Universal Basic Income

Opening Statement

Consider for a moment that from this day onwards, on the first day of every month, around 1,000 Rs is deposited into your bank account because you are a citizen. This income is independent of every other source of income and guarantees you a monthly starting salary above the poverty line for the rest of your life.

You might think that this is sheer madness and this is not possible, this is a new economic policy that is being seriously considered in many countries in the world today. In fact, it is also being implemented in many places across the world today. This economic policy is called UNIVERSAL BASIC INCOME.

About the topic   

A universal basic income is a government guarantee that each citizen receives a minimum income. It is also called a citizen’s income, guaranteed minimum income, or basic income. The intention behind the payment is to provide enough to cover the basic cost of living and provide financial security. The concept has regained popularity as a way to offset job losses caused by technology.

Why There is a need for UBI

 

One of the most important reason is the job losses that are happening and will happen in the future due to automation and AI (artificial intelligence), experts believe that there will be so many job losses that not everyone will be able to secure a job in the near future and people would not be able to bear their expenses in the absences of a job so it is necessary to give them some money for free to help them afford a basic standard of living so they are able to afford basic necessities like food, medicine, etc.

History behind UBI

Thomas Paine, Napoleon, and Martin Luther King, Jr., don't have much in common at first glance. Nor do socialists and libertarians or Finnish bureaucrats and Silicon Valley tycoons. Some policies have a habit of creating strange bedfellows, but none more so than the idea that governments should guarantee their citizens a minimum level of income. Not by creating jobs or providing traditional welfare, but by cutting checks, for the same amount, to everyone.

Universal basic income (UBI) is an old idea, but in recent years it has gained considerable momentum. The threat of automation is focusing minds: Algorithms are learning to perform a growing number of blue- and white-collar jobs, and soon there may not be enough paid employment to go around.

In a strict sense, the intellectual history of universal basic income is roughly half a century old. But the idea that the government should somehow prop up everyone's earnings has cropped up repeatedly over the past two centuries: as a citizen's dividend, a social credit, a national dividend, a demogrant, a negative income tax, and a guaranteed minimum income, among other concepts. Few of these proposals fit the usual definition of a basic income, and they differ from one another significantly. But they share a common thread.

 

Real-life Experiments of UBI

·        Alaska has had a guaranteed income program since 1982. The Alaska Permanent Fund paid each resident an average of $1,606 in 2019, all out of oil revenues. Almost three-fourths of recipients save it for emergencies.

·        In 2017, the Hawaii state legislature passed a bill declaring that everyone is entitled to basic financial security. It directed the government to develop a solution, which may include a guaranteed income.

·        In Oakland, California, the seed accelerator Y Combinator will pay 100 families between $1,000 and $2,000 a month.

·        In 2019, Stockton, California, began a two-year pilot program. It's giving $500 a month to 125 local families. It hopes to keep families together, and away from payday lenders, pawnshops, and gangs. About 43% of the recipients are still working. Most of the others were taking care of relatives, disabled, retired, or students.

·        Chicago, Illinois, is considering a pilot to give 1,000 low-income families $1,000 a month.

·        Canada is experimenting with a three-year universal income program. It's giving 4,000 Ontario residents living in poverty C$17,000 a year or C$24,000/couple. The government expects it will cost C$50 million annually.

·        In 2017, Finland gave 2,000 unemployed people 560 euros a month for two years, even if they found work. The recipients said it reduced stress. They said it gave them more incentive to find a good job or start their own business. Instead, the Finnish government found that they did not have higher incomes or more workdays than the control group.

Pros And Cons Of UBI

Pros

·        Workers could afford to wait for a better job or better wages

·        People would have the freedom to return to school or stay home to care for a relative

·        The "poverty trap" would be removed from traditional welfare programs

·        Citizens could have simple, straightforward financial assistance that minimizes bureaucracy

·        The government would spend less to administer the program than with traditional welfare

·        Payments would help young couples start families in countries with low birth rates

·        The payments could help stabilize the economy during recessionary periods

Cons

·        Inflation could be triggered because of the increase in demand for goods and services

·        There won't be an increased standard of living in the long run because of inflated prices

·        A reduced program with smaller payments won't make a real difference to poverty-stricken families

·        Free income may disincentivize people to get jobs, and make work seem optional

·        Free income could perpetuate the falling labour force participation rate

·        There are many opposed to handouts for the unemployed

My Opinion

 

The UBI scheme can be a boon for an economy or it can be a catastrophic failure, according to me the end results of this scheme mostly depends upon how it is implemented. I personally think that the government should only give extra monetary benefits to those people who are at least doing some kind of job - like farmers, street vendors, maids, etc. If we give free money to everyone then why anyone will work? So we should give extra monetary benefits to only those people who are doing at least some kind of job and this will also promote other people to do at least some small job. By doing this we will also solve the problem of unemployment and as people have done some hard work to earn this money they will spend it wisely, which will also solve the problem of inflation.

Thank you

If you have any doubt or questions about this topic please let me know in the comments below. 

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