The evaluation of the Finnish BI Experiment reveals the problems in the current conditional labour market policies
The first results of the Finnish Basic Income (BI) experiment were published at the beginning of February 2019. According to the results, the benefit mimicking basic income did not have any positive employment effects when compared to the control group, i.e. those not included in the experiment. There are several possible reasons for this result.
Firstly, we must keep in mind the specific characteristics of the target group of the experiment. Both the treatment group and the control group were drawn from the unemployed job seekers receiving unemployment benefits from the Social Insurance Institution of Finland (Kela) in November 2016. In order to understand the specificity of the group, we have to take a cursory look at the Finnish unemployment system.
An unemployed individual who is a member of a voluntary unemployment fund and meets the employment condition of 26 weeks during the previous 28 months is eligible for earnings-related unemployment benefits. At the average wage level, the benefit is about 65 percent of previous earnings. The benefit can be paid up to 300-500 weekdays depending on the work history and the age of the claimant.
An unemployed individual who is not entitled to the earnings-related unemployment benefit (the right to the benefit has expired due to long-term unemployment or the unemployed individual does not yet fulfill the employment condition) can qualify for unemployment benefits paid by Kela [1]. These Kela’s ‘basic security’ benefits (basic unemployment allowance and labour market subsidy) are not income-related. In principle, the labour market subsidy is income-tested and the duration is unlimited.
At the end of the year 2017, 369,058 people received unemployment benefits in Finland. Out of them, 196,452 (53.2%) received labour market subsidy and 31,460 (8.5%) basic unemployment benefits. Hence a minority, i.e. 138,949 (37.6%), were entitled to an earnings-related daily allowance from unemployment funds.
When consulting the above percentages, we can argue that the basic income experiment covered the population group that represents a majority of unemployed job seekers in Finland. However, despite this, the experiment was targeted to the long-term unemployed or those unemployed with a very short working history. Maybe the experiment would have yielded different results if it had included those unemployed individuals receiving earnings-related unemployment benefits, not to mention low-income earners, free-lancers and micro-entrepreneurs [2].
Secondly, at the beginning of 2018, the center-right government implemented a new labour market policy measure, namely ‘the activation model’. The aim of the reform was to increase labour market participation by sanctioning the unemployed by benefit cuts if specific activation criteria are not met [3]. While the activation model contaminated the control group, the results may be distorted.
A third possible explanation is that people do not react on monetary incentives as strongly as is usually supposed e.g. in the economic literature. But once again, we must keep in mind the specific characteristics of the target group. It may be that this group would react more strongly on services than on income transfers.
The fourth explanation to the “zero” result may relate to the possibility that the effects of a basic income counteract each other. In the treatment group, the strong monetary incentive to accept jobs (€560 net a month) might have increased employment, while the less stringent conditionality might have made the BI receivers ‘lazier’. Thus, these opposite effects may have repealed each other resulting in an overall zero outcome.
Too strong an emphasis on labour market behaviour?
The proponents of basic income disagree with the above view of laziness. On the contrary, they argue that by empowering people and giving them the freedom to choose for themselves the outcomes are more positive than what is achieved through sanctioning the unemployed. As desired outcomes of basic income, they emphasize not only the increased activity in the labour market but also increased the wellbeing of the citizens.
In fact, the proponents of basic income hardly consider the activation to employment as the main aim of BI, but rather the wellbeing of its receivers. For the supporters of BI, the economic activity e.g. in the labour markets is not a sin non qua for a functional society even if it was widely considered to be the prerequisite for it, at least if we aim to obtain the present welfare state model that is financed via income tax.
When the Finnish government decided to launch the basic income experiment, its main interest was in the employment effects of BI. The government obviously wanted to see if BI is good for employment. Thus, the government’s goal was rather limited and only when discussed in the parliamentary committees, the interest was laid in the wider wellbeing aspects of BI. However, the main interest still was – and still is – in the labour market behaviour of the BI recipients.
The preliminary results for the first year do not display any employment effects, making the opponents of the BI claim that the BI does not solve a low labour supply. However, we can turn the focus upside down. The zero result is an interesting one. According to the proponents of mainstream labour market policies in Finland, we should have witnessed a clear decrease in the labour supply among the basic income recipients compared to the control group. However, we did not observe anything like that. Neither was the employment rate better in the control group that remained in the current, conditional and punitive benefits system.
Hence, in regard to the long-term unemployed (which was the case for most of the recipients in Finland’s basic income experiment), the mechanism improving their labour market status is much more complex and perhaps more attention should be paid in the wellbeing effects of the experiment than on the employment effects. This is done in many other experiments outside Finland – in the evaluation of the experiments the focus in on the sine non qua for activity, namely wellbeing.
