Universal Basic Income: no strings attached

Our homage to the virtuousness of being busy is causing a great deal of harm in the world.

Ina Catrinescu

Ina Catrinescu

In Canada, in the heart of Manitoba, at Parkland’s doorsill, nestled in lush farmland lies Dauphin. Crowned by a bold slogan that promises you “Everything You Deserve,” Dauphin is a small city by local standards. Light buildings perched above their wooden foundations freckle two cobbled roads that converge at the mouth of this patch of land. 

These roads entangle a memory that has with ages gone, become a legend. Legend has it that in the 75th year of the 20th century a mysterious remedy coursed over Dauphin’s streets, putting the most destitute Dauphinites on their feet again. In just a handful of years, this remedy lowered the number of shoes that walked up the narrow stone steps of the city’s hospital, raised heads that used to bow and straightened shoulders that used to huddle. Once in demand hospital beds grew ever so desolate and the Dauphinites’ spirits that once were low, now soared high. Food abounded. Bills were paid. Farmers were busy. Women were fertile. And children were studious. Poverty was but a distant, foreign fable.  

In 1978 Canada’s economy was hit by a recession. Prices increased. Budgets shrunk. Manitoba’s government changed. Stories about the town’s auspicious remedy traveled to the ears of the new government. In 1979, at their behest the remedy and all remaining records were taken captive, caged into 1,800 boxes and stashed away, for nobody to find. 

After that ill-fated day, things went back to the way they used to be in Dauphin before 1974. The number of shoes that walked up the narrow stone steps of the city’s hospital grew, heads bowed again and shoulders huddled. The demand for hospital beds grew and the Dauphinites’ spirits that once soared high were now low again. Food abated. Bills abounded. Farmers were tired. Families went back to scraping by. And children dropped out of school to find work instead.

 

The same year, the rumors of this auspicious remedy also reached the ears of a young student at the University of Toronto. Here, among the noise of the squeaky benches, Evelyn Forget overheard her teacher whisper zealously of something “really important,” that was going to “revolutionize” the delivery of social programs. 

The mystery of Dauphin lay forgotten for over thirty years after that. Until, one day, in 2005 Forget remembered. A professor of health sciences at the University of Manitoba at the time, she ventured into a fervent and strenuous treasure hunt, to no avail. Following up clue after clue, Forget spent almost five years searching. In 2009, she finally got hold of it, all 1,800 dusty boxes and made Dauphin’s legend into a historical account and a track record for the modern policy makers in socially innovative countries. 

Over the next three years she scrutinized the convoluted, patchy records looking for the mysterious remedy that made the Dauphin community thrive between 1974 and 1978. The surfeit of files was hard to funnel into statistical data. Questionnaires were hand-filled and information pertaining to one Dauphinite needed to be scavenged from multiple boxes. The records were neither categorized, nor labeled or indexed. Fortunately Forget didn’t give up. Using a guest spot on a local radio station she invited the citizens of Dauphin to reach out to her. Her persistence paid off. What she found was far from a mystery, but nothing short of a miracle. The Dauphin remedy was a fringe experiment — simply an unorthodox approach to solving an orthodox challenge. 

Forget discovered that during those prosperous four years, thousands of dwellers of this rural municipality received an envelope with money each month, no questions asked, no strings attached. They were welcome to use the money as they pleased and were guaranteed to receive it for as long as they needed. 

The generous donors were two representatives of the government of Ottawa and Manitoba, Premier Ed Schreyer and Prime Minister Pierre Elliott Trudeau. To wage a war on poverty the two men joined forces and rolled out a social program that dispensed $17 million to those that needed the money the most. For five years they were winning the war. Poverty was completely eliminated. 

This counterintuitive, social experiment went down in history as the most radical poverty reduction program, and is known to us today by the title ‘Mincome’ — short for “minimum income.” In a nutshell — basic income was guaranteed to anyone who fell below the poverty line. 

A team of researchers occasionally visited the homes of the beneficiaries to assess how much money the household qualified for. Those households that didn’t meet the low-income threshold, would be automatically topped up. 

The biggest concern of critics was that the program was going to turn people into freeloaders. That they would run out of reasons and motivation to work and would just bum around, draining government resources.

There were indeed two segments that worked less as a result of Mincome: new mothers and teenagers. Maternity leave-taking is mostly a privilege reserved for the economically advantaged. Even with access to unpaid leave, few low-wage workers can afford to voluntarily forgo a paycheck for a month or two to actually utilize it. Mincome allowed new mothers to take maternity leave.

The second group – the teenagers, with the pressure to support their families taken off their shoulders opted to spend more time in school instead. As a result, more teenagers graduated. Education provided access to well-paying careers and ensured their long-term stability. For the rest, contrary to critics’ fears, people in Dauphin did not start quitting their jobs or reducing working hours to get “free” money from the government. A critical difference between traditional welfare and basic income programs is that there isn’t a “claw back” of benefits when beneficiaries of basic income start to earn again. The amount of support is not withdrawn but rises or falls depending on income. People are therefore more likely to remain in or join the labor market, which is in part what makes basic income programs such a viable model for tackling poverty.

 

These results are consistent across studies. In another experiment where Broadway, a London-based homeless charity offered veteran street sleepers £3,000. Rent deposits, utility bills, furniture, a TV or even travel costs — the funding could be spent on anything that would help the homeless get off the street. Nine months later, 10 out of 15 beneficiaries of the program served as testament to the fact that they were not just trousering a £3,000 bonus. They had permanent accommodation and were successfully getting their lives back on track. Time and again, when offered a significant chance to escape poverty, people are more likely to make the most of it, than to take it for granted. 

