The Swiss version of democracy is one of the world's most direct, meaning that the vote of the people is able to make laws rather than just elect representatives. Recently the Swiss people have brought forth a proposal to give a basic income of 2,500 Francs (2,800 USD) per month regardless of employment status. There are some news articles here, here, here, and here which talk about the proposal.

The idea is not a completely new one according to the Business Insider article linked above: "the idea has a long history, drawing support from the likes of the English-American revolutionary Thomas Paine and the economist Milton Friedman." The proponents of the action argue that it will stimulate economic creativity when every person does not have to worry about losing his or her job. The opponents argue that it will instill laziness by allowing unproductive members of society to have a comfortable lifestyle.

My questions are:

  1. Have there been any serious economic studies of the ramifications of such a policy?
  2. The program is supposed to cost 1/3 of GDP; how will the Swiss pay for such a program?
  3. Has this ever been tried before, albeit on a smaller scale?
  • I remember reading about a number of projects that implemented this on a small scale (an entire town) in America. Although right now I cannot recall where I read that. I got the impression that it was very successful in each case and sometimes had unforeseen social implications that might be seen as desirable. – Matthew Brown aka Lord Matt Jun 5 '14 at 21:06
  • Yes it was tried already: dominionpaper.ca/articles/4100 en.wikipedia.org/wiki/Basic_Income_Guarantee#Worldwide (Must just discuss initiatives to start this - some don't e.g. Iran, Namibia, India) – user45891 Nov 22 '14 at 15:54
  • Oh man, this would go wrong in so many ways. If I got $2,800 every month for free, I would just lay back and do nothing productive all day. This is what practically speaking everyone would do, and there goes your economy. No need to dig too far to find the problem with this, people! – AxiomaticNexus Dec 23 '14 at 20:29
  • Just for the record: de.wikipedia.org/wiki/Mincome was another experiment in canada – velop Feb 2 '17 at 9:54
  • @AxiomaticNexus Amount you get is relevant to the country and cost of living, 2800$ for Switzerland's standards isnt all that much. In general for UBI to work, theres a line set just above whats considered the poverty line. – Leon Jun 7 '17 at 11:43

To put the information from the comments and elsewhere into an answer:

  1. According to this website, there is a journal that deals with debate on basic income and studies on it. According to the description for the journal, there have been an increase in academic discussion of the issue which I imagine includes economic studies on the ramifications of the policy, but I can't find particularly many. There's a book that supposedly details the effects of a basic income but doesn't support or oppose it.

    However, you can figure out the economic costs and benefits of such a scheme yourself. It seems to reduce crime, but it would probably reduce the incentive to work (although if traditional welfare is fully means-tested and high then additional income can have a marginal income tax rate of 100% (according to Tim Worstall), a basic income which replaces the traditional welfare system would never have this dysfunction. However, if basic income replaced welfare (which is one of the advantages of it, the administrative costs of providing basic income would be lower than with welfare because it's simpler) then people who need higher than the basic income from the state (an unemployed person with many children for example) wouldn't be able to get it.

  2. There have been some affordability studies into such a policy and, apparently, having an income tax rate of 45% would fund such a policy and increase the income of most people. Additionally, if the basic income replaces the traditional welfare system entirely then the savings from the reduction in administrative costs will help to pay for the system - as well as the reduced crime meaning less damage to the economy and more tax revenue as well as less spending on the NHS - for example.

  3. Yes, the basic income idea has been used before, mostly in individual settlements in countries. It seems to reduce crime but its real impact can't be ascertained because the effect of migration to the settlements that provide the basic income probably distorts the effects of the policy somewhat.

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