Germany has begun an intriguing experiment. For a period of three years, a group of people will get €1,200 a month. (At today’s exchange rate, that’s $1,420.) The money is free; the only requirement is that recipients answer researchers’ questions about what they’re doing with this unconditional income.
Officials from the Mein Grundeinkommen (My Basic Income) charity are convinced that an unconditional income for all citizens would solve many current problems. The assumption is that people get more creative and become freer and happier if they don’t constantly face the pressure to earn enough money to get by.
Whether this lives up to reality will be explored scientifically during the project. “We’ll analyze what people are doing during a period of guaranteed material security,” project chief Jürgen Schupp from the German Institute for Economic Research (DIW) told DW.
Among the questions he’ll look into are: Will the test persons spend all the money or will they save a certain amount? Will they stop working altogether or work less? Also, will they donate money to others?
The experiment will give his team all the answers it needs, says Schupp. Even changes in people’s stress levels can be identified with the help of hair samples, he argues.
During the primaries, Andrew Yang brought the issue into more prominence, but the debate about UBI–an unconditional basic income– has been going on for years. The debate centers on dramatically different predictions of what people will do when they don’t have to do anything. Will receipt of a basic income make people lazy, make them less apt to work, less productive? Or is a UBI a tool to rationalize current social welfare systems (and not-so-incidentally, prepare for an era when automation has eliminated millions of jobs)?
I have been intrigued by what I see as the promise of a UBI.
What if the United States embraced a new social contract, beginning with the premise that all citizens are valued members of the American polity, and that (as the advertisement says) membership has its privileges? Contracts are by definition mutual undertakings, agreements in which both sides offer consideration. In my imagined “Brave New World,” government would create an environment within which humans could flourish, an environment within which members of the polity would be guaranteed a basic livelihood, a substantive education and an equal place at the civic table. In return, members (aka citizens) would pay their “dues:” taxes, a stint of public/civic service, and the consistent discharge of civic duties like voting and jury service.
With a UBI (in contrast to welfare) there would be no phase-out, no marriage penalties, no people falsifying information, no daunting (and expensive) bureaucracy.
Support for the concept hasn’t been limited to liberals and progressives. Milton Friedman famously proposed a “negative income tax,” and F.A. Hayek, the libertarian economist, wrote “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend.” In 2016, Samuel Hammond of the libertarian Niskanen Center, noted the “ideal” key features of a UBI: its unconditional structure avoids creating poverty traps; it sets a minimum income floor, raising worker bargaining power without wage or price controls; it decouples benefits from a particular workplace or jurisdiction; since it’s cash, it respects a diversity of needs and values; and it simplifies and streamlines a complex web of bureaucracy, eliminating rent seeking and other sources of inefficiency.
Hammond’s point about worker bargaining power is especially important. In today’s economy, characterized by dramatically-diminished unions and the growth of “gig work,” employee bargaining power has dramatically eroded. Wages have been effectively stagnant for years, despite significant growth in productivity. In 2018, Pew Research reported that “today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago.
If the U.S. had a UBI and single-payer health insurance, workers would have the freedom to leave abusive employers, unsafe work conditions, and uncompetitive pay scales. A UBI wouldn’t level the playing field, but it would certainly reduce the tilt. It’s also worth noting that a UBI would have much the same positive effect on economic growth as a higher minimum wage. When poor people get money, they spend it, increasing demand.
Previous experiments and pilot projects have been encouraging; receipt of a guaranteed basic income has not caused people to stop working, and the money hasn’t been used for liquor and sin. Germany’s experiment looks to be larger than the others that have been reported, and it will be interesting to see its results.
This was done in Stockton, CA as well, not sure if it’s still going on.
