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14 February 2019

Universal basic income: the idea that shows no sign of abating

Once derided as a utopian unicorn, Finnish trials of basic income suggest the policy has real-world potential.

By Anthony Painter

About three years ago there was a sudden spike of interest in Universal Basic Income. Amidst a flurry of attention and anxiety about the effects that automation could have on work, Silicon Valley entrepreneurs posited UBI as an apt response to mass job obsolescence. Others were attracted by its potential contribution to economic security. Many critics said the hype of this utopian unicorn would evaporate. But here we are, three years on, interest intensifying and UBI proposals getting ever more serious.

The simplicity of basic income polarises discussion; while people can intuitively grasp the idea, many experts are instinctively suspicious. This is why experiments are necessary to grasp its potential effects.

Finland was the first country to launch a UBI trial in January 2017. The results of the country’s two-year trial were published last Friday. The aim of a basic income – a universal, regular, unconditional flat-rate payment for all citizens – is to underpin economic security and enable personal wellbeing. At first glance, the initial results of the Finnish trial are promising.

Elsewhere, the Green Party in the UK and a range of campaigners and researchers have been supportive of basic income. The Scottish government is considering trialling the policy. The Royal Society of Arts is working in Fife to help understand how a place-focused trial could operate effectively. Meanwhile, Labour’s shadow chancellor John McDonnell is exploring whether Basic Income should form part of the party’s manifesto.

Basic income trials are gaining ground across the world. California has launched a trial. Meanwhile in India, the state of Sikkim has pledged to implement a full basic income. Other Indian states are considering similar schemes, and the opposition Indian National Congress Party has pledged a minimum income guarantee, which could function similarly to basic income.

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India’s trials build on precedent. Previous experimental work in India in the state of Madhya Pradesh showed how basic income supports work, lowers debt, increases entrepreneurship and positively impacts health and educational attainment, with strong positive effects on poor women in particular.

The most impressive long term trial, however, is Alaska’s permanent dividend fund, where every Alaskan receives an annual unconditional cash payment. Economists at the University of Chicago studied the fund and found that the policy, which has been in place for almost forty years, has not reduced employment overall, and has increased part time employment as cash is recycled back into the Alaskan economy. It’s unsurprising that Alaska’s permanent universal divided fund had no adverse impact on work. The universal support of the NHS, for instance, has hardly frayed the UK’s work ethic.

Four years of trials in Canada in the 1970s showed very positive impacts on health and education. The Canadian trials suggested that young men remained in education for longer, and young mothers were more likely to take a longer period of maternity leave. A Basic Income experiment among Cherokee Indians in North Carolina had similar positive effects.

Last week’s data from the Finnish trials reveals a similar pattern. There was no detrimental impact on employment during the first year of the UBI trial. There were positive impacts on health and wellbeing, including on mental health. Levels of trust amongst basic income recipients improved – in others and in Government – and participants became more confident about their future work opportunities. 

Over time, one can speculate that health and trust outcomes would help underpin economic security. Universal Credit, on the other hand, has had precisely the opposite effect. 

Some caution is necessary. This is early stage data. The Finnish experiment was unique in that recipients were spread far and wide. The largest effects have come when a whole community (or state, in the case of Alaska) have received basic income. This observation underpins the RSA’s work in Fife, where we’re exploring the civic and public support that might be necessary to help people train, find work, and support community involvement alongside basic income.

Three years into a wave of interest in Basic Income, the idea shows no sign of disappearing. Its advocates can take reassurance from the early Finnish results. As extreme wealth inequality and widespread economic insecurity fracture societies, we should keep basic income firmly on the agenda.

Anthony Painter is a director at the Royal Society of Arts. He tweets @anthonypainter

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