The Long, Weird History of Universal Basic Income—and Why It’s Back

Thomas Paine, Napoleon, and Martin Luther King, Jr., don't have much in common at first glance. Nor do socialists and libertarians, or Finnish bureaucrats and Silicon Valley tycoons. Some policies have a habit of creating strange bedfellows, but none more so than the idea that governments should guarantee their citizens a minimum level of income. Not by creating jobs or providing traditional welfare, but by cutting checks for the same amount to everyone.

Universal basic income (UBI) is an old idea that is gaining considerable momentum. The threat of automation is focusing minds: Algorithms are learning to perform a growing number of blue- and white-collar jobs, which means there may not be enough paid employment to go around.

Some basic income proponents reject or ignore this doomsday scenario. "I appreciate that argument," Basic Income Earth Network (BEIN) co-chair Karl Widerquist told Investopedia. "But I'm worried about overstressing it."

The COVID-19 pandemic brought even more urgency to the topic, as unemployment and financial hardship spread across the globe. In April 2020, the Spanish government announced that it planned to pay a basic monthly income to roughly a million of the country's neediest households to help them through the pandemic.

What Is a Universal Basic Income (UBI)?

In its purest form, a basic income is an unconditional, periodic cash payment that the government makes to everyone. It is not based on means-testing, which means that a hedge fund manager and a homeless person receive the same amount.

There are no strings attached with a UBI, so there are no requirements to work, attend school, receive vaccines, register for military service, or vote. It is not paid in kind—housing, food—or in vouchers. Instead, it is a floor below which no one's cash income can fall.

Questions about how to actually implement this policy abound:

• Would it be taxable? Probably not.
• Mortgageable? The jury's out.
• Who constitutes everyone?
• Would a basic income be limited to citizens or would other residents receive the benefit, such as the millions of undocumented immigrants who live in the shadows in the U.S.?

History of Universal Basic Income (UBI)

In a strict sense, the intellectual history of the UBI is roughly half a century old. But the idea that the government should somehow prop up everyone's earnings has cropped up repeatedly over the past two centuries as a:

• Citizen's dividend
• Social credit
• National dividend
• Demogrant (a grant based on a population's demographics)
• Negative income tax
• Mincome (also called guaranteed minimum income)

Few of these proposals fit the usual definition of a basic income, and they differ from one another significantly. But they share a common thread.

The Erosion of Income Security

For much of human history, it was assumed that society would provide a basic standard of living for those who could not provide for themselves. Hunter-gatherer societies (the only kind around for nine-tenths of Homo sapiens' existence) were bound together not just by kinship networks, but by overlapping systems that followed the same logic. This was evident in cultures, such as !Kung, who are a group of San people living in parts of Southern Africa, and Inuit or northern First Peoples, who live in Greenland, Canada, and Alaska.

Agriculture and urbanization whittled such networks down to the nuclear family or even the individual. The larger institutions that took their place (church, state) left gaps. These shifts occurred over centuries, so few noticed, except when cultures on either side of the change collided. Take, for example, Charles Eastman, who was born Ohiyesa to the hunter-gatherer Sioux in 1858 and was horrified by the deprivation he saw in Victorian Boston: 

"...we knew well what it is to endure physical hardship, but our poor lost nothing of their self-respect and dignity. Our great men not only divided their last kettle of food with a neighbor, but if great grief should come to them, such as the death of child or wife, they would voluntarily give away their few possessions and begin life over again in token of their sorrow. We could not conceive of the extremes of luxury and misery existing thus side by side..."

Thomas Paine and Henry George

Encounters between egalitarian societies and complex, unequal ones led people in the latter to consider a basic income more than once. Thomas Paine, an intellectual architect of the American Revolution, was struck by the Iroquois' way of life (they were farmers, not foragers) and made an effort to learn their language. In 1795, he considered the toll that human invention took on society. "Cultivation is at least one of the greatest natural improvements ever made," he wrote, but:

"...it has dispossessed more than half the inhabitants of every nation of their natural inheritance, without providing for them, as ought to have been done, an indemnification for that loss, and has thereby created a species of poverty and wretchedness that did not exist before."

