Finland is about to launch an experiment in which a randomly selected group of 2,000–3,000 citizens already on unemployment benefits will begin to receive a monthly basic income of 560 euros (approx. $600). That basic income will replace their existing benefits. The amount is the same as the current guaranteed minimum level of Finnish social security support. The pilot study, running for two years in 2017-2018, aims to assess whether basic income can help reduce poverty, social exclusion, and bureaucracy, while increasing the employment rate.
At first blush, universal basic income (UBI) seems a very attractive idea, especially to a progressive. Yet it suffers from two serious problems. First, the odds are very high that an effort to secure UBI would prove quixotic. Second, and more disconcerting, any possibility of overcoming the formidable obstacles to UBI will almost certainly require a left-right coalition that has significant conservative support — and conservative support for UBI rests on an approach that would increase poverty, rather than reduce it.
The key issues related to UBI include what it would cost, how it would be paid for, and the risks it poses. Let’s take these one at a time.
Oakland, California, will host what may be the first universal basic income experiment in the United States.
Around 100 families will be given a minimum wage as part of a pilot experiment by startup accelerator Y Combinator.
They will be given between $1,000 and $2,000 each month to see how the basic income affects their happiness, well-being and how they spend their time.
Oakland was chosen for its social and economic diversity and the fact it has areas of concentrated wealth and considerable inequality. Participants were selected randomly across the economic spectrum and include both the employed and jobless.
Next time you're having an fight with somebody who doesn't like the idea of a universal basic income, you might employ some of these arguments from Yanis Varoufakis, Greece's former finance minister. In an interview with the Swiss newspaper Tages Anzeiger, he not only refutes the usual arguments against the concept that the government should give everyone a minimum check every month, but he makes them sound quite ridiculous.
I imagine most of my readers have never heard of Dauphin, Manitoba. A small, farming community in Canada, Dauphin is a town that was part of an experiment back in the 1970s. The "mincome" project was launched in 1974, and offered everyone a minimum income. Unfortunately, the project was shut down in 1979 with a change in the government, and so the effects weren't long term enough. The purpose of the mincome project was to see what would happen if a "top up" was offered to everyone. Dr. Evelyn Forget has been studying records from those years, and following up on people to see how it impacted their life. Would people stop working? Would there be higher rates of employment? How would people respond?
But lets start from the top. What is a minimum income? Currently, there are two main models for a minimum income – the universal basic income (UBI), and the negative income tax (NIT). They're similar, but also slightly different in how they're implemented. A negative income tax basically gives you money to top you up to a certain among, after which point you start getting taxed. However, this has problems, such as how often would your income be evaluated? If it was only annually, then someone could be unemployed for a year or more before they receive their minimum income payments. More frequently would be better, but would also be more challenging to implement. The other alternative is a universal basic income, which gives every adult a monthly cheque regardless of income. At the end of the year, this would be included in taxable income. This is also problematic: primarily because of the high costs up front, plus the optics of giving everyone a cheque, including those who do not need it.
