How would you like some free cash? No strings attached, just money in your bank. It sounds too good to be true, but the concept of universal basic income is gaining popularity.
There are different proposals for what UBI could actually look like, but the core principles are usually the same. Here’s what you should know about the potentially revolutionary idea.
What is Universal Basic Income?
For context, it can be helpful to think of universal basic income compared to welfare.
Government welfare programs provide financial assistance to qualified adults based on certain conditions. For instance, to receive unemployment benefits, you must be unemployed by no fault of your own and actively searching for a job.
Universal basic income proposals instead come with almost no requirements but still promise financial aid to almost everyone. Not everyone agrees on the finer points, but all UBI plans share two things:
- Universal, or available to a massive portion of society, if not everyone
- Unconditional, or coming with as few strings attached as possible
Most discussions around universal basic income are theoretical, but some small scale programs have been initiated. The Finnish government gave underemployed citizens about $620 per month in 2018, providing the most prominent example of UBI.
The Finnish program found that recipients were healthier, more confident about their future, and felt that they were more likely to find work if they become unemployed than those that did not receive a basic income.
Why is UBI in the News?
While the concept of a universal basic income isn’t a new idea, it’s picked up steam lately.
Democratic presidential candidate Andrew Yang is running with UBI as his keystone issue, and it has become a talking point for many Democrats. Pete Buttigieg, Marianne Williamson, and Tulsi Gabbard have all expressed some level of interest in the policy.
The question is, why now? Yang’s pitch is that automation is chipping away at American jobs, and a UBI can help stop some of the bleeding. The idea has been pitched in the past, notably by Thomas Paine and Martin Luther King Jr., but fear of automation and economic anxiety have brought it to the forefront again. The idea now is that the potentially impending rise of artificial intelligence could make UBI a necessity for millions.
Why UBI Might (and Might Not) Work
While universal basic income has been successful in small sample sizes, many economists are skeptical that it could work in America. The primary argument against it is the cost. Yang’s proposed plan would give every American older than the 18 years of age $1,000 every month, a total of nearly $3 trillion annually. Yang believes he can make this pricetag work, but not everyone is so optimistic.
In addition, a major criticism of UBI is that it removes the incentive to work. If people are getting paid unconditionally, detractors say that they’ll scale back hours at work or stop entirely.
However, the Finland case study shows that this may not be true. A majority of people who received basic income said that the program made them more likely to start their own business, and statistically they worked about the same as a control group that did not receive any money.
Still, without testing on a larger scale its impossible to say for sure how universal basic income would impact people. Studies show that people generally have happier and healthier lives with a UBI, but economic concerns might make it entirely impractical.
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