What should then the political decision makers do based on the results? Shall they abandon basic income, if it does not increase employment, even if it improves people’s well-being? Or shall they abandon basic income, while strengthening the conditionality of the existing system in order to more effectively “activate” labour, even if it decreases people’s wellbeing? Considering the recent developments in Finland’s labour market policies, one should perhaps bet on the latter option.
[1] If the unemployed person violates the Unemployment Security Act, he/she may lose the right to the unemployment benefits and he/she may to apply for last resort social assistance of in need for financial support.
[3] The activity is monitored in periods of 65 days of payment. The activity requirement are met if an unemployed person, over the course of a single payment period, has been in salaried employment for at least 18 hours, or have earned an income of at least EUR 245.64 from self-employment, or if he/she has participated in five days of employment-promoting services or some other employment-promoting activity arranged by the Employment Services.
Written by: Eduardo Matarazzo Suplicy and Mônica Dallari
This January, we discovered an extraordinary pioneer effort towards poverty eradication in poor rural villages in Kenya: the transfer of Universal Basic Income (UBI). Through the initiative of GiveDirectly, an institution created by four graduates of Harvard University and MIT, Silicon Valley institutions and other organizations contributed to the formation of a US$30 million fund to benefit about 20,000 Kenyans in the most important and thorough study about UBI in history. In the visits to rural villages in the Kisumu and Siaya areas, reports were unanimous in stating that with UBI contributed to a significant improvement in the quality of life of all the beneficiaries.
Lula da Silva on the far left; Eduardo Suplicy on the far right
Upon learning that GiveDirectly was carrying out this experiment in Kenya, we decided to write a letter to them, in which I (Eduardo) introduced myself as the author of the Brazilian Law 10.835 / 2004, which establishes the implementation, in stages, the UBI for all people in Brazil, including foreigners residing here for five years or more. As honorary co-chair of BIEN (Basic Income Earth Network), I said I would like to know about the experiment. This request was accepted by Caroline Teti, GiveDirectly’s external relations director in Nairobi.
Eduardo Suplicy visits Grameen Bank with Muhammad Yunus, in Dhaka Bangladesh. July 2007
How the UBI program works
GiveDirectly´s office in Nairobi. January 2019
As soon as we arrived in Nairobi, we met with her and started a dialogue with the coordinator of a team of 34 people who work in the call center. The call center is responsible for the quarterly contacts with each one of the 21,000 adult beneficiaries of the UBI experiment. In 2016, GiveDirectly started the pilot to provide a UBI payment in Kisumu, Siaya and Bomet counties. More than 630,000 people in these counties live below the poverty line, defined by the Kenyan government as less than US$15 a month per household member, in rural areas, and $28 a month per household member in urban areas.
For the execution of the experiment, 295 villages (14,474 residences) were randomly selected, divided into four groups:
Control Group: 100 villages that do not receive payments;
Long-Term UBI: 44 villages in which adults (over 18 years old) receive sufficient income for basic needs, about US$0.75 per day, or $22 per month for 12 years;
Short Term UBI: 80 villages where adults receive sufficient income for basic needs, about $0.75 per day or $22 per month for 2 years;
Lump Sum UBI (or UBI Cash Payment): In 71 villages, families receive UBI in the fixed amount of US$1,000 divided into two payments of $500.
The transfers are made through M-Pesa, a mobile money service created in 2007 by Safaricom, a Vodafone telephone company in Kenya. The platform enables financial transactions that are safe, fast and cheap through a cell phone, such as deposits, transfers, and savings. The platform does not need a bank account.
View of the National Park at Nairobi. January 2019
Small retailers in rural villages across the country were trained and became agents of M-Pesa services. Beneficiaries can withdraw money or shop at accredited establishments in all villages in Kenya. Those who did not have cell phones were able to purchase a low-cost GiveDirectly device. Today, 80 percent of the country’s adult population has a cell phone.
From the visits to the beneficiaries of the Kenyan experiment of UBI, we can say that the improvement in the well-being of the people is very significant. This was what we were able to witness in all the residences we visited and in the dialogue with beneficiaries of UBI. Mothers and fathers spoke of the concern to prioritize the education of children and adolescents, ensuring attendance and completion of school. This became possible due to UBI, which even helped in the hiring of auxiliary teachers. In general, our respondents stated that they were better fed and had access to a greater variety of foods.
The benefit of the UBI resulted in people being able to work more intensely and productively, especially because they were able to acquire better working equipment, such as tools, motorcycles to transport people or make deliveries, livestock (goat and cattle) to supply meat and milk, fishing equipment to get more fish in the lake to sell them, land purchasing for vegetable and fruit trees planting. These activities directly increased their income. Some families have invested in systems to better capture rainwater or solar energy collectors in order to have electricity. Households purchased better furniture, such as mattresses, sofas, tables, chairs and small electrical appliances, such as a stereo or radio. Straw roofs have been replaced with steel that contains gutters.
