A basic income (also called basic income guarantee, Citizen's Income, unconditional basic income, universal basic income (UBI), or universal demogrant) is a form of social security in which all citizens or residents of a country receive a regular, unconditional sum of money, either from a government or some other public institution, independent of any other income.
An unconditional income transfer that is considered insufficient to meet a person's basic needs (or below the poverty line), is sometimes called a partial basic income, while one at or greater than that level is sometimes called a full basic income.
Basic income systems that are financed by the profits of publicly owned enterprises (often called social dividend, also known as citizen's dividend) are major components in many proposed models of market socialism. Basic income schemes have also been promoted within the context of capitalist systems, where they would be financed through various forms of taxation, although basic income could be paired with virtually any form of economic organization whether capitalist or socialist.
Similar proposals for "capital grants provided at the age of majority" date to Thomas Paine's Agrarian Justice of 1795, there paired with asset-based egalitarianism. The phrase "social dividend" was commonly used as a synonym for basic income in the English-speaking world before 1986, after which the phrase "basic income" gained widespread currency. Prominent advocates of the concept include Rutger Bregman, André Gorz, Ailsa McKay, Guy Standing, Karl Widerquist, Hillel Steiner, Peter Vallentyne and Philippe Van Parijs.
Basic income, it is argued, is a much simpler and more transparent welfare system than the one existing in the welfare states around the world today. Instead of having numerous welfare programs, it would simply be one universal unconditional income. This strategy for introducing basic income is controversial because some basic income supporters argue that it should be added to the existing welfare system rather than a replacement for it.
The lack of means test or similar administration would allow for some saving on social welfare, which could be put towards the grant. The Basic Income Earth Network (BIEN) describes one of the benefits of a basic income as having a lower overall cost than that of the current means-tested social welfare benefits, and they have put forth proposals for implementation that they claim to be financially viable.
Basic income is often argued for by its advocates because of its potential to reduce poverty, or even eradicate poverty. The ability of basic income to eliminate poverty is based on the assumption that an unconditional income set above the poverty line will not change the poverty line by inflation or other effects. It is controversial whether that level of basic income is sustainable and even more controversial whether that level of basic income is all-things-considered a wise policy.
Basic income and growth (or BIG) allows for potential economic growth: people may decide to invest in themselves to earn higher degrees and get interesting and well-paid jobs that, in turn, could trigger growth. As Jason Burke Murphy argues, a substantial discussion has grown over recent years about whether basic income could be a part of a larger degrowth movement.
Supporters commonly make three very different arguments that basic income promotes freedom. First, although most basic income supporters tend to be politically left, right-leaning supporters, at least since the 1970s, have argued that policies like basic income free welfare recipients from the paternalistic oversight of conditional welfare-state policies.
Second, Philippe Van Parijs has argued that basic income at the highest sustainable level is needed to support real freedom, or the freedom to do whatever one "might want to do." By this, Van Parijs means that all people should be free to use the resources of the Earth and the "external assets" people make out of them to do whatever they might want to do. Money is like an access ticket to use those resources, and so to make people equally free to do what they might want to do with the external assets of the world, the government should give each individual as many such access tickets as possible—that is, the highest sustainable basic income.
Third, at least since Thomas Paine, some supporters have argued that basic income is needed to protect the power to say no, which these supporters argue is essential to an individual's status as a free person. If some other group of people controls resources necessary to an individual's survival, that individual has no reasonable choice other than to do whatever the resource-controlling group demands. Before the establishment of governments and landlords, individuals had direct access to the resources they needed to survive. But today, resources necessary to the production of food, shelter, and clothing have been privatized in such a way that some have gotten a share and others have not. Therefore, this argument goes, the owners of those resources owe compensation back to non-owners, sufficient at least for them to purchase the resources or goods necessary to sustain their basic needs. This redistribution must be unconditional because people can consider themselves free only if they are not forced to spend all their time doing the bidding of others simply to provide basic necessities to themselves and their families. Under this argument, personal, political, and religious freedom are worth little without the power to say no. In this view, basic income provides an economic freedom, which—combined with political freedom, freedom of belief, and personal freedom—establish each individual's status as a free person.
