By Charlie Wood for www.csmonitor.com
What would you do with a modest paycheck that showed up monthly, regardless of employment: Retire early? Change careers? Open that business you’ve always dreamed about?
This question lies at the heart of the growingly popular but contentious topic of Universal Basic Income (UBI), which proposes replacing often inefficient social welfare programs with a guaranteed paycheck for all, enough to afford at least the basic needs of food, shelter, and clothing. It's a counter-intuitive income model that challenges assumptions about effective compassion and induced laziness, but amid fears of an automated future, more economists are starting to take a hard look.
This summer, Switzerland overwhelmingly rejected a UBI referendum, with almost 80 percent voting against it. “If you pay people to do nothing, they will do nothing,” Charles Wyplosz, an economics professor at the Geneva Graduate Institute, told AFP.
But is that necessarily the case? Some economists say a mounting body of evidence regarding a poverty-fighting tool called “cash transfers” may suggest otherwise.
Cash transfers are just what they sound like: a gift of capital, often from an NGO to members of a population living in poverty. Narrow in scope, they generally target groups of a few hundred to a thousand individuals with sums that fall between a few hundred and a few thousand dollars. Some are one-time lump sums, and others recur monthly for a time.
Proponents argue that cash transfers are effective for precisely the same reasons cash birthday gifts can be disappointing: they require almost no effort and often end up getting used on what the recipient needs, rather than what they desire. In these respects cash transfers resemble UBI with its flexibility and low overhead costs, although much more focused on helping people escape from poverty, rather than, say, surviving automation.
The Association of Volunteers in International Service (AVSI) Foundation gave a one-time transfer of $150, accompanied by four days of business skills training, to 15 of the poorest women in 120 Ugandan villages. Half of the 1,800 women received the cash transfer and training a year-and-a-half after the others. Comparing the group that received the money early with the one that received it later, research and poverty organization Innovations for Poverty Action (IPA) concluded that the program had a “transformative” economic effect, with monthly income almost doubling, consumption increasing by a third, and savings tripling.
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