Labor market trends were not the most compelling discovery of Forget’s research. Analysis of the health records of Dauphin’s residents during the Mincome period showed an impressive drop of 8.5 percent in hospital visits. The numbers of work-related injuries, emergency room visits, car accidents and domestic abuse cases reduced. An 8.5 percent decrease in hospital visits across Canada today would translate to $4 billion in annual savings. In addition, anxiety, stress, depression and other mental health related consultations dropped significantly during the Mincome period. People did better in all of the indicators that Forget was able to find for quality of life. Being wealthier meant being healthier.  

The relentless struggle to make ends meet is like a wild bushfire; all consuming, destructive and disconcerting. Questions like “What will I feed my children this week?” and “How do I pay the bills?” are bound to keep our focus etched on what we’re lacking. And this, according to psychologist Eldar Shafir from Princeton and economist Sendhil Mullainathan from Harvard, takes up most of our “Mental bandwidth,” and comes at the expense of smart decisions, wellbeing, good health and even intelligence. Poverty, according to Shafir, comes at the detriment of about 14 IQ points. This decline, is only valid as long as scarcity remains an issue. When the concerns about poverty are elevated, the IQ rises again. Shafir and Mullainathan called this effect “Scarcity mentality.” 

Scarcity, whether of time or money makes us as nimble and effective as a deer caught in headlights. Less is more, applies to scarcity too: The less we have of something, the more it means to us, or the more we worry about it. People with scarcity of time, are just as poor as those with scarcity of money: Being busy is to time, what being poor is to money. The poor are preoccupied with which financial reserves to draw from, while the busy are forced to worry about which energy reserves to tap into. The poor are scraping by, while the busy are spread too thin.

Living a good life, conventional wisdom tells us, depends to a great extent on how hard we work. It either depends on how hard the family we’re born into worked, on what degree we choose to follow, on how much we study, on how early we rise, or how few hours of sleep we can get by with. 

Reducing cyclical poverty has always been top of mind, for both governments, as well as economists and scientists alike. The “silver bullet” may still need to be found, but most of the world is searching for it. When it comes to scarcity of time however, the urgency escapes us. Sure, social scientists and employers now and then come up with incentives that aim to manage our time and performance. The latest weapon we’ve been armed with in our fight against overexertion, is the 17-minute break for every 52 minutes of work. But for the most part, when it comes to overexertion, the notion that it is something people have to overcome on their own still predominates. 

What if we can’t? What if the busy aren’t actually able to help themselves? What if all the awareness, all the information is like carrying water to sea?

Our homage to the virtuousness of being busy is causing a great deal of harm in the world.

According to ComPsych’s annual StressPulse Report, 92 percent of American workers report high levels of stress and 60 percent report extreme fatigue and feeling out of control. Job stress costs the United States economy some $300 billion in sick-time, long-term disability, and excessive job turnover. This estimate excludes the $550 billion that demotivated workers cost the United States annually.

In Europe, ten million employees fall ill each year as a direct consequence of stress at work. In the Netherlands, burnout is the number one occupational illness. One in seven people—more than a million employees—report burnout symptoms each year. Work-related stress costs the Dutch economy 7.5 million sick days a year, which amounts on average to €1.8 billion.

In the UK, 13.5 million workdays are lost each year to stress. One in six British employees has a mental health condition. That’s about five million out of Britain’s twenty-nine million workers. The average cost to the economy each year is a staggering £30 billion.

When a worker breaks a leg by falling off the stairs a hazard control plan will be put in place and the staircase will be “fall proofed” to eliminate any future safety and health risks. But when an employee resumes his work after a burnout, no controls are introduced to protect him from relapse. There are currently no effective measures to prevent a new episode either. Doesn’t that strike you as odd? Isn’t burnout an occupational hazard as well?

Employers often believe that they have done all they could by having sent out an employee engagement survey or put in place an employee satisfaction program. But what if all those well-meant incentives only make the situation worse?

The value of our time is as illusory as the value of our wellbeing. There is no way that management could have known what was going to happen to our health as a result of their well-intended incentives. Either that or they are all liars, but I assume they really just don’t know.

As history teaches us, before even the best ideas are accepted, they are often first disparaged. Pythagoras’ proposition that the world is round, or Darwin’s Theory of Natural Selection – history is drenched with theories and ideas that were first thought preposterous, but eventually became the breeding ground of extraordinary change and progress. But they all go to show that in that gap between idea and acceptance is where headway germinates. Einstein’s theory of relativity was labeled “radical” and ridiculed as more “artistic than actual physics.” Heinrich, the professor who made that assessment, denied his application for a Ph.D. In South Africa, Mandela was convicted of conspiracy and sentenced to life imprisonment for his strides to dismantle apartheid and tackle institutionalized racism. Malala Yousafzai was proclaimed “the symbol of infidels and obscenity,” and shot, before her advocacy for education was acknowledged.

In the words of Polish writer Czesław Miłosz, “In a room where people unanimously maintain a conspiracy of silence, one word of truth sounds like a pistol shot.” You can imagine the kind of skepticism Evelyn Forget faced when she first presented her findings. The economic policy makers are used to long rows of data arrayed in complex charts, measuring this GDP rate or that inflation rate. Proposing that we should give men fish in a world where we are predisposed to believe that it’s best to teach a man how to fish, is bound to sound like a pistol shot. Forget had to help economists look at a country’s economic prosperity in an entirely new way. She had to get them to realize that poverty is not something people choose for themselves and is often not something they are able to overcome on their own. Today, from Finland to Kenya, and from Brazil to India, pilot incentives that model the Dauphin Mincome program are underway, which proves that fringe ideas are fringe ideas until they aren’t.

On this pages, and with my books and programs, I hope to do for our understanding of work, health and wellbeing what Forget did for our understanding of poverty.