Table of Contents Show
In 2020, I was overseeing the digital performance of SIARIA, a mobile application with scenes in augmented reality that told about unconditional basic income and people whose lives could be changed or even saved if they received money for no reason.
There was a local surge of interest in this topic, largely due to the pandemic that exacerbated the problem of social support. Our project did not take off: those who wanted to learn something about basic income turned out to be even less than those interested in augmented reality.
But the idea itself – which is almost 500 years old – has not disappeared anywhere. The details may vary from project to project, but the majority of theorists agree on three main criteria. We are talking about a regular monetary payment that is: unconditional (money is paid regardless of whether you have a job, income or merit before society), universal (it is received by all residents of a specific area) and individual (the amount comes to each person personally). Over the past 50 years, various formats of such payments have been tested in hundreds of state, private, and hybrid experiments. And in October 2022, an article was even published in The Washington Post titled “Universal Basic Income has been tested multiple times. It works.”
States have instilled suspicion towards any utopian ideas in their citizens, and many consider unconditional basic income to be something radical and unattainable. However, I am convinced that without it, humanity will not be able to solve many critical problems of the 21st century. This letter is about why unconditional basic income is necessary, and the implementation of the idea is not an economic, but a political and ethical issue.
NAVIGATION
This letter has over 28,000 characters; it will take about 16 minutes to read.
The letter consists of four parts. The first explains how under neoliberalism the rich get richer, while workers become increasingly vulnerable. The second tells about dozens of experiments conducted with unconditional basic income in different countries. The third chapter is devoted to the conclusions that can be drawn from all these experiments. And the fourth is about where to get the money to pay for unconditional basic income for everyone.
Part One. Why are we even talking about unconditional basic income?
In the 1970s, changes began in the economies of Western countries – the transition to the neoliberal model promoted by economists from the International Society of “Mont Pelerin”. This set of political and economic principles began its journey around the planet with the policies of Ronald Reagan in the United States and Margaret Thatcher in Great Britain. It includes a belief in the free market as the main tool of progress, unlimited competition, privatization, the inviolability of private property, a minimal role for trade unions, and a reduction in social support for citizens by states to a minimum.
Throughout almost the entire 20th century, the share of national income in Western countries that goes to corporate profits and the share that goes to worker income remained relatively stable. However, thirty years after World War II, with the onset of the neoliberal era, the former began to grow and the latter began to decline. This trend intensified in the 1990s, but particularly after the 2008 crisis, when industrial capitalism transformed into what philosopher Nick Srnicek calls “platform capitalism.” Then, transnational corporations ceased to be just companies, becoming gigantic monopoly platforms whose infrastructure is now used not only by private customers, but also by other corporations and governments.
Encouraging capital, governments decreased taxes on high incomes, increased subsidies to corporations and owners of large property, while reducing support for low-income citizens. Documentary filmmaker Adam Curtis describes this process as a desire of politicians to pass power to the financial elite in the hope that they will better manage the task of moving society and the economy forward. Economist Thomas Piketty, in his study “Capital in the Twenty-First Century,” shows that between the two world wars, the fortunes of the world’s richest people declined, but starting in the 1970s, the balance between wealth (that is, capital profit) and income (that is, worker earnings) is changing rapidly. The former is growing much faster than the latter, not only in “first world” countries, but also in Russia and China. If the trend continues, Piketty believes that the future will resemble the 19th century, when the entire economy was built around a narrow circle of the wealthiest.
What’s wrong with this? States encourage entrepreneurs and corporations, and they earn more, driving the economy towards growth and society towards progress, right? Here is a place for yet another discovery by Piketty: a significant portion of the world’s largest fortunes comes not from earned income, but from inherited capital. Such estates are self-reproducing: capital income – from real estate, intellectual property, shares – today is much higher than income from labor. Therefore, the rich become richer much faster than everyone else, and this is not at all related to their diligence or productivity. Economist Guy Standing calls this situation “rentier capitalism“.
The issue is not only that salaries are growing slowly while capital incomes are growing quickly, but also the changing nature of employment. “Platform capitalism” has resulted in a reduction in the number of “salaried” employees (those on a fixed salary with social guarantees) and an increase in the number of “precarious” workers (people on contracts or freelancers without social guarantees). Ideally, workers’ income should not only consist of salaries, but should also include medical insurance, paid vacation and leave, benefits, and access to infrastructure. The transition to neoliberalism is accompanied by an increase in salaries, but it often removes companies and governments from the responsibility to support workers in all other ways.
