Published on 09/04/23
The contemporary political landscape is marked by the persistent challenges of rising poverty, social welfare, and the equitable distribution of wealth. In the 1960s, economist Milton Friedman put forward what appeared to be a promising solution to the complex issue of social welfare—a concept known today as Universal Basic Income (UBI). This approach entails the government providing unconditional monthly stipends to all legal citizens, with the aim of assisting them in meeting their basic financial needs. In recent years, as wealth inequality has grown and unemployment remains a pressing concern, support for the implementation of UBI has gained significant momentum, particularly following its advocacy during the 2020 presidential campaign of Democratic candidate Andrew Yang. While critics emphasize the high costs associated with UBI, there are compelling reasons why the United States should proceed with the implementation of a UBI program, offering $1000 to all legal citizens, given its potential to significantly reduce poverty and promote gender equality.
One of the primary arguments in favor of UBI centers on its positive economic impact. Poverty has long been an intractable issue in American society. According to a report from the Census Bureau, in 2021, more than 37.9 million Americans, equivalent to 11.6% of the population, lived below the poverty line ("National Poverty in America"). UBI presents a straightforward solution to this challenge: providing individuals with financial assistance to meet their basic needs. This direct support can lift individuals out of the depths of poverty and enable them to regain financial stability. UBI's success has been demonstrated in numerous pilot programs around the world. In Namibia, for instance, a UBI pilot program from 2007 to 2012 reduced poverty from 76% to 37% within a year, with recipients reporting reduced stress and improved mental well-being (Haarmann). Irene, a participant in the GiveDirectly UBI program in Kenya, attested in a YouTube interview that she was able to support her daughter and afford her own school tuition thanks to UBI (Irene).
Critics of the UBI system often point to Finland's failed experiment as evidence against its viability. However, it is essential to consider the specific circumstances surrounding Finland's UBI trial, as highlighted by Jimmy O'Donnell, a senior researcher at The Brookings Institution. The Finnish program was poorly designed, operating on an inadequate budget of €20 million and being rushed from the start (O'Donnell). As The New York Times aptly put it, "Universal Basic Income did not fail in Finland. Finland failed it" (Jauhiainen and Mäkinen). Therefore, it is inappropriate to extrapolate the failure of one specific UBI program to other countries. In contrast, UBI trials in the U.S. have consistently reported positive results. For example, a 2016 report from the University of Alaska found that the state's own UBI spin-off, the Permanent Fund Dividend, reduced poverty by up to 20%. UBI not only reduces poverty but also improves overall well-being, as seen in the increased life satisfaction, reduced stress, and enhanced optimism reported in various trials. For instance, Kenya's UBI trial resulted in an increase in life satisfaction and a significant decrease in stress and negativity (Haushofer and Shapiro). In Namibia, the implementation of a UBI system led to a 40% reduction in dropout rates among students who could now afford school fees. In the United States, implementing UBI could be expected to yield significant results in the battle against poverty.
Furthermore, the implementation of UBI can contribute to gender equality. There are two dimensions to this argument. Firstly, UBI empowers women to become financially independent. According to Lorena Lombardozzi, an economics professor, providing a UBI to women could bypass the traditional male dominance over household finances, granting women greater financial autonomy (Lombardozzi). This results in increased decision-making power for women within their households. The UBI pilot program in India from 2013 to 2014, conducted by SEWA Bharat and UNICEF, demonstrated a significant increase in women's bargaining power and decision-making within households, along with greater access to basic needs and utilities (Khosla). Moreover, it supports victims of domestic violence by eliminating a significant barrier to leaving abusive relationships. Women's Aid highlights the financial dependence that often keeps domestic violence victims trapped in abusive situations. By providing financial independence, UBI can ensure that no woman is financially reliant on her partner for her basic needs, thereby removing a significant obstacle to leaving abusive relationships. Empirical evidence supports this claim, as demonstrated in Canada's Mincome UBI trial in the 1970s, which led to an 8.5% reduction in hospital and emergency room visits related to domestic violence over a five-year period (Moore). Thus, implementing UBI in the U.S. has the potential to significantly enhance gender equality.
