The Radical Idea Of Making Sure Everybody Has Enough Money To Live On
While $21 a month may not seem like a life-changing amount of money, for Denis Otieno Anam it has been exactly that. “It was a big, big thing,” said the 40-year-old teacher, who lives outside the town of Bondo in western Kenya. “I could get some basic things I want in life.” Every month, money is transferred to him, no strings attached, to spend however he chooses.
He previously scraped by with slim earnings from his job in a small bar and whatever he could make from his goat and chickens. Once he had bought food and essentials for himself, his wife and four children, there was nothing left over. He dreamed of being a teacher, but “even applying for jobs was really difficult,” he said. He could not afford the costs of sending off applications.
That changed when he started receiving the money in 2017. He sent off a bunch of applications and landed a teaching job in a nearby high school. The money didn’t just transform his work; it changed things at home, too. Every month, he and his wife (who also receives cash payments) sit down together to budget, plan and figure out how to make their lives more secure. Anam, previously the sole breadwinner, feels the pressure on him has dissipated. “It’s brought harmony into my family,” he said.
Anam and his wife are recipients of the largest and longest-running universal basic income (UBI) program in the world. Led by the U.S.-based nonprofit GiveDirectly, it has provided 22,500 people in two very poor Kenyan counties — Siaya, where Anam lives, and Bomet — with some form of no-strings-attached money. The ultimate aim is to see what happens when you put money into the hands of poor people and give them the freedom to decide how to spend it.
The idea of giving people a basic income is centuries-old. It is supposed to cover your fundamental needs and to act as a cushion, so whatever happens to you ― an illness, unemployment, a natural disaster, a pandemic ― you should have enough money to survive.
In its purest form, UBI is universal rather than targeted based on criteria like income or wealth. It’s individual and unconditional, meaning there are no hoops to jump through and no restrictions on how it can be spent. It is not intended as a tool to force certain behaviors, but as a means to help people afford the basic dignities of life.
The program in Kenya is a big deal in the UBI world because it hits all these notes. “We don’t check if you’re rich or poor; we give it to everybody,” said Tavneet Suri, associate professor of applied economics at the MIT Sloan School of Management and one of the lead researchers on the GiveDirectly initiative.
More than three years in and the results have been good, said Caroline Teti, the director of recipient advocacy at GiveDirectly. Recipients are healthier and less hungry. They have a safety net to take risks and start their own businesses. Community resilience has also grown, with people pooling resources to make bigger investments ― such as piped water and more robust housing.
When COVID-19 hit, it was a serious test both of people’s ability to cope and of UBI. Between May and June, researchers called up recipients to see how they were managing: How was their health? Were they able to get enough food? Had their income dropped?
The resulting study was small and has not yet been peer-reviewed, but what they found was encouraging. While businesses saw much of their income wiped out, Suri said, those owned by people getting the basic income did not collapse, unlike those owned by people who were not receiving transfers. The researchers also found that those receiving a UBI were less likely to go hungry and that the improvements to their physical and mental health were not lost. “You see these effects of the UBI that persist through the crisis,” said Suri.
These results may offer insight into the role UBI could play in building resilience to a whole host of shocks: not just this pandemic or future viruses, but also the unfolding impacts of the climate crisis, which consistently fall hardest on the poorest and most marginalized. It’s an idea Suri is testing in the Kenya scheme. “We do think the UBI will provide some ‘insurance’ against bad events,” she said. “If something bad happens, you have a fallback.”
In 1795, about 60 miles west of London, an English district called Speenhamland implemented what some credit as the very first basic income scheme. Bad harvests, soaring food prices and rising unemployment made life bleak. So local officials gathered in a pub to formulate a radical plan: Give people money. Residents’ incomes were topped up to ensure they could afford basics. If food prices increased, the payments would too.
And it worked for a while ― hunger abated. But old ideas about the “idle poor” bubbled up and the scheme was blamed ― falsely, according to a recent analysis from historian Rutger Bregman ― for population growth and a loss of productivity. It was shut down in 1834, the income floor was swept away, and people were plunged back into poverty.
While Speenhamland’s system may have lasted only a few decades, its legacy was long.
Fast forward more than a century to the U.S. in the 1960s and basic income seemed to be gathering steam. Martin Luther King Jr. raised the idea in his 1967 book “Where Do We Go From Here: Chaos or Community?” And in 1969, UBI found an unlikely ally in President Richard Nixon, who planned for every American family of four to receive $1,600 a year from the state (around $11,500 in today’s money). But he was handed a report that featured a negative analysis of the Speenhamland scheme, claiming it had been a disaster. Spooked, Nixon attached a work requirement to his plan. The proposal ultimately died.
Basic income projects sprung up across the U.S. and Canada in the 1970s ― including the “Mincome,” a project in rural Canada between 1974 and 1979, which guaranteed families an annual income of 16,000 Canadian dollars (U.S. $12,000) in today’s money. Results of the Mincome ― published decades later, when economist Evelyn Forget stumbled across boxes of data on the scheme ― found an 8.5% decline in hospitalizations, improved mental health and improved high school completion rates.
