Is it now time for Universal Basic Income?
The COVID-19 pandemic opens a real future for a Universal Basic Income (UBI), a system where everyone receives a standard amount of money. For several years there has been a surging movement towards it, with some of the more famous supporters including Elon Musk, the CEO of Tesla and SpaceX and Pierre Omidyar, the founder of eBay. The startup incubator Y Combinator even launched a study into UBI in the United States.
As the COVID-19 pandemic hits economies across the world, the UBI movement has gained more and more strength. Now, more than 500 political figures globally have called for universal basic income in the fight against this new virus which is destabilising economies across the world. Opposition parliamentarians in the UK have even proposed it in the House of Commons when discussing measures to support families during this public health crisis which is quickly impacting the economy.
What is universal basic income?
Universal basic income is a pretty good name for what it is: it’s an income which should cover basic costs and should be given universally to everyone, that’s right, everyone (usually adults). The allocation of the income is unconditional. It’s not a new idea either; the Basic Income Earth Network is a network of academics and activists interested in the concept of UBI which was founded in 1986, and they have been working on it ever since. The idea can even be traced back to Thomas More in 1516 or even to Pericles and Ephialtes in 461BC.
Most known pilots only started in the latter half of the 20th century and increasingly in the last few years. Not all these pilots have been true UBI experiments, however. In 2015 Finland outlined a supposed basic income trial, but the beneficiaries of the trial were reduced to 2,000 randomly selected people who were registered as unemployed. They would continue to receive the benefits of €560 per month for two years, even if they found work. This was not, however, universal to the community, and so it was not UBI.
The benefits of universal basic income
The benefits of UBI are shared across the whole community, namely by reducing inequality and providing a form of financial security which brings more options and positive community engagement with it. Pilots that are closer to true universality, have shown that participants save more, invest more wisely, are healthier and more empowered (to name but a few of the positives). Most individuals continue to work as they did before.
Some of the earliest schemes which show the real benefits of UBI hark back to a negative income tax scheme known as Mincome in Dauphin, Manitoba, Canada between 1975 and 1977. Although not officially a cash transfer scheme, it reflected many of the same benefits.
Participants had fewer hospitalisations, accidents and injuries and youth were more likely to stay in school. There was little change in the time people worked in full-time jobs except that students and mothers did reduce their time in paid jobs freeing up time to spend on their studies or with their children.
At this time of global crisis, UBI could potentially bring more financial security to the millions that need it. If governments are bold enough to continue, we would all possibly see the long-term benefits.
Lessons from the tech world in UBI
Many people in Tech have supported basic income predominately to solve the growing issue of robot automation, but it has long been regarded as a pipe dream. In 2016, Y-Combinator, the startup accelerator announced a plan to conduct a small-scale basic income pilot in Oakland, California. Originally the idea was to give 100 randomly selected participants in poor districts, but they realised that this would not bring the community benefits to it. They, therefore, decided to change it to two community-wide projects – planning to give cash transfers to 3,000 participants. The project was delayed until 2019.
The project was delayed by the need for approval from Institutional Review Boards at Stanford and Michigan and coordination with California state agencies and the IRS to make sure participants wouldn’t lose existing benefits according to Elizabeth Rhodes, YC Research’s project director.
Guy Standing, in Basic Income: And How We Can Make It Happen, writes about the Y Combinator experiment and explains that setting the income level is also tricky. If it’s too high, it may be seen as fiscally impractical and that “a smaller amount might also have significant positive effects and be seen as more realistic”.
As the study begins, cash pay-outs are based on private funding. Rhodes mentions that this has a potential benefit over government-backed studies which can be affected by political swings and regulators who want to put restrictions on receiving cash. In the Netherlands, many UBI enthusiastic Dutch municipalities were stopped and undermined by a lack of political will. The experiment in Ontario was cancelled by Doug Ford, the newly-elected conservative premier of Ontario.
We will have to wait until the end of the study to see their results. The study team have renounced publicity during the project.
What’s next for universal basic income
Implementing a universal basic income takes courage, and political consensus helps. During this time of international crisis, governments and parliaments should undoubtedly think courageously. They should also be clear about what universal basic income means and that the benefits come from community-wide efforts. As the COVID-19 pandemic hits, we will need to look at unprecedented measures, and the movement of UBI is gaining momentum. It is time for governments to look at all the possible strategies out there, some of which may have long-term benefits beyond the crisis.