“A primary justification for a basic income is social justice.”
Guy Standing, Actor
Pros and Cons of Universal Basic Income
Universal basic income (sometimes also referred to as UBI, basic income, basic income guarantee or guaranteed annual income) refers to government payments that will be paid to the general public without the need to work.
Unconditional basic income schemes are currently tested in a few countries on our planet in order to access the reasonability of those programs.
Although there are some advantages related to basic income programs, there are also some problems related to them.
In this article, the pros and cons of universal basic income are examined.
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Contents
Advantages of Basic Income
- Many jobs will no longer exist in the future
- Basic minimum income for people has to be assured
- Can be considered as some kind of social security scheme
- Money without the need to work
- May mitigate the exploitation of workers
- Reduction of homelessness
- Companies may have to provide better incentives
- People may follow their passions
- Good measure to get people out of poverty
- Better education opportunities
- Potential increase in average wages
- Pensioners may have fewer financial problems
- Simple and transparent welfare scheme
- Good foundation to start a business
- More leisure time to mature in character
- Basic income may empower minorities
- Government support would be more socially accepted
- People can get out of bad family conditions easier
- People could take better care of their older family members
- Higher level of overall freedom
Many jobs will no longer exist in the future
One important advantage of the universal basic income is that it will provide people with a minimum living standard, even if they get unemployed and do not find a job anymore.
In our current state of the world, we will not need many jobs anymore due to our rapid technological progress since machines will soon be able to carry out our standardized manual tasks.
However, people who currently work in those jobs and are no longer needed anymore in the future will still have to cover their basic expenses.
For those people, basic income is a great tool to still get money even if they will no longer be needed in the workforce.
Basic minimum income for people has to be assured
In general, there are many people around the world who are not able to work for various reasons and a universal basic income may help those people to facilitate their lives since they do no longer have to fear financial issues since they know that they get minimum support.
Hence, introducing a universal basic income can also help to ensure a minimum level of amenities for people all over the globe.
Can be considered as some kind of social security scheme
Universal income can also be considered to be some kind of welfare or social security scheme and it might replace those other rather complex and non-transparent social security schemes out there in the long run.
It is pretty simple to just offer every person a minimum amount of money which can be spent on all things of daily life and there would not be a need for too many different welfare schemes anymore due to the introduction of a basic income for everyone of us.
Money without the need to work
Let’s be honest. Many of us do not like their jobs too much and the idea to get money even without having to work for it might be quite tempting.
Wouldn’t it be great if you can just get up in the morning without having to go to work and rather to spend your time on your hobbies and other things that you really like instead?!
Thus, universal basic income may also give us much more time to focus on things we really want to do instead of going to work to our sad jobs on a regular basis.
May mitigate the exploitation of workers
Introducing basic income schemes may also help to exploit workers on a global scale.
For instance, if there is a certain minimum guaranteed income that is paid to the general public from the government, there is less need for people to work in jobs that only offer quite poor conditions and low wages.
The exploitation of workers always happens in regions where people do not have a choice since they have to make money in order to survive, independent of how bad working conditions might actually be.
Hence, through the implementation of universal basic income programs, many workers that are currently exploited might be able to quit their work and to escape those poor conditions.
Reduction of homelessness
Homelessness is another significant global problem which could be mitigated through the introduction of basic income systems to a certain extent.
While many people all over the world may not be able to pay their rent anymore once they become unemployed and may end up in the streets, universal basic income can cover those people since they will get money from the government, independent of whether they have a job or not.
In turn, the risk to suffer from homelessness may decrease as well and the overall quality of millions of people on our planet may increase due to that.
Companies may have to provide better incentives
Since people get a certain minimum income from the government, they will have less incentive to work for a company, unless the company offers them greater incentives to do so.
Therefore, in order to have sufficient workers, companies all over the world might have to provide much better incentives for people so that they are willing to work for the company instead of just staying unemployed.
Hence, the introduction of basic income schemes may also improve the overall working conditions as well as other monetary incentives for workers.