Sunset at Lake Victoria. January 2019
It is important to note that we do not perceive any use of alcohol or other drugs. A study by Innovation Poverty Action1, IPA, corroborates our observation since there was no increase in spending on tobacco, alcohol or gambling. The impression we have goes in the opposite direction; behaviors based on solidarity and cooperation between individuals have been reinforced.
Perhaps most remarkable was the redefinition of gender roles. Because women also receive the benefit, we hear from them how they feel freer in deciding where to spend their money, and we record reports of how couples have come to the table on UBI payday to talk about the household budget. Households frequently organize groups to pool money for a larger purchase or to assume a higher value expenditure. In Kenya, polygamy is allowed. We sometimes see that the UBI contributed to greater solidarity between the wives of one husband, and even between his widows and children.
The agility and speed provided by the digital income transfer system were also fundamental. Each beneficiary is notified by SMS when the transfer is made, being able to make purchases in the M-Pesa accredited establishments, or if she prefers, to exchange the credit for money.
City of Kisumu. January 2019
Another important development was numerous reports demonstrating a noticeable decrease in violence against women and other criminal acts, such as theft in the villages. The direct income transfer done in this way has avoided incorrect procedures and corruption.
M-Pesa Agency. January 2019
For those who want to know more about this Universal Basic Income (UBI) experiment in Kenya and other countries, please access the website. The website provides testimonials from beneficiaries of the UBI collected by the people who work in the call center, available to everyone. You will have confirmed the positive impression of this remarkable pioneering experiment on Universal Basic Income. In addition, you will have the opportunity for this remarkable and important experiment. If you would like more information, write to info@givedirectly.org.
Call Center at the GiveDirectly´s Office. January 2019
Visiting Barack Obama’s Grandmother Sarah Obama
Eduardo Suplicy visits Mama Sarah Obama, in Kogelo. January 2019
On our last day in Kenya, we visited Mama Sarah Obama, Barack Obama’s grandmother, at her farm in Kogelo, another rural village. At first, we would have only three minutes to be with her because of her age, 98 years, but we talked with Mama Sarah and Obama’s aunt, Marsat Oniango, for almost 30 minutes. Enthusiastic about the conversation, they assured me they would send President Obama a letter that I had with me, the same one I had handed to him on October 5, 2017, during a lecture in Sao Paulo.
I spoke of my enthusiasm when I watched on TV the homage Obama paid to South African President Nelson Mandela on his 100th birthday in the packed stadium of Johannesburg. In that speech, the former US president made an important statement, expressing concern about “artificial intelligence that is accelerating. Now we will have automobiles without drivers, more and more automated services, which will mean the need to provide work for all. We will have to be more imaginative because the impact of change will require us to rethink our political and social arrangements to protect the economic security and dignity that comes with work. It’s not just money that a job provides. It provides dignity, structure, a sense of place and purpose. And we will have to consider new ways of thinking about these problems, such as universal income, review of working hours, how to train our young people in this new scenario, how to make each person an entrepreneur of some level.”
I concluded by expressing my certainty that this positive experiment in the Universal Basic Income in the country of Obama’s father and grandfather, whose graves we visited on the grounds of Mama Sarah’s house, will resonate very favorably throughout the world.
Steps after the trip
Eduardo Matarazzo Suplicy
Steel Roof to capture rainwater
The fact of having experienced a real immersion in the subject of Basic Income in such a short space of time and in two very different dimensions, that is, the theoretical academic approach of the conference in Cambridge and the opportunity to make field observations during our visits to Kenya, provoked a series of reflections, which made me desire to act.
The trip was made throughout the month of January 2019, coinciding with the inauguration and first month of the government of Jair Bolsonaro. The campaign of the victorious candidate in the 2018 election, his statements after confirmation of his election and the movements of the transition process between the Temer government and the new occupants of the Planalto indicate that the new government has an economic agenda that is based on intentions to resume growth and development of the country, generate jobs and guarantee some stability in public accounts. Despite the fact that I belong to the party that opposed the Bolsonaro candidacy, I believe that certain principles of equity, income distribution, and assistance to the most excluded are values of democracy that are not exclusive to this or that political aspect. So I decided that it was time to warn President Jair Bolsonaro, Minister of Economy Paulo Guedes and the Special Secretary of the Federal Revenue of Brazil Marcos Cintra Cavalcante de Albuquerque about the pertinence to take the steps towards the Citizenship Basic Income.