There is also a belief among critics that if people have free and unconditional money, they will not work (as much) and get lazy. Less work means less tax revenue and hence less money for the state and cities to fund public projects. There are also concerns that some people will spend their basic income on alcohol and drugs.
If there is a disincentive to employment because of basic income, it is however expected that the magnitude of such a disincentive would depend on how generous the basic income were to be. Some campaigners in Switzerland have suggested a level that would only just be liveable, arguing that people would want to supplement it.
Tim Worstall, a writer and blogger, has argued that traditional welfare schemes create a disincentive to work, because such schemes typically cause people to lose benefits at around the same rate that their income rises (a form of welfare trap where the marginal tax rate is 100 percent). He has asserted that this particular disincentive is not a property shared by basic income, as the rate of increase is positive at all incomes.
In one study, even when the benefits are not permanent, the hours worked by the recipients of the benefit are observed to decline by 5 percent, a decrease of two hours in a typical 40-hour work week:
While experiments have been conducted in the United States and Canada, those participating knew that their benefits were not permanent and, consequently, they were not likely to change their behaviour as much or in the same manner had the GAI been ongoing. As a result, total hours worked fell by about five percent on average. The work reduction was largest for second earners in two-earner households and weakest for the main earner. Further, the negative work effect was higher the more generous the benefit level.
However, in studies of the Mincome experiment in rural Dauphin, Manitoba, in the 1970s, the only two groups who worked significantly less were new mothers and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling. Under Mincome, "the reduction of work effort was modest: about one per cent for men, three per cent for wives, and five per cent for unmarried women."
Another study that contradicted such decline in work incentive was a pilot project implemented in 2008 and 2009 in the Namibian village of Omitara; the assessment of the project after its conclusion found that economic activity actually increased, particularly through the launch of small businesses, and reinforcement of the local market by increasing households' buying power. However, the residents of Omitara were described as suffering "dehumanising levels of poverty" before the introduction of the pilot, and as such the project's relevance to potential implementations in developed economies is unknown.
The affordability of a basic income proposal relies on many factors such as the costs of any public services it replaces, tax increases required, and less tangible auxiliary effects on government revenue and/or spending (for example a successful basic income scheme may reduce crime, thereby reducing required expenditure on policing and justice.)
The case for basic income affordability can be summarized this way:
A 2012 affordability study done in the Republic of Ireland by Social Justice Ireland found that basic income would be affordable with a 45 percent income tax rate. This would lead to an improvement in income for the majority of the population. Charles M.A. Clark estimates that the United States could support a Basic Income large enough to eliminate poverty and continue to fund all current government spending (except that which would be made redundant by the Basic Income) with a flat income tax of just under 39 percent.
Paul Mason stated that universal basic income would increase social security costs, but that it would also reduce the high medical costs associated with diseases of poverty, by reducing stress, diseases like high blood pressure, type II diabetes etc. would become less common.
We believe that the most pressing needs of the moment could be met by means of what we call a National Dividend. This would be provided by the creation of new money – by exactly the same methods as are now used by the banking system to create new money – and its distribution as purchasing power to the whole population. Let me emphasise the fact that this is not collection-by-taxation, because in my opinion the reduction of taxation, the very rapid and drastic reduction of taxation, is vitally important.
