Universal Basic Income (UBI) has, over the recent past, been one of the most discussed policy
ideas on how to deal with poverty in the world today. UBI, in fact, refers to the regular and
automatic distribution of a fixed amount of money to each citizen irrespective of his or her
employment status or salary. On the one hand, critics point out that basic income can be effective
in alleviating poverty and paying for economic inequality, while others mention drawbacks that
include engaging in feasibilities. In this paper, the author shows that, despite a number of
advantages associated with UBI, the disadvantages that it poses represent certain problems and
issues need to be solved.
Definition and Background
Universal Basic Income (UBI) is a sort of negative income tax that entails providing a
minimum sum to all citizens of a country on the basis of citizenship and without means test or
other conditions. It dates back as far as Thomas More and Thomas Paine and has been adopted in
various formats in Finland, among others, and Canada. As conceived, the social protection goal
of the policy is to serve as a form of insurance that can help avoid poverty and also decrease the
level of income disparity. Over the recent years UBI has emerged as an idea under consideration
with policymakers and economists and trial urban experiments that were done in the past few
years around the world.
In Finland, a two-year trial concerning 2,000 unemployed people allowed the recipients to
receive €560 each month with no expectations for activity. The aim, therefore, of anyone who
supports UBI is to know whether the policy would assist in depoliticizing the social security
mechanism and also enhance employment opportunities among citizens. In the same vein, in
Ontario, Canada, there was the trial of the Ontario Basic Income Pilot which sought to establish
whether the receipt of a basic income might enhance the overall wellbeing, education, and
employment prospects of the beneficiaries. Such programmes offer important insights into the
likely outcomes of UBI, and the evidence they present causes both optimism and pessimism.
Benefits of UBI
Perhaps the most common argument espoused in support of UBI is that with the
implementation of the policy, countries would experience economic stability and reduced levels
of poverty. This means that through the provision of UBI, necessary standard packages and other
items can be made available to the poor, thus curbing the levels of poverty. Studi es indicate that
direct cash transfers could bring about substantial positive changes to the lives of poor -house
hold (Banerjee et al., 2019). Moreover, UBI can provide consumers with more freedom to
develop their skills outside paid working time, including education, entrepreneurship, or other
activities not requiring long-term job availability. For instance, a pilot test of UBI in Kenya
proved that those who received it spent the money in business ventures and education hence
leading to more supplementing economic activity and enhanced wellbeing (Haushofer &
Shapiro, 2016).
Elimination of many small means-tested programs through substitution with a single
unconditional stipend can also help English council housing to decrease administrative overhead.
Introducing a more organized system of welfare can be far more effective, as well as less likely
to have blatant cheating or mistakes. Moreover, UBI can be useful to increase the safety net for
the workforce that is living in vulnerable employment status or does not have employment at all,
such as the gig economy workers, Uber, and the like. What is more, the security offered by UBI
has an additional positive impact on mental health, as financial concerns are often connected to
mental problems. Research has shown that, the amount of money has a negative coefficient with
anxiety and depression making the individuals well off (Baird et al. , 2018).
The additional positive effect of UBI is that it is capable of reducing the inequality in terms of
income. This has further worsened the social and economic problems of societies such that many
countries' poverty gap between the rich and the poor is significantly widening. There is also a
possibility for UBI here as it can assure a minimum basic income to which all citizens are raised,
thus improving the quality of life. This can also create social inclusion in welfare, like cutting on
the shackles of poverty and bringing togetherness of prosperity.
Drawbacks of UBI
However, several significant difficulties can be pointed out to its proponents. In any case, the
concept of UBI has several significant drawbacks. The main disadvantage that stands out is its
working expense or the cost of deploying this tool. To work at the national level, an essential
fiscal bill would be required, thus forcing governments to pay far more taxes. For example,
according to the Research & Policy Brief developed by the Roosevelt Institute, the direct costs of
the basic income plan with $1,000 monthly checks for all American adults total $3. Eight trillion
per year ($9. 2 trillion annually if children are also included as well as students) (Bivens, 2017).
This level of spending puts more pressure on the government Budget. It thus may require more
taxes to meet the expenditures,, thus reducing the advantages of the UBI for specific individuals.
Some people also say that UBI may lead to a lazy society because people who receive basic
income will not be motivated to work hard to earn a living. This concern emanates from the
belief that with the creation of a Universal Base Income that does not come with strict working
conditions, people may become lazy. But, scientific evidence needs to be more conclusive about
civil obedience pilot projects. Some of the research done argue that the increased income from
UBI does not have a negative or adverse impact on work effort, while on the other hand, other
research done has shown that reduced work effort coupled with a lower supply of labor may be
likely to occur with UBI, especially among the youths (Forget, 2011).
Further, the question of inflation arises given the likelihood that higher demand resulting from
the income will lead to hikes in prices and a consequent decline in the purchasing capacity of the
income. They pointed at the risks of inflation, including the possibility that when prices for
goods and services that consumers buy go up in response to increases in consumer demand, and
inflation erodes the actual value of the basic income and thus reduces its impact on enhancing
living standards. They [the taxes mentioned above] also present economic considerations that
include effects on public services. Of course, committing considerable resources to UBI might
mean they could be taken away from crucial social services such as healthcare, education, and
maintenance of facilities, to name. However, a few, and thus may lead to underfunding of these
services as well as the provision of inferior services and goods.
Counterarguments and Rebuttals
Most supporters of UBI claim that the policy could be financed from money presently
earmarked for welfare with the use of progressive taxation. They also argue that UBI could
create more jobs. People would be free to take any risks that they want to take in order to take up
the jobs that are closest to their hearts, unlike being tied down to jobs that they have to take
because they have to pay the bills. In addition, one has to look at inflation issues because high
rates of inflation are not uncommon in a free market economy. Thus,, they are regulated through
a strict economic policy.
For instance, it is possible for UBI to be funded by closing tax evasion schemes, narrowing
down military budgets, or just by a wealth tax among the top income earners. With regard to
work disincentives, research has found that people react by relying on basic income, thus
searching for better employment or for acquiring more education and skills (Banerjee et al.,
2019). Such cues propose that UBI, instead of demotivating people from employment, could help
them look for meaningful and productive work.
Furthermore, UBI, in particular, can provide the needed security to pursue bottom-line-
irrelevant, innovative, or self-creative pursuits that individuals may have an interest in but can
not pursue while being constrained by the need to find stable employment and earn a steady
paycheck. This can help in the development of new products that the market demands and hence
drive the growth and development of the economy. They also note that thanks to UBI's wages,
unpaid but meaningful work, like caregiving or volunteering, can also be sustained as these are
critical for societal health but go unnoticed in mainstream economic activities.
Conclusion
This way, Universal Basic Income is a promising idea for society, but it has difficulties and
challenges. This is because, despite the allure of poverty reduction, enhanced personal freedom,
and the simplification of the welfare of individuals with cleaner records, the costs remain slightly
high, and the knock on-effects are economically largely undesirable. Concerning challenges, it is
essential to admit that a proper UBI implementation requires both increased funding and better
testing and evaluation of pilots. More empirical analysis and debate are required in order to
decipher the proper role of UBI as well as the proper ways of financing. Thus, UBI is worthy of
further discussion and analysis as it applies to the constantly changing society today and the new
economic conditions in which this world exists.
