What happens when a government gives their citizens free money?
And - if it’s coming from the government - is it really free?
l Hey guys, I’m Alex, this is NowThis World,
and on this episode, we’re talking about Universal Basic Income, what it is, and why
it’s becoming a popular subject of debate.
Following recent news that Finland opted out of continuing its UBI pilot program beyond
2018, economists are questioning the sustainability of the controversial model.
We’re taking a look at local and national governments around the world that have given
it a shot - and diving into the question: could a universal basic income work for the
U.S.?
First - let’s break it down.
Though it comes in different shapes and sizes, universal basic income is an economic concept
in which everyone gets an equal amount of money from the government, every month, no
strings attached.
So whether you’re unemployed or working, low-income or in the 1%, the same check will
always come.
And nobody will tell you how to spend it.
Supporters say the idea is that providing folks with a security net won’t encourage
them to stop working, but actually give them the freedom to pursue work they’re really
interested in, and restore economic security.
Some liberal proponents argue that increasing taxes on corporations and the wealthy to help
support a universal income could be a positive way to help out low-income communities, while
some conservative supporters like the idea that a successful UBI could replace what they
deem as costly and ineffective social services like food stamps, job training, Medicaid,
and more.
The idea has gained steam in recentyears, with 48% of Americans supporting a universal
basic income program as of 2017, a number which, according to economist Karl Widerquist,
has skyrocketed up from 12% just 10 years ago.
But it’s not a new concept.
As far back as 1516, philosopher Thomas More proposed a similar idea in his book Utopia.
In a 1792 pamphlet, founding father Thomas Paine proposed a basic income for “every
person, rich or poor.”
And 20th century leaders from Milton Friedman to Dr. Martin Luther King Jr., spoke out about
the potential for a basic income to help different communities out of poverty.
And under President Nixon, a plan nearly passed to establish a guaranteed minimum income in
the early ‘70s.
Fast forward to today, and the concept is the subject of books, documentaries, and countless
academic panels.
It’s got big-name backers from Elon Musk, to Mark Zuckerberg, to Senator Bernie Sanders,
who said he’s “sympathetic” to the approach.
Countries around the world have piloted versions of the UBI experiment including Kenya, Canada,
Finland, the Netherlands, and Spain, with proposed versions in places like India and
Scotland.
It’s even been tested in a few U.S. cities - but, would it be a viable option for the
American economy?
Let’s look at the pros and cons.
We asked UBI expert and advocate Sandhya Anantharaman for her take on why some feel the concept
is gaining steam.
Poverty is exhausting, and financial stress is exhausting, and it really limits the time
and space mentally that you have to work on great ideas.
So the idea is that, for people who are struggling to make rent payments, buy groceries, and
support their families, the stress can be overwhelming - and flat-out tiring.
But having a security net - of, say, $1000 per month, could clear up people’s time
that they’d ordinarily spend stressing about where their next meal will come from, and
spend more time job-searching, volunteering, or participating in the economy.
Some participants in Finland’s pilot program, which will run through the end of 2018, are
already reporting that their stress levels have decreased.
And while many critics argue that free cash would disincentivize work, supporters say
there’s some evidence to the contrary.
In the 1960s we did a number of experiments around the country in different states to
test the impact of unconditional cash on work.
So essentially, do people work fewer hours or work for less money when you give them
unconditional support?
In a paper done by the Roosevelt Institute last year, they reexamined these experiments
and saw that there was essentially no reduction in work hours, so when you gave people unconditional
cash, you didn’t see a decrease in the hours worked, instead folks just took the opportunity
to enjoy the stability that they had.
When we looked into the data Anantharaman references , it did indicate that some programs
resulted in “a slight reduction in work and earnings,” but also ultimately showed
that the experiments didn’t result in the average worker leaving the labor force.
Of course, data from a few small experiments in the ‘60s isn’t a perfect predictor
of what would happen in the U.S. economy today.
But another recent study by the Roosevelt Institute showed that the economy could stand
to gain trillions of dollars if UBI were to be successfully implemented.
Others argue that UBI is a good solution to the growing fear that automation will swallow
jobs and lead to mass unemployment.
Study results vary widely on how much of a threat automation actually is to the workforce.
Whatever the truth, the risk certainly feels real to some Americans.
Two-third of them think robots and computer will do “much of the work done by humans”
within 50 years, according to a 2016 Pew study.
There have been other positive from similar pilot programs in other parts of the world,
too, including one in Dauphin, Canada.
So you saw kids, particularly young boys, stay in school longer, thanks to the cash
that their families had, because that means they didn't have to drop and get jobs, they
could stay in school.
You saw young mothers take more time off, particularly women who had just given birth
took time off to spend with their kids.
You also saw health outcomes go up.
You saw incidents of hospitalizations went down, you saw mental health go up.
And in Western Kenya - early results based on interviews with participants of the 12-year
pilot program showed reduced conflict and poverty.
And advocates of universal basic income in the U.S. argue it could actually build bipartisan
support , with a program that would both reduce social welfare programs and tax the wealthy.
Of course, critics of the concept argue there are many reasons UBI wouldn’t work in the
U.S.
The left-leaning Center on Budget and Policy Priorities suggests that even a cautious approach
to UBI would likely increase poverty rather than decrease it.
Their report shows that a monthly $900 for each American would cost about $3 trillion
annually.
Even if we just take into account the net cost of UBI rather than the gross, it’s
still a huge cost - and would Americans really go for a major tax increase?
Some critics of the program also take issue with the fact that, unlike other social welfare
programs, UBI wouldn’t specifically help low-income communities.
The same monthly check would arrive at Bill Gates’ doorstsep as the average American.
And many argue creating something like a UBI would inevitably lead to the government having
to slash other social welfare programs.
And finally, another critique is that UBI could disincentivize work - critics argue
that people wouldn’t feel the need to work or keep a job if they’re receiving a free
check.
Most data we examined from pilot programs - both in the states and abroad - showed that
people generally kept working.
In some instances, part-time work even increased.
But some experts say that might only be the case if the cash subsidy is enough for people
to live on.
One thing critics and opponents agree on is that funding this program will come with one
heck of a price tag.