“Recipients have spent almost 40 percent of their basic income on food, 24 percent on sales and merchandise, 11 percent on utility bills, and 9 percent on car repairs and gas. This information is a useful corrective to the myth that people become poor because they’re irrational agents.”
https://www.vox.com/future-perfect/2019/10/8/20902839/universal-basic-income-stockton-trial
when covid took me off the road,(by choice,working out of season) i was offered my unemployment,since my basic job is seasonal as a construction related,seasonal job here in NoDak,i get the top payout,at the same time i was granted the extra $600 with my state UI. total $1231 a week. My wife continued work at a truckstop,(i consider that hazardous work,being few use a mask,at any buisness here and follow dr trumps early grave remedy) my spending, went directly to local buisness,im restoring a peterbilt truck on wages,, since no banks like to loan money to start a new buisness here,and especially,a truck.the fact, when you have decided to be a renter over the need to follow the heard owning a property,and its guarenteed you will be able to pay it off without any,or few hickups on a 20/30 year mortgage,, ill rent..the truck is a 1988 without the issue of being tracked and a electronic log..seems our fair goverment now sees us a machines to turn us off and on by a electronic log(ELD),and implemented such before any needs about our pay cuts due to,the ELD or lack of a decent income in this field anyway..(ill admit,im doing well, but,im in a niche,and few are, most every driver today takes home less than $700 a week,and lives in a box behind the seat hes straped into) take into the high cost if living on the road,and lack of parking to find decent food to eat,and enjoy a towns local economy. (were concidered a disease,while we pad your lifestyle with soft cushions) so whats wrong with UBI? nothing..maybe we would have better truckdrivers bacause,those who get straped into this line of work due to desperation of the job market..,(theres lots of openings in those big companies,investor owned,by hiring anyone,whether they can handle the job, or just be the nut who holds the steering wheel on)..the effect i would imagine would be a more decicive workforce,where one would enjoy the work over being demanded to work for some asswipe who could care less if you live or die,as long as your making a profit for wall street and the bank who loaned him the money..those numbers on wall street are a reminder,whos making the money,and whos living closer to a poverty wage.(the one whos doing the work) everyday we as the working class see more labor laws and competion to the bottom for the wages offered,the above numebr is correct,we havent seen anywage increase since reagan,and his pie cutting show,drivers today are making what i made in 1984 as a driver,wages for any blue collar have only kept track with the gross cost of living.. if you want a taste of media promotion to the trucking industry ,watch” shipping wars,”(shitting on us wars)this show is produced by people who want you to assume this is how trucking is, ITS NOT! its a form of media presentation on how,the brokerage firms and large trucking companies,want to run trucking,on thier demands for profit. we have a ongoing war in our industry to make visable the real payout from the shipper,to the broker compared to what we are offered,either by getting a dirtrect quote,from the broker,or playing that stupid game of bidding down to poverty and out of buisness. transprtation is big,and its the final person in that seat getting the shit end of the deal,why not pay them for the constant BS they endure everyday while your ass gets padded,on demand..
dont by the shipping wars crap, few if any brokerages who want bids, get few replys,unless your desperate. (and desprate drivers,small buisness company owners,owers,will never survive above the poverty level)real trucking brokerages,and companies dont mince words,and play games with anyones freight,or money..they get real drivers who care,and pay for their services..im one of those drivers..
pay us a decent wage,and you will get,decent drivers,who care..
We would do much better in this country if careful investigation was being done on those applying for and receiving assistance which they do not qualify for. Our Social Security Disability is a primary example with actually disabled people who must wait 3 to 5 years for an answer to their application and it is normal procedure to deny the first application. People are forced to seek legal help and attorneys who specialize in these appeals will receive a healthy percentage of the retroactive check IF a person is finally approved. Then; as in my son’s case, he was disabled with seven fractured vertibrae when rear-ended on the highway. Three years later the attorney through his vehicle insurance won Medicare and SNAP for him; two years later he was approved for SS Disability. The Medicaid doctors diagnosed terminal cancer in addition to the disability. He was selling his belongings, using food pantries to eat and I was helping him from my $820 monthly Social Security checks and his sister was helping from her Disability checks. He received his retroactive check, repaid both of us which we did not want, and received his first monthly Disability check of $1,495 on a Monday; on Friday he received the cancellation notice for his Medicare because his monthly income was too high. I returned his repayment as needed for medical bills; the monthly spinal treatment was $800. There is a TWO YEAR wait to qualify for Medicare while on SS Disability. He applied for medically needy assistance through Medicaid and was told he would receive a small percentage of assistance on medical bills once he had documented he spent $1,210 monthly of his $1,495 Disability check on medical bills and prescriptions…they did generously include dental bills.
