Universal Basic Income: Will It Revolutionize Life in the 21st Century?

Posted February 02, 2017

Universal Basic IncomeImagine living in a country where the government pays everyone the basic cost of living. Where every adult - young or old, rich or poor, employed or unemployed - receives the same annual income, with no conditions or qualifications, and receives this payment for the rest of their life. No more welfare systems or meager pensions, no more worries about quitting an unfulfilling job or being able to afford to go to college rather than straight into work. Everyone will have enough to live on, period.

This is the world of UBI, or Universal Basic Income. Other names for it are the Citizens' Income or Social Wage. Far from being the stuff of utopian dreams, this is an idea which is gaining worldwide support, from Silicon Valley to Europe to India. It has even already been tried out in countries as far apart as the Netherlands, Canada and Finland.

Less a Revolution, More a Resurrection

UBI is by no means a new idea. President Nixon and the White House supported it in the late 1960s, as did the Senate and the House. But after going through the Senate Finance Committee, it was killed off by bureaucracy and a right-wing backlash. As the economist Professor Evelyn Forget of the University of Manitoba, Canada, says: "The political right (was) worried about work disincentives and the political left doesn't quite trust people to make their own decisions and choices."

The acclaimed 20th century political theorist and economist Friedrich Hayek saw a guaranteed income as the ideal way to alleviate poverty and give everyone economic freedom. In his 1973 work Law, Legislation and Liberty, he wrote: "The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be wholly legitimate protection against a risk common to all, but a necessary part of the Great Society."

What are the Advantages of UBI?

The word "welfare" has always had unpleasant connotations. Applying for any form of welfare can be a long-drawn-out, degrading process, and those who rely on it are often seen as spongers on society, as somehow lesser citizens than those who are in work. However, despite this negative association, a universal income would do away with people being disparaged for dependency on the state because everyone would be in the same position. Moreover, it could actually prove less costly than existing welfare systems because a fixed payment for all is cheaper to administer and to oversee.

Although gender equality supposedly already exists, the fact remains that many people of both sexes are still financially reliant on their partners, due to the burden of childcare, disability or other such hardship. In some less fortunate cases, financial reliance may become a shackle that, for reasons beyond their control, one partner may not ever be in a position to remove. With UBI every woman and every man would be financially independent and, in many cases, in a far better position to leave an unhealthy or abusive relationship.

Free from work constraints, people would have the opportunity to devote time to caring for elderly or infirm relatives, a need which is constantly increasing in our ever-aging society. Ditto for childcare. And public health would be markedly improved as a direct consequence.

Going back to the previous real-life trials of UBI, in the 1970s there were four basic income trials in the U.S., plus one - known as "Mincome" - in the small Canadian town of Dauphin, Manitoba, where 30 percent of residents were given a living wage for a period of five years. Professor Forget, who has studied the effects of these trials, found a reduction in hospitalization rates of between 10 and 12 percent over that time.

Universal Basic Income

The Canadian trial also showed that, contrary to expectations, employment rates amongst adults hardly changed, with those who reduced their working hours choosing to engage in other socially useful activities instead. Academic and artistic ambitions were pursued and realized as, freed from the necessity to work, people were able to take adult learning classes or complete advanced degrees.

The relaxing of economic pressure would also provide far greater opportunities for people to start their own businesses, with the guaranteed income as a safeguard against failure. High school completion rates would increase as young people no longer feel under pressure to earn an income rather than continue their education. And parents would be able to afford to stay at home to care for babies and pre-school-age children.

The Disadvantages

The main problem of establishing a system of universal basic income would unquestionably be the difficult and complicated business of deciding exactly how much to pay each citizen. How would a government go about determining what constitutes economic security amongst the diverse populations and wildly differing cost-of-living expenses of every country which implements the system?

Dr Nick Srnicek is the Canadian co-author of Inventing the Future, which explores ways of liberating humanity from work and expanding our freedoms. He recognizes that UBI is a long-term project which would be extremely costly, so revenues would need to be built up over time. "You need to be talking about the Panama Papers and tax havens, and how you're going to claw back tax revenues to pay for it," he says. He believes the only way of bringing in the funds "chimes with our rising concerns about tax avoidance and evasion" - which, as is widely acknowledged, is a challenging area for any government to confront.

He concedes that the concept of UBI is problematic for some people because it includes the rich as well as the poor. But for it to work, he says, it "has to be universal; it has to apply to everybody" - although that raises the objection that if it is partly funded from a discontinued welfare system, the poor would in effect be footing the bill for the rich.

There is also a view that UBI would be a boon for capitalists because it would subsidize meager paychecks, freeing companies from the necessity to pay a living wage to their employees. This is linked to a further concern that guaranteed incomes could cause issues with finding people to undertake essential but unpopular jobs. After all, who would choose to be a garbage collector or a sewer worker if they could afford not to?

