000 a month.

Response to COVID-19

As a response to the COVID-19 pandemic and related economic impact, basic income and similar proposals such as helicopter money and cash transfers were increasingly discussed across the world. [22] Most countries have implemented forms of partial unemployment schemes, which effectively subsidized workers' incomes without work requirement. Some countries like the United States, Spain, Hong Kong and Japan introduced direct cash transfers to citizens. [23]

In Europe, a petition calling for an "emergency basic income" gathered more than 200,000 signatures, [24] and polls suggested widespread support in public opinion for it. [25] [26] Unlike the various stimulus packages of the US administration, the EU's stimulus plans did not include any form of income-support policies. [27]

Basic income vs negative income tax

Two ways of looking at basic income when combined with a flat income tax, both of which result in the same net income (orange line). 1. (red) stipend with conventional tax for income above the stipend. 2. (blue) Negative tax for low-income people and conventional tax for high-income people. Cjcbi.svg
Two ways of looking at basic income when combined with a flat income tax, both of which result in the same net income (orange line). 1. (red) stipend with conventional tax for income above the stipend. 2. (blue) Negative tax for low-income people and conventional tax for high-income people.

The diagram shows a basic income/negative tax system combined with flat income tax (the same percentage in tax for every income level).

Y is here the pre-tax salary given by the employer and y' is the net income.

Negative income tax

For low earnings there is no income tax in the negative income tax system. They receive money, in the form of a negative income tax, but they don't pay any tax. Then, as their labour income increases, this benefit, this money from the state, gradually decreases. That decrease is to be seen as a mechanism for the poor, instead of the poor paying tax.

Basic income

That is however not the case in the corresponding basic income system in the diagram. There everyone typically pays income taxes. But on the other hand everyone also gets the same amount in basic income.

But the net income is the same

But, as the orange line in the diagram shows, the net income is anyway the same. No matter how much or how little one earns, the amount of money one gets in one's pocket is the same, regardless of which of these two systems is used.

Basic income and negative income tax are generally seen to be similar in economic net effects, but there are some differences:

Perspectives and arguments

Short film explaining different arguments for UBI

Basic income and automation

There is a prevailing opinion that we are in an era of technological unemployment – that technology is increasingly making skilled workers obsolete.

Prof. Mark MacCarthy (2014) [31]

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. [32] Yang has stated that he is heavily influenced by Martin Ford. Ford, in his turn, believes that the emerging technologies will fail to deliver a lot of employment; on the contrary, because the new industries will "rarely, if ever, be highly labor-intensive". [33] Similar ideas have been debated many times before in history—that "the machines will take the jobs"—so the argument is not new. But what is quite new is the existence of several academic studies that do indeed forecast a future with substantially less employment, in the decades to come. [34] [35] [36] Additionally, President Barack Obama has stated that he believes that the growth of artificial intelligence will lead to increased discussion around the idea of "unconditional free money for everyone". [37]

Basic income and economics

Some proponents of UBI have argued that basic income could increase economic growth because it would sustain people while they invest in education to get higher-skilled and well-paid jobs. [38] [39] However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth. [40]

The cost of basic income is one of the biggest questions in the public debate as well as in the research. But the cost depends on many things. It first and foremost depends on the level of the basic income as such, and it also depends on many technical points regarding exactly how it is constructed. According to Karl Widerquist it also depends heavily on what one means with the concept of "cost".

Basic income and work

Many critics of basic income argue that people in general will work less, which in turn means less tax revenue and less money for the state and local governments. [41] [42] [43] Although it is difficult to know for sure what will happen if a whole country introduces basic income, there are nevertheless some studies who have attempted to look at this question.

