Would you be more likely to start your own business if you received a stipend to cover your monthly expenses, like food and rent?
Advocates of a concept called universal basic income think so, and real-world trials of this radical-sounding policy are already taking place. Universal basic income creates a system where the government pays every person a monthly check with no strings attached.
The conversations about UBI have increased in light of technological advances such as mechanical automation and artificial intelligence put many traditional jobs at risk. Providing guaranteed stable income would in theory help people weather the rapid technological changes and be able to move to new emerging jobs without as much economic loss.
UBI advocates come from all parts of the political spectrum. On the left, some progressives believe that we have a social obligation to provide a basic standard of living to all, and on the right the libertarian ilk see UBI as a way to reduce the complexity of the government social safety net with universal payments.
Several experiments with the concept are happening across the world in Europe, Africa and Asia, Jenna van Draanen, secretary of the nonprofit organization Basic Income Canada Network told me.
“The Basic Income Grant pilot project in Namibia in 2008-2009 showed an increase in income-generating activities, including business startups. The Madhya Pradesh Unconditional Cash Transfers project in India in 2011-2012 found the same thing,” she said.
Closer to home, the Silicon Valley-based startup fund Y Combinator started a pilot project in Oakland to study the effects of UBI with 100 families. Y Combinator will provide $1,000-$2,000 per month with no conditions except to participate in the study. The study seeks to identify how people use their increased economic freedom in their lives. If successful, the fund plans to launch a larger five-year study.
How might an aspiring business owner here in Snohomish County take advantage of UBI?
The most obvious way is that it allows the owner of a startup to take a lower salary or none at all during the initial phases of the business. Being able to pay for basic necessities with a guaranteed income would reduce the amount of savings a prospective business owner would need to have in order to start a venture.
Basic income could also be used to bootstrap, or self-finance incrementally, an enterprise. For the part time entrepreneur, investing basic income payments into the business could accelerate growth to sustainability.
For existing businesses on the edge of profitability, UBI could help an owner weather the storm of a slow season, a key customer not paying a bill on time, or countless other incidents than can cripple an infant venture unable to tap into traditional credit markets.
For many the idea of receiving a guaranteed salary from the government seems radical, and such a policy change is unlikely to happen in the near future. In the meantime, take a few moments and think about what kind of business you would start if your essential monthly bills were all paid.
Ryan Davis is dean of business and applied technology at Everett Community College.
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