The basic income solution

Providing a basic income is primarily a completely different way of thinking about work, spending money, sharing wealth, solidarity and other phenomena that are deeply rooted in our economy. If everyone has a basic income, poverty in the world can be ended.

Text: Roeland Muskens

Thinking differently to end poverty

Providing a basic income is primarily  a completely different way of thinking about work, spending money, sharing wealth, solidarity and other phenomena that are deeply rooted in our economy. If everyone has a basic income, poverty in the world can be ended. 

Photography Bart Koetsiers

Not a left wing solution only

Basic income is not an idea derived from a specific political movement; from the right-wing economist, Milton Friedman to freedom fighter Marten Luther King, they were both in favor of it. The concept is based on the goodness of mankind and it is really for everyone; those with work, without work, sick or healthy, from the cradle to the grave.

Public health increased

Many experiments have already been conducted in various parts of the world. In all experiments, exactly the opposite has happened from what the criticasters expected. Equal numbers of people wanted a job as in the current economy, and in Canada and the USA where the best-known experiments were held, public health and school performance increased considerably.

Less crime and disease

The provision of a basic income also means less administrative costs for the inspectors and executors of the jungle of social regulations. There is less crime and disease levels are reduced thanks to the reduction in poverty which results in better nutrition and living conditions.

A great idea or what?

Is basic income not a great idea to solve hunger and poverty in the global south? A few years ago, an experiment was conducted in India, and more recently, a trial started in Kenya under the name GiveDirectly. Roeland Muskens reports on this incredibly revolutionary way of fighting poverty.

Unconditional cash transfers; development aid 2.0

Giving it away

At a certain moment in a small village on the Kenyan shores of Lake Victoria, mobile phones begin to ring. In all corners of the village, people look at their display and smile; others react with screams of joy. It is early August 2017, the time of the month when all the adults in the village receive 23 dollars from the US-based organisation GiveDirectly. Receipt of the money is confirmed by mobile phone. This was the start of a radio broadcast by reporter Nurith Aizenman for National Public Radio. Aizenman reported on the long-term experiment to provide all adults of this village with a stable income. The name of the village is, of course, a well-kept secret. 

In 2016, GiveDirectly announced that over a period of twelve years it would give a monthly sum of 23 dollars to all adults in 40 villages in rural Kenya, no strings attached. The amount of 23 dollars was not randomly chosen; it is the amount of money (0.75 dollars a day) needed to stay above the critical ‘food poverty line’. In order to be eligible for this allowance, villagers are not asked to participate in projects, they are not required to send their children to school, and if someone decides to go on a monthly drinking spree with his or her allowance, so be it. Luckily most do not choose the latter. At the end of this long trial period the situation in trial villages will be compared to 100 similar villages which have not received this allowance. In addition, 80 other villages will receive cash payments over a period of two years. A total of 16,000 people will receive this basic income, 6.000 of whom will receive it for a period of twelve years; allowing conclusions to be drawn on the effects of long-term income security.

Grandmothers and grandfathers spend their money on the education of their grandchildren

Cash transfers are hot. Economists and development experts increasingly agree that simply giving money is a good and effective way to fight poverty. It is the rationale behind pension plans for the elderly that have been initiated in many developing countries in the last decade. Invariably the results of these cash transfers are such that not only the elderly themselves benefit, but whole families are lifted out of poverty. Grandmothers and grandfathers spend their money on the education of their grandchildren, on investments in seeds, or on better housing and healthcare – all of these  resulting in less illness and more productivity. 

Universal Basic Income (UBI) takes this a step further. 

