POVERTY | The costs of universal basic income aren’t just financial
Facebook CEO Mark Zuckerberg, the fifth richest person in the world, has called for a universal basic income (UBI), even for people who don’t work. He and other billionaires such as Elon Musk say paying a guaranteed minimum “wage” would provide a cushion to help people try new ideas outside the 9-to-5 grind.
Despite many leaders’ dismissal of the concept as Marxist, several industrialized nations have moved beyond the debate stage. In 2015, Finland’s millionaire Prime Minister Juha Sipila said providing basic income to people would make the social security system less complex—a single government payment instead of many programs. The country instituted a two-year pilot program in 2017 that provided 800 euros per month to a group of jobless or skill-less people. But the project sample now involves too few recipients to show much universality, and organizers currently state the only aim is to coax people into accepting low-paying jobs.
Proponents still insist that nationwide implementation of UBI in Finland would streamline social security, as well as put to rest another bugbear in Finnish welfare: People sometimes refuse work in order to receive more handouts.
Swiss voters considered the idea in a national referendum in 2016, and 78 percent cast a “no” ballot. Daniel Straub, Swiss co-chairman of The Peoples Initiative for an Unconditional Basic Income told me, “We are now in a slow process of changing the paradigm.” He said the results of the referendum are due to people needing to “overcome familiar thought patterns.” The larger goal—far from poverty alleviation— is rebooting how Swiss society “thinks about work and income.”
The million-dollar question in every discussion of UBI is how to fund it. Zuckerberg argues for natural resource sales such as Alaska’s annual oil dividend paid to the state’s citizens. But UBI still amounts to a single-payer system for income.
Back in 2002, the Canadian province of Quebec enacted Bill 112 (an Act to Combat Poverty and Social Exclusion) and researched the effects of giving every resident a guaranteed minimum income. Laval University researchers then published a 2009 behavioral microsimulation study, concluding that the Quebec proposal “would have a large negative impact on hours of work and labor force participation—and mostly so among low-income workers.” It would also require a minimum outlay of $2.2 billion per year to implement.
In September, former U.S. Vice President Joe Biden weighed in, saying the American ideal is still “a steady job that rewards hard work.” Presumably, that includes low-wage jobs. National Review’s Oren Cass said at least a low-paying job provides what a handout never does: a deepening of skills, experience, and social network possibilities.
Forbes writer Frances Coppola asked, “Can giving people the basic means to live, with no strings attached, encourage them to find employment?” The U.S. answer is that many citizens already receive basic welfare benefits, with little net change in social or employment mobility. The Organization for Economic Cooperation and Development calculated that a guaranteed basic income would “not be an effective tool for reducing income poverty.”
“But even if it could work, it should be rejected on principle,” Cass said. “A UBI would redefine the relationship between individuals, families, communities, and the state by giving government the role of provider. It would make work optional and render self-reliance moot.”
— by Rob Holmes