A Dutch City Will Soon Experiment With Guaranteed Basic Income

This coming January, the guaranteed basic income will go on trial in the Dutch city of Utrecht, where 250 citizens will receive a flat sum of €960 per month (about $1,100) for two years. The experiment is a collaborative effort between the local government and the Utrecht University School of Economics, and is partly motivated by a desire to find an alternative to the Netherlands’ present welfare system, which many believe it both wasteful and of little benefit to its recipients.

As The Atlantic reports:

The Utrecht proposal—called “Weten Wat Werkt,” or “Know What Works”—includes six test groups, the members of which will receive slightly different stipends under slightly different conditions. In addition to the group that will receive €960 per month without any work obligations, there is a group that will be given that, plus an additional €150 at the end of the month if they provide volunteer services, such as doing maintenance work on schoolyards. And there is another that will have the same option to volunteer, but will get the money at the beginning of the month and have to return it if they don’t volunteer. “Human behavior is always unpredictable,” Groot says. “We want to know what motivates people, what people respond to.”

There are three other test groups. One is made up of welfare recipients who will keep receiving their benefits, but without their usual work obligations. Another is made up of welfare recipients who expressed interest in receiving the €960 stipend but will continue to receive only standard benefits. And then, lastly, there is a control group of welfare recipients who wanted to keep receiving their usual benefits.

Many believe, myself included, that this is an idea whose time has come. Philosophers and economists across the political spectrum have been exploring variations of this concept for centuries, from Enlightenment thinkers like Thomas Paine, to libertarians such as Milton Friedman and Friedrich Hayek — even Nixon proposed a similar idea.

That the Dutch would be the ones to lead the way on this bold idea speaks not only to their more humanitarian approach to socioeconomic problems — the Netherlands ranks high in measures of quality of life, civil liberties, and human development — but of their related concerns about the inefficiencies of their welfare systems to adapt to 21st century circumstances.

The Dutch historian and author Rutger Bregman has said he believes that the Netherlands’ welfare system is flawed, not least because it ties employment to well-being. As he writes in his book Utopia for Realists, “government assistance has become increasingly anchored in employment, with recipients required to apply for jobs, enroll in return-to-work programs, and do mandatory ‘volunteer’ work … the underlying message is clear: Free money makes people lazy.”

As automation and globalization alike put an end to all sorts of jobs, most of what remains will be in menial, low paying services such as retail and fast food — and even those jobs may not be around in the future, at least not in any sufficient number to meet employment demands. Uncoupling benefits from work may very well be a necessity, even if it challenges deeply entrenched notions about how we earn money.

As the article points out, and I had once before discussed, Utrecht would not be the first city to try out a basic income system: another socially conscious country experimented with it as early as the 1970s:

Between 1974 and 1979, economists in Canada selected residents of two Manitoba towns to be sent monthly checks with no strings attached, for an experimental program. But the Canadian government’s interest in the program faded, and papers on it were eventually packed up into cardboard boxes. In 2009, the University of Manitoba economist Evelyn Forget dug up that data, and recently told Public Radio International that she found the number of hours worked in the two towns involved dropped only by 10 percent—mainly because of reductions in hours by mothers who wanted to stay home with their small children and young boys who had previously been encouraged by their families to leave school early and support themselves, but who could now finish high school.

In other words, the common assertion that a basic income will lead to an epidemic of idleness is thus far unwarranted. Granted, there is no denying that some number of people receiving a basic income will become lazy freeriders. But for everyone abusing the system, there will be enough people putting it to good use — to create, build, invent, care for others, and otherwise contribute to society — to more than make up for it. From a utilitarian standpoint, a few lazier folks will be far outweighed by the majority that will remain productive in some way, even if it is not in the form of formal employment.

Aside from its possible social impact, there is also the reasonable question of cost. An economist at the center-left Center on Budget and Policy Priorities estimates that it would cost over $3 trillion a year to cover every American family, which is almost as much as annual federal tax revenue as of 2015. Other such calculations for the U.S. are lacking, perhaps a reflection that the idea is still not taken seriously enough by some policy experts.

In any case, Utrecht’s experiment should prove all the more instructive given the dearth of recent working examples. Finland might also roll out a similar and even more ambitious plan of its own for 10,000 residents sometime next year. (Unfortunately, Switzerland, which had the distinction of being the first country to hold a referendum on a proposed basic income program, voted down the idea by a large margin (77 percent; if it had passed, it would have given each adult approximately $2,600 a month, and even a stipend for children under 18.)

Whatever your thoughts on the idea, it definitely warrants more research and experimentation. I eagerly await the results, whatever they may be.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s