With hundreds and thousands of human jobs being automated, experts are starting to advocate Universal Basic Income – a monthly unconditional sum of money given to everyone. How far is this model viable?
What is Universal Basic Income (UBI)?
UBI is probably the most ambitious social policy till date. Under a UBI model, the state will pay a fixed amount of money to every citizen regardless of their income or social status. The idea of a basic income has been around for many decades, with even Martin Luther King working towards it. “We must develop progress – or rather a program that will drive the nation to a guaranteed annual income” he said at the Southern Christian Leadership Conference in 1967.
Experts have different ideas about how much each citizen must receive, and this amount would depend on the country a universal basic income is implemented in. But the first step would be to provide citizens with a minimum basic income – enough to stay above the poverty line. This would also in turn increase overall demand as the poor will be able to afford more – leading to a significant increase in the GDP.
Why we need it
The onset of Artificial Intelligence is threatening jobs all over the world today. Around 57% of all human jobs are at risk globally. That said, 97% of farm labourers and 88% of construction labourers are at risk of losing their jobs to machines. At this rate, more people will plunge into poverty and the gap between the rich and the poor will keep widening. However, having a constant source of income will help people be financially secure and stable. It also allows people to choose careers of their interest without worrying about the income they receive.
Where will the money come from?
Ever since the term “Universal Basic Income” started gaining currency, experts and critics have been constantly debating about how the state will be able to pay every single citizen. Common ideas include having the richer section of the society pay more tax than now, cutting the military budget and cancelling existing welfare programs. Economists believe that implementing UBI is highly feasible as long as the state is dedicated towards doing so. But will it work?
A common worry would be that all the money that the poor receive will not go to their welfare but to drugs. A study made by the World Bank in 2013 shows that poor people did not choose to spend cash given to them on alcohol or tobacco, but rather used it for their essential needs. It is also seen in many other studies that richer people tend to misspend money on such unnecessary things. Even if such threats to the society are not going to be a result of a basic income, could laziness creep into existence?
In the 70’s, Canada held a test run of a basic income. Only 1% of the participants chose to quit their jobs and most of them did it to take care of their families. Meanwhile, people spent on average 10% less time at work and used the extra time they get to concentrate more on other positive activities. Some joined schools to learn and explore while some took up hobbies.
How long until UBI is implemented?
With big personalities like Elon Musk and Mark Zuckerburg being vocal about UBI’s necessity in our world today, many are excited for the plan to be put into effect globally. Many countries like Canada, Kenya and the US are doing test runs to see how beneficial a basic income could be to its citizens. Finland launched its universal basic income program in 2017 where 2,000 people have been paid $665 every month and will be paid the same until the end of 2018. Results from the Finland test however, will only be revealed after the test is concluded. Arvind Subramanian, the Chief Economic Advisor to the Government of India has predicted that one or two states in India will begin enforcing UBI by 2020.
We are still in the initial phase of a grand welfare plan. Although many claim that rolling out such a plan is just a short term goal and does not deal with the actual problems that underlie, the initial test runs look promising.