Basic Income PerformancePhoto byStefan Bohrer, Public domain, via Wikimedia Commons

A universal basic income (UBI) is a guaranteed, unconditional salary provided by the government to every citizen. It has come to be quite an influential topic in discussing policies from the past few years. The proponents stake the reduction of poverty, simplicity in the welfare systems, and a boost in economic growth that it brings. Opponents, on the other hand, primarily consider UBI too expensive or practically unworkable. Yet, in the broader perspective, UBI could be not just an effective tool for social justice but a way to acquire substantial long-term economy for the society.

Understanding Universal Basic Income

UBI—Universal Basic Income—is regular cash sent by the government to everyone, with no conditions. Of course it makes sense: ensure that nobody has a life worse than what is allowed by giving them some money to enable their survival. This would allow so many more to get an education, start businesses, take care of their families, and live out their dreams without constantly worrying about making ends meet.

The Economic Case for UBI

At face value, UBI might seem prohibitively expensive. When we factor in the potential savings and other economic benefits, the picture is different. One of the areas of largest potential savings would be in reducing the complexity and cost of existing welfare programs. Currently, governments spend billions running hundreds of inchoate social welfare programs, each having its own eligibility criteria, application processes, and squads of bureaucrats. A UBI could consolidate these systems into one simple payment.

Healthcare and social services are another area where UBI may make some savings. Poverty is, apart from being a major social problem per se, one of the major determinants of poor health outcomes: the poor suffer more often from chronic diseases, have poor mental health, and die younger than their richer peers. First and foremost, if UBI is capable of raising people from poverty, it would have an effect that lightens many loads that the healthcare system is otherwise bearing. Moreover, some financial insecurity is often behind crime rates, family breakdowns, or substance abuse. A UBI would be able to alleviate these social problems, which save money in law enforcement, judicial systems, and social services.

Stimulative Effect of UBI

Another crucial point of UBI concerns its potential as a stimulator of economic growth—for the more people are given assured income, the higher the possibility that they will use this money to purchase goods and services. That would increase demand in an economy, then it would give rise to job creation, productivity, and hence more robust economic growth. Here is where the greatest potential of UBI lies: Small businesses would not be small any longer, considering that people could now afford to support small businesses within their reach with disposable income.

In other words, UBI could increase entrepreneurship because it gives a financial cushion to those who want to start their own businesses. Without fear of losing everything, more people might take the plunge to start new businesses, leading to innovations and economic diversification.

Longer-run Defense against Savings Drops: Investigating Further

This broader economic context is what one needs to consider in order to realize all the potential savings of UBI. For example, the United States annually spends about $1 trillion on welfare programs: food stamps, housing assistance, Medicaid, etc. A UBI would greatly shrink many of these programs and totally eliminate some, producing sizable net savings.

Another angle where UBI could hit very hard would be health. This is huge because the economic cost of poverty-related poor health is very consequential, including direct healthcare costs and lost productivity. Over time, these would be reduced by a healthier population supported by a stable income.

This might also entail significant savings in criminal justice costs. Research has generally shown that there is a clear link between poverty and crime. Thus, if UBI reduced poverty, it may lead to a reduction in crime rates and, therefore, the cost of policing, court time, and imprisonment.

Concerns That It's Too Costly

One of the main objections to UBI is its cost. It is, however, true that a UBI need not be financed wholly by new taxes. Indeed, most UBI funding can come from rearranging current government spending by way of consolidating welfare programs and cutting down on administrative costs.

Moreover, UBI could be designed to replace or supplement existing income rather than being an additional expense. For example, UBI payments could be taxed as income, particularly on the higher earners, which would help in recouping some of the costs involved. In addition, a well-designed UBI could be adjusted according to economic conditions that allow flexibility in its implementation.

On the Way FORWARD

While a Universal Basic Income is a radical idea, it holds within it a practical solution to some of the overwhelming, most intractable economic and social problems of our times. By providing a guaranteed income to all citizens, we can reduce poverty, simplify welfare systems, and stimulate economic growth. Savings from healthcare, social services, criminal justice, and administrative costs could offset the expense of implementing UBI.

In this increasingly automated, precarious economic world, basic income guarantees the opportunity for all individuals to live in dignity and work toward their goals. Far from an unrealistic pipe dream, UBI embodies a prescient investment in the future of our society—one that could ultimately be economizing while creating a more just and prosperous world for all.