Is It Time for a Universal Basic Income (UBI)?
The idea of a Universal Basic Income (UBI) or Basic Income (BI) is gaining renewed focus as a strategy to deal with economic inequality, the impact of AI on jobs, and the current general concern about the pressures of today’s economy, as reflected in political divides and protests, particularly in the United States and Canada.
Imagine waking up on the first day of every month to find $1,000 deposited into your bank account—not because of your work but simply because you are a citizen. This sum, your unconditional basic income (UBI), is designed to provide a safety net, ensuring a life above the poverty line, regardless of your other sources of income. It’s a transformative idea that challenges traditional notions of work and welfare by guaranteeing economic security for everyone.
What might this financial stability enable you to do? Perhaps more importantly, what might it free you from? How would this consistent foundation shape your career choices, the risks you’re willing to take, and even the relationships you nurture? Across the globe, UBI is gaining traction as a solution to growing inequality, stagnant wages, and the rapid automation of jobs by technologies like robotics and artificial intelligence. These trends, compounded by seismic shifts in politics and economics, underscore the urgent need to rethink how we support individuals in a rapidly changing world. This article explores the concept of UBI, its potential implications, and the societal forces driving its emergence as a radical yet increasingly relevant idea.
A research study led by Rashid Sumaila at the University of British Columbia, covering 186 countries, found that implementing a universal basic income (UBI) for all individuals worldwide could boost global GDP by 130% and alleviate poverty by a staggering $163 trillion. Additionally, the study revealed that funding UBI through carbon taxes could help mitigate environmental degradation. The researchers argue that UBI offers a powerful opportunity to strengthen social resilience, combat extreme poverty, and reduce environmental harm. By creating a universal safety net, UBI could contribute to shaping a more sustainable and equitable global future.
What is a Universal Basic Income (UBI)?
Universal Basic Income (UBI) is a proposal in which all citizens of a given population receive a minimum income regularly through an unconditional transfer payment, without a means test or requirement to work. In contrast, a guaranteed minimum income is provided only to those who do not already earn enough income to live on. A UBI would be granted independently of any other income. If the amount is sufficient to meet a person's basic needs (i.e., at or above the poverty line), it is sometimes referred to as a full basic income; if it is below that level, it may be termed a partial basic income.
The Basic Argument for UBI
The Advantages of Universal Basic Income (UBI)
As an unconditional money transfer, Universal Basic Income (UBI) has the unique ability to alter deeply ingrained incentive structures. Effectively addressing poverty requires reshaping the motivations that influence society as a whole. Our concepts of work and welfare are shaped by the norms and cultures of individuals who are typically full-time, wage-earning, and insured members of society—many of whom have never experienced a lack of alternatives.
This one-size-fits-all approach to work and income has not yet improved the overall choice architecture for impoverished individuals. In essence, UBI can maximize the choices of those living in poverty by reducing the choice-limiting behaviors of those who do not.
UBI promotes the “de-commodification” of human labour by transforming how the majority views work. It highlights the distinction between paid and unpaid work. Although we often see these as competing activities, the right to work for pay and not for pay should be entirely compatible.
Perspectives on UBI
Human Rights Perspective: Unconditionally providing income outside of employment enables individuals to fully realise their right to work, offering protection against unemployment and allowing them to refuse precarious jobs.
Sociological Perspective: A secure economic base revitalises personal and societal relationships, empowering those seeking meaningful employment to work for pay.
Gender Lens: UBI supports individuals engaged in unpaid work, such as domestic duties, caregiving, and volunteering. This unpaid work often sustains other socially beneficial activities but is typically undervalued and unremunerated.
Free Market Perspective: UBI promotes a more competitive labour market by diminishing the predominance of paid work over unpaid work. This levels the playing field between employers and workers, compelling employers to provide better wages and more flexible hours to attract workers' talent.
Broader Impacts of UBI
UBI has the potential to lift millions out of poverty, promote efficiency, and reduce federal bureaucracy. In the U.S., for example, there are currently 79 means-tested welfare programs. A single point of access would simplify recipients' lives. With a guaranteed basic income, workers could negotiate better wages and conditions, pursue education, or leave low-paying jobs to care for children or ageing relatives. Moreover, they wouldn’t worry about losing crucial benefits by earning more money.
Nobel laureate, professor, and bestselling author Joseph Stiglitz was among the leading economists who denounced the rise in income inequality. Just before the global pandemic began, Stiglitz published his book People, Power, and Profits, which chronicles how the masses have lost economic leverage and outlines a path for more progressive capitalism that reduces income inequality.
