What is a Universal Basic Income actually?

And how would it actually work?

Tossed around in circles lately has been the concept of a universal basic income, or UBI. The idea at its root is simple. Every citizen receives a monthly amount of money from the government, period. End of statement. What do you have to do to get the check? Nothing more than being a citizen, that’s it.

If it sounds like the ultimate handout for lazy people, paid for by everyone else, I’m going to strongly suggest you open your mind and keep reading.

The concept of a UBI was first mentioned back to the 1500’s, but for Americans, it was solidly suggested by philosopher Thomas Paine, when the United States was forming and expanding as a country. Paine believe the US was rich with resources (coal, timber, oil, water, farmland, etc.), and as those resources were exploited, every citizen should receive what he called a Citizen’s Dividend, a small amount of the profit, sharing the wealth of this God given treasure we were gifted at our feet (or, ahem, took from Native Americans). Essentially a basic income everyone would get a tiny slice of. Paine’s Citizen’s Dividend never got too far.

Fast forward to the present, and numerous times in history various people from various political backgrounds, both left and right, have advocated some sort of income related to Paine’s idea.

• Martin Luther King advocated a UBI. Mostly as a colorless way to curb poverty.
• Highly influential economist Milton Friedman (who I was somewhat critical of in this article here) favored what he called a negative income tax, (or reverse tax) a UBI for the poor, to keep them out of poverty.
• When faced with attempts at budgeting and forming welfare, President Richard Nixon came very close to pushing for a UBI, until enough advisers, and Republicans, slowly killed the bill.
• In the 2020 Presidential election Democratic candidate Andrew Yang focused his campaign around a UBI, gaining a surprising amount of traction.

The closest implemented idea of a similar dividend is quite possibly in the state of Alaska. When it was determined that there was a lot of oil in northern Alaska, and the pipeline was built, then governor Jay Hammond gave the people the option to vote. Did they want the tax from the pipeline to be used in the general budget, or returned to them in the form of a dividend? Not surprisingly, they chose the dividend by a nearly 2:1 margin.

If this is just a handout, free money for doing nothing, why would we even consider it? There are several reasons.

First, it would hardly be a handout. A federal UBI would replace most all 80+ federal welfare programs. It would replace all food stamps. It would replace all welfare money. It would replace all housing stipends. It would replace federal unemployment compensation extension. You simply couldn’t double dip. Anyone who has ever applied for food stamps, or welfare of any kind will tell you that it can be a struggle to know if, when you are receiving anything at all, or if you’re going to be cut off at any moment. It feels like you’re always watched, having to give updates, prove you are still poor. All of that costs money to administer. With a UBI a computer algorithm would simply deposit money into your account, making the overhead very small, likely returning well over 99 cents on the dollar.

There would be no stigma. Right now people are starting to distrust each other because the belief that some people are gaming the systems of welfare. Judging who gets it, who doesn’t. If a UBI were implemented, it’s likely that over 99% of your neighbors would be in the same situation as you, as rich people simply do not live right next door to working poor people.

Next, no one can really live, or live very well at all, on $1,000 a month or so, which seems to be about the largest amount anyone is talking about paying. To believe that, especially if all welfare, food stamps, etc. would be cut off and replaced with a $1,000 UBI would make someone live happy and fat and never have to work again is completely irrational. Think about this for a long moment and do your own budget based on your own living expenses if unsure.

The notion that homeless people, drug addicts, criminals would simply use the money for more ill doing is not supported by any studies. Addiction should be considered a separate issue than a UBI. There are a shocking amount of . The notion that pushing an addict, of any level, into even deeper penury will somehow motivate them to clean up and get a real job is unworldly foolhardy, and not backed by a single study in history. Programs by each state could be administered in a similar way to Medicaid, but for rehabilitation. That is, while an addict is in rehab, the UBI would be held for them, then re-started to them during times they are clean, or directly for life’s needs to help them stay clean including, housing, transportation. Again, addiction treatment is best administered on a state level, with each state using its own best judgement for its citizens how to address addiction.

