Give people money

| July 23, 2020

I recently read a book by Dutch historian Rutger Bregman – the book’s title is Utopia for Realists, and How We Can Get There. A very timely and readable book it is, and its confounding title (Utopia is for dreamers only! We can never get there!) is proved as an accurate and feasible dream.

It is not the only current title in circulation; similar ideas are being examined by Annie Lowrey, an economic policy specialist, in her book Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World. Other current works are by D R Woodly, J L Waltman, D R Lee , D H Ciscel, B J Clary, J A Buss, C Hughes and many others.

The thesis of the idea is simple: Give every person, rich and poor, a living wage – an amount equal to what it costs to make a basic living – with no restrictions, no boundaries and no questions asked. Society would pay for the cost of this basic wage from the moneys held by the owners of capital, in proportion to their assets.

This will ensure that no person will be humiliated by the received gift and will be free to spend it in any way. The resultant liberation of spirit will give people – who have so far been anxiously busy trying to bring home the minimum to provide for self and family – the freedom to think creatively of new and better ways to improve their situation.

As Oscar Wilde once quipped:

“The only people who spend more time thinking about money more than the rich are the poor”.

Can a Universal Basic Income work?

Many people throw their hands up in horror.

“Will the poor not drink away their free bounty?”

“Oh no, cash will be wasted on alcohol and on superlarge TV screens and no good will come for the needy children … those poor people need to be supervised how they allocate the ‘gift’, otherwise they will make bad decisions!”

They have no evidence, just opinions. None of the above commentators belong to the class who live in poverty.

International Experience

Currently there are many experiments in progress around the world to examine exactly what happens when the stigma of poverty is eliminated and people are given a Universal Basic Income (UBI).

Local experiments with stringent scientific controls are being carried out right now in Canada, the Netherlands, Finland, Scotland, Utah, Kenya, California, and elsewhere.

How do people actually fare when given free and unconditional living income? Do they stop working? Do they waste money on frivolities? Here are some thoughts on that.

In December 2016, Kela, the Social Insurance Institution of Finland, randomly selected 2000 people aged between 25 and 58 from across the country who were on unemployment benefits. It then replaced those people’s benefits with a guaranteed payment of €560 a month. They would continue receiving the payments whether they got a job or not.

The experiment ended on 31 December 2018. It compared the income, employment status and general wellbeing of those who received the UBI with a control group of 5000 who carried on receiving benefits.

There was no difference between the two groups in terms of the number of days in employment in 2017 – both groups worked on average 49 days. The UBI trial group only earned €21 less on average than the control group during 2017.

But the UBI group perceived their health and stress levels to be significantly better than in the control group.

Requiring unemployed people to continually prove they are looking for work creates a lot of stress for them, which is bad for their health and may mean they are less likely to be able to find work. It also creates bureaucracy for the state, which costs a lot of money for the government.

In Stockton, California, Mayor Michael Tubbs currently runs a UBI experiment funded by private donations. It is the Stockton Economic Empowerment Demonstration, or seed, a basic-income pilot program that has provided unconditional cash transfers of five hundred dollars per month to individuals over the last year and a half.

During the pandemic, the percentage of money that participants spent on food, consistently the largest category, reached nearly twenty-five per cent over the monthly average, while the amount spent on recreation dropped to less than two per cent.

Participants have also put the money toward rent, car payments, and paying off debt, as well as one-off expenses for themselves or their children: dental surgery, a prom dress, football camp, and shoes. They’ve also been able to cut back on working second and third jobs. Alcohol and tobacco have accounted for less than one per cent of spending per month, according to an article in the New Yorker.

A New “War on Poverty”

President Nixon very nearly brought in a Universal Basic Income system to the US, under the name of War on Poverty. He was, in the last minute, dissuaded from following this idea, by being reminded of a social experiment in Speenhamland in England, in 1795.

Although presented as a failure, those who participated in the Speenhamland experiment 150 years before, (namely the poor, who had been given a living wage) were not asked about the outcome, nor were any measures tracked about changes in their activities or wellbeing.

The experiment came to an end because only the elite of society – councillors, clergy, landowners who paid for the scheme – were asked to comment on it, and they lamented the expense and what they saw as the resultant indolence of the working classes.

Modern experiments in UBI are more carefully followed. In a Manitoba study, it was found that it was only young men and young women who spent less time in work during the trial, and this because they were either in college or looking after babies.

If further understanding is needed for seeing the destructive effects of conditional government-supervised handouts, rather than an unconditional UBI scheme, among Australia’s Indigenous population, I recommend reading Why Warriors Lie Down and Die by Richard Trugden. It shows that even the best intentioned charity is destructive. Self-determination is healing and inspiring.

Give People Money

Next on my reading list is Annie Lowrey’s book mentioned above. In it,  she examines the UBI movement from many angles.

She travels to Kenya to see how a UBI is lifting the poorest people on earth out of destitution, to India to see how inefficient government programs are failing the poor, to South Korea to interrogate UBI’s intellectual pedigree, and to Silicon Valley to meet the tech titans financing UBI pilots in expectation of a world with advanced artificial intelligence and little need for human labour.

Here is hoping that in this time of worldwide upheaval our governments will turn to these new ideas to bring a better world out of the ruins of our current war against the Pandemic, which is as real as any war before it, and which can serve as a stimulus for genuine change, just like previous wars have done.