A two-year trial between 2007 and 2009 in the Namibian community of Otjivero had remarkable results. Economic activity increased: the percentage of adults engaged in income-generating activities increased from 44% to 55% and that of underweight children dropped from 42% to 10%. School attendance soared and drop-out rates were reduced from 40% to 5%. Crime rates fell by 42%. Women became less dependent on men for their survival, freeing many of them from the pressures of transactional sex. And finally, household poverty dropped significantly: after one year, the percentage of residents under the food poverty line declined from 76% to 37%. And: there were no signs of increased alcohol consumption! The only negative effect was that after the introduction of the basic income plan, a significant migration towards Otjivero occurred: poor people from other parts of the country moved to the community hoping to profit from the economic prosperity. According to those involved, this negative effect was an argument to extend the trial to the whole country!

The most common question asked about basic income is: is it affordable?

Most experiments with UBI have not been ‘universal’. In most cases, poor communities were targeted, for example the trials in Namibia and Kenya, or the experiment was restricted to people already receiving welfare, for example a pilot run in the Dutch city of Utrecht. But in its purest form, the UBI idea is really to give all inhabitants (rich and poor) of a country a monthly allowance that is enough to cover their basic needs. This allowance is unconditional: recipients have no obligation to look for work or to provide services to the community. For one of the international champions of the UBI, British professor Guy Standing (see interview), the UBI is an effective answer to ‘neo-liberal’ economics and the ‘transformative changes in labour markets’. Standing writes in the preface of his book Basic Income: And How We Can Make It Happen (2017), “One outcome has been a growing ‘precariat’, consisting of millions of people facing unstable, insecure labour, a lack of occupational identity, declining and increasingly volatile real wages, loss of benefits and chronic indebtedness.”

The most common question asked about UBI is: is it affordable? Well, it probably is. Part of it could be financed by the more affluent in society through a progressive tax system. UBI-supporters also point out that the necessary funds could be generated through new sources of revenue like a carbon tax. In addition, a UBI could become feasible by scrapping subsidies and tax relief aimed primarily at corporations and the rich, and by taxing rental income from all forms of property – physical, financial and intellectual. For developing countries, a UBI-system could easily be financed through existing aid budgets. Using official UN-data, GiveDirectly calculated that lifting everyone above the extreme poverty threshold would cost about 80 billion dollars a year, about half of what the international community annually spends on global aid.

GiveDirectly Newsfeed

On the GiveDirectly website a newsfeed reports on reactions from Kenyan recipients after receiving cash transfers:

One hour ago

Charles (39): I spent my second transfer on completing my iron-roofed house, and I was able to buy two heads of cattle.

One hour ago

Sam (23): The biggest difference to my daily life is that I now have the self-worth which was lacking as I didn’t own an acre. I now have hope of starting a new life when the rains come, as I now have a place to cultivate my own crops in order to improve my household security.

Three hours ago

Pamela (48): I spent my third transfer on building a house for my son who didn’t have a home. I bought iron sheets, poles and nails and paid for the labour.

Four hours ago

Hulda (34): I spent my third transfer on starting a small business of KSH 20,000 and took the balance to the bank to save for my children’s education.

Seven hours ago

Leah (66): I plan to start keeping chickens and livestock; I hadn’t planned to start doing this because of a lack of money.

Cash transfers vs traditional aid

Less overhead costs

Less control mechanisms

Less paternalism

More ownership

Less corruption

More efficiency

More positive spill over

Guy Standing on TedX

Prof Guy Standing on Universal Basic income:

“Even the use of alcohol diminished”

Is a Universal Basic Income (UBI) a ‘silver bullet’ to fight poverty?

There is no silver bullet to solve poverty; there is no panacea. But experiments with basic income have had remarkable outcomes. The biggest ‘pilot’ so far was conducted in India between 2011 and 2013. Some six thousand people in nine villages were given a modest basic income, about 40% of what is considered subsistence level. The results were compared with thirteen villages where people did not receive a UBI.

What were the results?

One result was that the children’s nutrition improved notably, and – most remarkably – girls improved more than boys. This can be explained by the fact that in many Indian families, boys eat first and girls eat the leftovers. Improved nutrition resulted in better health, and when people became ill, they had better access to health care. Better health leads to better education. School attendance grew. Here again, girls profited relatively more than boys as poor people tend to keep girls at home. Providing them with a basic income allowed girls to go to school more often. The basic income resulted in more equality between girls and boys.

