When I first heard about universal basic income after more than a decade writing about economics, I confess that I dismissed it as a utopian flight of fancy.
The central idea was that the government would give everyone a regular allowance to cover their essential needs. This seemed as likely to happen as Steve Schwarzman donating his real estate empire to the homeless.
But the idea had been around in various guises for centuries, and a modern version was gaining traction. In the margins of the debate over economic inequality, a handful of activists and fringe economists were championing universal basic income as a solution to problems that were impossible to disregard. Global capitalism was clearly at a crisis point. Growing numbers of people were stuck in dead-end jobs in economies around the world. The ranks of the working poor were expanding along with those who had dropped out of the workforce. With paychecks no longer a reliable source of livelihood, governments could distribute a regular allotment to all—old and young, rich and poor, healthy and infirm—ensuring that no one went without necessities like food, housing, and health care.
In the fall of 1983, a trio of researchers in Belgium had forged a collective around discussion of an idea they called allocation universelle. Three years later, they held an international conference that drew five dozen participants, including the British economist Guy Standing. The event yielded an institution now known as the Basic Income Earth Network, an online gathering place for those interested in the subject.
“Security is a precious asset,”1 Standing wrote in a 2017 book on the subject, Basic Income: And How We Can Make It Happen. “It should be a goal of everyone who genuinely wants to build a good society rather than one that facilitates the aggrandizement of a privileged elite who knowingly gain from the insecurities of others.”
Security was indeed in short supply, but basic income still struck me as an impractical goal for a political system dominated by Davos Man—a diversion from what might actually be achievable. In the United States, where the problems of the working poor were profound, anything that smacked of welfare was easy for lobbyists to defeat. And basic income was easily dismissed as a form of socialism—the ultimate idea-killing label in the world’s capitalist superpower.
Then, in 2016, just as I moved to London to cover the European economy, Finland announced that it was conducting a two-year trial of a basic income scheme.
Finland was a Nordic country in which taxpayers were already financing extensive social welfare programs, making basic income a realistic aspiration. Finland was also Scandinavia’s most market-oriented economy, a nation dedicated to ruthless competition in the business world. Whatever this experiment was, it could not be written off as woolly-headed socialism. Rather, it appeared to represent an attempt to reinvigorate capitalism.
I decided to go and explore Finland’s experiment up close at the same moment that a slice of the economics profession became infatuated with basic income. From Aspen to London, conferences about the future of work suddenly featured discussions on the merits of various basic income schemes. Labor had changed so fundamentally, the argument typically went, that the traditional idea of a job for every able-bodied person had gone the way of the fountain pen. Basic income would serve as a broad form of social insurance. Whatever happened—whether everyone became a part-time Uber driver, or Uber drivers were replaced by self-driving cars—people could count on sustenance.
At Davos in January 2017, Standing seemed to be everywhere. A moderator introduced him as “the moral conscience” of the Forum, based on his work on the Precariat—the growing class of people whose capacity to support themselves had been menaced by globalization.
The Precariat was growing because of excessive faith in market forces and “the commodification of everything,” along with “the systematic dismantling of all institutions and mechanisms of social solidarity,” Standing said. Basic income was a way to right the balance.
Davos Men like Benioff increasingly favored the idea, positing basic income as a form of compensation for how their lucrative technological innovations tended to destroy jobs. If the billionaires liked the idea, that raised the prospect that it was, like stakeholder capitalism, a calculated means to stave off a more meaningful transfer of wealth. But it also meant that basic income had greater potential to gain political support.
Chris Hughes, a Facebook cofounder, launched an advocacy and research group, the Economic Security Program, devoted to championing the idea. Its funds turned Stockton, California, a city decimated by the foreclosure crisis, into the testing ground for a basic income program2.
In Kenya, a group called GiveDirectly, overseen by an assortment of credentialed academics, began distributing payments to people in nearly two hundred villages, while studying what would happen over the ensuing dozen years. Tests were planned or underway in India, South Korea, and Canada.
