Basic Income experiment has been implemented across the world. Gyeonggi Province operates several basic income policies.
Loss of jobs, reduced income, the threat of losing one’s home… the economic fallout of the COVID-19 pandemic has altered the lives of millions of people around the globe. In some countries, governments are stepping in to help people out in one form or another; amidst the chaos, the concept of universal basic income (UBI) is gaining substantially more traction.
But what exactly is UBI and how can we trust that such programs, which are hotly debated across the political spectrum, will have positive results? Today we’re taking a look at UBI and related experiments that have been undertaken around the world, as well as in Gyeonggi Province, to explore the concept.
Basic Income: The Concept & the Possibilities
Universal basic income (UBI) is a regular payment that is made “universally” (to every individual) with no strings attached. A closer look reveals three key UBI characteristics: it’s periodic, meaning that it’s paid at regular intervals; it’s a cash payment, which enables the receivers to decide how to spend it; and it’s unconditional, meaning every individual qualifies for it regardless of their income levels or other factors, such as their willingness to work.
While UBI might sound like a revolutionary liberal idea, commonly recognized after Andrew Yang, the aspiring American Democratic presidential candidate, adopted the idea as one of his core campaign policies, the idea itself is not new. In modern American history alone, the idea has been previously explored by Richard Nixon, a Republican president, in 1969.
The idea of giving a country’s citizens universal payments can be traced as far back as the 1700s (some even trace it back farther).
|The Universal Basic Income is a public program where a periodic payment is delivered to each individual|
Basic Income & Global Inequalities
In our modern world, structures of power are closely tied to financial issues. The most basic human needs – healthcare, education, healthy food, roads, electricity, and clean water – require capital.
One fundamental and somewhat idealistic aspect of the UBI concept is that the basic cost of living should be covered by the program. The idea is that humans will be able to flourish more fully if they are not struggling to keep up with their basic needs.
The supporters of UBI argue that it will have an important effect on reducing inequalities that plague societies. With a proper UBI program in place, along with services such as public education and healthcare, we can balance out the wealth gap and power dynamics, and potentially set ourselves on the path to eliminate poverty.
By creating a level of security, UBI can empower workers by giving them the freedom to exit their jobs. This empowerment of workers pushes the employers to treat their employees more humanely, offer better pay, and provide benefits.
Apart from balancing out power dynamics, some argue that UBI systems are inevitable. Among the supporters of UBI, you can find many leaders from the tech industry, such as Elon Musk, who warn us about potential mass unemployment that will follow automation and the Fourth Industrial Revolution.
While UBI skeptics argue that reduces people’s incentive to work, so far the results seen in the experiments carried out disagree. Since UBI is not based on an individual’s income level (unlike most other current support programs), it has a minimal impact on an individual’s incentive to work. Working more or in better jobs will still mean more money and a higher quality of life.
UBI: The Pros & Cons
In the debates around UBI, the different sides have brought up many different pros and cons. UBI remains a widely divisive topic and, interestingly enough, has supporters and opponents on different end of the political spectrum.
The advocates of UBI list pros such as:
- it provides a minimum standard income for everyone, thereby reducing inequality and poverty;
- it’s easy and efficient to administer;
- it eliminates bureaucratic obstacles that can exclude people from support;
- it has a positive impact on socially beneficial tasks such as caring for children or the elderly;
- it has a positive impact on the lives of individuals such as artists and entrepreneurs; and
- it reduces health risks related to poverty and homelessness, thereby leading to reduced healthcare costs.
Arguments against UBI include:
- it potentially encourages laziness and disincentivizes work;
- it results in a less flexible labor market as people in part-time jobs, such as students and working mothers, might reduce their working hours; and
- the cost of UBI means higher taxes which can further disincentivize work.
For an appropriate system to be put in place, all these arguments need to be considered carefully.
However, if the threat of a shrinking job market is considered, the pros of UBI outweigh the cons.
The economic fallout of COVID-19 is giving us a glimpse into how people can easily lose their livelihoods overnight. With the increasing number of freelancers and zero-hour contracts, the majority of millennials do not enjoy the same level of job security as previous generations.
UBI, which requires minimum administrative costs and interference, can help the government resolve these issues on a large scale.
Universal Basic Income Experiments Around the World
Putting the concept into practice, a number of pilot programs and experiments have been implemented around the world. However, other than a few cases, most experiments lack universality and target select groups of individuals for terms that are shorter than ideal. Nevertheless, there is much to observe and learn from these experiments that will help policymakers map out better plans.
|Many different countries are running pilot programs to test the concept of Basic Income|
Kenya’s Universal Basic Income Experiment
The Kenya experiment, perhaps one of the most famous of its kind, is one of the few that offers an examination of UBI payments over the span of a long-term study. As a result, the study is of high academic value. It has been carried out by a charity called GiveDirectly, making UBI payments to individuals in 197 villages for a planned period of 12 years. Researchers are also monitoring another 100 Kenyan villages as control groups.
