An unconventional tool called Universal Basic Income (UBI) is in use for the first time in Finland this year. The idea behind it suggests that all humans, even those out of work, deserve to have the money they need to survive. This is not a new concept to the world—writer and philosopher Thomas Paine suggested in a 1797 essay that governments ought to pay everyone 15 pounds per year. During The Industrial Revolution politicians flirted with the idea but instead focused their energies on creating welfare systems for the disabled and elderly.
You may be wondering why it took 280 years for a government to actually put this idea into action. Unfortunately, citizen’s incomes haven’t grown at the same rapid rate that the cost of food, housing and travel have over the years. Additionally, the development of technology and machine intelligence has affected job markets globally and taken work away from people. What happens when we no longer need to employ a human for jobs a robot can do?
While the amount allotted may differ from country to country, Finland’s pilot program promises citizens without work an allowance of £478/ month ($597.45 USD) from the Finnish government agency KELA. Historically in Finland, unemployed citizens might have refused low income or short term work in fear of having their financial benefits reduced drastically under the country’s generous but complex social security system. Now the UBI replaces existing social benefits and citizens will still be paid even if they find work. There are no age restrictions or obligation on how the money must be spent. Today, this nation of 5.5 million, stands at a 8.1% unemployment rate.
Other countries have partaken in pilot programs with UBI as well. So far the results from these studies have been positive — in India, earned income, nutrition, and health improved even without skills training or guidance. When this study was done during the 1970’s in Manitoba, Canada, studies showed that having a guaranteed income resulted in a higher secondary school graduation rate, less births before the age of 25 and far fewer mental health hospitalizations. Considering that the economic burden of mental illness in Canada is estimated at $51 billion per year, Canadians could potentially save billions in health care costs by implementing a UBI. Fife, a historic county in Scotland, is thinking of partaking in a UBI pilot program along with the Netherlands, Ontario and Prince Edward Island. Switzerland voted to reject the plan in June 2016.
But wait, why would anyone reject free money? Many naysayers of the program suggest it’s heavily socialist, greedy and/or a utopian fantasy. Some fear that certain individuals would abuse the system, despite studies of the pilot program proving otherwise. Former Social Market Foundation director Emran Mian, writing in the Independent, said:
“Replacing our complex system of welfare benefits with a single equal payment for everyone means one of two things: either the universal basic income is too low to replace the additional benefits people with particular needs receive, for example, those with disabilities or children; or, if it’s high enough not to leave those people out of pocket, then it costs much more than the present system we have.”
Having additional income could benefit the disabled or the young in several ways, however. Their family members would gain enough financial security to work less on their job and work more for the social good. Families would get to spend more time together, the burdens of expensive child care would dissolve and teenagers could spend less time working minimum wage jobs and more time focusing on their studies. Sure, UBI would pay individuals, but these are individuals who combine to make a community. With more free time they’d be able to provide in ways that would benefit the whole. Some people may even continue working at their jobs, even with a government funded dividend, since careers are often intertwined with a person’s identity. Even if one decided to quit their job, they may spend their time creating art for the community, exploring new innovations or starting a business now that there’s a financial cushion for the risks involved. Charles Darwin came from an affluent family, which he claims gave him the time to make scientific breakthroughs.
Having a basic income would allow people to make better, long term job decisions rather than drastic, short term ones. It would take lots of hard work to implement this system in America or Canada, but it would start with remodelling our taxing system. When a person files taxes, they generally claim a standard deduction and personal exemption, the combination of which subtracts roughly $10,000 from your taxable income. The higher your tax bracket, the more the deductions are worth. America would need to raise the share of GDP collected in tax by nearly 10 percentage points in order to collect funds to distribute evenly among citizens. The rich may not be huge fans of this solution to income inequality, however—a result of Western culture’s inclination to individualism.
Having a basic income for everyone would be invaluable for Louisiana residents, who can’t catch a break from natural disasters. It would help new moms who don’t get a paid maternity leave or stay at home parents who work so hard for no financial compensation. It would help citizens who are predisposed to mental illness avoid triggers such as financial stress and/or negative self perceptions. If every child was given an annual cheque, they’d be able to save for school instead of racking up student loans and debt. Alaska’s economy has already significantly improved since the government implemented a modest annual dividend. Entrepreneurs in Europe are crowdfunding to be able to provide a handful of citizens with a UBI. I’d suggest watching Money For Free if you’re interested in further researching the pros and cons of Universal Basic Income.