Universal basic income (UBI) is a concept that has gained momentum as a promising solution to end poverty worldwide. UBI is a system that provides every citizen, “regardless of income or employment status,” with a regular cash payment from the government. The idea is to provide a safety net that ensures “everyone has enough money to meet their basic needs, such as food, housing and health care” and to give people the freedom to pursue work that is meaningful to them.
Potential Benefits of Universal Basic Income
In many countries, poverty is a complex issue that is influenced by a range of factors, including unemployment, low wages, inadequate social services and discrimination. UBI aims to address some of these underlying causes of poverty by providing people with a stable source of income to rely on.
According to the World Bank, as of March 2023, 659 million people across the world live in extreme poverty, which is defined as living on less than $2.15 per day. UBI aims to provide these people with a basic level of income that can help them meet their basic needs and improve their standards of living.
One of the key benefits of UBI is income inequality reduction. In many countries, there is a widening gap between the rich and poor and UBI can help to narrow this gap by providing everyone with a basic level of income.
Studies and Pilot Projects
Studies have shown that UBI can reduce poverty rates, particularly among vulnerable groups such as children and the elderly. Research shows that a UBI pilot project introduced in the 1970s in the Canadian town of Dauphin led to a reduction in poverty rates and improved health outcomes as hospitalization rates declined by 8.5% in four years, mental health improved and more students completed secondary school.
UBI can also stand as a solution to end poverty by stimulating the economy. When people have more money to spend, they are more likely to invest in local businesses and contribute to economic growth. A study conducted by the Roosevelt Institute found that implementing UBI in the United States could boost the country’s GDP by as much as $2.5 trillion by 2025 by introducing an annual $12,000 per person basic income and this would increase the labor force by 4.5 to 4.7 million people.
In Finland, a two-year basic income pilot project that ran in 2017 and 2018 noted positive benefits. Participants reported improved well-being and mental health but no distinct benefits in terms of employment and productivity. Researchers at Helsinki University concluded, “The basic income recipients were more satisfied with their lives and experienced less mental strain than the control group. They also had a more positive perception of their economic welfare.”
Critics of UBI argue that it is too expensive and would be a disincentive for people to work. However, many UBI proponents believe that it could actually encourage people to pursue more meaningful work rather than being trapped in low-paying, dead-end jobs. UBI could also provide a safety net for those who are unable to work, such as people with disabilities or caregivers.
One of the major challenges with implementing UBI is funding. Some UBI proponents suggest funding the program through a wealth tax or by redirecting funds from existing social welfare programs. Others suggest that governments could fund UBI through revenue generated by a robot tax, which would tax companies that use automation to replace human workers.
The concept of UBI is not without criticism and there are concerns about the impact it could have on government budgets and other social services. However, many UBI proponents argue that the potential benefits, including reduced poverty rates and improved economic growth, outweigh the costs. Proponents believe that UBI is a forward-thinking solution that could transform the way society addresses poverty and inequality.
Furthermore, UBI has the potential to reduce the stigma associated with receiving social welfare benefits. Currently, some people are reluctant to access social welfare programs due to the social stigma attached to receiving government assistance. UBI would dissolve this stigma as everyone would receive regular cash payments from the government. This could encourage more people to access social welfare programs, leading to better outcomes for vulnerable populations.
UBI is a promising solution to end poverty and reduce income inequality. While there are still many questions about implementation and funding, pilot projects around the world show promising results. UBI has the potential to reduce poverty rates, stimulate the economy and provide a safety net for those who are unable to work. As the world continues to grapple with the complex issue of poverty, UBI stands as an approach that could transform the lives of millions of people.
– Sarmad Wali Khan