This country needs to inspect recipients of the current system of assistance programs before they start giving away money on a monthly basis as an experiment. Those who do not qualify should be removed; when Julia Carson was Washington Township Trustee she and her staff did just that. They also cited the guilty who were forced to repay what they had illegally received in assistance. Millions who, prior to the current Pandemic inability to work and loss of jobs, worked 2 and 3 minimum wage jobs just to keep food on their tables because this country refuses to raise minimum wage from $7.85 hourly wage. There is too much wrong with our current system to consider a random experimental giveaway program.
I neglected to mention that my son died of terminal cancer after only two years on Social Security Disability.
Jack’s story is a dose of reality everyone needs to experience.
That said, the UBI is where the Friedman/Hayak philosophy intersects with Keynesian economics: When people have money, they spend it. When they spend it, goods and services are required to fulfill the demand. That creates jobs. People working jobs earn more money. The more they earn, the more they’re likely to spend. This is a DUH moment in understanding economics and human needs and behavior.
Of course, the greedy bastards don’t want to give up any of their money. They think it makes them rich. Too bad that doesn’t enriched their souls. A UBI is totally and completely anathema to corporatists and Republicans, most often the same thing – whether or not they own a corporation.
I think we all know the outcome of this experiment before it even starts. As noted, there have been multiple proponents throughout the years.
Let’s see, in the past forty years, what has happened with the ratio of CEO pay, stock prices, and average employee pay?
And, what has happened to unions? They’ve become corrupt tools of corporatism. I’m completely lost over the explanation of public unions existence while those who pay taxes for public services don’t have the same benefits. I wonder where all the anti-government groups get their animosity.
Who has orchestrated these injustices?
Who has stripped employees of their rights?
It’s not just about money…it’s about power. It’s about oppression. It’s about eliminating choices. Control.
The FED is printing money by the trillions to clean up the financial industry and corporate America while our government (politicians owned by the Oligarchs) could only bring forth $1,200 for 6 months of economic carnage during a pandemic for which they mishandled at every turn.
We have the worst economy in our history for workers while the stock market is enjoying record highs with stocks being excessively over-valued.
Those stealing from the treasury and those allowing it, don’t want it to stop. They also don’t want to let workers, students, and retirees to have access to it. The Oligarchs have fought hard to have this advantage once again. #MAGA They sure don’t want to give it up now and I don’t see any courageous majority arising from the political class who have betrayed “we the people” for decades.
ALEC isn’t finished getting what they want, yet.
A guaranteed UBI would make a huge difference in so many lives. I hope and pray for a Blue Wave in November, our only chance to make UBI a reality.
jack smith, you win the Internet today with the term “dr trumps early grave remedy”. Thank you for making my day!
JoAnn, I always look forward to reading your insightful comments. I know what it’s like to outlive your child. So sorry for the loss of your son, made even more painful by the struggles he endured with Social Security Disability.
Freud said that each person needs to love and to work in order to have a meaningful life. Humans are highly creative. I wonder if we would have more musicians and artists if we had a UBI. I wonder if we would have more people studying the humanities especially if we gave people economic support for a college education. I wonder if it would support innovations in technology that would decrease our dependence on fossil fuels.
I wonder.
A sustainability limitation of capitalism is the undeniable fact that it increasingly redistributes wealth away from workers who create it to those wealthy enough to own the means of production.
In order for it to be sustained progressive income taxes have to bring some of it back.
UDI is a means that accepts the consequences of extreme capitalism.
Send everyone a modest unearned paycheck. Fund it by progressive income tax.
Simple to administer and effective and supportive of sustainable capitalism.