Philippe Van Parijs and Eduardo Suplicy at the University of Cambridge. January 14th, 2019
Soon after coming back to Brazil, I wrote a letter to these three government officials who had just taken their first steps and offered two copies of works that I believe are fundamental to understanding the concept of basic income: My book “Citizen’s Income: The Exit is Through the Door,” and “Basic Income – A Radical Proposal for a Free Society and a Sane Economy” by Philippe Van Parijs and Yannick Vanderborght, which contains a foreword by myself.
In my argument, I stress the fact that Law 10.835 / 2004, which establishes the Citizen Basic Income, Universal and Unconditional, was approved by all the parties in both houses of the National Congress, including by the then deputy Jair Bolsonaro. I reminded the President “in case the President of the Republic wishes to comply with Article 3 of the Constitution on the fundamental objectives of the Republic of Brazil, in a manner compatible with what is expressed in its program of government, to guarantee a minimum income for all Brazilian families, as liberal thinkers like Milton Friedman argue, the most effective way to do so will be through the implementation of the Citizenship Basic Income, a concept that Friedman considered another way to apply the Negative Income Tax.”
Beneficiary receives credit by SMS. January 2019
In the letter, I also summarized some up-to-date information on the subject, such as the fact that today “more than 40 countries are debating, conducting experiments and considering the implementation of Unconditional Basic Income.” I briefly reported on the visit I had just made: “The results so far are highly promising, as I found out in person. Brazil would have all the conditions to carry out local experiments, as indeed has been the desire of several municipalities like Santo Antônio do Pinhal, Apiaí and Maricá. In the City Council of São Paulo, a Law Project of Mayor Fernando Haddad is in process, already approved in the Commissions of Constitution and Justice and Public Administration, to establish, in stages, UBI in cooperation with the state and federal governments.” Finally, I suggested that a Working Group, possibly coordinated by IPEA, to study the steps towards the Citizenship Basic Income. I stated that I had already spoken with both the Perseu Abramo Foundation of the Workers Party and the Fernando Henrique Cardoso Foundation, linked to the PSDB, who have already been willing to discuss basic income with the newly elected government.
The letter, as well as the volumes, were delivered to Marcos Cintra Cavalcante de Albuquerque, current Special Secretary of the Federal Revenue of Brazil, with whom I had a hearing on February 1, 2019. At the same time, I delivered a letter to the then president and future president of IPEA, Ernesto Lozardo, and Carlos Von Doellinger, detailing how this Working Group could be constituted and reporting my dialogue with former President Fernando Henrique Cardoso during the electoral process. “Given that a number of Presidential candidates were in agreement with this objective, we could very possibly meet the various economic teams of the various candidates to work on this subject.” Sérgio Fausto, the working coordinator of the FHC Foundation, suggested that this meeting should be held after the elections in the first half of 2019.
On the other hand, Márcio Pochmann, President of the Perseu Abramo Foundation, accepted the proposal to create a Working Group for this purpose, and two meetings of this group have already been held. I believe it will be common sense for IPEA to coordinate the efforts of these various institutions linked to the parties whose candidates have made proposals to do this.
It is up to the Government to take the suggested steps.
Alexandria Ocasio-Cortez, also known as AOC, is a fighter. Ever since she was elected to the United States (US) House of Representatives, she has been doing much “ass kicking”. She made clear that energy transition in America was imminently necessary, and made a fewheadlines with her Green New Deal. A first draft of the Green New Deal also included the outline of some bold social policies, including a few measures to curb the racial inequalities that still plague the United States as well as a universal basic income (UBI).
This was not the first time AOC had mentioned UBI publicly. On one particular occasion at a Netroots event, she mentioned that a UBI was not a new idea in American politics, citing initiatives from Democrats in the past.
This is ground-breaking in contemporary U.S. politics, where things are often dominated by corporate interests. AOC’s fearlessness can feel refreshing to the general public, which also infuriates some special interest groups. Even as a Democrat, AOC is often critical of her Democratic Party colleagues for their “moderation” and submission to corporate donors. She says that American society has deviated far from where we collectively think we should be. Therefore, speaking up for what we believe is right can be considered “radical.”
However, there is a difference between speaking at a general-public event before being elected to the House of Representatives and speaking in that same House after being burdened with a formal political responsibility.
The Green New Deal draft bill presented to the House included the idea that the US government would take care of anyone who may be “unwilling to work.” That did not go well among AOC’s colleagues, Republican or Democrat.
This backlash has been documented, and it showed very clearly that for most politicians and political pundits, “unwilling to work” is simply translated as “lazy,” which was fatal for the program.
From that point of view, helping those “unwilling to work” simply does not make sense. That materialized into open ridicule from Republicans targeted at AOC and her Green New Deal, as well as silence from fellow Democrats. AOC was trying to demonstrate that people may wish to refuse degrading working conditions, starvation wages and other abuses from the marketplace. In that case, the government could ease their transition into something better by implementing a social policy similar to UBI.
