Empowering Communities With a Social Business Approach
Change the rules of the game by transferring power to the communities.
Ever more sophisticated robots are taking over jobs. Poverty might follow in step. But there is a concept, often derided as socialist utopia that could help.
As a concept, universal basic income (UBI) is as simple as it is controversial: Every month the state provides each citizen with a sum of money sufficient to cover their basic needs – regardless of employment status. Since the 1960s, various concepts and models have been suggested and discussed, some more widely than others, while field studies have enriched the debate with empirical findings. On a large scale, however, UBI has generally been dismissed as an unfeasible socialist utopia.
Today the debate has entered a new, global stage and is more serious and thoughtful than ever before. Since 2015, many societies from around the world have begun entertaining UBI as a real option and are considering it from various angles. National and international opinion polls have confirmed both its relevance and wide base of support. A number of pilot projects are scheduled to begin in 2017 in countries like Finland and Canada, and more are in planning. Support for the idea spans the political spectrum from far left to far right, and proponents have put forth many different financing models in their call for UBI. In the search for solutions to growing social fragmentation and the looming threat posed by the automation and digitalization of the job market in the wake of globalisation, UBI is increasingly relevant.
In the 1960s and 1970s, universal basic income was already under discussion in the USA and Canada among both conservative liberals and social democrats. Its ability to improve the welfare system was tested in small trails. At the time, “negative income tax” proposed by libertarian economist and Nobel Prize Laurate Milton Friedman was the most prominent model. Friedman began advocating for UBI in the USA in 1962, arguing that, depending on income, citizens should have a way to supplement their income that did not take away their humanity and dignity. Citizens with no income at all would be guaranteed a check from the treasury to cover their basic needs.
UBI resulted in significant savings for the state health care system.
Three field experiments were conducted in different socially disadvantaged regions in the USA between 1968 and 1972. The results were astonishing: while wage labour dropped by 13 percent, participating family’s investment in nutrition, education and health increased. Young people enrolled in the program also showed clear improvement in their performance in the educational system. In the small city of Dauphin in Canada, the “Mincome” programme provided around 1,000 mostly rural families with financial support from the government a period of 5 years starting in 1974. Participating families were not means tested. The study replicated the positive effects on education and family life seen in the USA, and also showed improvements in social cohesion. Particularly striking was the fact that the number of doctor and hospital visits dropped, resulting in significant savings for the state health care system.
UBI disappeared from the public and political scene in both the USA and Canada in the wake of the oil crises of the 1970s and 1980s and the austerity measures both countries introduced in response. Despite the promising results from the experimental programmes, international dialogue on UBI fell silent, only to reignite after the turn of the century in the form of smaller projects designed to address extreme poverty.
The findings from these Western experiments were often challenged because of their one-sided attempt to address poverty. Proponents argued that UBI was important not just for its positive economic impact, but because it could also foster independence and freedom that would benefit society as a whole. The effect is two-fold: Basic income provides the individual with more decision-making autonomy regarding their health, education and employment. It also reduces injustice by putting all the members of a community on equal footing, increasingly solidarity so needs and problems can be negotiated more constructively at the local level.
Re-emergence of the debate in an era of automation and digitalisation
Disappearing jobs and increasingly precarious working conditions have breathed new life into the public debate on UBI in Europe and North America. Supporters hope it will help streamline state bureaucracy by getting rid of the need for employment agencies, child and family benefits, and educational and living subsidies. Proponents of UBI also argue that in this age of advancing automation and digitalization, freedom from financial hardship and the sanctions of the state welfare system would encourage people to invest their energy in doing something useful and productive to improve society.
In the current debate on the future of the employment market, few bring up the possibility of mass unemployment. There is widespread agreement, however, that automation and digitization will continue to reduce the overall number of jobs, and that an information elite is forming that is controlling and profiting from this shift in the labour market. Machines are replacing human workers in the service and machinery industries in particular. In the near future, giant corporations like Apple, Microsoft, Samsung, Siemens and VW will slash tens of thousands of jobs without creating any new positions to replace them. Emerging and industrialised countries that rely heavily on manufacturing and processing might be hit hardest by digitalization. Many now view basic income as essential to guaranteeing every human being a life of dignity in the medium to long term.
To finance UBI, suggestions range from rethinking and reforming existing taxes, such as income, value added, property or estate, to revolutionary new taxes such as a machine tax, a value creation tax, or financial transaction tax to address modern, highly capitalized value-added processes and redistribute the profits to promote social equality. Depending on the model, UBI is also designed to replace complicated welfare systems, cutting down on red tape and cost.
