Imagine a world where everyone receives a basic income, enough to cover their essential needs, no questions asked. This isn’t a utopian dream; it’s a concept gaining traction as a potential solution to poverty and inequality. Giving free money from the government , or Universal Basic Income (UBI), has been tested in various experiments with surprisingly positive results. This article delves into the arguments for UBI, examining historical examples, economic benefits, and why it might be time to rethink our current welfare system.
The London Experiment: Unconditional Support for the Homeless
In May 2009, London embarked on a unique experiment involving fifteen un-housed individuals. These individuals, who had been living on the streets for years, were costing the government an average of £30,000 per person annually due to healthcare, court costs, and other social services. The experiment involved giving each person £3,000 with no strings attached, asking only what they needed to get off the streets.
This approach, facilitated by the charity organization Broadway, challenged the traditional welfare model. The results were encouraging: many participants used the money for things that improved their lives, such as gardening classes, hearing aids, and telephones. Within a year, more than half had secured housing, demonstrating that unconditional support can be more effective and humane.
Thomas Paine and Agrarian Justice
The idea of free money from the government isn’t new. As far back as 1797, Thomas Paine, in his pamphlet “Agrarian Justice,” proposed giving every citizen £15 at age 21 and then £10 annually for life. Paine’s vision was a radical reform of the social welfare system, advocating for a basic level of economic security for all.
Paine’s concept challenges the assumption that poor people cannot make good decisions on their own. The current welfare system often treats recipients as children, subjecting them to intrusive measures like drug tests, despite evidence showing that the vast majority do not use drugs. This paternalistic approach is not only inhumane but also economically inefficient.
The Inefficiency of the Current Welfare System
Our existing welfare system is plagued by inefficiency. A significant portion of taxpayer money is spent on administrative costs rather than directly benefiting those in need. For example, states in the US spent $490,000 in 2017 to drug test welfare applicants, with only a small percentage testing positive. These funds could be better used by directly supporting needy families.
The current system often imposes restrictions on what welfare recipients can purchase, dictating their choices and undermining their dignity. Instead of spending resources on overhead costs to control these choices, a more effective approach would be to provide cash assistance, allowing individuals to make their own decisions.
Addressing Common Misconceptions About Free Cash
A common concern about giving free money from the government is the belief that recipients will misuse it on drugs, alcohol, or other harmful products. However, evidence suggests otherwise. Studies have shown that when poor people receive cash, they tend to spend it on things that improve their lives, such as education, healthcare, and housing.
In the London experiment, the un-housed individuals spent their money on items and services that enhanced their quality of life. This demonstrates that providing unconditional support can lead to positive outcomes and break the cycle of poverty.
The Mincome Experiment: Eliminating Poverty in Dauphin, Canada
In 1979, the town of Dauphin, Manitoba, Canada, participated in a social experiment called Mincome. For five years, the poorest residents received monthly cash payments with no strings attached. During this period, poverty was virtually eliminated in the town.
Dr. Evelyn Forget, a researcher at the University of Manitoba, analyzed the data from the Mincome experiment and found that hospitalization rates for accidents, injuries, and mental health diagnoses dropped significantly. The study concluded that providing free money from the government improved health and social outcomes in the community.
Moreover, the experiment did not lead to increased marital instability or higher birth rates, dispelling common concerns about the potential negative social impacts of UBI.
US Experiments and Reanalysis of Results
During the 1960s, the United States conducted several social experiments to assess the impact of guaranteed income. These experiments aimed to determine if people would work less, if the program would be too expensive, and if it would be politically acceptable.
Initial analyses suggested that recipients reduced their working hours and divorce rates increased. However, a reanalysis of the data ten years later revealed flaws in the original findings. The corrected data showed no significant increase in divorce rates and minimal reduction in working hours.
Those who reduced their working hours often did so to pursue education or seek more fulfilling employment, highlighting the potential for UBI to empower individuals to improve their lives.
The Affordability of Universal Basic Income
With the level of wealth that has been accumulated globally, we can afford to guarantee a basic income for everyone. According to some estimates, it would cost $175 billion per year to eradicate poverty globally. As of 2021, the World Bank estimates the GDP of all world economies put together was $96.51 trillion. $175 billion is less than 0.5% of the global GDP and less than 8% of our current global military spending.
By comparison, it cost about $6 trillion to execute the war on terror in Iraq and Afghanistan. Winning the war on poverty would be a bargain compared to how much we’ve spent trying to win the war on terror, with mixed results. We have already seen that the current welfare system is grossly inefficient and a lot of the money that should be given to poor people goes to administrative costs. A large percentage of the money we spend on international aid also goes to administrative costs. Giving free money from the government is not just more effective in lifting people out of poverty, but it is cheaper.
Conclusion: The Time for a Guaranteed Basic Income Has Come
Capitalism and democracy have brought us a long way, creating unprecedented wealth and opportunities. However, not everyone has benefited equally. Our current social insurance system is economically inefficient and dehumanizing, stripping poor people of their agency and choice.
The time has come to take the next step towards economic justice and human dignity: a minimum guaranteed income for every citizen. While the specifics of implementation are open for debate, the fundamental principle that everyone deserves the security of a basic income should not be questioned.
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