Vysoká škola CEVRO Institut

Master’s Thesis Bc. Pavel Martínek

Prague 2020 Vysoká škola CEVRO Institut, z.ú.

The Potential Implementation of Universal Basic Income and its Actual Development

Bc. Pavel Martínek

Study Program: Philosophy, Politics and Economics Specialization: Austrian Economics Adviser: Mgr. Ing. Pavol Minárik, Ph.D.

Master’s Thesis

Prague 2020 I hereby declare that this master's thesis is my own and autonomous work. All sources and aids used have been indicated as such. All texts either quoted directly or paraphrased have been indicated by text citations. Full bibliographic details are given in the reference list which also contains internet sources containing URL. This work has not been submitted to any other examination authority.

Prague, 29. 7. 2020,………………………….. Abstract

The universal basic income model has gone through a long theoretical and practical development. This is evidenced by the interest of theorists dating back to the sixteenth century and several launched and still ongoing pilot projects and experiments around the world. The theoretical part of this work describes the theoretical development of the concept of basic income and compares the approaches of different schools of economic thought to this model of redistribution of income and wealth in society. The empirical part answers the question of whether the implementation of universal basic income increases the welfare of society. The research focuses on projects that have been launched in Namibia, Finland, Iran and India. Based on the used comparative analysis of the conclusions stemming from the projects and the experiments, it can be stated that universal basic income positively affects the welfare of society.

In addition to the mentioned analysis, the last part of the thesis focuses on the possible ways of funding universal income. This comparison shows that funding of universal basic income through income taxation or creating new money is unsuitable. On the contrary, taxation of consumption and private financing appear to be preferable alternatives.

Keywords: Universal basic income, Welfare, Basic income experiments, Socioeconomic factors, Transfer policy Acknowledgment

This master’s theses would not have been possible without the support of many people. I would like to thank my thesis adviser Mgr. Ing. Pavol Minárik, Ph.D., who helped me to a lot, gave me really valuable advice and read my numerous revisions. I would also like to thank the rector of CEVRO Institute prof. Ing. Josef Šíma, Ph.D., who formed a great international PPE program and made it possible to study with the best in the heart of Europe. And finally, I would like to thank my family who always offered me the support and endured this long process with me. Contents

Preface...... 7

1. Theoretical part...... 9

1.1. Definition & Characteristics of Basic Income...... 9

1.2. History of Unconditional Income Ideas...... 10

1.3. Different Types of Subsidies (UBI vs Other Transfer Policies)...... 14

1.4. Negative Income Tax Model...... 17

1.5. Socialist Approach to UBI...... 21

1.6. Libertarian Approach to UBI...... 26

2. Empirical Part...... 33

2.1. Pilot Projects & Experiments...... 34

2.1.1. The Namibian Case...... 34

2.1.2. The Finnish Case...... 38

2.1.3. The Iranian case...... 42

2.1.4. The Indian Case...... 47

2.1.5. Other Cognate Projects...... 51

2.2. Comparison Among Projects – Results & Impacts...... 55

2.3. Possible Instruments of Financing...... 60

2.4. Impact on Welfare of Society...... 64

Conclusion...... 66

References...... 68 Preface

The theoretical development of unconditional basic income dates back to the sixteenth century. It has gone a long way from the idea of providing a safety net for the socially disadvantaged individuals, to the socialist social dividend, to the model of negative income tax, and, ultimately, to the form that is widely discussed and studied by adherents of the left and the right today. The increased interest in the concept of universal income is also evidenced by a number of experimental and pilot projects launched at the end of the twentieth and the beginning of the twenty-first century around the world. The universal basic income model is often proposed as a more efficient and just replacement for the current social security and unemployment benefits systems. It is also discussed as a potential way of the distribution of resources in the case of replacing manual work by means of the automation of processes of production. However, opponents cast doubt upon its financial sustainability and warn of demotivation to work or other economic activity that its implementation may bring. This thesis focuses on the practical impacts of the implementation of such a model on economic and social situations of universal income recipients. Among other things, it analyzes the effect on the substitution of work for leisure time, which is often perceived as a potential risk associated with the implementation of universal income.

The main research question of the thesis is whether the implementation of universal basic income increases the welfare of society. The research seeks to answer this question by using a qualitative meta-analysis of secondary data. The data were obtained from studies that explore the socio-economic impacts of the implementation of universal income in unique pilot projects and experiments.

The text of the thesis is divided into the theoretical and the empirical part. The first part determines the concept of unconditional basic income, compares its characteristics and theoretical impacts with other alternative transfer policies and

7 describes its historical development. Its final section describes the socialist and libertarian approaches to the concept of universal income. The empirical part of the thesis analyzes the impacts of pilot projects that have been launched in Namibia, Finland, Iran and India. This part seeks to answer the research question through the comparative analysis of the impacts of the individual projects. In additional, this chapter also describes various options of funding the universal income and analyzes the impact of the implementation of universal basic income on the welfare of the societies affected.

8 1. Theoretical part

The first chapter is focused on the definition and basic characteristics of unconditional basic income (UBI). The following text describes its theoretical development reaching from Thomas More, John Stuart Mill, James Meade, to Milton Friedman. The next section categorizes and compares alternative transfer policies such as the Bismarckian social security system, Negative Income Tax, Basic Endowment or the concept of conditional basic income with UBI. The final part of this chapter describes the socialist and libertarian approach to the universal income model.

1.1. Definition & Characteristics of Basic Income It is necessary to define the concept of unconditional income in order to correctly understand how this income model works in practice. UBI can be most clearly defined as the income of an individual that is a transfer from the government. It is paid at given intervals and in the same amount to all members of society. It is also delivered unconditionally.1

There is simple categorization created by a worldwide organization BIEN (Basic Income Earth Network) which can be used for a more detailed definition. The organization set out five basic characteristics according to which it is possible to distinguish the UBI model from other socioeconomic tools used by governments:

• It is paid on an individual basis. On the contrary, it is no typical UBI model if the distribution and designation of income is specifically for households, a certain entity or region.

• Basic income has to be paid in the form of a widely accepted medium of exchange, such as money. The income is not subject to the obligation to

1 WIDERQUIST, K., A Critical Analysis of Basic Income Experiments for Researchers, Policymakers, and Citizens, Palgrave pivot, Cham, 2018, pp. 15-18. 9 use it for a limited range of goods and services (such as vouchers or food stamps).

• The income is paid unconditionally. That is, without any work requirements or proving afford to get a job. This is significantly different from established systems of social unemployment support systems.

• There exists a certain periodicity of income. The income is paid weekly or monthly. Not as a one-time grant.

• It is paid to everyone regardless of their life situation and wealth. This is another important point that distinguishes UBI from other social insurance systems. The UBI model operates without any means-test. For example, the applicant has to prove that he or she does not receive income from other sources and that his or her situation is difficult in a standard unemployment benefit system.2

There also exists the problem of classifying UBI like in the other cases of definitions based on characteristics and conditions. There are specific cases that do not fit into the exact theoretical framework, but their sense meets the requirements. The Alaska Permanent Fund Dividend could be a good example of that case, as we will see in following chapters.3

1.2. History of Unconditional Income Ideas

Although it may seem that phenomenon of UBI has been widely discussed in recent years, this is not the case. The history of this instrument dates back to the early sixteenth century. When it was considered in academic circles more likely on the basis of a basic social supportive system.

2 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp 18-23. 3 Ibid. Pp 16-17. 10 This chapter focuses mainly on theoretical development and proposals of basic income from number of thinkers and academics, rather than on proclamations or specific steps of political actors.

Thomas More mentioned the need for a social system as early as 1516 in his famous work Utopia. He illustrated the issue on the example of increasing crime and number of thefts, regardless of the amount of possible punishment. He explained that death by hanging for theft does not sufficiently discourage thieves if they have no choice how to ensure their needs. He therefore suggested offering people in difficult social situations any other means of subsistence instead of punishing them.4 This More‘s idea has been elaborated in more detail by Spanish philosopher Johannes Ludovicus Vives in 1526. He sent to the mayor of Bruges a proposal to provide a living wage for inhabitants. His proposal for this assistance was to be compulsorily implemented by the municipal government. It focused on the poorest sections of population and was designed to work as prevention against crime. These individuals had to show a willingness to work to get some support from the municipality.5 In this sense, it was a certain social security system rather than an unconditional subsidy.

None of these authors are a protagonist of unconditional income, but rather a form of a social system of the minimum wage. However, their development was really important for the future development of UBI concept. These are the first comprehensive ideas about the systematic functioning of a tool that will help individuals in poverty and work as crime prevention.

A more modern approach to basic income was introduced by Thomas Paine in 1797. His mindset was based on a philosophical approach to Earth as the property of all. Earth (or more precisely land on Earth) was originally intended for common use by all humans. 4 MORE, T., Utopie, Prague, Mladá fronta, 1978 (orig. 1516), pp 33-35. 5 History of basic income, Louvain-la-Neuve: Basic Income Earth Network, available at https:// basicincome.org/basic-income/history/ 11 Every individual who holds and cultivates land consequently "owes" this part of the land to the other members of the society. This is because of their original opportunity to hunt, fish and pick fruit on this land is denied.

Accordingly, in his opinion, landowners should contribute to a fund that would partially compensate others for not owning land and not being able to use it as non-owners. He suggested that this transfer should be paid to everyone in society, regardless of their wealth.6 He based this mindset on his approach to Earth. He believed that land should belong to everyone, so that every person is born with some property. In this respect, he was strongly influenced by the Physiocrats and their agro-economic doctrine.7 Pain found his justification for everyone's share of the land in the Christian tradition. The earth is a property of everyone, regardless of whether he or she is poor or rich. This idea of Pain’s was later followed by American politician and economist Henry George. He defended the real estate tax as the only just tax because it is connected to land, which everyone is entitled to.8

Another approach, that can be considered as comprehensive, is Fourierism. Respectively the work of its follower John Stuart Mill. He published his well- known book Principles Of Political Economy in 1848. In the chapter on property, Fourierism is presented as a non-communist socialist system in which neither private property nor inheritance is prohibited. However, the economy in this proposal is divided into smaller self-governing parts where the community sets a minimum income that will be guaranteed to both healthy members and those unable to work. Funds should be generated from profit made by the community. He considered the ideal size of such a unit around two thousand members. Dividends should be paid to the owners of the capital, but their intervention in the 6 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp 32-33. 7 EISINGER, C., The Influence of Natural Rights and Physiocratic Doctrines on American Agrarian Thought during the Revolutionary Period, Agricultural History, Vol.21, No.1, (Jan., 1947), pp. 18-20. 8 PARIJS, P.V. - VANDERBORGHT, Y., Basic Income: A Radical Proposal for a Free Society and a Sane Economy, Massachusetts, Harvard University Press, 2017, pp. 70-72, 271-272. 12 management of the property will be minimal. In this proposal, he also argued to establish a central authority of the group, which would carry out all buying and selling operations.9

After the First World War, the British philosopher Bertrand Russell advocated the idea of combining the advantages and characteristics of socialism and anarchism. In a proposal he described in his book Roads to Freedom in 1918, he combines interpersonal solidarity, justice, freedom and equality, regardless of wealth and willingness to work. It comes with a new social model that would provide all individuals with a small amount of resources, whether they work or not. This income would be sufficient for every individual to be able to get buy. So everyone could consider whether to be lazy and receive a "vagabond‘s wage", or to work and satisfy themselves with more luxurious goods. Russel directly described this income as “sufficient for necessaries”.10 From today's perspective, it was the first complex proposal that has been presented with similar characteristics and on the same grounds as it is discussed today.

A few years later, specifically in 1935, British economist George D. H. Cole came up with a concept that stemmed from the social credit movement. Thus, he followed the direction of philosophical thought developed at the beginning of the twentieth century and aimed to bring the system closer to the level of individuals and to ensure absolute economic security.11 Cole's approach was really revolutionary because developed a system in which each individual receives income partly as a wage for work and partly in the form of direct payment from a government. The amount of subsidy which person receives from a state should be sufficient to cover his or her basic needs to survive.12 9 MILL, J. S., Principles Of Political Economy, New York, Augustus Kelly, 1987 (orig. 1849), pp. 194-197. 10 PARIJS, P.V. - VANDERBORGHT, Y., Basic Income: A Radical Proposal for a Free Society and a Sane Economy, Massachusetts, Harvard University Press, 2017, pp. 78-80. 11 Ibid. p 81. 12 HUTCHINSON, F. - BURKITT, B., The Political Economy of Social Credit and Guild Socialism, Routledge, London, 1997, pp. 119-124. 13 Cole's follower, Nobelist and advocate of the "Social Dividend", James Meade described the system and its basic conditions more specifically. According to him, the social dividend should be a donated income from a state to every citizen. It should not be taxable and should be for all age groups.