But what has held fast ― informing policymaking from the demise of Speenhamland onward ― is the idea of a work-shy, “undeserving poor.”
It’s a powerful myth, and one that ignores economic realities. In the past few decades in the U.S., as wages stagnated for those on the lower end of the income spectrum, jobs have ceased to be a guaranteed route out of poverty. “We know that people are working and are poor. That’s why there’s a term called ‘working poor,’” said Michael Tubbs, the outgoing mayor of Stockton, California, who has been running a basic income scheme since 2019. Inequality in America has climbed to giddying heights. The odds are especially stacked against people of color: Black households in the U.S. on average hold one-tenth of the wealth of white households.
“For many people, it’s not going to be possible for them to simply just go out in the marketplace and find a job that will enable them to live a decent life,” said Andrew Yang, the former Democratic presidential candidate who now runs the nonprofit Humanity Forward. And many still do an enormous amount of unpaid labor ― like caring for small children and vulnerable relatives or volunteering ― which is incredibly valuable for society but not recognized by the economy.
“This is not a budget problem, this is a priorities problem.”
MELVIN CARTER, MAYOR OF SAINT PAUL
Calls for a UBI have become louder in recent years. Tech billionaires, such as Mark Zuckerberg and Elon Musk, have latched onto the idea as a buffer against increasing automation, which is predicted to take millions of jobs (and to distract from their own dizzying wealth). Yang campaigned for the 2020 presidential nomination on a policy of every American receiving $1,000 a month just for being alive.
But it took a pandemic to propel the idea of UBI into the mainstream.
COVID-19 has wiped away millions of jobs, many potentially permanently, and laid bare the brutality of an economic system where a person’s ability to access the fundamentals ― food, a home, medical care ― is dependent on having a job. And the pandemic is just one disruption of many. People are struggling to protect themselves from the coronavirus while simultaneously facing wildfires, hurricanes and cyclones ― disasters made more frequent and extreme by climate change.
Suddenly, the idea of giving people money doesn’t seem quite so radical anymore. Under the Trump administration, Americans were given a taste of basic income with a one-off stimulus payment of $1,200 earlier in the pandemic. In May, Spain brought forward the launch of a nationwide basic income scheme targeted at 850,000 low-income families. Canada, Scotland, India and others have discussed versions of basic income as a response to COVID-19.
“The pandemic was a trigger. It’s a crisis that’s been waiting to happen,” said Guy Standing, professor of development studies at the University of London’s School of Oriental and African Studies (SOAS) and co-founder of the Basic Income Earth Network, “… and it has shown we have no resilience.” Too many people, he said, “are living on the edge of unsustainable debt. That’s your life. You’re living bits and pieces.”
Virginia Medina knows what it’s like to live a life of bits and pieces. The Stockton, California, resident and her husband have long struggled with health problems and debt. When she found out she would be getting $500 a month to spend however she wished, “I just said thank God because he knew what I needed, and it came through at the right time.”
Stockton became the largest city in the U.S. to declare bankruptcy in 2012. But during his mayoral term, Tubbs has put it on the map for another reason: a guaranteed income program that, since February 2019, has been giving money to 125 people who earn below the city’s median income.
For Medina, the extra money has been a lifeline. “I can go to the store and get the things that I need and not have to worry, ‘Oh, gee, I get another bill, what am I going to do?’” she said. She can afford her medication, she has been able to visit her sick sister who lives in Oregon, and she has been paying down her debts. By the time the program finishes in January 2021, she expects to be debt-free.
Tubbs wants his program to dispel the myth, pushed by some critics of basic income, that people are poor because they have made bad decisions. That belief, the mayor said, is often rooted in racism: “Folks are uncomfortable giving other people ― mainly people of color, Black people ― agency in money-making decisions.”
The results of the Stockton initiative show that people are spending the money on necessities. More than 40% of the money is going toward food, 12% to utility bills, 9% to car-related expenses, such as fuel and repairs, with the rest spent on expenses like medical insurance, clothes and recreation.
Not only does this undermine assumptions that a UBI would be wasted; it also goes to the heart of what many basic income advocates say is often ignored ― that giving money to poor people directly supports the local economy. “It gets sent right back into the economy immediately,” said Yang, “in the form of grocery bills and daycare expenses and car repairs, and all of that activity ends up generating or sustaining job growth.”
Basic income trials launched around the world have shown a range of less tangible, but no less meaningful, positive outcomes. Between 2017 and 2018, 2,000 randomly selected unemployed people in Finland were given 560 euros ($640) a month. Findings showed that, while there was not a statistically significant rise in employment among the recipients, they were more secure, faced less depression and loneliness and had greater trust in policymakers and institutions than control groups.