AOC was deserted. And that must be hard to take in.
AOC and her colleagues tried to amend the Green New Deal. In the process, they erased any mention of basic income in the Green New Deal’s final proposed bill, while declining to reference this aspect of the program at public events. One example is AOC’s speech at this SXSW 2019 event.
First, she now defends a “jobs guarantee,” a policy more in line with the Democrats’ mainstream political thought, explicitly backed by Dem “heavy-weights” such as Barack Obama and Joe Biden. Second, she does not mention basic income anymore, not even when questioned about social solutions to things like automation and human rights issues such as racism, sexism, and inequality. In other circumstances, it would be obvious to reference basic income as someone who had already defended the principle on previous occasions.
We are left to watch her avoid the basic income issue. This can be exasperating knowing how enthusiastically she had already spoken about it. To me, this is the product of fear. She is afraid of being ostracized, particularly by her Democratic peers.
The result is hypocrisy. That is because her belief has remained unchanged. It would make no sense to assume that in a couple of weeks she had completely abandoned UBI in favour of its political competitor, the Federal Jobs Guarantee. A jobs guarantee has not brought significant results in other places. She only orbited back to a more front-and-centre endorsement of a Federal Jobs Guarantee because that is the “official” position of the Democrats.
Her professed courageous rebellion and uncompromising talk have gone down the drain, at least in part. In her defence, this behaviour is understandable. Deep down, no one likes to be abandoned. On the other hand, it is also disappointing for those who saw in her the possibility of radical change in American politics and the rise of “anti-establishment” discourse in America’s political landscape.
Courage includes managing the isolation and the criticism from other politicians and pundits while continuing to defend what she believes in. It may be a strategic pull-back, but the message that comes through is one of cowardness and submission to the “moderation” she so often criticizes in her fellow Democrats.
This does not imply I lost interest in AOC or that she is now politically dead to me. It means that no one is exempt from weakness and that there are moments when the pressure is just too much to bear. I am sure AOC will return to her formal vocal support for basic income. She is young, intelligent and restless, so I am sure that basic income will still play an important role in her political career. Perhaps she will follow in the footsteps of Andrew Yang, a not-much-older Democratic colleague of hers and rising-star presidential candidate.
As interest in UBI has exploded in recent years for many positive reasons, including the United Kingdom’s disastrous new “universal credit” policy, three major issues remain that are almost universally neglected. First, a modest ‘affordable’ UBI could not raise non-working individuals or households above poverty, even in addition to existing, means-tested benefits. Second, UBI alone would effectively subsidise low-wage and low-quality jobs, reducing pressure for improvement. Third, meaningful work is essential to well-being for most people, but unattainable for two million discouraged workers who want to work but have given up looking for work, as well as the officially unemployed (and those with inadequate jobs) – a major cause of unhappiness.
As we argue in Prospect, a public sector job offer (JO) at minimum wage, combined with a UBI of £3,000 to £4,000 per year could raise all households above poverty when combined with improved disability and housing benefits. Urgent and growing needs for care of an aging population and improvement of deteriorating infrastructure would ensure meaningful employment for all who took up JOs, with appropriate training when needed.
Such a modest UBI as proposed by Stewart Lansley and Howard Reed for Compass, and many others in the UK, could be partially funded by abolishing the regressive personal tax allowance. It would replace some means-tested welfare measures, though disability and housing benefits should remain and need augmenting. The additional cost of JOs is modest, only about £28 billion, which is around 11 percent of total welfare spending for 2 million full-time JO workers, less than total cuts in welfare spending under austerity measures since 2012. As a result of these cuts, child poverty has risen to 30 percent, and the UK holds the worst record in Western Europe. Child poverty has severe negative consequences for the entire life course of those affected.
By providing good working conditions and career advancement, our JO would set standards for minimum wage employment which could not be undermined by common current practices such as demanding unpaid overtime, since those affected could always credibly threaten to quit. Such a general improvement of working conditions would not greatly disrupt existing labour markets, in contrast to the high–wage job guarantee discussed in the US by prominent Democrats, promising to double the minimum wage. This would likely generate excessive uptake in public employment, causing substantial inflation, followed by restrictive government policies. Such a policy would not compensate for the unpaid work done mainly by women in the home as caretakers for children and the elderly.
JOs for all who want to work would be part of the framework of a Green New Deal (GND), now proposed by figures in America’s Democratic party, such as Alexandra Octavio-Cortez. This would involve greatly increased investment in the urgently needed transition to a carbon-free economy by 2050, which is essential to avoid catastrophic climate change. Such a GND could generate full employment similar to the mobilization in World War II but would require higher taxes on the rich for long-run funding. Though such tax increases would face strong political opposition, this would in turn help to reduce extreme inequality and all its negative effects.
