Universal basic income. Myth 5: All experiments failed

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Hello!

It’s time to review the results of some experiments on the UBI and debunk the fifth myth that all experiments have failed. The fact is that for some reason the press is very fond of covering the results of only two experiments, one of which can hardly be called an experiment, because the citizens of Switzerland refused to introduce it in a referendum. This is the experiment in Finland in 2017-2018 and, as a matter of fact, the result and experiment in Switzerland. We should probably start with these countries and end with Russia.

So, Switzerland. The project to introduce the UBI in Switzerland was launched back in 2012. In a 2016 referendum, almost 80 percent of Swiss citizens rejected the introduction of the UBI.

The Swiss were afraid of higher taxes and the abolition of the existing well-established social security system. If citizens had voted in favor, each adult would have received about two and a half thousand U.S. dollars, that is two and a half thousand Swiss francs, and a child – 625 Swiss francs each.

It would have been a classic UBI, since all citizens would have received payments without exception. The Swiss set the amount much more substantial than the Finns paid in their 2017-18 experiment. Finland paid adult citizens about the same amount as the Swiss set for their children.

Finland’s UBI experiment took place in 2017-2018. The government paid 560 euros to a randomly selected 2,000 unemployed people each month for two years. Participants were told that they would continue to receive the money even if they found a job. In fact, it was no longer a UBI, because, first, the experiment was selective, that is, local in nature. Only a small number of unemployed citizens received payments.

Second, the purpose of the experiment was to see if people would start looking for work, with some level of material security, even if the work turned out to be temporary or low-paid. And thirdly, the amount of payments was negligible, that is, by Finnish standards, the cost of renting a modest apartment on the outskirts of the capital.

The expectations of the government have not been met, which is why the press began to talk about the failure of the experiment. But in fact this is not the case because, first of all, it was among the unemployed. And as we know, there is such a thing as professional unemployed. That is, in society there are always people, their percentage is negligible, who fall into extremes, whether workaholics or lazy. If the experiment was conducted precisely among such people, people who already are not very eager to work, then it would be strange to expect different results.

At the same time it is of course impossible to extend these results to society as a. And secondly, we cannot say that the experiment failed because it did not meet the expectations of the government. The results were quite different – they were of a social nature. That is, all the participants noted that they felt better mentally and physically, they began to feel happier and more secure. That is, these results cannot be discarded, either.

This is how the experience of two countries, advertised in the press, has created a myth that all experiments with the UBI have failed, although in fact, in many countries of the world, private individuals, political parties, nongovernmental organizations have proposed the idea of introducing the UBI to the government for consideration.

I invite you to take a look at a map of the UBIs as of 2018. On the map in green are the countries where the government has expressed its support for the introduction of a UBI and has begun testing it.

Yellow indicates states where the introduction of the UBI is being discussed in government and nongovernmental circles. You can see only two small red spots in the center of Europe. These are Hungary and Switzerland, which have rejected the introduction of the UBI.

It must be said that only one country in the world, Iran, has implemented a project that can safely be called UBI, because payments were made to all citizens. But for some reason the press is silent about it, too.

In all other countries the experiments were of local nature and had a selective approach. This too should be taken into account when analyzing their results.

So, Iran. Iran is the first country in the world that in 2011 set a guaranteed minimum income for all citizens of about 40 U.S. dollars a month. At the same time, subsidies for electricity, water, bread and gasoline were eliminated. All citizens are entitled to benefits without exception, but 19 percent of the population – the rich Iranians, of course – voluntarily refused them. I must pay tribute to them: six years later a report was published with preliminary results of the project which showed that people were not working less, but in some areas, e.g. in services, they were more active.

I haven’t seen more cases like that in the world, I didn’t find information about them. All the rest in pure form, of course, were experiments, which were local in nature, so I propose to go directly to the experiments. I will try to be succinct, because there is a lot of information.

I have already talked about the Canadian city of Dauphin. In 1975-1977, there was an experiment whereby every one of the 12,000 residents of the town was entitled to a yearly fixed income, not a fixed income, but an annual minimum set income. Those whose earnings fell short of this amount were paid the difference, that is compensated for this shortfall. About 30 percent of the population received such payments.

The UBI experiment in the Canadian town of Dauphin in 1975-1977 showed that:

– hospitalization rates fell by 8.5 percent,

– mothers spent more time caring for their children,

– more teenagers were graduating from school rather than dropping out to find work and ended up finding better-paying jobs than their peers,

– young men began working 40 to 50 percent less, devoting more time to education,

– there were more volunteers, and social activism increased,

– breadwinners did not reduce their employment and compensate for the drop-off in income with benefits.

That is, people generally want to work, even if they have the option not to. After all, they could not work at all, receiving this minimum established income.

Back in Canada, in the province of Ontario, a three-year UBI project started in 2017, but in the next eighteen years, a government came to power that abruptly curtailed both the project itself and funding for analysis of its results. It wasn’t until last month in March 2020, a report was published by an independent organization with the results of the experiment.