The Changing Face of Work

The workplace is unquestionably changing, and the reason for this is automation. Its effect on our working lives is already making an impact and this will inevitably escalate year on year. For example, in the U.K. alone, a third of retail jobs - a total of one million - are forecast to be obsolete by 2025. Advances in the fields of robotics and artificial intelligence are continually being made. And when automation reaches the area of transport, this could be a tipping point. The number of jobs in the U.S. trucking industry is estimated to be 8.7 million, so as automated haulage increasingly becomes a reality, so jobs will decrease exponentially. And of course employment in areas such as cab driving, chauffeuring, delivery work and so on will suffer the same fate, with the predicted rise of autonomous vehicles over the course of the next few decades.

In New York, the venture capitalist Albert Wenger has been claiming for years that UBI offers a solution to this escalating problem. If, as he says, "we are at the beginning of a time where machines will do a lot of the things humans have traditionally done", how do you avoid "a massive bifurcation of society into those who have wealth and those who don't?"

This widening inequality is already causing concern and resentment among large sections of society in many countries. A basic income for all could therefore be a politically astute move by any government wanting to assuage its citizens' discontent and ward off any potential future unrest.

Universal Basic Income

Current UBI Programs

This year Finland is launching its own UBI experiment, with the government giving 2,000 randomly selected welfare recipients a monthly income of 560 euros ($600). This will continue whether or not they find employment. The experiment is being run by Kela, Finland's social insurance agency, and its representative, Marjukka Turunen, believes it will be of benefit to its participants. “We hope that basic income will give these people a sense of financial security and the opportunity to plan ahead for their lives," she says.

Another trial is due to start in Utrecht in the Netherlands. The local government will give 250 citizens a guaranteed monthly income of 960 euros (about $1,100) for two years. This proposal, called "Weten Wat Werkt", or "Know What Works", includes some additional test groups with varying conditions. One group will receive an additional amount on top of the basic sum if they do volunteer work, such as school maintenance. Another group will receive the extra money at the beginning rather than the end of each month, but will have to return it if they don't volunteer. "Human behavior is always unpredictable," says Professor Loek Groot, an economist working with the government on the project. "We want to know what motivates people, what people respond to."

Silicon Valley has also got in on the act. Venture investors Y Combinator, who specialize in funding start-up companies, began a year-long program in June 2016, sending between $1,000 and $2,000 to 100 families in Oakland,California. The aim, they say, is to find answers to key questions, such as how having the security of a basic income affects people's economic, psychological and physical well-being, and also how they choose to spend their time.

Plans for other studies are underway in places such as Ontario in Canada and Glasgow in Scotland. UBI hasn't met with universal support, however - a referendum held last year in Switzerland rejected a proposal to hold a trial there. Its opponents argued that it would be too costly and would encourage people to quit their jobs, especially those in low-paid, manual employment.

Universal Basic Income

Questions to Ponder

What is not clear is to what extent the proponents of UBI have considered the role that work plays in people's lives. Many people define themselves by the work they do, especially if they know that it has a value over and above their own need for economic security and personal fulfillment.

As the former assistant professor of economics Noah Smith says, work itself might address a basic human need for dignity. "Being part of something bigger than yourself, allying your efforts with other people's, being compensated for your efforts - this is all really important to (your) sense of being worthwhile." As he points out, short-term experiments can't tell us much about any potential long-term psychological harm which might result from relying on government handouts to live, rather than on money we have earned ourselves.

On the other hand, UBI could provide a welcome safeguard against the inevitable fact that some people will always fall through the cracks of any welfare system. And for many it could bestow a sense of liberation and freedom, enabling them to contribute to their communities, to care for relatives, to pursue a course of study or start a business, instead of spending a greater part of their lives working for someone else.

Despite the fact that it is by no means a new idea, the launch of a universal basic income on a national or international scale is still a long way off. Much more needs to be done before it would be possible to implement such a fundamental change in how we live our lives. Current trials may work well in the short-term, but they are merely the tip of the iceberg. As Noah Smith points out, when any policy is crafted it is vital to remember what studies like these can and, even more importantly, what they can't tell us about the nature of work, about ourselves, and about freedom.

Universal Basic Income


Kate Rhodes is a passionate scholar and advocate of happiness, both at home and in one's career. After working for over a decade in education, including adult literacy and special needs tutoring, she now divides her time between blogging on the subject of careers and work/life balance, and finding her own happiness curled up at home with a good book and a mug of hot tea. A true logophile (lover of words), her idea of perfect happiness is waking up one day to find that every apostrophe in the world is finally in its rightful place.

photo of The CareerBliss Team

The CareerBliss Team

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