About the authors:
FF – Emeritus Professor of Economics, and Research Fellow, IZA – Institute of Labor Economics, Bonn;
JJ – Reader in Economics, both in the School of Economics and Finance, University of St. Andrews
A popular 5-minute introductory video on Basic Income, in English, is now online.
The video was originally made in Spanish, produced by Atxe, a Spanish artist, as a project for Red Renta Basica, the Spanish affiliation of the Basic Income Earth Network (BIEN), 2 years ago. It gathered a great success reaching more than 5 million people. [1]
Carlos Arias, an activist of the Unconditional Basic Income Europe (UBIE), took the initiative to make an English version, which is now available online. Narration in English was done by Barb Jacobson, former chair of UBIE.
On this occasion, we had a short interview with Atxe to show our respect to the artist who made the probably most watched video on UBI:
– How you were involved in making the video?
Atxe: Basic income is something that has been of my interest for a long time. I had previously done this kind of videos – for instance, on the TTIP – and David Casassas, as a member of Red Renta Básica, suggested me to make one explaining the main ideas that association defends.
– How you do you think of great success of the video?
Atxe: I think basic income is a proposal that creates a lot of controversy and, either you like it or not, it shakes you up. The video deals with issues and problems that speak to a large number of people and that leave you everything but indifferent – especially in Spain, where we are intensely suffering the blow of the crisis. Also, I tried to make a fun and entertaining video, which, I suppose, helped too. I must add to all this that the dissemination campaign we did in social networks – many members of Red Renta Básica and other companions actively participated in it – ended up being really successful – the video became a trending topic fast and kept this position during almost two days.
– What do you think of the idea of UBI?
Atxe: In addition to all the benefits the video talks about and that every basic income supporter knows, basic income is today more relevant than ever because it can break the fear that permeates a large part of our societies. It is a fear that too many times is translated into fuel for the rise of the far-right, and basic income could put an end to this tendency.
[1] 5,423,641 visitors between 22 February 2017 and 30 January 2019 (data provided by Carlos Arias, a Facebook page administrator of Renta Básica Universal)
The website, Revista Libertalia, recently published an article in Spanish with extensive quotes from an interview conducted with me. The article is entitled, “Voces sobre la renta básica (II): ¿Está justificada? [Voices on basic income (II): Is it justified?].” It’s author is Pablo Magaña. The Spanish version was published on February 28, 2019. The author created, but did not publish an English version of the article. The quotes below reproduce the entire English version with no additional editing.
Voices on the basic income (II): Is it justified?
The idea of a basic income raises many hopes and some eyebrows. In this article, some of its defenders will explain to us which is, in their view, the best way to justify it. However, in order to make the discussion more interesting, we also asked them to answer one common objection that is often raised against the proposal: the free-riding objection. What does this objection say? Quite simple. Unlike other social security schemes, a basic income is unconditional, which means that you can be entitled to it regardless of your socio-economic condition. And, more crucially, regardless of the extent to which you contribute to your society.
For some people, this is plainly unfair. The viability of a basic income depends upon the existence of enough contributors to a common public fund. But, as long as this scheme is already in place and working in a stable manner, if any individual decided not to contribute to it, there would be nothing we could do in response: given the income’s unconditional character, the supposed free-rider would still be as entitled to it as any other citizen. Let us suppose – so goes the classical example[i] – that I decided to spent all my time living high, surfing the waves in Malibu, playing guitar under the moonlight, driving along endless highways on the wheel of an old van. Sounds great, doesn’t it? Still, since such a plan would only be possible if others work and contribute to a common fund, my decision might look like an injustice, a clear case of free-riding. But is it really like this?
Before introducing some possible answers to this challenge, we will look first at some arguments in favor of a basic income.
According to Hillel Steiner[ii], “the best way to defend the right to UBI involves a dual strategy: (a) showing that this right is implied by some more basic and uncontested principle, and (b) showing that this right is compatible with, and does not encroach upon, other widely accepted rights”. As a left-libertarian, Steiner regards the Earth as humanity’s common possession[iii], which entails that if somebody intends to appropriate herself of any portion of it, she should compensate her fellow co-owners. If she didn’t, she would be illegitimately appropriating of something that is not really hers. In other words, she would be stealing. Steiner’s emphasis on natural resources colors both his model of basic income and his preferred justification of it:
“In my view, a right to UBI should be funded by a 100% tax on the ownership of natural resources, commonly termed a ‘Land Value Tax’ or, more accurately, a ‘Location Value Tax’. This tax would be levied on the value of those locations themselves, and not on the value of any improvements made to those locations by human labour. A right to a UBI funded in this way satisfies (a) since those taxable natural resources/locations, not being the product of any person’s labour, are rightfully available for use by everyone. So if someone wants to privatise some of them, and to exclude all others from using them, then it seems only fair that the privatizer should compensate those others. The UBI I’m proposing simply is that compensation.”