We have entered what sociologists Luc Boltanski and Eve Chiapello call the “third spirit of capitalism”: workers are increasingly exploited, but this is smoothed over with mantras of freedom, absence of hierarchy, flexibility, mobility, and self-development. Add to this the war against unions, which is waged in the most neoliberal countries, and workers find themselves in a very vulnerable position. And most importantly, neoliberalism exacerbates global inequality.
A report on global inequality released in 2022 confirms this. Today, the top 10% richest people in the world receive 52% of global income, while the poorest 50% receive only 8.5%. Wealth inequality is even higher: the poorest half owns only 2% of assets, while the richest control 76%. The authors of the report point out that “inequality in income and asset levels has been increasing in all countries since the 1980s” – on the wave of implementation of deregulation and liberalization programs.
In inequalities, especially extreme ones, there are many consequences, including purely economic ones: at a certain level, they can slow down or even stop economic growth. That is, roughly speaking, inequality is more expensive for the state and society than measures to smooth it out, but it is not only about that. Finding only monetary arguments for everything is exactly what the culture of neoliberalism calls for: supposedly everything should be economically justified. But economic inequality is primarily a moral problem; it is direct evidence of the lack of social justice.
The fact that the rich continue to get richer while the poor become even more vulnerable than they were in the middle of the last century indicates the extreme imperfection of the current resource distribution system. And it’s not just about the resources that were discussed in past socialist projects, when the proletariat was forming as a mass class. Now, according to economist Guy Standing, resources include not only money, land, and production, but also basic security, control over one’s own time, education, financial literacy, and much more. And one of the most promising schemes for redistributing all of this can be considered a universal basic income.
Part two. How they experimented with unconditional basic income
In 2016, Swiss citizens were invited to participate in a nationwide referendum where they had to agree or disagree with three statements. The first statement was that the country introduces an unconditional basic income. The second was that it will allow all Swiss citizens to live a decent life and actively participate in society. The third was that the level of basic income and the source of its financing should be determined by law.
A wide social campaign preceded the referendum: supporters and opponents of unconditional basic income were canvassing, creating documentary films, and staging spectacular events. In the end, 77% of Swiss people voted against the idea, while the remaining 23% voted for it, and the basic income was not introduced in the country. However, the fact that such a referendum passed in Switzerland, a country with low poverty and inequality rates, a puritan work ethic, and a significant number of wealthy people, can be called a miracle. And the fact that supporters of the idea reached 23% immediately (in some districts, their number reached 40%) is even more remarkable.
History remembers moments when the introduction of unconditional basic income in some countries was closer than in Switzerland in 2016. For example, in 1969, American Republican President Richard Nixon proposed a plan to support low-income families: they were supposed to receive regular payments or an equivalent tax credit of at least $1600 per year (about $13,000 in today’s money), regardless of whether family members were employed or not. This sounds quite revolutionary – even though Nixon’s proposal was aimed at getting rid of the social welfare system, rather than expanding it. Historian and advocate of basic income Rutger Bregman describes Nixon’s project in detail in his book “Utopia for Realists”. In short, the 37th President of the United States did not succeed: Congress rejected the initiative, and Nixon himself was disappointed, partly under the influence of one of his advisers.
Universal basic income is much closer to reality than commonly thought: it has been tested in hundreds of experiments in different countries. Some were full pilot programs, others were studies or quasi-experiments. Some studied the concept as a whole, while others tested specific provisions. There were those that ended successfully and those that had to be terminated prematurely.
The longest and most extensive in duration and number of participants for many years remains the Alaska Permanent Fund. In this American state, since 1982, anyone who has lived on its territory for more than a year and does not have a criminal record is paid a dividend from oil exports. The payment is guaranteed by the Alaska Constitution and depends on several factors – not only on the volume of oil revenues but also on the number of recipients. Therefore, the amount varies slightly but averages $1500-2000 per year – and it is fixed for everyone.
The scheme in which revenues from the sale of resources are invested in a welfare fund and then somehow distributed among the people is precisely one of the ways to pay basic income practiced in various countries. For example, in Norway, a similar fund supports the social sphere with the revenues from the sale of oil and gas, in Botswana – from the sale of diamonds, in Kuwait and East Timor – from oil.
Mongolia, which depends on exports of resources, has been experimenting with payments to the population since 2004. Initially, a portion of the income from the sale of ores, minerals and fuels went to payments for children, whose parents had to meet certain conditions – regularly send them to school or vaccinate them on time. Then money began to be paid for each child. And in 2010, payments were introduced for every citizen of the country – though poor organization and corruption did not allow this program to last for more than two years.