Any results in economic terms?

Certainly. We saw productivity soar. The income was spent on things like seeds, fertiliser and all kinds of tools. Women started secondary activities like making clothes, preparing food to sell, growing vegetables. The UBI strengthened economic resilience, protecting households against economic shocks. The changes were transformative: there was a ripple of multiplier effects throughout the community. In fact, we couldn’t discover any negative consequence of the intervention. Perhaps the most important fact is that we noted a mental effect of the cash transfers: it was emancipatory. It gave people a sense of freedom, of regaining control over their lives. Even the use of alcohol diminished – and that is what most people say, that giving people free money will lead to more alcohol abuse. We know now: that is simply not true!

What is always said is that rather than giving people a fish, they should be given a fishing rod. Is that old adage wrong? 

No, but we should take it one step further. Instead of giving a fishing rod we should give people the means to buy a fishing rod – or something else for that matter. It is quite paternalistic to decide for other people what they need. Not all people can be fishermen!

What would the main challenges to a Universal Basic Income be?

 There are two main challenges. The first is that many people in control – often bureaucrats, like people from the International Monetary Fund (IMF) and World Bank – are sceptical. They invariably say: if you give peasants money, they won’t know how to spend it wisely. Overcoming this paternalism is the number one challenge. Another challenge is to overcome the opposition of people that profit from other schemes. For example, there is a whole ‘industry’ of people that make a living from subsidies like food aid, fuel subsidies, and other assistance programmes: food is sold before it reaches the people, fuel subsidies are often the basis of corruption. People involved in these activities will fight anything that threatens their source of income.

Why is it important that basic incomes should be unconditional? Some conditions could be beneficial, for example: you only get money if you send your children to school!

Making these grants conditional is basically saying: I know better than you what is good for you! Maybe a child is ill, and cannot go to school; are we then going to check if that child really has a headache or a cold? If a child runs away from school, are we going to punish the mother by taking away her allowance? In fact: almost all parents will want their children to have an education. If they fail to do that, they should be assisted, not punished. I remember a meeting with an Indian minister. His argument was exactly what you just said, ‘We should give money only to people who send their children to school’. A woman, a simple peasant woman, stood up and said, pointing her finger at him, ‘Do you know better what is best for my child than I?’ And the minister kept silent. He knew she was right.

You were co-founder, and honorary president of the Basic Income Earth Network (BIEN) in 1986. How did you come into contact with the idea of a basic income?

That was in the early years of Thatcherism. I saw that Thatcher’s policies resulted in inequality and insecurity. Fewer and fewer steady jobs, more short-term contracts. The old system of social security that existed in most Western countries did not fit that new situation. The old system was bankrupt; we needed something new. At first there was little support for the idea of a basic income, but in recent years we have seen growing support, from different sides.

Do you think we will live to see a country adopting a universal basic income for all its citizens?

Oh yes. I predict that within five years there will be a country that does just that. It could be Iceland, or perhaps Scotland or some other country.

A developed country rather that a developing country?

Not necessarily. It could also be a developing country. For example a country with rich natural resources, making it easier to fund such a system. Perhaps India, or one of the Indian states; remember that some Indian states are bigger than most European countries.

Photographer Bart Koetsier

‘Taillights Fade’ documents nightlife in the streets of Europe. The series is the result of years of nightly walks documenting the obscure fringes and poetic charm of urban life. 

After Amsterdam, Paris, Marseille, Warsaw and Palermo, Koetsier changed his focus to a series of European cities. He attempts to capture a vision of European misery. The night serves as a metaphor for the crises that plague a feverish Europe: the economic crisis, the refugee crisis, the encompassing identity crisis and the failure of the authorities to face these polarizing challenges.

On completion it will be a document of Europe in dark times, in which the resilience, fighting spirit, the hope and the humour of its inhabitants will emerge.

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