This is a fairly common way to defend the right to a basic income, also employed by Guy Standing[iv], author of Basic Income: And How we Can Make it Happen[v]. In Standing’s view, “the right to a basic income can be justified on three ethical grounds. First, it is a matter of common justice. The land, the air, water, and even ideas inherited from our ancestors are all part of the commons which belong to everybody equally. But elites and the wealthy have been given, have inherited or have used the commons for their benefit. Therefore, they should compensate the commoners who have lost the commons, and the fairest way to do that is give everybody in society a common payment, a ‘common dividend’ on our collective public wealth”.
Again, the basic income is presented as a way of compensating human beings for having deprived them of what is, in essence, a public good. However, as we have seen, Standing believes there are additional reasons on behalf of a basic income. “[A] second fundamentally ethical reason for a basic income”, he contends, “is that it would enhance individual and societal freedom. In particular, it would strengthen republican freedom — the freedom from domination by figures in unaccountable positions of power. Whether you are on the political left or right, we all claim (or most of us do!) to believe in freedom. But you cannot be free unless you have the capacity to say ‘no’ to people who can oppress or exploit you. If you do not have basic income security, you do not have that capacity.”
Note that this argument is slightly different from the previous one. Granted, here the argument is also premised upon the existence of an injustice. Yet in this case the injustice does not involve the illegitimate appropriation of what is commonly owned, but rather the presence of a structure of domination under which individuals cannot really be considered autonomous or free. According to this argument, justice requires that nobody ever feel the need to be subjected to another’s arbitrary will, an aim which would only be secured by implementing a right to a basic income[vi].
Political philosopher Karl Widerquist[vii], author of many books and articles on the basic income[viii], has defended a similar view. As he puts it, we need acknowledge that:
“[I]t’s wrong for anyone to come between another person and the resources they need to survive. It’s wrong for anyone to put conditions on people’s access to the resources they need to survive. Don’t ignore this fact: poverty is the lack of access to the resources you need to live a decent life. A healthy person with the right skills and access to a healthy environment can do many things that are impossible for an impoverished person in society today. They can build their own house; fish, farm, or hunt their own food; they can work with who they want. They call work alone or with whoever they want. They don’t need a boss. They never have to follow orders.”
“Our societies create poverty by interfering with people who would like to use the resources of the Earth for themselves. We do it because better off people want to control all the world’s resources. By allowing a small group to control the world’s resources without paying compensation to the people they thereby make propertyless, we put most people in the position in which “work” becomes synonymous with “a job.” Making a living means taking orders. This is not a fact of nature. It is the outcome of society’s rules. We need to change those rules.”
“UBI rectifies that problem. It says if you’re going to hold more resources than others, you have to pay something back in compensation, so that no one ever again is forced to live in poverty and no one is ever forced into the position where they must take orders to survive.”
“UBI is not the end of the market or the end of paid labor. It is simply a market where income doesn’t start at zero, and workers are freed from the threat of destitution. With UBI, workers enter the labor market as free people. Employers have to pay enough to make it worthwhile for workers to take those jobs. UBI will give us a high-wage economy that works for everyone.”
One view in this vicinity has been defended by philosopher Elizabeth Anderson[ix], who, nonetheless, does not believe that a basic income would necessarily be the best option. Now, if it was, she says, the best way to ground it would be as follows:
“The best case for the UBI is as follows. Automation, and changes in the nature of employment, are bringing about the disappearance of stable jobs and the rise of a precariat class whose members are unable to support themselves with steady employment. UBI is needed to provide the security and basis for a decent life for a rising number of people in the world. BI should be universal to ensure its political stability and to avoid the costs of means testing and intrusive investigations of people’s lives.”
Among other things, Anderson is well-known for her defense of so-called “relational egalitarianism”[x], the view that theorists of justice should focus a bit less on how resources are distributed and more on how we treat each other (the latter having obviously implications for the former). This is to say, what matters the most is not who gets what, but whether we treat each other as an equal or not – without distinctions based on social status or power asymmetries.
