Universal Basic Income Introduction
The issue of labor displacement in the United States has been on the rise. As much as this is a sad reality, automation continues to replace human labor. Automation isn?t the only factor risking the financial stability of the American people. Wealth inequality is another enormous problem. What?s more worrying is that the gap between the rich and the poor continues to increase.
A report recently released by the Brookings Institution that is based in Washington, states that 25% of US jobs are at risk of being lost due to technology. People may be forced to change their line of career, up-skill or re-skill. But is this sustainable? How do you get somebody who has worked in his field for 20 years to just abandon it? Perhaps a policy solution would be exemplary in mitigating these issues.
What is a Universal Basic Income?
Universal Basic Income (UBI) is a model that seeks to provide all citizens of a given country with a form of monthly income regardless of whether they are working or not. It really doesn?t matter what an individual?s financial status or resources look like, everybody is entitled to equal monthly income according to this income model. The ultimate goal of the Universal Basic Income is to address the issues of poverty and foster equality among the people.
This basic income should be livable enough to support every citizen in spite of whether they are contributing in terms of production. The circumstances into which a citizen is born into shouldn?t be used to determine the compensation. Some of the prominent features of Universal Basic Income include a periodic disbursement of monetary payment.
How Does Universal Basic Income Work?
Universal Basic Income works by making a cash payment to the citizens. The monthly cash payments are the defining characteristic of a UBI model.
Countries that follow the Universal Basic Income model shouldn’t provide payment in the form of vouchers or goods. Instead, the government typically makes a cash payment to all of citizens who are age 18 or older.
This means that the monthly payment should not be limited to one adult in a specific household. It is for every adult even if there may be one or more adults in the same household.
The word universal stresses that all the citizens should be eligible for the compensation. Finally, Universal basic income should be unconditional. In other words, no one would have a burden to demonstrate necessity or a willingness to work so that they can qualify to receive this income.
Universal Basic Income has been recently in the news as one of the best ways to support the people financially in the face of increased automation. However, people are divided on this issue. While some see it as the way to go, others have expressed their doubts about it.
Benefits of Universal Basic Income
We will now dive into the benefits of having a government sponsored Universal Basic Income.
Benefit #1 | Poverty Elimination
The Universal Basic Income can be instrumental in putting an end to poverty in the United States. Poverty denies some people the necessary capital and opportunities to excel financially. Poverty isn?t as mysterious as it seems. In fact, providing the capital to people through this UBI could prove to be a formidable weapon against poverty.
People with more money in their pockets are able to educates themselves, as well as their children. Most importantly, they are able to use the money for the basics of life, such as shelter, medical bills, insurance payments, etc.
Benefit #2 | Minimizing Wealth Inequality
There is massive wealth inequality in America today. The staggering gap between the wealthy and the rest should be minimized. The wealthy are known to hoard and control most resources. Nevertheless, economic gains can be equally redistributed through universal basic income to minimize the rate of wealth inequality.
Benefit #3 | Compensating Undervalued Laborers
The people, who barely get adequate compensation in their respective, constantly worry about meeting their basic needs. These hardworking people who are sometimes paid less than what their work is worth include cleaners, educators and caregivers.
In American society, these jobs are equally important. With a basic universal income, these people wouldn?t have much to worry about. UBI will enable them to concentrate on their jobs and give them the peace of mind that they will be taken care of.
Benefit #4 | Promoting Entrepreneurship
Starting a business in today?s economy is extremely challenging. Besides raising capital, one has to have some kind of safety net to support their daily needs before the business is stable. Moreover, businesses sometimes fail and people have to meet their basic needs. A universal basic income would provide the necessary safety net for entrepreneurs and also beef up their capital.
Mark Zuckerberg and Elon Musk have openly supported the universal basic income due to the fact that it would help people access capital more easily. In addition, people would take more entrepreneurial risks once they are provided with a guaranteed stipend. In some of the studies that have already been conducted on this income model, people reported having more time and resources to venture into business.P
Benefit #5 | Strengthens the Economy
Countries that have adopted universal basic income model have seen their economies gain strength. When the people are empowered, they are able to engage in more productive economic activities. Given that most Americans are hard working people, there is no doubt that this income model would stimulate economic growth.
