Universal Basic Income (UBI) Explained

Yes, it's literally free money

By a vote of 77%, Liberal delegates to the party's policy convention have endorsed a resolution calling for the establishment of a universal basic income (UBI) in Canada. With 5% of Canadians living in deep income poverty and many more facing financial hardship as the coronavirus pandemic rages on, backers of this policy argue a UBI would "ensure that communities at risk are able to feel financially secure."

Universal basic income is a proposed public program in which all citizens are periodically guaranteed a set amount of money. There are different versions of the policy, but the underlying idea is consistent: continually providing the populace with cash. With the Fourth Industrial Revolution going underway, UBI quickly gained relevance and controversy with the rise of automation and AI (artificial intelligence) taking over jobs. The controversy is between the people who think of UBI as a safety net and the people who think UBI as nothing but an inflation provoker.

The yay side—people see UBI as an opportunity for people to progress in their careers rather than staying at corporate jobs. In fact, an economic journalist, Annie Lowrey, wrote that, “A UBI is a lesson and an ideal, not just an economic policy.” UBI provides more freedom than other welfare programs because it doesn’t require taking part in courses, applying to a certain number of jobs per month, or accepting any job offer regardless if it is suitable. Furthermore, when considering the current technological advancements, the number of those job offers could be drastically reduced. UBI counters the effects of automation eating away jobs — an entire 1.7 million lost to AI so far and up to a projected 400 million by 2030 — because it enables the working class to find jobs that are not threatened by AI. But above all, it lends a helping hand towards income inequality and poverty. UBI can offer support, access to basic resources, and independence to lift an individual out of financial hardships.

The nay side—there are, however, some downsides that critics point out. The first, and most obvious problem is cost. While the exact price would differ from version to version, estimates for an overall basic income are up to $98 billion on top of the nearly $800 billion being spent. Neera Tanden, President of the Center for Progress, says this increased spending isn’t worth it. Besides, this sudden increase in cash isn’t going to hold up well against inflation. If people immediately have extra cash, most would immediately spend it. This would drive up the demand on whatever products and services being purchased, which would in turn lead to the manufacturers trying to produce more and more. There is, however, a limit as to how much can be made, thus forcing retailers to increase prices. Lastly, and probably the most interesting issue, UBI goes against the ideological foundation of capitalism, which is that money is not a birthright we are entitled to - it is something that is earned through voluntary exchanges between private property owners. This raises an important question: is UBI consistent with these ideological beliefs? 

Universal basic income, despite its recent attention, has a long history stretching back to the early 16th century when Sir Thomas More, in his book Utopia, depicted a society where every person received a guaranteed income. 

After several other notable figures including philosopher Bertrand Russel and renowned economist Milton Friedman endorsed the policy, 2020 Democratic Presidential Nominee Andrew Yang made it the central focus of his campaign and once again brought the idea into mainstream political discourse. The future of UBI, both as an idea and as a policy, remains unknown - it could be the heaven Thomas More once described, or the hyperinflated dystopia Tanden predicts.