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Wednesday, November 27, 2013

Swiss Voters Consider Guaranteed Income For All

In a publicity stunt this fall, advocates of the guaranteed income proposal dumped eight million coins outside the Parliament building in Bern -- one for every Swiss citizen. (Kopf oder Zahl/Flickr)

In a publicity stunt this fall, advocates of the guaranteed income proposal dumped eight million coins outside the Parliament building in Bern — one for every Swiss citizen. (Kopf oder Zahl/Flickr)

Swiss residents will soon vote on a referendum that would provide an unconditional monthly income to every adult. If passed, each citizen will be guaranteed $2,800 per month — that’s $33,600 a year.

The guaranteed income concept is gaining steam in many parts of the world: there are pilot projects in India, Brazil and Namibia.

Both liberals and conservatives find merit in providing basic incomes to individuals — for different reasons. Progressives see it as an anti-poverty measure; conservatives believe it will reduce the size of government by getting rid of food stamps and welfare programs.

There are concerns about whether it would create a disincentive to work, but some experts say the effect might be smaller than expected.

A study by economist Evelyn Forget of the University of Manitoba examined a small rural town in Canada, where about 1,000 poor families were guaranteed a minimum income for four years in the 1970s. Forget found not only that poverty disappeared, but that high school graduation rates went up and hospitalization rates went down.

Financial Times reporter Cardiff Garcia joins Here & Now’s Jeremy Hobson to discuss the basic income concept.

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Transcript

JEREMY HOBSON, HOST:

From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.

Imagine the government guaranteeing a basic monthly income to every adult regardless of whether they are rich or poor. Well, that idea, called the basic income scheme, may soon become a reality in Switzerland if Swiss citizens vote yes. The proposal would give each adult about $2,800 a month or about $33,600 a year.

Cardiff Garcia is a reporter for the Financial Times. He's with us, as he is each week, to discuss. Cardiff, how would this work?

CARDIFF GARCIA: So, it's exactly as you explained. And the idea here is very simple and, in fact, the simplicity of it is one of its strengths. Essentially, we have a tax and spend system, whereby we raise money with taxes and spend it in all kinds of things. And one of those things is on benefits and a safety net for lower-income Americans. Well, the idea of a basic minimum income is that you either supplement or replace some of those other benefits with a monthly check. And ideally, over the course of the year, that check would be enough to guarantee that all Americans either are raised above the poverty line or at least it would be enough to get most of lower-income Americans above the poverty line. So it's a very straightforward redistributed mechanism.

HOBSON: And I could see why some of the liberals would like that idea, guaranteed income program. Others may not like it so much. But I understand some conservatives are also kind of into this as well.

GARCIA: That's right. And it's sort of intuitive to see why it would have bipartisan support. As you noted, liberals like it because it essentially alleviates the strains of unemployment, of poverty, of inequality. But conservatives like it because it's a better alternative to the welfare state we just - we have right now. So essentially, right now, we have this massive bureaucracy. We have ideas like food stamps and housing vouchers and other lower-income benefits that are helpful.

But they also bring with them massive amounts of paperwork. They're vulnerable to fraud and to waste and things like that. And so, a basic minimum income is a very straightforward transferring mechanism. And conservatives like it because of that and also because it gives people a certain sense of control over their lives. So it's probably not politically feasible now, but it's starting to gain bipartisan support, even in the U.S. and in other parts of Europe.

HOBSON: But what about the critics? There are some who would think that this is disincentive to work, if you're getting $2,800 a month for nothing.

GARCIA: So that is the main contention. And the other sort of obvious cost here is just the price tag of the idea itself, which depends in part on the design. Interestingly enough, the disincentive to work is based on economic theory. But in the places where it's been tried experimentally - some small localities in the U.S., parts of Canada - that effect actually hasn't been that strong. It's actually been a very small effect, a very small disincentive to work. So actually, the idea seems to work pretty well. It's a bigger question and, obviously, untested on a much grander scale. But for now, I think the results are promising.

HOBSON: Yeah. Any another places trying this out?

GARCIA: So Cyprus, I think, right now is contemplating it. And as I said earlier, it's gaining some small measure of support in the U.S. and in Europe. And it has been tried in a small town in Canada. So we'll see if it starts to gain support. I think a big - I think Switzerland is going to be a big test case for this. And I think a lot of people are going to look to it to see, well, maybe this would work here.

HOBSON: And we're already getting some comments on our Facebook page about this.

GARCIA: I'm sure.

(LAUGHTER)

HOBSON: Cardiff, I'm going to read a couple of those, but I'll say goodbye to you.

GARCIA: Yeah, of course.

HOBSON: Cardiff Garcia, reporter at the Financial Times. Thanks as always.

GARCIA: All right. Take care, Jeremy.

HOBSON: And let's read some of these. From Julie Applegarth(ph), calls its communism. Rob Merinville(ph) calls it stupendously ignorant. He writes: This sort of poor subsidy will doubtlessly merge two distinctly different classes: those truly in need and those who are capable and cannot resist the lure of living off someone else's labors. I'll read one more here. B.T. Lim(ph) says: He'd rather see a guaranteed job program.

Let us know what you think at facebook.com/hereandnowradio. You can also go to our website, hereandnow.org. This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.


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Robin and Jeremy

Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

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