Guaranteed income for all citizens: benefit or harm?

In several countries it is planned to conduct a series of experiments aimed to find out what would happen to society if the introduction of a minimum guaranteed income for all citizens. Some believe that this revolutionary idea can completely change our attitude to work, writes the correspondent of BBC Future.

In January 2017, Finland began the revolutionary economic experiment.

The government of the country in the next two years will be to pay monthly to two thousand people a guaranteed minimum income of 560 euros (600 dollars).

The participants, selected at random from among sitting on the unemployment benefit, will receive that amount even if you find a job.

The Finnish project is the largest experiment of this kind, whose purpose — to find out what would happen if every citizen of the country will be a guaranteed source of stable cash income.

This social concept is known as “unconditional basic income”.

“We expect that a basic income will provide the participants confidence in their financial stability and give them the opportunity to better plan their lives,” says Marjukka Turunen, the representative of the Bureau of the Finnish social security KELA, which conducts the experiment.

The concept seems quite simple but actually it is revolutionary.

Not everyone liking the idea of the state handing out money right and left just like that. And some people worry that the presence of each of the guaranteed income it will be impossible to find candidates for public necessary but unpopular jobs.

However, the idea of an unconditional basic income is gaining popularity around the world, from Silicon valley to India.

Now, after the global financial crisis of 2008 many see guaranteed income best way of reforming social security systems, which in its present form is not able to handle the load, as well as response to the serious economic difficulties faced by most countries in the world.

The concept of guaranteed income did not appear yesterday. In the late 1960-ies the American President Richard Nixon first tried it in practice, and the experiment was successful. Nixon was considered basic income as an effective tool of reforming the social security system. However, prior to full implementation of the concept is not reached — was opposed by the Republicans.

Influential economists of the last century, Milton Friedman and Friedrich von Hayek believed that a guaranteed income in one form or another is the best way to overcome poverty.

In the book “law, legislation and liberty” Hayek describes it as a source of economic freedom for all citizens: “Guaranteeing a certain minimum income for everyone, a kind of strap, below which nobody can fall, even in the case of inability to provide for themselves, is not only completely legal form of protection from risk, equally faced by all, but mandatory element of the Big society, in which the identity will no longer present requests to a specific small group of people to which it belongs”.

In the face of rising financial and political pressure on the social security system, some believe that the introduction of unconditional basic income will be a logical solution to the problem.

It can actually be a more economical solution than the existing mechanisms of social security, mainly due to the fact that it is cheaper to provide and control.

However, the main reason why many return to the concept of basic income is that it is seen as a way to protect ordinary citizens from global economic shocks.

The world has still not recovered from consequences of the financial crisis of 2008. In addition, there are growing concerns about the automation of labor — robots and artificial intelligence threaten to deprive many people of work. A basic income would give citizens the opportunity to reconsider its place on the new labour market.

“We hope that our project will find work at part-time or start their own business,” says Turunen.

According to some accounts, such a result is possible. In 1968, Nixon had ordered the experiment, in which 8,500 participants received a guaranteed annual income of about $ 1,600 per family of four (roughly in today’s money would amount to 10 thousand dollars).

These “free money” had little impact on employment of participants: those who began working less, spending free time on other significant public classes.

According to Dutch historian, Rutger Bregman, a supporter of the introduction of a basic income and author of “Utopia for realists”, the experiment Nixon has had a great impact on the participants: “One woman, the mother, received a degree in psychology and took a position of researcher. The other went to acting classes, and her husband began to compose music.”

The second woman told investigators that she and her husband realized in art. The researchers also concluded that young people who never had to earn a living, mainly to spend more time to study.

A similar experiment was conducted in Canada in the 1970s: 30% of the population of the town of Dauphine, Manitoba received 15 000 $ on the person.

Analysis of results conducted in 2011 by the economist from the University of Manitoba Evelyn Forget showed that among children who participated in the experiment increased the number of those who graduated from high school, and the number of hospitalizations among participants decreased by 8.5%.

