DutchNews, April 21, 2016
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| Photo: Depositphotos.com |
We tend to think
that simply giving people money makes them lazy. Yet a wealth of scientific
research shows the contrary: free money helps lift people out of poverty. The
time has come for a radical reform of the welfare state, writes Dutch author
Rutger Bregmann.
London, May 2009—An experiment is underway. Its subjects: 13
homeless men. They are veterans of the street. Some have been sleeping on the cold
pavement of the Square Mile, Europe’s financial center, for going on 40 years.
Between the police expenses, court costs and social services, these 13
troublemakers have racked up a bill estimated at £400,000 or more. Per year.
The strain on city services and local charities is too great for things to go
on this way. So Broadway, a London-based aid organization, makes a radical
decision: From now on, the City’s 13 consummate drifters will be getting VIP
treatment. It’s adiós to the daily helpings of food stamps, soup kitchens and
shelters. They’re getting a drastic and instantaneous bailout.
From now on,
these rough sleepers will receive free money.
To be exact, they’re getting
£3,000 in spending money, and they don’t have to do a thing in return. How they
spend it is up to them. They can opt to make use of an adviser if they’d
like—or not. There are no strings attached, no questions to trip them up.
The
only thing they’re asked is: What do you think you need?
Gardening glasses
‘I
didn’t have enormous expectations,’ one of the experiment’s social workers
later recalled. But the drifters’ desires proved eminently modest. A telephone,
a dictionary, a hearing aid—each had his own ideas about what he needed. In
fact, most were downright thrifty. After one year, each had spent an average of
just £800.
Take Simon, who had been strung out on heroin for 20 years. The
money turned his life around. Simon got clean and started taking gardening
classes. ‘For some reason, for the first time in my life, everything just clicked,’
he said later. ‘I’m starting to look after myself, wash and shave. Now I’m
thinking of going back home. I’ve got two kids.’
A year and a half after the
experiment began, seven of the 13 rough sleepers had a roof over their heads.
Two more were about to move into their own apartments. All 13 had taken
critical steps toward solvency and personal growth. They were enrolled in
classes, learning to cook, going through rehab, visiting their families and
making plans for the future.
‘It empowers people,’ one of the social workers
involved in the project said about the personalized budget. ‘It gives choices.
I think it can make a difference.’
After decades of fruitless pushing, pulling,
pampering, penalizing, prosecuting and protecting, nine notorious vagrants had
finally been brought in from the streets. The cost? Some £50,000 a year,
including the social workers’ wages. In other words, not only did the project
help nine people, it also cut costs considerably. Even the Economist had to
conclude that the ‘most efficient way to spend money on the homeless might be
to give it to them.’
Hard data
Poor people can’t handle money. This seems to be
the prevailing sentiment, almost a truism. After all, if they knew how to
manage money, how could they be poor in the first place? We assume that they
must spend it on fast food and soda instead of on fresh fruit and books. So to
‘help,’ we’ve rigged up a myriad of ingenious assistance programs, with reams
of paperwork, registration systems and an army of inspectors, all revolving
around the biblical principle that ‘those unwilling to work will not get to
eat’ (2 Thessalonians 3:10). Touted as a shift ‘from welfare to workfare,’ the
underlying message is clear: Free money makes people lazy.
Except that
according to the evidence, it doesn’t.
Already, research has correlated
unconditional cash disbursements with reductions in crime, child mortality,
malnutrition, teenage pregnancy and truancy, and with improved school
performance, economic growth and gender equality. ‘The big reason poor people
are poor is because they don’t have enough money,’ noted economist Charles
Kenny in Bloomberg Businessweek, ‘and it shouldn’t come as a huge surprise that
giving them money is a great way to reduce that problem.’
In their book Just
Give Money to the Poor (2010), scholars at the University of Manchester furnish
countless examples of cases where cash handouts with few or no strings attached
have worked. In Namibia, figures for malnutrition took a nosedive (from 42
percent to 10 percent), as did those for truancy (from 40 percent to virtually
0 percent) and crime (by 42 percent).
In Malawi, school attendance among girls
and women surged 40 percent, regardless of whether the cash came with or
without conditions. Time and again, the ones to profit most are children. They
suffer less hunger and disease, grow taller, perform better at school and are
less likely to be forced into child labour.
From Brazil to India, from Mexico
to South Africa, cash transfer programs have become all the rage across the
Global South. By 2010, they were already reaching more than 110 million
families in 45 countries.
The great thing about money is that people can use it
to buy things they need instead of things that self-appointed experts think
they need. And, as it happens, there is one category of product on which poor
people do not spend their free money, and that’s alcohol and tobacco. In fact,
a major study by the World Bank demonstrated that in 95 percent of all
researched cases in Africa, Latin America and Asia, alcohol and tobacco
consumption either remained the same or declined.