Paine proposed that a "ground rent" of £15 be paid to every individual upon turning 21, followed by £10 every year after turning 50. He argued that "every person, rich or poor," should receive the payments "to prevent invidious distinctions." Napoleon Bonaparte was sympathetic to the idea but never implemented it. 

A century later, Henry George (An American economist active after the Civil War) called for "no taxes and a pension for everybody" via a public land fund. He was influenced by Paine and cited Sioux chiefs' astonishment at visiting East Coast cities to witness "little children at work."

The Past 100 Years

The basic income cause was taken up by the left in the 20th century. Huey Long, a populist senator from Louisiana, proposed a minimum income of $2,000 in 1934 (as well as a maximum income of 300 times the average). G.D.H. Cole, a political economist at Oxford, advocated a social dividend as part of a planned economy. He became the first to use the phrase basic income in 1953.

In the 1960s—perhaps coincidentally, as anthropologists were documenting the !Kung and other fast-fading hunter-gatherer cultures—the idea of a guaranteed minimum income entered the political mainstream. Martin Luther King endorsed it.

Experiments were run in New Jersey, Iowa, North Carolina, Indiana, Seattle, Denver, and Manitoba. Nixon pushed to make it federal law, though he insisted that his "basic Federal minimum" included work incentives, making it different from the $1,000 annual demogrant George McGovern would have given to every citizen.

The political winds shifted and the idea of a basic income hunkered down on the far left during the Reagan-Thatcher era. Market socialists weighed the merits against those of other fringe proposals, such as a coupon-based stock market in which all citizens would own dividend-paying shares, without the option to cash out. The occasional proponent from elsewhere on the political spectrum cropped up, including the self-described "Old Whig" Friedrich Hayek.

Imagining a 21st Century Basic Income

The idea of a basic income is part of the mainstream again. Unsurprisingly, given its scattered lineage, proponents make different arguments from diverse ideological vantage points. Broadly speaking, proponents on the left see it as an antidote to poverty and inequality. On the right, its appeal has more to do with increasing the efficiency of the welfare state.

Another distinction, which cross-cuts left and right, is between reformers who want to rationalize policy in light of current issues and futurists who aim to radically overhaul society or save it from radical overhaul due to automation. In practice, any given basic income proponent is likely to employ several of these arguments, without regard for political taxonomies.

Here's how these ideas play out across the spectrum.

Reformers' Ideas of Basic Income

One group of basic income supporters is mostly concerned with addressing problems with the status quo. That is mending a broken welfare system, reducing the stigma associated with public benefits, or cutting back on bureaucratic inefficiency.

Fix Welfare's Perverse Incentives

The existing welfare model is often criticized for creating perverse incentives for encouraging recipients to act in ways that the programs' designers never intended, or that offend against common sense.

In their book, Basic Income, Philippe van Parijs and Yannick Vanderborght pick up this critique, arguing that welfare ensnares beneficiaries (through means testing and work requirements) and needs to change.

The employment trap keeps recipients from leaving a job, whatever treatment they receive, for fear of losing benefits. Bad employers receive a subsidy in the form of a guaranteed pool of labor with no leeway to negotiate for better pay or conditions.

Ironically, welfare also produces an unemployment trap. Some programs tax welfare recipients' additional earnings at a 100% marginal rate so if they earn a dollar from work, they lose a dollar in benefits. The rate can even exceed 100% (a welfare cliff) making work a glaringly irrational choice.

In December 2018, Finland concluded a two-year basic income experiment that attempted to counteract the unemployment trap. The country's welfare office sent €560 ($635) per month to 2,000 randomly selected working-age unemployed people. They didn't lose the benefit if they started working, nor did the experiment affect their eligibility to receive unemployment insurance in excess of the basic income. Results from the first year found that recipients were happier and healthier than they were on unemployment, but that the basic income had little impact on their unemployment status.