The employment rate for adult participants in this case has not undergone any changes.

Despite the success of these projects, the political changes in the United States and Canada did not allow them to develop into a more ambitious program. Did you like this today?

Experiments like Finnish, are going to be held in the canadian province of Ontario, in Oakland, California and the Dutch Utrecht. In Scotland the authorities of the two cities — Glasgow and Fife — also announced the intention to experience the concept of basic income. The idea is supported by policies in the different countries of Europe, including the leader of the British labour party Jeremy Corbyn.

But can we expect positive results? In the UK unemployment benefits are approximately five million people. In 2015, the budget of the social security system of the country amounted to 258 billion pounds ($320 billion). If you divide this amount equally among the approximately 50 million adult citizens, everyone will get at 5160 pounds ($6,400) per year.

This amount is much less than 13 124 pounds (16 $ 280) a year to earn a regular job with a minimum salary level, established by the British government.

Many the size of an unconditional basic income seems too modest. He’s even smaller than the size of allowances paid to some now unemployed — benefits which, according to the authors of most of the models and is intended to replace the guaranteed income.

In the UK the unemployed over the age of 25 years can receive up to 3800 pounds (4714 dollars) per year in the allowances for the period of job search, as well as the average 4992 pounds (6192 dollars) per year in the allowances for housing.

However, according to a recent survey, 64% of Europe’s population and 62% of the UK population would have voted for the introduction of a basic income, if they had the chance.

However, not all this idea like. In 2016, the people of Switzerland voted in a referendum against the proposal to pay every adult citizen 2500 francs (2418 dollars) per month, and minors — quarter of this amount.

Opponents of this idea referred to the associated prohibitively high cost, and also stated that it will encourage people to quit, especially low-paid, manual labor.

Who will agree to work as a cleaner or garbage disposal, if basic income allows you to do that?

However, proponents of basic income argue that it is able to force society to rethink the importance of low-prestige jobs and to the wages of those who do.

Indeed, the availability of a guaranteed source of income if only additional, it can change our attitude to the postulate that says that only working people are full-fledged members of society.

The concept of employment is Central to modern society. The work is considered as an integral part of human identity. However, unpaid productive work — volunteering, housework and care of dependants — remains undervalued.

Godfrey Mose, a civil activist and Deputy Secretary of the Melbourne branch of the National Union of employees of Australia, argues that the introduction of a basic income has radically changed our attitude to work.

In an article published by The Guardian in 2013, he writes: “Imagine how much would be released as creative energy, a surge of innovation and entrepreneurship will happen, if every citizen is guaranteed a certain standard of living. People will be able to open social enterprises and co-operatives engaged in small business without the fear of losing livelihoods”.

There is even an opinion that the availability of a guaranteed income could have a positive impact on the situation of people working in the state.

If the person is not obliged to grasp at the first opportunity offer, he can demand higher wages and more decent working conditions.

However, the concept has critics. Dmitry Kleiner, author of “the Manifesto of telecommunica”, argues that the introduction of a guaranteed income can spur inflation as people begin to spend more money.

There are also fears that the experiments, limited in time, is not able to reflect genuine social change, which can lead to the introduction of a basic income on a regular basis.

It is possible that the participants in such projects are using free time for study or training for a new profession because at the end of the experiment they once again have to look for work.

In addition, the selection of participants from among the people sitting on the Dole, not significant, because it makes no assumptions about what might happen if a guaranteed income is guaranteed to all. To assess the impact of the concept of basic income to our understanding of employment will only be possible in the case of its widespread implementation.

At the same time, the Finnish experiment is criticized for modest-sized payments. In Finland, with its high standard of living of those 560 euros per month, received by the participants, will not last long.

Notwithstanding the foregoing, both supporters and opponents of the idea will be closely monitored for the Finnish project and for other similar experiments, to find out what the result of the presence of a source of small income.

It is not excluded that employment in its current form is coming to an end.