Is Universal Basic Income Possible?

Dan Hurt

April 7, 2023

The concept of universal basic income has been getting much attention lately. It has been put forward by American politicians like Andrew Yang and tech billionaires like Elon Musk to support people who might be displaced by automation. Whether a UBI program would reduce poverty and inequality will depend on how it is designed and financed. Economists and skeptics worry about it being too expensive, creating disincentives to work, and diverting resources from other priorities.

It’s a floor to stand on

The idea of universal basic income is a 20th-century policy that’s come into the spotlight recently. It’s a plan that would give every adult in the country a fixed amount of money, no matter their employment status or other criteria.

Proponents of universal basic income say that it will empower workers. They argue that a guaranteed, unconditional income will give people leverage to demand higher wages and better working conditions.

They point to Alaska, which has a basic income program. It’s been field-tested with good results and hasn’t led to fewer people working.

Conservatives also defend UBI as an efficient way to reduce government waste. They argue that the government can save a lot of money by cutting checks to everyone instead of maintaining a web of means-tested programs and benefits administration.

It’s a safety net

The idea behind universal basic income is to ensure that everyone has a guaranteed, unconditional cash payment. This would go a long way to address some of the most pressing social challenges in the world.

For instance, UBI could make it easier for workers to stay home with their children or reduce their working hours to spend more time with them. It also would provide a source of income for victims of domestic violence who have little to no money.

In addition, UBI equalizes what political theorists call “morally arbitrary luck.” People have a variety of contributions to society that are not reimbursed, such as taking care of elderly family members or raising children.

But the biggest challenge is to develop a universal cash transfer system that’s both fair and sustainable. It will require policymakers to assess how much money UBI needs to sustain itself and whether it can be financed via the current tax system or other means.

It’s a way of ensuring people are secure

A guaranteed income means you don’t need to worry about losing your job or your health. It also gives people an incentive to work.

To illustrate this, imagine an economy without a universal basic income. For every 100 working-age adults, there are 80 jobs. But half the workers are disengaged from their jobs, and half are unemployed.

With a universal income, all of those unemployed would receive an income. The economy would be transformed.

A UBI could have many benefits that we haven’t considered yet, from a reduced number of people on welfare to fewer bureaucratic barriers for those seeking employment. But it would cost a lot of money.

It’s a way of preventing poverty

A universal basic income (UBI) is a cash transfer to all citizens or adult residents without conditions. It’s an alternative to traditional social assistance programs primarily designed to support low-income individuals.

Many advocates of UBI believe it can prevent poverty, but not all of them think it will achieve its main objectives. For example, critics of UBI claim it will disincentivize people to work because they’ll lose money as they earn more.

Others argue that it could improve work incentives by not withdrawing income as someone earns more or reducing the rate at which it’s withdrawn.

The UBI debate is also fueled by fear that automation and AI-enhanced software will soon replace most human labor. This could result in significant labor displacement.

There are also many ways that people can contribute to a society that don’t require paid employment, such as caregiving and education. A universal UBI could help value all these contribution forms and remunerate them accordingly.