A brief history of universal basic income
The idea of universal basic income is nothing new. Thomas Paine called for a similar idea in his 1797 pamphlet, “Agrarian Justice.” The Rev. Dr. Martin Luther King Jr. advocated for guaranteed income as a way to fight poverty and achieve economic justice.
But the idea has gained momentum in the past decade or so, particularly in response to fears that millions of jobs will be lost to automation. Long-shot 2020 Democratic presidential hopeful Andrew Yang proposed a “freedom dividend” of $1,000 a month for every adult U.S. citizen.
The COVID-19 pandemic brought more calls for guaranteed income. The federal government provided three separate one-time stimulus checks to most adults in the U.S., though payments phased out at higher income levels. Several prominent politicians advocated for recurring payments that would have been similar to UBI. Senator Bernie Sanders (I-Vermont), for example, called for $2,000 monthly cash payments to “every person in America every month for the duration of the crisis.”
Pros and cons of UBI
UBI programs have been controversial. Here are some of the basic advantages and disadvantages of guaranteed income:
Pros
- Less cumbersome to administer than means-tested public benefit programs. Proponents argue that many means-tested programs don’t reach the intended beneficiaries due to factors like social stigma and administrative burden.
- Improved social safety net and access to food and healthcare.
- Potential to reduce childhood poverty.
Cons
- High costs. Giving every American $1,000 a month would cost more than $3 trillion per year.
- UBI could exacerbate inflation. A widely expanded money supply would increase demand for goods and services.
- Could create a disincentive to find work for some individuals.
- Higher-income people who don’t need assistance would still receive payments.
Related investing topics