Perverse incentives also tear at social bonds. The now-defunct Aid to Families with Dependent Children program was notorious for encouraging families to separate. James Tobin, who pushed for a guaranteed minimum income to be paid to male heads of household, wrote in 1966, "Too often a father can provide for his children only by leaving both them and their mother." Van Parijs and Vanderborght call such incentives the "loneliness trap."

Provide Dignity for All

Welfare's current design undermines recipients' dignity. Means-testing is often invasive. Van Parijs and Vanderborght mention the Belgian government's monitoring of gas and water bills in 2015 in an effort to root out cohabitating beneficiaries pretending to live alone, which would entitle them to higher benefits (the loneliness trap again).

The payment of in-kind benefits, as opposed to cash, implies that recipients do not know what they need and cannot be trusted to spend money rationally. Secondary markets allow beneficiaries to sell non-cash handouts where the margin on such transactions represents wasted taxpayer money. Cash payments can also be subject to paternalistic conditions. For instance, a 2015 Kansas law bars recipients of Temporary Assistance for Needy Families—a federal cash grant—from using the benefits to buy tattoos, movie tickets, manicures, or lingerie.

Welfare itself carries a heavy stigma. Maria Campbell, a Canadian Cree-Métis, wrote in 1983 that a friend admonished her to "act ignorant, timid, and grateful" on her first visit to the welfare office: "They like that." Campbell, wearing her friend's ragged "welfare coat," described feeling "humiliated and dirty and ashamed." Proponents argue that a universal benefit would remove the need for recipients to grovel.

Universal benefits are also perceived as more politically durable. "There's an old saying that benefits for the poor tend to be poor benefits," BIEN's Karl Widerquist says, adding that Social Security "has remained strong while other parts of the U.S. system that are supposed to be for the needy—whoever we determine to be needy, they somehow vilify them and then cut the program." Even universal benefits can be vulnerable. In 2016, Alaska's governor cut the state's oil-funded dividend in half.

"Strike a Grand Bargain"

On its face, a universal government handout hardly seems compatible with conservative libertarianism. Charles Murray is most famous for The Bell Curve, a 1994 book arguing that welfare is unproductive, since the root cause of poverty lies in racial disparities in intelligence. In light of these views, it is surprising to hear him join ranks with MLK and advocate for what looks like an extreme version of welfare.

"A libertarian dream of dismantling the welfare state is not in the cards," Murray told the Cato Institute, a right-libertarian think tank that is sympathetic to the idea of a guaranteed income, in 2016.

Rather than fighting a losing battle, he would "strike a grand bargain with the left" and consolidate the 100-plus federal antipoverty programs into one cash payment. A universal basic income "will do the good things I claim only if it replaces all other transfer payments and the bureaucracies that oversee them," Murray wrote in The Wall Street Journal that same year. (Some proponents to Murray's left, such as van Parijs and Vanderborght, favor keeping some existing welfare programs to supplement a basic income.)

The Federal Welfare System: An Illustration

Milton Friedman, another conservative libertarian, argued that a negative income tax would remove welfare's incentives against work. While his proposal was not implemented, the earned income credit (EIC) is based on that idea.

Reduce Waste and Corruption

The bureaucrats at India's Finance Ministry who would like to introduce a basic income are probably not motivated by a hatred of bureaucracy, but they share Murray's desire to reduce the government's role in distributing benefits because, in India, these tend not to reach their intended recipients.

A 2011 lawsuit accusing government employees in Uttar Pradesh of welfare theft made international headlines. For years, the suit alleged, officials had siphoned off fuel and food intended for the poor and sold it on the open market; the plaintiff told the BBC that offenders had made perhaps $42.6 billion in the prior decade. The head of a local NGO told Mint in 2013, "about 35% of the state's 44 million ration cards are held by ineligible people who bribe crooked bureaucrats."

In many developed countries, the rich receive more benefits than the poor, though this is sometimes by design rather than a result of corruption. The highest-earning 20% receive a greater share of the average transfer than the lowest-earning 20% in South Korea, Hungary, Japan, Austria, Latvia, Luxembourg, Chile, Poland, Spain, Portugal, Italy, and Greece, according to a 2017 Organisation for Economic Co-operation and Development (OECD) policy brief.