Snoozerbug; thank you so much. Mark died just 16 months after his big brother, my oldest son Tony, who died of brain cancer. My heart has gone out to Joe Biden when he mentions Beau; my sons were both 55 years old when they died but they are always your child.
I will dare to suggest that paid work has substantial value above a UBI – dignity and real worth. There is more than enough “work to be done” even for folks without a college degree to employ everyone at a decent wage (above UBI). UBI looks like another “silver bullet” for a very complex, human problem. You just can’t throw money at complex issues and go away.
Of all presidents, it was Nixon who proposed a (then known as) GAW (Guaranteed Annual Wage – now UBI). It went nowhere, of course, lost in the howls of rich campaign contributors. I favor the UBI on grounds of putting more money in everyone’s pockets in order to blunt the horiffic effects of wage inequality and also to stoke demand in our moribund economy, its benificent effect on unemployment, trade deficits etc.
However, there is a big caveat in my suspicious mind that I haven’t seen discussed in this blog or elsewhere today – and it is this: With the relative quiet of the rich and corporate class to Yang’s proposal it occurs to me that this class may be ready embrace this seemingly liberal proposal for a reason > that it gives that class an opportunity to slash wages and bring the working class back to where they were, thus defueling aggregate demand, putting a lid on a burgeoning union movement, and having taxpayers continue to pay what they should be paying to their workers, all of which would operate in fits and starts to leave the working class where they were, i.e., mired in wge inequality since such UBI would in fact go to the bottom lines of the rich and corporate class.
Even given such a scenario, I still favor the UBI if for nothing else its tempory effect, but I have seen bait and switch legislation before and have waxed wary when the rich and corporate class seem asleep at the switch because that class never sleeps – so let’s go over such proposed legislation with a fine toothed comb with a view toward protecting such UBI from the corporate grab bag. Let that class prosper from the enhanced demand for their goods and services rather than the wallets of the working class.
Oh my word JoAnn, I can’t begin to fathom what it’s like to outlive TWO of your children. Yes, they are always your children, no matter their age.
Six point eight million adults in the US already receive a basic income from SSI, and another million or so are on veterans disability. Together, they make a large field of data to harvest. What do those recipients do with their money?
I don’t know of a study that publishes that information. But I do know a few people on SSI and some more on VA disability. Their track record jumps all the tracks.
One young woman, in Noblesville, Indiana, free of having to work, invented and patented a new way to husband coral in inland tanks. It’s potential to save coral in our oceans is heartening, not to mention the business she has formed supplying pet stores with live coral for acquarian owners, live coral already accustomed to the inland environment.
Another man on SSI, however, buys a new Cadilac SUV every year and goes to the casino in Anderson almost every day.
Another man I know still lives exactly as he did before he got disability…except he stockpiles food. His home is stacked to the ceiling in every room with canned goods. He feeds his dog sirloin steaks and survives himself on cans of mixed vegitables. He worries constantly about having enough money to pay his utility bill.
Another man I know in Florida, call him Joe, was on 100% VA disability, more than enough to live comfortably…and with free health insurance. But he blew it. He was convicted of a felony drug charge, and the VA cancelled his disability. He now sleeps on the streets and begs for coins in front of Panera Bread, where he recharges his phone every morning.
These stories would make an informative book, but they are just random personal stories, not data of decision making caliber.
I’ve heard the arguments that many artists and musicians would take advantage of a UBI and create some wonderful stuff. From the eyes of an actual artist: The problem with that is that most who want to be artists want to be because they want the lifestyle rather than the work, and they would use their monthy stipend to buy outlandish clothes, decorate weird lofts, and spend more on tats than they would ever make selling their own art. The true artist would not behave like that is a fair response, but then the true artist is only one of a million–the other 999,999 are the want-to-be types in flipflops and ink.
Assuming we grant a UBI of $12,000 annually to every worker (approximately 150 million), the cost of a UBI in the U.S. comes to $1.8 trillion (double that if we give it to everyone). The $1.15 trillion cost of welfare is $687 billion for Medicaid , with $463 billion for non-Medicaid forms. We have a GDP of $21.4 trillion and a federal budget of $4.79 trillion (22% of GDP). The top 1% of income earners make $755 billion annually. Surely it makes no sense to provide a UBI for those already well provided for.
