Universal Basic Income- A Solution To Poverty

What Is Universal Basic Income (UBI)?

Universal Basic Income (UBI) can be described as a form of unconditional transfer payment to the entirety of the populace, without means testing or work requirements. It is an idea that is garnering heightened interest in debates across the political spectrum as a possible method of dealing with those prognostications that caution against a dire future of extreme inequality driven by both socioeconomic and technological factors. In this blog, we would mainly be talking about how a $12,000/yr UBI would benefit the USA.

Common Concerns Relating UBI:

1. UBI Would Make People Lazy: Now, it might seem like getting free money would make people lazy and cause them to work less, but studies like this one conducted by MIT (https://economics.mit.edu/files/12488) show that the lazy, drunk poor person is actually more of a stereotype. In fact, the richer you are, the more drugs and alcohol you consume. 

2. UBI Would Make People Work Less: In 1970, a UBI test run was conducted in Canada – The experiment was titled Mincome. Results from this experiment showed that less than 1% of recipients stopped working (mostly to take care of their kids) and people reduced their working hours by 10%, using the extra time to go back to school or learn new skills. Another state in the US has actually been doing something very similar to giving people money; Alaska has been giving its people some of the profits they earn from oil in the form of an “oil dividend” for decades now, without losing productivity. The claim that people would simply work less when given money does not hold water.

1. UBI Would Cause Inflation: The money to fund UBI would simply not appear out of thin air; UBI would actually be funded by recalibrating the national budget. Since UBI would be funded by shifting funds instead of printing money, we wouldn’t see3 inflation. We might see a small rise in prices but the free market would make sure that these prices stay low, making the rise in prices insignificant.

Benefits Of UBI:

1. Massive GDP Growth: A UBI of $12,000 in a year would grow the US GDP by 12%. This is mainly because the less fortunate would have more money to spend, increasing overall demand.

2. Empowering Workers: A $12,000/yr UBI would give workers extra leverage to demand better working conditions, lesser working hours and get more fulfilling jobs.

3. Fighting technological unemployment: With advanced technology taking over more and more blue and white-collar jobs, UBI would act as a sort of security net for the millions of people who will be left jobless by the tech revolution. Research shows that the longer you are unemployed, the longer it takes to find employment. If the jobless had a small source of income to help them back on their feet, they could find new jobs and start contributing to the economy sooner.

4. Eliminating Poverty: A $12,000 UBI would elevate everyone over the poverty line, effectively ending poverty.

5. UBI Is Better Than Current Welfare Programs: The “poverty trap” would be removed from traditional welfare programs. Traditional welfare programs do not go far enough to help people, instead, they often leave people way worse off than before. Instead of acting like a net that causes people to fall through its holes, UBI would act more like a floor which would give people a base to build on.

Future Of UBI

While UBI might still seem like a radical idea, it is actually gaining steam especially in the US. A recent Emerson poll shows that 53% of people support the idea of UBI (http://shorturl.at/fgluH) compared to only 20% support at the start of 2019. This increase is due in part to the presidential candidate Andrew Yang, who plans to implement a $12,000/yr UBI in the US. Despite having low to none media coverage, Yang has been doing well in early states and national polls, often polling above the top 5 candidates. Yang has always said that he would love to see his ideas get implemented even if he is not the president. Even if Yang doesn’t win the presidency, UBI has officially entered the mainstream and it is only a matter of time before automation forces us to rethink our current welfare system. When we do remake our welfare system, UBI is almost guaranteed to be at the forefront.