Stiglitz states, “One of the notable aspects of American inequality is that health disparities are even greater than our income and wealth inequalities. COVID-19 has exposed the extent of these inequalities. Republicans have taken the stance in Congress that states should fend for themselves and are responsible for education, health, and social welfare. All states operate under balanced budget frameworks and cannot borrow. Unlike the federal government, states cannot print money. They are about to face a higher revenue shock than 2008. Without federal assistance, there will be substantial cutbacks in education, health services, and other areas, and the inequalities we observe in our society will be even more pronounced.”
The coronavirus pandemic has revealed some uncomfortable truths about America's current state. Chief among these is the fragility of the American economy. After years of outsourcing manufacturing, the United States has created an economy where service industries account for approximately 55 per cent of overall economic activity. In an era of globalization, where interconnectivity operates seamlessly, this model has fostered an illusion of prosperity, marked by a thriving stock market and a rising GDP.
American corporations have demonstrated limited capacity to prepare for “rainy day” scenarios, instead concentrating all their economic resources on achieving short-term profit. Similarly, the American working class is living on the brink of disaster, with few Americans possessing savings to help them endure a period of prolonged economic inactivity or, worse, to cover emergency healthcare expenses.
The other uncomfortable truth about America that the crisis has exposed is the overall fragility of American society. The medical emergency brought about by the need to treat COVID has shown that what passes for a national healthcare system is, in fact, a fragile construct of for-profit institutions susceptible to being rapidly overburdened and unable to function once the cash-stream of overpriced healthcare has been cut off. The coronavirus crisis has revealed the reality of the US healthcare system today – most Americans don’t have the wherewithal to get quality healthcare when needed – the cost of such care is prohibitive, as are the insurance premiums one must pay to cover it.
Economist Mariana Mazzucato, Professor of the Economics of Innovation and Public Value and Founder and Director of the Institute for Innovation and Public Purpose at University College London, says the COVID pandemic will illuminate societal and economic systems worldwide and expose some of the flaws of a capitalist society.
She contends that Capitalism is facing at least three major crises. A pandemic-induced health crisis has rapidly ignited an economic crisis with unknown consequences for financial stability. All of this is playing out against the backdrop of a climate crisis that cannot be addressed by “business as usual.” The news media continues to provide us with frightening images of overwhelmed firefighters, not overwhelmed healthcare providers.
United States
Alaska has maintained a guaranteed income programme since 1982. The Alaska Permanent Fund provided each resident an average of $1,606 in 2019, funded entirely by oil revenues. Nearly three-fourths of recipients save it for emergencies. In 2017, the Hawaii state legislature passed a bill declaring everyone entitled to basic financial security. It instructed the government to develop a solution, which may include a guaranteed income. In Oakland, California, the seed accelerator Y Combinator will pay 100 families between $1,000 and $2,000 monthly. In 2019, Stockton, California, launched a two-year pilot programme. It’s giving $500 a month to 125 local families. It aims to keep families together and away from payday lenders, pawn shops, and gangs. About 43% of the recipients are still working. Most others care for relatives, disabled, retired, or studying. Chicago, Illinois, is considering a pilot to give 1,000 low-income families $1,000 monthly.
Canada
Canada was one of the first Western countries to experiment with UBI. The province of Manitoba experimented with Mincome, a basic guaranteed income, in the 1970s. In Dauphin, Manitoba, labor declined by only 13%, significantly less than expected. The Ontario provincial government launched a three-year basic income pilot in Hamilton, Thunder Bay, and Lindsay in July 2017. It provided 4,000 Ontario residents living in poverty with $17,000 a year or $24,000 per couple, at an annual cost of $50 million. Although referred to as a basic income, it was available only to those with low income, and funding would be removed if they secured employment, tying it more closely to the current welfare system than to an actual basic income. The pilot project was cancelled on 31 July 2018.
Finland
Finland provided 2,000 unemployed people with 560 euros a month for two years, beginning in January 2017. In April 2018, the Finnish government rejected a request from Kela (Finland’s social security agency) for funds to extend and expand the program. Despite the decision to cancel the project, the recipients said it reduced stress and gave them more incentive to find a good job or start their own business.
Scotland
Scotland has committed £250,000 to four pilot areas to pay every citizen for life. Retirees would receive 150 pounds a week, working adults would get 100 pounds, and children under 16 would be paid 50.