By 2018, another tech entrepreneur, Andrew Yang, was putting basic income at the center of an improbable presidential campaign that would attract more support than anyone predicted, promising a “Freedom Dividend” of $1,000 a month for every American adult.
Yet even as basic income had clearly captured momentum, it was still hard to get around the price tag—not necessarily on the merits, but on the prospects for political passage.
If every American were to receive $10,000 a year, the tab would run nearly $3 trillion. That was about eight times what the government was spending on existing social service programs. Washington might just as well have committed to handing out unicorns.
But realpolitik can easily turn into cynicism. Only a few years earlier, the American labor movement’s “Fight for $15” campaign to double the federal minimum wage had been written off by many experts as unrealistic. That national effort had persuaded many states and localities to deliver on its goals.
And crises push out the parameters of political possibility. The pandemic jolted the usual calculus. In the name of preventing another Depression, governments from Washington to Brussels were throwing around numbers that would ordinarily seem preposterous. From unemployment benefits and wage subsidies to government-furnished health care, the bill was going to be enormous, justifying serious consideration of alternative ways to distribute public largesse.
The pandemic also reinforced the reality that, in many countries, ordinary people were but one misfortune away from catastrophe. Before the coronavirus, four in ten Americans struggled to come up with a mere $400 to deal with an unexpected event such as a car repair or fixing a broken appliance, according to a widely circulated survey from the Federal Reserve3. All at once, tens of millions of Americans were suffering far worse than a blown transmission.
As the coronavirus shut down American life in 2020, garishly lit hotels in Las Vegas were empty, just as thousands of homeless people were camped out on the city’s sidewalks. From Minneapolis to Madrid, shopping malls were abandoned, while food banks were packed.
European countries would pay to minimize suffering via automatic programs like unemployment insurance, housing support, and cash grants. American programs were relatively modest, but a surge of unemployment was certain to be accompanied by long-term issues that would drain taxpayers—through law enforcement and prisons, if crime spiked; via payments made to emergency rooms that attended to the tens of millions of people who lacked health insurance. Indeed, the cost of the pandemic relief programs produced in Washington—first under Trump, and then under Biden—exceeded $5 trillion by the middle of 2021.
Even among the hard-boiled pragmatists who tended to run governments, universal basic income suddenly looked like a potentially practical solution to problems that were manifest everywhere.
As a candidate, Biden had been dismissive of the idea, placing emphasis on creating quality jobs. But in May 2020, his soon-to-be vice president, Kamala Harris, then a senator from California, had sponsored a bill that looked like basic income—cash payments well above the level of the CARES Act that would last for the duration of the pandemic. Single people would receive $2,000 a month. Families would gain up to $10,000 a month4.
Nancy Pelosi, the Speaker of the House of Representatives, and a proud practitioner of realism, suggested that basic income deserved a place on the public agenda.
“We may have to think5 in terms of some different ways to put money in people’s pockets,” she said. “Others have suggested a minimum income, a guaranteed income for people. Is that worthy of attention now? Perhaps so.”
Pelosi was just the latest in a line of powerful figures to warm to the idea. Soon, Biden would take a step in that direction.
Throughout history, crises that revealed the pitfalls of inequality had prompted leading thinkers to embrace the notion of a government-furnished social-insurance system—a regular dollop of money for ordinary people. Some favored this concept on ethical grounds; others as a means of preventing unruly mobs from overrunning their gates.
The pandemic had laid bare the magnitude of inequality in modern times. Basic income was gaining credence as a potential solution.
Let us stipulate that there are other solutions that are also worthy of consideration.
The government could directly lift living standards by creating a federal job guarantee. Under this approach, the government would operate a job bank that would always have positions available for those in need, paying a so-called living wage—enough to finance the basics of life. When work was plentiful, the job bank would be a lonely place. When a downturn came, the government would become a mass employer in lieu of writing unemployment checks.