He also strongly emphasized the need for unconditionality regardless of the social situation, health status or employment of an individual.13 I described the most important historical milestones of unconditional basic income development in this part of the thesis. Milton Friedman's approach in the form of Negative Income Tax will be discussed in the following text.

1.3. Different Types of Subsidies (UBI vs Other Transfer Policies)

There are many different forms of social support programs that have evolved, emerged, and disappeared over time. If I follow the characteristics of unconditional income, it is easy and obvious to see how UBI categorically differs from the established traditional social insurance systems, which are widely used by governments around the world. A social insurance program is the most widespread model in Europe which guarantees a certain minimum income. It is a Bismarckian social security system that was introduced at the end of the nineteenth century in Germany by Chancellor Otto von Bismarck. A similar system was widely implemented throughout the European continent after World War II. This system included only the oldest and youngest citizens of the country in its early form. However, it expanded later to a group of citizens of working age. The Bismarckian system is characterized as a social model that provides a wide range of benefits and subsidies by the state, a minimum share of private banks and insurance companies and a relatively balanced level of subvention.14

13 TIER, W. V., From James Meade‘s ‘Social Dividend‘ to ‘State Bonus‘: An Intriguing Chapter in the History of a Concept, Œconomia, Vol. 8, No. 4, 2018, pp.439-450. 14 CONDE-RUIZ, J. I.- PROFETA, P., What Social Security: Beveridgean or Bismarckian?, Universita Bocconi, FEDEA, 2003, pp. 2-8. 14 This system differs from unconditional basic income mainly in that it requires the individual to prove the need by a means test or a test whether he or she deserves the subsidy. It could be well shown on the example of a retired old-age pensioner. The amount of this income is calculated on the basis of the contributions that the individual has made to this system during his productive life. The second example can be an applicant for social need support within the minimum income system. The applicant must provide true evidence of the amount of his or her asset, the amount of income from part-time activities and he and his family must meet certain conditions (i.e., number of children, employed / unemployed partner, etc.). If we compare this widespread social security system with the universal basic income, it is clear that the recipient in the UBI system does not have to meet any of these conditions. This is the biggest difference between these two systems.15

Another useful model is Basic Endowment. It is a concept that was defended, for example, by already mentioned Thomas Pain in 1797. It meets a number of conditions, the same as basic income. For example, it is paid on an individual basis and without the need to prove or test social situation or income, and it is also paid in the form of a liquid medium of exchange. The cancellation or substantial reduction of other social benefits and benefits is also expected in the model of Basic Endowment (similar to UBI). However, the main difference is that it is not paid at monthly intervals but as a one-off block payment. It is typically paid at the age of maturity when a certain amount of means is credited to an individual's account. An interesting feature of this tool is the possibility to choose whether the citizen wants to receive a contribution in the total amount once, or conversely, to spread this payment over individual months and have a guaranteed income for the rest of his or her productive life. The specific proposal presented by Bruce

15 PARIJS, P. V., A Basic Income for All, Boston Review, Cambridge, October / November, 2000. 15 Ackerman and Anne Alstott envisages a one-off payment of $ 80,000 (i.e., $ 151 per month until retirement at the age of 65).16

This system may seem to be a better form of universal income, as it is purely up to the receiver which interval of payment he or she chooses. An individual can use a one-off payment to redeem tuition, buy real estate, start a business, or has a certain income for the rest of his life. However, the problem arises in practical implementation. Firstly, those who come from the wealthier strata of society do not need a one-off income like the poorer ones. In addition, richer families are, on average, better educated than poorer ones. Therefore, there is a presumption that they will deal with these funds more judiciously and meaningfully.

It would be like to say that freedom also means freedom in the management of property, whether it is effective or not. But that brings us to the second point. At the moment when the recipient spends the entire one-off payment during one night in the casino, the whole system ceases to function as a social network. An individual can no longer rely on a certain monthly income and can become a social burden for society. It is therefore not a tool that is automatic and realizes one of the main goals of universal income. On the contrary, it can cause many social problems in practice.17

An interesting alternative to unconditional basic income is the concept of "conditional unconditional/basic income". This is a proposal of a system that provides general payment to all members of society. Nevertheless, the payment is conditioned by active education. If the individual is working, he or she is not entitled to gain such a benefit. On the contrary, the citizen will receive an income from the government if he or she is unemployed but studying at that time.

16 ACKERMAN, B. - ALSTOTT, A., The Stakeholder Society, Yale University Press, 1999, pp. 65-75. 17 PARIJS, P.V. - VANDERBORGHT, Y., Basic Income: A Radical Proposal for a Free Society and a Sane Economy, Massachusetts, Harvard University Press, 2017, pp. 29-31. 16 In other words, an individual either works for others (job) or works for himself (education).18

This model should strongly compensate the impact of job losses caused by the restructuring of the digital economy within low-skilled professions are being replaced first. For example, a taxi driver whose source of livelihood will be replaced by an autonomous car will be motivated to retrain and study if he has the security of a guaranteed income during this education period. In fact, it can be perceived as a form of scholarship. It can work similarly in the case of an economic or current pandemic crisis. Some citizens who lose their jobs will just redirect their efforts to education.19

However, the design of this model brings a certain controversy with it. Let's give an example that such conditional income will be 10,000 CZK. If the individual is employed, he will receive a salary of 30,000 CZK. This income is (for simplicity) taxed at 20%, which is in absolute value 6,000 CZK. An individual who wants to return to work and stop being in "study mode" has increased cost of returning to work to 16,000 CZK. This phenomenon will motivate an individual to study, but no longer to return to work. Conditional general income by studying, or anything else, will only preserve citizens in a more favorable regime for them.20

1.4. Negative Income Tax Model A similar scheme as basic income was developed by Milton Friedman in 1962. He called it a negative income tax. Later, this model was innovated many times. However, it was designed as a combination of a tax and subsidy system in its original form. In this model, the poorest part of the population pays no income

18 SEDLÁČEK, T., Vznikne nová “nepotřebná“ třída lidí. Co s ní?, Hospodářské Noviny, Prague, Economia, August, 2019. 19 SEDLÁČEK, T., Ve virtuálnějším světě by společnost měla být podmíněná vzděláním, Hospodářské Noviny, Prague, Economia, April, 2020. 20 STROUKAL, D. - ŠOLTÉS, M., Rozmohl se nám tu takový nešvar: Nepodmíněný příjem, Roklen24, Prague, www:https://roklen24.cz/a/SXafF/rozmohl-se-nam-tu-takovy-nesvar- nepodmineny-prijem 17 tax. On the contrary, they receive income from the government in the form of a regular social benefit. Wealthier citizens have to pay a tax. Nevertheless, they have to taxes only income above a certain level. The individual, whose income is higher than the limit, will not receive any benefit at all.

The limit is considered as an amount of credit by which the tax is subsequently reduced.21 In the following table, there is demonstrated a possible form of such a model. It uses a taxable income level of $ 6,000 and a uniform flat tax of 50%.

Table no.1. - Income under a NIT

Gross Income Taxable Income Tax Total Net Income

$0 -$6,000 -$3,000 $3,000

$3,000 -$3,000 -$1,500 $4,500

$6,000 $0 $0 $6,000

$12,000 $6,000 $3,000 $9,000

It is clear from the above table that the NIT concept also functions as a safety net because it guarantees a minimum income even if the individual does not earn even a dollar. In this case, $ 3,000 is guaranteed in the form of a subsidy from a government. If a person earns $ 6,000, his income is not taxable, as it is exactly at the limit of possible taxation. Nevertheless, he is not entitled to any benefit at the same time. In the end, we can see $ 12,000 gross income but only $ 6,000 of the income is taxed at 50% tax. Friedman himself wanted to completely replace other benefits, subsidies and social insurance programs with this model. In his opinion, the negative income tax system is great because it solves the problem of poverty

21 FRIEDMAN, M., Capitalism and Freedom, The University of Chicago Press, 2002 (orig. 1962), pp.190-195. 18 automatically and directly on an individual basis. He strongly opposed support programs targeted at a specific group of people (seniors, low-income earners, mothers with two or more children, etc ..) or a segment of an economy (farmers, industry, unions, etc ..).

He specifically stated that „There is every reason to help the poor man who happens to be a farmer, not because he is a farmer but because he is poor.“22 There are some similarities between UBI and NIT models, especially in terms of their intention and the issues they solve. However, the comparison between them shows obvious differences in functioning. Firstly, NIT does not send any income or otherwise significantly benefit all individuals in society.

This is a model in which subsidies flow only to a selected group of people. Income from a government is paid only to those who are in need. Respectively, their income is below a certain threshold level set by the government. This may have a smaller impact on public budgets and it could be a cheaper alternative. Furthermore, the NIT does not cause any confusion and unnecessary procedural steps and administrative action. Conversely, in the UBI system, money is paid to everyone and then taxed back from higher-income individuals.23

However, the noticeable latency seems to be problematic, when the Negative income tax model starts to work and provides a subsidy to those in need. The delay between a job loss or a drastic drop in an individual's income and the submission of a tax return at the end of the fiscal period can be devastating for a person in need. That is, in the case when social security programs that provide payments in advance or a faster response does not work simultaneously with NIT. This problem of delayed reaction could be avoided by introducing negative advanced payments of tax. Unfortunately, such a system does not currently work within tax systems. 22 Ibid. p. 191. 23 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 216-219. 19 A similar problem is found in the following complaint against the NIT, namely the dangerous phenomenon of the unemployment trap. The demotivation of unemployed people to seek employment often does not stem from purely economic reasons, where taxation of labor and loss of unemployment benefit increase the cost of return to work. (see part 1.3.) A strong factor influencing their return is often the uncertainty of maintaining employment and income. This phenomenon occurs most often in socially weaker people with little or no savings, who are afraid of losing their jobs and subsequent administrative delays and waiting for subsidies. This problem is solved by universal income automatically and immediately by representing a guaranteed income regardless of an individual's employment or unemployment.24

Moreover, The Canadian Journal of Economics published a study whose findings show a high probability of reduced investment in self-education, especially for net beneficiaries in the NIT model. Consequently, it worsens the problem of their reintegration into the labor market.25

Last, but not the least disadvantage of implementation of the negative income tax model is the obvious need to extend bureaucratic apparatus for servicing this policy. An increase in administrative tasks at a purely individual level will lead to the growth of the state. Milton Friedman was also aware of this problem. He therefore proposed to incorporate the NIT into the current tax system and partially or completely replace all social care and subsidy programs. This would make administrative costs lower. However, the question is whether such a replacement is politically acceptable at all.26

24 PARIJS, P. V., A Basic Income for All, Boston Review, Cambridge, October / November, 2000. 25 RAE, S. A., Investment in Human Capital under a Negative Income Tax, The Canadian Journal of Economics, Toronto, Vol.10, No.4 (Nov., 1977), pp. 612-616. 26 FRIEDMAN, M., Capitalism and Freedom, The University of Chicago Press, 2002 (orig. 1962), pp.192-193. 20 On the contrary, the introduction of universal income signals the simplicity of administration and a greater understanding of this model by state and also by individuals.27

There exists a system that is very similar to NIT. It is an Earned Income Tax Credit, which allocates the largest amount of money transfers to US citizens. It is partly based on the NIT concept, but it is burdened with conditions and means- testing.28 Only citizens who work, are low-income, have a family with children are entitled to gain the subsidy. Moreover, it is paid only once a year. It is therefore unnecessary to describe and analyze the Earned Income Tax Credit more because it misses the UBI concept in its elementary characteristics.29

1.5. Socialist Approach to UBI

Socialism as an ideology arose based on a systematic critique of capitalism. This critique is a useful starting point for evaluating the socialist approach to the unconditional basic income model. There are basic socio-economic principles that are universally applicable and characterize the socialist doctrine and the reasons why many socialists argue for the implementation of the UBI model.

