EDITORIAL OPINION PIECE IN FINANCE

UNIVERSAL BASIC INCOME: WILL IT FILL OUR POCKETS OR EMPTY OUR PROMISES?

Universal Basic Income, or more commonly referred to as UBI, is a concept where the government would, essentially, give you enough money to pay all of your essential needs, like rent, food, insurance, etc. for free. As wildly unreasonable as that can sound, the essential idea is that work would not be an absolute necessity of survival and more of a supplementary income, where one would not be afraid to call out sick from work or fear of reprisal from management if one stands up for themself in the face of an unruly customer. A person on UBI would be free to chase whatever they would desire, whether it be going back to school to receive an education or higher, or pursue their passions, such as painting. That is what Elinor O’Donovan did when she was randomly selected to participate in a country-wide UBI pilot. All Elinor had to do was fill out a questionnaire about her well-being twice a year and she would continue to receive £1,200 every month, and assuming she continues to fill out these questionnaires, will continue to receive them until September of 2025 (Ferguson, 2024).

Elinor currently resides in Ireland, where her UBI pilot is currently being tested. However, UBI is being tested around the globe, with many of these pilots being tested here in the United States. Cheoni Hampton, who resides in Georgia, was at first skeptical of the UBI pilot when she first received the flyer in the mail. However, after researching UBI more and deciding to take the leap, now receives $850 a month until September, and has found that she has managed to pay off debts, and with the opportunity to find a better long-term job being one of her main incentives of signing up for the pilot, has even taken classes to become a security officer (Ferguson, 2024).

One of the more popular arguments to be made in favor of UBI, which has only surged in popularity since major concerns of AI and robotics taking over jobs has become a hot topic, is that UBI would make work into an additive form of income instead of a dependent form of income, meaning that citizens gaining the benefits of UBI would not have to worry about these jobs being taken, as all of their needs are already being met. This would, in turn, reduce demand for the availability of jobs, as well as increase quality of work, as employees would be operating under far less stress. A former democratic party candidate that ran for president in 2020, Andrew Yang, even made UBI his signature focus, gaining even more traction during the 2020 COVID-19 pandemic, where concerns over being able to hold a job was one of the chief issues at the time. According to his 2020 presidential campaign website, Yang would issue “freedom dividends”, where every citizen would receive a monthly paycheck of $1,000 dollars to spend on necessities, and the website even claims that it “would permanently grow the economy by 12.56 to 13.10 percent—or about $2.5 trillion by 2025—and it would increase the labor force by 4.5 to 4.7 million people.” (Yang2020, n.d.).

Not having to spend most of your money on your necessities also means that the money can be spent elsewhere, which is an argument for something somewhat similar that took place during COVID-19, in the execution of the CARES act, which dispersed three rounds of stimulus checks nation-wide to roughly 476 million people, to the tune of $814 billion dollars in total (IRS.gov, 2024). A supporting argument for the stimulus checks was that those who were receiving the checks didn’t have to spend the money to pay rent or for necessities, but the recipients could use to pay for anything, even things like TVs. It was even encouraged to do so, as spending like that was purported to help reinvigorate the US economy, which had been suffering do to life essentially stopping with the citizens all over the US who were quarantining due to COVID-19.

However, what are the major arguments against the use of UBI? One of the biggest arguments against the implementation is, frankly, where would this money come from? According to FiscalData, a website run by the United States Department of the Treasury, the total US spending deficit is currently $1.8 trillion dollars, which is up by 8%, or $138 billion dollars, compared to 2023 (FiscalData, 2024). Jobs no longer being a necessity and requirement for basic living would also mean a significant loss of income for the United States in terms of taxes levied from paychecks, which would mean that this income would have to either come from elsewhere, like new taxes being placed on other goods or services, or by heavily increasing the taxes levied from paychecks of currently existing jobs, hypothetically upwards of even 50% for your day-to-day workers.

Overall, Universal Basic Income would alleviate the greatest source of stress and anxiety that every single American citizen faces on a day to day basis. Many of those who see having to sacrifice such a large portion of their lives to simply be able to live with a roof over their head and food in their bellies find this kind of life disdainful, and UBI would have citizens find a much greater increase in the quality of their welfare and life than those who currently live without it. Despite that, the blatantly obvious question arises: How can we afford free money? We all know that free isn’t free, and much like how the road to Hell is paved with good intentions, the path to UBI is riddled with logical fallacies. At the end of the day, one has to ask themselves: do they value their time more than they value the number on their paycheck?

Lance Carr

October 28th, 2024

References

Ferguson, D. (2024, July 14). Money for nothing: is universal basic income about to transform society? The Observer. https://www.theguardian.com/society/article/2024/jul/14/money-for-nothing-is-universal-basic-income-about-to-transform-society

Fiscal Data. (2023). Fiscal Data Explains the National Deficit. Fiscaldata.treasury.gov. https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/

The Freedom Dividend. (n.d.) Yang2020. Retrieved October 26, 2024, from https://2020.yang2020.com/policies/the-freedom-dividend/

SOI Tax Stats - Coronavirus Aid, Relief and Economic Security Act (CARES Act) statistics (2024). In IRS.gov. Retrieved October 26, 2024, from https://www.irs.gov/statistics/soi-tax-stats-coronavirus-aid-relief-and-economic-security-act-cares-act-statistics