Universal Basic Income – The Inevitable Future of Welfare

By Adam Curry

Mark Zuckerberg , Martin Luther King Jr, and Milton Friedman: all three individuals are extremely successful and unique from each other. This is save for one common belief: the need for a universal basic income. Previous presidents such as Nixon and Carter attempted to implement versions, but with their failure came a fall of the concept from serious consideration by mainstream policymakers. Over 40 years later, its re-emergence into political discussions has been because of multiple major causes. Proponents of the policy argue that it has resurfaced recently because of technological progress: exponential increases in processing power have led to increases in artificial intelligence and automation. Thus there are grave fears of an imminent rise in unemployment, as capital with similar capability to labour is made available at a much lower cost (Ford, 2015). Second, the unifying nature of the policy is a key driver of its popularity increase. As shown earlier, it has garnered support from all sides of the political spectrum.

What is a Universal Basic Income? Well, a general definition is a monthly cash payment to all members of a community without a means test, with no strings attached, and at a sufficiently high level to enable a life free from economic insecurity (Bidadanure, 2019). This seems simple but can take many forms. One such form is a negative income tax, proposed by Milton Friedman, where earners below a set income are not taxed, instead being given cash until they meet the base income. However, currently the most popular version is every adult being given a set amount, say $1000, every month.

Now, armed with the knowledge of causes and specific actions of the policy, we can analyse its effects and outcomes to explain why many people believe it likely to be implemented. Primarily a form of welfare, it aims to maintain high standards of living, and redistribute wealth to eliminate poverty. This leads to many benefits: increasing school attendance among children in poverty, reducing addiction by improving economic security, and increasing entrepreneurship and small business creation through the provision of the social safety net. Other key benefits include a reduction in inequality, which is beneficial in many ways to society as outlined in Pickett & Wilkinson (2010), including increased trust and reduced crime rates. These benefits are not unique to UBI however, most currently proposed forms of welfare are similar, with support from left-wing, Keynesian politicians, such as the Green Party in the UK. Universal Basic Income distinguishes itself from other welfare proposals as it addresses the political right’s principal argument against welfare. Conservatives argue that people receiving benefits are under constant governmental scrutiny, and that if they were to get a low paying or part-time job, suddenly, they end up losing their government benefits, and perhaps end up worse off. With UBI, it would be condition free. This would urge more people to apply themselves and find jobs or volunteer work without the risk of being kicked off the program. This realignment of incentives is a key driver behind support from the right, as shown by its support from The Adam Smith Institute think tank.

Recent events have only caused an increase in urgency for its implementation. The COVID-19 pandemic has resulted in far more remote working and joblessness in several sectors, which in America has led to one-off stimulus checks handed to every adult. Consequently, there are now more natural experiments and data than ever, empirically proving the benefits that such a policy would have. One of its key criticisms, however, is that it could discourage work, and then working less labour supply will hurt the economy. However, although there is perhaps some logic to the argument, this does not hold up in the real world, where a 10 percent increase in the cash transfer people received led to at most a 1% decrease in hours worked (Marinescu, 2018). Additionally, the number of individuals involved in part-time work increased. Also, the number of young people, whose participation in the labour force declined, was offset by increases in education, which is more beneficial overall. Higher education leads to higher productivity, which increases wages, and is therefore beneficial overall to the nation in the form of higher tax revenue. It should be noted also that the social benefits extend beyond additional government income. For instance, individuals with higher levels of education are generally healthier, lowering public expenditure on provision of health care (OECD 2010).

With an evidence-based background, and support from all sides of the political spectrum, Universal Basic Income will undoubtedly be subject to avid political debate. In this highly divisive political era, this policy is something a unicorn, and will only play an increasingly larger role in welfare, as technology advances exponentially.

Ford, Martin. (2015). Rise of the Robots: Technology and the Threat of a Jobless Future. Basic Books.
Bidadanure, Juliana Uhuru. (2019). “The Political Theory of Universal Basic Income.” Annual Review of Political Science 22, no. 1 (May 11, 2019): 481–501.
Marinescu, Ioana. (2018). “No Strings Attached: The Behavioral Effects of U.S. Unconditional Cash Transfer Programs,” NBER Working Papers 24337, National Bureau of Economic Research, Inc.
Wiederspan, Jessica & Rhodes, Elizabeth & Shaefer, H.. (2015). Expanding the Discourse on Antipoverty Policy: Reconsidering a Negative Income Tax. Journal of Poverty. 19. 1-21.
Pickett, K., & Wilkinson, R. (2010). The spirit level. Penguin Books.
OECD (2010), “what are the economic benefits of education ?”, in Education at a Glance 2010: OECD Indicators, OECD Publishing

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