In 2016, Finland announced plans to begin an ambitious social experiment, designed and implemented by Kela, the country’s social insurance agency.

From a pool of 175,000 unemployed Finns between the ages of 25 to 58, 2,000 people were randomly selected to take part in project.

Those selected would receive $640 (€560) from the Finnish government for a period of two years, with no strings attached. The money was not a loan. The participants would not be expected to pay it back.

Now, imagine for a moment that your government promised to deposit a certain amount of money, say $1000 dollars, into your bank account on the first day of every month for the rest of your life.

Not because you are unemployed, not because you are poor, not because you cannot afford healthcare or education, but simply because you are a citizen of your country.

You would receive this money regardless of your every other source of income, and this money would ensure that you would never fall below the poverty line for the rest of your life.

What impact would such an income have on your life? What would you do when you knew you would always get money from the government to cover your basic needs? More importantly, what would you not do? How would such a guaranteed income affect decisions about your life?

These are some of the questions Finland’s experiment, which cost the Finnish government just under $23 million, was trying to find answers to.

The experiment was based on an idea or concept referred to as universal or unconditional basic income (UBI).

WHAT EXACTLY IS UBI?

At its very heart, a universal basic income is a guarantee by the government that each citizen will receive a minimum income to cover their basic needs. In some places, UBI is also referred to as basic income, basic living stipend, guaranteed income, citizen’s income, or universal demogrant.

The idea behind basic income is to provide financial security and act as a permanent earnings floor below which no citizen would fall.

With such an income, it would be possible for every citizen to cover their cost of living, and therefore, it would replace many of the temporary benefits available today, which are only given to those with emergencies, or those who meet specified qualification tests.

Ideally, to be termed as universal basic income, such payments by a government to its citizens would be:

  • Unconditional: Basic income should be given to everyone without any conditions. This means that everyone would receive the same amount of money regardless of their gender, family structure, living costs, employment status, level of income, or anything else. However, the amount of income would vary based on age.
  • Automatic: The income would be automatically paid to the citizens’ bank account or similar on a weekly or monthly basis.
  • Non-withdrawable: The amount of money paid out would not change following change in someone’s conditions. Whether your other income increased, reduced, or even stopped completely, you would continue to receive the same amount of basic income.
  • Individual: People would receive basic income on individual basis, rather than as households or couples.
  • A right: Everyone legally residing in the country would be entitled to basic income.

Despite the ambition of the Finland’s experiment, you might be surprised to learn that Universal Basic Income is not a new idea, and that Finland is not the only, nor the first country to experiment with the idea. Various versions of basic income have been tried out in many other countries.

In Alaska, a guaranteed income program has been in existence since 1982, with residents receiving roughly $1,200 every year. The money used to fund the program is sourced from Alaska’s oil revenues.

In the 70s, the United States also experimented with some form of basic income. In Canada, the town of Dauphin used a version of UBI to eliminate poverty for five years. The towns of Hamilton, Lindsay and Thunder Bay in Ontario are also experimenting with UBI.

In Kenya, a program run by the charity organization GiveDirectly has been paying out a minimal income to over 21,000 people in 197 rural villages across the country. The program started in 2016 and is set to run for 12 years.

In Scotland, funding is already underway for research into a scheme that will ensure citizens receive a basic income for life.

Under the program, it is expected that children under the age of 16 would receive 50 pounds a week, working adults would receive 100 pounds, and retirees would be paid 150 pounds a week.

Seed accelerator program Y Combinator is also experimenting with a basic income scheme that will have 100 families in Oakland, California, receive a basic monthly income of between $1,000 and $2,000.

Other UBI programs have also been experimented with in countries like Brazil, India, and Namibia.

INCREASING POPULARITY FOR UBI

While the idea of a universal basic income has been in existence for several decades, it has started gaining a lot of traction in recent times and attracting center-stage attention across the entire political spectrum.

At some point, former presidential candidate Hillary Clinton even considered running for presidency on a UBI policy.

There are a number of reasons behind this increasing popularity of universal basic income. First, the inequality between the rich and the poor has been rising astronomically, and UBI is seen as a viable solution to bridge this inequality. Second, with wages having stagnated, and the working class having exhausted all options for maintaining itself, UBI might be the only way out.

Today, the nature of work has also changed, with jobs which were previously lifelong careers becoming fragmented and being transformed into sub-hourly tasks.

This had made freelancing and the gig economy the default work model today.

Unfortunately, this model of work does not come with benefits, and therefore, UBI might just be the way to provide people operating in the gig economy with a safety net.

Perhaps the biggest factor driving the rising popularity of the UBI concept is automation, artificial intelligence, and machine learning. According to an HBR article, currently demonstrated technologies are capable of taking over half the jobs done by humans today.

