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Unconditional basic income – how does it work in practice?

Unconditional basic income – how does it work in practice?

Financial status, professional status, gender, social class – it does not matter. Every month, everyone is entitled to a guaranteed subsidy paid by the state.

This is not a salary, but money for basic living needs.

Lots of theory. How does an unconditional basic income work in practice, and could it work…anywhere? And is it worth paying attention to?

It is not a new idea and has sparked heated debates for a long time, but in recent years the passion and interest around the concept of unconditional basic income has become particularly strong.

Moreover, academic discussions, the Internet, and beer are just a prelude to the considerations.

There is no shortage of people and organizations willing to implement pilots in order to see how guaranteed basic income works in practice.

Many of them are already behind us. But first, let’s sort out the main points on this issue.

What is unconditional basic income?

The name of the topic under discussion is a glut of concepts. Basic Income, Universal Income, Guaranteed Income, Guaranteed Minimum, Citizen’s Wage, Citizen’s Income… Lots of deadlines, but all of them are now giving way to one of them, which is Unconditional Basic Income.

This term has only gained recognition in recent years thanks to a direct translation from English. Universal Basic Income resonates throughout the English-speaking world, in its entirety and under the acronym ” UBI “.

Wherever this topic appears, it quickly heats up the debate. why?

Unconditional basic income is a socio-economic concept according to which every citizen of a given country receives a monthly and continuous interest to ensure a minimum subsistence level . When awarding these funds, economic, age, property or status differences are not taken into account. The program works in a generic, general, non-judgmental way, and most importantly – non-returnable.

The concept of universal basic income will help combat economic disparities, extreme poverty and homelessness, as well as prevent other citizens from falling into the maelstrom of these phenomena.

Unconditional income will also be a response to the negative impacts of technological progress, which, according to many predictions, should depend on the proliferation of robots, reducing millions of jobs.

However, this aspect is only one of the building blocks – because the concept of UBI is older than we think.

When was the idea of ​​unconditional basic income born?

The concept of unconditional payment of benefits to citizens of a particular country was already noted in ancient Rome, where Emperor Trajan paid 650 denarii to willing citizens.

Thinkers and philosophers came up with the idea of ​​paying money to everyone also between the fifteenth and eighteenth centuries, considering it a solution, for example, to the phenomenon of theft or extreme poverty.

This is how we come to the twentieth century, where the concept of basic income that has been repeated in scholarly studies has bypassed the journalistic field.

The concept of using such a tool, again – as a way to fight extreme poverty, was floated in the 1960s by the President of the United States, Lyndon B. Johnson .

The administration of his successor, Richard Nixon, worked on the concept of unconditional benefits for certain groups. Both families of four, as well as retired and disabled people.

For the next half century, silence reigned over the concept, but it continued to live on in the field of journalistic and academic debate, and evolved into the modern era.

This is how we come to the second decade of the 21st century, when the proponents of the concept of unconditional basic income decided to formalize their idea under the name of the European Citizens’ Initiative for Unconditional Basic Income .

It was established in 2013 without having to wait for the first attempt to implement it on a large scale.

In Switzerland, in 2016, a referendum was held in favor of introducing unconditional income. She was persuaded to do so after 100,000 signatures were collected by supporters of this solution. Despite the colorful campaigns and promotions, the Swiss were skeptical of this idea. The chance of introducing a universal basic income in this mountainous country fell with 77% of the vote against and only 23% in favor. However, this was not the only active action against this concept – quite the opposite!

This is not just theory – UI tests in practice

In the wave of intense growth in popularity of the unconditional basic income concept in the last 20 years of the 21st century, the 2016 Swiss referendum was just the tip of the iceberg, masking the wide-ranging activities that tested it in practice .

Both skeptics and supporters of this concept may be satisfied.

In recent years, a concept that has emerged in theory has been put to a practical test to check how reality checks assumptions.

We regularly hear in the media about UBI pilots taken in different parts of the world. It targets both the rich countries and the poverty-free countries collectively, and the less developed countries that suffer from the problems of living on the poverty line on a large and global scale.

This allows you to draw interesting conclusions, as well as check the practical operation of the concept of unconditional income in various conditions. The number of UBI testers and pilots is constantly growing, which increases the database of our available apps.

leadership in poor countries

An enormous number of pilot programs have been implemented in poor countries, diversifying discussion and thinking on the topic of unconditional basic income. While it was mainly talked about in the countries of the western world widely understood, it was remembered that the concept of universal basic income can work very differently in countries with different economic and social structure. Let’s look at the most popular unconditional income tests in practice.

In the fall of 2010, the Iranian authorities decided to introduce a comprehensive cash benefit focused on the purchase of essential products.

As an additional cost, it was an intended service that could be used when purchasing fuel and select food products, as well as paying energy bills.

