- Dollars and Cents: How Money is Made – Lesson
- Supply and Demand: It’s Basic Economics – Lesson
- What Is Credit and How Is It Used? – Lesson
- What is Interest? – Lesson
- Taxation: What is it? – Lesson
- What is GDP? – Lesson
- The Supply Chain Crisis – What Is It? – Lesson
- The Supply Chain Crisis – What Is It? – Quiz
The U.S. Monetary System
Cycles of the Economy
All About Investing
The Future of Money
Universal Basic Income – Is it the Future? – Lesson
Will we see universal basic income in a post-Coronavirus world?
The idea of a Universal Basic Income (UBI) is becoming more and more popular, especially in the hard times of the Coronavirus. Millions of people have suddenly lost their jobs and may be wondering how to support themselves. Governments are offering financial help, while some are promoting a UBI as the answer.
Pope Francis recently wrote that now “may be the time to consider a universal basic wage” for every man and woman “to get you through this hard time.” A UBI involves the government giving every citizen a payment each month, no matter how much money that citizen already has.
Spain is planning to roll out a basic income to repair the economic damage from COVID-19. Are we in the beginning stages of getting a UBI for the rest of the global economy?
Before the pandemic, the U.S. government was spending more than $1 trillion every year on welfare programs; state and local authorities were also giving out about $700 billion. Over the years, officials have pointed out the waste and fraud associated with welfare. A 2016 study by the website FiveThirtyEight found that most welfare dollars do not even go to the people in need. Would it be simpler and more affordable to have a UBI instead? Yes, but only if you dismantle the entire welfare system and replace it with a monthly cash payment to every American adult.
Today, there are about 210 million American adults. If the government gave each person over 18 years of age $10,000 annually, the price tag would top $2 trillion.
Basic Income Drawbacks
While a UBI replacing welfare would have its advantages, there are also drawbacks.
A UBI may begin with a sum of $10,000 a year for each person. Many Americans would welcome the regular cash. As time goes by, more Americans could say this amount is not enough and that it should be raised to $15,000 per year because it is now a human right to receive free money. Before you know it, there may be talk of $30,000 and then $50,000 – there is no limit.
Many low-wage and unskilled positions could become automated. Since people would receive a UBI, they may not want to work as a stockboy or a cashier, forcing employers to automate these jobs, replacing human employees with machines.
The final concern is that a UBI would eliminate independence, making people more dependent on the government.
It now seems inevitable that universal basic income will become a reality. Therefore, it is a good time to look at the costs and benefits before America decides whether to try out this experiment.