The job guarantee is an elegantly straightforward corrective to the dire shortage of work, and it, too, has been gaining adherents6. Its greatest virtue is its broad impact on labor conditions: The government could ensure that every able-bodied person could get a job that paid a living wage. That would force all private employers to meet the standard or suffer a shortage of workers.
If Amazon failed to provide enough protective gear in the midst of a pandemic, people could take refuge at the federal employment center. Amazon would be forced to improve its treatment of workers or watch its parcels pile up undelivered.
In one swoop, the job guarantee would neatly address a pair of profound American problems—the reality that many people need work at the same time that there is much work to be done.
In major cities across the United States, highways are crumbling for lack of upkeep, public schools are deteriorating, and public transportation links need expansion as part of the battle against climate change. Meanwhile, experienced construction workers sit in unemployment offices scanning listings for jobs that pay poverty-level wages. The job guarantee could create spending power for those suffering underemployment, while laying down infrastructure that could boost economic growth for everyone via improved education and transportation.
We need not engage in some progressive version of the Cosmic Lie—pretending that these investments will pay for themselves—to justify spending what it takes. We simply need to avoid falling for the usual deficit-spending fearmongering that comes from Davos Man collaborators like McConnell, forever ready to extend the next tax cut for billionaires while crying poverty when the subject is help for regular people.
But the job guarantee confronts far tougher political obstacles than basic income. It involves the creation of a large-scale bureaucracy, while substantially increasing the role of the state in regulating pay. Basic income removes bureaucracy. Instead of forcing people to satisfy complex rules for individual aid schemes—from housing vouchers to subsidized childcare—it entails simply handing everyone a regular sum of money and allowing them to decide for themselves how to use it.
This feature has been central to basic income’s appeal; the element that has allowed it to gain credibility across the political spectrum over centuries.
Half a millennium ago, Thomas More’s seminal novel, Utopia, included the suggestion that public assistance might better deter thieves than the threat of a death sentence.
By the middle of the eighteenth century, the American revolutionary agitator Thomas Paine was advocating the creation of a national pool of money, financed via inheritance taxes on landholdings, and distributed to every adult, as a means of ensuring what we now call social justice.
Paine posited that every person was born into the world with what he referred to as a “national inheritance”—the nourishment provided by the natural sphere. Private property ownership denied some people access to the soil, which limited their ability to feed themselves.
“The most affluent7 and the most miserable of the human race are to be found in the countries that are called civilized,” Paine wrote. “The contrast of affluence and wretchedness continually meeting and offending the eye, is like dead and living bodies chained together.”
Paine was no progenitor to Marxism. His loyalties were firmly with the wealthy cultivators of the soil. But he argued that everyone was entitled to a regular allotment of money as recompense for the disruption of national inheritance. It had to be paid universally, “to every person rich or poor,” so as “to prevent invidious distinctions.”
If Paine were around today, he would presumably favor some form of wealth tax to finance a comprehensive system of social insurance. And he would reject philanthropy and stakeholder capitalism as untenable substitutes for a meaningful redistribution of wealth.
“In advocating the case of the person thus dispossessed, it is a right8 and not a charity that I am pleading for,” Paine wrote. “There are, in every country, some magnificent charities established by individuals. It is, however, but little that any individual can do, when the whole extent of the misery to be relieved be considered. He may satisfy his conscience, but not his heart.”
Nearly two centuries later, the Rev. Martin Luther King Jr. promoted a form of basic income as part of the movement for civil rights. He described economic inequality as a fundamental injustice, one that was inseparable from overtly racist forms of discrimination like Jim Crow laws.
“Dislocations in the market operation of our economy and the prevalence of discrimination thrust people into idleness and bind them in constant or frequent unemployment against their will,” King wrote in his final book, published in 1967. “The time has come9 for us to civilize ourselves by the total, direct and immediate abolition of poverty.”