People may follow their passions
Another important advantage of the universal basic income is that more people will follow their passions instead of money.
In our nowadays society, many people are so insecure and urgently try to make as much money as possible, even though they might hate their jobs.
However, by introducing a minimum level of basic guaranteed income, people may not work in jobs that they don’t like anymore since they know that they are covered in case of emergency and therefore, more people might find their courage and try to work in jobs they actually like.
Good measure to get people out of poverty
Another upside of basic income is that it can get many people around the world out of poverty.
Still, up to this day, billions of people on our planet suffer from lower income levels and most of them will never be able to get out of poverty since they can’t save and invest enough money.
Therefore, by setting a minimum basic income to a level where people will actually be able to invest money in assets or also in themselves, more people might have the opportunity to get out of poverty in the future and to create a better life for them and for their children.
Better education opportunities
Through the implementation of basic universal income schemes, people might also get much better access to education.
If people get a minimum income, they do not have to work anymore and can take courses in school or college instead, which may significantly improve their education levels.
In turn, better education is also strongly correlated with a higher average income.
Thus, in order to end the vicious circle of low income, a lack of education and poverty, we have to give people the opportunity to get proper education so that they will earn more money and can get out of poverty on their own in the long run if the overall framework allows them to do.
Potential increase in average wages
Since people can be pickier due to the introduction of a universal basic income since they do no longer have to rely on low-wage jobs, the overall wages might also increase significantly since companies have to raise the incentive for people to work for them instead of just being unemployed and getting their money from the state.
Consequently, basic income schemes may also help to increase the overall salaries of millions of people on our planet.
Pensioners may have fewer financial problems
In many countries across the globe, there is a high number of people who are not able to cover their basic expenses since their pensions are simply to low.
For those people, basic income schemes might be a great tool since they would get sufficient income from the state and would not have to worry about how to cover their basic expenses anymore.
Therefore, also for pensioners, the introduction of universal income schemes can be quite beneficial.
Simple and transparent welfare scheme
Another advantage of basic income plans is that they are quite simple to understand and to implement.
While other welfare schemes can be quite hard to understand and may also involve plenty of administrative work, basic income schemes are really easy to implement and also easy to communicate to the general public since the mechanism of those schemes is such simple and the general public will understand how it works.
Good foundation to start a business
In case you want to start a business, you will face many serious problems that you have to overcome somehow in order to make your business successful and to avoid failure.
One of the most important tasks when you found a business is that you have sufficient financial reserves so that you will not run out of money soon after you started.
Even the best ideas need time to develop and to implement and if you run out of money before you become popular, your business will still fail. It is therefore crucial that you have enough financial measures to overcome a certain period of time in which you will have no income at all.
The implementation of universal basic income can also help you in this regard since you will get a minimum amount of money from which you can pay your basic expenses like rent and food and you will have more time to promote your products and work on your business so that it can take off in the near future.
Moreover, basic income guarantees also give you some kind of security.
Most startups fail in the first years and in this case, you need a backup plan to cover your expenses.
Thus, basic income guarantees are also a great way to provide those financial backups to founders.
In turn, more people may have the incentive to start their own businesses and our technological progress will likely speed up due to that.
More leisure time to mature in character
Many people in our nowadays society just go from school to college, from college to work and stay in their jobs for the rest of their lives.
However, what’s completely missing in this framework is the possibility to really develop your own character, to think about what you want to do with your life and to act according to that instead of just following the mainstream movement like a dumb machine.
A universal basic income will give you the opportunity to go for your passion instead of money since you can always be sure that your basic expenses will be covered.
Therefore, you might also have much more time to mature, to learn new things and you will also be able to better decide what you want to do for the rest of your life.
This may not only be quite beneficial for you to develop your character, but it may also turn into a higher income over time since if we do what we love, we will automatically work much harder on it and the chances for promotions will increase significantly.
Basic income may empower minorities
In many countries all over the world, minorities still have a quite hard time to go for their dreams since they often suffer from significantly worse chances on the job market.
Therefore, they are often quite dependent on their employees and have to work under quite poor conditions.