As of 2017, the only well established and ongoing cash transfer programs akin to a basic income are the Permanent Fund of Alaska in the United States and Bolsa Família in Brazil. Additionally, several other countries have tested, implemented, or begun planning the following basic income experiments:
Economists and sociologists have advocated a form of basic income as a means for distributing the economic profits of publicly owned enterprises to benefit the entire population (also referred to as a social dividend), where the basic income payment represents the return to each citizen on the capital owned by society. These systems would be directly financed out of returns on publicly owned assets and are featured as major components of many models of market socialism. Erik Olin Wright, for example, characterizes basic income as a project for reforming capitalism into an economic system by empowering labor in relation to capital, granting labor greater bargaining power with employers in labor markets, which can gradually de-commodify labor by decoupling work from income. This would allow for an expansion in scope of the "social economy", by granting citizens greater means to pursue activities (such as the pursuit of the arts) that do not yield strong financial returns.
Other theorists leaning towards different kinds of basic income economic perspectives who have advocated basic income include James Meade, Bertrand Russell, Frances Fox Piven and Harry Shutt. Meade states that a return to full employment can only be achieved if, among other things, workers offer their services at a low enough price that the required wage for unskilled labor would be too low to generate a socially desirable distribution of income. He therefore concludes that a citizen's income is necessary to achieve full employment without suffering stagnant or negative growth in wages. James Meade advocated for a social dividend scheme to be funded by publicly owned productive assets. Russell argued for a basic income alongside public ownership as a means to decrease the average length of the working day and to achieve full employment. Fox Piven holds the view that an income guarantee would benefit all workers by liberating them from the anxiety that results from the "tyranny of wage slavery" and provide opportunities for people to pursue different occupations and develop untapped potentials for creativity. Gorz saw basic income as a necessary adaptation to the increasing automation of work, but also a way to overcome the alienation in work and life and to increase the amount of leisure time available to each individual. Harry Shutt proposed basic income along with reforms to make all or most of the enterprises collective in nature, rather than private. Together, he argued, these measures would constitute the make-up of a post-capitalist economic system.
Geolibertarians seek to synthesize propertarian libertarianism and a geoist (or Georgist) philosophy of land as unowned commons or equally owned by all people, citing the classical economic distinction between unimproved land and private property. The rental value of land is produced by the labors of the community and, as such, rightly belongs to the community at large and not solely to the landholder. A land value tax (LVT) is levied as an annual fee for exclusive access to a section of earth, which is collected and redistributed to the community either through public goods, such as public security or a court system, or in the form of a basic guaranteed income called a citizen's dividend. Geolibertarians view the LVT as a single tax to replace all other methods of taxation, which are deemed unjust violations of the non-aggression principle.
Support for basic income has been expressed by several people associated with right-wing political views. While adherents of such views generally favor minimization or abolition of the public provision of welfare services, some have cited basic income as a viable strategy to reduce the amount of bureaucratic administration that is prevalent in many contemporary welfare systems. Others have contended that it could also act as a form of compensation for fiat currency inflation.
Feminists' views on the basic income can be loosely divided into two opposing views: one view which supports basic income, seeing it as a way of guaranteeing a minimum financial independence for women, and recognizing women's unpaid work in the home; and another view which opposes basic income, seeing it as having the potential to discourage women from participating in the workforce, and to reinforce traditional gender roles of women belonging in the private area and men in the public area.
Concerns about automation have caused many in the high-tech industry to turn to basic income proposals as a necessary implication of their business models. Many in the tech industry believe automation (along with other things) is creating technological unemployment. Journalist Nathan Schneider first highlighted the turn of the "tech elite" to these ideas with an article in Vice magazine, which cited figures such as Marc Andreessen, Sam Altman, Peter Diamandis, and others. The White House, in a report to Congress, has put the probability at 83% that a worker making less than $20 an hour in 2010 will eventually lose their job to a machine. Even workers making as much as $40 an hour face odds of 31 percent.
Although the fear of technological unemployment has been a major cause of the recent increase in support for basic income, some tech-industry experts are worried more that automation will destabilize the labor market or that it will increase economic inequality than that it will cause increasing levels of unemployment. For example, Chris Hughes, co-founder of both Facebook and Economic Security Project, does not stress technological unemployment in his arguments for basic income.
