BY Jamie Maxwell
What does success look like for universal basic income?
For a few short years in the mid to late 1970s, the provincial authorities in Manitoba, Canada, flirted with a utopian concept: they gave people free money. As part of the so-called ‘Mincome’ initiative – the Manitoba Basic Annual Income Experiment – residents of the tiny town of Dauphin, 200 miles north of Winnipeg, were handed annual, no-strings-attached payments of up to $9000. The government wanted to find out if a universal, state-funded salary would eliminate or diminish work incentives among Dauphinians of employable age. Studies later showed that the impact on the local labour market was negligible.
Four decades later, Finland tried something similar – and got similar results. Between January 2017 and December 2018, 2000 unemployed Finns, selected at random, were given direct grants of €580 per month from the state. The hope was that by implementing a system of unqualified income support, test subjects would face fewer financial pressures and, consequently, find it easier to secure a job. The study failed. There was no sustained rise in employment among members of the control group – although the experiment did register an increase in the group’s general wellbeing and happiness.
The concept of a Universal Basic Income (UBI) has gained traction recently as a result of Covid, which, at its peak, forced three billion adults out of work or onto furlough. The coronavirus crash was unlike any other previous economic catastrophe. In 2020, workers the world over were actively demobilized by governments - they were told to stay home in a bid to stop the spread of a deadly pathogen. Last year in the US, politicians like Bernie Sanders argued that temporary Covid-related welfare payments should be extended to offset the social effects of lockdown. In Canada, the federal government issued weekly stimulus cheques to families whose earnings had been hit by the pandemic.
UBI draws support from both the left and the right of the political spectrum. Socialists believe a minimum income guarantee would end the humiliating rituals of means-tested welfare and bolster the case for comprehensive, free-at-the-point-of-use public services. Libertarians see it as an opportunity to dismantle the cumbersome bureaucracy of the modern welfare state by streamlining benefits into a single monthly grant.
Arguably the strongest rationale for UBI, however, is economic necessity. According to the World Economic Forum, rapid advances in industrial technology and artificial intelligence have already rendered tens of millions of people redundant all over the planet. Add to that the burgeoning reality of climate change, which will accelerate the decline of heavily polluting industries and prompt dramatic shifts in our everyday working lives, and the rationale grows. Indeed, in 2019, the International Labour Organization estimated that rising workplace temperatures would result in the loss of 80 million full-time jobs by the end of this decade. These losses would be concentrated in low-wage sectors like construction and agriculture, the ILO predicted.
Last summer, Scotland became the latest country to announce a basic income trial. “The pandemic has exposed the shortcomings of the UK social security system,” said Aileen Campbell, the Scottish government minister in charge of the trial, “and strengthened calls to explore how a universal basic income could provide support to people and reduce poverty.”
Public money, dispensed at regular intervals, without preconditions, into the accounts of every adult in the country. The idea sounds utopian. But utopian ideas have a way of becoming mainstream in the midst of a crisis. As the experiments in Manitoba and Finland suggest, universal income guarantees are not very effective at pushing people back into work. What they might do, though, is ensure a degree of social protection in the face of the economic turbulence to come.