Universal basic income would have a huge impact on the U.S. economy and the idea is gaining momentum and support recently from figures like Hilary Clinton, Mark Zuckerman, and Elon Musk.
Universal basic income, or UBI, could be a solution to technological unemployment and could streamline government, giving citizens more autonomy over how they spend their money.
A basic income (also called basic income guarantee, Citizen's Income, unconditional basic income, universal basic income (UBI), or universal demogrant) is a form of social security in which all citizens or residents of a country receive a regular, unconditional sum of money, either from a government or some other public institution, independent of any other income Wikipedia
According to the Roosevelt Institute who conducted a study on the economic effects of implementing a UBI, in every scenario, there is an increase in output, employment, prices, and wages.
In the study they examine three versions of unconditional cash transfers:
For each of the three versions, they modeled the macroeconomic effects of these transfers using two different financing plans - increasing the federal debt or fully funding the increased spending with increased taxes on households.
The results were interesting.
For all three designs, enacting a UBI and paying for it by increasing the federal debt would grow the economy.
Under the smallest spending scenario, $250 per month for each child, GDP is 0.79%, larger than under the
baseline forecast after eight years.
According to the Levy Model, the largest cash program - $1,000 for all adults annually - expands the economy by 12.56% over the baseline after eight years.
After eight years of enactment, the stimulative effects of the program dissipate and GDP growth returns to the baseline forecast, but the level of output remains permanently higher.
When paying for the policy by increasing taxes on households, the Levy model forecasts no effect on the
economy. In effect, it gives to households with one hand what it takes away with the other.
However, when the model is adapted to include distributional effects, the economy grows, even in the tax-financed scenarios. This occurs because the distributional model incorporates the idea that an extra dollar in the hands of lower-income households leads to higher spending.
In other words, the households that pay more in taxes than they receive in cash assistance have a low propensity to consume, and those that receive more in assistance
than they pay in taxes have a high propensity to consume.
Thus, even when the policy is tax- rather than debt financed, there is an increase in output, employment, prices, and wages. credit
The question most people have when the idea of giving each citizen a guaranteed monthly income is,
How will we pay for it?
The U.S. has a population of 323,100,000 people and of those 125.9 million are adults which means to give every adult citizen a basic income of $1,000 each would cost $125.9 billion a month or $1,510,800,000,000 trillion per year. That is about 10% of the U.S. GDP.
The cost of funding a national UBI would amount to about 39% of the budget.
According to NationalPriorities.org These trillions of dollars make up about 21 percent of the U.S. economy (as measured by Gross Domestic Product, or GDP).
It's also about $12,000 for every woman, man, and child in the United States.
If we look at the costs of programs like:
A universal income would dramatically offset these costs and all indications point to a more productive society.
Saving even a fraction of these costs alone could add up to well over the $1,000 per month given as a UBI to every adult in the country.
It seems to me that we are already paying for it in a sluggish economy, aid programs like food stamps and welfare, unemployment insurance, and a host of other economic crutches in our society.
Simply giving people some money would solve many of the concerns our economy faces while boosting the economy and consumer spending.
The same people that argue that a monthly allowance to citizens would lead to an epidemic of lazy people sucking the government tit, ignore the fact that those who are barely making enough to survive are more likely to turn to crime and drugs which cost the economy millions each year and does little to grow the economy.
Simply put, a junkie on the street with some cash in his pocket is better for a society than a broke one and far less likely to resort to crime. One way or another, we as a society are paying for it.
For our government to point the finger at someone on welfare and accuse them of living off of the government is the height of hypocrisy when compared to the military and corporate welfare state we find ourselves in.
For the majority of citizens though, studies show that they would remain productive even if they did get a monthly stipend. Some would argue they may even become more productive once their basic needs were met.
In some UBI trials done in Dauphin, Canada, and Oakland, California researchers found that households breadwinners as a whole reduced their workloads by about 13% and women reduced their workload only slightly more, devoting their time to caring for children or the elderly.
Teenagers spent more time pursuing an education rather than getting part-time jobs and there was a noticeable decline in the high school dropout rate.
Work, it seems, has more meaning than just a paycheck for most people and offers a means to contribute to society. For those who did choose not to work, they turned their attention to other meaningful endeavors.
Some of the most inventive people in our history were able to come up with novel and useful ideas in part because they did not have to earn their keep or be concerned with making ends meet.
Descartes, Darwin, Galileo, Adam Smith (to name a few) all did not have to work in the conventional sense to make a living. They were gentlemen of leisure but their contributions were not what one would call lazy.
Contrary to conventional wisdom, scientific studies have shown that when the concern of money for basic necessities is taken off the table, when people do not have to worry about money for food, health, and shelter, they become more productive, not less.
We have the strongest military in the world in part because as a nation we fund it. About 54% of the national budget currently goes to military spending. I'm not sure how many bombs it takes to blow up the world but I think we have enough to do it several times over.
We could afford to pay each adult $1,000 a month and reap the benefits of a stimulated economy, fewer costs for social services, homelessness, crime, and unemployment. All we have to do is fund it.
Learn more about Basic Universal Income here
