by Charize Hortmann, Master in Human Rights, UMinho

▪

Currently the world’s economy has reached an unprecedent juncture. If by one side has never been so much wealth generally accumulated[i], by the other is undeniable that inequality between the richest and the poorest increases by the minute[ii]. At the same time, we are getting close to fulfilling the greatest threat brought out by the first Industrial Revolution. The technological unemployment[iii], due the advance and the improvement of certain technologies, like Artificial Intelligence (AI) and the Internet of Things (IoT).

Considering this scenery, much has been thought about coming up with solutions that seek to curb the progress of social inequalities, as well as being an alternative to the possibility of facing a massive unemployment worldwide.

Among those proposals one has been acquiring some space in the academic community and the politicians, it’s the implementation of a systematic Universal Basic Income (also known as unconditional basic income or negative income tax). Meaning, to provide money to the people so they have their basic needs satisfied. In general, an assortment of stipulations, rules, deadlines and certain conditions can be arranged for receiving the benefit and by that conditioning those that will be contemplated. Regarding the Universal Basic Income (UBI) proposals without predetermined conditions, a fixed and general payment is assumed for all people. In the case of the so-called negative income tax, the statement would be a supplementation of the recipient’s income until this person reaches a pre-established value considered as a minimum for subsistence[iv].

The concept of Universal Basic Income without conditions was explained by van Parijis, when he advocated “Give all citizens a modest, yet unconditional income, and let them top it up at will with income from other sources”[v].

Such idea is not new. One of the first records of its practical implementation was through the Speenhamland System[vi]. It was put into practice in England in the mid-1800s, this project aimed to provide subventions that would supplement the income of poor families with a sufficient amount of cash to cover all their essential needs. However, when reviewing the results of the project in 1832, it was concluded that the initiative was not satisfactory. Apparently, birth rates among the poorest had significantly increased, as well as the outbreak of some diseases, not to mention the fact that idle people stopped looking for other useful occupations. The results of these survey definitively ended the implementation of similar initiatives because, in the mid-20th century, governments were still using the Speenhamland report to justify their refusal to implement UBI systems in their territories[vii].

It turns out that the report was fake. The information was inaccurate and in contrary to what was supposed the Speenhamland project had achieved good results, significantly reducing hunger, misery and solving the problem of popular revolts during the time it was in action[viii].

Afterwards, the same happened in 1973 when a project called MINCOME[ix], that also aimed to offer money without conditions to all inhabitants of Dauphin, Manitoba. Again, an unreliable report was made and the project terminated. Thirty years later it came to light that the numbers of school dropouts had dropped during the period, birth rates in families in difficult situations had also dropped, hospitalization rates decreased by an average of 10%[x].

As mentioned, the misinterpretation of the results obtained in these projects meant that UBI initiatives were forgotten for a long time. However, through subsequent reviews of the results and new studies on the area, it was finally proven its benefits. It’s interesting to point out that proposals of offering income are supported by both, liberal economist’s like Milton Friedman and socialist’s like Eduardo Suplicy[xi]. Within the liberal paradigm the direct offer of income could reduce the State’s participation related to some public services, generating savings for public taxes and favoring the individual’s autonomy. Under the socialist bias, the Basic Income proposals should not remove the responsibility from the State when the individual needs certain services, as a it’s the State mandatory function to solve problems of inequality.

The mainly positive points of UBI is the decrease of public spending on public health, since with the money the beneficiaries would be abler to have a better diet and to invest in prophylactic measures, by so avoiding hospitalizations[xii]. Followed by a drop-in violence rates and consequently, saving on public security, since people who are in marginality due to lack of opportunity will be able to live with dignity when they have their minimum needs satisfied. A decrease in school dropouts’ rates[xiii], because the income will provide the children the possibility to get to classes, access adequate food, and avoid the need of child labor to compose the family incomes. Not to mention a general heat up in the economy, not only through consumption, from the money received directly, but also due to the investments and undertakings made by the beneficiary’s families of UBI programs.

Obviously, the idea is not as simple as it may sound. It’s not enough to simply distribute money to everyone. Many aspects need to be taken into account when it comes to offering a Basic Income. One of them would be on how this initiative would be implemented. In some countries, such as Spain, Portugal and Brazil[xiv], initiatives to offer income to the poorest already exist, but with the imposition of certain conditions, such as deadline for the individual to find a job, meetings with social workers, or the need to attend to professional training courses. However, what is known is that the imposition of these conditions ends up diminishing the potentially of the benefits of these programs, because it restricts the number of beneficiaries and prevents people from seeking alternatives out of fear to lose their benefits. This type of behavior is called unemployment trap[xv].

Despite that, other questions remain open. The discussion on the value of the payments and the macroeconomic effects of the large-scale acceptance of the universal basic income are aspects that must be discussed. There’s a possibility that the increase in the average income will end up bringing negative effects on the economy, such as the possibility of increasing inflation, for instance.