Source: OECD.

Futurists' Ideas of Basic Income

Reformers support a basic income in light of society's needs and problems as they stand. A second group, the futurists, looks farther down the line. Some feel that current concerns pale in comparison to the threat of technological unemployment and offer basic income as a solution. Others welcome such societal overhaul and see a basic income as a cornerstone of an eventual utopia.

Techno-Pessimists: Save the Future

Fears of machine-induced mass unemployment are as old as the power loom. The Luddites, whose name survives as a slur for the tech-averse, spent the 1810s smashing them, and David Ricardo fretted over "the substitution of machinery for human labour" in 1821. A century later, playwright Karel Capek applied the Czech word for corvée labor (robota) to a caste of artificial quasi-humans who decreased the cost of industrial production by 80%, then exterminated humanity. 

The idea that our inventions will render us obsolete and dead has not panned out so far. Technology has enhanced human productivity, not replaced it. Until recently, nearly everyone farmed. Now, fewer than 1% of Americans do, but they keep busy and the U.S. produces a food surplus.

Yet, Murray is not the only one arguing that "this time is different." Some of Silicon Valley's leading lights back a basic income to counteract the automation their sector is creating, including Elon Musk, who has called artificial intelligence an "existential risk." In 2016, Sam Altman, president of startup incubator Y Combinator, announced an ambitious study on the effects of a basic income in Oakland, California. However, a pilot program was beset with recruitment problems and red tape and the larger study has been delayed.

UBI got a boost during the 2020 presidential campaign from Democratic candidate Andrew Yang, whose "Freedom Dividend" would pay $1,000 a month to every American over 18. His reason for proposing a UBI: "...the smartest people in the world now predict that a third of all working Americans will lose their job to automation in the next 12 years. Our current policies are not equipped to handle this crisis."

A March 2017 study by Daron Acemoglu of MIT and Pascual Restrepo of Boston University found that each robot reduces local employment by 6.2 workers. Automation has been put forward as an explanation for the persistent gap between economic growth and wage growth in the U.S. since the 1970s.

And that trend is expected to continue. The World Economic Forum predicts major changes to the workforce in terms of increased automation by 2025, thanks to the COVID-19 pandemic. This includes white-collar professions as well as those requiring skilled worker. According to its study:

• 43% of businesses said changes in technology would reduce their workforce
• 41% of businesses said increased technology would lead them to use contractors for specialized jbos
• 34% of businesses said technology would lead to an expansion in their workforce

One solution would be to grow out of these problems, producing twice the output rather than laying off half the workforce. But this could be a tall order. According to the IMF, advanced economies are expected to contract from a rate of 4.4% to 2.16% between 2022 and 2023. Newer variants of the COVID-19 virus and the resulting effects (capital flows, economic pressures, financial uncertainty), along with increased threats from climate change, could impact global gross domestic product (GDP) in the future.

Utopians

Other futurists look at the prospect of mass unemployment and wonder what all the fuss is about. When robots shuttle dinner from kitchen to table or travelers from airport to hotel, are they yanking waiters' and cab drivers' livelihoods away or are they liberating them from tedium? Arguably the latter, if they receive a basic income sizable enough to live comfortably, and especially if they use their newfound free time in creative and socially beneficial ways.

In 1930, John Maynard Keynes articulated a utopian vision of "technological unemployment." He argued that we would leave behind "the struggle for subsistence" and that work would cease to be a necessity, though for "many ages to come the old Adam will be so strong in us that everybody will need to do some work"—perhaps 15 hours a week—"if he is to be contented." Labor's obsolescence would not just free up time and energy, but be morally uplifting:

"I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virtue—that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable."

Keynes did not mention a basic income, assuming instead that standards of living would rise inexorably until, around 2030 or so, his languid utopia would materialize. There is still time, but some proponents believe a basic income could hurry the process along. They see creative people, freed from the need to take jobs they don't want, contributing artistic, entrepreneurial, and spiritual vitality to society.

