Should Universal Basic Income be the future of our society?

Introduction

Universal Basic Income is perhaps the most ambitious economic phenomena of the 21st century. On the surface, Universal Basic Income (otherwise known as UBI) is a government program in which citizens receive an unconditional set amount of money regularly. The term universal refers to the idea that it should be paid to all members of society and basic suggests an amount that would enable someone to survive in extremis, providing them with basic economic security, yet not total security nor affluence (Guy Standing, 2017). Especially during the time of Covid-19 and with the increasing influence of Artificial Intelligence and many other factors, such as poverty and homelessness, this can be the key to the future of our society. There are also many ways in which this can become reality (such as whether the Welfare System should be replaced) and I will explore these in this essay also. I will begin by looking at the history of this economic phenomena, followed by its advantages (including the impact on poverty inter alia), disadvantages, how it could take place and the large caste study completed in Finland.

The history of Universal Basic Income

The concept of a Universal Basic Income has arguably been around for hundreds of centuries and precisely since Ephialtes, the ruler of Ancient Greece in 460 BC. Ephialtes initiated the democratic reforms of paying citizens for jury service. Despite this arguably being a conditional offer, it was a payment for something which had previously been constituted by the polispolitical community structure of Athens- and was a part of Athenian life. Similarly, after Ephialtes’ death, Pericles (who had been his second-in-command) also continued a basic income for those who had participated in the polis (Standing, 2017). Once again, despite this being a seemingly conditional offer, this action was thought of as one’s moral duty. However, upon the overthrowing of Pericles by the Alcibiades in 411BC, the idea of UBI ended and was not revived for centuries.

Modern UBI was first explored by Sir Thomas Moore in his fictional vision of the island of Utopia in 1516, where Moore explores the perfect society and their political, religious and social customs. In this book, one of Moore’s characters is depicted saying ‘Instead of inflicting these horrible punishments, it would be far more to the point to provide everyone with some means of livelihood, so that nobody is under the frightful necessity of becoming first a thief and then a corpse.’ (Moore, 1516) Following this in 1526, Moore’s friend, Johannes Ludovicus Vives, sent a letter to the Mayor of Bruges with the first formal proposition of a Universal Basic Income for the poor as ‘even those who had wasted all their money on riotous living should receiver it for no one should die of hunger’ (Ludovicus Vives, 1526).

One can attribute the origins of Universal Basic Income to aforementioned thinkers, who concentrated on aid especially to the poor. However, the theory was then once again ignored for two centuries with the development of a Welfare state until Thomas Paine, an English-American writer, restored it in Agrarian Justice. In this book, Paine mentioned that ‘Every proprietor, therefore, of cultivated land owes to the community a ground-rent (for I know of no better term to express the idea) for the land which he holds; and it is from this ground-rent that the fund proposed in this plan is to issue’ (Thomas Paine, 1797). Although this might appear to be breaking the idea that the payment should be unconditional, Paine’s ideology of what would fund Basic Income refers to the modern idea of paying it as a subset of tax, which had separately been accepted as a necessity centuries ago.

Advantages Decrease in Poverty

Perhaps the greatest issue with the Welfare state-the current form of government which promotes the equality and social well-being of its citizens through a range of government benefits- is that it creates a poverty trap, where an individual’s increase in income is offset by a loss of state benefits, therefore making them lose money. This is mainly caused by tax margins. For example, in Britain, someone on low state benefits faces what is in effect a marginal tax rate of 80% or more when moving from benefits into a low-paying job. Furthermore, this does not take into account the costs of working such as transport or childcare which would diminish the benefits of labour even more. Therefore, people become caught in this ‘poverty trap’ where it is more beneficial for them to stay where they are (which also has a significant economic impact which I shall mention later). This affects many countries in the world, with more than 9.2% of people living in extreme poverty- earning less than 2 dollars a day. This amounts to 34 million people in the US alone. An even more interesting figure is that, of the 34.2% of the inhabitants of the US receive state benefits such as food stamps and subsided housing, a large percentile of these people derive from de facto extreme poverty sector. This demonstrates that there is a correlation between people receiving benefits and ending up in the ‘poverty trap’, which I shall delve into in the following paragraph. However, UBI would be able to provide a safety net for the poor to attempt finding a better, more enjoyable job, without worrying about the costs of the process. Scott Santens, founding member of the economic security project, has said that a UBI set at $1000 per adult per month and $300 per child per month would eradicate US poverty entirely However, certainly the most persuasive aspect for UBI, is that it is not an experiment- it has been proven to work. Since Brazil has begun giving 100$ a month to its inhabitants in March 2020, the poverty level has fallen to the lowest level in forty years. On the other hand, this has only been a trial so the payment has only been received by 25% of the population. However, if UBI became a permanent, wider-scale programme, there is now evidence that it could eradicate poverty in Brazil altogether UBI has also been tested in less-developed parts of the world.

