Model Examples of Universal Basic Income

Universal Basic Income has become a popular policy initiative in recent times but the problem is the lack of hard data to support a conclusion on whether it works or not. For this model, examples will need to be examined and a conclusion can be drawn.

U.B.I. would allow every citizen to receive money from the taxpayer without conditions and as a right. This could be implemented at local, state, or national levels. There are many welfare programs and streamlining these services into a one-size-fits-all solution could do away with most of the wasteful bureaucracy that is a by-product of the welfare state. 

Probably the model which comes closest to being a practical reality and not an experiment is the Alaska Permanent Fund. While it is paid out to nearly all state residents it doesn’t cover the basic expenses of living there. It is derived from the oil and gas revenues that are generated within the state. It is important to remember that the payment is not fixed and it is not guaranteed. Andrew Yang used the program as a way of convincing people of the merits of U.B.I. when he ran unsuccessfully as a presidential candidate. It is probably the model that comes closest to having long-term credibility as the program has been operational for a number of decades now and it comes pretty close to the standards to which U.B.I. is held.

Other welfare programs come close as well to fit the definition of U.B.I. Pensions are generally available to all citizens if they reach a certain age but recently some countries have introduced means testing in order to reduce the number of applicants to these programs. Pensions have been around since 1889 when they were first introduced by Otto von Bismarck in Germany so it is fair to say that enough time has passed to say whether it is working as intended. 

One way that doesn’t get a lot of attention today but did so 50 years ago is the idea of ‘’Negative Income Tax’’. This writer received a refund when my income was very low when I was much younger and living in Australia and it came as a pleasant surprise. When the income level of the citizen falls below a certain level then the citizen is refunded some money. The idea has faded from the public discourse over time but it is interesting to note that President Nixon supported the idea.

So far there has only been one referendum held on U.B.I. and that was held in Switzerland in 2016. The vote went against the proposal to introduce U.B.I. into Switzerland so the idea has died as a viable policy in that country. This fits in with the past history of referendums versus elections. An election is an auction for higher benefits while a referendum is a veto on spending your own money on other people.

There have been a number of experiments conducted over the years with U.B.I. Countries such as Namibia, Finland, Holland, India, Uganda, Brazil, and Canada have all conducted experiments and the findings are interesting. Bolsa Familia in Brazil is a cash grant system with conditions such as school attendance by the children. Such a program has been found to increase the level of education in a similar program in India by a factor of 25%. In Livorno in Italy a program that nearly meets the conditions set down by the U.B.I. the principal gives money to the poorest citizens. Such programs have mostly been shut down by the governments which succeeded them. This is in spite of the fact that in Uganda a program that tried U.B.I.  found that business assets, work hours, and earnings all increased by double-figure amounts.

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Such programs if implemented nationally would give rise to some questions. Where would the money come from? Would people have an incentive to work if they knew money was coming into their bank accounts regardless if they worked or not? Would inflation rise if everyone’s income level rose at the same time? It is easy to start programs that make us feel good but the real-world consequences can be devastating. Much more careful examination of this particular issue is called for and while the benefits might be obvious in limited programs the real way to solve poverty is to give someone training and education for a job that pays well and is safe and secure.

Nick Hanlon

I'm an Aussie interested in topical issues.

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