The central idea of socialism is to create a classless society, or rather to strengthen the working class as the dominant class at the expense of the capitalists. Conversely, capital owners / capitalists are the dominant class in capitalism from this point of view. The implementation of UBI partially tackles this dominance on behalf of employees. The fundamental benefit of universal income should be in reversing the asymmetry of economic, political and bargaining power that now

27 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 218. 28 GROOT, L. - VEEN, R.V.D., Basic Income on the Agenda: Policy Objectives and Political Chances, Amsterdam University Press, Amsterdam, 2000, pp. 43-44. 29 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 225-227. 21 belongs to capital.30 Labor supply will be reduced in the labor market thanks to partial income compensation through the UBI. Therefore, the bargaining position of employees will improve on an individual as well as on a collective basis. As a result, universal income will enable workers to negotiate higher wages, better working conditions or shorter workweek..31

This idea is followed by the socialists' effort to decommodification of labor power. In a capitalist economy, people must own and provide the means of production, or sell their labor power and time in the market. This is called commodification of labor power because the labor offered is treated as a commodity. If the economy is moving towards satisfying needs (for example through a social security program) rather than maximizing profits, it can be described as the decommodification of labor power. Socialists, therefore, view work for money for employers as a certain form of slavery. A person who is forced to work for subsistence is unfree.

Only when he or she becomes socio-economically independent on his wage and on the employer that they become truly free.32 However, if the income through the UBI is sufficient to be able to substitute an acceptable level of wages, people will be able to fully decide whether to enter the labor market at all or to be satisfied with the received subsidy. This will allow people to engage in activities that are not profitable. It could be difficult to finance these activities without resources like philanthropy in a pure market economy without universal income. For example, it can be various forms of non-profit culture, community organizations, political and civic engagement, etc. From this point of view, they are therefore free.

30 SRNICEK, N. - WILLIAMS, A., Investing the Future: Postcapitalism and a World Without Work, Verso, London, 2015, p. 120. 31 SCULOS, B. W., Socialism and Universal Basic Income, Class, Race and Corporate Power, Florida International University, Vol. 6, No. 1, 2008. 32 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 459-464. 22 From a socialist point of view, it is necessary to ensure a certain level of social security and to reduce income inequality (or even to unify wages completely). The solution to this vision can also be partly ensured through universal income. Of course, it will depend on the specific parameter settings of such a program in practice. However, in essence, the UBI automatically redistributes income and wealth from high-income individuals to low-income individuals, a trend that appeals to most socialists and offers them some form of capitalist transformation.33

This section summarized the main reasons why socialists argue for universal income. However, their approach is not unambiguous. There are also arguments that reject the UBI model.

Firstly, according to socialists, the replacement of specific and concrete subsidies on an individual basis by general universal basic income is not possible. UBI must be understood only as a certain basic level and income security, which will be supplemented by other unconditional services provided by the state. These are, for example, education, public health, social housing, etc.

The need to purchase these services privately and directly may change the universal basic income to an absolutely irrelevant income in relation to the expenses of a person in need. For example, the price of any insurance increases significantly with the risk of the insured thing or the insurer. If we convert this example to health insurance, it is obvious that an elderly or sick person will pay a higher price of insurance. As a result, socially disadvantaged groups may be in a worse position than before the introduction of universal income and the cancellation of other social and health policies financed from the state budget.34

33 WRIGHT, E. O., Basic Income as a Socialist Project, Rutgers Journal of Law and Urban Policy, Rutges School of Law, Vol. 2, No. 1, Fall 2005, pp. 196-203. 34 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 470-471. 23 Socialism is essentially based on the working people and its ideal goal is to ensure full employment. Thus, it is based on the people who work, not on the people who receive benefits and subsidies. The second reason why the Socialists criticize the implementation of UBI stems from their approach to the labor market.35 They argue that its launch would have a negative impact on people's motivation to work. There is no reason why anyone would want to work when everyone in society expects a guaranteed income. This trend could destroy the functionality of the UBI model and the economy as a whole.36 Let us leave aside the fact that there is a similar "cheating" within the current social security system even if the conditions for gaining a subsidy are not met. A solid argument against this fear of free-riding is the very nature of people, i.e.,their inner satisfaction from work and urge to cultivate the real world around them, not laziness.37

If we focus on more practical arguments, there are already groups of people whose identification is very costly today, but they certainly cannot be labeled as black passengers of the system. People who have a medical or mental illness that limits their ability to work at various levels are typical examples of these groups. Determining the true state of their disability and distinguishing it from an unwillingness to work can be costly and even impossible in some cases. Another large group of potential recipients of universal income is people who create values that can not be quantified by money. They simply do not have an official income. Typically, these are family members who take care of the household, students or various non-profit activities that are not rewarded with wages. Beyond these arguments, it is clear that many people are motivated not by the level of income, but by getting respect and appreciation from others in society. This will avert the proliferation of the free-rider problem and misuse of the UBI system. Whether we 35 SCHWEICKART, D. - LAWLER, J. - TICKIN, H., Market Socialism: The Debate Among Socialists, Rouletge, New York, 1998, pp. 60 – 61 36 MARANGOS, J., Social Dividend Versus Basic Income Guarantee in Market Socialism, International Journal of Political Economy, M.E. Sharpe, Vol. 34, No. 3, Fall 2004, p. 28 – 29. 37 CROWTHER, F. - CALDWELL, B., The Workplace in Education, Acea, Rydalmere, 1994, pp. 16-17. 24 view free-riding as a natural but marginal risk, or as a scarecrow that can ruin the whole idea of universal income, it is important to realize that this is an ethical and moral problem. From this point of view, it will diminish by the development of society and its respect for these values.38

This view is often interpreted by representatives of trade unions. They argue that UBI is just a tool that forces hard-working people to support lazy citizens. However, there is a stronger argument why trade unionists attack the introduction of universal income. There exists a real possibility that workers will no longer need unions thanks to the implementation of UBI, i.e., thanks to the improvement of their bargaining power in the labor market and the guarantee of a minimum income. This scenario will occur mainly in the case of trade unions which focus their activities only on negotiating the minimum wage.39

Specific models have been proposed from socialist circles. These models solve the problem of free-riding in some way and should achieve full employment. They support the implementation of Job Guarantee or Social Dividend system.

However, these proposals are difficult or even utopian to realize. In the first case, the Job Guarantee is about achieving full employment through a state that acts as an employer of last resort. Nevertheless, it is really difficult to achieve practical implementation and testing of free-riders is expensive as explained in the paragraph above.40

In the second case of Social Dividend, it is an idea developed by Oskar Lange in 1936. The model of social dividend is similar to the universal basic income, especially in the part of allocation and distribution of resources.

38 PARIJS, P.V. - VANDERBORGHT, Y., Basic Income: A Radical Proposal for a Free Society and a Sane Economy, Massachusetts, Harvard University Press, 2017, pp. 99-106. 39 WRIGHT, E. O., Basic Income as a Socialist Project, Rutgers Journal of Law and Urban Policy, Rutges School of Law, Vol. 2, No. 1, Fall 2005, pp. 196-203. 40 PAUL, M. - DARITY, W. - HAMILTON, D., Why We Need a Federal Job Guarantee, Jacobin Mag, New York, 2017, available at https://www.jacobinmag.com/2017/02/federal-job- guarantee-universal-basic-income-investment-jobs-unemployment/ 25 On the other hand, the condition for its implementation is a different method of financing and a strictly different approach to ownership. Within the social dividend system, the economy is centrally planned and part or all of companies' shares are owned by the state. The dividends are distributed to members of the society through the state ownership. Although this model is similar to universal income in its purpose, the method of implementation and the radical change of institutions do not allow this model to be used in the capitalist economy.41

1.6. Libertarian Approach to UBI

Specification and determination of the libertarian approach to the universal basic income seem problematic. At one end of the libertarian thought spectrum, we can include anarcho-capitalists who reject the reasons for the existence of the state and government as unfounded. They argue that the voluntary cooperation of individuals in associations and organizations sufficiently protects human life and property.42 There is also a large group of minimal state liberals who focus only on the basic protection of the population from violence and theft. Only such a form of state is justifiable by them.

A similar position is supported by classical liberals. However, they allow state intervention even above the level of the night-watchman state. According to them, the state should provide public goods and reduce market failures arising in the free market. On the other side of the spectrum, there exists social or left-wing liberalism, which advocates the state as an active player in ensuring freedom for individuals. Such freedom is achieved only if citizens are educated, healthy and do not live in poverty from their point of view. Social liberals believe that such a situation should be secured and guaranteed by the state through its policies.43 41 TIER, W. V., From James Meade‘s ‘Social Dividend‘ to ‘State Bonus‘: An Intriguing Chapter in the History of a Concept, Œconomia, Vol. 8, No. 4, 2018, pp.439-450. 42 HOPPE, H. H., Rothbardian Ethics, LewRockwell, 2002, available at https://www.lewrockwell.com/2002/05/hans-hermann-hoppe/rothbardian-ethics/ 43 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 439-440, 447-448. 26 Each version and form of liberalism advocates a different level of redistribution of wealth in society. It is not crucial to analyze various approaches of thought and forms of liberalism for the purpose of this thesis. Liberalism can be interpreted and understood in absolutely different forms depending on the region and historical use. To declare oneself a liberal in the United States means to be a follower of the left spectrum. On the contrary, to declare oneself a liberal in France means to be an advocate of the extreme right. A similar confusion stems from misuse liberalism as a term can be seen around the world.44

For this reason, it is more important to describe the right-wing liberal approach to universal income in general. Common features of this ideology include shared characteristics such as the defense of civil and political freedom, a strong emphasis on private property, and a rejection of coercion. But above all, liberals strongly advocate a free market environment which should be intervened only in unique cases, or ideally let the market and its mechanisms work without any intervention by third parties.45

The basic logic of supporting the redistribution of resources in society is clear. The approach is based on self-ownership. It implies that an individual does not have to and cannot be forced to contribute his work and profit for the benefit of someone else.46 In other words, redistribution through taxation is unjust in this respect and it actually acts as working for other's benefits. Taking the result of one's efforts under the threat of violence is illegal.47 Profit justly deserves only to the individual who worked on it and whose effort made that output. The individuals own themselves, just as they own the fruits of their labor.

44 KOTRBA, Š., Exkluzivní rozhovor s François Bayrou, Britské listy, O.S. Britské listy, Praha, 2006, available at https://legacy.blisty.cz/art/28336.html 45 MISES, L. V., Liberalismus, Liberální Institut, Praha, 1998, pp. 157-159, 183-185 46 MUNGER, M. C., Basic Income Is Not an Obligation, But It Might Be a Legitimate Choice, Basic Income Stuides, Vol. 6, December 2011, pp. 3-4. 47 ZWOLINSKI, M., Classical Liberalism and the Basic Income, Basic Income Studies, Vol. 6, Is. 2, December 2011, p. 2. 27 The implementation of UBI would therefore imply the unjust thefts of time and property which belong to workers.48 However, the legitimate question is how absolute is this right.

Eric Mack argues that there are moral and ethical principles that take precedence over absolute property rights. He shows that on the well-known concept of freezing hiker. This is the story of a hiker who is surprised by a fatally cold snowstorm in mountains. He could not predict the storm. There is a locked but unoccupied cottage, which can save his life from freezing. According to the absolute concept of property rights, he should respect the property right of the owner of the cottage at the cost of his own life. According to Mack, there is no moral theory to defend and say that an individual should sacrifice his life to others because of the absolute concept of property rights.

It even contradicts the presumption of self-ownership as such, because the individuals cannot be forced to give up themselves - their basic property rights. Turning this argument to the example of universal income, it is clear that it would be very chaotic to allow arbitrary intervention to property rights by anyone solely on the basis of an unexpected need arising from an urgent misery. For this reason, it is more logical and just to use a social safety net that does not allow individuals to find themselves in such a need. It seems to be a better situation than the chaotic justification of the violation of property rights at the individual level.

