Having a monthly, tax-free, no-strings-attached income that would cover the basics for life may sound too good to be true, but it’s no fantasy. The idea of universal basic income (UBI) already has been implemented in some regions, such as Canada, Europe, and even Alaska, and Facebook founder and CEO Mark Zuckerberg recently revitalized discussion about the concept.
Zuckerberg endorsed UBI during his 2017 commencement speech at Harvard University as a means of leveling the economic playing field and opening the doors of entrepreneurship to everyone.
"We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas," Zuckerberg told graduates. “Now it’s time for our generation to define a new social contract.”
What Is Universal Basic Income?
Zuckerberg, Facebook co-founder Chris Hughes, and other tech executives, including Tesla CEO, Elon Musk, have turned to this notion in response to the re-emerging concern about unemployment in the tech sector.
But the concept was originally developed hundreds of years ago as a way to lift citizens out of poverty.
Universal basic income (UBI) actually dates to the 16th century and the Renaissance, when the idea of a minimum income guarantee originated as a way to help poor people. Then in the 18th century, the idea of a “basic endowment” emerged to help alleviate theft, murder, and poverty in Europe.
The concept has changed through the years. When people talk about UBI today, they’re referring to an unconditional cash grant regularly distributed to all members of a community without any means test or work requirements, according to the Basic Income Earth Network. The concept means that everyone receives a set amount of money each period, no matter their circumstances.
Despite its existence for even centuries, UBI did not take the stage like other social assistance programs, such as Social Security, food stamps, and unemployment benefits, which some critics believe would be outperformed by UBI, if implemented.
Jason Murphy, assistant professor of philosophy at Elms College in Chicopee, Mass., and U.S. Basic Income Guarantee Network (USBIG) coordinating committee member, says UBI would remove the conditions placed on existing social assistance programs that limit who receives help and how. The program would better target communities that are especially vulnerable and overlooked — ensuring that no one has to go hungry and everyone starts on equal footing, he adds.
Still, with UBI in place, Murphy says he thinks not only does it give everyone a chance to cover essential needs, but it also opens the door for others to invest, start businesses, and create more jobs for the economy.
Critics argue that UBI could cause inflation, cause people not to work, or be an unfair tax on the rich, but research shows this isn’t likely. A study by MIT and Harvard economists found that "no systematic evidence that cash transfer programs discourage work" in poor countries and, in some cases, encourage it.
Karl Widerquist, an economist, philosopher, Basic Income Earth Network board member, and visiting associate professor at Georgetown University-Qatar, says he thinks with a decent tax policy, the program would serve as an automatic stabilizer, alleviate income inequality, and help everyone financially.
“The average worker is no better off than they were in the 1970s when you adjust for inflation,” Widerquist says.
Some Places Are Already Benefiting
In the late 1990s, a tribe of Cherokee Indians in North Carolina began distributing some of the profits from the tribe’s casino to its 8,000 members, the New York Times reported. It amounted to about $6,000 per year for each member.
A long-term study on the tribe’s universal income experiment was published in 2016 by Duke University epidemiologist E. Jane Costello. She found that children in communities with a basic income experienced improvement in the education system, better mental and physical health, lower stress levels and crime rates, and overall economic growth.
Finland began a similar experiment in 2017, promising to give 2,000 citizens $600 per month through 2019. And Alaska has offered a basic income to its residents since the early 1980s.
With these small, pilot projects, social scientists and politicians are observing the effects of a basic income on the economic, social, and personal well-being of residents before launching large-scale programs.
Can UBI Really Level the Playing Field?
With a cushion, Widerquist says people will be less likely to settle for certain jobs and living arrangements, causing employers and property owners to cut better deals and prioritize clients, customers, and employers.
“I think it will promote growth,” Murphy says.
The rich and well-off may use the extra money to invest, and possibly begin investing in low-income communities, which works in favor of those in both social classes, Murphy says. He also says it could revitalize local economies, because those who rely heavily on the cash grants are more likely to spend locally.
What’s the Catch?
Murphy says the tax reform needed to make UBI a reality must be progressive. That way, it will avoid a major concern for the middle class — the upper class will evade taxes, and the middle class will have to fit the bill for the “non-workers” of the world.
Widerquist argues that implementing this program requires open minds that are willing to move away from an economic system where the upper class maintains control over the flow of cash through ownership and stringently structured government programs. Instead, he thinks the government and society should first focus on eradicating poverty, and the roads to economic prosperity will follow.
“The con is that the devil is in the details,” Widerquist says. “There are some [programs] that want to redistribute less to the poor … that would not be better than the programs we already have.”
Is UBI Feasible?
The answer is yes, Widerquist says.
“The net cost of a basic income, large enough to eliminate poverty in the United States, is $539 billion a year,” Widerquist says. “That’s only a fourth of what the government is spending on entitlements.”
Although it would be a big item in the federal budget, Murphy says he thinks it’s even cheaper to implement and maintain than Widerquist’s projections suggest.
“It’s going to take a commitment, but some of the calculations that are out there are actually way too high,” he says.
With no means testing, Murphy says, there is no need to hire people to interview citizens, which saves money compared to requirement-driven social assistance programs.
The money poured into a basic income program would represent about 3% of the gross domestic product, which would put everyone above the poverty line, Murphy says.
Also, Widerquist and Murphy suggest that while universal basic income is possible without drastically cutting other programs, like unemployment benefits or universal health care, there are other ways to keep costs down. Those include trading UBI for programs like food stamps (since it is a cash grant), or taxing items like pollution, traffic, and electronic financial transactions.
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