Extract from The Guardian
Finland is trialling an unconditional income scheme, and studies show
its benefits. I’d bet my own income that the idea would work here in the
UK
‘A basic income removes onerous benefit conditions to seek and take
employment, yet increases the incentive to take low-wage jobs because it
is not withdrawn as income rises.’
Photograph: Jack Taylor/Getty Images
The
20th century income distribution system has broken down irretrievably.
Globalisation, technological change and the move to flexible labour
markets has channelled more and more income to rentiers – those owning
financial, physical or so-called intellectual property – while real
wages stagnate. The income of the precariat is falling and becoming more
volatile. And chronic insecurity will not be overcome by minimum wage
laws, tax credits, means-tested benefits or workfare. In short, a basic
income is becoming a political imperative.
There has recently been a surge of interest in basic income. The idea is that a monthly income should be paid, unconditionally, to either every resident citizen or legal resident, perhaps with legal migrants required to wait before qualifying. Long derided as unaffordable and conducive to idleness, basic income is now attracting support from many quarters and standard objections have been robustly challenged.
This interest has prompted the launch of several basic income pilots around the world. One started on 1 January in Finland with others planned in Ontario, Canada, Oakland, California, Aquitaine and Catalonia, and discussions are ongoing in Fife and Glasgow. A US NGO, GiveDirectly, is raising $30m for a 12-year experiment in Kenya.
It is important to stress that pilots can only test certain behavioural aspects of paying a basic income and seeing what people do differently, whereas its proponents rest their case on more fundamental justifications – social justice, freedom and economic security. None of these can be tested by pilots, which by definition are short-term and involve relatively small numbers of people.
Most pilots do not conform to a universal basic income system, in which everyone in a given community receives it, so these benefits cannot be tested. And if only a few people are given a basic income, recipients may soon find themselves under pressure from relatives and neighbours to share it.
For these reasons, some see pilots simply as a way of avoiding other important policy decisions. But once results start to come in, they may help to “win the argument”, as John McDonnell, Labour’s shadow chancellor has put it, by showing that basic income is both feasible and does not have the negative behavioural effects commonly attributed to it.
At the moment, Finland’s pilot is receiving global attention. It is not a true basic income experiment, which is not to imply it will have no value. Instead, 2,000 randomly selected unemployed people aged between 25 and 58 have started to receive €560 (£475) as a tax-free monthly unconditional benefit, paid for two years. It will not be reduced if they earn income, and they will not be obliged to search for jobs.
The reasoning behind the experiment is that the Finnish social security system, designed for an industrial society, has become dysfunctional. As in the UK, it is overcomplex and has created severe poverty traps. A basic income removes onerous benefit conditions to seek and take employment, yet increases the incentive to take low-wage jobs because it is not withdrawn as income rises. Thus the pilot’s designers pose the question: could a basic income simplify the social security system and increase employment?
A well-known experiment in the Canadian town of Dauphin in the 1970s showed that recipients of the basic income suffered less from ill-health and mental stress. In negative income tax experiments in the US in the 1970s, children from recipient families were less likely to drop out of high school.
And in an “accidental” basic income pilot in North Carolina, where a longitudinal study of child development coincided with the decision of a Cherokee community to distribute casino profits to all tribal members, children in recipient families had fewer behavioural disorders, performed better in school, and were less likely to drift into crime. This was attributed to more economic security and better family relations, partly because parents spent less time arguing about money and more time with their children. Alcohol and drug abuse also fell.
In developing countries, experiments coming closest to a test of basic income have been conducted in Namibia and, on a larger scale, in India. In the largest Indian pilot, about 6,000 men people in eight villages received a small basic income for 18 months, and their experience was compared with what happened in 12 similar villages where nobody received the basic income.
Four positive effects were observed: First, there were benefits to welfare – improved nutrition, better health, improved schooling. Second, there were positive equity effects; the basic income helped the disabled more than others, women more than men, and scheduled caste households more than high-caste ones. Third, there were positive economic effects; having a basic income led to more work and labour, raised productivity and output, and reduced inequality. In particular, there was a growth in secondary, self- employed work.
Later this month, the Indian government is due to publish its annual economic report, which will include a chapter on the feasibility of rolling out a basic income across India. It may be cautious and noncommittal but the fact that a major country is even considering the introduction of a basic income testifies to a growing legitimacy.
One unanticipated result was that the emancipatory value of the basic income, in terms of transforming people’s lives, was greater than the very modest monetary value. I would argue that this emancipatory effect would apply wherever a basic income system was instigated, whereas most other forms of benefit, by being selective, conditional and inefficient, have an emancipatory value less than the monetary value.
