Could Universal Basic Income be the solution to a failing welfare system?
What are the pros of Universal Basic Income (UBI) and how could it solve many of the issues current welfare systems are facing? This is a complex topic, but I will try to break it down into it's simple components.
Table of Contents
Issues with current welfare systems
The issues related to the current welfare systems are multifaceted, although some problems are more pressing than others.
The first big issue is its fundamental historic design flaws. Welfare as a system had the following original aims:
- Give an income to individuals incapable of working because of evident and diagnosable sicknesses.
- Rehabilitating the induvidual with the hopes of being employed again in the future.
Current welfare system emerged at a time when societies as a whole were facing different issues than what they currently are doing. The family dynamic was completely different; people lived in a traditional family structure. The husband went to work, while the wife was homebound and focused on caring for their children.
The majority of people had stable jobs where they worked 8 hours workdays. They earned a livable wage that could support their family, and they usually kept this job until retirement.
That's no longer the case to the same extent; many do not live in this traditional family structure, and society must adapt in some ways to accommodate the structural changes. The job market has changed completely. People are more adaptable and usually change career paths or jobs throughout life.
A growing group in society is working from home or doing freelance work. These jobs have an unstable income but are increasingly becoming ideal for many.
Expanding Definitions: Challenging the Boundaries of Sickness and Work
Sickness is not always easy to define. Many people struggle with health issues that do not always fit a specific diagnosis. Humans are much too complex to be put into a category, and reasons, why one might not work, are multifaceted.
A common misconception is that unemployed people are not contributing to society. The current definition of work is too limited, and we all need to broaden our perspectives. Work, in the traditional sense, generates value in the form of wealth. The reality is that most people create some form of value for society.
Some examples of value generated - what one might call diverse value creation - that does not fit the traditional description of work are the following:
- Voluntary work.
- Art and creative work, in its many forms.
- Social support through friendships and other generally positive relationships.
From my experience, people on welfare are able to these kind of activities, but are unable to do more traditional jobs. They feel they aren't receiving any reward or recognition from society for this, which is an unfortunate reality as it causes a range of issues for an individual to not be appreciated. On top of this, the uncertainty that occurs with not knowing if your welfare payouts might stop in the future.
Another issue faced is the social stigma of being a welfare recipient - this increases inequality in society - which results in discrimination based on life situations and income.
Defining what UBI is
UBI is a universal government-funded payout for every citizen over a specified age. Although some people disagree on the implementation details of UBI, the payout should be wholly unconditional. People somewhat disagree on the technicalities of how UBI should be implemented, but the idea at its core is what´s important.
Tax system
The goal of UBI is to give everyone a livable wage, which means people who earn above the median yearly income would have to pay the dividend back as taxes. A core principle of UBI is the unconditionality. People receive an income regardless of income level.
How it solves the current issues with welfare
As mentioned earlier, it is a common misconception that people who receive "free" money will remain inactive - be "slobs" watching tv all day. That's false, and the research shows that most people would do the opposite. Most people want to work if able. Most individuals wish to contribute or help in some way.
You have probably heard the trope: Giving positive reinforcements has much better results than negative reinforcements. I believe the same reasoning fits most areas of society, especially welfare.
What about people who require additional support?
Expenses differ based on the individual, for instance those with children or people with considerable medical expenses. These groups would still require additional support, so what about them?
One possible solution to this would be the exemption card system that countries like Norway have, or child support. The point being that there are solutions to these special cases.
Poverty and mental health
Poverty is one of the leading causes of mental health issues. The uncertainty of not having a stable source of income is a substantial stressor for people. People generally work more effectively with basic needs met. They are more cooperative and have an increased ability to think creatively, which has a lot of positive results for society.
Society usually stresses the importance of contributing. Everyone should get a job. Ironically this might have the opposite of the intended effect.
What UBI is not
There are many misconceptions about UBI. It is therefore important to clarify what UBI is not:
A handout or welfare
UBI is often misunderstood as some form of unconditional welfare, or a simple redistribution of wealth. However, UBI is designed to provide a basic level of economic security to all induviduals, regardless of their income or employment status. It aims to empower induviduals to meet their basic needs, and to pursue oppurtunities rather than creating a dependency on the state.
A replacement for jobs
UBI is not intended to replace the need for work, or to discourage induviduals from seeking employment. It is meant to provide a safety net for all induviduals.
A solution to all socioeconomic problems
UBI is often discussed as a potential solution to various challenges, such as poverty, inequality, and technological unemployment. While it can have positive impacts on these issues, UBI alone cannot address all societal problems. It is one tool among many that policymakers can consider to promote social and economic well-being.
Free money without any consequences
UBI is often viewed as an investment in social and collective well-being. By providing individuals with a basic income, UBI aims to alleviate poverty, reduce inequality, and improve overall societal outcomes. The benefits of UBI extend beyond the individual recipients and can positively impact communities and economies as a whole. UBI is not solely about giving money to individuals, but about fostering social progress and enhancing the quality of life for everyone.
UBI programs need to be economically sustainable in the long term. They should be designed with careful consideration of the costs, benefits, and potential impacts on the labor market, tax system, and overall economy. Ensuring that UBI programs are financially viable and do not create excessive fiscal burdens is crucial for their success and continuation.
Studies on UBI
The Stockton demonstration
The Stockton Demonstration has shown promising results, giving increased credibility to the idea of UBI in practice. In the demonstration, 125 randomly selected residents received a monthly paycheck of $500 for 24 months. Here are some of the key findings from the study:
- Created a more stable income.
- Enabled participants to find full-time work.
- Recipients showed better all-around health, including lower levels of depression and anxiety.
- Unconditional income genereated new possibilites for the participants to focus on starting businesses and other ventures.
Finland: A study on UBI
A Finish study on UBI ran from 2017 - 2018. It included 2000 participants, all of which were unemployed. The participants received a monthly unconditional income of around $600. The key takeaway from the study was that people reported increased well-being and less mental strain than the control group, including mild positive effects on employment, especially for families with children. In addition to this, participants reported a better outlook on the future.
This trial only included the unemployed - which is inconclusive to the general population - but the findings are still very promising. Freelancers, artists, and entrepreneurs had more positive views on the effects of basic income, which some felt had given them opportunities to start businesses.
Hope at the end of the tunnel
Although discussion on UBI is still in the starting phases, plenty of research has shown promising results. That certainly makes the idea worthwhile to discuss and study further. You may disagree with the prepositions outlined in this document, but I invite you to consider some of the philosophies behind them. Maybe it can give you a new perspective.
Sources
American Study on UBI - https://www.stocktondemonstration.org
Finish study on UBI:
https://julkaisut.valtioneuvosto.fi/handle/10024/162219
https://weall.org/resource/finland-universal-basic-income-pilot
Norwegian interest organisation for UBI - https://biennorge.no