Taiwan
Taiwan may vote on a basic income. Younger people have departed rural areas in search of decent wages. Some have even emigrated to seek work abroad. A guaranteed income could prevent them from leaving. It would also assist the senior citizens left behind who live in poverty. The country spends only 5% of its gross domestic product on welfare programmes, whereas the average for developed countries is 22%. Under the proposal, the government would pay NT$6,304 per month for children under 18 and NT$12,608 per month for adults. This would cost NT$3.4 trillion, or 19% of GDP. Taiwan would impose a 31% tax on earnings exceeding NT$840,000 annually to fund it. Consequently, the programme would raise the incomes of two-thirds of the population, while the wealthiest third would lose NT$710 billion.
Brazil
Bolsa Família is a significant social welfare programme that provides financial assistance to many impoverished families. This system relates to basic income but has more stipulations, requiring recipients to keep their children in school until graduation. Brazilian Senator Eduardo Suplicy advocated for a law passed in 2004 that recognised Bolsa Família as a first step towards a national basic income. Nonetheless, the programme has yet to be extended in that direction.
Silicon Valley Advocates
Much of the renewed interest in UBI in the U.S. has emerged from Silicon Valley. Tech giants and the scholars surrounding them are concerned that the robots and artificial intelligence they have developed will quickly displace humans in the workforce or at least force them into dead-end jobs. Some researchers contend that robots will take over the low-paying jobs that people prefer to avoid, while others argue that humans will end up with the least desirable jobs unsuitable for robots.
The foundation of the Silicon Valley argument for UBI is based on the belief in exponential growth driven by science and technology, as articulated by Peter Diamandis in his book Abundance: The Future is Better Than You Think. Diamandis argues that technological advancement, including improvements in health, computing power, and the evolution of machine intelligence, among other factors, will lead to technological transcendence that makes contemporary society resemble what we consider the Dark Ages. He suggests that the human mind struggles to intuitively grasp this concept, leading us to underestimate long-term consequences consistently. Suppose one charts progress over several decades, Diamandis writes. In that case, we arrive at unimaginable abundance: “We will soon possess the capacity to meet and exceed the basic needs of every man, woman, and child on the planet. Abundance for all is within our reach." grasp.
The True Impact on Motivation
What about the concern that some might choose not to work under a basic income system? Wouldn’t that become a significant burden? This is where the discussion gets intriguing. Conditional welfare systems often create a disincentive to work, as benefits are reduced or removed when someone starts earning income. If taking on paid work leaves a person barely better off—or even worse—what incentive do they have to seek employment?
Basic income changes this dynamic. Under such a system, every dollar earned from paid work (after taxes) becomes additional income, ensuring that individuals are always financially better off when working full-time, part-time, or gig roles. Rather than introducing a disincentive to work, basic income eliminates the one inherent in conditional welfare programs.
Enhanced Motivation and the Future of Work
Basic income goes beyond fixing disincentives; it transforms how we view work itself. Research on motivation shows that financial rewards are adequate for routine, mechanical tasks but often counterproductive for creative work. As mechanistic jobs increasingly shift to automation, the work left for humans will predominantly require creativity and intrinsic motivation. Basic income supports this shift by enabling people to pursue meaningful work driven by personal goals rather than financial necessity.
It also recognizes and amplifies unpaid yet invaluable work. For instance, informal caregivers in the U.S. provide an estimated $700 billion worth of care annually, and contributions from the free and open-source software (FOSS) movement form the backbone of the Internet. Basic income validates and encourages such contributions by offering a financial safety net.
Redefining Work and Job Matching
Basic income could also revolutionize how workers engage with the labor market. Providing the power to refuse undesirable jobs could lead to better matches between workers and roles, higher job satisfaction, and even redefined job structures. Though less frequently discussed, these benefits highlight the transformative potential of basic income.
A Small Part of a Larger Picture
Basic income may seem straightforward, but its implications run deep like an iceberg with hidden depths. Its cost represents an investment in human capital with potential significant returns. The evidence so far is compelling: improved social cohesion, better physical and mental health, reduced crime (e.g., a 42% drop in Namibia), fewer hospitalizations (e.g., an 8.5% decline in Dauphin, Manitoba), reduced debt, and increased entrepreneurship. These are just the known benefits; further experiments are likely to uncover even more.
The concept of basic income is not just about improving markets by making them more inclusive; it’s about addressing a fundamental human need—security. A secure economic base enables individuals to thrive, laying the foundation for a more stable and equitable future. It’s not a magical solution, but it reframes problems like poverty, inequality, and automation-induced income loss as solvable challenges contingent on our choices.
A Truly Free Market for Labour
How many people are unhappy with their jobs? According to Gallup, only 13% of those with jobs feel engaged with them. In the US, 70% of workers are either not engaged or actively disengaged, leading to a productivity loss of approximately $500 billion per year. Poor engagement is also linked to a reluctance to donate money or volunteer, among other issues. It measurably erodes social cohesion.
