Sacred Headwaters #18: Universal Basic Income

Thanks to some combination of the pandemic and Andrew Yang, UBI has entered the mainstream discourse. But it's been explored as an idea for hundreds of years and there are many real-world experiments.

Sacred Headwaters is a bi-weekly newsletter that aims to guide a co-learning process about the existential issues and planetary limitations facing humanity and about how we can reorient civilization in a way that will enable us to thrive for centuries to come. If you’re just joining us, consider checking out the first issue for some context and head over to our new table of contents to browse the whole library. The newsletters are not strictly sequential, but this exploration is meant to build on knowledge and understanding over time. Subscribe below if you haven’t already, and please share with friends, family, and colleagues who may be interested:

Table of Contents

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Issue #18: Universal Basic Income (UBI)

The events of 2020 have catapulted “universal basic income” into the public dialogue, in part thanks to Andrew Yang’s single-issue presidential campaign and in part because of most countries’ economic response to the COVID-19 pandemic. The US gave a universal one-time check and dramatically expanded unemployment benefits; Canada created a conditional monthly basic income for those who didn’t qualify for unemployment benefits; many European countries are using a combination of programs including a broadly successful employer wage subsidy. The UN has called for a temporary basic income to the world’s poorest 2.7 billion people as a way to mitigate both the spread and impact of COVID-19.

The interesting thing, though, is that a guaranteed income (which is a superset of “universal basic income” — I’ll explain that below) has been part of the socioeconomic discourse for many years. Martin Luther King Jr. advocated for a guaranteed income to fight poverty and racial inequity. Political economists from John Stuart Mill to Friedrich Hayek to Milton Friedman supported guaranteed income schemes. Friedman called for an implementation via something called a “negative income tax” which effectively guarantees a basic income that phases out slowly as your earnings rise. President Lyndon Johnson created a Commission on Income Maintenance Programs that, in 1969, called for a guaranteed income via negative income tax, but some combination of Congress and Nixon ultimately killed it.

John Maynard Keynes wrote in 1930 that he believed innovation would advance productivity and affluence to such a degree that we’d face “technological unemployment,” ultimately cutting the work week to 15 hours and having a guaranteed income. He also explicitly supported a basic income plan in England in 1935. His ideas may sound familiar in a couple ways: first, they fit with Andrew Yang’s call for UBI due to the threat of automation (i.e. rising productivity), and second, they’re exactly in line with labor policy recommendations from modern-day degrowth economists.

It’s actually rather fascinating. UBI has been discussed — and nearly implemented! — for centuries. The idea predates the United States, was broadly supported by its founders, and has been researched by governments, NGOs, and academics in great detail. But since George McGovern’s failed presidential campaign in 1972 when he proposed a universal basic income called the “demogrant,” it’s been off the table. Here we are in 2020, when the US political atmosphere exists wholly to the right of conservative economists of yore, and this old, consensus- and experimentally-supported idea is a “radical” progressive proposal. The Overton window is — maybe — opening up to the point where we’re allowed to discuss an idea that was frequently considered 50, 100, 200 years ago.

I’m digressing a little bit out of frustration, and I want to be clear: UBI is not just being talked about because of Andrew Yang and COVID-19, but in the United States, it certainly feels like those two, together, brought the concept from the realm of policy wonks and op-eds back into the public eye. In this issue, we’re going to read about what universal basic income is, what some of the arguments for it are, and what the experimental evidence looks like from a smorgasbord of global policy implementations. This is — in my opinion — an incredibly important topic with a rich history of proposals, experimentation, and academic work. UBI has a huge potential role to play in combating poverty, racial injustice, and the climate and ecological crises. You need a certain degree of privilege to even think about taking climate action or “voting with your dollar,” but even more than that, you need a degree of security to be able to begin questioning the systemic structures that dictate your actions; without that, I can’t see a path forward.

As an exercise, ask yourself: if you received monthly payments in an amount great enough for you to live on and expected to receive them for the rest of your life, what would you be doing differently?

One hour of reading is, as always, pretty limiting, and I hope this issue can serve as a jumping off point that allows you to take UBI seriously and sparks a desire to learn more.

The Difference Between “Guaranteed Income” and “Universal Basic Income”

Guaranteed income is a broad term that refers to government providing an income floor: no one in society will have less income than that. Friedman wanted it implemented via a negative income tax. King advocated for a guaranteed income that was pegged to (and rose with) the median national income. Others have envisioned it as an employment guarantee or a simple annual payment. Universal basic income is a policy within the space of guaranteed incomes: it means that government provides cash payments to everyone, whether they’re employed or not, whether they’re wealthy or not, etc. UBI has no means testing and no work requirements. In some usages, the word “basic” is taken to imply at least a minimum subsistence level of income, but that’s not always the case.

“Everywhere basic income has been tried, in one map” (10 minutes)

This article from Vox is an overview of “everywhere basic income has been tried.” It’s actually not as complete as it makes itself out to be, but it is a good summary of most of the implementations that exist or have existed and their results (where available). One thing to note is that many of these “experiments” have been pilot programs, targeted at some subset of a population as a test, meaning, definitionally, they were not actually universal. There are more exceptions to this than the article notes: there are or have been universal programs in Kenya, Iran, Alaska, Mongolia (2010-2012), the Eastern Band of the Cherokee Nation, Kuwait, and regions of Namibia and India. This article very briefly summarizes the outcomes from a variety of experiments, but it’s well-referenced and I’d encourage you to click through to some of the sources they’re drawing from.

As a resident of Canada, I found it particularly interesting to hear that there have been two UBI experiments here: between 1974 and 1979, Manitoba ran a universal trial in a small town that had very positive results (when the data were finally assessed in 2011), and in 2017, Ontario launched a basic income pilot, but it was canceled in 2018 when the provincial government changed parties.

