BY: DANIEL WATERBORNE
Germany is now experimenting with the economic concept of free money. And while the idea of basic income might immediately cause some minds to jump to aggressive suspicion like a 21st century version of The Red Scare, rest assured that the communists are not invading. Germany is running an experiment among a select group of individuals, hand-picked from over 66,000 applicants to prove that basic income could save the country billions of dollars a year, eradicate poverty, replace and improve social security benefits and spur creativity on a mass scale.
Basic Income, also known as a citizen’s dividend is the economic idea that all citizens should be able to afford basic human rights (food, shelter and education) unconditionally. The idea isn’t exactly new and can be traced back to Thomas Paine, who wrote in Agrarian Justice that a baseline income for citizens was “a right, not a charity.” As Professor of Economics, John Marangos explores in his essay, Paine believed that while the fruits of land ownership are augmented by human hands, land itself precedes human birth. Because Paine understood that land supported human life, but also believed that humans have the right to own things, free money should be distributed to compensate those over 21 to bridge the gap of opportunity to support basic needs. Poverty, he believed, was manmade.
Mein Grundeinkommen (My Basic Income) is a private organization using crowd-sourced funds to give 26 people a cheque valued at $1,100 each month. This year, Utrecht, one of the largest cities in the Netherlands will also run a separate experiment issuing a cheque to parts of the population worth $978 each month. The cheques come with no-strings attached, and are enough to provide the modest standard of living. The experiments hope to answer two of the greatest arguments against basic income:
1) Free money equals lazy people
2) Basic income equals crippling national debt.
While the experiments have just begun, some of these questions have already been answered in similar experiments that have occurred in other corners of the world. In Otjivero, Namibia all 1000 inhabitants under the age of 60 were given a photograph and fingerprint plastic chip card on which they would receive 100 Namibia dollars per month unconditionally. As Der Spiegel notes, the village had an unemployment rate of over 70 per cent, along with rampant alcoholism, malnourishment and disease. The common belief was that giving these poor people money could only result in depravity—a quick burst of luxury and a slow descent back into squalor when the money evaporated. What actually happened was that just a over year later the malnourishment rate had plunged from 42 to 10 per cent. Since children didn’t have to help their parents scrape by, 92 per cent of children were now in school, and the village had become a breeding ground for entrepreneurship.
Similar findings were found when basic income was applied in a developed country accustomed to higher standards of living. The Mincome basic income experiment in Canada saw a significant decrease in healthcare costs and substantially higher rates of graduation. While the proposition of guaranteed basic income might seem too expensive to be applied in the United States, Rutger Bregman notes in his TED Talk that decreases in healthcare costs and legal costs justify the overall cost. The economic growth resulting from increased education and innovation would further offset expense. It is also worth noting that the United States spent $619 billion on its military in 2013, while 46.7 million people lived in poverty.
The idea of universal basic income is not some thought bubble of hippie-idealism. The idea was supported by Nobel Prize winner Milton Friedman, who also served as an economic adviser for Ronald Reagan and Margaret Thatcher. The Austrian defender of free-market capitalism and socialist critic, Friedrich Hayek wrote: “The assurance of a certain minimum income for everyone…is a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.” The realization is that universal basic income is not contrary to free markets or to property rights. Universal basic income is not communism and it is not socialism, because it does not advocate state-ownership of industry. Rather it vaults individual liberty by making sure that no one is naked or starving by establishing a relative economic baseline.
“A basic income paid out to everyone could unleash enormous amounts of creativity,” said the man behind Germany’s basic income experiment, Michael Bohmeyer. In an LA Times article, he continued, “to be able to work creatively, people need some security, they need to feel free. And they can get that with a basic income.”
Findings of Germany’s micro-experiment should be available sometime next year.
Finland is also currently calculating the costs to run a similar experiment in 2017, a poll showing that the plan has received popular support of 69 per cent. Netherlands is also running a program this year.
