“Basic Income is not a utopia, it’s a practical business plan for the next step of the human journey” — Jeremy Rifkin
What if I offer you $1000 every month for a lifetime? This is not a joke, this is a government scheme which is currently under observation in many countries. This is called the universal basic income (UBI). Let’s dive deep into this topic of UBI. Let’s check out the pros and cons of UBI. And is Universal basic income is a Good Idea? Let’s check out.
What Is Universal Basic Income?
Universal basic income is a theoretical government program/scheme to give a fixed amount of money to every individual above the age of 18 for a lifetime. The basic income can be implemented nationally, regionally, or locally and will vary from country to country based on the infrastructure, development growth, economy, etc of the country. This idea of basic income is introduced by Sir Thomas More in the 16th century. Even today several famous personalities around the world support universal basic income such as Elon Musk, etc.
Sources Of Money For Universal Basic Income
Since it’s a hypothetical program and not yet being practiced by any country but still here are some hypothetical sources from where the UBI can be funded.
1 – Taxes
The government increases the taxes on the commodities to fulfill the need for money in the country. In UBI, the higher class people of society will have to pay more taxes followed by the middle-class people and than lower-class people. This is the one way that the government can ensure money for everyone.
2- Reducing Extra Expenses
If every country comes together to implement universal basic income then they can reduce the expenses on the defense budget. In this way, the government can also invest that amount in UBI. The embodiment of that is Japan. Japan has limited military because America provides protection to Japan. So, Japan has reduced its expenses on military premises to focus more on research and technology.
3- Eliminating the Welfare Schemes
As UBI is also a welfare program but it is Direct welfare. We are handing the money directly to the individual. So, the government can shut down its several welfare schemes. As citizens, now they have direct money so they can invest in whatever and whenever they want.
The road to meet the expenses of UBI can vary from country to country based on their social-economic factors. There is no hard route to implement a universal basic income in a country. So, let’s move forward to see why do we need Universal basic income.
Need For Universal Basic Income
With time, humans are developing new technology every day. And we are increasing our dependency on machines. So it’s not wrong to say that robots will replace humans for many of the work. Due to this, there will be a great loss of jobs in the future. So, what will people do for a living? How will they earn money? Keeping the future in mind there is a strong requirement of UBI. This is the reason why Elon Musk openly accepts the need for the UBI.
2- Gap Between Rich And Poor
We all are well aware of the poor in our society. The gap between rich and poor is increasing. Richer are getting richer every day and the poor poorer. There is a need to bridge this gap and this can be filled by the Universal Basic Income. As it increases the status of the poor and gives them a platform to start from. More taxes on the wealthier section of society can stop this increasing gap. This is the only reason why do we need UBI.
We recently checked the need for universal basic income. Is the concept of universal basic is really good at practical? What are the pros and cons of universal basic income?
Pros of Universal Basic Income
Education is the key to success. Many people have argued that access to direct money will make it easier for people to access education. One can pursue higher studies after leaving his/her job. One can pursue his/her education that he/she left due to a financial crisis. Overall it will give opportunities to those who want education.
We discussed the gap between rich and poor is widening. To reduce the gap, we have to increase the status of the poor people. Giving money will increase their financial status to a limit. Then it’s their job what to do with the money.
Promotes Better Working Environment
If the government starts to give money to every individual without any work. Then who will do basic and essential jobs of the society like sweeping, cleaning, etc? Many studies suggest that implementing universal basic income will promote a better working environment for the working people. Studies also showed that companies will be ready to give better working equipment to the workers. Overall it will increase the working status and health condition of these workers.
Good For Country’s economy
A study shows that every dollar spends by poor people contributes $1.5 to the economy whereas every dollar spent by the rich contributes $0.39 to the country’s economy. According to economists, if we give $1000 to every US citizen it will increase the US economy by 12.2%. As people will spend more as they have access to money.
Cons of Universal Basic Income
Many people who are not in favor of UBI argued that UBI will promote laziness. We all know money is the driving force of this world, money keeps us motivated to do something productive. But if we remove the motivation of money then it will reduce creativity and decrease the willingness of people to try something. This is the exact opposite of the argument that we discussed education.
Increase Global Immigration
UBI schemes could increase global immigration. Immigration is the international movement of people to a destination country of which they are not natives or where they do not possess citizenship to settle as permanent residents or naturalized citizens. Taking the example of the US, the US is the world’s biggest economy so the universal basic pay will the higher anywhere in the world. So, UBI schemes will encourage people to apply for VISAs and it will increase the migration to the US.
According to many studies, if UBI schemes are implemented in the country it will make the employer pay fewer wages/ salaries to their employees. They will argue that if the government is already giving the basic support salary then why should they pay more.
Increase Alcohol/ Drug Usage
If the government is providing free money to everyone. So, how can we say that they will invest this money in something productive? Many people argue that UBI schemes will increase alcohol and drug consumption. As people will use this money in buying drugs and alcohol.
This is the most used argument against the universal basic income. According to many people, universal basic income will decrease the value of money and it will create an environment of inflation. As people have access to money they will spend more so it will increase the demand for the products and due to limited supply, the overall cost will be increased. It will create inflation.
Inflation is just an assumption. Inflation is not a simple topic. Hence, there are several other factors that should be taken into consideration for inflation.
We have seen the pros and cons of universal basic income. Now let’s check some studies and data of the countries that tried UBI on a small scale.
Real-World Experiments Of Universal Basic Income
Villages in Madhya Pradesh, India
The government of Madhya Pradesh decided to study the benefits of UBI. So, they took 20 villages among them 8 villages got the minimum basic income and the other 12 villages are used as control groups. Their experiment showed that the UBI scheme increased the happiness and productivity of the village. People spent more on health and education. The number of small businesses got doubled. Sanitation and nutrition of the villages improved as well.
In Finland, the government select 2000 unemployed individuals at random. They were given euro 560 per month. They recently shut down their UBI experiment. In this experiment, they observed it led to a small increase in employment. It also led to an increase in positivity and happiness in their life. This overall increase their life satisfaction.
Is Universal Basic Income Expensive?
As well already discussed that the the amount government will give to the individual is based on the socio-economic factor of that country. Taking the example of the United States has a population of 300 Million. If the government provides each and every citizen $1000 then it will cost $3 Trillion to the United States. But this is a simple calculation. According to economist Karl Widerquist, if every American adult gets $12000 per month then it will cost $539 Billion only which is far way less than $ 1 Trillion. This is because the money provided to the rich classes will come back in the form of taxes.
The universal basic income is a theoretical idea. We can analyze the pros and cons and make our point through it. But whether we criticize or admire the universal basic income there will be the need for universal basic income as technology is evolving faster and faster. We have already seen the job losses during the corona Pandemic. So, counties around have to start thinking about the implementation of universal basic income.
So, we talked about the pros and cons of universal basic income. What are your viewpoints on UBI? Should the government implement UBI? If yes then why? Tell us in the comment section below.