In this article, we discussed the meaning of basic income, the example, the effect, we also talked about the pros and cons
Definition
Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive a minimum income in the form of an unconditional transfer payment, i.e., without a means test or need to perform work.
Universal basic income (UBI) is a social welfare program that provides a minimum income to all citizens of a country, state, or city. The income is unconditional, meaning it’s given without any requirements or means test.
How it works
UBI would provide a regular cash payment to everyone, regardless of employment status or income
The goal is to help prevent poverty and economic inequality
UBI could replace other need-based social programs.
Examples of UBI
This fund provides a yearly payment to all Alaskan residents. The payment amount varies each year, but in 2015 it was around $2,000. The fund is funded by oil revenues.
Julius Caesar’s bequest
When he died in 44 BCE, Julius Caesar left money to every free Roman citizen.
Arguments for and against UBI
Some say that UBI could cause inflation, which would increase the cost of living.
Others say that UBI should be assessed over the long term, considering its effects on spending, investment, and behavior.
There are many different types of UBI systems.
How UBI can be implemented
Tax the wealthy
Some UBI plans propose taxing the world’s wealthiest people to fund the program.
Replace other social programs
Some UBI plans propose replacing existing social programs with a UBI.
Fund with natural resource revenues
Some UBI plans propose redirecting revenues from natural resources to citizens.
Fund with other taxes
Some UBI plans propose taxing the stock market or top earners to fund the program.
Who would receive UBI
Everyone: Some UBI plans would send a payment to every person, regardless of employment status.
Unemployed people: Some UBI plans would only send a payment to unemployed individuals.
How UBI could be paid
Check: Some UBI plans would send a check to individuals.
Direct deposit: Some UBI plans would deposit the payment directly into a person’s bank account.
The pros of UBI
Reducing Poverty
Supporters for UBI claim that UBI could be helpful in bringing everyone’s income above the poverty line. An author of “Give People Money, Annie Lowrey said that we have tonnes of experimental data from the U.S., from Iran, from other countries, from all over the world. This data shows that if we give people money, it reduces the poverty rate.
Discouraging Low Wages
A major pro of UBI is that it would provide employees enough security to have bargaining power. Lowrey also said that why take a crummy job for $7.25 per hour when people have guaranteed $1000 per month to fall back on? It means that along with the reduction of poverty, UBI will allow the unemployed people to take their time to find a job that will be more suitable for them in terms of wages and employment conditions.
Redistribution of Wealth
The economic growth of high-income countries makes the rich richer but has very little impact on the working class. An economist, Thomas Piketty, has spoken about the idea of “inheritance for all.” A UBI could help to balance the inequality in a country and allow fair redistribution of wealth between each age group.
Fighting Technological Unemployment
As technological advancement is taking more jobs, advocates for UBI say that it would act as a security net for the millions of people who will be losing their jobs in the near future due to the tech revolution. According to research for the Federal Reserve Bank of New York, the longer a person is unemployed, the longer it would take to get employed
The Goal of UBI
The primary goal of UBI is to overcome poverty, income inequality and replace some need-based social programmers that potentially require greater bureaucratic involvement. The idea of UBI has gained fame in the United States because automation is increasingly replacing workers in production and other sectors of an economy.
A diagram illustrating Universal Basic Income (UBI)
Example
The concept of UBI gained attention during the first stage of the 2020 presidential campaign after businessmen and former democratic candidate Andrew Yang made it a cornerstone of his campaign. He called his campaign “Yang’s Freedom Dividend”. This would give every American over the age of 18 a $1,000 cheque every month. The people who were enrolled in the federal assistance programmed are still able to collect this dividend.
Later, he dropped out of the presidential race because his proposal for a federal basic income has not been tested. A number of local jurisdictions have experimented with UBI pilot projects.
Historical Background
The idea of providing basic income to each person in society is present in different shapes in history. The 16th-century English philosopher and statesman Thomas More, explain this idea in their work, named Utopia.
