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Would Free Money Make People Happy or Lazy?

A Universal Basic Income is a policy whose time has come, but it’s not without controversy

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Germany recently announced a trial exploring the potential benefits of a Universal Basic Income (UBI). 120 individuals will receive 1200 Euros ($1410) each month, for three years. The lead researcher, Jurgen Schupp, wants to see how a “reliable, unconditional flow of money affects people’s attitudes and behaviour.” The research could prove an important stepping stone towards the introduction of a UBI. A policy whose time may have finally come.

But the UBI is not without controversy. Critics believe giving people free money will make them lazy, unmotivated and unproductive. Supporters counter it will reduce poverty, drive motivation and increase wellbeing.

Schupp explained the tension between the two camps when announcing the German UBI project, telling Der Spiegel newspaper;

The debate about the basic income has so far been like a philosophical salon in good moments and a war of faith in bad times. It is — on both sides — characterized by clichés:

Opponents claim that with a basic income people would stop working in order to lie dull on the couch with fast food and streaming services.

Proponents argue that people will continue to do fulfilling work, become more creative and charitable, and save democracy.”

The division is born out of political ideology. Like so many policy decisions, political beliefs are a major roadblock in the UBI’s implementation.

The controversy surrounding the UBI

A UBI makes right-wing conservative politicians uneasy. It sounds like a handout, and handouts come a close second to increasing taxes in a list of things conservative parties hate.

At the root of their argument is a struggle to earn money is no bad thing. The tension created by knowing you need to make money to provide for your family gives people the drive to succeed in the first place. If you don’t get out of bed in the morning, there will be consequences.

Take away that tension, and you take away the pressure considered so important in motivating people to go out and make something of themselves.

Money isn’t the motivator

The tension created by the need to earn money also reveals money isn’t the motivator in and of itself. Earning money provides people with security and social identity and allows them to care for their families. It’s the benefits and lifestyle money affords people that motivates them to earn money because life with no money can have debilitating consequences.

In the UK, 14 million people are living in poverty. Meaning one in five people live on the breadline, not earning enough money to provide for themselves and their families. Levels of poverty mirror the fact one in five adults have less than £100 ($130) of savings to their name.

With under £100 of savings, this group are highly vulnerable financially. And any change in circumstances, such as redundancy, the loss of a job, or having hours cut on a zero-hour contract forces people into applying for payday loans to pay for necessities. It tends to be the most vulnerable who are exploited by the ease with which payday loan companies offer loans. The catch is these loans come with interest rates reaching 1500%.

With such astronomical interest rates, it’s easy to see how those already on the breadline are consumed by a spiral of debt. Once you’re in the cycle, it becomes difficult to get out of it. And the burden of debt can have serious impacts on mental health and wellbeing.

What the UBI has the potential to do is free people from the stress, anxiety and burden of not having enough money. A UBI would provide a level of security for every person in society, acting as a fail-safe to protect families in times of need.

Sure, payday loan companies and debt collectors will be worse off, but these companies represent a social failing. The less of them there are, the healthier society is because people aren’t forced to turn to them in times of need.

A self-fulfilling prophecy

The right-wing would argue with their finances taken care of people will lose the motivation to work. Decadence will be the order of the day, and society will become lazy and useless.

They use those on benefits as a case in point. At present, people on welfare are considered parasites, who suck money out of government but giving nothing back. They’re useless, unproductive, and serve no social function.

These kinds of labels have a powerful effect on our psyche. In communities with high levels of unemployment, there is a self-fulfilling prophecy at work. The more you’re told you’re useless, the more you start to believe you are.

The view people on benefits are scroungers shows a lack of understanding of what makes a human being prosper. It is fulfilling and rewarding to be a productive, useful member of society. People want to feel like they have a purpose.

A UBI can flip the script by liberating people from an existence where they’re burdened with debt and the stress of never having enough money to pay the next bill. Doing so can unlock their potential, giving each person a platform to develop a skillset where they’re able to achieve what they want to achieve. 

An idea whose time has come?

There is evidence to support the argument. Finland undertook a two-year study where 2000 unemployed participants received monthly payments of 560 euros ($658).

The results showed an increase in employment when compared to a group who weren’t receiving the payments. The results also found the payments boosted mental and (not surprisingly) financial well being. Crucially the findings showed a UBI doesn’t demotivate people to work.

The trial in Finland was overwhelmingly positive. But due to political idealogy, whether the UBI motivates or demotivates people to work will continue to remain divisive.

And that’s why the trial in Germany is so important. The trial will provide further evidence of whether a UBI makes people lazy. Or, if the payment increases the wellbeing of society.

What is promising is with more and more studies, it builds a stronger case for the introduction of a UBI. The real tipping point is when a country stops experimenting and implements the policy. The Coronavirus has forced governments to make payments to people like a UBI. Meaning that if there are any positives to come from the pandemic, it’s that it could prove an ideal moment for a country to implement the radical policy. The UBI really could be an idea whose time has come.