One of the most cited media experiments was conducted in Finland in 2016 due to the quality of organization and the resulting book. A nationwide program was launched there, within which two thousand randomly selected people received 560 euros per month for two years regardless of their income level and employment status. In the same year, the non-profit organization GiveDirectly – sponsored by private individuals, companies, and various funds – launched a project in Kenya with a budget of 30 million dollars. Residents of 44 local villages receive unconditional basic payments for 12 years from the start of the program, in other 80 villages – for two years, in 71 villages the money will be distributed in a short period, and people from another 100 villages will not receive anything and will act as a control group. The experiment is still ongoing, and the final results will only be seen in five years, but some things are already known (for example, that a few million dollars have already been distributed among a total of 20,000 Kenyans).
In 2018, the Canadian province of Ontario began its experiment: four thousand local residents with low or no income received payouts of up to $24,000 per year. However, the conservative government that came to power later stopped the implementation of the project, which even caused protests.
In different cities in the USA, over the past three years alone, about 50 experimental programs have been launched that explore the effects of direct payments to citizens. In the aftermath of the pandemic, Spain has developed a plan for unconditional payments that are intended to help 850,000 of the country’s poorest families. The project is still in the implementation stage, but about 160 households have already started receiving money, making this program one of the largest experiments in basic income in history. One of the most ambitious programs in the world was launched in January 2023 by the Spanish autonomous region of Catalonia. Starting in the fall, five thousand randomly selected people will receive unconditional basic payments for two years: adults – 800 euros per month, minors – 300.
In Brazil, a law enshrining people’s right to unconditional basic income was adopted by parliament and signed by the president back in 2004. It remains the only country in the world to have passed such a law, but it has stalled in implementation. As an interim measure under President Luiz Inácio Lula da Silva, the Bolsa Família program (translated as “Family Allowance”) was launched – The Economist called it “a poverty-fighting scheme with fans around the world.” For many years, Brazil’s poorest families received monthly payments if their children attended school and were vaccinated on time. However, in 2021, under the conservative President Jair Bolsonaro, this program was replaced by another, Auxílio Brasil (“Brazil Aid”), which did not sit well with a significant portion of Brazilian society.
Various experiments and pilot programs on something similar to a basic unconditional income – of different scales and with different samples – have also been launched in Germany, India, the Netherlands, Namibia, China, Japan, Nepal, the Philippines, Indonesia, Mexico, Pakistan, Ethiopia, Argentina, and other countries. Yes, only a few of them can be called national experiments, and even then with some stretch. Not all of them were conducted with convincing samples, not all of them can be reproduced, and the majority were too short-lived to predict their long-term economic and other consequences. The authors of Debating Universal Basic Income correctly point out that these are more demonstration programs than randomized controlled trials, which are considered the gold standard of science. And yet, the data collected is sufficient to refute the most common arguments against basic unconditional income and attempt to predict its impact on various aspects of human life.
Part Three. What have we learned through all these programs and experiments?
In 2021, a group of authors analyzed 86 reviews of experiments with universal basic income conducted over the past 60 years. They found that from the 1960s to the 1990s, the focus of researchers was mainly on the impact of such payments specifically on the labor market. And to this day, the main objection of opponents of basic income can be formulated as follows: won’t people stop working because of the money they receive for free?
“For almost 30 years, the answer to this question has been sought, but by the zero years, interest in the concept of unconditional basic income had waned. Only after the 2008 crisis, with a new wave of interest, a group of authors indicate that researchers began to pay attention to other aspects – such as the effects that payments have on mental and physical health, access to housing and education, the level of crime, the climate crisis, and gender inequality. That is, the complex impact of unconditional basic income has only recently begun to be studied.”
Immediately to the most painful concern – supposedly, by receiving money for nothing, people will completely stop working. If so, this is an advantage rather than a problem, but more on that later. However, none of the studies on the universal basic income have found such an effect. In 2018, a group of authors published a meta-analysis of 16 experiments, and nowhere was there a significant impact of basic payments on the volume of job offers on the labor market or the labor initiative of people. Two years later, a systematic review of 18 experiments was released, and its authors also did not find factual confirmation of this common stereotype. Even on the contrary – they noticed some increase in the number of employable citizens who are looking for vacancies. Similar conclusions are presented in the point-by-point analysis of the results of the most famous experiments. That is, the basic income does not affect people’s desire to work or has a negligible effect.
In other research fields, the effects of testing basic income are almost always positive. This is clearly seen in another review of experiments conducted at Stanford University in 2020. Most of them show that poverty and inequality levels have significantly decreased in the experimental areas – although not as much in prosperous countries as in poor ones.