In his 2017 Harvard commencement speech, Mark Zuckerberg said, "we should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas," stressing that if he hadn't been "lucky" enough to enjoy free time and financial wiggle room, he couldn't have founded Meta (META), formerly Facebook.

Basic income proponents also see a recognition—even if only implicit—of women's largely unpaid work. Van Parijs and Vanderborght, borrowing a phrase from Rousseau, sum up the utopian view of a basic income: It is "the instrument of freedom," of "real freedom for all and not just the rich."

Could a Basic Income Work?​

Not everyone is sold. According to Bill Gates, "Even the US isn't rich enough to allow people not to work. Some day we will be but, until then, things like the earned income tax credit will help increase the demand for labor."

His remark sums up the two main criticisms of a universal basic income—that it would be ruinously expensive, and that it would reduce or eliminate incentives to work. Proponents challenge both of these assumptions, but a lack of empirical evidence for a basic income's effects means the debate is mostly speculative.

Could We Afford a Basic Income?

Whether a country could afford to provide its citizens with a basic income depends on:

• The size of the payment
• The design of the program, such as whether it replaces or supplements other welfare programs
• The country's fiscal situation

Addressing the first issue, Widerquist points out that basic income is just that: "It's basic. It gets you a basic level, it doesn't get you great luxury." Some proponents—particularly those worried about mass unemployment—say that a basic income should be enough to live on, but others think it would be necessary to top it off with additional income, if only because states could not afford to pay a living wage to every citizen. 

Estimates of what governments could currently afford appear to indicate that a realistic basic income would be modest. The Economist calculated the amounts that 34 OECD countries could pay if they scrapped all non-health transfer payments; the OECD mostly consists of rich countries in Western Europe and North America.

The most generous hypothetical benefit comes from Luxembourg, which, with its $100,300 GDP per capita, could afford a $17,800 annual payout. Denmark, with its tax take of 49.6% of GDP, comes in second with a potential payout of $10,900. In a May 2017 report, the OECD itself concluded that funding a basic income at "meaningful levels" would require "further increasing tax-to-GDP ratios that are currently already at a record-high in the OECD area."

The U.S. could pay $6,300 at current tax rates. To afford a $12,000 payout ($60 short of the federal poverty level), it would have to increase its tax take by 10% of GDP. The Tax Foundation estimated that Yang's $1,000-a-month Freedom Dividend would cost $2.8 trillion a year, or roughly 60% of the federal government's pre-pandemic projected budget for 2020.

Switzerland held a referendum on a basic income proposal in June 2016, and it received just 23.1% support. Part of the reason the measure was voted down was its perceived unaffordability. The ballot did not specify an amount, but campaigners mentioned 30,000 Swiss francs, or $30,900. 

A Little Goes a Long Way

There is evidence that even small payments are beneficial. For instance:

• Brazil's Bolsa Família, a conditional cash transfer program, reduced poverty despite paying just 178 reais​ ($57) per family per month on average. Families with per-person incomes of less than 170 reais ($54) are eligible, and 13.6 million receive benefits. This program was replaced by Auxiliio Brasil, which runs until the end of 2022.
• Alaska's annual Permanent Fund Dividend, which is financed by oil revenues, topped out in nominal terms at just $2,072 in 2015. That figure dipped to $992 in 2021. The total balance in the fund, as of Dec. 31, 2021, was $82.41 billion, which includes the $65.8 billion principal balance.

Basic income has been put forward as a way to smooth the earnings of the precariat, an emerging class of freelancers, temporary contract workers, interns, and other rich-world workers, some of whom are highly educated, with precarious relationships to the labor market. Standing argued in 2010, when Uber and TaskRabbit were in their seed rounds, that a basic income would be an "egalitarian way of reducing economic volatility" that could help the rich world avoid a "politics of inferno." 

Some proposals would sacrifice strict universality in the name of affordability. India is mulling a "quasi-universal" basic income of 7,620 rupees ($118) per month. The government estimates that it can only be paid to around 75% of the population to be workable. Proposals to limit uptake include naming and shaming and means-testing based on ownership of assets such as cars and air conditioners.