If you want a slightly more complete database, the Stanford Basic Income Lab has an interactive map of past, present, and proposed UBI implementations.

“What We Know About Universal Basic Income: a Cross-Synthesis of Reviews” (20 minutes)

This is a rather dry review of reviews from the Stanford Basic Income Lab that aims to synthesize all the existing research that’s been done on universal basic income (and guaranteed income) experiments around the world. Feel free to skip the experimental design sections, although they do give a good overview of the space of different policies that have been tried. The interesting parts of this are both the completeness of their database and the overwhelmingly positive summary of the research. There are variations in effects, especially between low- and middle-income countries and wealthy countries, but virtually every study has demonstrated lower levels of poverty and strong evidence correlating cash supports with health and nutritional benefits and increased educational achievements. There’s also very little evidence of a “disincentive to work,” one of the common critiques of UBI, and in the studies where the labor force did decline, it was coupled with an increase in time spent in the “care economy” — currently un- or under-valued work like child care. This study from the Roosevelt Institute is a good complement for US and Canadian readers because it focuses on experiments that have happened in North America.

“Can Guaranteed Income Help Americans Escape Poverty?” (20 minutes)

This essay is a personal story of poverty in America and of a non-profit led UBI pilot program in Mississippi. The author combines a woman's life and the day-to-day impacts of the cash transfers on her and her children with references to broader research, other initiatives, and short explorations of how policy implementations might work. She also hints at some of the enduring questions about whether income supports need to be universal in order to fully succeed. This program — the Magnolia Mother’s Trust — is one of many small UBI experiments in the US, but it’s also important to note that UBI has been explored globally and would play a somewhat different role in lower income countries.

“How to Fund a Universal Basic Income Without Increasing Taxes or Inflation” (10 minutes)

One of the most common retorts to advocates of UBI is, “How will we pay for it?” Some simple calculations suggest a gross annual cost of over $3 trillion USD, which sounds staggering, but generally speaking, government spending stimulates GDP which in turn increases government tax revenue, so the actual net cost will be less, regardless of how you fund it. But the cost is obviously not insignificant and how to fund it is a valid question with a variety of answers. In this article, Ellen Brown, a public banking advocate and author, argues that UBI could be funded through a monetary policy called quantitative easing, something that’s been used extensively to stimulate the economy since the 2008 financial crisis. She argues that there is increasing evidence that much of the money that’s created (and spent) will return to the federal government in the form of tax revenue and that the influx of cash to the economy will not cause inflation, despite traditional economists’ fears. These arguments are becoming more mainstream and are in line with a relatively new economic school of thought called modern monetary theory that we will likely read more about in the future.

Brown’s recommendation here is just one possible answer. The real answer to the question, “How will we pay for it?” is simple: the same way the government pays for everything else it does, through a combination of debt and tax revenue. Personally, I’m particularly partial — and so are a majority of American voters, including a majority of Republican voters — to a wealth tax, and more generally, to simplifying the tax code and ensuring that it is progressive in effect, not just appearance (meaning that the wealthy are taxed at higher rates than the poor, as the tax bracket system intends). And maybe we could cut the military budget while we’re at it. But the main point here is, we have a lot of options for paying for expensive government programs, and “how will we pay for it?” is not in itself an effective criticism of policy efforts designed to end poverty and build resilience.

“Why Americans Need a Guaranteed Income” (5 minutes)

"The reason we need a guaranteed income isn’t technological progress; it’s the fundamental precariousness and injustice of today’s economy."

This piece is a bit out of character for this newsletter in that it’s a short and sweeping op-ed with some firmly stated opinions and not a lot of information, but I think the author, Chris Hughes, makes a really important point: that we need universal basic income to create resilience in what has become an incredibly fragile socioeconomic system. In my opinion, this is especially important because climate change is causing us to face overlapping natural disasters at scales we can only begin to imagine. Resilience is a term that’s often used as a synonym for climate adaptation, but, to me, a resilient society is one that needs to be able to withstand all sorts of shocks, whether or not they are directly correlated to atmospheric CO2. The author argues that, in the US, UBI is the best path towards that kind of resilience. Importantly, this is a very different justification than that of Andrew Yang, that of the various Silicon Valley techno-futurists, and even that of Keynes: we don’t need UBI because automation is making work obsolete. We need UBI because we’ve created a system that’s rife with unpredictable risk, both ecological and socioeconomic, and it’s a tool that can help us build systemic resilience.

Book Recommendation: Give People Money by Annie Lowrey

This easy-to-read book combines a policy overview of the whys and why-nots for universal basic income with a series of stories from around the world, showing how basic income has the potential to transform the lives of impoverished people in both Global North and Global South countries. The author interviews participants in GiveDirectly’s Kenya UBI experiment as well as minimum wage workers in the US, drawing connections and emphasizing the structural issues that hold people in poverty. This book is a good overview of a potentially paradigm-changing policy that has the potential to make major changes to the way society operates around the world. The author made a short video about UBI with The Atlantic.

This Week in Unrelated Writing: “There’s Always Something (or, Why Are Environmentalists Always Complaining)”

I published a new essay this week on Medium. I argue that the nitpicking complaints that environmentalists always have with the next big “solution” are actually a signal that our frameworks for problem solving are reductive and misguided and that we need to re-conceive our conceptions of value, epistemology, and science if we hope to build a civilization that can thrive for centuries to come (or, less optimistically, one that can survive for more than one more century). I promise the essay itself is less wordy than this introduction. If you enjoy my more editorial writing, feel free to follow me on Medium and share the essay.

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Screenshot from The Atlantic’s “Why the U.S. Should Provide Universal Basic Income.”