Universal Basic Income – Is It Feasible or Utopian Hogwash?

Home News Universal Basic Income – Is It Feasible or Utopian Hogwash?
Universal Basic Income – Is It Feasible or Utopian Hogwash?

Consider this: You are not required to work for a living. Your government gives you money to pay for all your basic needs with absolutely ZERO strings attached. You are free to do whatever you want.

Sounds very utopian right? Precisely, because the idea of a Universal Basic Income (UBI) was first explored in the book Utopia written by Sir Thomas More in 1516. Over the centuries, it has tickled the fancy of a lot of great thinkers including philosopher Thomas Paine, civil rights champion Martin Luther King, Jr., economist Milton Friedman, among others. In 2017, discussions about UBI has gained a lot of ground as it is being endorsed by tech giants and billionaires.

Tesla CEO Elon Musk said in February, 2017: “There will be fewer and fewer jobs that a robot cannot do better… I want to be clear. These are not the things I wish will happen; these are things I think probably will happen… I think we’ll end up doing universal basic income. It’s going to be necessary.”

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To this, billionaire entrepreneur Richard Branson agreed: “With the acceleration of [artificial intelligence] and other new technology… the world is changing fast… A lot of exciting new innovations are going to be created, which will generate a lot of opportunities and a lot of wealth, but there is a real danger that it could also reduce the amount of jobs. This will make experimenting with ideas like basic income even more important in the years to come.”

What Richard Branson said of Universal Basic Income - Twitter

In May, 2017, Facebook CEO Mark Zuckerberg said in his commencement speech at Harvard University: “The greatest successes come from having the freedom to fail… Now, it’s our time to define a new social contract for our generation. We should explore ideas like universal basic income to give everyone a cushion to try new things.”

But what really is Universal Basic Income?

UBI has been defined by the International Monetary Fund as a “cash transfer of an equal amount to all individuals in a country.” This means that no matter your social class or income level, you will receive the same amount of money from the government. Each country or government may have a different computation of what the final amount may be. But the important thing to remember is that the UBI is supposed to cover each individual’s basic needs.

The idea behind the UBI is that it provides an individual with a safety net and the freedom to do anything he or she wants to do. It can be used for food or basic necessities and allow a person to attend school, trainings, go into business or even stop work and attend to the needs of the family. Stewart Butterfield, co-founder of chat program Slack, foresees that the UBI can unlock the entrepreneurial spirit among its recipients.

Stewart Butterfileld co-founder of Slack regarding Universal Basic Income - Twitter

A World Bank study in 2015 supports the feasibility of the UBI. In the said study, it was found that with free money, “ low-income people tend to advance their lives through investments in themselves and their families, rather than turn to self-indulgence.” Given this argument, UBI can indeed help counter the effects of automation on jobs and income opportunities as people will have the chance to creatively think of ways to improve their lives.

This finding has been proven in a recent UBI experiment in Finland. The Guardian reports the plight of a certain Juha Järvinen who is one of the recipients of the UBI trial in a Finnish countryside. Prior to receiving condition-free UBI, he was getting dole money from the government in order to raise his six children. Dole money came with strings, foremost of which is the requirement for him to regularly apply for jobs and trainings. While he had lots of entrepreneurial ideas, he could not act on it for fear of losing access to dole money. With UBI, he now has the freedom to try implementing his business ideas and work harder than ever before.

This particular argument is what Zuckerberg is also pushing. In his Harvard University address, he emphasized that without the financial security provided by his family, he most likely would not have been able to pursue his interests. “If I had to support my family growing up, instead of having time to code, if I didn’t know I’d be fine if Facebook didn’t work out, I wouldn’t be standing here today,” he said.

Another argument for UBI is the fact that it can help spur the economy. A study by the U.S.-based Roosevelt Institute found the economy to be “sluggish because people on middle and lower incomes aren’t earning enough money relative to inflation.” By providing access to UBI, those in the lower income bracket will have improved spending power which will then be plugged into the economy. Marshall Steinbaum, the Roosevelt Institute’s research director, adds that UBI can also help improve the conditions of workers. “The absence of job opportunities means employers can benefit at the expense of employees by reducing wages and benefits. If you make benefits not conditional on having a job, that increases workers’ bargaining power because they’re supporting themselves separately and they’re not dominated and manipulated,” he explained.

More importantly, UBI is foreseen to help a lot in addressing poverty and income inequality.

Critics of UBI argue that the problem with how its advantages are presented is the premise that all beneficiaries will continue working despite receiving free money. There is a consensus among critics that the UBI will negatively affect and disincentivize productivity and work despite the fact that its proponents are actually counting on it to spur productivity. In fact, when Scotland announced its UBI trials in several cities on December 26, 2017, former UK skills minister Nick Boles condemned the idea, emphasizing that “we should not be trying to create a world in which most people do not feel the need to work.”

Universal Basic Income – Is It Feasible or Utopian Hogwash?

Aside from this, there is also the concern that UBI is costly and will result in an increase in taxes. The Economist reports that the scheme of providing a basic income of $10,000 a year to every adult and child will require a tax increase of “nearly 10 percentage points and cannibalize most non-health social spending programs.”

Given both the pros and cons of UBI, is its implementation feasible?

Data shows a positive outlook. In Alaska, which has been implementing the UBI scheme since 1982, only one percent of the population is reported to have actually worked less. This is contrary to the claim of critics. Meanwhile, its cost has been offset by increased spending and the fact that “purchasing power has resulted in 10,000 additional jobs for the state”. Astoundingly, it has also resulted in a decrease in the poverty rate of Native Americans from 25 percent to 19 percent between 1980 to 1990.

Aside from its implementation in Alaska and Finland, trials are also being done in Kenya and Canada. Scotland is set to start its trial this 2018.

What about you? What do you think of UBI? Are you for it or against it? Let us know your thoughts.

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