What Is Universal Basic Income And How Would It Work?

December 2, 2022

What would happen if the government paid everyone a fixed monthly income? Do people get lazy? Do they not appreciate this money and waste it?

The discussion of welfare and living standards is one of the hottest topics in economic policy. Economists present advanced models for wealth distribution in society to reduce social inequality and its consequences. One of the most controversial programs in wealth distribution is the universal basic income (UBI) program.

The idea of this program has different legal, economic, political, and social aspects. It is also related to the technological revolution. It may seem that this idea has an imaginary and utopian meaning. Still, it is like a welfare policy in which a government donates to all citizens living in a country unconditionally of their income. This article will discuss the definition, importance, feature, and functions of universal basic income and examine its strengths and weaknesses.

What Are the Features of Universal Basic Income?

Universality – this amount is given to everyone, regardless of the source of income a person has.
Automaticity – governments should pay basic income automatically without any administrative bureaucracy.
Immutability – as the status of each person’s housing, livelihood, occupation, and income changes, the fixed income should not change.
Individuality – governments should deposit the basic income directly into the individual’s account, not the family or spouse’s account.
Right to use – the governments should consider the individual right, i.e., a right that all citizens of a country have. Among such programs, bad credit payday loans Canada guaranteed approval, for example, is a program for those with limited time to improve their credit score. Therefore, everyone considered a citizen or resident of a country would have this right.
Sufficiency – this income should be enough for the person to meet his minimum needs. These minimums can also be different according to the economic structure of each country.
Unconditionally – one does not have to do anything to receive it.

These features seem to make the realization of UBI impractical and a fantasy approach. Moreover, it seems this policy does not have many supporters among political and economic policymakers, but it is not like this!

What Are the Main Purposes of Universal Basic Income?

The idea of universal basic income has three main goals:

Eradication of absolute poverty – Today, almost all poverty alleviation programs, including health care insurance, food coupons, educational scholarships, long-term loans, etc., have shown their weakness in reducing poverty.
Automation and mechanization – workers who have become experts in one work for many years cannot go to another specialization. They have to accept work with lower expertise and lower salaries. This will create more class divisions in society. If a person has a basic income, he can deepen his expertise and seek multi-skilling without stress.
The general change of the job concepts – in the coming years, various types of self-employment, entrepreneurship, and freelancing will replace worker and employee jobs. In such a world, people need more support to work freely and without worries, because the risk-taking in these new jobs will be very high and costly. Such a situation puts people in a very precarious and dangerous state. In such a case, they have the reliable and permanent financial support that can help people in their career path. Also, having financial support can give people more courage to start their entrepreneurial projects.

Automation and Its Relevance with Universal Basic Income

One of the trends that helped bring the idea of UBI into the public arena was the mechanization or automation of work. It is predicted that robots will replace jobs in the coming decades. According to the report of McKinsey & Company, by 2030, some work activities will be completely automated.

Automation will also create new jobs, but in any case, many believe that it will cause a crisis in modern society. Automation will reduce the share of labor. In general, the process of automation usually leaves two major effects:

Structured unemployment; has caused us to have no option but universal basic income.
Labor market polarization: Many jobs have lost relevance in human labor; These jobs usually belong to the middle class, and therefore the middle class is weakened in the economic pyramid. This situation exacerbates inequality, and it appears that technology will increase it even more.

Criticisms Related to the Idea of Universal Basic Income

In addition to all the benefits of universal basic income, there are many criticisms of this idea, among which:

UBI does not solve the problem of inequality, and we should focus our attention on the structures that generate this inequality.
The modern concept of work has a role in society. When you don’t have a role in society, your human dignity is not respected by paying you a salary.
In the global structure, we pay attention to consumption (goods reach consumers more cheaply). But the emphasis of social science experts is to pay attention to production instead of consumer access to cheaper goods. In such a framework, the dignity and identity of workers precede and have priority over economic growth.
This plan has not been widely implemented in practice, and its main consequences have not been revealed yet. Recently, they have been implementing this idea in Finland, but this work is done in a limited way, and other variables are not controlled.

Can We Hope for the Realization of Universal Basic Income?

It is impossible to say whether the universal basic income plan can reduce or eliminate poverty. To answer this question, we need more research, studies, and experiments at the macro level and a long time to measure this plan. Does basic income increase productivity and creativity or decrease people’s willingness to work?

In addition, universal basic income has not yet been widely implemented, while one of the factors that can give credibility to any idea is its ability to be implemented. Scandinavian countries have achieved the UBI idea’s ultimate goal and have reduced the class gap. This system is great if it can fix the defects of previous systems, but it is necessary to turn this abstract idea into action. But one should try to minimize the problems of this program in the long term, which will not be possible except with expert research and reviews.

It is also impossible to provide a single version of the universal basic income plan for all countries. These plans can differ according to each country’s geography, culture, religion, socioeconomic and political structure. Policymakers and elites of each country have to prescribe the best method of this plan for their country.