Namibia’s UBI programme, which took place from 2007-2012, reduced household poverty rates from 76% to 37% after just one year (1). Therefore, UBI has been proven to be successful in decreasing poverty in a number of countries.

On the other hand, one can be sceptical as to whether a Universal Basic Income, as opposed to common benefits, is a more effective idea as people could waste the money. However, as outlined in the introduction, the purpose of a Universal Basic Income is to provide people with a way out of extremis- not to provide them with an amount to live in luxury. This difference is key, as seen in a number of trials. The Economist conducted a trial where it spoke to homeless people in the Square Mile, London, and proposed to give them whatever they needed to ‘change their lives’. Of the thirteen who engaged, eleven had moved off the streets and become employed within a year. During interviews, they revealed that they cooperated because UBI provided them with control over their lives and allowed them to attempt at receiving a job, as opposed to being forced into a hostel with benefits. Moreover, the cost was an average of £792 per person, a mere 3% of the £26000 estimated to be spent annually on each homeless person

(Standing, 2017). Therefore, UBI has the potential (with evidence) to eradicate poverty whilst providing the government with more money. Although it might seem to be a different name for benefits, it provides people with the motivation to find a better job or, in a lot of cases, a job.

Economic Impact

One of the greatest impacts which UBI could have is an impact on the economy. It would provide a sustainable production growth in relation to average income, unlike the current Welfare system. An obvious flaw of the Welfare system is how fragile the economy is- as can be clearly seen in the 2007-2008 financial crash. This was caused by ‘rising energy prices on global markets, leading to an increase in global inflation’ (2) which therefore made it too expensive for property owners to repay mortgages, leading to a rapid fall in property prices and therefore of the assets held by many financial institutions. UBI could be a solution to de facto economic problems as it would be a way of maintaining high aggregate demand while making the economy less fragile. Interestingly, the Australian government was the only country to use UBI in the aftermath of the 2007-2008 crisis by making grants of A$1000 to carers, children and pensioners and they were one of the only countries which escaped economic recession. This shows that UBI is effective in large-scale trials also. Moreover, UBI would have a vast positive effect on economic growth. Research has shown that, out of the one billion full time workers in the world, only 15% are engaged with their work and the rest do it to ‘put food on the table’, which especially affects industrialised countries (3). In America, this lack of employee commitment has cost around 500 billion dollars in economic productivity. Therefore, UBI could be a solution to this issue as the extra funds would encourage people to look for a job that they enjoy, even if it produces the extra costs of transport and childcare as these would now be paid for.

Although there is evidence that UBI would have an economic impact in industrialised countries, it would also affect developing countries. Having already spoken about Namibia and how UBI has decreased its poverty rates, UBI has also been seen to have a large economic impact in nine villages in Madhya Pradesh, India. This was the first UBI trial in India, and it took place in 2011 for the course of eighteen months It entailed universal, unconditional and individual monthly grants to 6000 men, women and children. Furthermore, ‘more than 15000 individuals were covered by the research and 100 in-depth case studies were carried out with the recipients’ (4). This research sample once again reinforces the difference between state benefits and and UBI as the income levels were set with the aim of providing ‘enough to make a difference to living standards, but not enough to improve them considerably’, which was tantamount to 20-30% of the income of lower-income-families ($4.40 per adult which was later increased by 50% to make the experiment reliable, considering the rate of inflation). As can be seen in the book ‘Basic Income- A Transformative Policy for India’, there was a huge economic impact especially in the field of education.