This safety net should provide minimal support only for those who did not get themselves into a difficult situation through their own conscious fault and cannot find employment. However, as already mentioned in the previous part of the work (see part 1.5.), trying to identify who is able to work and who is not, or who caused themself a difficult social situation and who did not, will be very costly and erroneous.49 48 NOZICK, R., Anarchy, State, and Utopia, Blackwell, Oxford, 1974, pp. 167-174. 49 PARIJS, P.V. - VANDERBORGHT, Y., Basic Income: A Radical Proposal for a Free Society and a Sane Economy, Massachusetts, Harvard University Press, 2017, pp. 99-106. 28 Consequently, the safety net would create errors on an individual basis as part of the testing of applicants and would leave some of them in need without such support. That would justify the violation of these "freezing tourists" in the property rights of others and boost chaos in society.50

One of the main practical and empirically provable arguments for the implementation of universal income is an inefficiency of the current social security system, as described by Michael Munger. The resources that are spent each year to combat poverty in the United States compared to the number of people who are officially in poverty shows that income per capita is well above the poverty line. The total United States spending on these programs equals $ 1 trillion a year. If we divide this amount by the number of people in poverty in the US, it is $ 20,000 per individual or $ 62,000 per poor family of three. This fact puts the financial position of such a family not only above the poverty line but even above the average income of the population. So how is it possible that poor citizens of the United States are not so "rich"?

This inefficiency is caused by a complicated administrative process that allocates subsidies through 126 different anti-poverty programs and employing around 60,000 employees (employed only by federal governments). The implementation of the universal basic income and the replacement of current social programs are often challenged by the argument that "UBI pays people not to work." However, the opposite is true. The social and unemployment support system creates a demotivation to work and preserves individuals outside the labor market. If they return to work, they will no longer receive any unemployment benefits and will have to tax their income. The net profit of getting a job is often so small that they prefer to stay at home. The universal income does not create such demotivation. On the contrary, it allows people to earn above this guaranteed income level.51

50 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 442-444. 29 There also exists support in the form of various vouchers to purchase food or direct payments of rent for the socially disadvantaged people. The support through vouchers is the third example of inefficient redistribution. The vouchers are used in the belief of the proper education of the poor by politicians and the bureaucratic apparatus. These vouchers and specific purpose payments are often subsequently traded on the black market at a much lower price, as they have low liquidity and do not meet the needs of the beneficiaries. It is obvious that only the beneficiary is able to prioritize how he or she will use the subsidy. Control and reduction of consumption are not used by the state over the rich, so there is no reason why it should be controlled over the poor. Such measures only stigmatize and deepen the differences in autonomy between the rich and the poor.52

A very frequently used argument against the implementation of universal basic income is the injustice of this model. Opponents typically argue that the UBI model only redistributes wealth from rich to poor. Some poor people objectively deserve this help and should be entitled to it but others only abuse the generosity of the system.53 However, this argumentation is based on a certain misunderstanding of the UBI concept. Firstly, the abuse of a subsidy can occur only if the income is conditioned by some test and the applicant lies to receive the benefit (as may be the case in current circumstances). There is no such thing as "abuse" of the subsidy in the case of the unconditional basic income because everyone is entitled to it without meet any conditions.54

Secondly, the injustice and abuse of social security programs are a real practice of those that run today. Social programs act as a tool for distributing subsidies on the basis of individually tested conditions that indicate how much the applicant is in 51 MUNGER, M. C., Tomorrow 3.0 – Transaction Costs and the Sharing Economy, Cambridge University Press, Cambridge, 2018, pp. 131-151. 52 MUNGER, M. C., Basic Income Is Not an Obligation, But It Might Be a Legitimate Choice, Basic Income Stuides, Vol. 6, December 2011, pp. 5-10. 53 PARIJS, P. - HRUBEC, M. - BRABEC. M., Všeobecný základní příjem: Právo na lenost, nebo na přežití?, Praha, 2007, pp 55-57. 54 Ibid. p. 61. 30 need. This practice allows, according to the school of public choice, a wide range of ways of rent-seeking and motivates applicants to "be poor enough" to get support. Estimates point to a significant dispersion of such funds. it is estimated that 30% of gross domestic product is spent on non-productive activities through rent-seeking in the United States. The only way to block these practices is to somehow symmetrize the amount of subsidy and limit the autonomous decision- making of bureaucrats on individual cases. This is precisely the problem solved by the implementation of UBI. The UBI model does not allow a different position of individuals when receiving payment thanks to the symmetry and generality of the basic income.55 The wasting of scarce resources is partially solved by a shift to the universal income model that would reduce social policy expenditure, increase the amount received by beneficiaries and at the same time increase the freedom and autonomy of beneficiaries. It would be also possible to significantly reduce the administrative apparatus.56 Of course, it will depend on the specific settings of parameters, but as a result, the implementation of UBI would bring an improvement for all. It would reduce the expenses of net contributors to the system and also improve the situation of net beneficiaries. It would therefore be Pareto-superior.57

From a libertarian perspective, one of the greatest benefits (and accepted as justified by almost all libertarians) is the replacement of the current inefficient and unjust social welfare system. Respectively, they directly specify that in the case of the implementation of UBI, no law which would provide benefits only to certain citizens and does not comply with the condition of symmetry may be accepted by

55 MUNGER, M. C., Basic Income Is Not an Obligation, But It Might Be a Legitimate Choice, Basic Income Studies, Vol. 6, December 2011, pp. 5-9. 56 FRIEDMAN, M., Capitalism and Freedom, The University of Chicago Press, 2002 (orig. 1962), pp.190-195. 57 MUNGER, M. C., Tomorrow 3.0 – Transaction Costs and the Sharing Economy, Cambridge University Press, Cambridge, 2018, pp. 131-153. 31 federal, state or local government. They also definitely require the termination of all such existing programs.58

It is clear that even such a plan to reduce the current ineffective programs will not convince most minimal-state libertarians or anarcho-capitalists to support and advocate the implementation of UBI. Since this model is still essentially planned as a redistribution of wealth in society and violation of private property.59 Nevertheless, for many of them, it represents a sufficient alternative to current social security programs and the reduction of waste associated with the redistribution of resources.60 These impacts of UBI are the main reasons why some great thinkers of liberalism have been expressed sympathies for the implementation of universal income. Their recommendations are slightly different, but the basic form and objectives of the proposals are the same. James Buchanan, Milton Friedman, and Frederick August von Hayek have advocated the idea of the same minimum income for all for a large part of their careers.61 62

58 MURRAY, CH., In Our Hands: A plan to Replace the Welfare State, The AEI Press, Washington, 2006, p. 10. 59 ZWOLINSKI, M., Classical Liberalism and the Basic Income, Basic Income Studies, Vol. 6, Is. 2, December 2011, pp. 11-12. 60 PARIJS, P. - HRUBEC, M. - BRABEC. M., Všeobecný základní příjem: Právo na lenost, nebo na přežití?, Praha, 2007, pp. 143-145. 61 BOETTKE, P. - MARTIN, A., Taking the G Out of BIG: A Comparative Political Economy Perspective on Basic Income, Basic Income Studies, June, 2011, pp. 1-11. 62 ZWOLINSKI, M., A Hayekian Case for Free Markets and a Basic Income, IN: The Future of Work, Technology, and Basic Income, Routledge, 2019, pp. 7-12. 32 2. Empirical Part

This part of the thesis focuses on the description of selected projects of universal basic income, which have been launched or are still ongoing all over the world. The basic starting points are the studies based on surveys managed within UBI projects in Namibia, Finland, Iran and India. The projects were selected according to comparable results of the finished surveys and similar conditions and characteristics of the UBI model that was applied. The part of this chapter is concerned about an analysis of secondary data obtained from the mentioned projects and description of political, economic and social conditions in the locality. This qualitative meta-analysis is based on a combination of previously published study results and analysis of impacts on a particular entity. The original published primary data of individual projects were obtained through quantitative and qualitative methods. The following and fundamental part of this chapter is based on a comparison between UBI experiments, statistical data about aggregate indicators of the economies available from public sources and selected conclusions of studies researched within similar projects in the United States, Canada and Kenya.

The final part of the chapter is devoted to a synthesis of knowledge resulting from this comparison and their application to economic models, which describe some theoretical assumptions. The main target of the empirical part is to answer, based on the research, whether the implementation of the universal basic income increases the welfare of society. This part compares the impacts of universal income projects to answer the main research question. There were selected socio- economic indicators, which are as realistic as possible to demonstrate the well- being of the community, as the main criteria of the impact. This selection also took into account their mutual comparability.

33 Impact on poverty level, malnutrition, economic activity and individual indebtedness were selected as the main socio-economic indicators. These indicators were also consensually selected by researchers who evaluated the impacts of specific UBI pilots and experiments.

2.1. Pilot Projects & Experiments

The basic starting points of the empirical part are the real projects and experiments of universal basic income and studies evaluating their socio- economic impacts. These projects comply with the UBI criteria, which were defined in the theoretical part of the thesis. This section describes launched projects, the political and economic consequences and the results of studies.

2.1.1. The Namibian Case

The African Unconditional Income Project was launched in January 2008 under the name Basic Income Grant and ran until December 2009. Namibia was chosen as the optimal place to launch the very first UBI pilot project in a relatively pure form. Specifically, the multi-ethnic poor rural area of Otjivero-Omitara with approximately 1,000 citizens, located less than 100 km east of the capital city Windhoek. Namibia was chosen as an ideal location because it is a mineral rich country but with a small middle-income population. At the same time, Namibia's economy was in trouble due to a high level of unemployment (20,5%), poverty and one of the worst income inequalities in the world (the Gini index exceeded 63 points).63

63 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 357-359. 34 The project was designed to provide 100 Namibian dollars each month (equivalent to $ 7 at the time) to every child and adult who was not receiving a retirement pension.64 It is necessary to take into account the fact that the average household income in a rural area was around 512 Namibian dollars per month, but it was almost three times more in cities. The average size of a typical rural household was 5,5 members whereas 4,2 in an urban household. In addition, statistics show that 15% of the poorest citizens spend 104 Namibian dollars a month on average, while less than 6% of the richest spend 5744 Namibian dollars per month. Furthermore, the Central Bureau of Statistics presented a study in 2008, which says that almost a third of Namibians can not purchase basic needs such as food, housing, energy, water in the amount of 262 Namibian dollars per month.65 These statistics show that it is not relevant to use Gross national income per capita (which was $ 4,310 in 2008 at current prices) as a starting point for comparison. This is also due to the large difference in income between rich and poor or between the center and the periphery. The GNI per capita value in this case does not reflect the real situation of any group, as 20% of the highest-income population receives approximately 80% of the total national income.66 Given that the universal basic income pilot project was launched in a poor rural area, the analysis will continue to use 512 Namibian dollars ($ 36 in 2008 prices) as a default for household income.67

The Basic Income Grant pilot project was prepared by the "BIG Coalition", which was established in 2005 according to an international conference on poverty and income inequality in Namibia. Six organizations were involved in the BIG Coalition. 64 ČECH, N., Nepodmíněný základní příjem vede lidi k aktivitě a tvořivosti, 2013, available at https://levaperspektiva.cz/clanky/nepodmineny-zakladni-prijem-vede-lidi-k-aktivite-a- tvorivosti/ 65 JOUCH, H., Poverty, Unemployment and Inequality in Namibia, TEMTI – Economic Perspectives on Global Sustainability, EP 02, 2013. 66 KLOCKE-DAFFA, S., Is BIG enough?: Basic Income Grant in Namibia – report, University of Tubingen, Germany, 2012. pp- 4-5. 67 The World Bank – Data based on GNI per capita (current US$) in Namibia 35 These were mainly non-governmental organizations focused on working conditions, health care issues, access to education and the conditions of adolescents, but also a religious organization. Based on the success of the small- scale pilot project, their goal was to launch the universal basic income with support of the Namibian government throughout the whole country.68

In this case, the pilot project was launched and secured more in a private way than as a government policy. Funding was provided through voluntary donations to two grants launched in autumn 2007.69 The success and impact of the pilot project were analyzed on the basis of three studies, which included both qualitative and quantitative research. The first took place in November 2007 (two months before the first payment of universal income) to determine the baseline. This was followed by two further surveys in July and November 2008 to compare the results. The quantitative survey studied a sample of 398 individuals in 52 households. The following text will be based mainly on empirical data from the first (November 2007) and third (November 2008) qualitative survey for the clearest possible presentation of the effect of UBI on individuals.

