The Universal Basic Income Experiment
I first heard about Universal Basic Income from a childhood friend who touts it as the best! idea! ever! It’s not a bad idea, but it’s an idea that works best in its natural environment as part of the overall economic and political system. If not, it’s sort of like placing a lion in an elementary school. You can do it, and it would certainly be interesting, but I don’t think it would be what we’d call successful for either the lion or the students.
Meaning, people have a tendency to see something working in one place and believe they can implement that idea in another place. The reason it works in the first place is because the idea is integrated into a larger mentality and belief system, and the reason it usually doesn’t work in the second place is because the system doesn’t really fit with the overall personality of the new space.
The idea of UBI is to give people an allowance that covers all of their needs. You work out what is the lowest amount of money a person can live on while having their basic needs of food, shelter, and health care met, and then the government gives that money to the citizen so they have the breathing space to find their most productive space in helping society continue to run.
You may have heard about it recently because Finland is testing out the idea on 2000 people.
Listen, there are definite benefits to UBI. If everyone has a basic income, you don’t need millions of social welfare programs. There would be no homelessness, no hunger, less crime, more education. People wouldn’t stay in jobs that make them miserable simply to hold onto benefits. In fact, employers would no longer have to worry about providing benefits at all. You would still need to work if you wanted extras like fashionable clothing or iPhones. But your basic needs would all be covered.
It sounds good, and it certainly could work, small-scale. But UBI requires high taxation levels (at least it would in capitalistic countries like the US), and a social mentality where people put taking care of their neighbours over their own personal gain. I can’t really see that working out large-scale in the US, especially not in today’s political climate. I can’t even see it working large-scale in Finland, or any country without a shift in mindset.
But I’m totally curious to watch it play out.
Do you think something like UBI could ever work, large-scale? Any economists out there with thoughts on this?
11 comments
I think a government funded year long parental leave would work in the US. It does in Canada and Australia as well as other countries. You get a certain percentage of your income to live on and your job is held. It decreases childhood illness due to increased breastfeeding rates and not putting 6 week olds in group childcare. It would also help with daycare scarcity as there’d be almost a year that no one really needs to have their infant in fulltime care. It could also include infant mortality rates and post partum depression and anxiety.
As for something like UBI, I come from an experience in the welfare system. UBI might not work in the US where we have the false belief that everyone can work harder and succeed and a very individualistic culture. But, it could give the current welfare system some ideas for improvement. Such as correcting the gap between where your support is decreased when your income increases and the actual amount of income you need to make up for that lost support. (Say you get $350 in food stamps and you get a job, but your income only leaves you with $200 for food and your food stamps were cut completely. You go back into debt and can’t keep your head above water.) Something like a universal food expense for people with under a certain income could help bring the lowest earning people up. But then again, a universal living wage would also be great!
It is likely to have long term positive effects on children. A lot of recent research has looked at what scarcity and uncertainty does to kids growing up, and has shown that our current system incorporates a lot of fluctuations and uncertainty.
How much of an effect it would have on work outcomes is unclear and likely depends on program specifics. Theory suggests people would work less at least in the short term on average. But if ubi is set low enough and has the right incentives people might invest in more education leading to higher incomes and more work. How taxes are structured will also matter.
There’s a difference between being economically a good idea and being politically viable. In a country talking about removing Medicare, ubi is not going to happen.
I’m all for social safety nets and things like nationalized health care benefits but as described it sounds a little like (idealized) communism.
I have no background in psychology social work etc. but lately I have come to the conclusion that there is a certain subset of the population that for various reasons (mental illness, etc) just will never be able to work/play a standard role in society. I usually think about this when I see homeless people laying about who clearly can’t just pull it together, clean up a little and find a job (although there are some homeless people in that camp too). I think as a society we need to take care of these people who can’t care for themselves. We shouldn’t be ok with people freezing to death outside (like 2 people in my Calif coastal community last year–and this is not MN or AK type weather), etc. Sadly many people in this country *deplorables* *cough* have the “get a job!” viewpoint.
I am for it. But I am someone who has always happily paid my taxes. I want good roads and good schools and health care. I would happily paid more to put our homeless in to apartments and to make sure every child got breakfast and on and on and on.