Regarding the question of basic income vs jobs there is also the aspect of so-called welfare traps. Proponents of basic income often argue that with a basic income, unattractive jobs would necessarily have to be better paid and their working conditions improved, so that people still do them without need, reducing these traps. [46]

Philosophy and morality

By definition, universal basic income does not make a distinction between "deserving" and "undeserving" individuals when making payments. Opponents argue that this lack of discrimination is unfair: "Those who genuinely choose idleness or unproductive activities cannot expect those who have committed to doing productive work to subsidize their livelihood. Responsibility is central to fairness." [47] Proponents argue that this lack of discrimination is a way to reduce social stigma. [47]

Basic income, health and poverty

The first comprehensive systematic review of the health impact of basic income (or rather unconditional cash transfers in general) in low- and middle-income countries, a study which included 21 studies of which 16 were randomized controlled trials, found a clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers, according to the study, may also improve food security and dietary diversity. Children in recipient families are also more likely to attend school and the cash transfers may increase money spent on health care. [48]

The Canadian Medical Association passed a motion in 2015 in clear support of basic income and for basic income trials in Canada. [49]

Academics on basic income

Economists

Other academics

Pilot programs and experiments

Omitara, one of the two poor villages in Namibia where a local basic income was tested in 2008-2009 Omitara.jpg
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, several pilot programs and experiments on basic income have been conducted. Some examples include:

1960s−1970s

2000−2009

2010−2019

2020−present

Examples of payments with similarities

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. More precisely the fund resembles a sovereign wealth fund, investing resource revenues into bonds, stocks, and other conservative investment options with the intent to generate renewable revenue for future generations. The fund has had a noticeable yet diminishing effect on reducing poverty among rural Alaska Indigenous people, notably in the elderly population. [102] 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.

Macau

Macau's Wealth Partaking Scheme provides some annual basic income to permanent residents, funded by revenues from the city's casinos. However, the amount disbursed is not sufficient to cover basic living expenses, so it is not considered a basic income. [103]

Bolsa Familia

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. [104]

Other similar welfare programs

Petitions, polls and referenda

See also

Related Research Articles

Citizens dividend Proposed policy

Citizen's dividend is a proposed policy based upon the Georgist principle that the natural world is the common property of all people. It is proposed that all citizens receive regular payments (dividends) from revenue raised by leasing or taxing the monopoly of valuable land and other natural resources.

The Alaska Permanent Fund (APF) is a constitutionally established permanent fund managed by a state-owned corporation, the Alaska Permanent Fund Corporation (APFC). It was established in Alaska in 1976 by Article 9, Section 15 of the Alaska State Constitution under Governor Jay Hammond and Attorney General Avrum Gross. From February 1976 until April 1980, the Department of Revenue Treasury Division managed the state's Permanent Fund assets, until, in 1980, the Alaska State Legislature created the APFC.

Welfare reforms are changes in the operation of a given welfare system, with the goals of reducing the number of individuals dependent on government assistance, keeping the welfare systems affordable, and assisting recipients to become self-sufficient. Classical liberals and conservatives generally argue that welfare and other tax-funded services reduce incentives to work, exacerbate the free-rider problem, and intensify poverty. On the other hand, socialists generally criticize welfare reform because it usually minimizes the public safety net and strengthens the capitalist economic system. Welfare reform is constantly debated because of the varying opinions on the government's determined balance of providing guaranteed welfare benefits and promoting self-sufficiency.

Guaranteed minimum income (GMI), also called minimum income, is a social-welfare system that guarantees all citizens or families an income sufficient to live on, provided that certain eligibility conditions are met, typically: citizenship; a means test; and either availability to participate in the labor market, or willingness to perform community services.

Philippe Van Parijs Belgian professor, philosopher and economist

Philippe Van Parijs is a Belgian political philosopher and political economist, best known as a proponent and main defender of the concept of an unconditional basic income and for the first systematic treatment of linguistic justice.

Mincome, the "Manitoba Basic Annual Income Experiment", was a Canadian Guaranteed Annual Income (GAI) social experiment conducted in Manitoba in the 1970s. The project was funded jointly by the Manitoba provincial government and the Canadian federal government under Prime Minister Pierre Trudeau. It was launched with a news release on February 22, 1974, under the New Democratic Party of Manitoba government of Edward Schreyer, and was closed down in 1979 under the Progressive Conservative of Manitoba government of Sterling Lyon and the federal Progressive Conservative Party of Joe Clark. The purpose of the experiment was to assess the social impact of a guaranteed, unconditional annual income, UBI, including whether a program of this nature would create disincentives to work for the recipients and, if so, to what extent.

A job guarantee (JG) is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability by having the state promise to hire unemployed workers as an employer of last resort (ELR).

