Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Universal basic income can be the worst of all worlds - but ‘free money’ schemes do work | Gaby Hinsliff

Universal basic income can be the worst of all worlds - but ‘free money’ schemes do work | Gaby Hinsliff

A trial in Wales for care leavers is brave and imaginative, but a benefits system must work for all, says Guardian columnist Gaby Hinsliff
It is the unspoken promise of parenthood, the deal millions make as their fledglings fly the nest: that in an emergency, they can always come fluttering back. Even if they never have to cash that unwritten cheque, just knowing it’s there can be enough to see them through the wobbly early years of independence. That place is home. It is what gives young adults the confidence to flee a toxic relationship or a dodgy flatshare, knowing they’re not going to end up on the street, or to stick it out in the kind of insecure careers where persistence ultimately pays off. But home isn’t like that for everyone, and shamefully it’s least like that for children parented by the state.

Once they turn 16 they’re no longer looked-after children, a euphemism already covering a multitude of sins, but “care leavers”. At best that means staying with a loving foster family until they’re ready to leave, but at worst it means the kind of downhill slide that explains why too many rough sleepers have previously been in care. Almost half of care leavers have mental health issues and more than a third aren’t in education, employment or training between the ages of 19 and 21. Although the state now offers a “personal adviser” to guide them into their 20s, with the best will in the world it’s not going to be like crying on a parental shoulder.

And that’s the backdrop to the Welsh government’s brave and imaginative decision this week to trial a universal basic income (UBI) of £1,600 a month – equivalent to an annual salary of just over £19,000 – to care leavers. Brave, because it invites not just predictable tabloid outrage at handing out “money for nothing” but also understandable resentment from workers slogging away at minimum-wage jobs that they don’t enjoy for the same money. But imaginative, because if it works – which will mean coupling that money with the kind of intensive support and guidance that care leavers should frankly be getting anyway – it opens up a much broader debate about the future of welfare. It’s road-testing an idea that will make instinctive sense to most parents, which is that the emotional security money buys is not nothing; indeed, for some, it might actually be everything.

A now famous trial of UBI for unemployed people in Finland, originally designed to test whether the carrot of free money was more effective than the stick of sanctions in getting people back into jobs, found only a slight increase in days worked but a much bigger impact on happiness and health. Recipients reported less stress, depression, sadness and loneliness than the control group, plus more confidence in the future. More surprisingly, they also reported higher cognitive skills – things such as the ability to remember, learn and concentrate – and higher levels of trust in their fellow Finns and in public institutions. If buying happiness, focus and trust doesn’t sound like a terribly efficient use of public money then you are not thinking hard enough about how much unhappiness and all its spiralling consequences – from anxiety and depression to drug and alcohol addiction, relationship breakdown, or the lifelong emotional and educational impact on children’s lives of having parents continually pushed to the limit – costs the taxpayer. Or just how much public trust in institutions from the police to public health experts turned out to matter in a pandemic, or how easily the politics of hate feeds off misery and suspicion.

What’s interesting about the Finnish findings is that they chime with research from developmental economists suggesting that giving away cold hard cash can be a surprisingly effective way of delivering aid. As the Dutch historian and UBI enthusiast Rutger Bregman has repeatedly argued, the myth that poor people will only blow it on booze and cigarettes is just that: people counting every penny tend to know exactly what they’d do with a bit more, using it strategically and frugally. If anything it’s grinding deprivation that drives humans towards bad choices, and money that helps us make better ones, lifting the fog of panic and exhaustion and helplessness that accompanies poverty and giving recipients the confidence to take risks. The catch for UBI advocates, however, is that the magic of universal basic income may well lie in the last two words, not the first.

For many the whole point is the universality, or the dream that free money for everyone will miraculously engender a warm fuzzy feeling of togetherness even in those too wealthy to actually benefit (because for them UBI would be effectively taxed away) while delivering on the Keynesian dream of prosperity buying ever-expanding leisure. But that’s not where the evidence points. The secret sauce seems to be providing people who just can’t see another way out with enough free money to catch their breath and make plans. An extra pittance for everyone regardless of need – which is what every economically realistic proposal for UBI I’ve ever seen ends up apologetically boiling down to, given the exorbitant cost – is the worst of all worlds; not quite enough to be meaningful to those who could really benefit, but still too expensive to be politically plausible. Better to start by funding the existing welfare system properly, recognising that the benefit cuts of the past decade went far too deep and left millions without enough to live on, and then targeting those for whom the security of a basic income could be genuinely life-changing.

In San Francisco and Vancouver, there have been small but fascinating pilots involving free cash transfers to homeless people. The success of furlough in keeping people attached to the workplace despite being temporarily out of a job suggests another possible avenue. Most people who lose their jobs aren’t out of work for long, but for those who don’t have savings, even a few months on benefits that are a fraction of their normal salary mean racking up debt that can leave long-term scars. Some kind of time-limited basic income for newly redundant people could bridge that gap, and give people a chance to retrain; it could be useful too in softening the transition to net zero, offering people who lose jobs in dying fossil-fuel industries time to rethink their futures. The possibilities are exciting, but only if we let go of the utopian theory and focus relentlessly on what actually works. It’s not about money for nothing. It’s money for things that might just turn out to be priceless.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×