‘We had a bail-out for the banks. Now we need one for the people’
There’s an old quote that I can’t get out of my head these days. It’s from Milton Friedman, one of the most influential economists of the 20th century. In 1982 he wrote:
“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”
Right now, we are in the biggest crisis since the Second World War. The economic impact of the coronavirus is greater than the impact of the financial crisis of 2008, and may be even greater than that of the Great Depression of the 1930s. If history teaches us anything, it is that extraordinary things are possible during times like this. Terrible things, but also good things. Everything depends, as Friedman said, on the “ideas that are lying around”.
We’ve created a system that makes people depressed
Just seven years ago, when I first stumbled upon the old concept of giving everyone an unconditional basic income, it was an almost forgotten idea. Most people thought it was crazy: wouldn’t people just stop working? Wouldn’t they waste the money on alcohol and drugs?
Over the past couple of decades, the welfare state has grown to operate on suspicion and mistrust. In countless interviews and on dozens of forms, you have to repeatedly prove that you are sick enough, depressed enough, and really a hopeless case who will never get anything done in your life, and then – maybe – you will receive a little bit of financial support. We’ve created a system that makes people depressed.
But now, suddenly, the idea of a basic income for everyone is everywhere. It’s even supported by the Financial Times (not exactly a left-wing newspaper), and polls find that a majority of voters, even on the right, love the idea. The reason is pretty simple: in a crisis, there’s no time for mistrust. The government cannot keep tabs on everyone who needs support right now. We simply have to trust each other. The good news is that science says we can.
London, May 2009 – An experiment is under way. Its subjects: 13 homeless men. They are veterans of the street. Some have been sleeping on the cold pavement of the Square Mile, Europe’s financial centre, for going on 40 years. Between the police expenses, court costs and social services, these 13 troublemakers have racked up a bill estimated at £400,000 or more per year.
There are no strings attached, no questions to trip them up
The strain on city services and local charities is too great for things to go on this way. So Broadway, a London-based aid organisation, makes a radical decision: from now on, the city’s 13 consummate drifters will be getting VIP treatment. It’s adiós to the daily helpings of food stamps, soup kitchens and shelters. They’re getting a drastic and instantaneous bailout.
From now on, these rough sleepers will receive free money.
To be exact, they’re getting £3,000 in spending money, and they don’t have to do a thing in return. How they spend it is up to them.
They can opt to make use of an advisor if they’d like – or not. There are no strings attached, no questions to trip them up.
The only thing they’re asked is: what do you think you need?
“I didn’t have enormous expectations,” one social worker later recalled. But the drifters’ desires proved eminently modest. A telephone, a dictionary, a hearing aid – each had his own ideas about what he needed. In fact, most were downright thrifty. After one year, they had spent an average of just £800.
Take Simon, who had been strung out on heroin for 20 years. The money turned his life around. Simon got clean and started taking gardening classes. “For some reason, for the first time in my life, everything just clicked,” he said later. “I’m starting to look after myself, wash and shave. Now I’m thinking of going back home. I’ve got two kids.”
A year and a half after the experiment began, seven of the rough sleepers had a roof over their heads. Two more were about to move into their own apartments. All 13 had taken critical steps toward solvency and personal growth. They were enrolled in classes, learning to cook, going through rehab, visiting their families and making plans for the future.
“It empowers people,” one of the social workers said about the personalised budget. “It gives choices. I think it can make a difference.” After decades of fruitless pushing, pulling, pampering, penalising, prosecuting and protecting, nine notorious vagrants had finally been brought in from the streets. The cost? Some £50,000 a year, including the social workers’ wages. In other words, not only did the project help 13 people, it also cut costs considerably. Even The Economist had to conclude that the “most efficient way to spend money on the homeless might be to give it to them”.
Studies from all over the world offer proof positive: free money works.
At the University of Manchester, researchers summed up the benefits seen around the world of cash-transfer programmes: (1) households put the money to good use, (2) poverty declines, (3) there can be diverse long-term benefits for income, health and tax revenues, and (4) the programmes cost less than the alternatives. So why send over expensive white folks in SUVs when we can simply hand over their salaries to the poor? Especially when this also takes sticky civil service fingers out of the equation. Plus, free cash greases the wheels of the whole economy: people buy more, and that boosts employment and incomes.
In a now-famous article published in the late 1990s, two Swedish sociologists showed that the countries with the most universal government programmes have been the most successful at reducing poverty. Basically, people are more open to solidarity if it benefits them personally. The more we, our family and our friends stand to gain through the welfare state, the more we’re willing to contribute. Logically, therefore, a universal, unconditional basic income would also enjoy the broadest base of support. After all, everyone stands to benefit.
Utopias always start out small, with experiments that ever so slowly change the world
Right now, we’re saddled with a welfare state from a bygone era when the breadwinners were still mostly men and people spent their whole lives working at the same company. The pension system and employment protection rules are still keyed to those fortunate enough to have a steady job, public assistance is rooted in the misconception that we can rely on the economy to generate enough jobs, and welfare benefits are often not a trampoline, but a trap.
Never before has the time been so ripe for the introduction of a universal, unconditional basic income. Look around. Greater flexibility in the workplace demands that we also create greater security. Globalisation is eroding the wages of the middle class. The growing rift between those with and those without a college degree makes it essential to give the have-nots a leg-up. And the development of ever-smarter robots could cost even the haves their jobs.
In recent decades the middle class has retained its spending power by borrowing itself into ever-deeper debt. But this model isn’t viable, as we now know. The old adage of ‘those unwilling to work will not get to eat’ is now abused as a licence for inequality.
Don’t get me wrong: capitalism is a fantastic engine for prosperity. “It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts and Gothic cathedrals,” as Karl Marx and Friedrich Engels wrote in their Communist Manifesto. Yet it’s precisely because we’re richer than ever that it is now within our means to take the next step in the history of progress: to give each and every person the security of a basic income. It’s what capitalism ought to have been striving for all along. See it as a dividend on progress, made possible by the blood, sweat and tears of past generations. In the end, only a fraction of our prosperity is due to our own exertions. We are rich thanks to the institutions, the knowledge, and the social capital amassed for us by our forebears. This wealth belongs to us all. And a basic income allows all of us to share it.
Utopias always start out small, with experiments that ever so slowly change the world. It happened just a few years ago on the streets of London, when 13 street sleepers got £3,000, no questions asked. As one of the aid workers said: “It’s quite hard to just change overnight the way you’ve always approached this problem. These pilots give us the opportunity to talk differently, think differently, describe the problem differently . . .”
Now it’s time to scale up the experiment. Millions of unemployed workers, gig workers and freelancers need a basic income, and they need it now. The Royal Society of Arts has already drawn up the plan: one payment of £1,500 and monthly payments of £450, combined with universal credit and housing costs after that. We can finance the whole thing with a wealth tax on the rich – another idea whose time has come.
After the financial crisis of 2008, we had a bail-out for the banks. Now we need a bail-out for the people.
Utopia for Realists by Rutger Bregman is out now in paperback (Bloomsbury, £8.99), and his next book Humankind is out on May 19 (Bloomsbury, £20) @rcbregman
This article is part of The Big Issue’s ongoing After The Virus series. To read more brilliant people plotting a path for Britain beyond the pandemic lockdown, head here.
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