What is Universal Basic Income?
Universal Basic Income (UBI) is a proposed program that would provide citizens with a certain amount of income periodically, without strict restrictions on who can receive this benefit. In the US, the most popular version of the proposal is monthly payments of $1,000 to adult US citizens regardless of employment status. This concept is gaining momentum in terms of support and awareness. It has been described as something that may become necessary in the future to account for rapid change in the shift of employment.
Why do we need a Universal Basic Income?
By 2030, nearly 40% of jobs in the US could be automated. With robotics and artificial intelligence either replacing jobs or drastically changing the skills needed to perform certain jobs, there likely will be a large shift in the overall job market. McKinsey & Company estimates that "between 400 million and 800 million individuals could be displaced by automation and need to find new jobs by 2030 around the world."
Besides this future threat of automation and the loss of jobs or the need to transition for many to new jobs, there are other reasons UBI is needed. Human beings deserve dignity and basic needs, and unfortunately in some places, this is hard to deliver. In the United States, however, I believe that it is very possible to deliver these needs. According to the US census, “about one in eight Americans still lived below the poverty line — $25,465 for a family with two adults and two children.” With a UBI in place, a two adult household would be lifted just about to the current poverty line. This income in combination with their current income from employment which they would keep, brings millions of people to a higher standard of living immediately.
Additionally, as we have seen with a crisis that affects employment such as the COVID-19 pandemic, people are struggling to make ends meet and pay for their necessities, and the government is slow to react and has proven unable to provide the financial support for its citizens when needed in a timely and sufficient manner. The UBI would eliminate some of the need for measures such as unemployment aid in times of a crisis, as well as the catastrophes of not being able to pass such measures, such as people being evicted from their homes.
What would Universal Basic Income do? What are the benefits?
The biggest reason for UBI is the increase of freedom and flexibility it would provide US citizens. It could help break the cycle of poverty by allowing people to gain skills, education, or pursue small business development or other passions with additional income giving them the financial security to do so. It would be a great catalyst for entrepreneurship and innovation, while also providing people with enough money to take care of basic needs such as rent, food, and childcare. As opposed to unemployment, this income would not be based on working status, so people would not have disincentive to work, since the income is guaranteed at a level meant to augment employment income, not replace it. By not making any requirements to earn this income, besides being 18 years or older, the costs of administering or deciding who qualifies would not be an issue. Another benefit is that this program would empower workers, who no longer need to keep exploitive jobs at employers just to survive with UBI, granting them leverage. UBI also improves the health and well-being of citizens among many other areas of life, these are discussed in further detail in Andrew Yang’s policy he proposed as a 2020 Democratic presidential candidate, and you can learn more here.
Is this socialism?
No, Universal Basic Income has nothing to do with revolutionizing the current system in terms of the ownership of the means of production. UBI is just an addition to capitalism, where income does not start at zero, protecting people from falling through the floor so to speak under the current system. Research suggests that UBI will enhance the economy as markets and businesses will be bolstered by consumers who now have more purchasing power. Andrew Yang describes UBI as “pro-growth, pro-market, and pro-consumer” and fundamental in a “trickle-up economy.”
Who supports Universal Basic Income?
- Activist Martin Luther King Jr: “I’m now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”
- Former Presidential Candidate Andrew Yang: “I’m a capitalist, and I believe that universal basic income is necessary for capitalism to continue.”
- CEO of Tesla and SpaceX Elon Musk: “What to do about mass unemployment? This is going to be a massive social challenge. And I think ultimately we are going to have some sort of universal basic income. I don’t think we have any choice.”
- Philosopher Thomas Paine: “I care not how affluent some may be, provided that none be miserable in consequence of it.”
- Facebook CEO Mark Zuckerberg: “Every generation expands its definition of equality. Now it’s time for our generation to define a new social contract .... We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.”
One of the most comprehensive studies of the effects of UBI has concluded in Finland that recipients who received the no strings attached monthly payments experienced mental and financial well-being, as well as improved employment. Other findings include more security during crises, such as the COVID-19 pandemic, and more confidence in their futures.
How will we pay for it?
There are many ways to pay for it, and one common proposal is the institution of a value-added tax on goods, notably not on grocery or clothing goods (as to not have an impact on the price of those goods). By instituting this, inflation should not occur any more than normal, since new money is not being added into the economy. Value-added taxes make it harder for large companies to avoid paying their fair share of taxes, and the vast majority of countries already have this in place. To pay for UBI, Andrew Yang (one of the most popular proponents of this system) would implement a value-added tax of 10%, which is about half of the rate in the European Union. Costs would also be expected to lower in other areas of government operations, as UBI would be expected to lower the need for other programs such as incarceration and health programs, as the US population would become more stable and healthier, avoiding these other less pro-active types of programs. Additionally, research suggests this would grow the economy, furthering the justification on a cost level.
Justice Mory is majoring in Business Analytics and is part of the John W. Gallivan Program in Journalism, Ethics, and Democracy. He is from Southern California and now lives in Duncan Hall. His main goal is to keep learning and to continue to become more informed. He can be reached at jmory@nd.edu or @JmoryND on Twitter.