The basic task of universal income in the case of Namibia was to reduce poverty. The direct effect of UBI was reduction of the quantity of critically poor individuals in the sample. Specifically, from 76% to 16%. However, this reduction could be achieved by simply modifying the amount of the subsidy. The socio- economic impacts that the pilot project has brought are far more interesting and surprising. During the focused period of one year, the most significant change was observed in the index of child malnutrition, which fell from 42% of malnourished children to only 10% in the experimental group, according to WHO standards.70 68 HAARMANN, C. - HAARMANN, D., Piloting Basic Income in Namibia – Critical Reflections on the process and possible lessons, 2012, available at https://basicincome.org/bien/pdf/munich2012/haarmann.pdf 69 WIDERQUIST, K., A Critical Analysis of Basic Income Experiments for Researchers, Policymakers, and Citizens, Palgrave pivot, Cham, 2018, p. 58. 70 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 360-362. 36 In terms of children's education, there was observed a remarkable improvement in early school leaving. Before the launch of UBI, almost 40% of children did not complete primary school. On the contrary, no one did not complete school in November 2008. In addition, more than double the number of parents started paying school fees and the absence of students in schools dropped by 42%.

In terms of the health care system, the villagers had to pay 4 Namibian dollars (ND) for each visit to the hospital. The hospital's revenues from patients clearly show a trend of increasing care for their health. The revenues increased from 250 ND to almost 1,300 ND.71

This phenomenon was not caused by the higher morbidity of the villagers. On the contrary, they sought health care with common diseases such as the flu and cough because they could afford to visit a doctor. This made it possible to stop a serious illness before it starts. This is evidenced by a 12-fold increase in the number of patients receiving antiretrovirals (drugs used to treat HIV). The level of crime also decreased rapidly in the research area, especially in the categories of economic crimes. The overall year-on-year decrease was almost 37% in reported cases. This change also includes the categories of illegal hunting and trespassing (95% reduction) and thefts (30% reduction). At the start of the project, the villagers selected the 18 most educated individuals from their community to advise others on how best to use the money. In addition, they created a community-wide collective agreement to close bars and pubs on the day the payment was received. They decided to do so based on fear of the negative impact on the study. Thus, fear of the conclusion which could be an increase in alcohol consumption without other positive effects.72

71 HAARMANN, C., Basic Income Grant – Ten Years Later, Economic and Social Justice Trust, 2019, available at http://www.bignam.org/Publications/BIG_ten_years_later_report_2019.pdf, pp. 6-10. 72 SAMSON, M., et al., Making the difference! The Big in Namibia, Basic Income Grant Coalition, Assessment report, 2009, pp. 26-81. 37 According to many theorists and politicians, the pilot project was doomed from the beginning. They argued that it would only lead to dependence on universal income and laziness. The year-on-year comparison shows that 25% more citizens started work and earn money than before the launch of UBI. This led to a reduction in the average household debt from 1,200ND to 770ND.

Some have even opened savings accounts and entered to the formal banking sector, which is slightly unusual in this locality.73

It is obvious that the universal income pilot project caused a substantial improvement in the socio-economic aspects of life in the researched area. The community changed its habits and even generated collective action. There was wide criticism of the findings of the research and the pilot project in general. The critics strongly impeached the results of study that could be affected by migration in and out of the village. They also claimed that the conclusions of the research were influenced by policy made on the government level. It appears as legitimate criticism. However, it could be impossible to extract the influences and effects that do not directly correlate to the implementation of the universal basic income in a small village in Namibia that is not closed to the outside world.74

2.1.2. The Finnish Case

The history of the Finnish pilot program goes back to the 1970s when different concepts and approaches to securing social rights and a minimum standard of living for all were widely discussed by governments and academics. The main shift of these debates in Europe took place in 2015 when universal income came to the attention thanks to the highly publicized Swiss referendum on UBI. Subsequently, the center-right coalition, whose program included the launch of the universal income pilot project, won the Finnish parliamentary elections. The

73 Basic Income Grant Coalition, Press Statement, 2008. 74 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 363-367. 38 newly elected government commissioned a feasibility study to Kela. Kela is a government agency that secures and provides social and economic assistance to the citizens of Finland. The agency is therefore the main mediator of the social security system.

The study proposed and described four different scenarios of implementation, namely full basic income, partial basic income, Negative Income Tax and Participation Income.75 The main reason why the Finnish government launched an experiment and wanted to change the social security system was the fear that long-term unemployment benefits created the poverty trap and people find it difficult to return to the labor market.

The experiment was launched in January 2017 and lasted for two years until December 2018. The project ran under the patronage of Kela, who had adequate infrastructure, labor market information and sufficient knowledge about the social situation of Finnish citizens. The project was designed as a survey of 175,000 individuals who were receiving some amount of unemployment benefits during the experiment. 2,000 unemployed people were randomly selected from these citizens. They were receiving the universal basic income each month (treatment group). The rest of the unemployed in the system did not receive any universal income (control group). The only condition for selection into the treatment group was age between 25 and 58 years.76

This method of research provided results throughout society and the country. However, the research focused only on a specific group of unemployed people. For data collecting and comparison, 5,000 individuals who participated in the research were randomly selected from the control group. The amount of universal income was set at 560 euro per month.

75 KANGAS, O., From idea to experiment: Report to UBI experiment in Finland – Working paper, Kela, Helsinki, 2016, pp. 5 – 46. 76 WIDERQUIST, K., A Critical Analysis of Basic Income Experiments for Researchers, Policymakers, and Citizens, Palgrave pivot, Cham, 2018, pp. 64 – 65. 39 Compared to the average income in Finland in 2017, which was 3,360 euro, it did not compensate for a wage at all, but it rather served as a partial guaranteed income to provide for basic needs.77

However, this level corresponded to the amount of basic unemployment benefit that the control group still received. Accordingly, it was only a change of conditions and the abolition of testing, i.e., the conditional support was replaced by the unconditional income. These realities of settings of the experiment limited the informative value of the research. Nevertheless, the fatal mistake was an omission of a baseline survey before the launch of the experiment. This caused the incomparability of hard data before and after the pilot. Many critics blame this failure on political pressure and hurry. Other opponents say that the main problem was the change of the research team during the experiment. 78

The conclusions of the research were based on data through a telephone survey and questioning the participants of the experiment. The participants were asked about their subjective evaluation of well-being and then the results were compared between the treatment and the control group. The recipients of universal income reported that they felt less economic poverty (39% vs. 49% in the control group), less stress and depressive symptoms (17% vs. 25%), and had less experience and problems with a bureaucracy (59% vs. 68%). In general, basic income recipients were able to pay their bills in time and avoid penalties for late payment. A significant proportion of recipients stated that they more belief in the future and livelihood (58% of respondents), compared with only 46% in the control group.79 Some respondents said that basic income enabled them not to focus so much on basic needs and could devote themselves fully to small business start-ups or

77 The World Bank – Data based on GNI per capita (current US$) in Finland. 78 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 396 – 402. 79 KANGAS, O., First results from the Finnish basic income experiment, European Social Policy Network, Brussels, 2019. 40 artistic independent activities.80 The only hard data that the research provided is data on willingness and motivation to work.

The data were obtained from the Kela register, which evaluates the number of days spent at work of each applicant for unemployment benefit. A slight increase was detected in the group receiving the basic income. They spent about 7% more days at work than the control group. However, this effect was supported by the change of unemployment insurance legislation on the national level, which came into force in 2018.81

The study was heavily criticized for ignoring hard data and failing to conduct a baseline survey that would provide an analysis of the change and empirical defensibility of the implementation of UBI. Also, the number of responses to the questionnaire survey was very low (30% in the treatment group and 20% in the control group). Another failure was insufficiently secured conditions of the experiment that did not provide any valid information. It was caused by the fact that the treatment group had far better financial conditions than the control group.82 Although the amount of universal income was set at 560 euro according to the amount of unemployment benefit, the tax norms favored the treatment group when participants have joined the labor market. Weak coordination among the bureaucracy, the research team and the government, which wanted to adapt the project to the length of its term, was a serious failure.83

80 KAURANEN, A., Finland‘s basic income trial boost happiness but not employment, Reuters, Helsinki, 2019, available at https://www.reuters.com/article/us-finland-basic-income/finlands- basic-income-trial-boosts-happiness-but-not-employment-idUSKCN1PX0NM. 81 JAUHIAINEN, S. - KANGAS, O., Evaluation of the Finnish Basic Income Experiment, The Ministry of Social Affairs and Health, Helsinki, 2020, pp. 187 – 190. 82 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 401 – 404. 83 WISPELAOERO, J. D., et al., The Rise (and Fall) of the Basic Income Experiment in Finland, CESifo Forum, October, 2018. 41 2.1.3. The Iranian case

The Basic Unconditional Income Project in Iran has been launched in December 2010. However, the genesis of the implementation of this project is rooted in a long-term socio-economic problem in Iran. Iran's economy is based on oil production and subsequent process industries. Thanks to the nationalization of most of the oil sector, the profit from domestic sales and exports goes to the government budget. For many years, these government revenues were used for public spending, a large part of it was subsidies on fuel products for domestic consumption. However, the policy also included subsidies on the prices of some basic food, electricity and water. According to official estimates, this subsidy policy cost almost 120 billion USD a year.84 This policy caused extremely low prices of fuels, but also other products made from oil.

This resulted in the impossibility of price calculation based on real prices and thus the impossibility of correct calculation of allocated resources. Products subsidized in this way indicated an inefficient use of oil, overconsumption, smuggling into other countries, pollution and wasting of petroleum products. This inefficiency was caused by strongly distorted prices, which did not reflect the scarcity of oil.85 Moreover, segregated subsidized products increased inequality in society because those who consumed more (usually wealthier people or production and logistic corporations) also benefited most from subsidized prices. The government of President Mahmoud Ahmadinejad came up with a radical reform of price subsidies.

84 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, p. 340. 85 MISES, L. V., Socialism: An Economic and Sociological Analysis, Yale University Press, New Heaven, orig. 1951, pp. 128-143. 42 They wanted to gradually remove most subsidies and achieve market prices of the products. In order to assure sufficient public support for these steps, the government decided to replace the policy of subsidies with direct payments to households.86 The Iranian government proposed many different forms of the new agenda that were not universal and unconditional for all. However, after a wave of protests, they accepted the simplest model of distribution in a universal and unconditional form.

The specific parameters of the program determined that each individual in the society receives 455,000 rials per month (which corresponded to approximately $45 according to the exchange rate in 2010) regardless of his gender, age, employment status, income, assets, etc. This amount of payment corresponded to approximately 66% of the minimum income converted into an average household. Compared to the gross national income per capita of $520 per month (in current prices), the basic income of $ 45 seems negligible.87 However, given the Gini index, which indicated 42 points in 2010, 14% unemployment rate and the fact that 70% of the population did not reach the average wage, it is clear that the amount of $ 45 was great support for poor families.88 The income was paid to one member of the household. This does not match the key characteristic of basic income that payments should be sent to individuals directly. However, other key features, such as regular monthly payments through the government budget and universality, were met. The Iranian universal income scheme was by far the largest and most comprehensive project ever launched in comparison to other UBI experiments around the world. Almost 73 million people received the monthly unconditional income. It was 96% of Iran's population (4% of them let the payment forfeited voluntarily).

86 HOWARD, M. W. - WIDERQUIST, K., Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World, Palgrave Macmillan, New York, 2012, pp. 17- 21. 87 The World Bank – Data based on GNI per capita (current US$) - in Iran. 88 Trading Economics – Data based on GINI Index Chart – in Iran. 43 The total annual transfer of payments in 2011 was approximately 39,5 billion USD. It is the same amount as a sum of the budgets of Bulgaria and Slovenia. The funding of the project was secured through the higher prices of previously subsidized goods. Thus, the program was designed not to significantly burden the state budget or revenues from the export.

The impact of the project was significant due to the relatively high amount of the payment of $ 45 per person. Although the financing was secured primarily outside the state budget, in the first year of operation it ended in a deficit of 1.6% of GDP, which represented approximately 9,3 billion USD.