At the same time, some unemployed individuals wish to be employed, but the available jobs are occupied by those who don’t genuinely want to be there. This is an inevitable consequence of needing jobs to survive. With no real choice, people undertake work they would instead not do in exchange for money that may be inadequate – but that is still preferable to nothing – and then cling to that paid work despite being the “working poor” and/or disengaged mess.
Consider an economy without UBI. We’ll call it Nation A. Nation A has only 80 jobs for every 100 working-age adults. Half of the workforce is disengaged from their jobs, and another half is unemployed. Many actively seek work but find none, like players left without a chair in a game of musical chairs.
Now, imagine an economy with UBI. We’ll call it Nation B.
In Nation B, there are still 80 jobs for every 100 working-age adults initially.
However, the unconditionally provided basic income enables people to decline jobs that do not engage them, opening these positions to the unemployed who would find them appealing. This creates bargaining power for everyone to negotiate better terms. Jobs become more attractive with higher pay or fewer hours. This reorganization of the labour supply could significantly enhance productivity by reducing the number of disengaged workers, leading to greater prosperity.
In Nation B, the disengaged workforce opts out of the current labour market, allowing all 50 people who wish to work to secure jobs they are interested in. Some employers increase wages to attract workers who demand more compensation or shorter workweeks, while others reduce hours. The result is a transformed labour market with more engaged, better-paid, and more productive workers. Fewer people are excluded, and there is more scope for workers to become self-employed entrepreneurs.
Simply put, a basic income enhances the labour market by making work optional. The shift from a coercive market to a free market compels employers to attract workers with better pay and more flexible hours. It also nurtures a more productive workforce, reducing the need for market-distorting minimum wage laws. Labour market friction may be alleviated, empowering individuals to move swiftly from job to job, pursue education or retraining, or even become entrepreneurs, thanks to increased individual liquidity and the elimination of counterproductive bureaucratic conditions. Perhaps most importantly, higher wages incentivise the automation of low-demand jobs. Tasks that people refuse to undertake for less than the cost of a machine become automated. With a basic income, workers displaced by automation aren’t left stranded. Instead, they can find new work that suits them best, whether paid or unpaid, full-time or part-time. The reality is that the costs of individuals having insufficient basic income are numerous and collectively massive. It burdens the healthcare system, the criminal justice system, and the education system. It burdens would-be entrepreneurs, both productivity and consumer purchasing power, and thus entire economies. The total cost of all these burdens exceeds $1 trillion annually in the U.S.. Therefore, the few hundred billion net additional cost of UBI pays for itself many times over. That’s the big picture maths.
Summary :
The Tip of a Big Iceberg
The concept of a Universal Basic Income (UBI) may seem straightforward, but it’s akin to an iceberg with much more lurking beneath the surface. Investment in human capital promises significantly greater returns, uncovering deeper influences on what truly motivates us. Many known benefits exist, such as enhanced social cohesion and improved physical and mental health, demonstrated by a 42% reduction in crime in Namibia and an 8.5% decrease in hospitalisations in Dauphin, Manitoba. Debt levels tend to diminish, and entrepreneurship tends to thrive. Other advantages will likely emerge with further experimentation.
The increasing body of evidence supporting cash transfers generally positions basic income as transformative for the future of work, even more so than its long history of consideration has suggested. It resembles a game of Monopoly in which the rules have been altered to prevent players from collecting money to pass Go, effectively excluding individuals from markets. Basic income rectifies this, making markets more inclusive and addressing something more fundamental.
Humans require security to flourish, and basic income offers a secure economic foundation. This new base can reshape our precarious present and construct a solid future. While it isn't a silver bullet, it indicates our challenges are not insurmountable. Poverty, extreme inequality, and the threat of mass income loss due to automation are not supernatural adversaries; they are choices. At any moment, we can choose to make new ones.
A Vision for the Future
With the mounting evidence supporting basic income, it’s clear that this approach offers a transformative opportunity. Poverty, extreme inequality, and the instability caused by automation are not insurmountable forces; they are the outcomes of policy choices. At any moment, we can choose differently.
A universal basic income represents a bold yet practical step toward a fairer, more resilient society. It is not just an economic tool but a commitment to providing everyone with an equal starting point—and a more promising future.
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18hI think it's past time this was implemented in America but the rich will have to start paying their fair share of taxes again in order to make it happen. Anybody currently living below the poverty level should automatically receive it.