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Study: Universal Basic Income Doesn't Work

Andrew Yang, founder of Venture for America and 2020 Democratic presidential candidate, speaks during the Democratic Wing Ding event in Clear Lake, Iowa, U.S., on Friday, Aug. 10, 2018.
Daniel Acker/Bloomberg via Getty Images
 

An extensive study on universal basic income (UBI), the idea that the government should provide all citizens enough money to live on — an idea increasingly promoted by many on the Left, including Democratic presidential candidate Andrew Yang — found that the current schemes to implement it are unsustainable, even in the short term, and would not actually improve individual wellbeing or equality as much as simply investing the money in "reforming social protection systems, and building more and better-quality public services."

 

In a report published by The Guardian, Anna Coote, the co-author of the New Economics Foundation study, which was produced for the global trade union federation Public Services International, says that after reviewing "16 practical projects that have tested different ways of distributing regular cash payments to individuals across a range of poor, middle-income and rich countries, as well as copious literature on the topic," the group found that UBI is not only unsustainable, it fails to actually accomplish what its proponents claim it will accomplish.

The study "could find no evidence to suggest that such a scheme could be sustained for all individuals in any country in the short, medium or longer term — or that this approach could achieve lasting improvements in wellbeing or equality," the study's co-author writes.

The report found that while some of the UBI projects have claimed success, the numbers simply do not add up: "What’s been tested in practice is almost infinitely varied, with cash paid at different levels and intervals, usually well below the poverty line and mainly to individuals selected because they are severely disadvantaged, with funds provided by charities, corporations and development agencies more often than by governments."

 

Rather than being government-funded, many of the experiments have been funded by charities and private business; and rather than distributing money universally, the money is often distributed to people selected because they have very low incomes. In this way, the projects misleadingly present positive results as if they would work across the board and fail to demonstrate long-term sustainability.

 

Coote provides some specific examples of UBI projects, including the Alaska Permanent Fund and Finland's experiment, that appear to be "successful" but do not actually demonstrate that they can be sustained or the kinds of impacts on key demographics that proponents say they will.

"The cost of a sufficient UBI scheme would be extremely high according to the International Labour Office, which estimates average costs equivalent to 20-30% of GDP in most countries," writes Coote. "Costs can be reduced — and have been in most trials — by paying smaller amounts to fewer individuals. But there is no evidence to suggest that a partial or conditional UBI scheme could do anything to mitigate, let alone reverse, current trends towards worsening poverty, inequality and labour insecurity. Costs may be offset by raising taxes or shifting expenditure from other kinds of public expenditure, but either way there are huge and risky trade-offs."

The money dedicated to these universal cash payments "cannot be invested elsewhere" and the more money dedicated to it, "the less money will be left to build the structures and systems that are needed to realise UBI’s progressive goals." In the end, the money would be better spent on "reforming social protection systems, and building more and better-quality public services," the study concludes. (Read the full report here.)

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