Negative income tax Proposed tax reform

In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money, as shown by the blue arrows in the diagram. NIT was proposed by Juliet Rhys-Williams while working on the Beveridge Report in the early 1940s and popularized by Milton Friedman in the 1960s as a system in which the state makes payments to the poor when their income falls below a threshold, while taxing them on income above that threshold. Together with Friedman, supporters of NIT also included James Tobin, Joseph A. Pechman, and Peter M. Mieszkowski, and even then-President Richard Nixon, who suggested implementation of modified NIT in his Family Assistance Plan. After the increase in popularity of NIT, an experiment sponsored by the US government was conducted between 1968 and 1982 on effects of NIT on labour supply, income, and substitution effects.

Universal basic income in India refers to the debate and practical experiments with universal basic income (UBI) in India. The greatest impetus has come from the 40-page chapter on UBI that the Economic Survey of India published in January 2017. It outlined the 3 themes of a proposed UBI programme:

Universal basic income in Canada refers to the debate and trials with basic income, negative income and related welfare systems in Canada. The debate goes back to the 1930s when the social credit movement had ideas around those lines. Two major basic income experiments have been conducted in Canada. Firstly the Mincome experiment in Manitoba 1974–1979, and secondly the Ontario Basic Income Pilot Project in 2017. The latter was intended to last for two years but only lasted a few months due to its subsequent cancellation by the then newly-elected Conservative government.

Universal basic income is a subject of much interest in the United Kingdom. There is a long history of discussion yet it has not been implemented to date. Interest in and support for universal basic income has increased substantially amongst the public and politicians in recent years.

Universal basic income in Japan Overview of universal basic income in Japan

Universal basic income refers to a social welfare system where all citizens or residents of a country receive an unconditional lump sum income, meaning an income that is not based on need. The proposal has been debated in a number of countries in recent years, including Japan..

Universal basic income (UBI) is discussed in many countries. This article summarizes the national and regional debates, where it takes place, and is a complement to the main article on the subject: universal basic income.

Basic income pilots are smaller-scale preliminary experiments which are carried out on selected members of the relevant population to assess the feasibility, costs and effects of the full-scale implementation of basic income or the related concept of negative income tax, including partial basic income and similar programs. The following list provides an overview of the most famous basic income pilots, including projects which have not been launched yet but have been already approved by the respective political bodies or for the negotiations are in process.

Karl Widerquist American political philosopher and economist

Karl Widerquist is an American political philosopher and economist at Georgetown University in their campus in Qatar. He is best known as an advocate of basic income, but is also an interdisciplinary academic writer who has published in journals in fields as diverse as economics, politics, philosophy, and anthropology. He is a consistent critic of propertarianism, right-libertarianism, social contract theory, and the Lockean proviso.

Universal basic income and negative income tax, which is a related system, has been debated in the United States since the 1960s, and to a smaller extent also before that. During the 1960s and 1970s a number of experiments with negative income tax were conducted in United States and Canada. In the 1970s another and somewhat related welfare system was introduced instead, the Earned Income Tax Credit. The next big development in the history of basic income in the United States came in 1982, when the Alaska Permanent Fund was established. It has delivered some kind of basic income, financed from the state's oil and gas revenues, ever since.

<i>The War on Normal People</i> 2018 book by Andrew Yang

The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future is a 2018 book written by Andrew Yang, an American entrepreneur and Venture for America founder, who would later run as a 2020 Democratic presidential candidate on policy strategies discussed in the book. It was published by Hachette Books in the United States on April 3, 2018. A paperback edition was released on April 2, 2019. Yang narrated an audiobook version released on YouTube in September 2018.

A wage subsidy is a payment to workers by the state, made either directly or through their employers. Its purposes are to redistribute income and to obviate the welfare trap attributed to other forms of relief, thereby reducing unemployment. It is most naturally implemented as a modification to the income tax system.

The report of the British Columbia Expert Panel on Basic Income“Covering All the Basics: Reforms for a More Just Society” was released on 28 January 2021. The BC Green Party made a study of basic income a requirement before they would support the NDP's minority government, as stated in the 2017 Confidence and Supply Agreement between the BC Green Caucus and the BC New Democrat Caucus. The panel was appointed in July 2018.

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Further reading