Since the turn of the century, successful entrepreneurs from the Silicon Valley and Western Europe have been at the forefront of the movement for UBI. In 2016, the Swiss referendum on introducing a UBI provision into the constitution fuelled debate in the West. The Swiss popular initiative recommended paying the same UBI to all Swiss citizens, and although it was voted down, it sparked wider and more differentiated social discourse. In Namibia and India, countries that depend heavily on the processing industry, there is a real fear that robotization will drive large segments of the population even deeper into poverty. Despite strong economic growth, poverty is already widespread in both countries, and national UBI programmes are under discussion as a possible solution.
Neoliberal approaches and social democratic alternatives
The political and ideological calls for UBI are growing louder in many Western countries. Spurred on by economic necessity, Finland’s central-right government is starting a pilot to in 2017, which will pay 2,000 currently unemployed Finns up to 750 euros per month over a period of more than two years. The primary initial goal of the scheme, which international critics have called a “flat rate for losers”, is the temporary streamlining of the welfare system. The basic income falls well short of the subsistence level of around 1,100 euros and, in addition to rationalizing state bureaucracy, is also intended to make it easier for people to start “mini-jobs” (marginal part-time work) or part-time positions. Unfortunately, the programme’s design make it unlikely to any generate important findings on how UBI might improve society and the employment market over the long term.
The basic income studies scheduled to take start in the Dutch cities of Utrecht, Gronigen, Tilburg and Wageningen as of January 2017, are also designed to streamline bureaucracy and simplify state welfare over the short term. The primary focus is on identifying if and how UBI could be used to get unemployment benefit recipients back into work. The effectiveness of three approaches will be tested on cohorts of 100-150 subjects: universal welfare, welfare with a job application requirement, or bonus payments for specific activities.
All these experiments are short-lived, pragmatic reactions to the growing realisation that the dream of full employment cannot be realized in today’s working environment. And to the fact the past efforts of many European countries to tighten the requirements and limitations placed on unemployment benefits have not had a positive effect on the individuals or the employment market as a whole. As such, the experiments in Finland and the Netherlands might at most succeed in using universal unemployment benefits to push more welfare recipients into the low-wage sector in future.
Right now, debate on UBI is more constructive and fruitful than ever before.
In recent months, European parties from the left, green, and social-democratic camps have begun demanding UBI models that promote the interests of workers and serve as a long-term solution to disappearing jobs and the emergence of a socially precarious underclass. These generally involve a basic income that does not completely replace state welfare, and includes important social benefits like state health insurance. In France in particular, where UBI is growing in popularity across all party lines and with the public in the run-up to the presidential election in 2017, demands for a social-democratic UBI are growing louder – particularly from elements of the Parti Socialiste (PS) and Les Verts (EELV).
As a reaction to growing unemployment among young people and the elderly, and to increasingly precarious working conditions, UBI is understood here as a basic guarantee to provide workers with basic financial security, and thus allow them to act and live with dignity. Based on findings from previous basic income studies, the accumulated effect of improvements in health, education and entrepreneurial self-reliance will ultimately benefit individuals and the employment market, and help lessen social divisions.
The debate on a basic income will continue.
Right now, debate on UBI is more constructive and fruitful than ever before, especially in Western societies. In the Netherlands, for example, over 20 town councils are exploring basic income projects. In Great Britain, the parliamentarians in the House of Commons plan to discuss pilot projects this year. Namibia and India are both considering introducing some form of UBI nationwide.
Over the coming years, empirical findings will provide fodder for the ongoing political debates. In 2017, two additional, larger experiments are tentatively scheduled for the Canadian province of Ontario, and in Oakland , California. Planning has begun on many more, such as in Glasgow and Fife in Scotland, and in the French Nouvelle Aquitaine region.
As discourse on UBI progresses, it will be important to consider workers and the lower and middle classes crumbling in so many countries today. UBI could be the concrete alternative so desperately needed to counteract the rapid spread of right-wing populism, and shows promise as a long-term solution. The mainstream parties currently in power, whether they lean more towards socialist, conservative, or liberal values, should see UBI as a possible approach to overcoming the current economic and social crisis. Any party that refuses to entertain and explore the idea of universal basic income is letting an excellent opportunity pass them by.