Imagine we are traveling to Spain together, and I have promised you a night out at Madrid’s Royal Theatre. The production is a tragedy about Spain’s 3 billion euro ($3.7 billion) Ingreso Mínimo Vital (IMV), which was implemented a year ago last month. The joint governing deal between the Spanish Socialist Workers’ Party and Unidas Podemos agreed to develop “a general mechanism to guarantee earnings for families with no or low income” in December 2019. The COVID-19 pandemic accelerated the plan.
Polls showed that more than 80% of Spaniards were in favor of the huge measure. The country’s seemingly ambitious initiative turned the heads of policymakers and economists around the world. Nature magazine called the Spanish policy “the largest test yet of an idea called universal basic income” and said it “might just be remembered as the world’s biggest economics experiment,” while a headline in The Independent boasted, “Spain to Become First Country in Europe to Roll Out Universal Basic Income.”
But is our three-act play, “Ingreso Mínimo Vital,” really about a genuine universal basic income system? Or will the denouement reveal that IMV is just a standard welfare program with a misleading name?
Pros and Cons of Universal Basic Income
Universal basic income (UBI) is a government program whereby all adult residents of a country receive an unconditional (i.e., without a means test), regular payment regardless of income, employment status and assets. In the U.S., the concept is often associated with Andrew Yang’s 2020 presidential campaign, but it has much longer roots: Thomas Paine was a proponent of it in the 18th century, and Martin Luther King advocated for it in his final book, “Where Do We Go From Here: Chaos or Community?” Milton Friedman called for a basic income in the form of a negative income tax, while during the Nixon administration, Donald Rumsfeld, who was the director of the Office of Economic Opportunity, supervised UBI programs for the president. And nowadays, UBI has piqued the interests of scholars on the right and left, from Yuval Levin to Robert Reich.
In the U.S. today, neither national nor statewide UBI systems exist, but enthusiasm for UBI at the city level has been high. Fifty-seven American mayors are members of Mayors for a Guaranteed Income, a network that helps them initiate and test UBI in their cities. To date, 25 pilot programs have been launched, in cities as large as Los Angeles and Denver and as small as Madison, Wisconsin, and Hudson, New York. Depending on the city, beneficiaries receive between $500 and $1,000 a month during a one- or two-year period.
But these programs are targeted, not universal. Even the largest of them, Los Angeles’ initiative, is capped at 2,000 city residents. Nor are the pilot programs unconditional or automatic. Only people with incomes at least 200% under the federal poverty level (in Newark, for example) or families earning below $52,000 a year (in Tacoma) are eligible. The program in Oakland is limited to 600 low-income families that are Black, Indigenous or people of color; the program in Columbia, South Carolina, to fathers; and the initiative in Long Beach to “artists who have been financially impacted by closures caused by the COVID-19 pandemic.” Therefore, these programs are guaranteed, means-tested, minimum income systems, not universal basic income initiatives.
A targeted, means-tested form of UBI was recently tested in Stockton, California, and Jackson, Mississippi. In Stockton, 125 residents were given $500 per month for two years, and in Jackson, 110 “Black mothers living in extreme poverty” were given $1,000 a month for a year. The results in both cities have been positive. Among the beneficiaries in Jackson, those who paid their bills on time increased to 83% from 27%, and the number of participants who prepared three meals a day rose from 32% to 75%.
Meanwhile, the extra monthly money incentivized work: Stockton participants were twice as likely to secure full-time employment compared with people not receiving the payments. The guaranteed income also created opportunities for self-determination, goal-setting and risk-taking, often leading to self-improvement. Without constant financial strain, Stockton recipients were more likely to complete “internships, training, or coursework that [led] to full-time employment or promotions, or reallocating resources in a way that facilitates seeking better job prospects.” And less than 1% of participants’ spending went to tobacco and alcohol.
UBI does have its detractors, however, both as a genuinely universal program and as a conditional, means-tested system. Among the economic arguments against UBI are that it is too costly, could trigger inflation, increases the size of the government, discourages productive work and encourages recipients to spend recklessly. Critics, furthermore, contend that UBI programs can lead to fewer marriages and more single-parent households.
“It [UBI] is expensive and inefficient. We have better tools to address poverty. I prefer insurance to guarantees,” said Allison Schrager, a senior fellow at the Manhattan Institute. “We should focus on insurance-based programs that preserve good incentives and dignity and target the problems of poverty more directly.”
Spain’s IMV Program Is Not Universal
Still, as our plane is landing in Madrid, you remain excited about our trip to Spain, where you’ve heard a UBI system has been in place since last year. “If I were a resident of Spain,” you ask me, “would I soon be receiving IMV payments?” I duck your question, but when you press me, I send you the link to the Spanish Ministry of Inclusion, Social Security and Migration so you can fend for yourself.