This deficit of the program had to be financed from the state budget. Besides this impact on the state budget, the implementation of UBI affected the household income and labor supply. The average rural household of four members was able to cover 26% of monthly expenses by the universal income. The typical urban household covered 14% of their expenditures. This indicates the effect of reducing income inequality between urban and rural areas in favor of the periphery. The analysis of 20% of the poorest households shows that the basic income covered up to 80% of their expenditures in the case of rural and 40% in the case of urban families. On the contrary, the analysis of 20% of the richest indicates that their guaranteed income covered only 10-20% of expenditures in rural and 5-10% of expenditures in urban areas. This trend of decreasing income inequality between rich and poor is also noticeable in the calculation of the Gini index, which fell from 41 to 37 points in the first year of the UBI experiment.

The analysis of the labor supply can be based only on data officially declared by the participants. It implies that the implementation of UBI did not negatively affect those with lower incomes, which was the group that the research mostly focused on. There was not any reported impact on work performance and economic activity of low-income workers according to research among randomly

44 selected respondents. However, in two specific groups, the willingness to work and to participate in the labor market has decreased. Specifically, participation in the labor market declined by 2,1% in the group of young people aged 20-29 and women of all ages. The young people who officially studied and still worked decreased their economic activity by 23,5 hours per week.

The decrease in hours worked is explained by the increased interest in studying and education in general. This might be caused by the basic income they received.89 A relevant indicator, in this case, is the unemployment rate, which decreased by 29,5% by 2013 according to the statistical data.90

Some theories emphasize the possible negative impact of UBI on alcohol consumption and thus on cohabitation in a family. In Iran, however, they did not prevent this temptation and negative impact (such as in Namibia, where they decided to close the bars on the day the benefits were paid). They did not create any regressive precautions simply because alcohol has been prohibited in Iran since 1979.91 Based on the survey in the form of a questionnaire, a significant proportion of respondents declared they started or expanded their businesses thanks to a reduced risk of poverty. In other words, they did no longer worry about how to ensure basic needs. The increase in business activity appeared in approximately 10% of cases. However, this research was conducted on a very small sample of respondents and cannot be considered relevant.

An interesting impact can be observed on the combination of abandoning generous price subsidies accompanied by the implementation of universal income. If we compare household expenditures on subsidized products in 2010 (before the

89 SALEHI-ISFAHANI, D. - MOSTAFAVI-DEHZOOEI, M., Cash Transfers and Labor Supply: Evidence from a Large-scale Program in Iran, The Economic Research Forum, Egypt, 2017, p. 11. 90 The World Bank, Unemployment of total labor force / national estimate – Iran, Available at https://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?locations=IR 91 RAJENDRA, V. - KAPLAN, G., Iran, Marshall Cavendish Benchmark, New York, 2006, p. 105. 45 implementation of UBI) and expenditures on the same products in 2011 (after the implementation of UBI and the cancellation of the price subsidy), there was a significant increase of expenditures on this basket of goods. The 10% of the poorest households increased their expenditures on these good by 81% (to 11,2% of the total family expenses) and for the 10% of the richest by 172% (to 3,8% of the total expanses of the family).92 This phenomenon shows how the market and commodity prices were distorted in favor of high-income groups before the cancellation of subsidies and the implementation of UBI. According to the consumer price index, year-on-year inflation growth was 26,3% between 2010 and 2011. It was even astronomical 120% between 2010 and 2013.

Critics of the UBI in Iran suggest that the dramatic growth of the inflation rate was mainly caused by the financing of the project, which was partly secured through loans from the central bank. However, if we focus on the growth of prices of every single commodity, which was heavily subsidized before the implementation of UBI, it is obvious that the growth of inflation was not caused only by the funding scheme. For example, the price of gasoline increased by 285% between 2010 and 2013. In general, the cancellation of subsidies on products was accompanied by an increase in their prices from 75% to 2000%, depending on the selected product. Besides these domestic economic factors, the rise in inflation was mainly due to international sanctions against Iran. As a result, the dramatic increase in inflation rapidly reduced the real purchasing power of the basic income. The payment paid by the government lost 70% of its real value in 2017 and thus became irrelevant. This fact and the political upheavals have caused the abandonment of the universal income model. Nowadays, it is paid simply as social support to the poorest people.

The Iranian model has faced criticism, which has been specified above. However, the Iranian example showed specific funding options through the mining of 92 STUCKI, B. W., et al., The Reform of Energy Subsidies in Iran: The role of Cash Transfers, Virginia Tech, 2014, pp. 20-22. 46 natural resources. This scheme in the Iranian case worked similarly to carbon tax financing. Unfortunately, it complicates the long-term sustainability for two reasons. Firstly, if the system is successful, it will gradually destroy its source of funding. Secondly, such a financing system is extremely prone to fluctuations in energy and commodity prices, and its development is difficult to predict, as the Iranian project has shown.93 The approach of a government that has never presented the program as permanent also seems problematic. It could confuse many individuals and distract them from the action, that they would do under the guaranteed and declared conditions.

The conclusions of the study and their interpretation were also greatly influenced both by the international political and economic situation and, in some cases, by insufficient data collection before and after the launch of the universal basic income.94

2.1.4. The Indian Case

India is the seventh-largest country with the second largest population in the world (approximately 1,3 billion inhabitants). Thanks to the relatively low cost of the labor force, the openness of the economy and location, it is a sought-after country for foreign investment. However, the consequences of globalization and the automation of production, the public and private sectors have begun to worry about some possible socio-economic consequences. These concerns were mainly caused by distrust in India's current social security and unemployment benefits systems. These state policies performed very unsuccessfully, mainly due to their inability to act due to the enormous bureaucratic apparatus, poor quality of

93 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, p. 348-354. 94 MURPHY, J. B., Study of Iran‘s basic income shows it did not harm employment, The Basic Income Earth Network, 2017, available at https://basicincome.org/news/2017/06/study-irans- basic-income-shows-not-harm-employment/ . 47 institutions and a rigid organization.95 The government has tried to combat this inefficiency and in recent years launched more than 1,000 different programs to support education, retraining, support, infrastructure in rural areas, etc.

However, most of the efforts did not have the expected effect and the gap between rich modern cities and the poor periphery was widening.96 Following these problems, there was a debate on an alternative model that could be more efficient than the current complex and administratively expensive system and could be sustainable.97 This challenge was taken up by SEWA (Self Employed Woman's Association), which launched two basic income pilot projects in 2011 in nine villages in the central state Madhya Pradesh with the financial support of UNICEF (United Nations International Children's Emergency Fund).98

The experimental project was launched in an almost pure form of the UBI model. So absolutely unconditional, the incomes were transferred directly to individuals to their account or in cash and they could spend it on anything. The first, general, project monitored the process in the eight villages that were included in basic income and twelve similar villages that were not included. The second, tribal, project focused specifically on the tribal population, which is poorer than the villagers and lives in different conditions, typically in forests. In the second experiment, the community receiving universal income was also compared with a similar community, which did not receive the income. In the general pilot, each adult received 200 rupees and the child 100 rupees. This amount increased to 300 rupees ($ 6 equivalent) and 150 rupees per child ($ 3 equivalent) in one year after

95 MCCARTHY, J., India‘s Lagging Manufacturing Sector Slows Job Creation, National Public Radio, Washington,D.C., 2016, available at https://www.npr.org/2016/08/11/489584349/india- s-lagging-manufacturing-sector-slows-job-creation . 96 DAVALA, S., et al., Basic Income: A Transformative Policy for India, Bloomsbury Publishing plc, London, 2015, pp. 1-3. 97 KHOSLA, S., India‘s Universal Basic Income, Carnegie Endowment for International Peace, Washington,D.C., 2018, pp.5-6. 98 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, p. 373-375. 48 the launch.99 The participants in the tribal project received the same amount of 300 rupees for an adult and 150 rupees for a child from the beginning. Adolescents' incomes were paid to their mothers. The basic income was calculated to provide about a third of the income of the average low-income family in a rural area.

In other words, the level of income was set to ensure the purchase of necessities, not to compensate wages. More than 6,000 participants were receiving the basic income during the experiment, which ran for 29 months. Taking into account the total coverage of the study, which also included the control group, there were 15,000 participants. It collected statistical data focusing on social and economic impacts before, during and after the experiment. Some case studies were also performed based on interviews with participants after the end of the experiment.

100

The effects of the experiment can be seen on the social and health situation of children in families. The proportion of malnourished children decreased by 20% in the surveyed villages during the project, while only by 10% in the control group. The project also had a strong impact on the school attendance of girls, aged 14 to 18, whose education is not traditionally as prioritized as the education of a son for a poor family in India. In the case of families receiving universal income, the attendance of girls in school was almost twice as high as in the control group.101 In addition, the consumption of families for school fees, books and other school supplies increased by 82% in the surveyed group, while in the control group period did not occur any change. At the same time, the amount of child labor decreased by 20% in the surveyed group, while in the group without a basic

99 Conversion based on USD to INR currency exchange rate on December 2011, available at fx- exchange.com. 100 SEWA, A Little More, How Much It Is… Piloting Basic Income Transfers in Madhya Pradesh, India, Sewa Bharat, New Delhi, 2014, p. 10. 101 CARIAPPA, A. - SRINIVAS, A., Universal Basic Income for India: The Way Towards Right to Equality, In: Indian Journal of Economics and Development, Vol. 15, No. 1, 2019. 49 income there was a decrease of only 5%. The impact on individuals' access to health care is interesting. The experiment ran for a short time to evaluate the effect on the health status of individuals. Nevertheless, the data from health insurance companies show that three times more people bought a health insurance during the experiment than in the control group.

The impact on the tribal community was significant in a rate of morbidity with common diseases such as flu or cough, which decreased by 21%. This was caused mainly by more regular health care and improved availability of medicines for the population.102

One of the most noticeable effects of economic impacts was observed in the change of work activity, which increased by 21%, while in the control group only by 9%. Furthermore, 17% of universal-income families reduced their debts during the experiment, while in the control group it was only 2% of families.

In the case of the tribal village, it was even 73% of the beneficiaries who reduced the debts. However, it is important to note that almost 45% of people in the study group increased their debt during this period. Unfortunately, no record about the purposes of the loans has been made, so it is not clear whether the loans were used for consumption or investment.103 An interesting impact was the increase in the number of small farms and people who started some agro-business in the case of the tribal village. The increase in the number of people during the experiment was 22 percentage points, which represents an increase of 55%.

In 2017, an observational study was performed above this experiment. The results say that after the end of the experiment in 2013, there were some permanent effects. They include maintaining higher incomes, expanding farming, better and

102 SEWA, A Little More, How Much It Is… Piloting Basic Income Transfers in Madhya Pradesh, India, Sewa Bharat, New Delhi, 2014, p. 16. 103 SCHJOEDT, R., Indian‘s Basic Income Experiment, in: Pathways‘ Perspective on Social Policy in International Development, Development Pathways, United Kingdom, No. 21, April 2016, pp. 4-5. 50 regular health care and better nutrition. However, some impacts of UBI, such as higher numbers of health insured people or higher expenditures on school fees and higher adolescent school attendance, were completely dropped after 2013.104

This experiment was excellently planned and the comparison with the control group provided a solid and valid interpretation of the project.

Nonetheless, it was drafted as a model with different levels of income for children and adults. In addition, the amount of payment has been changed during the experiment, which could affect individuals' decisions and behavior. Unfortunately, this was not monitored.

2.1.5. Other Cognate Projects

There have been historically launched many projects that have been very similar to the universal income model but have not met some of the basic characteristics of UBI. For this reason, they are not considered as pure projects providing a basic income, but rather as related and comparable to UBI. However, the impacts and effects of general income can be well-observed thanks to the unique conditions and the scale at which some of these projects run.