Before finishing this part of the article, let us look at another possible strategy to justify a basic income. Until now, the arguments we have seen have focused either i) on a compensation for an illegitimate appropriation of a common good, or ii) on the need to make sure that individuals enjoy a minimal independence, in that they ought not to be forced to choose between accepting orders or starve. But there is a third line of argument, which would stress iii) the alleged positive consequences of a basic income. This is Guy Standing’s third argument:
“The third ethical reason for wanting a basic income is that it would tend to provide basic security, which is what we call a public good. We all want basic security in our lives, and basic security is a superior public good in that if everybody in our community has basic security, it increases the value of it for everybody. Basic security has been shown to increase tolerance, resilience, altruism and mental bandwidth (or mental health and IQ).”
This is all very well, one might say. But, what happens with our Malibu surfer? Isn’t he objectionably free-riding on his fellow citizens? Isn’t it unfair that he can live a highly pleasant life while I have to break my back from 9 to 5?
In Steiner’s view, the answer is no: “[E]veryone – lazy, as well as industrious – is entitled to that compensation”. For remember that, according to him, a basic income is not just another subsidy, but the compensation that those who want to possess more than their fair share of the Earth’s natural resources have to pay to the rest of us – whether we are surfers or not.
Widerquist, in his reply, invites us to cast some doubt on the value judgments and the assumptions presupposed by the objection:
“The thing that most detracts people from UBI is the belief that prosperous people have the right and responsibility to tell less prosperous people what to do. We, the prosperous, want to think we are better than the less prosperous. We want to think our virtue—rather than a less-than-perfectly-fair system—is the reason people are less prosperous than we are. We like to think that we know what the less prosperous need to do to become prosperous—even though the vast majority of us have no idea what it is like to grow up poor and how different people’s circumstances can be.”
“Not only are these beliefs unfounded, they are not good for the middle class. Because we want to put the very poor in the position where they have to do what more prosperous people want, we put the vast majority of people in the position where they have to do what the wealthiest few want. Probably well more than 90% of people in every country have no choice but to take a job for a living. The vast majority of us—even some very prosperous people—are unfree to work for ourselves. And so, we must go to an employer—most of whom represent very wealthy corporations—get a job, and take orders all day. That is neither freedom nor fairness.”
“UBI will put the middle class in a much better bargaining position. In most countries, the middle class is not significantly better off than they were 40 years ago. Virtually, all the benefits of the last 40 years of economic growth have gone to the wealthiest 1%. UBI will help the other 99% command the better wages and the shorter working hours that they have earned.”
Another way to answer the free-riding objection involves calling into question its relevancy. Why should we care so much, the rejoinder goes, about something that is actually very unlikely? A rejoinder of this type has been endorsed by Guy Standing:
“The normal human condition is to want to work, to improve ourselves, to improve our living conditions, to improve the life prospects of our children and so on. I would feel sorry for somebody who would not work because he or she had a modest basic income. But of course this is not what happens or is likely to happen to more than a tiny number of people. We have found in our pilots that people with a basic income work more, not less, and are more productive, not less.”[xi]
Indeed, Standing believes that even if free riding was as likely as the objection assumes, the good consequences of a basic income would probably outweigh its potential defects or unfair aspects. As he puts it, a basic income “would encourage more of us to spend more time doing work that is not labour, such as caring for elderly frail relatives or children or doing community work. Most of us will go into old age wishing we had done more of that type of work and less of labour”.
Finally, one can accept the core of the objection – namely, that justice requires some degree of reciprocity – while denying that one’s contributions to society must be measured solely according to their market value. In Elizabeth Anderson’s words: “Everyone ought to contribute to society. But not all positive contributions to society need be via paid employment on the market. Much of women’s work taking care of children and elder dependents is not paid, although it is socially necessary. Much nonprofit work makes a huge difference for others, but it is also not paid. Most people want to make a positive contribution and will do so in one way or another. Society should expand opportunities to make a contribution, but not insist that they survive a market test”.
What this view suggests is that Californian surfers needn’t be free-riding on us. Though their economic contribution to society may border on nothingness, this wouldn’t necessarily imply that they cannot contribute in other ways, nor that they are unable to provide us with valuable things. Suppose we discovered that no member of the Rolling Stones has ever paid a dollar in taxes since they became famous. Would that mean they haven’t contributed to society as much as they should? Probably. Would it also mean they haven’t contributed anything at all? That seems harder to stomach. For many people, listening to their songs, going to their concerts, or simply learning to play guitar by imitating Keith Richards or Roon Wood are in themselves valuable experiences that would not vanish of a sudden.
Are these arguments convincing? Do they answer adequately to the free-riding objection? Do they really succeed in justifying a basic income? That is something for the reader to decide.
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[i] This objection was famously formulated by John Rawls in his article “The Priority of Right and Ideas of the Good” (1988), Philosophy & Public Affairs 17(4): 257, n. 7. For an equally well-known response, see also Philippe van Parijs,“Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income” (1991), Philosophy & Public Affairs 20(2): 101-131.