King advocated that the government furnish an allowance that ensured that everyone could live at “the median of society,” with increases tracking the standard of living. He cited an estimate from the economist John Kenneth Galbraith suggesting that such a program might run $20 billion10, which was only a smidgen more than the government that year planned to spend on the futile war in Vietnam.
Milton Friedman, the godfather of shareholder maximization, also embraced a variant of basic income—negative income taxes that put cash in the pockets of the poor. Ever disdainful of government bureaucracy, he viewed cash as a far more effective form of public aid than programs run by the dreaded state.
In its modern-day incarnation, basic income has gained currency as a malleable approach that can be tailored to widely divergent conceptions of society.
Progressives like Standing envision it as a means of emancipation from the meaninglessness of low-wage work. People stuck in minimum wage jobs at fast-food restaurants could gain freedom to abandon the fryolator, going home to play with their children, make music, and dig vegetable gardens.
Labor advocates embrace basic income as a way to increase bargaining power, enabling workers to refuse jobs at poverty-level wages.
Liberals envision basic income as a way to remove the stigma of public assistance. Instead of relying on food stamps at the grocery store while suffering the judgmental gazes of other shoppers—Shouldn’t she buy spinach instead of frozen pizza?—poor people would receive the same steady support as everyone else.
Conservatives, like the political commentator David Frum, are drawn to basic income for its simplicity, viewing it as an all-in-one replacement for the tangle of overlapping social welfare programs that are already on offer.
And Davos Man favors universal income as a means of unburdening himself of moral responsibility for profiting off technology that threatens jobs.
“As business leaders11, we have an obligation to ensure that the changes wrought by technology transcend our companies and benefit all of humanity,” Benioff wrote in Fortune in 2017. “For those who cannot be retrained, and even those traditionally not compensated for raising a family or volunteering to help others, we need to look at universal basic income.”
This sort of talk is why some economists—Stiglitz, among them—disdain basic income as an ersatz substitute for paychecks. People want to work for a living, he says. They don’t want perpetual handouts.
This is true, yet his critique is premised on the narrow conception of basic income that prevails in Silicon Valley: as a permanent welfare scheme for those displaced by automation.
This dystopian picture is indeed worthy of opposition—robots doing most of the work, while redundant humans live off government-furnished scraps. But there are other ways to harness basic income toward a different vision that involves expanding employment and encouraging economic growth.
When Finland launched its trial in 2017, it was looking to basic income not as a replacement for work, but as a means of spurring more of it.
Finland had never recovered from the global financial crisis, which had played out just as the rise of tablet computers and smartphones decimated one of the country’s largest industries—commercial paper manufacturing. Nokia, the Finnish company that had once ruled mobile telephones, had failed to cash in. For a decade, the Finnish economy had grown not at all. The unemployment rate was stuck above 8 percent.
Tending to the human cost of this misfortune was expensive, because Finland’s social welfare system was generous. As a share of its overall economy, Finland’s spending12 on unemployment benefits had increased by 70 percent between 2008 and 2015.
Finland’s leaders had reason to worry that their unemployment program was preventing people from moving on with their lives. As in many countries, Finland required that recipients of jobless benefits regularly visit unemployment offices to satisfy a confounding assortment of bureaucratic dictates. People had to prove that they were really looking for a job while attending training sessions. They had to continually disclose and verify their income.
Recipients were discouraged from accepting part-time jobs or launching their own businesses. Extra income risked undercutting their eligibility for benefits. So people passed up opportunities for fear of jeopardizing government support.
This was maddening to Asmo Saloranta, whose technology startup was struggling to hire workers. He was based in Oulu, a city of two hundred thousand people that no one would mistake for Palo Alto. Notched in low pine forests, only one hundred miles south of the Arctic Circle, it felt far removed from everything.
But the city had long been a hub of wireless communications—a major outpost for Nokia, before the company faded toward oblivion. The local unemployment rate sat above 16 percent. Scads of creative engineers were on hand and in need of work.