The first is Alaska Permanent Fund Dividend launched in 1982 and still ongoing. Through this program, the profit from the sale of oil from state-owned deposits is distributed in the form of a dividend to all citizens and residents. The dividend is paid once a year in a volatile amount from $330 up to $3,269.105 The amount is determined by both the conditions on the oil market and political decisions. By its character, Permanent Dividend is more similar to the Basic Endowment or Stakeholder Grant model than to the UBI model. (see part 1.3.) It is not paid monthly, the amount of the payment is not specified and its purpose is not to 104 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 378-382. 105 Alaska Permanent Fund Corporation, History of Annual Dividend Payouts, available at https:// web.archive.org/web/20141006103714/http://www.apfc.org/home/Content/dividend/ dividendamounts.cfm 51 secure basic needs, in comparison with some UBI definitions. It is rather a form of a share of commonly owned property or a certain tax on land ownership (even in the case of public ownership). Nevertheless, the dividend is paid to everyone in the society, without any test of merit and with the free use of it.106

The dividend itself is not substantial for the average citizen, as it covers from 1,7% to 6,4% of total citizen's income depending on the amount of their wage. Due to the relatively high earnings of citizens and the marginal level of the dividend, no demotivation to work and substitution of work for leisure were observed. According to Paul Segal, this is not even possible, because such an impact could occur only in the case of poor society and a sufficiently high level of the income/dividend.107 This hypothesis was confirmed by a study that focused on the impact of the Alaskan dividend to the labor market. It follows that the implementation of the dividend in 1982 did not harm the labor supply at all. Only the participation of workers in part-time jobs increased by 1,8 percentage points.108

The second example is the well-known Negative Income Tax model (NIT), which ran in experimental mode between 1968 and 1980 in Canada and the United States. It is important to highlight differences to UBI, which have been already described in detail in the previous section. In short, it is mainly the non- universalism of NIT and the testing of means. As a result, only citizens with income below a certain threshold will receive the income..109 The experiment consisted of four sub-projects in the United States and one in Canada.

106 HOWARD, M. - WIDERQUIST, K., Alaska‘s Permanent Fund Dividend: Examining its Suitability as a Model, Palgrave Macmillan, New York, 2012, pp. 3-9. 107 WIDERQUIST, K, et al., Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World, Palgrave Macmillan, New York, 2012, pp. 109-121. 108 JONES, D. - MARINESCU, I., The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund, The University of Chicago, Chicago, 2019. 109 FITZPATRICK, T., Freedom and Security: An Introduction to the Basic Income Debate, Macmillan Press Ltd., London, 1999, pp. 91-94. 52 The threshold of income level was set in each sub-project on the basis of local realities. It ranged from 0,5 to 1,48 of the set recommended income level. The marginal tax rate was also set at 0,3 to 0,75 according to regional specifications. Different settings of parameters and different methodologies of implementations and researches made it significantly more difficult to compare individual projects with each other. The only common condition of the experiments was the method of selecting families.

It was the requirement that only people whose income was below $ 11,000 or $ 13,000 can participate. A total of 9,900 individuals who participated in the experiment were split into study and control groups. The studies evaluated the change in time spent in paid employment between these groups and divided the participants into three categories: women, men, and single mothers. The results considerably varied in each experiment, however, there was not an increase in work activity in any case. Men reduced the work activity by 0,5% to 9%, women by 0,1% to 27%, and single mothers even by 15% to 30%. In general, this study confirmed the hypothesis of demotivation to work by the implementation of some form of guaranteed income.

Nevertheless, the research and its conclusions were quite unrepresentative due to the diversity of basic conditions among projects and focusing only on a certain segment of the population. There also exists a question of whether these low- income individuals were looking for a better-paid job for a longer period of time than they would be looking for a job without the guaranteed income. NIT improved their position in negotiation compared to the control group, so they could look for a more attractive job. However, this possibility cannot be confirmed or refuted.110 Therefore, any increase in unemployment cannot be seen as laziness caused by the implementation of NIT or UBI without knowledge of changes in other variables. 110 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 304 – 311. 53 Some qualitative studies presented an increase in children's school attendance and better results in school tests in the experimental groups. This impact was also monitored in the case of adult men who began to attend educational institutions more than those in the control group.111

The third example is experiments and pilot projects that have been launched, for example, in Brazil (Bolsa Família program) or Ontario, Canada (Basic Income project). These projects are often associated with the universal basic income, or even their name refers directly to UBI. However, in practice, they are very far from this model and indicate the characteristics of social insurance rather than the key features of UBI. In addition, they do not work without a mean test or on an individual basis.112 On the contrary, an interesting project that matches the characteristics of UBI is an experiment running in Kenya since 2017 under the patronage of GiveDirectly. Kenya is one of the poorest countries in the world, with 50,5 million people and 42 different ethnic groups.

The project includes a total of 300 villages within almost 20,000 adults receive a regular unconditional income of $22 per month.113 The experiment is divided into several sub-projects, the largest part of it should last 12 years. It is clear that researchers will be able to evaluate the main results of the research in 2029. However, partial ongoing studies have been already created. For example, before the start of the experiment, 42% of women under the age of 44 experienced physical or sexual violence from their partners. The survey conducted two years later reveals a dramatic decrease in domestic violence by 51% and sexual violence by as much as 66% in households that receive a basic income.

111 LEVIS, M. A. - WIDERQUIST, K. - PRESSMAN, S., The Ethics and Economics of the Basic Income Guarantee, Routledge, New York, 2005, pp. 93 – 105. 112 HELLMANN, A. G., How Does Bolsa Familia Work?, Inter-American Development Bank, 2015, Working paper, available at https://publications.iadb.org/publications/english/document/ How-Does-Bolsa-Familia-Work-Best-Practices-in-the-Implementation-of-Conditional-Cash- Transfer-Programs-in-Latin-America-and-the-Caribbean.pdf. 113 GiveDirectly, Inc., Overview of ubi study, New York, available athttps://www.givedirectly.org/ ubi-study/. 54 The experiment has indicated so far a significant impact only on the social and economic position of women in society.114

2.2. Comparison Among Projects – Results & Impacts The following text summarizes and compares the impacts of individual projects. It focuses only on pilots and experiments that correspond to the characteristics and key conditions of UBI, or are at least very similar to the model. For this reason, the results obtained from the projects in Ontario, Brazil or the Netherlands will not be taken into account.

Firstly, it is necessary to compare the levels of universal income that were set in individual projects. The comparison used the conversion factor of purchasing power parity against the purchasing power of the international dollar, which corresponds to the US dollar in the United States. This conversion offers a more realistic sense of the income level for the recipient as well as a better understanding of the real purchasing power of the income in each country. In other words, it shows how many goods and services can an individual buy in a particular country compared to the basis, which equals to the purchasing power of the currency in the United States.

The data in the following table clearly illustrate the difference between the nominal value of the amount of universal income and the real purchasing power of this amount in a specific market. It shows that a recipient in India can buy about three times more goods and services for one dollar than a recipient in the United States. In Finland, on the other hand, recipients could buy about 10 percent fewer goods for the same dollar. As a result, from a global perspective, it could be "cheaper" to spend resources on the payment of universal income in less developed and poor countries to achieve a certain standard of living according to

114 DALLARI, M. - SUPLICY, E. M., Citizen‘s basic income and Kenya, Brazilian Journal of Political Economy, Vol. 40, No. 3, 2020, pp. 566 – 583. 55 local conditions. Respectively, in countries whose conversion factor of purchasing power parity is lower than in other countries. An interesting figure for comparison between individual projects is the ratio of the amount of universal income payment to the average income in the country.

Table no.2. - Levels of UBI compared to gross national income per capita*

Country Level of GNI per Level of GNI per Ratio of UBI UBI capita / UBI / capita / level / month PPP month / Average PPP Income

Namibia 7 18 (425)** 13,5 35 (820)** 38% (1,6%)**

Finland 622 4008 555 3546 15,6%

Iran 45 550 118,5 1447 8,2%

India 6 / 3 116 18,5 / 9,3 358 5,2% Note: * All sums are expressed in USD. Data based on statistical data115, 116, 117 ** The data of average income in Namibia has been intentionally adjusted to the average income in poor rural areas for which the pilot project has been prepared. For a clear comparison and compliance with the methodology, the average income per capita in whole Namibia is given in bracket.118

115 The World Bank, Price Level Ratio Of PPP Conversion Factor (GDP) To Market Exchange Rate, Available at https://data.worldbank.org/indicator. 116 Organization for European Economic Cooperation, PCI – price level (indicator), Available at https://data.oecd.org/price/price-level-indices.htm. 117 Namibia Statistics Agency, Namibia Household Income and Expenditure Survey 2003/2004, Available at https://nsa.org.na/page/central-data-catalogue/. 118 JOUCH, H., Poverty, Unemployment and Inequality in Namibia, TEMTI – Economic Perspectives on Global Sustainability, EP 02, 2013. 56 In the case of Finland, this amount was given by the basic setting of the project, i.e., the equivalent of unemployment benefits. It was also the only one of the compared experiments, which was directly financed from the state budget through the already existed bureaucratic infrastructure.119 This was also the main reason why the Finnish experiment failed to collect and evaluate empirical hard data. A similar case of funding took place in Iran, with the difference that payments to beneficiaries originated primarily outside the state budget. However, it was still the government revenues from the trade of oil and petroleum products. On the contrary, the pilot projects in Namibia and India were funded by the private sector or international organizations, not by the governments.

Given the amount of basic income received in Finland and Iran and the amount received in Namibia and India, it seems to be evident that projects run outside the state budget and the state bureaucracy have a lower level of payment relative to the average income of the population. There is also a difference in size and impact among the projects. The Finnish and Iranian projects reached the whole country. Conversely, there were selected poor rural communities and areas in the cases of two other projects.

The following table summarizes the socio-economic impacts of UBI projects. Firstly, the comparison takes into account the income inequality indicated by the Gini index before the projects started and the reduction of the number of people at or below the poverty line. It shows the evident effect of reducing income inequality and protecting the population from falling into poverty. As a result, it indicates a greater reduction in the number of people in poverty according to the higher income inequality coefficient at the beginning of the experiments. In the case of Finland, the data were obtained from surveying beneficiaries about their fear of poverty. Therefore, they are not included in this comparison.

119 KANGAS, O., First results from the Finnish basic income experiment, European Social Policy Network, Brussels, 2019. 57 The only national comparison available is the change in income inequality in Iran, as it was the only project launched at the national level and for all citizens. According to the change of the Gini index, income inequality in Iraq decreased from 41 to 37 points.

Another effect that can be well observed is the reduction of childhood malnutrition, which has been well documented in hospitals in Namibia and India. The trend in Iran can also be involved in this comparison. However, it concerned the malnutrition of the whole society.

Table no. 3 – Impact of UBI on socio - economic indicators

Country Gini index Poverty Prevalence Increase of Ppl who reduced before the reduction of economic debts UBI started malnutrition activity

Namibia 63 79% - 76% 25% 36%

Finland 27 (49%)* X 7% In time****

Iran 42 38% - 11%** 29,5% X

India 38 X - 20% 21% 17% (73%)*** Note: * The data obtained on the basis of a questionnaire survey asking about subjective poverty. ** In the case of Iran, there is a reduction in malnutrition in all age groups. *** 73% of UBI beneficiaries reduced their debts specifically in the monitored tribal village. **** A significant part of the basic income recipients said in the survey that, thanks to UBI, they started to pay their debts and bills in time. (Data based on the part 2.1.1. - 2.1.4.)

58 The most surprising impact of the implementation of the basic income is a significant increase in economic activity. These data include an increase in the number of people employed and the number of hours worked, as well as income from newly established businesses. Finland has the lowest increase in economic activity. In this case, the impact was strongly influenced by the fact that the recipients of the universal income improved only by lower taxation if they earned above a certain limit compared to the control group receiving the same high level of unemployment benefits. However, even in Finland, where the level of universal income was the highest in absolute terms and also the highest to average income, the experiment did not show a reduction in work activity. On the contrary, it increased by 7%.

The results of all four research projects, therefore, contradict the opinion of many economists and critics of universal income that it will motivate people to substitute the work for their free time.120

Nevertheless, the impact of UBI on reducing the debts of beneficiaries as one of the quantifiable side effects is surprising. Participants in the experiments began to repay and reduce their debts and other financial liabilities. In other words, they used part of the subsidy received to repay their liabilities instead of spending them immediately. Moreover, in the case of the tribal village in India, debts were reduced in 73% of cases of universal income recipients. This indicates to the obvious financial literacy that people have even in such underdeveloped and poor areas. In addition to these comparable effects, which have been documented in most projects, improvements in the position of women in society and family have been recognized. The impact has been observed mainly in Namibia and Kenya, where a tradition of polygamous marriages exists. The women stated in the survey that the universal income helps to balance their position.

120 NELL, G. L., Basic Income and the Free Market – Austrian Economics and the Potential for Efficient Redistribution, Palgrave Macmillan, New York, 2013, pp. 186-189. 59 There has been a significant reduction in cases of domestic violence against women in Kenya since the experiment was launched.

