How does Universal Basic Income work?

Universal Basic Income (UBI) is a concept where a government gives every citizen money on a regular basis, no matter how much they already have.

There are different versions of the idea, but essentially UBI aims to cover the cost of living – just enough to keep people out of poverty. In the US, this would be around $1,000 a month.

One concern is that UBI would make people lazy. Trials run in Canada during the 1970s found that only 1% of people stopped working (mostly to take care of children). It also found that working hours were reduced by less than 10% on average.

A universal basic income would never be taxed or taken away. It actually rewards work, as any extra income only improves your financial situation.

The increase in spending across the board could grow a country’s GDP by an estimated 12% over eight years. And no, inflation wouldn’t be an issue: UBI simply shifts existing funds instead of creating more money.

Current unemployment programs have some clear drawbacks: you often have to sign up for courses or take the next available job, regardless of fit. And if you bring in any additional income, you lose your benefits entirely. This can trap people inside the system.

OK, so how do we make UBI happen? Well, that depends on the country. The simplest solution is to abolish welfare and eliminate all the bureaucracy involved – freeing up the funds. The risk here is that there’ll still be a need for programs of some sort, depending on people’s needs.

Another way is to simply raise taxes for the rich, redistributing wealth. But this would not eradicate inequality. Many people would want a UBI big enough for a middle-class existence. Rental options, for example, would be extremely limited on just $1,000 per month.

There is also concern that a universal basic income would give governments more leverage to sway public opinion. Populist politicians could make all sorts of promises about UBI to get into power.

Ultimately, a universal basic income would certainly reduce fear and stress across society. It may be the most ambitious social policy of our times, but more research and testing needs to be done before it has any chance of success.