Saloranta’s company, Asmo Solutions, had developed a phone charger that drew power only when the device was plugged in. He had his eyes on a former Nokia employer who was a legend at developing prototypes. Saloranta only needed him part-time. He was offering 2,000 euros a month—less than the potential hire was bringing in via unemployment benefits.
“It’s more profitable for him to just wait at home for some ideal job,” Saloranta complained.
Under its basic income trial, the Finnish government planned to randomly select two thousand people who were drawing jobless benefits and commence sending them 560 euros a month, automatically, while exempting them from bureaucratic requirements. They would be permitted to earn money on the side.
The government was keen to see what would happen. Would more people join startups or launch their own? How many would pursue education that would position them for more rewarding careers? How many would drop out of life and dedicate their hours to vodka? The trial was as much a test of human nature as economic policy.
Saloranta was confident the results would be positive. “It would activate many more unemployed people,” he said.
Jaana Matila was the sort of person he had in mind. When I met her in the gray chill of an Arctic morning, she was twenty-nine years old and in possession of three degrees in computing. She had a borderline-obsessive interest in software. What she did not have was a real job. She had completed three unpaid internships. She was doing a bit of freelance work, having most recently designed a website for a hair salon. Sometimes she taught adult swimming lessons. But she had to limit these gigs lest she imperil her 700-euro monthly unemployment check. She had once failed to secure a receipt for one of the swim lessons. While she tracked it down, she lost her benefits for a month.
“I had to ask my boyfriend, ‘Can you give me some monthly money so I can buy some food?’” she told me. She spent most of her time taking her dog on walks through the forest while trying not to think about how her skills were falling behind the constant advances of technology.
“People in a disadvantaged position, they use a major part of their cognitive ability worrying about their lives,” Mikko Annala, a researcher at Demos Helsinki, a think tank, told me. “What if we have this potential there that is continuously worrying about life, about making it? What if we can get that into use by giving them something? That is a hypothesis that we should absolutely test.”
This was an aspect that tended to get lost in the basic income conversation. Basic income was frequently described in shorthand as money for nothing, a dose of socialism for the masses, but Finland was testing it as a way to improve capitalism.
“Some people think basic income will solve every problem under the sun, and some people think it’s from the hand of Satan and will destroy our work ethic,” said Olli Kangas, who oversaw research at the Finnish government agency that administered social welfare programs. “I’m hoping we can create some knowledge on this issue.”
The results of the trial three years later would not settle the argument. The sample size was so small that the findings lacked authority, while offering a little something to validate every preconception.
Those who received basic income payments were only marginally more likely to be working than those who had started off in the traditional unemployment program. But those in the trial had shown a pronounced tendency toward greater personal satisfaction and happiness. They were less likely13 to be depressed, sad, lonely, or stressed out.
That alone was worth something.
Finland opted not to go14 ahead with basic income, instead imposing stricter work requirements on recipients of unemployment—a step in the opposite direction. But elsewhere, basic income was more in vogue than ever.
In March 2021, Stockton, California, released the findings15 of its experiment in which it had handed out $500 a month to 125 randomly selected people for two years. There, too, recipients were less prone to depression and anxiety. And they were more likely to be employed—especially women—as the extra money financed needed childcare, clothing for interviews, and transportation.
But one key limitation was at work: Basic income appeared most politically achievable in the places where it was needed the least.
Countries that already spent heavily on social welfare programs, like Norway and Finland, could reorient their budgets to produce some version of basic income. They could do this without demanding that someone pay higher taxes, and without cutting some other program to come up with the money.
But in places like the United States and Britain, where social programs had been dramatically reduced, basic income would demand a new tax, or cuts to some other spending. History suggested how this would play out: with reductions in support for the most vulnerable people.
In the United States, the demonization of welfare by President Reagan in the 1980s had produced the so-called welfare reform signed by Clinton in the mid-1990s, which dropped support to a pittance, yielding increased poverty. Poor single mothers were required to work, even as promised increases in subsidized childcare16 never materialized.