But it gets even stranger. In
Liberia, an experiment was conducted to see what would happen if you give $200
to the shiftiest of the poor. Alcoholics, addicts and petty criminals were rounded
up from the slums. Three years later, what had they spent the money on? Food,
clothing, medicine and small businesses. ‘If these men didn’t throw away free
money,’ one of the researchers wondered, ‘who would?’
Utopia
Free money: It’s a
notion already proposed by some of history’s leading thinkers. Thomas More
dreamed about it in his book Utopia in 1516. Countless economists and
philosophers—Nobel Prize winners among them—would follow. Its proponents have
spanned the spectrum from left to right, all the way to the founders of
neoliberal thought, Friedrich Hayek and Milton Friedman. And Article 25 of the
Universal Declaration of Human Rights (1948) promises that, one day, it will
come.
A universal basic guaranteed income.
And not merely for a few years, or
in developing countries alone, or only for the poor, but just what it says on
the box: free money for everyone. Not as a favour, but as a right. Call it the
‘capitalist road to communism.’ A monthly allowance, enough to live on, without
having to lift a finger. The only condition, as such, is that you ‘have a
pulse.’ No inspectors looking over your shoulder to see if you’ve spent it
wisely, nobody questioning if it’s really deserved. No more special benefit and
assistance programs; at most an additional allowance for seniors, the
unemployed and those unable to work.
Basic income: It’s an idea whose time has
come.
Mincome, Canada
In a warehouse attic in Winnipeg, Canada, nearly 2,000
boxes lie gathering dust. The boxes are filled with data—graphs, tables, reports,
interviews—about one of the most fascinating social experiments in post-war
history.
Evelyn Forget, a professor at the University of Manitoba, first heard
about the records in 2004. For five long years she tried to convince Canada’s
national archives to allow her access to the warehouse. Finally, in 2009, she
succeeded. Stepping into the attic for the first time, Forget could hardly
believe her eyes. It was a treasure trove of information on the real-world
implementation of Thomas More’s dream from five centuries before.
In March
1973, the provincial government of Manitoba earmarked a sum of $83 million in
modern U.S. dollars for the project. He chose Dauphin, a small town of 13,000
northwest of Winnipeg, as the location of the experiment. Everybody in Dauphin
was guaranteed a basic income, ensuring that no one fell below the poverty
line. In practice, this meant 30 percent of the town’s inhabitants—1,000
families in all—got a check in the mail each month. A family of four received
what would now be around $19,000 a year, no questions asked.
For four years,
all went well, but then elections threw a wrench in the works. A conservative
government was voted into power. The new Canadian cabinet saw little point to
the expensive experiment, for which the national government was footing
three-quarters of the bill. When it became clear the new administration
wouldn’t even fund an analysis of the experiment’s results, the researchers
decided to pack their files away in some 2,000 boxes.
When Professor Forget first
heard about Mincome, no one knew what, if anything, the experiment had actually
demonstrated. For three years, she rigorously subjected the data to all manner
of statistical analysis. No matter what she tried, the results were the same
every time.
Mincome had been a resounding success.
From experiment to law
‘Politically, there was a concern that if you began a guaranteed annual income,
people would stop working and start having large families,’ said Forget.
What
really happened was precisely the opposite. Young adults postponed getting
married, and birthrates dropped. Their school performance improved
substantially: The ‘Mincome cohort’ studied harder and faster. In the end,
total work hours only notched down 1 percent for men, 3 percent for married women
and 5 percent for unmarried women. Men who were family breadwinners hardly
worked less at all, while new mothers used the cash assistance to take several
months’ maternity leave, and students to stay at school longer.
Forget’s most
remarkable finding, though, was that hospitalizations decreased by as much as
8.5 percent. Considering the size of public spending on health care in the
developed world, the financial implications were huge. Several years into the
experiment, domestic violence was also down, as were mental health complaints.
Mincome had made the whole town healthier. Forget could even trace the impacts
of receiving a basic income through to the next generation, both in earnings
and in health.
Dauphin—the town with no poverty—was one of five guaranteed
income experiments in North America. The other four were all conducted in the
United States. Few people today are aware that the United States was just a
hair’s breadth from realizing a social safety net at least as extensive as
those in most western European countries. When President Lyndon B. Johnson
declared his “War on Poverty” in 1964, Democrats and Republicans alike rallied
behind fundamental welfare reforms.
First, however, some trial runs were
needed. Tens of millions of dollars were budgeted to provide a basic income for
more than 8,500 Americans in New Jersey, Pennsylvania, Iowa, North Carolina,
Indiana, Seattle and Denver in what were also the first-ever large-scale social
experiments to distinguish experimental and control groups. The researchers
wanted answers to three questions: (1) Would people work significantly less if
they receive a guaranteed income? (2) Would the program be too expensive? (3)
Would it prove politically unfeasible?