This graph compares the increase in school attendance between the villages trialled by the SEWA (Self Employed Women’s Association) and the control villages. One can see that there was a small 20% change in the controlled villages, compared to the 55% change (including a 19% big improvement) in the villages receiving the monthly grants (Sarath Davala, 2015). Around the world, especially in developing countries, the rate of people dropping out of school to find a job is drastically increasing as, due to the rate of inflation, people need to earn an annually-increasing salary to be able to afford things such as an abode. In Britain, the number of sixteen year-olds dropping out of school is ‘one in five pupils’ (5); in the USA, 7000 students drop out every day. UBI could provide an income which would allow students to stay longer at school and find a job which they would enjoy, thereby increasing economic productivity as well as therefore increasing economic growth- both of the previous factors in one. This possibility is reinforced by the evidence amalgamated in Madhya Pradesh, as seen in the graph above. Many people were interviewed after the UBI trial, including one mother who said that ‘We could, with the cash, spend more time with our children and families and help the children with their education. Now that the project is finished, we are again having to take loans and pay interest and the children have to go to work with us. When we received the cash the children were attending only school. Now they have to go and earn money to pay for their education, for example by working in the fields or at the potato factory. My oldest son is working for some of the farmers in their fields’ This quote reinforces the impact which UBI has on education, as well as displaying my next point- how it gives people the opportunity to avoid debt.

The key to large economic growth is not only a well-educated population. Throughout history, credit and investment have been the driving force of industrialisation and a country’s development (Harari, 2011). For example, during the expansion of an empire, a country has to borrow large sums of money to finance the necessary elements such as wars. In 1754, to start forming the largest empire in history, Britain had to borrow a lot of money from Dutch and British bankers to finance the French and Indian Wars. Throughout the nine years of war, British debt almost doubled from £75 million in 1754 to £133 million in 1763. However, to continue expanding an empire or for someone to continue investing, one has to be able to pay back the previous debt because, otherwise, the interest will increase too and the country will stay in continuous, increasing debt and, therefore, economic recession. This can also be translated to the thriving of a family. However, the Welfare state creates a vicious circle where, especially in low-income families where saving money can be very difficult with the lack of funding, people cannot pay back their debt very quickly and have to stop investing too. On the other hand, UBI could provide assurance and form a solution to this problem. The extra funds would allow a person to invest more, thereby growing the economy, whilst still having the extra supply of monthly cash to repay their debt. This is once again reinforced by the trial in Madhya Pradesh

From the graph above, one can see how villages with UBI had a significant decrease in debt whilst those without the extra income not only had a small reduced debt, but also a magnified one. Precisely, ‘Around 73% of beneficiaries in the tribal village managed to reduce their debts while none increased. In the control village, 18% had reduced their debts while they increased for 50%’. This provides evidence that UBI could help decrease debt as well as therefore allowing more investment. Moreover, in this less developed region, it can take years to pay back debt.

During the trial, researchers found a family that had to pay off a debt of $1500 to the owner of a brick kiln. However, due to the parents’ minute combined salary of $5.40 a day as well as the cost of feeding the entire family, it will take years for them to repay that debt. This once again reinforces the idea of a vicious circle created by debt. However, despite having an especially vast economic impact on industrialising countries, the impact is omnipresent in industrialised countries also. This can especially be seen in the 2007-2008 crisis where people could not pay off their mortgages which caused a mass recession which has been seen over the last ten years. An example is USA, whose gross domestic product fell by 4.3%- the lowest since World War 2- and the unemployment rate also. Although it might seem like something of the same calibre could not happen again, currently 340 million people have a mortgage in the US alone- more than 62% of America’s homeowners (6). Since UBI has proven to work in Madhya Pradesh by not only helping people to escape the poverty trap, but also to provide people with more freedom from their employers, it could work in other countries also and help them recover from crises such as the aforementioned financial one.