A pamphleteer named Thomas Paine, whose idea helped stimulate the American Revolution. He proposed a tax plan in which revenues would provide a basic government income. Another one, named Martin Luther King, Jr., proposed the concept of “guaranteed income” in his book, named Where Do We Go from Here: Chaos or Community?, which was published in 1967.
Pros of Universal Basic Income (UBI)
A table containing the pros of UBI.
Reducing Poverty
Supporters for UBI claim that UBI could be helpful in bringing everyone’s income above the poverty line. An author of “Give People Money, Annie Lowrey said that we have tonnes of experimental data from the U.S., from Iran, from other countries, from all over the world. This data shows that if we give people money, it reduces the poverty rate. UBI will be especially beneficial to those who are poor or unemployed in getting at least some amount of money to cover their basic needs, leading to the elimination of poverty.
Discouraging Low Wages
A major pro of UBI is that it would provide employees enough security to have bargaining power. Lowrey also said that why take a crummy job for $7.25 per hour when people have guaranteed $1000 per month to fall back on? It means that along with the reduction of poverty, UBI will allow the unemployed people to take their time to find a job that will be more suitable for them in terms of wages and employment conditions.
Redistribution of Wealth
The economic growth of high-income countries makes the rich richer but has very little impact on the working class. An economist, Thomas Piketty, has spoken about the idea of “inheritance for all.” A UBI could help to balance the inequality in a country and allow fair redistribution of wealth between each age group.
Fighting Technological Unemployment
As technological advancement is taking more jobs, advocates for UBI say that it would act as a security net for the millions of people who will be losing their jobs in the near future due to the tech revolution. According to research for the Federal Reserve Bank of New York, the longer a person is unemployed, the longer it would take to get employed. If the jobless had a small source of income to help them back on their feet, they would soon find a new job and start contributing to the economy.
Helping Victims of Domestic Violence
Research by Women Aid shows that women who suffer domestic violence become trapped in violent situations because they don’t have the means to leave them. UBI would make it easier for women to leave the abusive partner from a financial point of view. By giving financial independence to everyone, UBI would ensure that no woman is ever dependent on their partner for their basic needs, and it would act as a barrier from leaving.
Supporting Unpaid Care Workers
Some ill or differently abled relatives are forced to quit their jobs to care for them full-time. UBI allows care workers to support themselves, encouraging care work at home and reducing pressures on the public services that give support and care to the sick and elderly.
Eliminating the Need for Social Security
There are many governmental organizations that are responsible for supporting those in poverty, handing out unemployment benefits, food stamps, and subsidies for housing. UBI would remove these countries spending by eliminating these organizations. UBI can also replace the unemployment benefits or means tested benefits where the government will pay money to those unemployed or meeting some criteria.
Cons of Universal Basic Income (UBI)
Cost
A major disadvantage of UBI is the cost. The cost of implementing UBI would be huge. For example, the estimated UBI is about $3.9 trillion per year in the US, and in the UK, it is estimated at about $28 billion. It is argued that UBI takes pressure off health services and makes social security institutions unnecessary, but these are not enough numbers for the government to budget for.
Motivation to Work
Another disadvantage of UBI is that it would provoke many workers to stop working by removing the incentive to work. Moreover, the unconditional payment of UBI can make some people lazy in terms of acquiring new skills, which can lead to a reduction in occupational mobility of labor.
Philosophical Counterarguments
Capitalist countries are built on the foundation that money or income is something we earn. UBI would change this completely. But some people believed that community service should be a requirement for receiving UBI.
Conclusion
In conclusion, the universal basic income (UBI) states that the government regularly gives every adult citizen a fixed amount of money without conditions related to wealth and unemployment. The aim of the UBI is to reduce poverty and help meet individuals their basic needs. The UBI proposals have been implemented in the cities across the United States, though they have been limited in scope. The idea of UBI has gained attention in 2020, especially given ongoing developments in automation and artificial intelligence (AI).