Universal basic income

Universal basic income (UBI), also called unconditional basic income, basic income, citizen's income, citizen's basic income, basic income guarantee, basic living stipend, guaranteed annual income, universal income security program or universal demogrant, is a theoretical governmental public program for a periodic payment delivered to all citizens of a given population without a means test or work requirement. A basic income can be implemented nationally, regionally, or locally. If the level is sufficient to meet a person's basic needs (i.e., at or above the poverty line) it is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income.
There are several welfare arrangements that can be viewed as related to basic income. Many countries have something like a basic income for children. Pension may be partly similar to basic income. There are also quasi-basic income systems, like Bolsa Familia in Brazil, which is conditional and concentrated on the poor. The Alaska Permanent Fund is essentially a partial basic income, which averages $1,600 annually per resident (in 2019 currency). The negative income tax is also strongly related to basic income.
Several political discussions are related to the basic income debate, including those regarding automation, artificial intelligence (AI), and the future of the necessity of work. A key issue in these debates is whether automation and AI will significantly reduce the number of available jobs and whether a basic income could help alleviate such problems, as well as whether a UBI could be a stepping stone to a resource-based or post-scarcity economy. The economic impact of the COVID-19 pandemic prompted some countries to send direct payments to citizens.
History.
Antiquity.
In an early example, Trajan, emperor of Rome from 98–117 AD, personally gave 650 denarii (equivalent to perhaps USD$260 in 2002) to all common Roman citizens who applied.
16th to 18th century.
In his "Utopia" (1516), English statesman and philosopher Sir Thomas More depicts a society in which every person receives a guaranteed income. Spanish scholar Johannes Ludovicus Vives (1492–1540) proposed that the municipal government should be responsible for securing a subsistence minimum to all its residents "not on the grounds of justice but for the sake of a more effective exercise of morally required charity." Vives also argued that to qualify for poor relief, the recipient must "deserve the help he or she gets by proving his or her willingness to work." In the late 18th century, English Radical Thomas Spence and English-born American philosopher Thomas Paine both had ideas in the same direction.
Paine authored Common Sense (1776) and The American Crisis (1776–1783), the two most influential pamphlets at the start of the American Revolution. He is also the author of Agrarian Justice, published in 1797. In it, he proposed concrete reforms to abolish poverty. In particular, he proposed a universal social insurance system comprising old-age pensions and disability support and universal stakeholder grants for young adults, funded by a 10% inheritance tax focused on land.
Early 20th century.
Around 1920, support for basic income started growing, primarily in England.
Bertrand Russell (1872–1970) argued for a new social model that combined the advantages of socialism and anarchism, and that basic income should be a vital component in that new society.
Dennis and Mabel Milner, a Quaker married couple of the Labour Party, published a short pamphlet entitled "Scheme for a State Bonus" (1918) that argued for the "introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom." They considered it a moral right for everyone to have the means to subsistence, and thus it should not be conditional on work or willingness to work.
C. H. Douglas was an engineer who became concerned that most British citizens could not afford to buy the goods that were produced, despite the rising productivity in British industry. His solution to this paradox was a new social system he called social credit, a combination of monetary reform and basic income.
In 1944 and 1945, the Beveridge Committee, led by the British economist William Beveridge, developed a proposal for a comprehensive new welfare system of social insurance, means-tested benefits, and unconditional allowances for children. Committee member Lady Rhys-Williams argued that the incomes for adults should be more like a basic income. She was also the first to develop the negative income tax model. Her son Brandon Rhys Williams proposed a basic income to a parliamentary committee in 1982, and soon after that in 1984, the Basic Income Research Group, now the Citizen's Basic Income Trust, began to conduct and disseminate research on basic income.
Late 20th century.