Social Justice

Besides the positive impacts which UBI would create, one can also argue that it would be social justice- ‘justice in terms of the distribution of wealth, opportunities, and privileges within a society’ (7). Firstly, it would be social inheritance and a form of social dividends- a deserved return on the natural resources owned by society. Thomas Paine suggested this in Agrarian Justice when he said that ‘It is a position not to be controverted that the earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race… it is the value of the improvement only, and not the earth itself that is in individual property. Every proprietor, therefore, of cultivated land, owes to the community a ground rent’. Paine believed that the Earth is ownerless and that the only thing belonging to the human race are the things bestowed upon it. His conclusion was therefore that every holder of property should pay a fee to the state. This belief is fortified by the beliefs of John Locke, an English philosopher in the 17th century who believed that everybody possessed natural rights, so the government has obligations to its citizens. Locke stated that ‘Every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say, are properly his.’ (John Locke, 1689) This once again ascertains that everybody has a right to self-ownership and the fruits of their labour, hence explaining the necessity for Paine’s ‘ground rent’ as citizens’ have taken this ability from others due to the cultivation of the Earth. Locke also proposed the Lockean Proviso which states that ‘You have the right to appropriate natural resources only up to the point that there is enough, and as good, left in common for others’. Despite the latter stage being composed of vague vocabulary, one can comprehend that Locke believed in equality and precisely a moral duty to redistribute one’s income to someone else.

Thomas Paine takes this further in Agrarian Justice as he proposes ‘to create a National Fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance by the introduction of the system of landed property. And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.’ Paine’s theory was therefore that a UBI was needed as social justice due to the introduction of property, inter alia, which has taken one’s ability to enjoy the ‘uncultivated’ Earth, which should belong to everybody.

However, the issue presented by the Lockean Proviso is why there would be a need for UBI specifically, and not another form of income distribution. Peter Vallentyne, professor of philosophy at the University of Missouri in Columbia, takes the Lockean Proviso further by explaining the stated issue. Vallentyne does this by looking at different interpretations of the Lockean Proviso and I will explore the Nozickian interpretation. According to this interpretation, one needs to make sure that no one is made worse off by another’s appropriation of natural resources than they would have been if those resources had not been appropriated. One can use an example with two citizens, X and Y, in a model state. X’s appropriation of land imposed a £100 deficit on Y, yet Y’s appropriation of the previously-uncultivated land has imposed a deficit of £50 on X. According to the Lockean Proviso, there now needs to be an end goal where X has £50 and Y has £100. This will require a system of tax-and-transfer, and Vallentyne draws a distinction between the two possible systems. In the Gross system, both X and Y proceed to place their money into a common fund, similar to the ‘National fund’ suggested by Paine, and the money is distributed accordingly leaving X with £50 and Y with £100. The other example is a Net System where X and Y only have to pay their gained amounts into a common fund, so X would pay £50 and Y would receive £50, leaving X with £50 and Y with £100. Although both reach the same final outcome, the Gross system is very similar to a UBI where each citizen received a UBI of £50 and Y received an additional grant. Therefore, to evaluate, UBI could be a form of social justice for the loss of one’s social inheritance and dividends. This could be an effective system where equality, especially economic, can be reached between individuals as further explored by Vallentyne.

Artificial Intelligence

The Welfare State has also been criticised for being unable to deal with changes, such as the threat of automation. The increasing development of AI provides a number of threats, the main one being the economic impact. This differs from the previously-discussed economic impact of the welfare state as, rather than people preferring to stay in benefits than finding a job, there is a chance that there simply will be no jobs and therefore possible mass unemployment. The number of jobs which shall be displaced by AI varies, but some think that it could be at least a billion. Moreover, research has predicted that 375 million jobs could become obsolete altogether. Although most believe that the future will not be as dystopian, some specific data still suggests that the job loss will amalgamate to 85 million jobs globally by 2025 (8). According to Andy Stern, former head of the US Service Employees International Union (SEIU), this would be driven by the ethos of shareholder value as, in the upcoming years, AI will be cheaper to maintain and to use. Stern’s opinion is that this will not be like ‘the fall of the auto and steel industries. That hit just a sector of the country. This will be widespread. People will realise that we don’t have a storm anymore. We have a tsunami’ (Standing, 2017). The obvious underlying consequence of mass unemployment will be people not being able to pay for rent amongst other things, but there are other significant consequences of mass unemployment. For example, an increased inequality gap- Britain being a suitable example.

