Universal basic income

The idea of providing everyone with a guaranteed universal basic income (UBI) is something that is being increasingly discussed. One reason is that as automation increases, the need for human beings may decrease or their jobs may shift to ones that are low-skilled and thus pay less. Finland is one country that is trying out the idea of a universal basic income, with a pilot program that gives $587 a month tax-free to 2,000 residents, regardless of their job status or wealth with “the only caveat is that recipients had to have been receiving an income subsidy from the state.”

Giving people money regardless of whether or not they’re working seems to defy common sense about personal responsibility and how to boost productivity. But supporters of UBI have argued that it just makes sense as public policy, for several reasons. First, in the long run, it might be simpler and cheaper for the state to give people money than to oversee a complicated welfare bureaucracy. And it looks as if technological advances might level industries that may have seemed impervious to automation, such as truck driving: driverless vehicles will soon be out of the experimental stage, journalist Gwynne Dyer has noted. There’s controversy among economists over whether “robotization” will lead to a massive net loss in jobs. But many progressive economists point out that regardless of whether one views joblessness as the result of robots taking over or not, a UBI might nevertheless lessen the pain and social costs of mass unemployment.

Plus, as CNN points out, the policy might actually motivate people to look for jobs.

“The change could also encourage more jobless people to look for work, because they won’t have to worry about losing unemployment benefits. Some unemployed workers currently avoid part time jobs because even a small income boost could result in their unemployment benefits being canceled,” writes CNN.

“Incidental earnings do not reduce the basic income, so working and … self-employment are worthwhile no matter what,” Marjukka Turunen Finland’s social insurance agency told CNN.

Some parts of the US have already already do this. Some states like Alaska give each resident a portion of the proceeds (between $1,000 and $2,000) received from oil revenues and some Indian reservations such as the Eastern Band of Cherokee Indians in North Carolina that have casinos distribute some of the profits to tribe members. In 2016, every tribal member received about $12,000. This money has lifted many members of the tribe out of poverty and has had significant benefits, for children especially.

In two studies, one published in 2003 and a follow-up in 2010, Costello compared children who were lifted out of poverty after the casino opened to those who had never been poor. She scored them based on the presence of what researchers referred to as emotional disorders, like depression and anxiety, as well as behavioral disorders, including attention deficit hyperactivity disorder (ADHD).

Before the casino opened, Costello found that poor children scored twice as high as those who were not poor for symptoms of psychiatric disorders. But after the casino opened, the children whose families’ income rose above the poverty rate showed a 40 percent decrease in behavioral problems. Just four years after the casino opened, they were, behaviorally at least, no different from the kids who had never been poor at all. By the time the youngest cohort of children was at least 21, she found something else: The younger the Cherokee children were when the casino opened, the better they fared compared to the older Cherokee children and to rural whites. This was true for emotional and behavioral problems as well as drug and alcohol addiction.

The idea of a guaranteed income for everyone whether they work or not is appealing as a poverty fighting mechanism. But there is another, non-monetary aspect of work that is sometimes overlooked and that is that work can provide psychological benefits if the work is something that enables people to feel that they are contributing to the common good. That feeling may be hard to discern if one has an awful job with poor working conditions, no benefits, and terrible bosses but does the need to feel productive and useful ever go away? Is the need to contribute to society something innate or just a byproduct of the capitalist system that has conditioned us internalize the feeling that people must work if they are to live?

The idea of being able to spend one’s days as one likes without having to clock in for work that one despises might be appealing but in addition to providing people with income, we should also look into how we can also provide the feeling that one’s life is worthwhile and contributing to society. As a retired person, I do not work but have an income. In my case, I can feel that I have ‘earned’ my retirement after a lifetime of work and so can avoid the feeling of being a parasite on society. But how would I feel if I never had to work at all?


  1. Rob Grigjanis says

    In Canada, Hugh Segal (Conservative ex-Senator) has been eloquently and passionately championing Guaranteed Annal Income for years.

  2. jrkrideau says

    That Costello study was very interesting and seems to support a pilot study carried out in Brandon, Manitoba in the 1960’s that suggested that a GAI or UBI had overall good outcomes. Unfortunately we had a change of government and no one has ever done a complete analysis of the data.

    we should also look into how we can also provide the feeling that one’s life is worthwhile and contributing to society.