The expected amount is $40 per person on a monthly basis, or $480 per year.

A decade later, two Iranian economists released a comprehensive report on the subject. It collects data on the impact of the Iranian basic income index on professional activity , education development and entrepreneurship.

It was these areas that aroused the greatest curiosity, but also fears among skeptics, who saw in universal basic income a phenomenon that negatively affects citizen activity.

Iranian scholars, in conducting their research, showed that citizens who received the subsidy generally did not give up their paid work, and most of them did not choose to work less.

It was noted that the funds from the universal basic income were used by the younger recipients, who were hitherto unemployed, to enroll in higher education .

Not only that – the study showed interesting behavior among small entrepreneurs, noting that some of them set aside money from their unconditional income to develop their business.

However, the program was eventually abandoned due to pressure from opponents of the program. They were concerned about the long-term impact of the UBI scheme on the state budget.

Read also: What is NATO? in full form

Indian experience

Let’s move on to India, where I’ve experimented with unconditional basic income several times. One of the most interesting cases is the 2010-2011 pilot period, during which a group of 6,000 people from eight villages in the great state of Madhya Pradesh were selected.

For 18 months, they received unconditional compensation of between 100 and 300 rupees per month. After the completion of the experiment, a decrease in food shortages and the percentage of serious illnesses was observed compared to similar sites not covered by UBI.

Another pilot in 2012 showed that both Indian women and men on trial increased their interest in entering education.

Information about unconditional basic income operating experiences will continue to grow. The eyes of the world are now on Kenya, where the longest-running pilot was launched in 2017. In a small village on the outskirts of Nairobi, it is expected to last for 12 years, until 2029 .

Extension in rich countries

We have already mentioned Iran, India and Kenya – that is, countries where great inequalities prevail, societies are not rich, extreme poverty and the problem of access to basic living needs are the gray everyday life of millions of people.

Possibly the positive conclusions and the environment in which these pilots took place could have won over enthusiasts. But is an unconditional basic income something needed in the rich Nordic world?

An attempt was made to find out in Finland, where in the years 2017-2019 a group of 2,000 citizens of this rich Scandinavian country was paid an unconditional sum of 560 euros per month.

with one but. The experimental group was restricted to the unemployed only, guided by the possibility of observing the effect of universal basic income on their life situation. After the experiment was completed, it was decided not to extend it, but to focus on developing results.

In May 2020, the Finns finally published a report that drew interesting conclusions . It turned out that families with children were more keen on professional activation, while in the remaining groups it was small.

However, overall indicators of feeling financially secure improved and the percentage of people complaining of mental ill health decreased.

The study authors admitted that the biggest failure was poor occupational activation for people who had not taken any steps in this direction prior to the study .

Or maybe a larger country? Let’s take a look at the United States, where the longest unconditional basic income pilot program in history was introduced in 1976 in the largest state of Alaska.

Under it, money in the amount of $1,000 is paid unconditionally to anyone who has lived in Alaska for more than a year.

In more than 40 years of experience, it has not been noticed that it has a negative effect on people’s professional activation. It has also been noted that a universal basic income can be a valuable support for people who enjoy the seasonal occupations that are popular in this region.

For example, in tourism or fishing.

Also, among the rich countries, there are a large number of countries that have implemented the UBI pilot initiative , and will provide their feedback in the coming years. Among them are Israel, Italy and the US state of California.

Spain’s Unconditional Basic Income – How COVID Produced a New Pilot

So far, the test cases on unconditional basic income that have been described so far are concerned with, let’s call it, peacetime.

Although the concept of universal basic income is intended to be a remedy for objective negative phenomena that affect the dignity and lives of billions of people in the world, it is a long-term phenomenon caused by many factors, and manifests itself in different ways.

The COVID-19 pandemic , which broke out in March 2020 and gradually spread throughout the world, has shaken up the system that has prevailed so far.

The lives of those who make a living or even perform well have been unexpectedly ruined by the loss of a job or the ability to run their business.

As a result, the problem of unemployment and the severe deterioration of the material situation hit even the highest chiefs , forcing the states to take exceptional measures.

The so-called crisis shields, income support and parity systems to reduce the effects of the Corona virus crisis. Among this group, Spain especially stood out because it decided to go a step farther than neighboring European countries. COVID-19 has prompted the government in Madrid to implement an alternative to unconditional income .

The alternatives, because they target only the poorest families and those unemployed due to the pandemic, numbered in Cervantes’ homeland nearly a million.

As of mid-2020, the selected group receives monthly benefits ranging from €462 to €1,015 . The condition to be included in the Small Basic Income is the total annual income not exceeding 12,184 EUR per person.

Time will tell how long this program will last and whether it will affect the lives of the poorest Spaniards. However, it cannot be denied that this is another valuable building block for the UBI debate.

