Should we have Universal Basic Income?

Should we have Universal Basic Income? I'll gather recent pilot evidence and arguments for and against to give you a balanced view.

Universal Basic Income (UBI) is a contested policy and whether "we should have it" depends on goals, design, and funding - there is no consensus among economists.

What is UBI?

Universal basic income is a regular stream of payments made unconditionally by the government to the entire population or a large segment of it. A basic income – also called basic income guarantee, universal basic income or basic living stipend – is a program in which citizens of a country receive a regular sum of money from the government.

The idea is not new. Thomas Paine called for a similar idea in his 1797 pamphlet, "Agrarian Justice" and the Rev. Dr. Martin Luther King Jr. advocated for guaranteed income as a way to fight poverty, but it has gained momentum in the past decade particularly in response to fears that millions of jobs will be lost to automation. Long-shot 2020 Democratic presidential hopeful Andrew Yang proposed a "freedom dividend" of $1,000 a month for every adult U.S. citizen. Tech leaders Elon Musk and Mark Zuckerberg have floated the idea. During COVID-19, several prominent politicians advocated for recurring payments similar to UBI, such as Senator Bernie Sanders calling for $2,000 monthly payments.

Arguments In Favor

Proponents argue:

1. Improves the safety net and reduces poverty and inequality:

2. Fixes flaws in current welfare: The most attractive aspect is that it can serve to underwrite market participation, in contrast to other welfare programs that essentially require people to not be employed to receive the benefit. Some programs even require participants to have essentially zero assets in order to qualify. In effect, the programs kick in when people have hit rock bottom, rather than trying to prevent them from getting there.

Proponents also argue it is Less cumbersome to administer than means-tested public benefit programs. Many means-tested programs don't reach intended beneficiaries due to factors like social stigma and administrative burden.

3. Protects against technological disruption: Such a program could help protect workers who hit rock bottom in an age of technological disruption.

4. Supports autonomy and decision-making: Poverty, scholars have found, actually makes it harder to be responsible, to plan, to think about the future. When you are focused on getting enough to eat, or making rent, you don't have many psychological resources left over. Proponent Milton Friedman argued: "If we give them the money, we will strengthen their responsibility". In most scenarios, the grant would not be enough to forsake paid employment altogether. The idea is that when combined with paid income, a UBI would lift the living standard of even low-skilled, low-income workers.

Arguments Against

1. Cost and funding: The most common criticism is expense.

However, costs vary depending on whether children are included and at what benefit level. If you set this against current taxes and transfers, and conceptualize the UBI as a benefit that can be taxed for higher earners, the costs come down significantly.

2. Inflation: UBI could exacerbate inflation. A widely expanded money supply would increase demand for goods and services. Depending on its design, a basic income could lead to inflation, which would significantly erode its purchasing power. Theoretical interactions between a universal basic income and the price level are debated in both orthodox and heterodox monetary theories.

3. Work disincentives: Could create a disincentive to find work for some individuals. Economic theory suggests the canonical UBI generates a pure income effect which would reduce work on the extensive and intensive margins. Providing basic incomes to the lowest earners could greatly dis-incentivise the least skilled and the most vulnerable victims to work, and additionally, if its introduction were to motivate people to work less, consequences could be more problematic.

4. Poor targeting and political feasibility: Higher-income people who don't need assistance would still receive payments. The best argument against UBI is feasibility - there is significant bias against unconditional transfer programs. Most welfare programs in the United States are tied in some way to employment; for example, think of Social Security. Building popular support for a program that breaks this connection between welfare and work will require political leadership.

What Does the Evidence Show?

Pilot programs were tried in countries such as Namibia, Kenya, Brazil, Finland, Canada, and India similar to UBI, and in cities from Finland to Kenya to Stockton, California.

Finland (2017-2018): 2,000 unemployed people received an unconditional monthly payment of €560 ($634) instead of their usual unemployment benefit. Similar sum to previous benefit.

Stockton, California - Stockton Economic Empowerment Demonstration (SEED): 125 people were given $500 a month, no strings attached. Results released on March 3, 2021 from the first year show guaranteed income drastically improves job prospects, financial stability, and overall wellbeing. Research found that guaranteed income did not dissuade recipients from working, instead enabling stability and helping people get out of the cycle of poverty.

Alaska Permanent Fund Dividend (PFD): Since 1982, all Alaskan residents have received a yearly cash dividend from the Alaska Permanent Fund. Virtually every Alaskan who has lived in the state for at least a year is eligible, usually averaging about $2,000.

Overall, systematic reviews find mixed but not alarming labor supply effects: many pilots show either no effect or small reductions in work hours, often offset by improved well-being, health, schooling, and entrepreneurship, particularly for part-time work and caregiving.

Alternatives to Full UBI

If the goals are poverty reduction and work incentives without full universality, alternatives are often proposed:

So, Should We Have It?

There is no simple yes/no answer. Consider:

Should lean toward YES if you prioritize:

Should lean toward NO or MODIFIED if you prioritize:

Many economists and scholars suggest a middle path: modest, targeted guaranteed income pilots, or a budget-neutral reform that replaces some existing transfers and tax breaks with a taxable UBI, rather than a large universal payment on top of everything else. State-level experiments may come first before any national program.

If you share what you value most — e.g., reducing poverty, encouraging work, controlling costs, preparing for AI automation — I can outline what a UBI design that fits those priorities might look like and how it would compare to alternatives.