    There are lots of ways for people feel that one’s life is worthwhile and contributing to society above without paid employment. Wage slavery is not a requirement. And for those who are working, it might reduce the inequalities in power between employer and employee.

    A GAI would, likely, remove the stigma and indignities of accepting welfare plus vastly reducing the costs of delivering such programs.

    The preliminary results from Brandon suggested that people still worked though, IIRC, they sometimes spend more time in an educational setting before taking a job.

    @ Marcus
    how to keep capitalists and rent-takers from just gobbling it up

    Definitely an issue, though see my point about power inequities above. Also, my guess is that a GAI (UBI) might work better in a less capitalistic society than the USA is, at the moment.

  3. jrkrideau says

    @2 Rob Grigjanis

    Hugh has lost weight! He has been advocating a GAI for at least 20 years.

    We have ans Ontario pilot project getting off the ground in “Hamilton, Brantford, Brant County, Lindsay and Thunder Bay and the surrounding area” under the Liberals. https://www.ontario.ca/page/ontario-basic-income-pilot

    Heaven help us if Doug Ford wins the election.

  4. says

    How much do you want to bet that, even if it passes, the right-wingers will want to do drug tests on the recipients?

  5. Rob Grigjanis says

    jrkrideau @3: The study I’ve heard of (from Segal in a talk some years ago), was conducted in Dauphin, Manitoba in the 70s. See here for some details.

    Re Ford: Some folk are actually wearing “Make Ontario Great Again” caps. It doesn’t look good…

  6. jrkrideau says

    @ 6 Rob G

    You’re right. I don’t know why I wrote Brandon. So much for a 10 year old memory.

    It is bad when you look back on Rob Ford as the good brother. 🙁

  7. Daniel Schealler says

    I agree with Marcus that the real threat to the success of UBIs is market forces. The real test of a UBI won’t come until it is scaled up significantly, and as it scales up the incentive to take advantage of it through market manipulation will go up as well -- and once that happens, it will be very hard to undo the situation.

    I always found the argument that UBI recipients would drop out of work to be suspicious. It sounds superficially reasonable on the face of it, but you don’t have to poke very hard to see the problem with it.

    If you can still improve your quality of life with work, then you’ll work. Just because you’re not starting from zero any more doesn’t change that.

    The trick is to look up actual expert analysis. One study that I found just now concludes the following:

    In sum, the effects of unconditional cash transfers vary depending on program design, but there is either no impact on or a moderate decrease in labor participation and a significant increase in other quality-of-life benefits (mental and physical health, education outcomes, parenting, reduced criminal activity, etc.).

    Benefits that are conditional on earning less than a given amount, or on working less than a given number of hours, often create a perverse incentive against work, The following example illustrates the problem. Note that I’ve chosen numbers that are easy to work with -- they’re not intended to be representative.

    Suppose you have a situation where you will receive $10,000 a year on the condition that you earn less than $20,000 per year in take-home pay. You have a part-time job working three days a week that brings in $19,500 per year in take-home pay. Your total income is $29,500 after tax.

    You get offered the opportunity to work a fourth day per week. Your earned take-home pay goes up by a factor of one third, so you’re bringing in $26,000. But you no longer qualify for the $10,000 benefit, so your actual income has gone down.

    So you’re working more, but taking home less.

    Now, of course if you were to eventually transition from four days work to full time work, your take-home pay would go up to $32,500, so eventually you would be better off. But to get there you have to go through the valley of working more for less, which is a potent disincentive, particularly when you’re already not earning very much.

    Now suppose that $10,000 was set to be unconditional. Once it’s unconditional, working four days would bring you $26,000 in take-home pay, but you’d still have the $10,000 benefit, so your real income would be $36,000. Working the extra day brings in more income, so you still have incentive to do it.

    Different unconditional cash programs have different effects depending on how they’re structured. But in the scenario where an unconditional benefit replaces a conditional one, labor participation can go up when they remove disincentives against working more.

  8. lanir says

    I feel like I’ve met a lot of poor people. I’ve only met two that might forego work if given the option. They both had significant mental problems that, if they had the money to address them, may well have ceased to be an obstacle to working.