While none of those figures answer the question “Can America afford a UBI?”, they seem to me to describe a financial and fiscal reality where that discussion becomes reasonable to engage in. We have been and still are so inept in assuring that welfare is spent in pursuit of the outcomes it aims for, giving cash to individuals holds out the promise that expenditures will align more closely with needs.
But an equally fundamental problem given the wackadoodle form of capitalism we work under is this: Can we bring salaries more in line with the societal contributions of the job being performed? Shooting baskets can pay $25 million or more while nurses and teachers struggle to make ends meet. Here in Pawleys Island workers who make our community beautiful often live 8 to a small house. If every football team stopped playing tomorrow (I love football), the societal impact would be minuscule. If garbage collectors stopped showing up our country would become a stinking mass of diseases in a few weeks. Our scientists and doctors and professors are the brightest people in our world, yet few of them have a shot at the top rungs of income. Our hedge fund managers and financial gurus add little quality to our lives, yet they prosper the most. My list of the 25 ways in which capitalism works for so few could be used to make a societal to-do list to last us 500 years.
Just imagine, a government program that would actually pay for itself! Of course, at the present time, I don’t have that ability, next year, hoping to get back to a more normal state of affairs…..
Terry and JoAnn – You are missing the point of a UBI – Everybody gets it, no bureaucracy, no more waiting when you are deserving and no more worrying about “cheating” – There are huge monetary savings when you just say “everyone”. For the small number of super-rich, it’s chicken feed, but giving it to them saves more than they get by not spending time and money in means testing.
One other thing – If it is universal, everyone wants it to continue. If it is means tested, the rich will say that the poor are getting too much and “balance the budget” by reducing the UBI.
Lester – Yes, throwing money at things is foolish, and work has more functions that providing income, but that is the point. If I had a guaranteed income, I would still work — even at my age– but, working for IT consulting firms, I have been laid off several times so that the CEO could get a bonus for “reducing costs”. After a while, I would take any job that was offered. With a UBI, I wouldn’t been so desperate. Beyond that, it makes no sense in a country that values its citizens to “walk away”. How about providing services, training, life training, financial training, etc. As an example, if we close a coal mine, we, as a country, should concern ourselves with helping those displaced workers in finding gainful employment.
My one fear, is the Zeke Emanuel effect. He once proposed giving everyone in the country money to buy health insurance and leaving everyone on their own. He stated that he fully expected the amount to NOT keep up with inflation, and that everyone would have to learn how to self ration health care. He didn’t account for flim-flam policies, or poor medical choices.
The UBI might end up like the minimum wage. Since the rich don’t need it, they wouldn’t miss it. It could be linked to inflation, but a new “club for growth” congress could decide that everyone could afford a small fee, or some health costs would now be part of the UBI, thus shrinking it.
Still, an intriguing idea.
Len Farber is correct – UBI is called “universal” for a reason. Everyone who meets very specific and impossible to cheat criteria gets it. And it doesn’t take a massive bureaucracy to administer it and police how the money is spent (why libertarians favor it).
The the other significant difference between UBI and the present mish-mash of income assistance programs is that it is focused 100% on the individual, and not the family, or a household (again why libertarians favor it). So if 5 related or unrelated adults choose to cohabitate together their combined UBI is $60,000. I do not support children as UBI recipients – that’s just an incentive to have lots of children. Age 18 seems right, given that’s the age one can vote or be drafted into military service (if you’re a male). So here’s my criteria for UBI:
1. You must be 18
2. You must be a US citizen
3. You must have a tax ID
4. You must have a savings or checking account
5. You must be registered to vote
6. You must devote 1 or 2 years of your life to national military or other social service before you turn 26. Only exceptions are extreme physical or mental incapacity.
As more and more people lose their jobs to technology, and more American jobs are exported, UBI become more rational. It takes a minute to process the concept, but the reality is that it makes a whole lot of economic sense and will benefit everyone.