Iran Tests Most Generous Basic Income Plan Yet

Iran hardly comes to mind when it comes to testing bold new ideas (never mind its various scientific and technological achievements in the face of sanctions and a reactionary theocracy). But since 2011, it has been testing and monitoring one of the most generous basic income schemes in the world, joining the likes of Canada, Finland, and the Netherlands (among others) in exploring the merits of an idea that has been gaining traction amid concerns about mass unemployment from advancing automation.

The program, which is ongoing, was launched during the tenure of President Mahmoud Ahmadinejad, himself hardly a progressive (to put it mildly). But it was ideal timing, as it followed cuts to subsidies for bread and fuel, which disproportionately impacted the poor. Participants received a monthly cash transfer equivalent to 29 percent of the country’s median household income — which would amount to over $16,300 a month in the U.S.! This is far more generous than the $1,000 or so monthly stipend that is typical in most basic income schemes. Even advocates of the idea might think it is far too much to sustain a productive population.

Yet, as BusinessInsider reported, not only did researchers find that most recipients remained employed, but many of them worked more hours.

Despite reports in local press that the poor were forgoing their jobs to spend the extra money, the investigators found no such evidence.

“Our results do not indicate a negative labor supply effect for either hours worked or the probability of participation in market work, either for all workers or those in the bottom 40% of the income distribution,” they wrote.

They did find people in their twenties tended to work a bit less. But “this is not surprising since the attachment of Iranian youth to the labor market is weak,” they wrote, and many young people may have used the money to enroll in higher education they otherwise couldn’t afford.

In other cases, the extra money appeared to increase how much time people spent working. Service workers, such as housekeepers, teachers, and deliverymen, upped their weekly hours by roughly 36 minutes, “perhaps because some used transfers to expand their business.”

In other words, people were empowered to invest the money they received in ways that created greater values for themselves and, by extension, their loved ones and community. This comports with the results of the basic income experiments conducted in Canada and Namibia, as well as Brazil’s Bolsa Familia program, which is one of the few examples of a full-fledged cash-transfer scheme (although not quite a basic income, since it is conditional on children attending school and being vaccinated).

Unfortunately, Iran’s experiment also proved another common feature of the basic income idea: widespread negative attention and cynicism, in this case by both politicians and the general public. Across different societies and cultures, the idea of handing people money with no string attached strikes a visceral chord.

But given where automation and economic innovation are heading, it seems inevitable that mass unemployment — and the massive wealth imbalance that would follow — will need to be corrected. Not only would a guaranteed income provide for people’s basic needs, but as these pilot programs are thus far proving, they would empower individuals with the resources they need to unlock their own potential, whether it is freeing up time for socially valuable work (caregiving, volunteering, etc.) or investing in their own creative or commercial ventures.

What are your thoughts?

 

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