Since the 1980’s, an inequality in wealth and therefore unemployment has arisen- research has shown that in some areas in the North it is 200 times as difficult to find a job than in the South (9), with the north-east of England having the highest unemployment rate in the whole of England with 5.5%. This high level of unemployment will be increased with the rise in automation too. AI will first replace dangerous jobs such as farming which is omnipresent in the North of England especially. Therefore, as well as causing mass unemployment, large political issues could arise from Artificial Intelligence also. UBI could be a solution to this problem as it could be a way in which all would benefit from economic gains resulting from technological advance. This is because Universal Basic Income would provide people with the extra income to meet their needs. Moreover, as shall be discussed in more detail later, the greatest issue with UBI is its affordability and studies have shown that large AI companies would generate enough wealth to pay every citizen in the US a UBI of $13500 (10).

However, although this issue would be solved, the other issue of who will take the remaining jobs and who will walk with free money arises. Although the answer to this question is uncertain, one can definitely be sure that everyone will want the spare jobs and, because these will be highly technical, they will require people to have a great education, with a large possibility of the working class ultimately losing out. UBI would be able to provide this as the extra income would not only give people the opportunity to stay at school longer but also to travel further if needs be. Therefore, UBI would be able to decrease the effect of mass unemployment caused by AI and, by developing the education sector, ultimately end up with a higher-quality work force. The key disadvantage to the welfare state in this issue is that, if people lose jobs, it cannot provide them with the necessary income

On the other hand, let’s look at the short-term possible consequences, assuming that the rise of Artifical Intelligence does not lead to a ‘workless future’ As previously discussed, AI is not expected to make human workers obsolete by at least 2045 because, for example, AI often requires an amount of ‘learning’ and therefore large amounts of data The cost of electricity to power one supercharged language AI model was estimated at $4.6 million (11). Moreover, some sources even suggest that, although AI might displace 7 million jobs, its management could also create 7.2 million jobs therefore producing a net gain of 200,000 (12). However, even this change presents issues such as income inequality. As AI grows the economy and produces more money, the question of income distribution is affirmed even more. Even nowadays, the wealthiest 10% of American households own 89% of all US stocks which is a record-breaking high in wealth inequality. The debate of whether the rich should have the money that they have is one of the biggest, dividing questions of the century and I believe that UBI could be the solution. It could be a way in which all could benefit from economic gains resulting from technological advance as a set some of money, increasing with the development of AI, would be given to everybody whilst the rich still received their amount.

Disadvantages

Having up to this point discussed the benefits of UBI, some people believe that this economic phenomena is flawed. Many have firstly questioned how it could be afforded during the economic recession which the world is currently experiencing as a result of the pandemic and whether other issues could arise from such an ambitious spending plan? However, some have also questioned Universal Basic Income on philosophical grounds, including libertarians amongst others. Finally, there’s also the question of how UBI would fit into our society and what form it should take

Libertarianism

Libertarians believe in a ‘small state’, on the grounds that the government infringes on individual Liberty. A libertarian has a set of common criticisms for the current Welfare state which we have to explore first before turning to UBI. Firstly, they believe that forced charity is unjust as individuals should have a moral right to decide if they want to help other citizens. Further, they believe that in a free, capitalist market forced charity is unnecessary as voluntary donations are enough. Thirdly, if one does receive government aid (charity), then they are less likely to take care of themselves or to go to work. Finally, forced charity is growing rapidly, with the future holding exorbitant taxes with, possibly, another financial crisis. We will later discuss the future of the welfare state but, firstly, is UBI actually a better alternative which does not hold the same criticisms?