Although critics highlight the high cost of UBI, this argument relies on the false premise that a tax increase is necessarily detrimental. In the U.S., where a progressive tax system is in place, higher-income quartiles are taxed more heavily based on their financial capacity. By increasing taxes, wealth can be redistributed from the rich, who are less financially vulnerable, to the needy, who require financial assistance. Recent research by economist Howard Reed, the director of economic research at Landman Economics, suggests that the costs of implementing UBI can be offset by additional revenue generated from changes in tax rates and National Insurance Contributions (NICs) (Reed). Thus, in the long term, the economic benefits associated with UBI can help cover its costs, making it budget-neutral without the need for substantial tax hikes. By reducing poverty and stimulating the economy, implementing UBI in the United States promises substantial economic benefits.
In summary, the evidence from various UBI trials around the world indicates that the implementation of a $1000 UBI program in the United States would deliver more benefits than drawbacks. This approach holds the potential to combat poverty and promote gender equality by offering financial support to those in need. Despite the associated costs, these would eventually be counterbalanced and surpassed by the long-term economic benefits. Amid global economic challenges and widening social disparities, the time is ripe for the U.S. federal government to take action and address societal ills by introducing a UBI that empowers women and safeguards individuals from the precipice of poverty.
References
Haushofer, Johannes, and Jeremy Shapiro. “The Short-Term Impact of Unconditional Cash Transfers to the Poor: Experimental Evidence from Kenya.” Princeton University, The Trustees of Princeton University, 2016, collaborate.princeton.edu/en/publications/the-short-term-impact-of-unconditional-cash-transfers-to-the-poor.
Henderson, David R. “Universal Basic Income, in Perspective.” Hoover Institution, 2019, http://www.hoover.org/research/universal-basic-income-perspective.
Hoynes, Hillary, and Jesse Rothstein. “UNIVERSAL BASIC INCOME IN THE US AND ADVANCED COUNTRIES.” NBER, 2019, gspp.berkeley.edu/assets/uploads/research/pdf/w25538.pdf.
Khosla, Saksham. “India and Cash Transfers – India’s Universal BASIC … – Carnegie India.” Carnegie India, 2018, carnegieindia.org/2018/02/14/india-and-cash-transfers-pub-75503.
Jauhiainen, Antti, and Joona-hermanni Mäkinen. “Universal Basic Income Didn’t Fail in Finland. Finland Failed It.” The New York Times, The New York Times, 2 May 2018, http://www.nytimes.com/2018/05/02/opinion/universal-basic-income-finland.html.
Moore, Kieran. “National Support for a Basic Income Guarantee.” Ontario Medical Association, 2015, d3n8a8pro7vhmx.cloudfront.net/bicn/pages/164/attachments/original/1444323422/National_Support_for_a_Basic_Income_Guarantee_%28CDN_Medical_Association%29.pdf?1444323422.
“National Poverty in America Awareness Month.” Census.gov, 20 Dec. 2022, http://www.census.gov/newsroom/stories/poverty-awareness-month.html#:~:text=Official%20Poverty%20Measure,37.9%20million%20people%20in%20poverty.
Neate, Rupert.
O’Donnell, Jimmy. “Why Basic Income Failed in Finland.” Jacobin, 12 Jan. 2019, jacobin.com/2019/12/basic-income-finland-experiment-kela.
Paulson, Mariko. “Options for Universal Basic Income: Dynamic Modeling.” Penn Wharton Budget Model, Penn Wharton Budget Model, 3 Sept. 2019, budgetmodel.wharton.upenn.edu/issues/2018/3/29/options-for-universal-basic-income-dynamic-modeling.
Reed, Howard, et al. “Basic Income Could Cut Poverty to Lowest for 60 Years.” Compass, 14 June 2022, http://www.compassonline.org.uk/publications/tackling-poverty-the-power-of-a-universal-basic-income/.
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