As these technologies advance, they will take up even more of the jobs done by humans, meaning a lot of people might find themselves jobless. UBI would provide people with a livelihood in a future where work will be very scarce. SpaceX and Tesla founder already predicted in 2016 that we would end up with UBI or something similar as a result of automation.

The growing traction of the UBI idea has stirred up a huge debate on whether governments should adopt it or not.

Some people feel that UBI is the best solution to tackle some of the world’s greatest problems, such as poverty and inequality.

Tech billionaires like Elon Musk and Mark Zuckerberg have already expressed their support for UBI.

Those in opposition of UBI feel that giving out money could encourage laziness and discourage people from working.

Others feel that UBI is a feeble attempt at trying to simplify the complex welfare payment systems.

In addition, some feel that UBI is a very expensive program. It is estimated that giving Americans a monthly payment of $1,000 would cost about $3.9 trillion every year.

Citizens from different countries are also torn between supporting and opposing the idea of a universal basic income.

A poll by Gallup found that whereas more than three quarters of UK and Canadian citizens support UBI, only 43% of American citizens support the idea.

Source: Gallup

So, is UBI a good idea or not. Let’s take a look at some arguments for and against basic income.

BENEFITS OF UNIVERSAL BASIC INCOME

Those in favor of the implementation of UBI believe it will go a long way in resolving many 21st century problems. Some of the touted benefits of UBI include:

It Will Help Fight Technological Unemployment

Today, many of the jobs that were previously done by humans have been taken over by machines and technology. We have already seen that already existing technologies have the potential to take over more than half the jobs done by humans today.

As technology advances, more of our jobs will be at risk. What happens when most of the work in the world is done by machines? How will people survive?

UBI will act as a safety net for people who have lost their jobs to machines and technology, giving them a way to survive and remain on their feet as they look for new jobs.

In addition, with a way to support themselves and maintain a decent standard of living, these people would be able to go back to school or retrain to gain the skills they need to do the work that will be available at that time.

It Will Free the Labor market and Increase Productivity

Today, most people are not happy with their jobs. According to a Gallup poll, only 13% of people in the world are engaged in their jobs. In the US, only 30% of workers are engaged.

The disengagement of majority of workers is costing businesses over $500 billion every year. Business all over are struggling to find ways to increase their employee engagement levels.

One of the factors contributing to low employee engagement is the fact that people need jobs in order to live.

Therefore, a huge portion of the workforce take up jobs not because they want them, but because they need them.

Among the unemployed, there are those who would have loved these jobs (and would therefore have been engaged), but they can’t find employment because some of these jobs have been taken by people who don’t really love the jobs, but need them.

With UBI, this would change. People would not take up jobs that don’t engage them, because they have the means to support themselves while searching for a job that would engage them.

This in turn would mean that more people would be working in jobs they love, thereby increasing employee engagement.

The increased employee engagement would in turn lead to increased productivity, and businesses would stop losing billions every year.

It Will End Abuse

Domestic abuse is a huge problem today. Unfortunately, the abused, who are mainly women, remain in abusive relationships because they have no option – they are dependent on their abusers for their survival.

If these people were guaranteed a basic income, it would be much easier to leave an abusive partner because they can survive on their own.

This way, UBI would set free millions of people trapped in domestic violence.

It Will Tackle Decreasing Birth Rates

Falling birth rates are already a concern in many countries. One of the reasons behind this is that young couples are wary about starting families when they are not sure they will be able to take care of the families.

UBI gives these young couples the confidence they need to start families because they are assured they will be able to meet the basic needs of their families.

It Will Support Unpaid Care Workers

Very often, people with ill or disabled relatives have no other option but to quit their jobs in order to care for their ill or disabled relatives.

Unfortunately, by quitting their jobs, it becomes harder for them to support themselves or even care for the sick relatives.

If they had a basic income, it would be easier for them to support themselves and care for their relatives.

This would encourage more people to care for their relatives, and therefore take pressure off public resources that are currently used to provide care to the sick and elderly.

It Will Reduce Inequality

While the economies of most countries are growing, only the richer are getting richer. For the masses, there is very little change.

In other words, the economic pie is growing, but only the rich are getting bigger and bigger pieces from it. The poor continue to receive smaller pieces of the pie.

According to research by Thomas Piketty and Emmanuel Saez, the bottom half of earners were making just 13% of overall income in 2014, down from 20% in 1979.

The top 1% of earners, on the other hand, went from 11% in 1979 to 20% in 2014. Providing UBI would have a significant impact in helping bridge this gap between the rich and the poor, and would help expand the shrinking middle class.

It Will End Poverty

Those in favor of UBI believe that in countries considered to be some of the richest in the world, it is not right for someone to be too poor to live.

By providing an income to cover basic costs, UBI would ensure that no one is below the poverty line.

