Basic Income (UBI) Pros and Cons

Universal Basic Income (UBI) is currently being trialed in Wales UK, should we be debating the efficacy of Universal Income?

The concept of universal basic income is nothing new, but has become a much more significant talking point over recent years.

Back in 1967, Martin Luther King Jr. proclaimed that the introduction of a guaranteed income scheme would wipe out poverty in the United States. More recently, Sir Richard Branson has stated that such a scheme will eventually become inevitable, as automation transforms the face of the global job market.

Elon Musk has also said that the world will eventually rely on universal income, given how a time will come when robots will put the vast majority of people out of work.

Universal basic income is a controversial topic and has a tendency to divide the public down the middle. Even when the pros and cons of UBI are considered from an objective perspective, there remains no simple solution that is likely to please everyone.

What is Universal Basic Income?

Universal basic income refers to a type of initiative where every citizen receives a flat payment each month from the government, irrespective of whether they work and how much they earn.

Different UBI proposals have different policies and restrictions with a garter who gets the payment and who doesn't. For example, some would restrict payments only to those who fall below a certain income level, while others propose the same payment to all citizens irrespective of such factors.

Pilot UBI schemes are either underway or have already taken place in a number of countries and territories worldwide, including Brazil, Canada, China, Finland, Germany, India, Iran, Japan, Kenya, Namibia, Spain, The Netherlands and The United Kingdom (in Wales).

One of the most successful UBI initiatives to date has been the Alaska Permanent Fund (AFP), which since 1976 has paid dividends to all permanent residents of Alaska derived from oil revenues. The country's oil sector performance each year determines how much each resident receives, which over the years have varied from $2,072 in 2015 to just $331.29 in 1984.

The Benefits of Universal Basic Income

Where a UBI initiative achieves its objectives, it has the potential to be beneficial in the following ways:

•  Problems with poverty can be minimised or eradicated

•  Homelessness can be tackled more effectively

•  Citizens can pursue their education goals with greater freedom

•  It becomes financially possible to leave work to care for a relative

•  Members of the workforce can wait longer for better job opportunities

•  Young couples may be more motivated to start families

•  The economy of the country is stabilised during subsequent recessions

The Drawbacks of Universal Basic Income

On the downside, critics argue that even the most effective UBI initiative would be flawed in the following ways:

•  Over reliance on government handouts can become problematic

•  Small payments may not make enough difference to combat poverty

•  The prospect of free money could affect motivation to work

•  Increase in demand for goods and services could trigger inflation

•  Many people are opposed to handouts for the unemployed

Whether the benefits outweigh the downsides is a matter of personal opinion, fuelling a debate that is unlikely to subside anytime soon.

But if the predictions of influential figures like Elon Musk and Sir Richard Branson are correct, UBI schemes are set to play a major role in the world's increasingly automated future.