Critics may say that what happens in India would not happen in the UK. However, I would wager my future basic income that, although many pilots are not true basic income experiments, the results will be similar to what has been shown in other places. That should help to win the argument. It will then be up to the courage and integrity of politicians to build a basic income system
There has recently been a surge of interest in basic income. The idea is that a monthly income should be paid, unconditionally, to either every resident citizen or legal resident, perhaps with legal migrants required to wait before qualifying. Long derided as unaffordable and conducive to idleness, basic income is now attracting support from many quarters and standard objections have been robustly challenged.
This interest has prompted the launch of several basic income pilots around the world. One started on 1 January in Finland with others planned in Ontario, Canada, Oakland, California, Aquitaine and Catalonia, and discussions are ongoing in Fife and Glasgow. A US NGO, GiveDirectly, is raising $30m for a 12-year experiment in Kenya.
It is important to stress that pilots can only test certain behavioural aspects of paying a basic income and seeing what people do differently, whereas its proponents rest their case on more fundamental justifications – social justice, freedom and economic security. None of these can be tested by pilots, which by definition are short-term and involve relatively small numbers of people.
Most pilots do not conform to a universal basic income system, in which everyone in a given community receives it, so these benefits cannot be tested. And if only a few people are given a basic income, recipients may soon find themselves under pressure from relatives and neighbours to share it.
For these reasons, some see pilots simply as a way of avoiding other important policy decisions. But once results start to come in, they may help to “win the argument”, as John McDonnell, Labour’s shadow chancellor has put it, by showing that basic income is both feasible and does not have the negative behavioural effects commonly attributed to it.
At the moment, Finland’s pilot is receiving global attention. It is not a true basic income experiment, which is not to imply it will have no value. Instead, 2,000 randomly selected unemployed people aged between 25 and 58 have started to receive €560 (£475) as a tax-free monthly unconditional benefit, paid for two years. It will not be reduced if they earn income, and they will not be obliged to search for jobs.
The reasoning behind the experiment is that the Finnish social security system, designed for an industrial society, has become dysfunctional. As in the UK, it is overcomplex and has created severe poverty traps. A basic income removes onerous benefit conditions to seek and take employment, yet increases the incentive to take low-wage jobs because it is not withdrawn as income rises. Thus the pilot’s designers pose the question: could a basic income simplify the social security system and increase employment?
A well-known experiment in the Canadian town of Dauphin in the 1970s showed that recipients of the basic income suffered less from ill-health and mental stress. In negative income tax experiments in the US in the 1970s, children from recipient families were less likely to drop out of high school.
And in an “accidental” basic income pilot in North Carolina, where a longitudinal study of child development coincided with the decision of a Cherokee community to distribute casino profits to all tribal members, children in recipient families had fewer behavioural disorders, performed better in school, and were less likely to drift into crime. This was attributed to more economic security and better family relations, partly because parents spent less time arguing about money and more time with their children. Alcohol and drug abuse also fell.
In developing countries, experiments coming closest to a test of basic income have been conducted in Namibia and, on a larger scale, in India. In the largest Indian pilot, about 6,000 men people in eight villages received a small basic income for 18 months, and their experience was compared with what happened in 12 similar villages where nobody received the basic income.
Four positive effects were observed: First, there were benefits to welfare – improved nutrition, better health, improved schooling. Second, there were positive equity effects; the basic income helped the disabled more than others, women more than men, and scheduled caste households more than high-caste ones. Third, there were positive economic effects; having a basic income led to more work and labour, raised productivity and output, and reduced inequality. In particular, there was a growth in secondary, self- employed work.
Later this month, the Indian government is due to publish its annual economic report, which will include a chapter on the feasibility of rolling out a basic income across India. It may be cautious and noncommittal but the fact that a major country is even considering the introduction of a basic income testifies to a growing legitimacy.
One unanticipated result was that the emancipatory value of the basic income, in terms of transforming people’s lives, was greater than the very modest monetary value. I would argue that this emancipatory effect would apply wherever a basic income system was instigated, whereas most other forms of benefit, by being selective, conditional and inefficient, have an emancipatory value less than the monetary value.
Critics may say that what happens in India would not happen in the UK. However, I would wager my future basic income that, although many pilots are not true basic income experiments, the results will be similar to what has been shown in other places. That should help to win the argument. It will then be up to the courage and integrity of politicians to build a basic income system
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