Also, when people have more disposable income, they tend to spend more. When spending increases, the economy thrives.
Benefit #6 | Empowers Employees
Most workers have to stick to their jobs even when they face abuse or any other form of humiliation in the workplace. This is necessary because they are desperate for an income. The universal basic income offers workers more confidence and freedom to quit their jobs for whichever reason they may have. If automation forces some workers to quit their jobs, UBI will help them support themselves and their families while they look for a better job.
Benefit #7 | Increases Political Power
Money plays a crucial role in today?s political affairs. The more money a certain section of the people has, the easier it is to influence political leadership. This happens in terms of donations to their preferred political leaders. The scenario would be different if more people can fund their chosen political movements by contributing small donations to a political party of their choice. As a result of this, people would have more political power by having money to support their favorite candidates.
Problems with Universal Basic Income
Now that we have gone over the benefits of universal basic income, we are going to explore some of the problems with implementing such a system in the United States.
Problem #1 | Cost
The main problem with Universal basic income is that it’s expensive for most world governments to implement and fund. Cost-wise, a $12,000 universal basic income, would cost the U.S Government around $2.4 Trillion annually.
Problem #2 | Diverting Assets
The second problem with a universal basic income is that it diverts some of the government assistance that is being given to the poorest Americans. Some estimates state that parents with three or more children stand to lose more than $15,000 per year in government funding.
Problem #3 | Shrinking the Labor Force
Opponents of establishing a universal basic income will tell you that UBI will reduce the workforce. Smaller labor force translates into less economic output and lower tax revenues for the government to use to fund UBI and other programs intended to help the poor.
Estimates indicate that the U.S Government spending approximately $500 to $600 Billion annually to fund food stamps and disability benefits. Offering UBI would divert money away from these programs.
That said, according to the Roosevelt Institute, empowering the citizens by putting money in their hands would grow the economy by an estimated $2.5 trillion. Additionally, this would create over 4 million jobs. As a result of increased economic activity, an extra $500 to $600 Billion would be generated to fund the programs that had money diverted away from them.
Funding Universal Basic Income
According to Andrew Yang, an American entrepreneur, philanthropist, and politician who is eyeing the 2020 presidential seat through the Democratic Party, there are numerous sources of funds to pay for this income model.
Currently, the American government is said to be spending over a whopping trillion dollars in healthcare, homeless, incarcerations and so on. About $100 to $200 billion could be saved and committed to the UBI model if need be. This is because with the universal basic income the health care would be much better and the crime rates will be reduced.
Countries that have Universal Basic Income
The State of Alaska is the only United States States that has a running model of guaranteed income. Although it has been implemented on a small scale, it works for the people of Alaska, so it might just be a viable model for the rest of Americans.
Brazil is a another great example of UBI. However, their program is predominantly for families with children. UBI has allowed many poor families to send their children to school to acquire a decent education.
Also, Iran has implemented universal basic income model at a national level. They introduced it in the autumn of 2010. The main motivation was to reduce the inequality and poverty that existed among the citizens of Iran.
When first implemented, there were claims that UBI reduced the public participation in the labor force, but no convincing evidence has been found to support these claims.
Other notable nations that have warmed up to a guaranteed income model include Namibia, India, and Mexico. It is however not used in all parts of these countries due to various reasons.
Universal Basic Income Conclusion
A lot of governments around the world are interested in universal basic income. The American people have not been left behind. In fact, business and political leaders are getting more interested in this income model. This is because it has demonstrated promising potential.
A lot of researchers have conducted studies into the universal basic income model and the majority of institutions and scholars who have participated in such studies are happy with the benefits the UBI model brings. Finally, what?s better than a policy that seeks to empower all the citizens, regardless of their religion, race or political choice? An empowered nation is a happy nation.