Moreover, in countries where women still have not equal rights compared to men, those women might also be quite financially dependent on their husbands and will not be able to get out of an unhappy marriage due to that.
By introducing basic income schemes, we can empower those minorities since they will be able to get basic income and may no longer be dependent on their job or their spouse in order to survive.
Government support would be more socially accepted
In our current state of the world, it is still considered to be rather dodgy to enjoy the benefits of government support since people often think it is not the right way to go and that we should work instead to earn money instead of having to rely on the government.
However, in a state where everyone will be eligible for basic income payments, chances increase that this income scheme will have a higher social acceptance in the future.
People can get out of bad family conditions easier
In general, many people all over the world suffer from extremely poor family conditions and many women would have left their husband a long time ago if they were able to sustain themselves financially.
Therefore, in order to give those women the opportunity to get out of their unhappy relationships, universal basic income can be a great measure to give those women the chance for a happier life.
People could take better care of their older family members
Since our medical systems continue to improve, so does our overall life expectancy.
We will soon have a much higher fraction of old people in our society and we have to take care of them somehow.
When you work in a demanding job, you will not have the opportunity to take care of your old parents too much.
However, with basic income, you might be able to quit your job and to take care of your elderly relatives.
Higher level of overall freedom
In general, our overall level of freedom would significantly increase through the implementation of basic income schemes on a large scale since we would have more time for things we actually want to do instead of just doing them for money and missing out on things that might be actually most important in life.
Disadvantages of Universal Basic Income
- Laziness might increase
- Incentive to work may drop
- Overall GDP may decrease
- Enormous burden for government finances
- Money may be missing for other important projects
- Basic income schemes may not be sustainable in the long run
- Rich people might not need a basic income
- May be considered to be unfair
- Possible necessity to introduce higher tax rates
- Part-time work would almost completely vanish
- People may lose the ability to work hard
- Inflation issues
- May give flawed incentives for immigration
- Might be too low to make a difference in expensive cities
- Mental problems
- Unclear long-term effects
Laziness might increase
Apart from the many important advantages of basic income schemes, there are also some problems related to it.
One downside of basic income is that it might significantly increase the level of laziness of people.
If you get money, independent of whether you go to work or not, many people might just decide to stay at home instead of going to work, even if this implies a humbler lifestyle.
However, as humans, we should strive for a certain level of excellence since we have many environmental problems to solve and we should all take some effort to do so.
Laziness can be quite bad for those goals and basic income schemes may not be a good idea to that.
Incentive to work may drop
In general, the overall incentive to work and to achieve things may also drop significantly.
People may just stay at home, lying on the couch and watching TV or using streaming services until the day is over and they can go back to bed.
Thus, basic income schemes can lead to flawed incentives that not only take away the incentive to work, but may also lead to quite a poor quality of life for people who do no longer have a goal in life.
Overall GDP may decrease
Since fewer people will work in a job, also the overall GDP per person might decrease significantly. In turn, the average income and wealth levels might also decrease.
In the long run, tax revenue will decrease as well and it might no longer be possible to continue this basic income scheme due to insufficient tax revenue.
Enormous burden for government finances
For many countries, the financial burden that is implied by the introduction of universal basic income systems might be far too high and therefore, it will not be realistic in many countries all over the world to implement those basic income schemes since they would simply be far too expensive.
Money may be missing for other important projects
Since basic income is quite expensive from a public spending perspective, the money that has to be spent on those schemes might be missing for other important infrastructure projects like repairing roads, building schools and so on.
Therefore, it might not be a good idea to spend significant tax income on basic income schemes since other important infrastructure projects may no longer be affordable for the state.
Basic income schemes may not be sustainable in the long run
Due to the vast amounts of taxpayers’ money that has to be spent on universal basic income schemes, those schemes may simply not be sustainable in the long run for most countries all over the world.
Hence, although they might seem like an interesting theoretical construct, universal income schemes may fail in practice.
Rich people might not need a basic income
Another downside of basic income schemes is that also rich people would get a monthly payment.