Van Parijs and Vanderborght allow that a basic income would be expensive, but "there is cost and there is cost." For many households, they argue, higher taxes would come right back to them as basic income, with little net difference to their finances. For others, a basic income would raise or lower after-tax earnings significantly, but the authors argue that redistribution is different from spending on "real resources," since it "does not make the population as a whole either richer or poorer."

On the other hand, the OECD found that a large majority would see either significant gains or large losses in income if a revenue-neutral basic income were introduced.

Tax the Robots

The above considerations assume that society retains approximately its current form. But if mass technological unemployment does occur, Bill Gates and others have proposed taxing the robots.

Gates is skeptical of basic income and sees the tax as a way to "slow down the speed of that adoption somewhat to figure out, 'OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?'"

But the revenues could, in theory, fund a basic income, as Benoît Hamon, France's Socialist candidate for president in 2017, proposed. (He was eliminated in the first round of voting, with just 6.4% of the vote.)

​Would People Stop Working?

In a 2014 working paper weighing a basic income against traditional unemployment insurance, economists at the St. Louis Fed projected that voluntary unemployment would rise rapidly as a basic income's amount rose. Voluntary quitting would in turn raise the tax burden on workers needed to fund the payout, encouraging more people to drop out of the workforce: "The likelihood of quitting rises exponentially in response to increases in UBI [universal basic income] benefits." However, the authors argue, a basic income of $2,000 (2011) or so is "clearly sustainable."

The Manitoba Experiment

The closest approximation we have to data on the effects of a universal basic income comes from the "MINCOME" experiment, in which two groups of Manitoba residents received a guaranteed minimum income from 1974 to 1979.

One of these, the rural town of Dauphin, was a "saturation site": Everyone received the benefit. Politicians soured on the project and it wrapped up without producing a final report, but economists in the 1980s found that secondary earners worked less, while primary earners barely altered their behavior. 

In 2011, Evelyn Forget of the University of Manitoba compared these findings to health data to try to pinpoint why. She found that two groups in particular worked less—married women and young men. "Married women tended to prolong the period they were out of the workforce when they gave birth," Forget says, in effect "using the stipend from income to buy themselves longer parental leave." As for young men, "what we found was a pretty dramatic increase in high school completion rates in Dauphin during that period compared to the rest of rural Manitoba."

Breadwinners did not quit their jobs to indulge in drinking or other odious extracurriculars. In fact, these may have declined. Hospitalization rates fell 8.5% relative to the control group, led by accident injuries, which encompass "work accidents and farm accidents, car accidents, family violence," says Forget.

On the other hand, four roughly contemporary negative income tax experiments in the U.S. found that primary earners were responsible for one-third of a 13% reduction in working hours by families as a whole. These results contributed to the decline in political support for guaranteed minimum income schemes—a reported increase in divorce rates among black families (spurious, we later learned) did the rest.

Defining Work

Anthropologist David Graeber draws comparisons between a basic income and an existing institution that gives 2.2 million Americans the opportunity not to work:

"I always talk about prisons, where people are fed, clothed, they've got shelter; they could just sit around all day. But actually, they use work as a way of rewarding them. You know, if you don't behave yourself, we won't let you work in the prison laundry. I mean, people want to work. Nobody just wants to sit around, it's boring."

People may not always opt to work in the traditional sense of the word, however. Graeber gives the example of a poet-musician friend who became a corporate lawyer. With a basic income, he would not be idle, nor would he be working a traditional full-time job. Speaking to Freakonomics, Forget pointed out that "gentlemen of leisure" were responsible for many of the scientific breakthroughs of the 18th and 19th centuries.

Such arguments also find traction on the right. Murray points out that his wife, who holds a Ph.D. from Yale, does not work for pay, but "is busy all day long with half a dozen different useful organizations." By encouraging such contributions, he says, a basic income could "revitalize American civil society."

What's So Great About Work?

