What Is Universal Basic Income?

By Rick Gonzales | 3 months ago

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If anything, the COVID pandemic has proven that as a population, Americans are not prepared for an unexpected financial crisis. How could they be? The financial inequality across our nation continues to divide like the parting of the Red Sea. The blame for this can go in many different directions, but it is a split without any apparent solution. Or is there one? And would it be in the form of universal basic income?

Universal basic income is a government-funded guaranteed payment to each citizen across the United States. Its intent is to cover the cost of basic living expenses as well as help provide financial security. This universal basic income would go to everyone, regardless of income level.

Universal basic income is not a new idea. Its roots take place many centuries ago as a way of providing the have nots with a simple living wage. As one story goes, a small England village called Speenhamland needed a way of offsetting the rising prices of grain, so a group of magistrates met in attempts to solve the crisis. The social system at the time was called the Elizabethan Poor Law, which saw indigent adults separated into three groups: the ones who could work, the ones who could not, and the ones who were called the “idle poor” or the ones who didn’t want to work. Those who could or were disabled received aid or work through the local parishes. Those who didn’t want to work were either forced into labor or were collected and beaten for being lazy bums.

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These magistrates devised a system to help. They topped up the household incomes to cover their cost of living. Others would get three-gallon loaves of bread per week as well as a loaf and a half for every other household member. Big families could truly make out. Naysayers to the new system rightfully pointed out that it would incentivize the lazy to continue to be so. They were right. And that is the crux of the universal basic income system.

The disparity of income across the globe is the driving force behind universal basic income. Rising costs and dwindling jobs are also major contributors to the nation’s poverty line rising higher and higher. The rise in homelessness is an indicator of how bleak things are becoming as millions are unable to provide for themselves even the most basic of needs. So, would a universal basic income work?

The obvious answer is yes. By providing a set amount for those who are in need, the nation could possibly get rid of welfare programs such as unemployment, housing assistance, and the earned income tax credit. But then we start getting into the nitty-gritty of such a program. As advertised, the universal basic income would go to all. Everyone. Yes, even the supremely wealthy. Of course, as with those sporadic at best stimulus checks, the universal basic income could be tiered. But still, could it work?

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Right now, Spain is in the middle of the largest attempt to date at a universal basic income. The results are mixed though it has helped their devastated economy. Other countries have tried smaller versions of this with the same mixed results.

There are some telling advantages to a universal basic income for those in the U.S. Workers could afford to hold out for better-paying jobs or even higher wages. It could allow for some to stay home to care for the elderly. The influx of cash could help revive the economy. Theoretically, the government would spend less on this than it would with the current welfare programs we have in place.

But there is always the flip side to the good. With cash in hand, inflation could rise as makers would know everyone has cash in hand now. As inflation rises, the universal basic income remains the same, so in the long run, we could be defeating the purpose. Those who have no desire to work will have less incentive to go out and find a true paying job. Damned if you do, damned if you don’t.

elon musk

It may come down to the fact that there will be no choice to have some sort of universal basic income set in place. Elon Musk feels that robotics will be what drives the decision. With more and more companies turning to automation and robotics to handle their business, job opportunities will begin to dwindle, forcing a universal basic income. “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” Musk told CNBC. “Yeah, I am not sure what else one would do. I think that is what would happen.” But Musk doesn’t necessarily feel a universal basic income system would be a bad thing, “People will have time to do other things, more complex things, more interesting things,” says Musk. “Certainly more leisure time.” Musk is looking at it that a universal basic income would go a long way not only to boost the economy but allow people to afford more time to search for what suits them.

Sir Richard Branson also feels similar to Musk. “I think that’s really important,” he told CNN. “It will come about one day.” Branson feels a universal basic income is necessary because it can protect those who may lose their job to artificial intelligence. Even Facebook’s CEO Mark Zuckerberg said during a Harvard commencement address, “We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas.”

Another big disadvantage to a universal basic income is how to pay for it. The government just can’t print money to dole out (well, it can but…) so to get money in the pockets of every American, there is going to have to be a tax increase. The obvious choice here is to tax the rich even more so the money can be handed out to the less fortunate. All fine and dandy for the less fortunate and while a few big earners might not care about an increase in taxes, make no mistake about it, there would be push back from others. If taxes have to be raised all around, then what exactly is the big benefit of a universal basic income? Higher taxes, less money.

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The answer is never simple. On the surface, a universal basic income would be a welcome to the wallets of millions across the nation and to our struggling economy. It would be the boost we could all use during this time of the continuing pandemic. Millions of jobs have been lost, thousands upon thousands of businesses have gone under. Is this the solution we want and need and if so, at what cost and to whom?