Should the government implement a universal basic income system?
In the past few decades, a discussion around how to tackle income inequality, increasing poverty, and overall economic problems, has seen the idea of setting a universal basic income as one of the possible solutions emerge, leaving some to wonder whether implementing it would indeed solve some of these issues.
Rise of the Issue
With the financial crisis of 2008 causing economic anxiety, the COVID-19 pandemic creating economic stress, and ever growing financial inequalities, support for and discussion about a universal basic income (UBI) has grown.
UBI is money provided by the government to everyone, regardless of his or her socio-economic status or financial need. Comparable to UBI is a negative income tax — where the government provides money to those who earn less than a certain income level. As of March 2022, 24 U.S. cities and states provide a form of UBI to their eligible citizens.
One of the pioneering UBI programs was the Stockton Economic Empowerment Demonstration, which provided a monthly UBI of $500 to 125 randomly selected residents in Stockton, California, for 24 months. The California program helped mitigate levels of depression among low-income earners, and encouraged them to seek full-time jobs. Not every UBI program brought success, however. Ontario’s experiment with UBI was canceled as the no strings attached money rather disincentivized beneficiaries from rejoining the workforces.
Advocates for UBI believe it will reduce poverty and may be necessary to ensure minimal living standards, particularly with the prospect of automation taking away, according to a study, some 47% of all U.S. jobs. Opponents fear a loss of incentive to work and also believe that it is unaffordable. A national poll says about 54% of Americans disfavor the idea of providing a UBI to all adults.
Family Assistance Plan
Included in the Family Assistance Plan proposed by President Richard Nixon was a negative income tax, ensuring a minimum income for American families.
McGovern Promises “Demogrant”
Democratic presidential nominee George McGovern, who would later lose the election, campaigned in part on a promise to give every American a grant of $1,000.
Alaska Permanent Fund
Oil revenues allowed Alaska to provide annual checks averaging $1,600 for nearly all citizens.
Yang Proposes UBI
Democratic candidate for President Andrew Yang, citing concerns about the loss of jobs to automation, proposed a UBI of $1,000 per month.
COVID Relief Efforts
The U.S., in reaction to the loss of jobs and resulting reduction of income caused by the COVID-19 pandemic, passed legislation providing unprecedented aid to families in the form of unemployment and relief payments, known as “stimulus checks”.
UBI Proposed in Congress
The Guaranteed Income bill, written by U.S. Rep. Ilhan Omar would provide a guaranteed income of up to $1,200 for adults and $600 for children per month, as a way to combat the economic fallout from COVID-19 and increasing poverty rates.
Advocates believe that any resource, particularly fiscal resources, made available to those who have few or none automatically raise the recipients’ standard of living.Opponents fear that UBI and other welfare programs perpetuate a cycle of poverty due to recipients being disincentivized to work.
UBI grants a stipend to everyone, including wealthy individuals who presumably don’t need it, and non-earning individuals, who some believe don’t deserve it. UBI supporters however say most UBI programs are geared to ensure low-income individuals a minimum standard of living and to reduce the ever growing wealth gap.
Proponents claim UBI will provide income for food, shelter, and medical care that will help ensure better overall health outcomes for society, while opponents believe it would drain funds from an already overtaxed health system.
Some see UBI as opposing the U.S.’s national ethos of hard work and risk-taking. Proponents of UBI however believe that it will actually spur entrepreneurialism as it frees people from dead-end jobs and provides them the means to take risks.
UBI reduces poverty.
Studies indicate that forms of UBI reduce poverty and lead to better health outcomes.
It stimulates the economy.
Money going to the people who need it most is put back into circulation, providing a boost to the economy. Studies, such as one by the Roosevelt Institute, claim a $12,000 payment per adult each year would boost the economy by 12% to 13%.
Job conditions will improve.
One study shows it leads to better productivity due to workers, who are receiving UBI, being happier, having better cognitive functioning and even working more compared to those who are not receiving UBI.
People can come up with original ideas.
Freed from the drudgery of a dead-end job and a lack of expendable income, according to one paper, people will be motivated to explore innovative and entrepreneurial ideas.
It rewards unappreciated workers.
A UBI will pay primary caregivers, volunteers at charitable organizations, and others who provide essential work for little or no pay. Providing essential workers such as these with UBI will benefit society as a whole by providing recipients a better sense of well-being.
UBI is universal.
The purpose of benefits and UBI in general is to help those in need, providing money to those who already possess a lot is wasteful and can cost some $3 trillion per year, according to the AEI.
It disincentivizes people.
Given the choice between a job and getting paid not to work, people may choose the latter. Some studies found that unconditional payments caused a 14% decline in labor force participation.
It is too expensive.
The national debt is already too high and a universal UBI will exacerbate that. Some studies that have shown how beneficial UBI will be to the growth of the economy involves the increasing of the already extremely large national debt, which many see as unfavorable.
All government aid should be conditional.
Anyone applying for government aid should be in need of it. Increasing government spending should be directed to those in society who have no other means and provide them with a way to be financially stable, not to help those who are not in need.
It could cause lower wages.
The prospect of UBI can cause employers to lower wages as they see the government stepping in and subsidizing salaries.