Why not Universal Basic Income?

Universal Basic Income (UBI) is an income support policy under which all individuals receive a regular unconditional cash payment from the government, regardless of employment status or income level. In other words, every adult citizen (and sometimes children, at a lesser amount) is granted a basic stipend periodically, with no means test or work requirement attached. The primary goals of a UBI are to ensure a minimum standard of living, reduce poverty, and simplify the social safety net by replacing or complementing targeted and more complex welfare programs¹.

The idea of a basic income has varied roots. In Thomas More’s Utopia, published in 1516, he writes that instead of punishing a poor person who steals bread, “it would be far more to the point to provide everyone with some means of livelihood, so that nobody’s under the frightful necessity of becoming, first a thief, and then a corpse”². Thomas Paine in 1797 proposed a universal payment as compensation for land inequality, while in 1848, John Stuart Mill also supported the concept in Principles of Political Economy, arguing that “a certain minimum [income] assigned for subsistence of every member of the community, whether capable of labour or not” would give the poor an opportunity to lift themselves out of poverty². In 1967, civil rights leader Martin Luther King Jr. called for a guaranteed income to alleviate poverty³. Neoliberal economist Milton Friedman introduced the related concept of a negative income tax (NIT), aiming to replace complex welfare programs with a simpler cash guarantee through the tax system⁴. Philosophers such as Philippe Van Parijs argue that UBI provides “real freedom” by giving everyone the resources to make life choices⁵.

In modern times, interest in UBI has been fuelled by concerns about automation and job insecurity – the idea that a guaranteed income floor could support those displaced by technology. The rate of displacement by technology looks as though it will increase with the advent of Artificial Intelligence (AI), which is finding its way into all avenues of business and thereby displacing people. Currently almost 80% of global companies use AI, and the companies most affected by it are in the technology, finance and healthcare⁶.

Proponents see UBI as a way to promote equity and dignity (treating support as a right rather than charity), and to stimulate entrepreneurship and creativity (since people have a safety net to take risks), while sceptics are concerned about costs and lack of incentives to work².

UBI is defined by its universality and unconditionality, which distinguish it from almost all existing welfare programs. Its features include:

Universality vs Targeted: Traditional welfare programs are usually means-tested or targeted – only the poor, unemployed, or other specific groups qualify. UBI, by contrast, is paid to everyone (universal) regardless of income or need. For example, a conventional anti-poverty program might only pay benefits to those below a poverty-line income, whereas UBI would be sent to rich and poor alike (with the understanding that the wealthy would likely pay more back in taxes)⁷.

Unconditional vs. Conditional: Many programs impose conditions (e.g. unemployment benefits may require proof of job search, while food stamps in the US can only buy certain products). UBI has no strings attached – recipients can use the cash freely and are not required to fulfil any obligations to receive it. This echoes the philosophical notion of trusting individuals to know their needs best, and it eliminates bureaucratic oversight of behaviour⁸.

Individual vs. Household: UBI is typically paid on an individual basis. This contrasts with some benefits that are calculated per household or require a household composition test. Paying each person directly (including men, women, minors, etc.) can empower individuals within households (for instance, giving women independent income)⁹.

Integration vs. Fragmentation: UBI is often envisioned as a simpler system – a single program for all – in lieu of multiple overlapping programs (e.g. housing assistance, food assistance, tax credits, unemployment benefits, child endowment). By providing a basic income floor, it could streamline social support, reducing bureaucracy and “poverty traps” (situations where earning more causes benefits to be lost). Critics, however, note it would need to be high enough to replace those programs’ functions, or else run alongside them⁹.

Financing and scope: A true UBI that is high enough to live on would be costly; proposals often suggest financing it through tax reforms, wealth taxes, or repurposing existing welfare budgets. Some implementations have been partial UBIs (small dividends that supplement other income, such as Alaska’s oil dividend). Unlike social insurance programs (e.g. pensions or unemployment benefits), UBI is not contributory – one does not need prior earnings or contributions to qualify¹⁰.

In summary, UBI aims to provide a guaranteed basic floor for everyone, in contrast to welfare policies that provide a safety net for some. This universality is hailed by supporters for its simplicity and fairness (everyone gets it, avoiding stigma and bureaucracy). Sceptics worry that universality means paying out to people who don’t “need” it and that it could remove the incentive to work or could be fiscally unsustainable. These debates have prompted numerous experiments around the world. These included:

Manitoba’s Mincome experiment (1974-1979)

The “Mincome” (short for Minimum Income) experiment was funded jointly by Canada’s federal government and Manitoba’s provincial government. Its most famous component took place in the town of Dauphin, Manitoba, which was selected as a “saturation site” where every family in the town (about 10,000 people) was eligible to receive an income guarantee. This made it one of the only experiments to cover an entire community, approaching a true UBI environment within Dauphin. In Dauphin, all residents were enrolled in the guaranteed income program (except seniors, who had their own pension, and the very wealthy who wouldn’t qualify due to the income thresholds)¹¹.