On the surface, the website seems fairly easy to navigate, but it is full of recondite information, much of it written in legal jargon. Prospective beneficiaries must, first, register and, second, apply for IMV. The steps are multiple, the procedure arduous and the application form a whopping 14 pages. A current lease is one of the numerous requirements, but that is not feasible for the unemployed or those with part-time jobs or gig work, who are often forced to rent from landlords who allow them to pay rent in cash. (These landlords don’t often declare the rental income, and renters, lacking proof of rent payments, can’t get any tax reductions.)
Then you come upon this chart: It shows thresholds (in euros) which your assets—not your income—must be less than, depending on your household unit, to qualify for IMV. You scratch your head, wondering whether IMV is truly universal and automatic, or whether it’s actually a means-tested program.
Your suspicions are correct. What the Spanish government has titled Ingreso Mínimo Vital is far from automatic or universal. Moreover, it already exists in the form of a commonplace means-tested welfare program, in every country in Europe as well as Canada, Australia and the U.S. To receive IMV payments, people must be destitute: annual income of under 5,639.20 euros (less than $7,000) for a single household, 7,330.96 for married or common-law couples, 8,571.58 for a single person with one dependent, 10,263.34 for a single person with two dependents, 9,022.72 for a couple with one child, and 10,714.42 for a couple with two children.
If qualified, depending on household income and dependents, beneficiaries would get anywhere from 469.93 to 1,137.24 euros a month (the latter figure refers to a single parent with four dependents). Overall, 850,000 households (approximately 2.5 million people) are expected to qualify for at least 469.93 euros a month.
Mixed Messages From Government and Media
But how could the current Spanish Socialist Workers’ Party-led government possibly push and perpetuate the false narrative that IMV was some sort of groundbreaking UBI initiative? A facile answer may lie in the misleading (and intentional?) nomenclature and inaccurate translations from Spanish. The word “universal” is the same in Spanish and English, and although it isn’t included in IMV’s official title, each of the other three words—ingreso (“income”), mínimo (“minimum”), vital (“basic” in this context)—is deceptive. Spanish is a rich language replete with better linguistic options to describe what IMV really is, so the Socialist-majority government could have selected more precise and representative words to name it.
Another answer may be that Spain’s establishment media aided and abetted the Socialists in propagating the fib that IMV was some kind of breakthrough in the fight against inequality. Watch, for instance, this clip of Nadia Calviño, first deputy prime minister and minister of economy, on La Sexta, Spanish TV’s equivalent to MSNBC. Calviño is interviewed by Ana Pastor, whose journalistic inquiry is as exhaustive as an MSNBC anchor’s when interviewing a Democratic Party official. During most of the interview, one-third of the screen is taken up by Calviño’s image. But on the remaining two-thirds flash images of factory workers sewing masks for the coronavirus pandemic, technicians assembling respirators, a man wearing a Spanish labor union jacket (UGT) as he stands in the empty parking lot of an automobile assembly plant, and a man at his desk wearing a polo shirt with the Spanish flag on it.
As Calviño is talking, there is a graphic overlay with one of her quotes from the interview: “We [the Socialist-led coalition government] are taking measures so that nobody is left behind,” adding, “starting with workers.” The problem is, she said at the beginning of this statement that “we are clearly taking a series of measures,” which also includes furloughs, assistance for workers with temporary contracts about to expire, and support for the self-employed. In other words, none of those workers who appeared on the screen will qualify for IMV payments, unless they have been completely pauperized.
I must now keep my promise to take you to the theater, for only through the vehicle of theatrical farce can you understand the real story behind the origin and fate of Spain’s dubious Ingreso Mínimo Vital. But first you must know the setting and timeline of our Spanish political tragedy: modern-day Spain, May 31, 2018, to the present. Now meet the dramatis personae. The leading man is Pedro Sánchez, socialist prime minister of Spain and secretary-general of the Spanish Socialist Workers’ Party, one of Spain’s two establishment parties. Sánchez is tall, lean and handsome (think Obama).
Calviño is our female protagonist. She is a composite character of Larry Summers and Janet Yellen. The Panglossian character is Pablo Iglesias, the winsome former second deputy prime minister, minister of social rights, and founder and erstwhile secretary-general of Unidas Podemos, an anti-establishment progressive party. Iglesias’ politics are left-wing, but in 2014 he founded Podemos partly as a response to the partisan impasse between the Socialists and the conservative Popular Party, Spain’s other establishment party. This partisanship, often blind and rancorous, has paralyzed long-needed economic and legal reforms in Spain and further entrenched the inertia of the country’s large administrative state.
The Tragedy Unfolds
Act I. Spanish Parliament. May 31-June 1, 2018. Conservative Prime Minister Mariano Rajoy of the Popular Party has just lost a no-confidence vote. Pedro Sánchez of the Socialists has the chance to become prime minister. To do so, he needs the votes of many other parliamentary groups (Basque and Catalan independence parties, for instance), but, above all, those of Podemos. Pablo Iglesias has the floor. He and his party will vote to oust Rajoy, but they want Sánchez to be guided by a new, outside-the-box politics.