It Will Eliminate the Need for Social Security

Today, there are several initiatives meant to help the poor – subsidized housing, food stamps, unemployment benefits, and so on.

However, with UBI, no one would be too poor to afford their basic needs, meaning that there would be no need for these welfare programs.

Worse still, many of these means-tested welfare programs exclude people owing to their complexity – you need to prove that you are eligible, they have complex application processes, and so on.

With UBI, everyone would receive the guaranteed income because it is their right, not because they qualify or because they applied correctly.

In addition, most welfare programs are designed to keep people trapped in poverty. If someone’s income increases, they lose free medical care, subsidized housing, and food stamps.

This encourages these people to remain poor so that they do not lose access to these benefits.

With UBI, however, change in income would not change their guaranteed income. Therefore, there is no disincentive for increasing their wealth and bettering their lives.

UBI would also cut the bureaucracy associated with welfare programs.

Since it would be a simple and equal payment to every citizen, there would be no need for complicated bureaucracy, costly verification paperwork, or multiple programs. This simplicity would reduce costs for the government.

It Will Discourage Low Wages

Today, people are forced to take low wage jobs because they have no other option. Take that job or sleep out on the street.

However, with a guaranteed income, no one would be under pressure to take these low wage jobs, which would force employers to increase their wages.

The labor market would transform from a coercive market where people take low wage jobs because they need them into a free market where employers have to offer better wages and more benefits in order to attract employees.

It Will Provide Equal Opportunities

Most people assume that a job is the prerequisite for you to get money. In real sense, however, money is the prerequisite you need to get a job. To get a job, you need education, which costs money. You need clothes to wear to work, which cost money.

You need to commute to work, which costs money. You need to eat to have the energy to work. Food costs money. If you want to start your own business, you need money. Therefore, money is what leads to opportunities.

UBI gives people access to equal opportunities by giving them an equal baseline income. You can think of UBI like a game of Monopoly.

Everyone is given some little money to start the game. You can then use this money to become rich in the game.

Without money, the game wouldn’t work. Similarly, UBI gives everyone a starting point from which they can grow and become successful.

ARE THERE DOWNSIDES TO UNIVERSAL BASIC INCOME?

Those against the idea of UBI feel that it has some possible downsides that make it a not-so-attractive option. Some of these potential downsides include:

Decreased Motivation to Work

Some people feel that with a guarantee of free money every month, some people would have no motivation to work.

This would reduce productivity, meaning that there would be less taxable income (which helps support the UBI).

However, this is not proven, because some basic income experiments found that people used the money to set up businesses, while others stopped looking for work so that they could study or care for sick or elderly relatives, all of which are beneficial to society as a whole.

Inflation

There are arguments that giving everyone a basic income would lead to inflation.

Most people would immediately want to spend the money on things they couldn’t afford before, leading to an increase in demand.

Manufacturers would try to increase supply to meet this increased demand, but in the event that they are unable to meet the demand, there would be an increase in prices. The increased prices would once again make basic needs unaffordable to those who have no other source of income, and in the long run, they would once again fall below the poverty line, despite having a guaranteed income.

Cost

Perhaps the biggest argument against UBI is that it is a very costly affair. Like we saw earlier, is it estimated that a $1,000 per month basic income for all Americans would cost about $3.9 trillion a year.

However, proponents of UBI argue that the cost of UBI would be way cheaper than this because it would get rid of many of the other existing welfare programs, take pressure off health services and elder care, and lead to increased productivity (meaning more taxable income to support the program).

Inequality

Some of those against the idea of UBI also question the logic of giving the same amount of money to the poor and to multi-millionaires.

For instance, is it really necessary for the government to give Jeff Bezos extra money every month? Won’t this increase the inequality that UBI is supposedly alleviating?

Therefore, some feel that UBI should not be available to people beyond a certain level of wealth.

Philosophical Counterarguments

Under UBI, money would become a basic right.

However, some people believe that money is not a birthright. Capitalism is built on the ideology that money is something we earn by providing value.

With guaranteed income, this ideology would change.

Therefore, some argue that people need to do something in order to receive UBI, such as providing community service.

WRAPPING UP

The idea behind a guaranteed basic income is noble. Ideally, by giving everyone a minimum living wage, it would be possible to lift masses out of poverty, reduce the ever-widening gap between the rich and the poor, and provide people with a safety net, especially at a time when there is a possibility of mass unemployment due to technological advancement.

Proponents of the idea feel that UBI is the solution that will tackle many 21st century problems.

Opponents, on the other hand, feel that UBI is a lazy solution that will never work, especially when you put into consideration things like inflation and the disincentive to work.

So far, however, even though UBI is still in being experimented on, the current findings show that it could have more benefits than downsides.

Why we should all have a basic income

Share your thoughts and experience

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.