With the cost-of-living crisis biting, many are looking for solutions to lift millions out of poverty.
One solution is a social welfare system that grants unconditional income to all. It is known as a universal basic income (UBI) or basic income guarantee (BIG).
Evidence shows that these programs would have a beneficial impact on people’s well-being.
Early proponents of income guarantees, such as civil rights leader Martin Luther King Jr and free market economist Milton Friedman, viewed experiments such as the New Jersey Graduated Work Incentive Scheme, which ran from 1968 to 1972, as leading the way.
That scheme used Friedman’s proposal of a negative income tax, where those who earned under a certain threshold received money from the state.
This model was used in subsequent experiments, including the Rural Income Maintenance Experiment, the Seattle-Denver Income Maintenance Experiment and the Manitoba Mincome Experiment.
These experiments found there was a rise in physical and mental health outcomes, living standards, food and housing security and social relationships.
However, the studies only offered supplements that, on their own, would leave the recipient in poverty. They were not liveable payments.
More recent studies, such as those in Ontario, Canada, Stockton in California and Finland, also found that there were material benefits for participants.
While the Ontario experiment replicated earlier experiments, the Stockton and Finnish experiments granted the payment to experiment participants unconditionally, making no change to payments received based on income from labour.
The studies disprove conservative criticism that BIG/UBI programs create a disincentive to work.
A comprehensive review of 16 BIG trial programs, published in 2018, also found that this was not the case.
It found little-to-no reduction in labour force participation. Reductions in work time were largely restricted to new parents, who opted to work less to spend more time with children, or young workers who wanted to complete their studies.
The review found that participants had more agency in how they engaged with work, including more ability to upskill and train, or develop other skills that would assist with securing employment.
While none of the payments in any of these studies were “liveable” — relying on them alone would still leave participants in poverty — the findings did show profound psychological benefits to having a secure source of income.
In addition, economically disadvantaged sections of the population, including women, people with disabilities and other marginalised groups, were the biggest winners under these experiments.
It showed that a BIG/UBI can partially address the huge amount of unpaid household labour — disproportionally undertaken by women — and help shrink economic gaps facilitated by systemic racism.
A BIG/UBI could also increase workers’ bargaining power, not only allowing them to be more flexible with their working arrangements, but it could also strengthen workers’ ability to sustain protracted strike action.
Without the threat of unemployment and homelessness, workers would have some protection from bosses’ efforts to refuse wage rises and reduce conditions.
One argument by conservative critics of UBI/BIG is its cost: it would be very high.
An income guarantee of $36,000 a year for everyone over the age of 18 in Australia, for example, would cost approximately $768 billion.
This is nearly three times the 2024 spending on social security and welfare, which includes JobSeeker, the National Disability Insurance Scheme, the Aged Pension and other social payments.
However BIG/UBI funding could be sourced by replacing the current social security system, which currently funnels billions into private employment providers as well as a dedicated infrastructure to police recipients. This would also constitute higher payments for those currently on JobSeeker and the Aged Pension.
Scrapping the $368 billion for United States-built nuclear-powered submarines, reversing the Stage 3 tax cuts and implementing higher taxes on big corporations and the super-rich could also help pay for a BIG/UBI.
Designing the BIG/UBI as an “opt-in” program, with a steeply progressive parallel tax system for recipients, would ensure the scheme is used by those who need it and control costs.
Some on the left argue that progressives should fight for better wages and investment in public infrastructure, such as healthcare, education, public renewable energy and other infrastructure, instead of a UBI/BIG.
They point to existing UBIs, or equivalents, that are not enough to subsist on. They also recognise that an authoritarian state could use the UBI/BIG as an excuse to gut public services.
Governments, conservative and progressive, have used the state to assist when they deemed it necessary.
German archconservative Chancellor Otto Leopold Von Bismark introduced one of the earliest iterations of social insurance in the 1880s to improve workers’ material conditions to reduce the appeal of socialism.
United States President Franklin D Roosevelt’s “New Deal” in the 1930s expanded social spending to counter the ravages of the Great Depression.
The Bob Hawke government struck a class collaborationist deal between Labor, some union bureaucrats and the bosses, to suppress wages and industrial action in exchange for a limited expansion of the “social wage”.
Early arguments for income guarantees, such as those in Thomas Paine’s 1797 pamphlet Agrarian Justice, prioritised the maintenance of “social cohesion” and recognised the growing contradictions caused by the rise of capitalism.
Today, there are calls for BIG/UBI coming from the capitalist class, including billionaires Mark Zuckerberg and Elon Musk, who claim such programs are necessary to respond to the impact of automation and artificial intelligence on the labour market.
Despite these factors, BIG/UBI has the potential to profoundly transform society.
Not only do such programs improve the well-being and agency of workers, they also challenge the coercive wage-labor system.
As part of a broader progressive platform including tax reform, expansion of public housing, healthcare and transport, BIG/UBI would be a step towards radical change.