Households were guaranteed a minimum income (around 60% of the low-income cutoff) and benefits phased out at a 50% rate as earnings rose. For a family of four in Dauphin, the guarantee was approximately CAN$16,000 per year in 1970s dollars (about CAN$3,800 for a single person at the time), provided via monthly cheques. The payments ensured no family fell below the poverty line, accounting for any other earnings. The experiment ran for 5 years (1974–79), but due to budget cuts, comprehensive analysis was delayed for decades (data sat in archives until researchers analysed it later)¹¹.

Mincome found only slight reductions in work effort. Overall work rates did not collapse. There were small labour reductions in specific groups: new mothers tended to take longer maternity breaks (working fewer hours while their infants were young), and teenagers worked less, presumably because the guaranteed income allowed them to focus on school instead of needing a job to support their family. Prime-age men’s work hours barely changed at all. As one analysis put it, the decline in work was “not anywhere close to disastrous” – in Dauphin, there was no mass exit from the labour force. In fact, education improved: with less pressure to earn money, more adolescents stayed in school through 12th grade. The guaranteed income seemingly gave many young people the option to graduate rather than drop out early¹¹.

Economically, Dauphin saw poverty reduction and more economic security. While detailed consumption data is scarce, families were able to maintain more stable incomes, pay off debts, and make small investments (some accounts mention families buying new farm equipment, for example). There was no spike in frivolous spending reported. Importantly, significant long-term economic benefits were found in terms of poverty alleviation and community stability¹².

The Mincome experiment is particularly known for its positive effects on health and social well-being. It was found that during the Mincome period, hospitalisation rates in Dauphin fell by 8.5% relative to similar regions. This was a remarkable drop, especially in hospital visits for mental health and accidents. Residents had fewer anxiety-related illnesses and injuries, which suggests that income security reduced stress and related health issues. Participants also reported fewer visits to doctors and improved mental well-being. Family dynamics in some cases improved too: with a financial safety net, there was less domestic stress (and violence) over money. Years later, many Dauphin residents recalled the Mincome years as transformative, saying it “made a real difference” in their lives by alleviating constant financial pressure¹².

A notable unintended benefit was the community-wide effect: because everyone in Dauphin was eligible, there was no stigma in receiving the support, and the town as a whole showed improvements (suggesting a “saturation” effect where overall social cohesion improved)¹².

Finland’s National Basic Income Pilot (2017–2018)

The Finnish government launched a pilot to test whether a basic income (BI) could incentivise employment better than traditional unemployment benefits. The trial randomly selected 2,000 unemployed persons across Finland and gave them an unconditional monthly payment. While not fully universal (it was limited to jobless people), it was unconditional and did not reduce if they found work, mimicking a core aspect of UBI. The control group of 173,000 people remained on normal benefits. The recipients received €560 per month each. This was roughly equal to the standard unemployment benefit. It was paid monthly, tax-free, for two years, unconditionally – recipients did not have to prove job search or accept job offers, and if they became employed, they still kept the €560 (and would pay taxes on new earnings normally)¹³.

The Finnish pilot’s primary question was whether removing welfare conditionality (and guaranteeing income) would encourage unemployed people to find work (the theory being they might take gigs or short jobs without fear of losing benefits). The results showed no significant difference in employment rates between the basic income group and the control group. In the first year, basic income recipients worked a statistically similar number of days as those on traditional benefits. Over the full two years, there was no increase in employment on average – essentially, the basic income did not act as a strong “work incentive” carrot, but nor did it reduce work effort. There was a hint of a “mild positive effect” on employment for certain subgroups, such as recipients with children and those in rural areas finding part-time work, but these effects were modest. Importantly, entrepreneurial activity saw a slight uptick – a few more people in the BI group started their own businesses than in the control. And because the BI was simple, recipients navigated less bureaucracy – some took short jobs they might have otherwise declined (since under BI they didn’t have to report income changes constantly). Overall, however, employment levels did not materially diverge from the control group. The government had hoped to see a big jobs boost; that did not happen, which led some to deem the trial a “failure” on that narrow criterion¹⁴.

Where the Finland pilot truly shined was in human well-being. Surveys and assessments found that basic income recipients had significantly better mental health and life satisfaction than the control group. They reported lower stress, less depression and anxiety, and higher confidence in their future. Being free from the onerous monthly paperwork of conditional benefits and the stigma of joblessness improved their mental wellbeing. One recipient famously said it was “stress-free money”. Recipients also expressed greater trust in social institutions and other people – interestingly, the BI group showed higher trust in government and society than the control group did. This suggests receiving a guaranteed income made them feel less alienated. Indeed, financial insecurity and bureaucracy can be mentally draining, and the basic income removed that, yielding more positive mood and cognitive focus. Recipients also felt freer to pursue meaningful activities – some took training courses, others did volunteer work or cared for relatives without fear of sanction¹⁴.