The comparison among socio-economic indicators and basic income levels indicates a correlation between the ratio of UBI to average income and poverty reduction. In particular, it is clear that the higher universal income compared to the average wage brings a greater reduction of poverty in the area. This effect is strongly supported by income inequality in areas marked by the Gini index.

Unfortunately, there are no relevant data from the Indian experiment for this comparison, and Finnish research provides only a participants' subjective evaluation. Moreover, the large amount of data and research findings that have been obtained are incomparable due to the use of different methods and different experimental conditions. For example, interesting impacts on the availability and usage of health care were evaluated differently in each project. For this reason, the data about a five-fold increase in visits at the hospital in the Namibian project and a threefold increase in health insurance in the Indian project are not comparable. However, overall, this phenomenon shows that the implementation of UBI brings a significant effect on increasing the availability of healthcare for recipients.

2.3. Possible Instruments of Financing

It is necessary to secure sources of funding in order to make the universal income model feasible in practice. A large number of UBI's opponents refuse its implementation on the grounds of its cost and unsustainability. However, they often use only this argument but no longer talk about the specific level of the payment and the impact on economic feasibility. They even apply very high sums of possible basic income in their calculation of sustainability. The result of such a calculation and its implementation then, of course, seems like nonsense.121 It is

121 ACEMOGLU, D., Why Universal Basic Income is a Bad Idea, MarketWatch Inc., 2019, Available at https://www.marketwatch.com/story/why-universal-basic-income-is-a-bad-idea- 2019-06-19 60 more accurate to say that there is no doubt that the UBI model is feasible, but it depends on the conditions and settings of its implementation. It is obvious that if the amount of the benefit is at the level of a few USD per month, then it may be a policy that can hardly ruin the state budget even of a "poor" state. This possibility of general implementation can be well demonstrated in the case of Namibia. The Namibian state budget for fiscal year 2019/2020 was $ 58,6 billion.

There live approximately 2,45 million people.122 If each citizen receives a basic income of 100 ND (which is the same amount as the income in the experiment), this would have an impact on the state budget of 2,94 billion ND (about 178 million USD).

Just to imagine the real impact of this amount, you can buy a medium-sized luxury yacht, half a regular Boeing 777-300ER, film an average Hollywood blockbuster or provide a universal basic income of 100ND per person for one year in Namibia. In other words, the state budget would decrease to ND 55,66 billion, i.e., by 5,1%. It cannot be said that these means are negligible. However, at this particular level, it does not mean a significant risk to the sustainability of public finances. For this reason, it is far more important to discuss a possible funding scheme and model than the specific amount of universal income in each country. It is possible to accept two basic models of funding, which do not bring enormous and uncontrollable inflation like financing through the creation of new money. All of them have been or are still used to secure public budget revenues. Especially libertarian economists often recommend the replacement and permanent cancellation of the current systems of social security and unemployment benefits directly by the UBI model. This is the right precondition for the implementation and effective operation of the basic income. However, the funding scheme also needs to be adapted to this model. Not just replace the current programs. Ignoring

122 Deloitte, Namibian Budget 2020/21, Available at https://www2.deloitte.com/na/en/pages/tax/articles/Deloitte-Namibia-Namibian-Budget- Guide-2020.html 61 the change of the funding scheme could worsen the situation, especially of low- income individuals, as will be seen later.

The first scheme of possible funding is through taxation. Respectively, the placement of UBI in today's most widespread system of financing of state budgets. The simplest approach seems to be to finance basic income through income taxation, in other words by taxation of labor.123

The taxation will work as a redistributive mechanism from rich to poor according to its progressivity. Nevertheless, increasing labor costs seems problematic in this case. Respectively, any burden of labor by direct or indirect taxes consequently reduces the net salary of employees, because it is calculated as a proportion to the worker's income.

The employee is always in a worse position, as this burden cannot be passed onto the customers.124 Such taxation in turn reduces incentives to work and causes a substituting of work for leisure time. As a result, the funding scheme based on income tax could "destroy" the source of funding itself, i.e., labor. This is also confirmed by the analysis of the four UBI pilot projects. The average taxation of income is 37% in Namibia, 53,7% in Finland, 25% in Iran, and around 36% in India.125 The effect is visible when comparing these levels of taxation to the changes in economic activity in these countries. The greatest increase in activity of 29.5% occurred in Iran, which has the lowest level of income taxation. On the contrary, the lowest increase in economic activity by only 7% occurred in Finland, which has the highest level of income tax. (See table no. 3) Another possibility of a funding scheme is the taxation of capital. However, this scheme is very problematic and does not effectively collect the taxes unless it is unified within

123 WIDERQUIST, K., A Critical Analysis of Basic Income Experiments for Researchers, Policymakers, and Citizens, Palgrave pivot, Cham, 2018, pp. 64 – 65. 124 ROTHBARD, M. N., Man, Economy and State with Power and Market,Ludwig von Mises Institute, Alabama, Scholar‘s Edition, 2009, pp. 1164-1171. 125 Trading Economics, Personal Income Tax Rate Chart, Available at https://tradingeconomics.com/personal-income-tax-rate. 62 the continent or, even better, globally.126 The consumption tax seems to be the most appropriate of these options. That is the shift of the tax burden to the end customer. Such a method of funding does not demotivate to work activity. It also does not discourage capital investment and the establishment of companies. However, just as fuel taxes or other excise taxes, consumption tax works regressively.

It means that people with lower incomes spend a larger part of their income to ensure basic needs than people with higher incomes. Thus, low-income citizens might find themselves in a worse position in the case of a badly set level of tax or a basket of taxed products than before the implementation of UBI and changes in tax laws.127 In addition, there exists a risk of misuse of this tax to achieve policy goals, which can exceed 100% of taxation. On the other hand, as the Laffer curve says, there is no such danger in the case of labor taxation.128

The second scheme of funding is secured through dividends from state-owned natural resources. For example, financing of the mentioned Alaska Permanent Fund Dividend or partly the Iranian project is based on such a method. The problem of this scheme is the sensitivity of the dividend to the international political situation and the price of the commodity on the market. It is therefore impossible to keep the amount at a guaranteed level only through such a source of funding. Besides, this scheme is not universally transferable because it arises from a source bound to a particular locality.

There also exists an alternative private way of funding apart from the state secured funding. The scheme works primarily on voluntary donations from individuals, companies and non-profit organizations in today's conditions.

126 PARIJS, P.V. - VANDERBORGHT, Y., Basic Income: A Radical Proposal for a Free Society and a Sane Economy, Massachusetts, Harvard University Press, 2017, pp. 147-148. 127 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 113, 159-160. 128 EBELING, R. M., Some Thoughts on Supply-side Economics, Mises Institute, Alabama, 2010, Available at https://mises.org/library/some-thoughts-supply-side-economics. 63 There were only smaller pilot projects funded privately. Nevertheless, they showed better results in some of the monitored impacts than state-funded projects. (See part 2.2.) Furthermore, these private-funded pilots had far better research and evaluation as we can see on the examples of the Namibian and Indian experiments. A privately funded pilot project is running now in Kenya, and the Maezawa Basic Income Social Experiment is expected to begin this year in Japan.129

2.4. Impact on Welfare of Society

The main research question of this thesis is whether the implementation of universal basic income increases the welfare of society. Firstly, it is fundamental to determine the term welfare for the needs of this thesis. In the practical sense of the word, welfare is closely connected to social security programs at the federal and state levels in the United States.130 In a theoretical sense, it is the term used by social sciences to express the well-being or quality of life of society. There exist many ways how to study welfare. A typical economic approach views welfare objectively on the macro level as prosperity that is measurable in aggregate quantities, such as GDP.131 Besides, there also exists a more individual approach on the micro level which explains more about a specific situation and phenomenon that can be studied. This approach takes into account components such as health, the number of people in a community in poverty or the school attendance of adolescents.132

129 Privately-Funded Basic Income Experiment Begins in Japan, Basic Income: Today, 2020, Available at https://basicincometoday.com/maezawa-basic-income-social-experiment-2020- and-basic-income-social-experiment-survey/. 130 US Welfare Programs, the Myths vs. the Facts, The Balance, New York, 2020, Available at https://www.thebalance.com/welfare-programs-definition-and-list-3305759#welfare-funding- in-the-united-states. 131 GREVE, B., Welfare anf the Welfare State: Central Issues Now and in the Future, Routledge, London, 2019, pp. 17-28. 132 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, p. 103. 64 For the purpose of this thesis, the term welfare is understood as a combination of all socio-economic indicators that completely and most realistically show the real standard of living of participants of UBI projects.

The previous section of the thesis analyzed the impacts on the economic conditions of UBI beneficiaries in the form of a proportion of the subsidy to the average income, the change in income inequality during the analyzed period, or the reduction of economic poverty in the community. The results observed in every single analyzed project were positive, however, they had a very low informative value of real conditions. The main research question can be answered only after comparing these economic conditions with the socio-economic changes that occurred in the communities after the implementation of UBI. In general, the reduction of crime, domestic violence and the improvement of the position of women in society was monitored. The increased welfare has also resulted in a dramatic decline of child malnutrition, the absence of adolescents in schools and the neglect of health care.

There has also been monitored a reduction of poverty and a significant increase in economic activity, which in some cases has led to a reduction of household debt and the opening of savings bank accounts. All these changes, which occurred due to the implementation of universal income, had a positive impact and increased the welfare of the society.

65 Conclusion

Universal basic income is a complex model that mediates redistribution of wealth in society. For this reason, this thesis also approaches the UBI model comprehensively. The theoretical part describes and confronts both left-wing and right-wing approaches to this concept. Based on these, it is well observable that the UBI model has its advocates and opponents on the side of both socialists and libertarians. In view of the fact that UBI leads to improvement in efficiency, and justice, and emphasizes certain principles of self-ownership, it can be understood as a libertarian concept.133 On the other hand, it provides dignity and social security to the poor, which appeals to socialist thinkers.134 Consequently, it is obvious that UBI is not a purely right-wing or left-wing concept.135 Furthermore, various schemes for the possible funding of this model have been analyzed. This analysis showed that the only scheme of funding known to be well-functioning and sustainable is through consumption taxes, or alternatively, through private means. The private method of financing has not yet been sufficiently tested in practice and is currently secured by voluntary donations. In contrast to that, the scheme based on taxation of labor, and "creation of new money" appear to be ineffective and unacceptable ways of funding.

The main target of the thesis was to answer the question of whether the implementation of unconditional basic income increases the welfare of society. A comparative analysis of secondary data was applied to answer this research question. The data were obtained from pilot projects and experiments in Namibia, Finland, Iran and India.

133 WILDERQUIST, K., Perspectives on the Guaranteed Income - Part I, Journal of Economic Issues, Taylor and Francis, Vol. 35, No. 3, 2001, pp. 749–757. 134 TORRY, M., The Palgrave International Handbook of Basic Income, Palgrave Macmillan, 2019, pp. 489-490. 135 WILDERQUIST, K., Perspectives on the Guaranteed Income - Part II, Journal of Economic Issues, Taylor and Francis, Vol. 35, No. 4, 2001, pp. 1019-1030. 66 A comparison of the socio-economic data confirmed that UBI has a positive effect on the welfare of the community. All analyzed experiments showed improvement in the monitored indicators.

Possible further research in this field should be carried out on a sample of closed urban and closed rural groups, as these two groups of people showed very different socio-economic starting conditions in the analyzed cases. So far, no research has been designed on the basis of an experiment that would focus on the different impacts in the center and on the periphery.

The contemporary discussion and popularity of UBI help to launch new pilot projects in different places around the globe. Thanks to this trend, it would probably be possible as well as interesting to compare the behavior of recipients in an experiment that is time-limited and the behavior of recipients in an experiment that runs as an unlimited project. Such a difference could be observed between a clearly defined period for which the UBI system will operate and a system that depends only on the political will or political cycle. It would open the possibility of applying models known from the theory of public choice to these researches.

The fact that there is no recommended and universally used research method was observed to be a problematic factor in the analyzed experiments. It seems obvious that the method of research is largely determined by the conditions and possibilities of the implementation and process of the experiment itself. However, the Finnish example clearly shows an administrative and organizational failure that has significantly worsened possibilities of the research and reduced the relevance of the data obtained. It will be crucial to strive for greater uniformity of projects and methodologies for future research and comparison between individual experiments.

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