Experiments around the world have never been extended into policy, so we assume they have failed. But why does the idea keep coming back?
Universal basic income – the idea of giving everyone an adequate monthly income to live on – is a concept so far-fetched it barely merits consideration. That was my view. Then I noticed it was being supported by both the political left and right at the same time. A bit of research shows it has been around a long time and dismissed without ever really going away.
Indeed, it has been on the agenda of radical thinkers for centuries. In 1796, Thomas Paine suggested a lump sum was given to everyone on their 21st birthday and a pension at 50. Charles Fourier was labelled a “utopian socialist” by Karl Marx for suggesting the government paid a “minimum” subsistence to citizens.
It surfaced politically in the 20th century, first in the 1920s, then in the 1970s when the Heath government considered it, as did Nixon in the US, who spanned the concept into a form of negative taxation. Hayek and Milton Friedman broadly supported the idea as a way of removing state benefits bureaucracy.
There it lay until 2013 when Enno Schmidt, a Swiss artist, spearheaded a successful campaign to bring it to the public vote with a referendum in 2016. UBI was rejected by 77 per cent of voters, but it didn’t stop Finland from launching its own mini-experiment on 8,000 low-paid workers. The funding was pulled this year after just two years.
A small, brief experiment, it did not solve unemployment but it did improve physical and mental health among participants. The Dutch city of Utrecht is next with a two-year experiment.
For five years in the 1970s, the Canadian town of Dauphin ran a UBI project. The results, where there were any, seem consistent with others. There are considerable educational and health benefits (which could be monetised in the UK as NHS savings), as well as reduced criminality.
The only notable reduction in working hours is among teenagers and women with young children. But, none of these experiments have been extended into policy and so we must assume they have failed. Why? And if they are just bad ideas why do they keep coming back?
Silicon Valley is hardly synonymous with socialism, yet it is now visibly at the forefront of UBI with a number of its poster boys such as Marc Andreessen, Elon Musk, Sam Altman and Gerald Huff.
Their line can be summed up as: “Your jobs are all going to be, like, totally wiped out by the robots we invent, so we need to come up with a way of giving you something to live for. Obvs.”
There is a colossal amount of arrogance in their thinking, but also the kind of self-serving capitalism that has attracted support from the libertarian right. They believe it will generate more wealth (for them) in future. They also have endless personal wealth to play with, so can run whatever experiment they want for as long as they like. See also their plans to send rockets into space.
Altman’s experiment covers 3,000 people across two states over five years. A thousand of them will be given $1,000 (£762) a month, and the rest will act as a control group with just $50 a month. The profile of UBI will soar again.
The most common argument against UBI is that it encourages sloth. The evidence so far is that it doesn’t, other than among mothers who reduced working hours (which will please some) and teenagers who are more inclined to stay in education.
It prompts interesting questions on what people would do without “fear of not being able to eat as a way to motivate people”, to quote Altman. These aren’t dissimilar questions to those planners ask their own clients about retirement.
It hasn’t, however, solved employment issues and it is hard to see how long an experiment would need to run to prove that it did. Certainly longer than two years.
Research shows nobody says they will do nothing if they were paid a minimum income but they believe everyone else will. This is a huge problem in winning support.
The argument in UBI’s favour is that it actually costs money to work, not just in benefits reduction but clothes, travel, etc, and this will help, not hinder, more and better quality work.
The most challenging problem is how you would implement it and calibrate it across different countries. The Swiss rightly pointed out the likely consequences for immigration if they went alone. Given the huge disparity in income between countries, how would you avoid this?
Even intra-country, this is difficult. The Green Party ran with £80 a week in the 2015 general election, which was laughably low and costed to fit into existing tax structures. Silicon Valley discussions start at $1,000 per month. Would you pull away other public safety nets, as “small state” libertarians hope, in return for a decent income which can pay for it, or not, as people choose?
The practical implementation of UBI as an idea is a huge problem but it doesn’t seem to stop the theory from being resurrected, refined and invested in by utopian socialists and right-wing libertarians alike. It remains in the province of daft science fiction for the time being but very little is unthinkable nowadays.
Phil Young is managing director of Zero Support