In the suburbs of Atlanta, I met a nineteen-year-old single mother who was unable to line up childcare for her infant daughter, which meant that she could not attend the job-training classes17 the state of Georgia required as a condition of her $235 monthly welfare check. Having lost those benefits, she was selling her body to come up with cash for diapers. Since the Clinton welfare reform, the number of poor families with children18 in Georgia had nearly doubled, yet the share of such families who were receiving cash assistance had plunged from 98 percent to 8 percent.
Among conservatives, basic income was appealing precisely because it would provide justification for cutting other social welfare programs. What was sold as a comprehensive form of social insurance could become a single target in the mission to dismantle government.
Beginning in the 1970s, Washington had moved away from so-called entitlement programs in which anyone who satisfied basic criteria like income had a right to public assistance. In their place came so-called block grants given to states along with the freedom to determine how to use these funds. States took this as the impetus to tighten eligibility for relief, pushing people off their welfare rolls. More fell into poverty, prompting conservatives to attack remaining programs as ineffective—grounds for further cuts.
Between 2000 and 2017, Congress cut funding19 for thirteen block grants that were a source of support for low-income people by more than one-third. Trump administered further reductions to help finance his tax cuts for Davos Man.
In Britain, austerity included the consolidation of multiple social programs into one all-encompassing scheme known as Universal Credit. Osborne, then running the treasury, championed this refashioning as a way to cut spending while forcing people to work.
“For too long, we’ve had a system where people who did the right thing—who get up in the morning and work hard—felt penalized for it, while people who did the wrong thing got rewarded,” Osborne said in April 2013. “This month, we will make work pay.”20
Instead, Osborne engineered the reverse. Over the subsequent four years, employment edged up in low-income households in the United Kingdom, while average earnings rose by nearly 4 percent. But those gains were wiped out and then some by a 7 percent cut to state support for working age Britons, along with the elimination of tax credits for the poor. Overall, low-income people suffered21 a 3 percent drop in income in those years. By 2018, the share of British children22 who were officially poor had climbed from 27 percent to 30 percent.
Under the shift to Universal Credit, the government tightened eligibility to levels that were cruel and absurd.
In Liverpool, I met a woman with cerebral palsy who had been living on a disability check for the eight years after she lost her job answering the phones at an auto parts company. She had recently been summoned for an assessment of her continued eligibility.
The first question undercut any pretense that this was a sincere exploration of her situation: “How long have you had cerebral palsy?” From birth. “Will it get better?” No.
She was then sixty-one, and her bones were weakening. The man conducting the assessment dropped a pen on the floor and commanded that she pick it up—a test of her dexterity. Soon, a letter came informing her that she had been deemed fit for work—and, therefore, not entitled to her disability check.
“I think they were just ticking boxes,” she told me.
Basic income was a catch-all phrase that meant different things depending on who was using the term. It could clearly be designed to bolster economic security, allowing people to live happier, healthier, more prosperous lives.
It could improve working conditions, boost wages, and limit vulnerabilities to commonplace misfortunes like car trouble along with global disasters like pandemics.
But in the usage that had gained the greatest political traction—the one embraced by people like Benioff—it was an allowance proffered as justification for the status quo, a payment that indemnified Davos Man for having prospered at the expense of people in need, a substitute for billionaires submitting to meaningful sacrifices like progressive taxation.
Basic income held potential as a means of attacking inequality, but it had to be protected against hijacking by the beneficiaries of continued inequality. It had to be a complement to a robust social safety net—perhaps paired with a job guarantee—and not a substitute.
Biden gave it an important push. The $1.9 trillion stimulus spending package he signed into law in March 2021 included a provision that amounted to a version of basic income: Most American parents would receive23 a monthly check of $300 a month as part of an expansion of child tax credits.
That provision was authorized for only a year, but the Biden administration aimed to establish it as permanent. Researchers at Columbia University estimated that the policy could reduce child poverty24 by 40 percent.
Basic income had become mainstream.