It allows you to check assumptions known from theory against an increasing number of practical examples.

How is unconditional basic income funded?

Well, we already know how many attempts have been made to check the operation of unconditional income on organisms, or rather, organisms.

We know the amounts that single pilots have been subject to in UBI. We know what criteria or lack thereof was a requirement to join the programme.

We also explored how much and for how long each experience was allocated. However, one question that naturally arises after that is. – “Just how much will this all cost and how is it financed?”

Here we enter the ground that arouses the strongest feelings, because it collides with two paradigms – liberalism and socialism. Adherents of the first concept are usually skeptical, considering universal basic income an excessive intervention and contribution to an increase in the amount and number of taxes.

Second Vision adherents, in turn, support this idea at least. They view it as the next stage in reducing inequality based on the principle of social solidarity.

Regardless of sympathy for the concept of universal basic income, a question arises either way. How will the state budget deal with unconditional basic income financing?

Unconditional basic income, of course, isn’t one perfectly consistent dogma, which is why there are so many ways to fund it. Some are offered by UBI proponents or researchers as common solutions, while others are preferred alternatives. Let’s summarize the most common ideas.

  • Increasing taxes for those with higher incomes according to the concept of progressive taxation . These include the so-called highest income, as well as the largest companies and institutions. As long as they will be forced to pay taxes in the country of activity, which, as you know, can be different.
  • Increasing the budget deficit and public debt and implementing the so-called modern monetary theory.
  • The state’s activities that stimulate an increase in budget revenues thanks to the greater consumption that will occur after the introduction of the universal basic income.
  • The abolition of other social expenditures of the state, such as benefits and allowances , and the recognition of the principle of universal basic income as a fully universal and universal successor.

Supporters of an unconditional basic income argue that the introduction of this solution need not be a factor causing an increase in inflation . Universal Basic Income would be financed by the money already in circulation, increasing the money supply through increased consumption, rather than by issuing it (i.e. printing).

Introduction of unconditional basic income in Poland – how much does it cost?

The introduction of a nationwide unconditional basic income as something generally available and sustainable is a bit of a spectrum.

Poland won’t be joining the basic-income citizens soon, though there are those who consider the 500+ program, which has been in operation since 2017, to be our version of UBI here . And in fact, in a way it is – because more than 500+ are currently available without standards, per child, per month, indefinitely. Let’s say it is a Polish basic unconditional income for underage citizens.

Only for them, for the whole of 2020 it cost up to PLN 40 billion, and the average number of children covered by it is 6.6 million.

However, 500+ is not a way to guarantee a subsistence minimum, but rather an addition to a home budget. And although this is an add-on, its costs can impress many people.

So what is the cost of introducing an unconditional basic income in Poland ? How much should this benefit be given for the current cost of living?

Experts from the Polish Economic Institute have calculated that in 2021 the amount of the so-called subsistence minimum will be 1,200 PLN for adults and 600 PLN for children.

UBI does not exclude anyone, so the cash benefit per Polish citizen will amount to about PLN 376 billion in 2021 alone , taking into account the above figures. It cannot be denied that with the current state of the UBI state finances of 1,200 PLN is too much for the current possibilities.

In 2021, the budget planned for just over PLN 486 billion in expenditures and PLN 404 billion in revenues. And the state has a number of other costs and investments to be covered!

With the current form of state finances in Poland – universal basic income is becoming completely unrealistic.

arguments for

It’s time to group the information we already know on the subject of Unconditional Basic Income into two easily distinguishable groups. First, let’s take a look at the franchises that UBI fans are referring to.

  • It is a step towards eliminating or reducing extreme poverty.
  • An incentive for the poor to activate professionally and educationally instead of focusing on covering their needs from month to month.
  • Minimizing the severity of the trauma in situations such as the coronavirus crisis, where millions of people suddenly lose their livelihoods.
  • In response to gradual automation and robotization, which will gradually reduce millions of jobs, and not replace them with a relatively new number of jobs.

discussions against

On the other hand, there are many arguments against UBI that are often not based on malicious denialism for denial’s sake.

Many of them were made by people who like to think about having a universal basic income, but the following examples present a snag.

  • A very high total cost, which is difficult or impossible for the country to secure in its budget plan in the long term.
  • Economic revitalization of the unemployed and/or uneducated does not guarantee, and may even lead to an increase in the number of such persons. With the introduction of basic income, especially in rich countries, citizens may be less willing to work.
  • The presence of Universal Basic Income (UBI) may lead many low-wage employers to cut them, making things worse for many.
  • Inflation, the rising cost of living, and other factors will force UBI down the index. This will force the state to constantly look for ways to “close the budget”

sources: security-and-mental-wellbeing,nId,4901040

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