Even if people decide not to work upon receiving a basic income, would that be so bad? Strains of thought on both the left and right see work as conferring dignity and as a good in itself. Many on the right see it as teaching self-reliance, if not conferring inherent spiritual merit. Many on the left see it as necessary to build solidarity among workers.

But there is evidence that humanity's natural condition is positively indolent. Anthropologists in the 1960s found that foraging groups such as the !Kung spent around 20 hours per week obtaining food, compared to our accustomed 40-plus. Adding in foragers' other chores yields something closer to 40 hours, but workers in advanced economies do their cooking, cleaning, and shopping off the clock.

If we extrapolate these 20th-century foragers' regimens to earlier non-agricultural societies, our current enthusiasm for labor looks like Stockholm syndrome. For 90,000 years our ancestors worked bankers' hours; the hard slog only appeared in the last 10,000. Critics argue that such extrapolation is ridiculous. The anthropologists' data set is tiny and flawed, gathered during times of plenty from unrepresentative groups—and in any case, we shouldn't envy anyone who lacks modern dentistry.

Then again, if we were able to recreate that easy lifestyle—even if it were atypical—with added benefits, why shouldn't we?

Would a Basic Income Reduce Poverty?

It is not enough for a basic income to be harmless. Bureaucracy-busting arguments aside, it must also reduce poverty and inequality.

Brazil's Bolsa Família program has been encouraging in this regard. Beginning in 2004, the program made modest cash grants to poor families who send their kids to school and the doctor. The country's poverty rate fell from 26.1% in 2003 to 14.1% in 2009. The extreme poverty rate fell from 10.0% to 4.8%. From 2007 to 2009, Bolsa Família led to an estimated 59% of the reduction in poverty and 140% of the reduction in extreme poverty. The Gini coefficient, a measure of inequality, fell from 0.580 to 0.538 from 2003 to 2009, in part due to Bolsa Família. Now, however, the Brazilian government has been cutting those benefits, even as the coronavirus pandemic spreads.

The development sector has begun to favor direct cash transfers over aid in kind. Having previously thought that recipients would waste the money, well-meaning benefactors realized they were hardly any better without it. Africa is dotted with broken water pumps whose donors made no provision to fix them. Cash aid, on the other hand, appears to work rather well.

There are a number of studies that show how cash grants can help families. For instance, families in Kenya who were given one-time cash transfers of $1,000 (in U.S. dollars) showed positive results, according to a 2021 study. These findings were notably seen through improved health, education, and nutrition. Spending by these—and surprisingly other families who didn't receive the grants—increased by as much as 13%.

For some goals, however, adding conditions helps. Adolescent girls' school attendance in Malawi rose with no-strings-attached cash grants but making school a mandatory condition for receiving payments had a much larger effect.

The OECD estimates that a revenue-neutral basic income would increase poverty. In countries such as Britain, those depending exclusively on transfer programs would see their benefits cut, whereas 2% of the U.K.'s population would move out of poverty due to a hypothetical basic income, 7% would fall into it. 

We May Soon Find Out

The coronavirus pandemic may push governments to adopt some form of basic income, at least for a while. On April 27, 2020, U.S. Speaker of the House Nancy Pelosi said a guaranteed income for Americans struggling because of the pandemic is "worthy of attention," and, as noted, Spain decided to move ahead with one.

The White House made certain changes to address the needs of American families in light of the pandemic. In 2021, the Biden administration expanded the Child Tax Credit. Families with children between six and 17 were eligible to receive $3,000, compared to the previous maximum of $2,000, and those with kids under six could receive $3,600, compared to $2,000.

Should governments institute a basic income, even if it's for a short period of time, it may help answer questions about the effectiveness of such a program. Yet, until the results of more research become available, a universal basic income will remain an uncertain but tantalizing prospect. Could doing away with poverty, sweeping away patronizing bureaucracy, neutralizing the threat of mass unemployment, and increasing the value society places on worthwhile, but unprofitable, pursuits really be as simple as handing everyone cash?

Brazilian author and former senator Eduardo Suplicy paraphrased Confucius' Analects: "A saída é pela porta." The way out is through the door.