Automation has been happening for hundreds of years. It has not yet caused declining levels of employment but it has displaced workers who spend their lives building up skills just to see them outmoded and find themselves forced into the unskilled labor market. Technological unemployment is a future fear, but automation-based employment instability has been around since before the Luddite movement gave it a name in the early 1800s.
Paul Vallée, a Canadian tech-entrepreneur and CEO of Pythian argues that automation is at least as likely to increase poverty and reduce social mobility than it is to create ever-increasing levels of unemployment. At the 2016 North American Basic Income Guarantee Congress in Winnipeg, Vallée examined slavery as a historical example of a period in which capital (African slaves) could do the same things that human labor (poor whites) could do. He found that slavery did not cause massive unemployment among poor whites, but instead increased economic inequality and lowered social mobility.
To better address both the funding concerns and concerns about government control, one alternative model is that the cost and control would be distributed across the private sector instead of the public sector. Companies across the economy would be required to employ humans, but the job descriptions would be left to private innovation, and individuals would have to compete to be hired and retained. This would be a for-profit sector analog of basic income, that is, a market-based form of basic income. It differs from a job guarantee in that the government is not the employer (rather, companies are) and there is no aspect of having employees who "cannot be fired", a problem that interferes with economic dynamism. The economic salvation in this model is not that every individual is guaranteed a job, but rather just that enough jobs exist that massive unemployment is avoided and employment is no longer solely the privilege of only the very smartest or highly trained 20% of the population. Another option for a market-based form of basic income has been proposed by the Center for Economic and Social Justice (CESJ) as part of "a Just Third Way" (a Third Way with greater justice) through widely distributed power and liberty. Called the Capital Homestead Act, it is reminiscent of James S. Albus's Peoples' Capitalism in that money creation and securities ownership are widely and directly distributed to individuals rather than flowing through, or being concentrated in, centralized or elite mechanisms.
Discussion of a basic income can be found both in the economics literature and in public policy debates in the political arena.
Major Western economies today are managed to maintain a large army of unemployed to discipline the demands of labor, which they believe would increase inflation. A primary tool in this regard is the NAIRU (non-accelerating inflation rate of unemployment): The theory is that unemployment below that level will presumably drive up inflation.
Daron Acemoğlu, has expressed doubts on basic income with the following statement: "Current US status quo is horrible. A more efficient and generous social safety net is needed. But UBI is expensive and not generous enough." Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare". The Economist notes that raising the income floor would have no impact on the wealth gap. While cash transfers would make the most difference to those on the bottom of the pile, they posit it would be instead of existing welfare benefits.
Discussion of what eventually came to be called basic income began with scattered writers in Britain and the United States in the first half of the twentieth century. The idea quickly gained strength in United States and Canada in the 1960s and 1970s, but almost as quickly disappeared from the political scene there by 1980. By that time, the discussion had begun to develop in Europe where it grew gradually in 1980s, 1990s, and 2000s. Following the 2009 financial crisis, basic income has seen a significant rise in prominence around the world. The debate has broadened to most of the developed world, to Latin America, Middle East, and to at least some countries in Africa and Asia. Alaska's Permanent Fund Dividend (a cash grant financed out of the state's sovereign wealth fund called Alaska Permanent Fund) is regarded as one of the best examples of an existing basic income, even though it's only a partial basic income.
Other examples of existing basic income, or similar welfare programs, include the partial basic income in Macao and a short-lived program in Iran. Basic income trials, such as Mincome, have been conducted in United States and Canada in the 1960s and 1970s, Namibia (2008–2010), in India (2011–2013), in Kenya (from 2016), and in Finland (from 2017). Governments and private institutions are currently discussing new basic income trials in Kenya, the Netherlands, Ontario, Scotland, Uganda, and the United States. Voters in Switzerland strongly defeated a referendum on the topic in 2016 with 77 percent voting against the proposal.
a flat rate payment as of right to all resident citizens over the school leaving age, irrespective of means of employment status...it would in principle replace all existing social-security entitlements with the exception of child benefits.
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