The Finnish trial was sometimes misreported as a “UBI failure” because it didn’t boost employment. Critics also point out it wasn’t a full UBI: it only targeted unemployed people (so not universal), and €560, while helpful, was not enough to live on in Finland (it was below the poverty line), meaning people still needed other support for housing, etc. So, it was really a test of unconditional unemployment pay. By 2019, a new government decided not to extend it, partly due to the employment results. However, the positive social outcomes are widely acknowledged: “The basic income recipients were more satisfied with their lives and experienced less mental strain” than the control. This demonstrates a classic trade-off: even without job gains, UBI can improve well-being, trust, and mental health. Some critics argue Finland’s amount was too low and sample too limited to show potential employment impacts of a true UBI (since all participants were initially unemployed, it didn’t test how already-employed might behave). Another unintended issue was political – the hype around the experiment led to international scrutiny, and when results came, commentators rushed judgment that may not have fully appreciated the wellbeing improvements¹⁴.

Ontario’s Basic Income Pilot Project (2017-2019)

Ontario initiated a Basic Income Pilot Project to evaluate the impacts of providing a guaranteed income to low-income individuals. It was a government-led trial under the Liberal provincial government, intended to run for 3 years, but it was cut short after about 17 months when a new Conservative government took power in 2018. Despite the premature cancellation, the Ontario pilot yielded valuable evidence on economic and social outcomes. It was a randomised controlled trial, with a ‘treatment’ group of about 4,000 adults receiving basic income and a control group not receiving it (though in practice the cancellation interfered with full RCT analysis). Participants were low-income people (both unemployed and working poor were eligible). Another ~2,000 people were assigned as a comparison group. Annual basic income was set at ~CAN $16,989 for a single adult (about $1,415 per month) and $24,027 per year for a couple, minus 50% of any earned income. The amounts were about 75% of the poverty level (“low-income measure”), intentionally, to see if partial basic income still helps. There were no work requirements; participants could work or not, as they chose, and the only reporting was to inform the program of any earnings (to calculate the reduction)¹⁵.

Despite the premature cutting of the project, analysis of the project found a small decline in labour market participation among the basic income group. Some participants left precarious jobs, or reduced hours to return to school or to care for children. However, this decline was relatively small and commonly, those who left low-paying jobs often pursued higher education or training programs to find better employment. Others in the pilot maintained or even improved employment: freed from constant financial stress, some were able to get better jobs or work on business ideas. One study found an overall slight reduction in employment but marked improvements in job quality and stability for many. For example, a few participants started small businesses (one opened a woodworking shop, another a catering service). The security of the basic income gave them the confidence to take entrepreneurial risks. Participants universally reported greater income stability, allowing them to pay bills on time, avoid predatory payday loans, and even start saving. A report by McMaster University found over 80% of respondents were able to make better financial choices – such as buying healthier food even if it was more expensive¹⁶.

The Ontario basic income had profound effects on recipients’ quality of life. Studies found that mental health improved for the vast majority. Recipients reported less stress, anxiety and depression, and doctors noted fewer visits related to mental distress. Physical health indicators also improved. A statistical analysis showed over 79% of recipients felt their overall health was better during the pilot. They had better nutrition (affording fresh food), could pay for medications and eyeglasses, and some tackled long-neglected health issues. Furthermore, participants’ sense of optimism and life satisfaction dramatically improved¹⁶.

Food security was enhanced – people were eating more regularly and better. Many participants said they experienced less strain and shame, which improved their family relationships and enabled them to be more involved in community. In one site with the highest saturation of BI, community observers noted reduced crime and improved neighbourhood atmosphere, although formal data wasn’t collected before cancellation¹⁶.

Despite the premature cancellation, the Ontario pilot provided compelling evidence that basic income can improve health, housing stability, and mental well-being even over a relatively short period. Community groups in Ontario continue to advocate for reinstating such a program¹⁶.

Studies of the above examples and others (in the US, Iran, Namibia, India, Spain, Germany, Wales, Brazil, Kenya) have had common findings:

Employment generally does not decrease (and often improves), as people use the security to find better work or start businesses;
Poverty and income volatility drop; health and psychological well-being improve significantly;
Concerns about idleness or misuse of funds are largely unsupported by evidence;
Average education level of the citizenry improves;
Reduces gender inequality¹⁷.

Differences in design (e.g. targeted vs universal, short-term vs long-term) affect outcomes, but the overall picture from these global experiments is that a basic income can be a powerful tool for social improvement¹⁷.

While conservatives tend to whine about how much UBI costs¹⁷, it should be noted that this has never been a concern when tax cuts for the wealthy are implemented, as we have seen with the passing of the recent bill by the US House of Representatives (215-214) which will cut social security benefits for millions of Americans, cutting Medicaid for the poor and disabled, while it will decrease taxes on corporations and the wealthy, all this while it will increase the national debt by several trillion dollars over the next decade¹⁸.

UBI will never be implemented anywhere while the poor are demonised, corporations buy politicians, and the wealthy are consumed by greed.

Sources

Why not Universal Basic Income?

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