Universal Basic Income

In Utopian thinking: the easy way to eradicate poverty, Rutger Bregman argues that we need a universal basic income. [Others worry that it will eat away at the welfare state: see article at the end of this piece.]

Studies show that poor people borrow more, save less, smoke more, exercise less, drink more and eat less healthily. Why? For a long time it was thought that it was lack of character or ability, but recent research suggests that this is wrong.

A psychological study with sugar cane farmers in India found that they collect about 60% of their annual income right after the harvest, but are relatively poor before the next harvest. IQ tests before the harvest (the poor part) scored 14 points of IQ less (similar to losing a night’s sleep, or the effects of alcoholism) than just after the harvest. The reason: people behave differently when they perceive a thing to be scarce, whether it’s time, money or food. A “scarcity mentality” narrows focus to the immediate lack and you ignore the long-term perspective. This behavioural change is why many anti-poverty programmes don’t work.

So what can be done? Solutions like making paperwork easier or sending text message reminders of bills cost next to next to nothing but ignore the causes. One idea is a universal basic income – a monthly allowance of enough to pay for your basic needs: food, shelter, education - completely unconditional: not a favour, but a right.

But could it really be that simple? One town had done it, had eradicated poverty – after which nearly everyone forgot about it. In 2009, Evelyn Forget, an economics professor at the University of Manitoba, heard about a warehouse attic in Winnipeg, Canada, where nearly 2,000 boxes are filled with data – graphs, tables, interviews – about one of the most fascinating social experiments ever conducted; a treasure trove of information on basic income. For three years she subjected the data to all manner of statistical analysis, and the results were the same every time. The experiment – the longest and best of its kind – had been a resounding success.

“The experiment had started in Dauphin, a town north-west of Winnipeg, in 1974. Everybody was guaranteed a basic income ensuring that no one fell below the poverty line. And for four years, all went well. But then a conservative government was voted into power. The new Canadian cabinet saw little point in the expensive experiment. So when it became clear there was no money left for an analysis of the results, the researchers decided to pack their files away. In 2,000 boxes.”

Forget discovered that:

• the people in Dauphin had not only become richer, but also smarter and healthier
• school performance of children improved substantially
• hospitalisation rate decreased by as much as 8.5%.
• domestic violence was also down, as were mental health complaints
• people didn’t quit their jobs – the only ones who worked a little less were new mothers and students, who stayed in school longer

Having money means people can use it to buy things they need instead of things self-appointed experts think they need. While a universal basic income won’t solve everything, and policies such as a rent cap and more social housing are needed in places where housing is scarce – a basic income would work like venture capital for the people. Poverty is hugely expensive to the state in terms of higher healthcare needs, less education and more crime.

Poverty is not a lack of character. Poverty is a lack of cash.

Source: Utopian thinking: the easy way to eradicate poverty by RutgerBregman (translated from the original Dutch by Elizabeth Manton) in The Guardian, 6 March 2017. [Rutger Bregman is the author of Utopia for Realists: And how we can get there]

Wikipedia entry: MINCOME experiment

Love the Idea of a Universal Basic Income by Ellie Mae O'Hagan
UBI is gradually becoming mainstream thinking, with the news that the Finnish government has piloted the idea with 2,000 of its citizens with very positive results. In January 2017, MEPs voted to consider UBI as a solution to the mass unemployment that might result from robots taking over manual jobs. In March 2017, Ontario in Canada started trialling a similar scheme.

But UBI also has right-wing supporters. Sam Bowman of the Adam Smith Institute wrote in 2013: "The ideal welfare system is a basic income, replacing the existing anti-poverty programmes the government carries out" and that UBI would result in a less "paternalistic" government.

From this perspective, in the hands of the right, UBI could be seen as a kind of universal credit for all, undermining the entire benefits system and providing justification for paying the poorest a poverty income. E.M. O'Hagan writes: "UBI cannot be a progressive initiative as long as the people with the power to implement it are hostile to the welfare state as a whole."

Alex Williams and Nick Srnicek, in their book Inventing the Future, link UBI to three other demands: collectively controlled automation, a reduction in the working week and a diminution of the work ethic. Without these provisions, UBI could act as an excise to get rid of the welfare state.

O'Hagan suggests "it is possible for the welfare state not just to act as a safety net, but as a tool for all of us to do less work and spend more time with our loved ones, pursuing personal interests or engaging in our communities." She concludes "UBI has this revolutionary potential - but not if it is simply parachuted into a political economy that has been pursuing punitive welfare policies for the last 30 years."

Source: Love the Idea of a Universal Basic Income? Be careful what you wish for: by Ellie Mae O'Hagan in The Guardian, 23 June 2017