Some libertarians believe that it is simply a worse version of the prior, with the same criticisms further amplified. Firstly, one can understand forced charity to some extent since it is aid for those who cannot help themselves, such as the severely disabled. However, an economic system where citizens are paying everyone, notwithstanding their financial situation, could be argued to be an even larger encroachment on citizens’ freedom. However, a libertarian can justify coercive redistributions and, to do so, we need to turn back to Vallentyne. According to Vallentyne, a libertarian could justify coercive redistribution if it protects the core libertarian rights and one of these is the freedom of contract, where individuals and groups have the ability to form contracts without government restrictions Although libertarians believe in the freedom of contract, this usually requires enforceability. For example, if you make a promise to pay me a sum of money before next week, you are obliged to do so as it has then become your moral duty. However, if I do not pay you that sum of money, I can then be coerced to do so. This therefore proves that libertarian principles do not coincide with coercive redistribution, especially as one of the core values of libertarianism requires it. This also justifies the existence of a functioning, governing body which is not necessarily a state. Having proved this, we can come back to the idea of social justice as to why UBI is the best form of de facto coercive distribution, since (as Thomas Paine amongst others argued) it is the recompensation for the loss of our social inheritance.

Secondly, many libertarians argue that UBI creates even more incentives to not go to work and use state aid. Under current welfare, if you are an able-bodied adult between the age of 18-64, without custody of any minor children, you are ineligible for most programs whereas, UBI would provide a stable, monthly income notwithstanding your situation. However, as we have previously discussed, the thought that UBI would provide enough money to not go to work is a myth. For the younger generation, as seen in the case studies conducted in Madhya Pradesh, UBI has proven to allow more students to continue their education for longer rather than wasting their money. Furthermore, for adults, we have seen that the extra sum of money allows them to travel further to jobs which they enjoy more, and therefore thrive more at. We shall see later on how UBI has performed in larger case studies and whether this is true.

The third issue presented by the libertarians is perhaps the greatest one of all that is associated with Universal Basic Income, and that is its affordability. Many people predict that UBI would lead to hyperinflation, but this could be avoided if money was shifted, and not created As we shall see, the costs associated with this economic phenomena are significant but, to try and solve this issue, we need to address the deeper question of how Universal Basic Income would fit into our societies, and what shape it would take.

Welfare state

The libertarian view on UBI, having proven it to be an acceptable economic system, is that it would be very expensive- most libertarians approximate the favourable fund to be around $10000 per person, monthly. However, this number is unsupported by evidence. In the US, author Edward Dolan has worked out the cost to be $4452 per person, monthly. This amounts to around 17.5 trillion dollars annually (13). Furthermore, in England, Georgetown academics found that, to eradicate poverty, it would take a UBI scheme with an approximate cost of 16.7 billion pounds per year (14). One of the possibilities to fund this is to abolish, or at least change, the Welfare system.

The current Welfare system costs the British government approximately 255 billion pounds35% of government spending. Moreover, on average, 172 billion of this is spent on state benefits which we have already evaluated to be less effective than a UBI, which would provide people a way out of extremis, thereby increasing economic productivity. We should also reiterate the criticisms which the Welfare system holds from the libertarian perspective only, including the unjust, unnecessary system of coerced charity which could lead to yet another financial crisis. However, the Welfare system has failed in many other aspects- not just its philosophy.

In the US in 1963, President Lindon Johnson announced that his aim is to build ‘A great society for the American people’, with the sheer focus of his campaign being to eradicate poverty. However, sixty years later, the US government has spent more than 25 trillion dollars and 12% (38 million people) of American citizens are still considered poor. Even if we look at poverty in a different way, placing more emphasis on the amount which people spend on food and counting welfare benefits as income, the number of people in poverty is still 4%- more than 12 million people (15). Moreover, Johnson’s aim was to shrink citizens’ dependence on the government but, as we saw, the ‘poverty trap’ results in people preferring to stay on welfare benefits rather than aiming to find a better job or, in the least, a job. Therefore, one can see how UBI is a much cheaper alternative which has proven to decrease poverty and encourage more people to work.

However, it is, of course, not as transparent as that. Many people will require more than the 4452 dollars that Ed Dolan proposes, or the 240 dollars per person which GeorgeTown University predicts in the UK. For example, the NHS- by many considered the core of the Welfare Stateprovides free healthcare for those who, in some cases, would otherwise have to spend enormous sums. The full budget for the NHS is around 120 billion pounds annually- with certain medicine, such as the recent purchase of LibMedley, having the list price of 2.8 million. However, speaking in terms of Britain, the 255 billion pounds which is spent on the Welfare system, after subtracting the cost of the NHS and UBI, would still leave 68 billion. Therefore, money would not be an issue in UBI, with the extra funds having the potential to fund the revival of the economy.