Experiments demonstrate the favorable effect of unconditional basic income on the education sector: families who receive basic payments are more likely to have children who regularly attend school and are better prepared for it. Additionally, most studies show an improvement in health: people simply have the opportunity to seek medical assistance and undergo necessary tests. A systematic review by The Lancet found that the more vulnerable the test group, the more positive the effect that basic income has on it. For example, among low- and middle-income people, the frequency of contraception use increases, resulting in fewer unplanned pregnancies and early marriages. We know for sure that unconditional basic income improves food security and dietary diversity.
The famous 2009 London experiment, in which thirteen homeless people were paid money for no reason (similar projects were also carried out in Vancouver and San Francisco), demonstrates the ability of a basic income to positively impact access to housing for people in extreme situations. A significant number of those who participated in these experiments either found a permanent home or spent less time on the streets. There is a stereotype that if homeless people are given money, they will spend it all on alcohol or drugs. However, in various experiments, people without a permanent place of residence or those who are extremely poor spent their payouts on food and medical care.
One of the problems with most basic income research is that testers usually focus on its individual effects, rarely addressing its impact on communities, social or economic situations in regions, let alone the macroeconomy. However, for example, experiments in Kenya, Namibia and India suggest that basic income promotes the consolidation of local communities and strengthens self-governance. Psychological experiments also indicate an increase in tolerance levels: basic income recipients become more tolerant towards “others”.
Finally, one of the theoretical effects of basic income (theoretical because only small studies have shown it) is the decrease in workers’ dependence on “bad” employers. The hypothesis is that thanks to basic payouts, people will be less likely to accept “crazy” jobs and will begin to defend their rights more confidently, without being as afraid of being fired or sanctioned.
The authors of the book “Debating Universal Basic Income” summarize the arguments of supporters of unconditional basic income, writing that it is capable of reducing not only poverty and inequality, but also social stress and crime. Additionally, it can increase access to education, entrepreneurship, and healthcare. Importantly, it can contribute to the fight for women’s independence. In particular, experiments in Kenya, Namibia, and India have shown that basic income makes women less economically dependent.
Part Four. What opponents of basic income say – and how to finance it
Another common argument against unconditional basic income is that it is impossible to implement because it is too expensive. But where to get the money for basic income is the smallest of all potential problems.
There are already many different calculations made for specific economies. Roughly speaking, these are ready-made schemes that allow countries to pay a minimum living wage to all their citizens. These schemes can be divided into two groups: one for existing budgets, while the others require additional sources of financing. In some cases, the unconditional basic income may not cost the budget anything extra – for example, if other social programs are stopped and the funds are thus released. Some projects provide for increased tax burden for certain groups of taxpayers or redistribution of resources. This, by the way, is the answer to those who are convinced that the introduction of a basic income necessarily leads to high inflation – it is not just about printing more money. It’s about restructuring the economic system.
Impressive sums of money can also be freed up, for example, by reducing military spending and expenses on maintaining prisons. Taxes can be imposed not only on the ultra-rich, but also on robots used for production automation (or rather, their owners). And also – enterprises with a large volume of harmful emissions, that is, to introduce a carbon tax, which already exists in some countries. Part of the funds from it can go to financing a basic income, as well as income from trading emission quotas and a tax on the use of public resources.
But anyway, any calculations at the current stage are approximate. As with any other large project, during the implementation they will definitely not match reality. The difference is that for some reason no one asks if there is money, for example, for corruption during government procurement, which is about 35% of the revenue of the federal budget of Russia; wars usually also begin without any public discussion – and whether there are enough means for it at all. Many economic events simply happen at the will of democratic or undemocratic power – and the task is to reconsider priorities. Existing calculations show that when the priority becomes the unconditional basic safety of people, providing it will be, to put it mildly, not impossible.
What else do opponents of unconditional basic income argue? Two books help summarize the arguments against it: the aforementioned “Debating Universal Basic Income” and “Basic Income And The Left: A European Debate“. Skeptics also fear that basic income will increase citizens’ dependence on the state. In the United States and Great Britain, where neoliberalism and individualism culture are thriving, it is customary to disdain the “nanny states” of Northern and Western Europe – supposedly they fuss too much with the poor and other vulnerable populations, only corrupting them. At the same time, neoliberal states themselves tend to have increased paternalism. Their social welfare systems are tied to numerous checks and conditions – the state monitors citizens as if they were small children. And the overly complicated system of benefits, for example, in the US creates what is called a poverty trap or welfare trap – when people with low incomes cannot raise them precisely because of the conditions for receiving subsidies.
