Economists exaggerate the risks. We’ll never design a better welfare system if we don’t try it
The term “universal basic income” (UBI) has been showing up a lot lately. Once relegated to the realm of utopian pipe dreams, UBI has found its way into the mainstream discourse through small-scale trials of unconditional cash handouts currently taking place in countries as diverse as Finland, Kenya, and Canada, among others.
The concept behind UBI is appealing in its simplicity: Everyone should be entitled to a no-strings-attached minimum income. Those receiving this income are not required to report on their financial circumstances or on how they spend their money. They’re not required to attend job-seeker workshops or any other government initiative designed to make people “work-ready” (as is currently the norm in many welfare systems).
Free cash for doing nothing? Before dismissing such a program as the perfect recipe for disincentivizing work and encouraging laziness, consider the following:
In the developing world, providing people with a basic income has proven to be an effective method for poverty alleviation. This has led institutions such as the World Bank and the United Nations Development Programme (UNDP) to advocate for continued testing and implementation of basic income schemes.
Meanwhile, proponents in high-income countries argue that adoption of UBI is needed to protect the masses from widespread job losses currently being wrought by advances in the fields of artificial intelligence (A.I.) and automation. They claim that providing people with a basic income holds the potential to radically reduce levels of poverty and inequality in societies by solving many of the problems that plague current welfare systems.
The problem with existing welfare systems
There is mounting evidence to suggest that the conditionalities associated with claims to welfare can actually increase the time a person remains reliant on them. That’s right, forcing unemployed or underemployed people to constantly report their income, penalizing them for earning a higher income, or providing only work-based welfare can actually detract from their ability to overcome poverty.
One possible explanation for this phenomenon can be found in an emergent field of science concerned with the psychology of scarcity. Drawing from the fields of behavioral science and economics, Sendhil Mullainathan and Eldar Shafir of Harvard University have shown how scarcity can compromise an individual’s cognitive function and make them more predisposed to certain behaviors.
It’s not that poor people are inherently lazy, unmotivated, or stupid. Rather, it’s that poverty—regardless of who experiences it—causes a certain mindset. Mullainathan notes that one of scarcity’s most insidious effects is in how it enables mindsets that rarely consider long-term best interests. Coming up with answers to short-term dilemmas—such as “How will I feed my family?” or “How will I afford next week’s rent?”—demands mental precedence because failing to find a solution to such questions can pose an existential risk to someone experiencing poverty.
Addressing an individual’s fundamental financial needs has the potential to free up a large portion of mental bandwidth previously occupied by a condition of incessant poverty. In other words, removing the fear of destitution from the equation not only frees people to do work they find meaningful—it could potentially change the very way they behave.
With this in mind, we can see how jumping through bureaucratic hoops to receive welfare can tax the already stretched mental capacity of someone experiencing poverty. By attaching conditions that may be difficult to meet, unnecessary stress is placed on beneficiaries, which ultimately encourages a cycle of welfare dependency. The unconditional nature of UBI, in theory, could bypass these problems.
Medium
Alex Goik - Is Universal Basic Income as Radical as You Think?
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When I was very young my dad became very ill and couldn't work anymore and we ended up on benefit. My mum did used to do a part time job but had to give it up as she could not earn enough to look after us and also, she had to look after my dad and two children. The benefit was very low and my mum told years later that we were often hungry, so it was lucky that my friends and myself were always out scrumpying, stealing fruit from the orchards and getting blackberries from the woods.
On the government benefit my mum was only allowed to do four hours work a week or we might start to bring in what low paid working families brought in and that wouldn't have been fair they told us. And I could only earn two pound a week so I did a paper-round right up to the age of 16 years old where my friends all got well paid Saturday jobs at the age of 14.
My mum was house proud and she wanted some nice furniture like other people had so she worked illegally for the 'Key-ring Man' for years making key-rings all day long on her sowing machine. My dad would glue them together and stick the medallion in ready for sowing. My mum told me not to tell anyone because people would report us and my mum and dad would be sent to prison. We closed the curtains a bit so no one could see my mum working. I felt like a criminal.
One day key-ring man said to my brother and myself that we could also glue the key-ring fobs together and he told us how much he would give us per hundred. So I spent all week gluing them together working my nuts off and when the end of the week came the key-ring man gave me a fiver, and I thought, what, a fiver for that work? Anyway, I only did it for a few weeks when I told him he could poke it and my brother did the same too, but my dad carried on gluing them. Anyway, we started to slowly get some nice furniture and one day the colour TV arrived and it was awesome, but our neighbours had had them for years.
Now, just imagine how different it could have been if we had had the Basic Income.
Kevin Vincent
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When I was very young my dad became very ill and couldn't work anymore and we ended up on benefit. My mum did used to do a part time job but had to give it up as she could not earn enough to look after us and also, she had to look after my dad and two children. The benefit was very low and my mum told years later that we were often hungry, so it was lucky that my friends and myself were always out scrumpying, stealing fruit from the orchards and getting blackberries from the woods.
On the government benefit my mum was only allowed to do four hours work a week or we might start to bring in what low paid working families brought in and that wouldn't have been fair they told us. And I could only earn two pound a week so I did a paper-round right up to the age of 16 years old where my friends all got well paid Saturday jobs at the age of 14.
My mum was house proud and she wanted some nice furniture like other people had so she worked illegally for the 'Key-ring Man' for years making key-rings all day long on her sowing machine. My dad would glue them together and stick the medallion in ready for sowing. My mum told me not to tell anyone because people would report us and my mum and dad would be sent to prison. We closed the curtains a bit so no one could see my mum working. I felt like a criminal.
One day key-ring man said to my brother and myself that we could also glue the key-ring fobs together and he told us how much he would give us per hundred. So I spent all week gluing them together working my nuts off and when the end of the week came the key-ring man gave me a fiver, and I thought, what, a fiver for that work? Anyway, I only did it for a few weeks when I told him he could poke it and my brother did the same too, but my dad carried on gluing them. Anyway, we started to slowly get some nice furniture and one day the colour TV arrived and it was awesome, but our neighbours had had them for years.
Now, just imagine how different it could have been if we had had the Basic Income.
Kevin Vincent
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