I am watching Finland with interest, as I suspect it will be successful (in ways they can’t even imagine) and they will expand the program. We’ll see if I’m right.
This idea of a base is not a new one. We’ve see various versions throughout history. The issue comes in just as you said, though, which is there has to be an inherent integration both into society on an economic and social acceptance level. People have to value the system. The Scandinavian countries are a good place to try this experiment given that there is enough of an integration sociological principles like this. But there’s also a lot of other factors many people aren’t considering too for why this experiment would work in Finland while fail in a place like Greece or Columbia.
One can dream though, huh? And maybe there’s enough there for countries like he US to start adopting for much needed social reform.
This is a very interesting idea. I agree with 35jupiterdrive in that I am for it… but always pay my taxes, etc. If there’s one thing (among so many things really) this last year has shown us it is that there are a LOT of self-serving people in this country who will find an angle or a way to manipulate anything for personal gain. The skeptic in me says that this would be taken advantage of immediately.
I think you’re right about it working only where the culture is prepared for it. Though introducing something new – especially if there is true political will – can do a lot to changing cultural norms too. I read recently that the shorter working hours work well in one of the Nordic countries (can’t remember which one), because there is a cultural view that if you’re working long hours, it means you’re not coping with your work. Whereas in NZ (and I suspect in the US), working long hours tends to mean/gives the impression that you’re productive and important and needed.
It’s an idea that is kicked around here a lot. We’re not there yet – and if we are not, then it seems to me that the US is definitely not there yet. The attitudes towards minimum wages, for example, (or healthcare, or parental leave, or any form of welfare) would need to be overcome (I would think) before a universal income could be considered.
In an ideal world, it would work. But for the world we have right now? I feel like it might work in the right environment and with the right people….but I’m not sure that environment/people exist. It would require a massive culture shift and I am not sure anywhere is ready for that…but if its going to work anywhere, Finland is the place to start!
“There would be no homelessness, no hunger…” Untrue. Some people will slip through the cracks.
“But UBI requires high taxation levels…” Does it? I realise that’s the myth. People are like: it will cost money, therefore that means more tax. But actually it has the potential to save and produce money. How much value is trashed from the US economy because people aren’t getting timely health care or are stuck in unsuitable jobs for health care benefits, for example? I think this is going to be one of the interesting data points from the experiment – to see whether the scheme falls into the red or the black.
But of course you’re right that it won’t automatically transfer – you can’t save money on administration of a billion social welfare programs if you don’t have any social welfare programs. The ledger will look different everywhere. And the social mindset thing… yeah, it is going to be easier to sell in some places than others.
Coming from a place which in theory offers a basic income to all (albeit via a web of programs) I’m mindful of the fact that administration costs aren’t all *costs* either – grouping people into categories and treating them differently makes sense when/if it’s effective at addressing the problems that are keeping them dependent on the system. Even if UBI works out better economically, we should still look at whether it’s working out better for dependent members of society from a social point of view.
I remember commenting on someone’s blog about this very issue not too long ago, although I can’t for the life of me remember where. Anyway — there was a limited experiment with a basic guaranteed income in Dauphin, Manitoba (Canada) back in the 1970s. (My family lived about 40 miles away around the same time & I had absolutely no memory of this, although to be fair, I was only 13 when we moved away. 😉 ) Then the government/political climate changed, the experiment was discontinued and the data collected was packed away & forgotten & never analyzed or looked at… until about 30 years later. The analysis was not complete, but what they did learn was pretty interesting. Here are some links for you:
http://www.huffingtonpost.ca/2014/12/23/mincome-in-dauphin-manitoba_n_6335682.html
http://www.cbc.ca/news/canada/manitoba/1970s-manitoba-poverty-experiment-called-a-success-1.868562
I certainly don’t see anything like this happening in the States anytime soon.
I think it would work wonders here. Our social welfqre system is so complex that everybody has an ibcome but the stat at hone parents. But elite is all very complicated and complex and sometimes hinders working ( because You will loose welfare for working a small job that You couldn’t live from. Basic income would make it more fair and easier! My City is experiementing!