Social And Employment
Universal Basic Income: The Policy of Free Money
What It Is and How It Works
Universal Basic Income (UBI) is a policy in which the government issues regular, unconditional cash transfers that are intended to cover basic living costs. In its most universal form, the transfer is given to all adult citizens. However, most proposals adopt a less universal, "quasi-universal" approach that targets households with specific profiles - often the poorest households. The aim is to guarantee a minimum income without either the conditions of work requirements or means-testing.
Because public budgets are limited, funding UBI at high levels typically means cutting other spending or raising taxes in order not to increase the government budget deficit. Some view this trade-off as one of the biggest challenges to making UBI affordable.
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The Policy's Impact
UBI can potentially reduce poverty and improve financial stability for citizens, particularly in countries with high inequality or large informal economies. By giving everyone a consistent income, UBI can help prevent people from falling into extreme poverty, especially those in unstable or low-paid work.
It may also support individuals who carry out unpaid tasks like caregiving, which is often done by women and rarely compensated. UBI could give such individuals greater financial independence and recognition. In situations where automation or digital platforms are transforming the job market, some argue that UBI could act as a safety net, helping people adapt during periods of job loss or retraining.
However, there are concerns about its cost and sustainability. UBI would require a large portion of national budgets and might compete with spending on services such as education or healthcare. Governments might need to raise taxes or shift funds from other welfare programs to cover it, and the current reality is that funding such a project requires great amounts of political motivation, which is simply not present anywhere around the world.
Another worry is that guaranteed income could reduce the motivation to work. While some pilots have not shown major changes in labor participation, the long-term effects of UBI at a national scale are still unclear. If more money is circulating without a matching increase in production, it may also lead to inflation.
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Stakeholders and Political Implications
UBI involves many stakeholders, including citizens, taxpayers, and policymakers. It could offer basic support in lower-income countries where traditional welfare systems are limited. In wealthier nations, the discussion often focuses on how UBI fits into debates about inequality, automation, and the future of work.
From a gender perspective, UBI is sometimes promoted to recognise unpaid household and caregiving labor. However, some worry it could also reinforce traditional gender roles if not paired with active labor policies and services.
Politically, UBI is both promising and controversial. While it offers a universal and simple support model, it raises difficult questions about how to fund it and what programs might be reduced in return.
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Some Debates Among Economists
Supporters of UBI believe it can simplify welfare systems, reduce inequality, and provide people with greater freedom and security. They argue that it is transparent, fair, and reduces the stigma often attached to targeted aid.
Critics point out the high costs and potential inefficiency of giving money to those who do not need it. Others worry about inflation or reduced work incentives. Many economists agree that UBI has potential, but whether it should replace or supplement existing systems remains widely debated.