Furthermore, perhaps the biggest disadvantage with the Welfare System is that it is inflexible. The best example of this is the financial crisis in 2007-2008, where the welfare state was not able to support the number of mortgages which were taking place, and not being paid back. Of course, one cannot assume that UBI would definitely solve this issue but the evidence in the previous paragraph reveals that UBI would leave a sum of money which could save Britain during unexpected crises.

To summarise, the Welfare state has a lot of significant issues such as inflexibility, being ineffective in spending its money and coercive charity. Although we had previously proven that libertarians can work with coercive redistribution, it is only when it supports other core values, which does not take place in the case of the Welfare system. The Welfare state spends a lot of money unnecessarily, whilst it’s inflexibility also provides a risk of financial crises. On the other hand, Universal Basic Income could be a way of minimising the money spent, with greater effects on the eradication of poverty amongst other things, while therefore leaving a sum of 68 billion in the case of economical emergencies, such as a pandemic. Therefore, replacing the Welfare System with UBI could, although not definitely, provide numerous advantages whilst, as a result, making Universal Basic Income affordable.

Is UBI the best income distribution?

We have already explored the Nozickian Interpretation which suggests that UBI is the best basic income because of its social justice. However, there are of course many other examples of selective income. Furthermore, there is evidence which supports the idea that only the poorer section of society should receive the extra income. A study in the US found that, for every dollar invested into wage earners, an extra 1.22 dollars would be produced for the national economy whereas, for every dollar which was received by high income Americans, only 0.39 dollars would be produced (16). This shows that paying the poor would have a much more significant effect on the economy than also paying the rich. On the other hand, many also believe that top earners would, although not being more economically productive, be smarter with their money. At lowincome levels, an increase in income is likely to see a high marginal propensity to consume as people need to buy a lot of services, but high income earners tend to save more of their money as they already possess what they need (17). Although this evidence shows that other income distributions could yield more money or economic productivity, the issue of inequality then arises. It is quite difficult to draw the line between the rich and poor without creating conflict and disagreement. UBI, on the other hand, despite possibly leading to a smaller economic productivity, could still create a number of benefits without increasing inequality. Universal Basic Income has the potential to increase equality by giving the poor the opportunity to look for better jobs too, without the worry of other costs (such as transport or childcare).

Finland

Although many countries have conducted Basic Income experiments, Finland is the only country which has thus far conducted a true, nationwide, Universal Basic Income experiment. It is crucial to evaluate the progress which the new economic system has had on Finland to conjure up a conclusion about the true significance and effect which UBI could have. From 2017-2018, Finland conducted the UBI experiment where a group of 2000 randomly-picked, initiallyunemployed people received the unconditional payment of €560 monthly (18). This was then compared to a control group of 173000 who were on welfare benefits. The main aim of the UBI was to decrease unemployment and poverty, as well as to ameliorate people’s well-being.

Firstly, there was a statistically important, albeit small, increase in employment. The experiment showed that the people receiving Universal Basic Income were more likely to receive a job than the control group. Between November 2017 and October 2018, people receiving UBI worked an average of 78 days compared to those on unemployment benefits who worked six days less. This statistical difference clearly shows the increase in employment which UBI caused Even though this difference might not seem that significant, €560 was a tiny percentage of most Finnish households’ incomes so, to see a noticeable difference in employment, is very significant.

Perhaps the biggest effect which the study showed was how UBI had a huge boost on people’s well-being A survey found that average life satisfaction among the tested group was 7.3/10, whereas that of the control group was 6.8/10, which is a very large increase (19). To see a similar lift in well-being, McKinsey predicts that a person’s income would have to increase from 8002500 euros monthly The Finnish government states that the difference was large enough to erase the difference in life satisfaction between employed and unemployed people.

