Universal Basic Income (UBI)

In 2020, Democratic presidential candidate Andrew Yang brought attention to something

he was passionate about: universal basic income. While Yang successfully introduced the masses to

universal basic income, the idea has actually been around since at least the 1500s. But what is it,

and how might it affect an economy? Universal basic income, or UBI,

is a policy in which all adult citizens of a society regularly receive a set amount of

money. It is unconditional, meaning there are no eligibility requirements for receiving the

money. It is paid out by a government and can be implemented nationally or locally. The goal of UBI

is to provide enough money to meet a person’s basic needs, like food, access to clean water,

and shelter. In other words, its goal is to eliminate poverty. Additionally,

many economists argue that UBI can replace other need-based social programs that potentially

require greater bureaucratic control. While the idea of a universal basic

income has existed in some form or another since at least ancient Rome,

it was first argued for by the English philosopher Sir Thomas More. In his book “Utopia”, he wrote

“instead of inflicting…punishments, it would be far more to the point to provide everyone with

some means of livelihood, so that nobody’s under the frightful necessity of becoming first a thief,

and then a corpse." Later, the Spanish philosopher Johannes Ludovicus Vives and American philosopher

Thomas Paine argued governments should provide this basic income. In the 1800s, the Belgian

author Joseph Charlier argued that this basic income should be unconditional. By the 1900s,

many politicians around the world were calling to begin experimenting with a form of UBI. But

ever since, few experiments have actually been implemented, typically in a small society or in

small amounts. For example, in the 1970s, a group of Canadian economists conducted an experiment in

which it gave money to citizens in the town of Dauphin, Manitoba. However, this was more

accurately an example of a negative income tax, or a system which reverses the direction in which an

income tax is paid for incomes below a certain level. If you make less than a certain amount,

you not only don’t have to pay taxes, but you receive money from the government. So in Dauphin,

many did not qualify to get money from the government since they made too much money.

More recently, since 2016 the nonprofit charity organization GiveDirectly has been sending direct

cash payments to more than 14,000 households in the Siaya and Bomet Counties of Kenya.

Overall, however, economists don’t have much data to work with regarding the effectiveness of UBI.

Therefore, much of the analysis regarding its effectiveness is theoretical. With this in mind,

let’s look at the potential pros and cons of a universal basic income.

The first positive is the most obvious. A UBI would reduce poverty. It’s no surprise that

when people have more money, they can more easily take care of their basic needs. Related to this,

many argue a UBI would improve physical and mental health. By having basic needs met,

people generally would have less anxiety-related ailments. Third, many economists argue that

a UBI would lead to positive job growth while simultaneously lowering school drop out rates.

With more money, people would be more willing to make riskier decisions like starting a business

or going for an additional degree that would get them a better job down the road. Fourth,

a UBI guarantees income for people who work but are not included in the labor force. This would