In his 1964 State of the Union address, U.S. President Lyndon B. Johnson introduced legislation to fight the "war on poverty". Johnson believed in expanding the federal government's roles in education and health care as poverty reduction strategies. In this political climate the idea of a guaranteed income for every American also took root. Notably, a document, signed by 1200 economists, called for a guaranteed income for every American. Six ambitious basic income experiments started up on the related concept of negative income tax. Succeeding President Richard Nixon explained its purpose as "to provide both a safety net for the poor and a financial incentive for welfare recipients to work." Congress eventually approved a guaranteed minimum income for the elderly and the disabled.
In the mid-1970s the main competitor to basic income and negative income tax, the Earned income tax credit (EITC), or its advocates, won over enough legislators for the US Congress to pass laws on that policy. In 1986, the Basic Income European Network, later renamed to Basic Income Earth Network, was founded, with academic conferences every second year. Other advocates included the green political movement, as well as activists and some groups of unemployed people.
In the latter part of the 20th century, discussions were held around automatization and jobless growth, the possibility of combining economic growth with ecological sustainable development, and how to reform the welfare state bureaucracy. Basic income was interwoven in these and many other debates. During the BIEN academic conferences there were papers about basic income from a wide variety of perspectives, including economics, sociology, and human right approaches.
21st century.
In recent years the idea has come to the forefront more than before. The Swiss referendum about basic income in Switzerland 2016 was covered in media worldwide, despite its rejection. In Europe and elsewhere there have been several polls that show that a majority are positive to the idea. Famous business people like Mark Zuckerberg and Elon Musk have lent their support, as have high-profile politicians like Jeremy Corbyn.
In the US Democratic Party primaries, a newcomer, Andrew Yang, touted basic income as his core policy. His policy, referred to as a "Freedom Dividend", would have provided American citizens 1000 dollars a month.
Response to COVID-19.
As a response to the COVID-19 pandemic and related economic impact, basic income and similar proposals such as helicopter money and cash transfers were increasingly discussed across the world. Most countries have implemented forms of partial unemployment schemes, which effectively subsidized workers' incomes without work requirement. Some countries like the United States, Spain, Hong Kong and Japan introduced direct cash transfers to citizens.
In Europe, a petition calling for an "emergency basic income" gathered more than 200,000 signatures, and polls suggested widespread support in public opinion for it. Unlike the various stimulus packages of the US administration, the EU's stimulus plans did not include any form of income-support policies.
Basic income vs negative income tax.
The diagram shows a basic income/negative tax system combined with flat income tax (the same percentage in tax for every income level).
Y is here the pre-tax salary given by the employer and "y"' is the net income.
"Negative income tax"
For low earnings there is no income tax in the negative income tax system. They receive money, in the form of a negative income tax, but they don't pay any tax. Then, as their labour income increases, this benefit, this money from the state, gradually decreases. That decrease is to be seen as a mechanism for the poor, instead of the poor paying tax.
"Basic income"
That is however not the case in the corresponding basic income system in the diagram. There everyone typically pays income taxes. But on the other hand everyone also gets the same amount in basic income.
"But the net income is the same"
But, as the orange line in the diagram shows, the net income is anyway the same. No matter how much or how little one earns, the amount of money one gets in one's pocket is the same, regardless of which of these two systems is used.
Basic income and Negative income tax are generally seen to be similar in economic net effects, but there are some differences:
When the level of the basic income is high enough for people to live purely from that income, it is sometimes referred to as a "full basic income". If not, it is often referred to as a "partial basic income". No country has yet introduced either to all its citizens.
Perspectives and arguments.
Main themes.
Basic income and automation.
