How Iran Led the Way on Universal Basic Income

An Iranian Trial for Universal Basic Income Destroyed Preconceived Notions and Proved the Idea Works

Note: This article was originally published in 2020

With the still ongoing coronavirus pandemic predicted to cause the worst financial crisis of our lifetimes and the West on the brink of a potentially catastrophic second wave, unemployment is set to rise to a conservative estimate of 10% of the working population in the U.K. Some reports suggest as many as 4 million people could be out of work. The dire circumstances have led to increasing calls for the British government to implement a scheme of universal basic income, a system whereby every citizen is guaranteed payments from the government, regardless of their work status.

Universal basic income (UBI) has become one of the hottest talking points in world politics, perhaps helped into the mainstream by the U.S. Presidential candidature of Andrew Yang. Yang centred his run for the Democratic nomination around the issue. Yet despite his making UBI a talking point, the concept of universal income has a much longer history.

Cyrus the Great of Persia introduced a minimum standard of income prior to 500 BC, and Abu Bakr introduced a guaranteed minimum standard of income during his reign as the first Muslim Caliph. Universal basic income as we know it, however, has its origins with Sir Thomas More’s Utopia, in which he depicts a society where every citizen receives a guaranteed income from the state. The radicals Thomas Spence and Thomas Paine both advocated for UBI.

The concept is not new to the U.K. either.

The Beveridge Committee, which in 1942 published the Beveridge Report to fight “want… disease, ignorance, squalor, and idleness”, recommended a complete overhaul of welfare, suggesting social insurance, means-tested benefits, and unconditional allowances for children. Liberal Party committee member Lady Rhys-Williams went further, advocating that adult allowances should take the form of universal basic income. Her son Brandon Rhys Williams proposed the same in 1982.

While the West drags its feet on the issue, it was Iran that led the way with UBI, harking back to the very origins of the concept in Persia by becoming the first country in the world to roll out a basic income.

Iranian UBI came as part of a broader strategy towards boosting the Iranian economy that was heavily hit by crippling U.S. sanctions, a situation that exists to this day. Passing the subsidy reform plan in 2010, Tehran described the groundbreaking reform as “one of the most important undertakings in Iran’s recent economic history” as the country sought to replace the massive subsidies they paid to the food and energy sectors.

The amount of money offered by the Iranian government was staggering in comparison to what many are calling for in the West, being 29% of the median household income. This sum would equate to over £8,500 per annum in the U.K. and over $16,000 in the United States.

A subsequent report into the scheme by economists Djavad Salehi-Isfahani and Mohammad H. Mostafavi-Dehzooei found that the common belief that UBI would stop citizens from working had not developed during the Iranian project. They found no evidence that there was widespread unwillingness to continue work.

“Our results do not indicate a negative labour supply effect for either hours worked or the probability of participation in market work, either for all workers or those in the bottom 40% of the income distribution.”

Djavad Salehi-Isfahani and Mohammad H. Mostafavi-Dehzooei

While a minority of younger Iranians were amongst those identified as no longer working, it is believed many used the extra income to enrol in higher education. In other cases, the increased income actually increased work, with citizens using the money to expand their small businesses.

Despite the positive results, the Iranian scheme fell into the same trap that denies UBI a start in the West — the hostility of conservatives. As is their MO, many were inclined to ignore the facts of studies and trials in favour of preconceived notions, here that basic income will lead to idleness and hurt the economic prospects of the nation.

In 2019, there were reports that Scotland was “on the brink” of replacing the Universal Credit system of welfare with universal basic income, with the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) stating that the implementation of the idea would eradicate poverty in the country. A report by the charity suggested that “child destitution would vanish almost immediately”. If the sum total was their suggested £4,800, then the scheme would “completely eliminate destitution in Scotland”.

With reports claiming that the fallout from the coronavirus will constitute one of the greatest economic slumps in history, the British public is facing new years of turmoil, unemployment, and poverty. The need to preempt the looming crisis in welfare could not be more urgent, with the solution plain for all to see. All except Chancellor Rishi Sunak.

Considering the indifference shown before the coronavirus to the concept, it was a staggering number when over 170 MPs penned a letter to the Chancellor urging the Conservative government to consider giving every British citizen a basic income. The message came in the wake of Boris Johnson stating that he would “certainly consider” the idea. However, despite the cross-party calls for the implementation of the policy alongside increasing support from across the population, Sunak has rejected the suggestion.

“We’re not in favour of a universal basic income, although we have strengthened the safety net for the most vulnerable in our society with over £7bn invested in improving our welfare system.”

Rishi Sunak

The effects of COVID-19 will not just last until the end of a potential second lockdown or the discovery of a vaccine; the impact on the entire population will last for years, if not decades, to come. Jobs will be lost, businesses will go bust, and poverty will subsequently increase. Many of the public will once again have to make impossible choices between their own safety and continuing to work. The government’s eagerness to serve the economy and City ahead of public welfare has already been made explicit, yet campaigners and MPs must continue to push for a radical and workable solution for what comes afterwards.

Britain stands at a crossroads, and it’s time to make the country and economy work for everyone. It is no longer time for capitalist conservatism where welfare is concerned; it is time for radicalism.

---

---