Free money for living: a 500-year-old idea that’s having a moment
Can basic income solve inequality?
By Meagan Day
An unconditional sum of money dispensed at regular intervals to every citizen: the idea’s been around for centuries. It’s gone by many names — territorial dividend, state bonus, citizen’s wage, universal benefit, demogrant, Bürgergeld, reddito di cittadinanza, basisinkomen. Its most common name in English now is the basic income, and more and more people think it’s a good idea. After five hundred years, has its time finally come?
This past weekend, Switzerland held a referendum on instituting a basic income — which, if it had passed, would’ve resulted in a $30,000 a year dividend for every adult, just for being Swiss and being alive. The referendum failed, but fierce debate about the merits of basic income continues across Europe. And that conversation is starting here as well: Last week, the tech incubator Y Combinator announced that it will be running an experiment in Oakland, California, giving 100 participants between $1,000 and $2,000 dollars a month to see how they spend it and what happens to their lives.
Basic income is intended to supplement work wages, not fully replace them. Its aim isn’t necessarily total redistribution of wealth, in the socialist sense — the point is to make sure that every citizen has some spending power. Proponents argue that it’s a smart government investment that will improve individual quality of life and the national economy simultaneously. The idea has been naturally embraced by the left, but also the fiscal-minded right and, especially, libertarians who see it as a way to reduce government bureaucracy and hefty spending on fixing the problems (like crime, blight and illness) caused by abject poverty.
The earliest proponents of a basic income were 16th century humanists. In his 1516 book Utopia, the socialist philosopher Thomas More includes a scene in which his protagonist is appalled by the sight of a throng of thieves hanging from the gallows. “Instead of inflicting these horrible punishments,” he says, “it would be far more to the point to provide everyone with some means of livelihood, so that nobody’s under the frightful necessity of becoming, first a thief, and then a corpse.”
Enlightenment philosophers found these ideas convincing, and some even proposed to put them into action. Thomas Paine, an American Founding Father and author of The Age of Reason, felt that the land-ownership system took from people what naturally belongs to them. Instead of abolishing property ownership, though, he suggested in 1796 that “there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property. And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.” The United States didn’t take him up on his idea.
In the 19th century, as industrial capitalism exploded, social thinkers were increasingly concerned with the exploitation of workers by their bosses. While Marx and Engels advocated proletarian revolution, John Stuart Mill felt that the basic income was a more moderate and feasible path forward. In 1849 he endorsed a system which “does not contemplate the abolition of private property, nor even of inheritance,” but does guarantee “a certain minimum [which] is first assigned for the subsistence of every member of the community, whether capable or not of labour.”
In 1918, British political philosopher Bertrand Russell reiterated Mill’s idea:
“A certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income — as much larger as might be warranted by the total amount of commodities produced — should be given to those who are willing to engage in some work which the community recognizes as useful.”
The concept became increasingly popular in Britain in the first half of the 20th century. But more conditional forms of relief, which constitute the modern welfare and state benefits system, won out, and enthusiasm for the basic income idea fizzled in economic circles.
While it lay dormant in Britain, however, basic income started to gain some unlikely fans in the US. In the 19th century basic income was yoked to socialist thought, but in the 1960s Milton Friedman, the American economist who’s often considered the architect of neoliberalism, started to entertain the idea, as did many of his colleagues and peers. They argued that a regularly disbursed sum would actually decrease individual dependency on the government in the long run, and the idea briefly won some supporters on the American right.
In Spring of 1968, over a thousand economists submitted a petition to Congress urging it “to adopt this year a system of income guarantees and supplements.” The New York Times published a story on its front page with the title “Economists Urge Assured Income.” Surprisingly, the Nixon administration was swayed, and engaged in an experiment to see what it might look like on the ground. Tens of millions of dollars were given out to over 8,500 American families around the country. The main concern was that people would stop contributing to the workforce, but the results showed the opposite. “The ‘laziness’ contention is just not supported by our findings,” concluded an analyst working on the project. “There is not anywhere near the mass defection the prophets of doom predicted.”