One central rationale for basic income is the belief that automation and robotisation could lead to a world with fewer paid jobs. U.S. presidential candidate and nonprofit founder Andrew Yang has stated that automation caused the loss of 4 million manufacturing jobs and advocated for a UBI (which he calls a Freedom Dividend) of $1,000/month rather than worker retraining programs. Andrew Yang has stated that he is heavily influenced by Martin Ford. Ford, in his turn, believes that the emerging technologies will fail to deliver a lot of employment; on the contrary, because the new industries will "rarely, if ever, be highly labor-intensive". Similar ideas have been debated many times before in history—that "the machines will take the jobs"—so the argument is not new. But what is quite new is the existence of several academic studies that do indeed forecast a future with substantially less employment, in the decades to come. Additionally, President Barack Obama has stated that he believes that the growth of artificial intelligence will lead to increased discussion around the idea of "unconditional free money for everyone".
Basic income and economics.
Some proponents of UBI have argued that basic income could increase economic growth because it would sustain people while they invest in education to get higher-skilled and well-paid jobs. However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth.
The cost of basic income is one of the biggest questions in the public debate as well as in the research. But the cost depends on many things. It first and foremost depends on the level of the basic income as such, and it also depends on many technical points regarding exactly how it is constructed. According to Karl Widerquist it also depends heavily on what one means with the concept of "cost".
Basic income and work.
Many critics of basic income argue that people in general will work less, which in turn means less tax revenue and less money for the state and local governments. Although it is difficult to know for sure what will happen if a whole country introduces basic income, there are nevertheless some studies who have attempted to look at this question.
Regarding the question of basic income vs jobs there is also the aspect of so-called welfare traps. Advocates of basic income often argue that basic income makes work pay more, reducing these traps.
Philosophy and morality.
By definition, universal basic income does not make a distinction between "deserving" and "undeserving" individuals when making payments. Opponents argue that this lack of discrimination is unfair: "Those who genuinely choose idleness or unproductive activities cannot expect those who have committed to doing productive work to subsidize their livelihood. Responsibility is central to fairness." Proponents argue that this lack of discrimination is a way to reduce social stigma.
Basic income, health and poverty.
The first comprehensive systematic review of the health impact of basic income (or rather unconditional cash transfers in general) in low- and middle-income countries, a study which included 21 studies of which 16 were randomized controlled trials, found a clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers, according to the study, may also improve food security and dietary diversity. Children in recipient families are also more likely to attend school and the cash transfers may increase money spent on health care.<ref name="doi10.1002/14651858.CD011135.pub2"></ref>
The Canadian Medical Association passed a motion in 2015 in clear support of basic income and for basic income trials in Canada.
Pilot programs and experiments.
Since the 1960s, but in particular since 2010, there have been a number of basic income pilot programs. Some examples include:
Examples of payments with similarities.
Alaska Permanent Fund.
The Permanent Fund of Alaska in the United States provides a kind of yearly basic income based on the oil and gas revenues of the state to nearly all state residents. More precisely the fund resembles a sovereign wealth fund, investing resource revenues into bonds, stocks, and other conservative investment options with the intent to generate renewable revenue for future generations. The fund has had a noticeable yet diminishing effect on reducing poverty among rural Alaska Indigenous people, notably in the elderly population. However, the payment is not high enough to cover basic expenses (it has never exceeded $2,100) and is not a fixed, guaranteed amount. For these reasons, it is not considered a basic income.
Macau.
Macau's Wealth Partaking Scheme provides some annual basic income to permanent residents, funded by revenues from the city's casinos. However, the amount disbursed is not sufficient to cover basic living expenses, so it is not considered a basic income.
Bolsa Familia.
Bolsa Família is a large social welfare program in Brazil that provides money to many low-income families in the country. The system is related to basic income, but has more conditions, like asking the recipients to keep their children in school until graduation. As of March 2020, the program covers 13.8 million families, and pays an average of $34 per month, in a country where the minimum wage is $190 per month.
Public opinion.
Support for basic income varies widely across Europe. In general the attitudes are more positive towards the idea in southern and Eastern Europe, while several of the countries in the northern part of Europe have somewhat less support. Overall, support tends to be on average higher in countries where existing unemployment benefits are not generous or the receipt of benefits is conditioned on certain job search behavior.