The answers were no, no and yes.
Declines in working hours were limited across the board. “[The] declines in
hours of paid work were undoubtedly compensated in part by other useful
activities, such as search for better jobs or work in the home,” noted the
Seattle experiment’s concluding report. For example, one mother who had dropped
out of high school worked less in order to earn a degree in psychology and get
a job as a researcher. Another woman took acting classes; her husband began
composing music. “We’re now self-sufficient, income-earning artists,” she told
the researchers. Among youth included in the experiment, almost all the hours
not spent on paid work went into more education. Among the New Jersey subjects,
the rate of high school graduations rose 30 percent.
And thus, in August 1968,
President Nixon presented a bill providing for a modest basic income, calling
it “the most significant piece of social legislation in our nation’s history.”
A White House poll found 90 percent of all newspapers enthusiastically
receptive to the plan. The National Council of Churches was in favor, and so
were the labor unions and even the corporate sector (see Brian Steensland’s
book The Failed Welfare Resolution, page 69). At the White House, a telegram
arrived declaring, “Two upper middle class Republicans who will pay for the
program say bravo.” Pundits were even going around quoting Victor Hugo—“Nothing
is stronger than an idea whose time has come.”
It seemed that the time for a
basic income had well and truly arrived.
“Welfare Plan Passes House […] a
Battle Won in Crusade for Reform,” was the headline of the New York Times on
April 16, 1970. With 243 votes for and 155 against, President Nixon’s Family
Assistance Plan (FAP) was approved by an overwhelming majority. Most pundits
expected the plan to pass the Senate, too, with a membership even more
progressive than that of the House of Representatives. But in the Senate
Finance Committee, doubts reared. “This bill represents the most extensive,
expensive and expansive welfare legislation ever handled,” one Republican senator
said. Most vehemently opposed, however, were the Democrats. They felt the FAP
didn’t go far enough and pushed for an even higher basic income. After months
of being batted back and forth between the Senate and the White House, the bill
was finally canned.
In the following year, Nixon presented a slightly tweaked
proposal to Congress. Once again, the bill was accepted by the House, now as
part of a larger package of reforms. In his 1971 State of the Union address,
Nixon considered his plan to “place a floor under the income of every family
with children in America” the most important item of legislation on his agenda
(see Steensland, page 157).
But once again, the bill foundered in the Senate.
Not until 1978 was the plan for a basic income shelved once and for all,
however, following a fatal discovery upon publication of the final results of
the Seattle experiment. One finding in particular grabbed everybody’s
attention: The number of divorces had jumped more than 50 percent. Interest in
this statistic quickly overshadowed all the other outcomes, such as better
school performance and improvements in health. A basic income, evidently, gave
women too much independence.
Ten years later, a reanalysis of the data revealed
that a statistical error had been made; in reality, there had been no change in
the divorce rate at all.
Futile, dangerous and perverse
‘It Can Be Done!
Conquering Poverty in America by 1976,’ Nobel Prize winner James Tobin
confidently wrote in 1967. At that time, almost 80 percent of Americans
supported a guaranteed basic income. Years later, Ronald Reagan would famously
sneer, ‘In the ’60s we waged a war on poverty, and poverty won.’
Yet some ideas
just won’t die.
Recent years have seen basic income make a comeback on
political agendas. Switzerland is already looking forward to a referendum.
Large-scale experiments have been announced in Finland and Canada, and are in
the works in nearly 20 cities in the Netherlands. Even in Silicon Valley, basic
income is the talk of the town.
Maybe now the time has come that we can finally
be rid of that pointless distinction between two types of poor—and to the major
misconception that we almost managed to dispel some 40 years ago: the fallacy
that a life without poverty is a privilege you have to work for, rather than a
right we all deserve.
Remember: the great milestones of civilization always
have the whiff of utopia about them at first. But almost as soon as a utopia
becomes a reality, it often comes to be seen as utterly commonplace. Utopias
always start out small, with experiments that ever so slowly change the world.
It happened just a few years ago on the streets of London, when 13 street
sleepers got £3,000, no questions asked. As one of the aid workers said, ‘It’s
quite hard to just change overnight the way you’ve always approached this
problem. These pilots give us the opportunity to talk differently, think
differently, describe the problem differently…’
And that’s how all progress
begins.
Rutger Bregman (1988) is the author of Utopia for Realists: The Casefor a Universal Basic Income, Open Borders, and a 15-Hour Workweek, available
in English and published by The Correspondent. Like him on Facebook and follow
him on Twitter @rcbregman.
Translated from Dutch by Elizabeth Manton.
Translated from Dutch by Elizabeth Manton.
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