Social welfare systems in Europe are also filled with conditions and checks that lead to stress and humiliation for people. The public imagination still holds the image of a migrant or a poor person who wants to quickly receive welfare benefits without doing anything, which is why opponents of a basic income fear that “helicopter money” will corrupt even more people. However, in reality, social support programs around the world suffer from “underpayment”: in different countries, up to 40% of people who are entitled to certain benefits do not claim them for various reasons. Among them are the complexity or vagueness of the rules, unattainable conditions, stigma, and the inability to combine benefits even with low-paying jobs.
Another argument against it is that it is supposedly too primitive of a scheme for the 21st century, when personalized mechanisms are available. However, practice shows that social welfare programs, for example, are moving towards personalization in order to cover a greater number of different cases – and this leads to systems becoming absurdly complex. In Spain, where something like unconditional basic income was proposed to cover about 850 thousand families, they faced difficulties already in the candidate selection stage: this requires a huge bureaucratic apparatus, so delays and confusion constantly occur.
Canadian researchers point out that creating an effective registry of citizens could become one of the main challenges in implementing unconditional basic income. They also mention two other challenges: the need to design a universal payment method that will work for everyone, and the organization of such control over payments that will not resemble surveillance of recipients.
But the main obstacle to unconditional basic income is not budget deficits or technological nuances, but the neoliberal culture, fueled by the unwillingness of the ultrarich to participate in a new agreement on capital redistribution. People on the right side of the political spectrum find the idea of basic income absurd because “only those who work should receive money.” This is a paradoxical thesis in the conditions of “capitalism of rentiers,” when the majority of the largest fortunes are inherited, and income from capital exceeds income from labor. We also know about financial bubbles, stock market manipulations, and the phenomenon of companies like Uber, which can exist for many years and attract investors’ money while continuing to operate at a loss. Those who work and those who receive money are not always the same people.
Professor of Jurisprudence Katarina Pistor in her book “The Code of Capital” explains in detail that wealth (and inequality) is created, in part, through laws enacted under pressure by those who stand to benefit from them. Thus, wealth is not a neutral economic category, but a socially constructed phenomenon. In turn, philosopher Philippe Van Parijs points out that a huge portion of modern human income is not the result of their own work, but a gift from nature, multiplied by knowledge, capital, and innovations passed down to us from previous generations. And every member of the global community has the right to claim their share of this gift.
Universal basic income is not a radical idea, as evidenced by the number of experiments with it and the level of approval in Western countries. But its implementation inevitably makes one think about truly radical things. The first is that people need to work less. Concept of post-productivism and de-growth are already gaining popularity, according to which humanity needs to stop economic growth. Continuing to do so and exploiting resources at the same pace, we simply will not be able to cope with the climate crisis.
Another radical idea is to finally separate survival and employment. Firstly, not everyone can work constantly (and, as shocking as it may sound, not everyone wants to). Secondly, for a huge number of people, the main motivation to work is not for physical survival, but for something else: they do it for fulfillment, pleasure, or to make a contribution to their community. A person should have the right to not work, especially since we still understand work too narrowly. In some experiments with unconditional basic income, it is seen that many people begin to spend their freed-up time caring for those around them.
Basic income can become a step towards the so-called universal caregiver society – a society in which each participant performs labor in caring for others. Today, it is mainly performed by women, is not considered “real” work, and is almost unpaid. And even if it is simply recognized as work, in gender redistribution, it is unlikely to help: men will not rush to do it. The task is for each member of society to feel the need to take on a share of the work of caring for others. And basic income can help with this – allowing a person to consciously choose the balance of paid work, reproductive labor, and leisure that suits them.
At the end of his book “Battle Eight Giants,” sociologist Guy Standing writes that the economic effects of a basic income will likely be moderate. The main reasons he advocates for the implementation of this concept are not economic, but moral and ethical.
Universal basic income can give people more freedom and unite them, thus reviving social connections destroyed by decades of neoliberalism and authoritarianism. However, it is only part of the set of measures needed to create a new social contract for fair redistribution of resources. Another part could be the idea of a maximum allowable income or limits on accumulating capital and converting money.
Some opponents of the unconditional basic income propose to replace it with social services: free healthcare, education, transportation, and other essential services. However, in a world so dependent on money, this will not make a person’s life truly sustainable and secure – and that’s the goal. Therefore, when thinking for quite some time about the unconditional basic income, its connection to work and wealth, you inevitably start thinking about another truly revolutionary idea – a world without money.
Responses