Facing the controversies that still hover over about the best modal of application of the aides, experiments aim to measure the effective benefits brought by the implementation of such programs. However, as Karl Widerquist[xvi] advocates, the gap between what an experiment can show and the answers for most of the questions regarding Universal Basic Income programs is enormous. Within a certain field, specialists can achieve the understanding of small fragments of the experiment, while in different fields of mutual understanding is more difficult to understand all the variables that are involved. Let’s suppose that during the implementation of a UBI program, researchers discover that there was a significant increase in GDP, new commercial activities emerged, in addition to a significant decrease of the general need for public health services. In contrast, economists find that the unemployment rates increased during the period when people received their income. How would be possible to measure if the program brought benefits or harms?[xvii]

It’s certain that there’s still a long path to be walked when it comes to an equal distribution of income specially without conditions. Many practical doubts, in addition to a certain prejudice due to the social stigma about the option of not having a regular paid work, are obstacles that must be overcome. In the same way, it’s also certain that we are moving towards an outlook of changes in the global economy, in which formal jobs tend to be even more scarce. Taking these data into account, to consider the hypothesis of income distribution programs, it is no longer just an exercise in ethics and citizenship it has become a necessity.

[i] Cf. RESEARCH INSTITUTE. Global Wealth Report 2015, Credit Suisse, outubro de 2015 https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html [10/02/2020].

[ii] Cf. ALVAREDO, F., PIKETTY, T., CHANCEL, L., SAEZ, E., ZUCMAN, G., PERROTINI, I., e MULLER, N. (2018). Informe sobre la desigualdad global, World Equality Lab, 2018, https://wir2018.wid.world/files/download/wir2018-summary-spanish.pdf [15/02/2020].

[iii] [iii]Cf.  SUSSKIND, Daniel. Um Mundo Sem Trabalho – Como Responder ao Avanço da Tecnologia, 1ª ed., Editora Porto, 2020, p. 11.

[iv] Cf. FRIEDMAN, Milton, e FRIEDMAN, Rose D. Capitalismo e liberdade, 1ª ed., Rio de Janeiro, Artenova, 1977, p. 57.

[v] Cf. PARIJIS, Philippe van. Basic Income: a simple and powerful idea for the twenty-first century, Politics & Society, v. 32, n. 1, 2004, p. 7-39,: https://journals-sagepub-com.bibezproxy.uca.es/doi/pdf/10.1177/0032329203261095 [15/02/2020].

[vi] Cf. POLANYI, Karl. Speenhamland, 1795, Tradução Fanny Wrobel in K. Polanyi, A Grande Transformação, Rio de Janeiro, Campus, 2000, p. 99-100, http://www.fafich.ufmg.br/hist_discip_grad/Speenhamland.pdf [10/02/2020].

[vii] Cf. POLANYI, Karl. Speenhamland, 1795, Tradução Fanny Wrobel in K. Polanyi, A Grande Transformação, Rio de Janeiro, Campus, 2000, p. 99-100, http://www.fafich.ufmg.br/hist_discip_grad/Speenhamland.pdf [10/02/2020].

[viii] Ibid., p.35.

[ix] Cf. FORGET, Evelyn L. The town with no poverty: A history of the North American guaranteed annual income social experiments, Research Gate,  University of Manitoba, Canadian Institutes for Health Research, Canada, 12 e maio de 2008, p. 35, https://www.researchgate.net/profile/Evelyn_Forget/publication/228680075_The_Town_with_No_Poverty_A_history_of_the_North_American_Guaranteed_Annual_Income_Social_Experiments/links/53ee53390cf23733e80c9e72/The-Town-with-No-Poverty-A-history-of-the-North-American-Guaranteed-Annual-Income-Social-Experiments.pdf [15/02/2020].

[x] Ibid.

[xi] SUPLICY, E. M. Um diálogo com Milton Friedman sobre o imposto de renda negativo, in Basic Income European Network VIII International Congress, Berlin, 2000, p. 6-7,  https://basicincome.org/bien/pdf/2000Suplicy2.pdf [20/02/2020].

[xii] HOUGH Julliet, and RICE Becky. Providing personalised support to rough sleepers, na evaluation the city of London pilot, Joseph Rowntree Foundation, 2010, https://www.jrf.org.uk/report/providing-personalised-support-rough-sleepers [17/02/2020].

[xiii] AGUERO Jorge, CARTER Michael, and WOOLARD, Ingrid. The impact of the unconditional cash transfers on nutrition. The south african childsupport grand, International Poverty Center, Brasília, 2007, https://ipcig.org/pub/IPCWorkingPaper39.pdf [20/02/2020].

[xiv] GUTIERRES, Ernest. Nueva Pobreza e Renta minima de insercion, Dossier Catalunya Social 2014, http://www.tercersector.cat/sites/www.tercersector.cat/files/dossier_nueva_pobreza_y_renda_minima_de_insercion_mayo_2014_castellano.pdf  [20/02/2020].

[xv] Cf. FORRESTER, Viviane. A renda de cidadania, in PIBIC, PUC Rio de Janeiro, 2007, http://www.puc-rio.br/ensinopesq/ccpg/Pibic/relatorio_resumo2007/relatorios/dir/relatorio_gustavo_fferreira.pdf [20/02/2020].

[xvi] Cf. WIDERQUIST, Karl. A Critical Analysis of Basic Income Experiments for Researchers, Policymakers, and Citizens, 1ª ed., Genebra, Springer International Publishing, 2018, p. 27.

[xvii] HORTMANN, Charize. Inteligência artificial no mercado de trabalho: Prevenção de impactos e a implementação de políticas públicas, Tese de Mestrado Universidade do Minho, 2019, p. 77.

Pictures credits: Basic income triptych by Russell Shaw Higgs.