The idea of giving some, or all, citizens enough money to meet their daily needs was once decidedly fringe. Not anymore. Now, everyone is talking about universal basic income (UBI), including Silicon Valley, the media, numerous pundits, and even some politicians. Several large trials–particularly in Kenya, Canada, and Finland–began this year, and more are planned for 2018.
But is UBI actually a good idea, or is it an unrealistic, expensive pipe dream? Will it really “solve poverty,” as its fans claim, or will it just blow up the federal budget? Is it practical as a political matter? And, what might be its unforeseen consequences–say, on economic growth?
In this excellent explainer video, you can get a quick sense of the arguments and make up your own mind. The video, which comes from Kurzgesagt, a popular German video studio that funds itself from online patronage, goes through why UBI is attractive to a broad range of people, the different ways it could be implemented, and the big arguments for and against it.
The arguments in favor of a basic income–for instance, $1,000 a month to all citizens–go like this: It could lift people out of poverty, so they have enough money for food, clothing, and shelter. It could help streamline the welfare state by taking lots of government programs and converting them into a single payment. It could give people more autonomy to make their own decisions and allow them to do jobs that are fulfilling and meaningful.
The arguments against: Giving people free money inevitably makes them lazy. It leads people to drink and take drugs and watch TV all day. And we can’t afford it, especially as we already have massive public debts and politicians that are wedded to other priorities, like lowering taxes and reforming health care.
The video points out that the drinking and drugs argument has largely been refuted by now. An exhaustive World Bank review in 2015 found that in conditions of free money, low-income people tend to advance their lives through investments in themselves and their families, rather than turn to self-indulgence (in fact, richer people are more likely to spend money on drugs).
The explainer shows the big difference between UBI and traditional welfare. The latter is often a “trap,” conditional on not working. If recipients want to earn more than their monthly welfare check, they can lose everything. If they want to go off welfare and accept a job, they need to cover the attendant costs of work (e.g. transit, childcare, and taxes), which might make them poorer overall.
With UBI, recipients get the $1,000, tax-free, in all circumstances. They can use it to get a better job, to earn more money, and to improve themselves. “Instead of a ceiling, it creates a floor from which people can lift themselves up,” the video says. “We would still have poor people, but we could eliminate fear, suffering and existential panic for significant numbers.”
Some big questions about UBI remain unanswered, including how the entire U.S. could have a single, flat payment when living costs vary so much state by state, region by region. Also, when people talk about “streamlining welfare” to pay for UBI, do they mean eliminating everything (including, say, Medicaid) or just some less effective programs? If so, which programs would they keep?
Though UBI has a long history (Thomas Paine, in the 18th century, called for a “citizen’s dividend”), it’s really a new idea that’s only being tested now, and only in a piecemeal, localized fashion. It’s going to take time before we have the necessary data to make an informed decision about its wide-scale feasibility. “There needs to be a lot more research–more and bigger test runs,” the video says. We need to think of what UBI we want and what we’re prepared to give up to pay for it.”