    The real reason this wouldn’t ever go anywhere in the US is simple. Companies elsewhere seem to have different values but in the US the mass employers are actively dedicated to making poor workplaces. It makes them more money in our system and they frankly don’t care about anything else. What do you think would happen to Walmart and McDonalds and the others like them if their workers could live without them? There’d be mass walk-outs. Strikes would become a LOT more common until a more agreeable equilibrium was established.

    Another issue aside from the one Marcus brought up is location. The rich and poor are already segregated and government services are notably less robust in poorer areas while overtly authoritarian policing is much more common. I suspect that would continue and get worse. I have to wonder what the long game would look like. We already have a lack of education, efforts to remove representation, a rigged legal system with a mass incarceration problem, and labor in prisons. What happens if any of those start getting worse? I don’t think UBI would promote any of these ideas directly but it would really stoke the Republican base. And they feed on all of these things.

    A lot like healthcare, implementing this would require someone watching your back and playing whack-a-mole on talk of “death panels”* and other inane stupidities.

    * ask disabled Americans who keep getting arresed while protesting healthcare changes where the real death panels were

  9. Dunc says

    But there is another, non-monetary aspect of work that is sometimes overlooked and that is that work can provide psychological benefits if the work is something that enables people to feel that they are contributing to the common good.

    There seems to be a fairly reliably inverse correlation between the degree to which work contributes to the common good and the degree to which it is remunerated. A lot of very worthwhile work is so badly paid that it’s effectively limited to people who don’t need the money. One very significant potential benefit of UBI is that it makes it easier for people to do work that is worthwhile and satisfying, rather than work that pays well.

  10. jrkrideau says

    GAI seems to be popular at the moment. John Quiggin, an Australian economist at Univ of Queensland, http://johnquiggin.com/ has a note on it with a reference to a new paper discussing GAI plus a Job Guarantee approach.

    I have only glanced at the abstract but it looks interesting. I still an not sure that we are not seeing a Calvanist morality about work there but there may be some good arguments when I get it read. https://www.dropbox.com/s/dvi19mo1032cdz0/Fitzroy%2C%20F.%20Journal%20of%20Poverty%20and%20Social%20Justice%202018%20Basic%20Income%20and%20a%20Public%20Job%20Offer.pdf?dl=0

  11. blf says

    Apparently, Finland to end basic income trial after two years:

    Government rejects request for funds to expand scheme and plans stricter benefits rules

    Since January 2017, a random sample of 2,000 unemployed people aged 25 to 58 have been paid a monthly €560 (£475) , with no requirement to seek or accept employment. Any recipients who took a job continued to receive the same amount.

    The government has turned down a request for extra funding from Kela, the Finnish social security agency, to expand the two-year pilot to a group of employees this year, and said payments to current participants will end next January.

    It has also introduced legislation making some benefits for unemployed people contingent on taking training or working at least 18 hours in three months. “The government is making changes taking the system away from basic income,” Kela’s Miska Simanainen told the Swedish newspaper Svenska Dagbladet.

    The scheme — aimed primarily at seeing whether a guaranteed income might incentivise people to take up paid work by smoothing out gaps in the welfare system — is strictly speaking not a universal basic income (UBI) trial, because the payments are made to a restricted group and are not enough to live on.

    But it was hoped it would shed light on policy issues such as whether an unconditional payment might reduce anxiety among recipients and allow the government to simplify a complex social security system that is struggling to cope with a fast-moving and insecure labour market.

    Olli Kangas, an expert involved in the trial, told the Finnish public broadcaster YLE: “Two years is too short a period to be able to draw extensive conclusions from such a big experiment. We should have had extra time and more money to achieve reliable results.”


  12. blarg says

    For most of my life I have made just more than is acceptable to get subsidies for child care, or to qualify for certain tax supports for the destitute, or poorest of the poor education benefits. I have met many people who are fortunate enough to make enough money to be permitted to pay for things. They are, almost universally, right-wingers, or sympathetic to the right, and resentful of “those people” who are forced to crawl through the bureaucracy of degradation that has been placed before them for basic acts of humanity.
    I told you that to tell you this…
    The problem in all this is the “guaranteed” part. How can those in power pit one group of have-nots against another if they aren’t able to be resentful towards each other?

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