Sánchez and the Socialists govern until Sánchez calls a snap election for November 2019, which the Socialists win. A coalition government with Podemos as the minority partner is born. The result is the first multiparty Cabinet in the history of Spain, with 11 of 22 ministries led by women. And although a majority of ministries are occupied by the Socialists, Podemos heads three of them. A slew of new policies is promised, including universal basic income. Act I ends with the last line of Sánchez’s soliloquy: “There is great hope in the Kingdom of Spain.”
At this point you may be thinking, “This is not a tragedy; it’s a fairy tale!” I don’t play the Big Bad Wolf just yet, so at First Intermission, I slip you the production’s program. In it you read about the Socialists’ and Podemos’ political platforms. Within Article 220.127.116.11 of the Socialist electoral platform is “Ingreso Mínimo Vital,” while Article 213 in the Podemos platform is titled “Ingreso Básico Garantizado.” Although you would have been more comforted had the Socialists chosen the same words as Podemos—words which more accurately translate to “basic guaranteed income” rather than “minimum basic income”—you are beaming.
But then you read the fine print: Whereas the Podemos platform says, “We will guarantee that no one is without basic income, notwithstanding luck or employment status or pension payments,” and that “each adult will be guaranteed between 600 and 1,200 euros a month,” which will be “automatic and unconditional,” the Socialist Party platform merely says, “We will move toward the establishment of an Ingreso Mínimo Vital,” and “We will develop a mechanism of guaranteed income for highly vulnerable households.” The skin on your forehead crinkles.
Nevertheless, when the curtain rises for Act II, you remain optimistic. But it’s all downhill from here. At nearly every instance in which Podemos tries to effectuate change, the Socialists, with Calviño whispering in Sánchez’s ear, fall on the side of “more of the same,” causing Iglesias to accuse the Socialists of failing to honor their signed agreement.
I see you squirming in your seat, nervous about the potentially nasty ending of this Spanish political drama. You cover your eyes in terror. But then there is a new scene, the last one of Act II. Upon hearing the melodious notes of a harp, you peek out with one eye. Standing at center stage before a background of puffy white clouds is Sánchez bathed in golden light, his arms aloft. He beckons the audience toward partially ajar pearly gates over which a sign reads “INGRESO MÍNIMO VITAL,” the deus ex machina of our play.
At Second Intermission, you read more about the history of the drama, learning that the IMV bill passed in the Spanish parliament without any dissenting votes. Only Vox (a far-right party whose French equivalent is Marine Le Pen’s National Rally) abstained, but the Popular Party and Ciudadanos joined the Socialists and Podemos to vote in favor. You raise your eyebrows, finding it hard to believe a true UBI proposal would pass so easily. You look to me for reassurance, but my eyes remain cold, my expression indifferent. You sink into a shattered state of delirium.
Act III, this tragedy’s denouement. Iglesias is out on the moors. His clothes are tattered rags, and he is standing barefoot at center stage. The clouds have grayed and the lights are dim. He says, “In these pages I hold to my breast are 12 amendments to Ingreso Mínimo Vital. Their purpose is, above all the rest, to convert IMV into an authentically universal basic income.” There is the sudden boom of distant thunder and the lights grow dimmer—when Calviño materializes out of the darkness and strikes the papers from Iglesias’ hand! As he bends to recover them from the craggy ground, she sticks him with a dagger, and before he can defend himself—as trumpets sound—Sánchez darts onto the stage and slays Iglesias with his sword.
Any chance of seminal public policy is slain. Sánchez and Calviño shred the 12 amendments, keeping IMV in its current form of massive and unimaginative traditional welfare. Then, looking directly at the audience, Sánchez says, “All is the same in the Kingdom of Spain.” The curtain falls and the houselights go on. I see you back to the hotel and tuck you into bed, where I am, at this very moment, trying to subdue your feverish descent into hysteria by dabbing your forehead with a damp rag.
The epilogue of the play confirms IMV as a draconian and stingy traditional welfare program. A year ago, the Spanish government estimated that 850,000 households would qualify for IMV benefits throughout the coronavirus pandemic and beyond, but today less than one-third of that number have received a payment, with three out of four applications denied and 30% pending in a bureaucratic abyss.
Podemos’ proposals to streamline the application process and open up the benefits to more people have been blocked in the Spanish parliament. The silence on the matter coming from both the Popular Party and Ciudadanos seems to indicate they are happy with, or at least complacent about, the current discombobulated mess that is IMV. And although IMV, now one year on, has been called an “absolute and total failure” and a “bad joke,” the Socialists have not taken any steps to reform the program.
Maybe Madrid should look to tiny Jackson or tinier Stockton for advice. But despite the relative success of those U.S. programs, their small size and targeted, non-universal nature are unlikely to please Spaniards, who were promised a true UBI program.