Yet, those people do not need money at all since their wealth is often enormous and there is no reason to support those rich people even more since they can take easily take care of themselves from a financial standpoint.
Therefore, basic income schemes may also benefit people who actually do not need the money at all.
May be considered to be unfair
Opponents of basic income often also claim that this kind of universal unconditional income can be considered to be unfair since money without work cannot be justified.
Thus, also from a fairness perspective, the implementation of universal basic income schemes can be considered to be rather questionable.
Possible necessity to introduce higher tax rates
In order to finance those basic income policies, governments all over the world may also have to increase tax rates.
However, this would take away more money from people who work and the incentive to get a job would become even lower due to that.
In the end, most people may decide not to work anymore, which can lead to disastrous outcomes for an economy.
Part-time work would almost completely vanish
Part-time jobs will also likely vanish completely since it will simply not be worth it anymore to work in such jobs since you will likely get similar amounts of money by staying at home and getting a basic income from the government.
People may lose the ability to work hard
People can learn and can also unlearn to work hard for their goals.
However, if the incentive to work hard is taken away from people due to the introduction of basic income schemes, people may lose their ability to work hard and in crises times when those basic income schemes may no longer be sustainable, people may be rather helpless and might not know what to do since they have become dependent and used to income without having to work for it.
Therefore, it might be quite dangerous to push people in a direction where they might lose their drive.
Inflation issues
Since government spending and debt will likely increase due to basic income schemes, central banks might have to print more money in order to indirectly finance government debt, product prices may increase significantly.
Thus, inflation may be fostered through basic income schemes, which may lead to pretty bad economic outcomes in the long term.
May give flawed incentives for immigration
If those basic income schemes are not set up properly, people from poor countries may have a great incentive to migrate to rich countries in order to profit from those basic income payments.
Therefore, the implementation of basic income schemes may also lead to flawed incentives for economic migration movements.
Might be too low to make a difference in expensive cities
Even if those basic income policies are introduced, the money people get from the government may not be enough to cover their basic expenses, especially in expensive cities where rents are quite high.
Thus, those policies may be rather ineffective and may be useless in some regions of our planet.
Mental problems
People who get a basic income may also suffer from serious mental problems since they might just watch TV all day long and may completely lose connection to the outside world.
Moreover, if people do not have goals in life, they might mentally suffer since their brainpower will become significantly lower over time.
Unclear long-term effects
Since the concept of universal basic income is rather new, there had not been extensive studies on it yet and the long-term consequences are still rather unclear.
Therefore, we might want to wait with the implementation of those schemes until more empirical research has been done on this topic in order to avoid any unpleasant outcomes in the long run.
Top 10 Basic Income Pros & Cons – Summary List
| Basic Income Pros | Basic Income Cons |
|---|---|
| Reduction in poverty | Universal basic income implies huge costs |
| Better working conditions | People might get lazy |
| Less homelessness | Can be considered kind of unfair |
| Higher wages on average | Decrease in GDP |
| Lower stress levels | Government may run out of money |
| Good to build a business | Lower tax revenue |
| Constant salary | Need to increase tax rates |
| We can stop working | Mental issues |
| Better education opportunities | Inflation |
| People can follow their passions | Long-term effects are yet unclear |
Does Universal Basic Income Make Sense?
As we can see from the previous discussion, there are many advantages and disadvantages related to the universal basic income.
Due to our rapid technological progress, we will lose many jobs in the future and people who are no longer needed in the workforce may need some basic income to survive.
However, the implementation of those schemes should be done in a quite elaborated manner so that the positive effects of basic income schemes can be maximized and the negative effects can be minimized.
Sources
https://en.wikipedia.org/wiki/Basic_income
About the author
My name is Andreas and my mission is to educate people of all ages about our environmental problems and how everyone can make a contribution to mitigate these issues.
As I went to university and got my Master’s degree in Economics, I did plenty of research in the field of Development Economics.
After finishing university, I traveled around the world. From this time on, I wanted to make a contribution to ensure a livable future for the next generations in every part of our beautiful planet.
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