Universal Basic Income: Fact or Fiction?

Author: Daan Schrage
December 11, 2020

Universal basic income or UBI for short. A system where every adult receives a stipend by the government on a regular basis. It differs from means-tested programs in that everybody receives it, regardless of income, age (as long as they are an adult) or health status. It would help alleviate poverty without the need for as much bureaucracy as the currently existing social programs. Sounds like a dream, right? Well, it might be closer to reality than you think.

The idea of a universal basic income goes back a long way. First proposed in the 16th century by philosopher Thomas Moore, who proposed a tax plan wherein every person would be provided with an income stream by the government, regardless of their financial status. Later, famous political activist Martin Luther King Jr. proposed a similar measure in his book “Where Do We Go from Here: Chaos or Community?” published in 1967, where he called for a “guaranteed income”. In more recent times, United States democratic presidential candidate Andrew Yang brought it to the forefront of the discussion by making UBI a central pillar of his policy platform. Proponents of a universal basic income argue that in the coming age of automation, UBI will be essential, as those workers displaced by automation will not be able to find gainful employment elsewhere. It would also be easier and cheaper to implement than a program targeting only those affected by automation, they claim, as the reduced bureaucratic burden of a universal basic income program saves money compared to the traditional alternative.

However, perhaps more interesting is the universal basic income trial that was launched in Finland, back in 2017. A total of 2000 randomly selected participants among those aged between 28-58 which were receiving unemployment benefits at the time. Preliminary results released in 2019 found that while those that were part of the program did not increase their levels of employment, they did experience less stress, had fewer difficulties concentrating, and had fewer health problems. In the Netherlands, a similar experiment was performed. A group of people claiming social assistance were divided into four groups, three of which were faced with fewer or different rules for receiving payments. While all three groups did experience positive outcomes, the results were slightly different compared to those from Finland. The Dutch experiment showed that while labor market participation went up, there were no significant positive benefits to health. Overall, interest in a universal basic income seems to be increasing, as now both Germany and Scotland have also started their own experiments with regards to UBI. Only time will tell how those will turn out, and whether or not their results will confirm the findings in Finland in the Netherlands.

In conclusion, while an actual fully-fledged universal basic income program might still be ways off, preliminary results are cautiously optimistic. It is still too premature to call any findings conclusive, but as more evidence becomes available, we will know for certain whether or not UBI is the way forward in a world where the looming threat of automation hangs over society.

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