Concerns that UBI recipients will stop working have consistently been disproved, as have suspicions that the money will be spent in socially undesirable ways. A basic income trial in Madhya Pradesh, one of India’s poorest states, found that alcoholism declined among the 6,000 recipients ― in line with World Bank research that shows basic income does not lead to increased spending on “sin products” like cigarettes and alcohol.
The people in Madhya Pradesh bought goats and chickens so they could sell eggs, milk and meat. Dependence on money lenders declined. People weather-proofed their homes, built toilets and improved sanitation, which particularly benefited girls (clean facilities to use when they had their periods made it easier to attend school).
“There was a huge emancipatory effect,” said Soumya Kapoor Mehta, head of IWWAGE, a gender research and advocacy centre in India, and one of the principal researchers on the India scheme ― and it lasted beyond the program. “Those are permanent improvements,” she said. “The footprint that we left … there was a sense of resilience that had built up.”
Some hope that basic income could even shore up resilience in the face of the climate crisis. “If you’re trying to give people the resources to, for example, get out of the way of a storm,” Yang said, “the most efficient way to do that is to put money into their hands.”
And it goes further than that, said Standing, who believes UBI could help build a lower-carbon economy. While there is still a lack of research on the environmental impacts of basic income programs, the SOAS professor said they could encourage more people to shift from jobs offering poor pay, bad working conditions or long commutes “to forms of work that we value, [but] which are unpaid, such as care work, voluntary work, and community work” ― which, he added, are better for the environment and a boost to communities.
The most common criticism of UBI is cost.
Economists and advocates have laid out a slew of plans to raise money to fund basic income efforts. Governments could cut some existing programs or run larger deficits. Some, like Standing, call for the development of huge national capital funds ― in Alaska, for example, every resident receives an annual dividend paid out from the proceeds of the state’s oil economy. Taxes are also in the mix: eco-taxes to penalize polluters, wealth taxes on society’s richest, and land taxes.
But for many basic income supporters, “How can we afford it?” is simply the wrong question. Mia Birdsong, a writer, activist and host of “More Than Enough,” a podcast series on basic income, said she gets this question all the time. Her response: “Are you fucking kidding me?”
“We don’t ever get asked about the military or the space program, or having Secret Service [protection] for every president until they die,” she said, but “when it comes to super basic needs like housing and food and education and health care, the hand-wringing starts.”
“We’re always worrying about the money, trying to figure out the least expensive thing that we can do,” said Saint Paul Mayor Melvin Carter, who is launching a basic income trial in his city. But the pandemic has shown that money can be found when it’s most needed, he said. “This is not a budget problem, this is a priorities problem.”
What almost everyone agrees on is the need for more data, especially on the impact of UBI schemes in high-income countries. “There is a huge upside [to UBI], this kind of liberating effect,” said Suri, “[but] it might be countered by some of the downsides.” For example, prices could rise if supply didn’t keep up with the new demand, she said.
And while there’s plenty of evidence that giving money to very poor people in developing countries measurably reduces poverty, the effect in high-income countries is complicated by the existence of welfare systems. Should basic income replace safety net programs in those countries or exist in addition to it? Some right-wing proponents, such as controversial political scientist Charles Murray, have called for the welfare state to be swept away. Others, like Yang, want some programs to continue alongside UBI, but not others.
“Basic income is such a nice and simple word and thing, but it’s very complicated,” said Olli Kangas, the scientific leader on Finland’s basic income trial. “Each country is different and each country is a special case.”
That’s why we need data over debate, said Jürgen Schupp of the German Institute for Economic Research, who is leading a new basic income trial in Germany. Schupp despairs a little over the polarization of the basic-income debate. People insist either that basic income will be easy to implement, he said, or that it’s too fiendishly complex to ever work. We don’t know yet but we need to find out, he insists, because “we have a lack of utopian ideas” and countries consistently fail to provide their own people with the resilience and security they need to weather shock after shock.
The coronavirus pandemic has pummeled health, economies and livelihoods, thrusting many more people into what Standing calls the “precariat” ― a mass class of people who have jobs but cannot escape the crush of poverty. It’s revealed the fragility of economies and sounded a warning bell for what’s to come. COVID-19 won’t be our last crisis. A warming world is bringing with it increasing, converging shocks that will have the power to displace populations, crash financial markets and tank whole industries.
There’s an appetite for something transformatively different, said Tubbs. “And not incremental but bold. And not bold for boldness’ sake, but bold to meet the bold times we’re living in.” UBI, a once-radical idea, is suddenly in the frame.
Back in Kenya, Anam said the additional income he and his wife receive has brought some extra security during the pandemic and, longer-term, given his family a layer of stability they simply did not have before.
There are families in his community who, before the UBI program, would often go whole days without meals. “With the basic income, at least they can buy food to give them the energy to look for jobs,” Anam said. The scheme has also bound the community together in their determination to use the money to build foundations ― for homes, for relationships, for jobs, for financial security. “Basic income is working,” he said, “and I am living testimony.”
- Posted In:
- Latest Blogs