In a nutshell, the results are only positive on all counts. Similar experiments have been repeatedly conducted in the United States. There, in the 1970s and 1980s were conducted four experiments of 3 to 5 years among low-income citizens.

In the U.S. the first experiment with the introduction of the UBI was conducted from 1968 to 1978. In the end only 17 percent of women and 7 percent of men quit their jobs, mostly for studies. There was also an increase in divorce rates, as need and family support programs had previously kept people together.

Residents of Alaska have received regular UBI since 1976 through the Alaska Permanent Fund, which receives 25 percent of oil sales. The amount is about $800, but it is recalculated annually. It is paid to every unexpunged Alaskan citizen who has lived there for at least a year and intends to continue living there. The increase in the purchasing power of UBI recipients in Alaska has led to the creation of thousands of additional jobs.

Alaska has become one of the states with the lowest levels of inequality. In the United States there have been several more local experiments with the UBI in the year two thousand, spearheaded by individuals, nonprofit organizations, and academic centers.

Similar experiments have been repeatedly conducted in developing countries such as Brazil, India, and Kenya.

In Kenya, the largest experiment began in 2017, spearheaded by a nonprofit American organization. About six thousand people in Kenya will receive a monthly sum for 12 years, which is needed to cover basic needs – about twenty-two and a half U.S. dollars.

Interestingly, the experimenters encountered a problem – some residents refused the payments because they did not believe they were gratuitous.

Interim results of the experiment showed that the payments were used for education, home improvements, and even the creation of small businesses. Spending on alcohol and cigarettes fell, crime rates fell, and many women were able to give up hard physical labor.

In another African country, Namibia, the experiment was conducted in 2008-2009, and payments were made to residents of two villages in the equivalent of $6.

The UBI experiment in Namibia reduced household poverty rates from 76 percent to 37 percent after just one year, and reduced child malnutrition rates from 42 percent to 17 percent after just 6 months. The experiment helped increase parents’ ability to pay for school expenses. As a result, the school dropout rate dropped from 40 percent to 5 percent in nine months and to nearly zero after one year. The experiment led to increased economic activity, decreased crime, and improved children’s health due to proper nutrition.

In one village in Uganda, the UBI experiment began in January 2017. It was initiated by a nonprofit organization. Each family receives a monthly payment of 8 euros. This is the living wage of one adult and 2 children. The experiment will last for two years. The result will be a scientific film and a report. The UBI experiment in Uganda allowed participants to invest in training as well as tools and materials, resulting in a 57 percent increase in business assets, a 17 percent increase in hours worked and a 38 percent increase in earnings.

A larger experiment was conducted in India. It began in 2010. For a year and a half, residents in 20 villages were paid a monthly sum based on 300 rupees per adult and 150 rupees per child. About six thousand people received such payments. However, one village was left without benefits as a control group to analyze the results of the experiment.

As a result of the UBI experiment in India:

– healthcare and nutrition improved,

– caste-based disadvantages decreased because the UBI was paid to all in the same amount,

– school attendance increased,

– the quality of housing improved,

– the level of anxiety was reduced.

The Brazilian project, where in 2003 the government offered cash payments to poor families, requiring them to take their children to school and to medical facilities for preventive examinations, was a success. As a result, by 2013, 10 years later, the poverty rate in the country had more than halved.

That same year, the project was supported by 50 million Brazilians, that is, a quarter of the country’s population. Of course, the project is effective, and most importantly, it has raised the standard of living of the poorest segments of the population. As a result, inequality, especially economic inequality, has decreased in the country, but most importantly, more than 90 percent of those who participated in the project were women. Their status has risen considerably.

Similar projects in Russia are very modest. It is difficult to even call them UBI.

So in March 2019 in the Kaliningrad region in the village of Yantarny was launched a project initiated by the nonprofit Yarland Foundation. Among those who registered, 10 lucky people were randomly selected each week, to whom only one thousand rubles were transferred each month.

Since November 2019, the project has expanded to the entire Russian Federation. But do not be fooled – this only means that any able-bodied citizen of Russia can apply to participate in the project. As of November 15, 2019, there were about 12,000 participating in the project. Of those, about 350 were recipients.

If you apply today, you will not get every month a thousand rubles to your card. Instead, you will be awarded points equivalent to this amount, which you can spend on a special trading platform. It’s up to you to decide how much of this is UBI. Personally, I can’t bring myself to call this experiment by that word.

Local experiments with the UBI were conducted in many countries, including Italy, Spain, Germany and others. I only could not find information about similar experiments in Asian countries.

It has certainly had a positive effect on the lives of the poorest part of the population in developing countries. In those countries, which are usually called developed countries, the participants of the experiments noted that they became more comfortable and safer to live and work in. But everywhere, in both countries, people said that they had gained confidence in the future and more freedom. Personally, I believe that only a free, materially unburdened person can take a genuine interest in life, work with pleasure, and care for his neighbor, as it should be in the Creative society.

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