The Advantages and Disadvantages of Universal Basic Income
The idea of an unconditional basic income has three historical roots. The idea of a minimum income first appeared at the beginning of the 16th century. The idea of an unconditional one-off grant first appeared at the end of the 18th century. And the two were combined for the first time to form the idea of an unconditional basic income near the middle of the 19th century.
In the recent days, so many economists, scholars have been engaged in the ‘Universal Basic Income’ debate. As we hear the arguments and counterarguments, let us look at its pros and cons in detail.
Pros
- Workers could afford to wait for a better job or better wages.
- People would have the freedom to return to school or stay home to care for a relative.
- The "poverty trap" would be removed from traditional welfare programs.
- Citizens could have simple, straightforward financial assistance that minimizes bureaucracy.
- The government would spend less to administer the program than with traditional welfare.
- Payments would help young couples start families in countries with low birth rates.
- The payments could help stabilize the economy during recessionary periods.
- Certainly it will give a ‘mental relief’ to the need and poor and reduce their tension considerably.
Cons
- Inflation could be triggered because of the increase in demand for goods and services.
- There won't be an increased standard of living in the long run because of inflated prices.
- A reduced program with smaller payments won't make a real difference to poverty-stricken families.
- Free income could perpetuate the falling labor force participation rate.
- Sometime people may end-up in spending the ‘free money’ for the wrong cause like drugs, cigarettes and alcohol
Compiled by
Srini