Therefore, one can see that Universal Basic Income had a significant impact on Finland, increasing both the economy and the citizens’ well-being. The €560 monthly allowed people to find the jobs which they enjoyed, even if they were lower-paid, and also made them much happier. As one woman reported, “I actually enjoy my job a lot. I love my co-workers, I love the office, I love the hours! I just love being independent and earning my own money, and standing on my own two feet. Basic Income has changed my life. Without it, I couldn’t have taken a job with a little lower salary.” (20)

Conclusion

In conclusion, Universal Basic Income has a lot of potential to take society to another level. It has proven to be capable of decreasing poverty, with countries such as Brazil reaching the lowest poverty levels since the 1980’s, and also to hold a huge economic impact- both on the younger generation, by encouraging more people to stay at school, and the older generation by encouraging them to look for better jobs without worrying about the costs. Most importantly, as seen in the case study of Finland, it can increase people’s well-being. The current economy has a lot of benefits, but a lot of disadvantages too. Covid-19 has already endangered 7.6 million jobs24% of the UK workforce- and the inflexibility of the welfare system makes it very vulnerable to financial crises, the impact of pandemics and, although it isn’t very probable, massive unemployment with the increasing presence of Artificial Intelligence. In the words of Elon Musk, Universal Basic Income ‘is going to be necessary’; it is the future of our society.

Bibliography:

Guy Standing, 2017: ‘Basic Income: And How We Can Make It Happen’, pages 3-11, 25-30, 5060, 73-79, 95-109.

Guy Standing: The Economist

Sarath Davala, et al: ‘A Transformative Policy for India’, 2015

Thomas Moore: Utopia, page 233

Ludovicus Vives, 1526: Letter to Mayor of Bruges

Thomas Paine, 1797: ‘Agrarian Justice’, pages 12, 25-30, 149, 294

Yuval Noah Harari, 2011: ‘Sapiens: A Brief History of Mankind’, Chapter 16

John Locke, 1689: Second Treatise of Government, paragraph 27, Chapter 5

Peter Vallentyne, 1991: ‘Contractarianism and Rational Choice: Essays on David Gauthier’s Morals by agreement’

Footnotes:

1: ProCon.org, ‘Universal Basic Income (UBI) – Top 3 Pros and Cons’

2: HistoryExtra, ‘The 2008 Financial Crisis Explained’

3: Josh Barney, Einsteinmarketer- ‘Only 15% of Employees are engaged. What Can Leaders Learn?’

4: Rasmus Schjoedt, 2016: ‘India’s Basic Income Experiment’

5: Graeme Paton, 2012, Telegraph: ‘fifth of British teenagers drop out of school at 26’

6: Teresa Bitler, 2021: ’10 States with the Most Mortgage-Free Homeowners’

7: Wikipedia: ‘Social Justice’

8: Neha Gupta, 2021: ‘Will AI take over jobs in the future?’

9: Belinda Robinson, 2013, ThisisMoney: ‘Jobs map of UK shows North-South divide growing: 200 times more difficult to find employment in Salford than in Cambridge or Aberdeen’

10: Sam Shead, 2021: ‘Silicon Valley leaders think A.I. will one day fund free cash handouts. But experts aren’t convinced’

11: Ben Dickson, 2020: ‘ The GPT-3 Economy’

12: PWC: ‘AI will create as many jobs as it displaces by boosting economic growth’

13: Bryan Caplan, EconLib.org: ‘Why Libertarians Should Oppose the Universal Basic Income’

14: Liam Geraghty, 2021: ‘Is a universal basic income ‘too expensive’ for the UK?’

15: The Heritage Foundation (YouTube): ‘America’s Biggest Issues: Welfare’

16: Kurzgesagt- In a Nutshell (YouTube): ‘Universal Basic Income Explained – Free Money for Everybody? UBI’. Time: 6:17-6:29

17: Tejvan Pettinger, 2019: ‘Marginal Propensity to Consume’

18: McKinsey & Company, 2020: ‘An experiment to inform universal basic income’

19: Donna Lu, 2020: ‘Universal basic income seems to improve employment and well-being’

20: BBC News (YouTube): ‘Did Finland's basic income experiment work?’