The experiment is still in progress and full results will become available in subsequent years. However, much of the qualitative data collected so far seems promising. Perhaps most importantly, the experiment is disproving the concern that UBI disincentivizes work while leading people to spend money on vices and so-called “temptation goods”. The recipients have been using the money to improve their lives, investing in their children’s education, and other quality-of-life improvements. The recipients have also voiced their views that the payments are creating hope, which in turn can lead to healthier mental states.
One postulation has been that people’s spending priorities focus on their basic needs and necessities, especially in poor communities. Research in different countries seems to suggest that spending on so-called“temptation goods” can even decrease after UBI is implemented.
Finland’s Basic Income Experiment
Finland’s 2017 UBI experiment is another famous example of a study on the social effects of no-strings-attached cash payments; the experiment also remains controversial as Finland was the first European country to start experimenting with such payments.
During the experiment, 2,000 unemployed citizens received a monthly payment for a year. As the participants' employment rate did not increase, some consider Finland’s experiment to be proof that UBI does not work.
However, the results suggest a positive impact on the happiness and mental health of the subjects. Some researchers also argue that there were major flaws in the experiment to begin with, rendering the results and data inapplicable to the evaluation of UBI.
Ontario’s Basic Income Pilot
In Canada, Ontario’s basic income pilot was a planned 4-year program that offered an annual stipend to 4,000 low-income participants. The study sought to test how basic income payments can affect aspects of low-income individuals’ lives such as food security, mental health, physical health, housing stability, education, and employment.
The program was canceled two years earlier than initially planned. The early termination was cited as being part of larger efforts to reform the province’s social assistance programs after a change in provincial government leadership. However, interest in similar programs remains high in Prime Minister Trudeau’s government.
Spain’s Basic Income Program
Spain will be the first European country to implement a guaranteed monthly income payment to the underprivileged. The Spanish government has expressed it hopes to keep the program as a permanent part of the country’s social welfare system.
The program organizers hope to reach 1.6 million people (12.4% of the Spanish population) who each will receive at least USD 500 a month. Discussions about the plan began last year, but the government decided to accelerate the schedule after the onset of the COVID-19 pandemic.
America’s Basic Income Experiments
The United States has tried different cash payment programs in small-scale experiments and special regional programs. In Alaska, residents are given annual cash redistribution payments from oil sales. In North Carolina, revenue from the Cherokee casinos has been unconditionally divided among Cherokee nation members since 1997. Between 1968 to 1974, a similar idea was experimented with in the form of a negative income tax.
More recently, the City of Stockton in California launched the first modern experiment with UBI. The city randomly selected low-income residents to receive a guaranteed monthly payment of USD 500. Data analyses from the first few months of the experiment show that as much as 40% of the payments were spent on food, the most basic necessity.
Scotland’s Basic Income Experiment
Scotland is considering UBI as a reform measure to address current social security programs. Four municipalities in Scotland are receiving funding to implement studies and develop models for possible future programs.
Scotland is interested in developing a social security system based on respect and dignity as the government seeks to reduce poverty and inequality. To counter challenges posed by the COVID-19 crisis, Scotland is holding discussions with the UK government about basic income.
Basic Income in Gyeonggi-do
As mentioned earlier, South Korean politicians are currently debating possible basic income plans. The current Gyeonggi provincial administration is an advocate of basic income. So far, the province has put into action a number of its own basic income programs.
Gyeonggi-do to provide residents with the disaster-related basic income
ⓒ 나의 경기도
Youth Basic Income in Gyeonggi-do
Gyeonggi-do’s Youth Basic Income project, first implemented in 2019, marked an important step forward in South Korea’s realization of the basic income concept. The program, which targets all 24-year-old residents of the province, offers 4 payments over the span of one year in the form of Gyeonggi local currency.
The age range was selected after careful deliberation; 24-year-old youths in Korea have typically just finished university and are preparing to enter the job market. In South Korea, the job hunting process can be quite fierce; as a result, youths in this stage of life face pressure and stress and do not receive special support.
In addition, payments are made in the form of the local currency. This connects with the other provincial initiatives aimed at helping local businesses. Gyeonggi local currency can be used at local shops and small businesses that have registered with the local currency program.
In 2020, amidst the COVID 19 crisis, the second year of the Gyeonggi Youth Basic income experiment continues is now being carried out.
Disaster Relief Basic Income in Gyeonggi-do
To counter the economic fallout of the COVID 19 pandemic, Gyeonggi Province Governor has initiated a disaster relief support program through which each Gyeonggi resident, regardless of age or income level, receives KRW 100,000 in the form of Gyeonggi local currency.
|Basic Income in Gyeonggi-do facilitates local small business|
This payment helps families with their purchases of necessary goods while also benefiting local small businesses that have been hit hard by the current economic downturn.
Although it’s too soon to evaluate results, anecdotal evidence points to positive impacts for both provincial residents and businesses.