The idea of unconditional income is marching across the planet: the British are also being advised to hand out free money
As BBC notes, the authors of the report believe that a guaranteed minimum income will help the poorest segments of the population and make the labor market more flexible. The country's economy is expected to undergo significant changes in the 2020s, the report says, "many jobs will be automated, the effects of climate change will be felt more strongly, and more and more people will need to combine work with caring for relatives."
Where do free money come from?
The British Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) proposes creating a state sovereign fund, from which every citizen would be paid five thousand pounds sterling twice a year. To fill this fund, the authorities plan to borrow on the market and also introduce fees on corporations that move assets out of taxation. The fund will also receive income from investments in long-term infrastructure projects.
Critics of the proposal have already stated that creating such a fund will only increase the tax burden on the population. The Adam Smith Institute believes that all existing social benefits should simply be abolished and replaced with a single guaranteed income, which would be given without any conditions.
The authors of the RSA report warn that many families will face economic difficulties in the coming decade if problems caused by labor automation, Brexit and an aging population are not resolved. "If we don't change our attitude to this problem, nothing will change. Because the old principle – the more you work, the more you get – no longer works," says Anthony Painter from the Royal Society.
If people have a guaranteed income, even if minimal, many will be able, for example, to work part-time for a while to learn something new or improve their skills in their free time, the authors of the RSA report believe.
Pros and cons of free money
As BBC notes, the idea of providing all residents of a country with a basic income is not new, but has mostly remained a theory over which economists, sociologists, psychologists and politicians have long been at loggerheads.
The first to propose the idea of a guaranteed minimum income was the Anglo-American philosopher and publicist Thomas Paine back in 1797 in his pamphlet "Agrarian Justice." Influential economists of the last century, Milton Friedman and Friedrich von Hayek, believed that a guaranteed income in one form or another is the best way to overcome poverty.
Many politicians in different parts of the world, from Britain to Canada, from the USA to Iraq, say they are looking with interest at the idea of a guaranteed income, but want to first thoroughly study all possible consequences.
In 2016, Swiss residents voted in a referendum against a proposal to pay every adult citizen 2,500 francs ($2,418) per month, and minors a quarter of that amount. Opponents of the idea cited the prohibitively high costs associated with it, and also claimed that it would encourage people to quit their jobs – especially low-paid manual labor.
The Organization for Economic Co-operation and Development (OECD) published a report stating that the results of introducing a guaranteed income would depend on the existing tax system and social services in each individual country. At the same time, the OECD notes that this plan could be extremely costly for the treasury and have little impact on the poverty level. Moreover, the OECD notes that if this scheme is financed by abolishing existing social benefits, the poverty level could rise.
Many economists believe that a basic income can only be financed by raising taxes, which is unlikely to please the wealthier segments of the population, since it will be their shoulders that will bear the burden of paying more.
Practice of handing out free money
Finland. The Finnish authorities randomly selected two thousand people from among the unemployed receiving the lowest benefits. The amount of basic income for these people differs little from what they received through benefits – 560 euros per month.
Alaska. This state has a Permanent Fund, from which subsidies are paid to all residents of the state once a year. The fund is financed by taxes on the oil industry, and accordingly, annual payments vary depending on the income of oil companies operating in Alaska.
Canada. In the 1970s, money was given to residents of the town of Dauphin, Manitoba province. The Canadian experiment lasted four years, did not reveal any serious changes in citizens' attitudes toward work, but showed improvements in the social sphere.
Scotland. The authorities are conducting a pilot project among randomly selected unemployed people in four locations – Glasgow, Edinburgh, Fife and North Ayrshire.
Iran. Iran became the first country in the world to establish a guaranteed minimum income for all citizens of the country. The measure was adopted in 2010, with the simultaneous abolition of gasoline subsidies. The amount is not large – about $40 per month.