Unsurprisingly, opposition within the Nixon administration was strong. In particular, a Nixon advisor named Martin Anderson “vehemently opposed the plan, fearing a future where money was considered a basic right,” writes Rutger Bregman at Jacobin. “The concept of a basic income ran counter to everything he… believed in: the smallest possible government with the greatest possible individual responsibility.” Anderson organized resistance to the plan, and eventually it was scrapped. Later, Mark Anderson wrote his own article for the New York Times, claiming ultimate victory after the various bills spawned by the basic income debate were all dead. “Americans have a generous, benevolent attitude toward those who are truly needy,” he wrote, “but they have never understood why they should work to support those who are capable of supporting themselves.”
In the 80s, debates cropped back up in Denmark, the Netherlands, Britain, France and Germany, but the conversation seemed to have died in the United States. Quietly, however, something unexpected happened: in 1982 the state of Alaska instituted the Alaska Permanent Fund. The yearly dividend to Alaska residents wasn’t enough to live on, but it did guarantee a return on the profits made from taxing natural resource exploitation in the state — much in the spirit of Thomas Paine’s exhortation to compensate people for the loss of their natural inheritance, the land, to private ownership.
The Alaska Permanent Fund has been going strong since its inception, and “is pretty much the closest thing the world has to a universal basic income anywhere,” said basic income advocate Scott Santens in a recent conversation with Vice. “Instead of resources being freely given away, rent is instead being earned on shared resources and every resident is receiving an equal share of the fruits of that rent.”
In examining the social impact of the Alaska Permanent Fund, economist Scott Goldsmith found that it has decreased statewide income inequality by allowing poor people to reduce their debt, take care of their basic needs and participate more fully in the state economy. “The dividend establishes a floor below which the cash income of residents cannot fall,” he writes, noting that its predictability allows for a degree of economic planning that is scarcely afforded to the needy, especially the rural poor who rely on subsistence harvests for survival.
The Alaska Permanent Fund is of interest to proponents of the basic income, but the amount is too small to help predict how, for instance, models like the defeated Swiss proposal might work. Another experiment is more instructive: between 1974 and 1979, the Canadian government gave nearly every low-income resident in the town of Dauphin, Manitoba a modest but livable basic yearly income. “Doctor and hospital visits declined,” writes Whitney Mallett at Vice, “mental health appeared to improve, and more teenagers completed high school.”
Some residents “used the money to pay for essentials; others used it as supplementary income to purchase things that could help them increase their earning potential, like new vehicles.” Still others worked less so they could look for better jobs or return to school. After a few years, a faltering economy dried up funding and ushered in a more conservative era, and the project was stalled and largely forgotten.
Y Combinator’s proposed project will replicate the Dauphin experiment to an extent, except for one crucial element: where only low-income families were eligible for guaranteed income in Dauphin, the tech incubator’s experiment will select recipients across the economic spectrum. This is closer to the spirit of basic income, which is intended to provide everyone with the same floor on their yearly earnings. While many details of basic income are debated, proponents tend to agree that it should involve a single, stable sum paid to everyone, no matter how much they earn or whether they’re employed.
Even though the Swiss referendum failed, we’ll likely be hearing more debate on the issue. Global inequality is skyrocketing, with the top 1% owning half of the world’s wealth as of 2015. In the United States, where wealth concentration at the top is extreme and increasing, a new generation is becoming familiar with the idea of a basic income for the first time — and liking the sound of it.
As FiveThirtyEight put it, “Basic income is having a moment.” Unlike previous moments, this one is increasingly driven not by philosophers and top-level economists, but by frustrated citizens. If popular interest continues to swell, and data starts to pour in through initiatives like Y Combinator’s, maybe the idea of a basic income will finally see some real action.
