Explaining Universal Basic Income – Its Positives and Negatives


Universal basic income is the minimum money that the government gives to each citizen. It’s a government guarantee that each citizen of a particular country receives a minimum income. So why does a government of any country give money to its citizens? UBI intends to provide each citizen a basic cost of living and financial security.

A universal basic income is a periodic payment that is unconditionally send to the citizens with any work requirement.

Here the above statement has 5 characteristic:

  1. Periodic – Payment made monthly.
  2. Payment – Mode of payment can be cash or via bank transfer. 
  3. Individual – It is made on an individual basis. 
  4. Universal – Equal amount is made to each individual. 
  5. Without work requirement – No string, no work is demanded in exchange of money. 

This basic income can be implemented on national, state or at regional scale. It helps the people in living a basic life, that is sufficient to meet their daily needs. 

Why Universal Basic Income or UBI Requires?

In the year 1967, Martin Luther King Jr. once said that a guaranteed basic income will help in reducing income inequalities and it will end poverty. 

Not only Martin Luther King Jr., many other famous influencers like Richard Branson, Elon Musk, etc, are in favour of universal basic income. 

Technology & Its Disadvantages

As we all know technology is its peak in innovation. We are using technology in our daily life, businesses are also not untouched with the benefits new technology is providing. This will not only reduce the manpower but come out to be more effective and productive. Business will always stand with the cost effective and productive methods, their solution lies in the emerging technology. 

Technology not only eased out our working process but contrary it is now becoming our potential competition and threat towards employment. Artificial intelligence is rapidly reducing the human capital requirements in different fields.

Pandemic Crisis

The crisis created due to covid-19 virus forced all world economies to shut down, it changed the industry revolution. With the sink in the economy leads to high unemployment rate, with almost all industries have cut down even shut down their process. 

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The poverty rate, unemployment rate was at its peak before the corona virus outbreak but it becomes worse due to the lockdown. Data shows that the global economy is worse than the “Great depression”. The economic superpower United States has declared a national emergency. Some countries are now opening the lockdown with some guidelines to review their economy, but this will be very difficult to maintain until any “vaccine” is not developed. 

Due to this pandemic crisis the world will be changed, so as the industry will be changed also. Where employment cuts, social distancing, use of machinery will be the most important part. 

 Cash is the best thing you can do to improve health outcomes, education outcomes and lift people out of poverty. 

Facebook founder Chris Hughes said.

Possible Positives

  • People can spend more on their health and lifestyle
  • It opens the door for the right employment opportunity
  • People can wait for the good wage employment
  • For the developing country where basic necessity is more important than education, this will change.
  • With the direct transfer of cash, the government has to spend less to administrator the program.
  • It will help the young couple to start a new and improved life.
  • Economy will be stabilized.
  • It will cut down the bureaucracy
  • People with money in hand can spend more quality of time with their families.
  • There will be no compulsion to choose a full-time job.
  • People can choose part-time jobs and can spend time and money on education or in skill development.
  • Family savings will get tripled.

Possible Negatives

  • People will get lazy to work.
  • Inflation will be increased due to high demand and supply
  • The standard way of living will be short tempered due to several consequences created.
  • It will make people hate for the job due to free cash they will get monthly.
  • Jobs will become another source of income for the handful people.
  • It will lead to over dependence..
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Where will this money come from? 

Before going forward we need to clearly understand that the Government spends huge amounts on different schemes for the citizens of his country like healthcare, sanitary, education, etc. If the amount spended in these schemes can be directly given to the people then people will have different choices to spend the amount. People with health problems will spend on health care, poor people will spend on the standard of living. 

Here is a basic calculation:

The population of United states is 328.2 million

Government spend per person/ per year – $10,000

Government spends on the total population in a year – $3 trillion.

For the economic superpower it is just 3% of its annual GDP.

Some experts believe that this cost will be much lower than the estimate, as the richer people will give back the money to the government via tax and the same applies to the other section of the society.

Questions to Ask? 

Q.1 Is a Universal Basic Income Program Worth the Costs?

Ans. With the two-year experiment in Finland, UBI does not impel people to work. Yes it is worth the cost, people are spending more on health. 

Q.2 Is it Improving Employment?

Ans. Universal basic income allows people to choose good employment, rather than poverty as an obstacle in choosing the right employment for them. This indirectly helps their productivity and skills in their chosen employment. 

Q.3 Is universal basic income the answer to the inequalities in income?

Ans. Yes universal basic incomes allows people to live life in equality, it fills the gap that occurs due to the inequality in the income.

Q.4  Is it just a theoretical aspect?

Ans. The answer is no. Many countries are planning to implement universal basic income due to current economic conditions.

Acknowledgement: Thank you Mr. Dhruv Rathee for his amazing and informative video on Universal Basic income that encouraged me to briefly explain the complexities and easiness associated with the basic income.