Here’s another reason why it could matter. Over the last 10, 20, 30 years, decent pay for most jobs has continually dropped, making it harder and harder for people to just get by. The notion that most people who aren’t working now are purely lazy and don’t want to work is often absurd, or very minimal, single digit minimal. More often than not, people are stuck in bad jobs, or simply cannot get hired at a decent paying job due to continuous suppression of labor. Just as one example, over 60% of the people on Medicaid for the poor, are actually working at a job. That’s how many working poor people there are. A UBI would not allow them to quit their job and live free and easy, it would buy these people some breathing room.

Another factor is a simple one: Artificial intelligence and robotics are going to wipe away far more jobs than they are going to create. Yes, some jobs will be created, but far more will be disrupted. This is validated in study after study, report after report, and rarely addressed at all at any political level.

Now, if you believe people need to fight each other just to get a job, a decent paying job, no matter how bad the labor market is, then I can see why you would be against this. There are plenty of conservatives who believe there should be no government assistance at all, period. If you cannot find a job, too bad. If that’s you, then I can see why you’re against a UBI. Just don’t be too surprised when there are millions of desperate, hungry people who revolt in a violent upheaval. History has shown this happens.

So how would a UBI work, who would get it, how would it get paid for?

The concept would be simple as noted. If you are an adult US citizen, you would get a monthly check of somewhere around $1000. There are exceptions to who would get it:

• A UBI should be means tested. That is, if your adjusted gross income (AGI) on your taxes is over a certain amount, say, $100,000 a year, you wouldn’t get it. This is similar to the Covid checks the government handed out.
• If you are in prison, you wouldn’t get it. Or it would have to be deferred into a trust, say to a child for their retirement.
• If you are incapacitated, it would go into a conservatorship managed by a caretaker, or trustee.
• You would start receiving it on your 18th year, until you are deceased.
• It would not be adjusted to cost of living. Someone in a large expensive city would not get more than a person in a poorer, rural area. This actually would help the economy most in those poorer areas, where a UBI would be most effective.
• If you are not a US citizen, you wouldn’t get it.
• The amount would be indexed to inflation. Similar to COLA increases in Social Security.
• The money would be tax free.

It would be paid for through a combination of factors:

• As mentioned above, it would eliminate most US federal welfare programs, curb federal unemployment insurance (often in the form of extensions). This would make a huge dent into the cost.
• A dedicated mix of wealth tax, income tax, corporate tax, payroll tax, should be earmarked directly towards the UBI, similar to how Medicare is paid. The amount of tax should be dynamic to inflation, in order to keep the program solvent, and not just have the government print up more money.
• There is strong belief that because the money handed out in a UBI would go to working people far more than anyone, this money would be poured directly back into the local economy, helping actually raise total tax revenue, making the program at least partially pay for itself over time.

One question that comes up is inflation. Would not inflation increase if a UBI were handed out? The general answer is no, or not very much. What most people would do with the money is pay utilities, make home repairs, eat out a little more, perhaps save up for modest vacations. The amount of money is simply too small. And whatever tick it may give to inflation, is likely to be not terribly felt by individuals. There is a misnomer in media circles that the only cause of inflation is labor costs (wages), when in fact it can be very complex, and almost always involves corporate profits, and shocks to supply and demand. In fact, this is the root cause of inflation in 2022–2023, post pandemic, when not enough supply of numerous things, often even as simple as chip parts, could meet the demand, thus limiting product to purchase, thus driving costs up.

Are there any alternatives to a UBI?

Yes. There are several. It has been discussed many times by many people, mostly in Democratic circles that instead of a UBI, the government would be better served passing legislation for infrastructure, health care, education, mortgage relief, utility relief, even child care. The issue is, those programs are administered, would take months, if not years to set up, and would thus be potentially shaving money off to implement, giving less return on the dollar than a UBI.

Some Democrats want a UBI, but only for certain demographics, such as homeless people. This is an idea fraught with problems. Just as people today have to figure out how to prove they are poor enough for food stamps, people will be trying to prove they are homeless, with some doing so in order to game the system. When a simple, means-tested UBI to one’s income, is most simple, and fair.

An argument has been made that a UBI is a conservative plan. If people blow the money without thinking or planning, so be it, that’s what they get, no more handouts beyond this. Some argue this could result in an even bigger mess than we have now, but people would have to adapt. Many conservatives would argue the best alternative to a UBI is simply a tax cut of some sort. Though I believe most Americans have come to realize that when taxes are cut they see little to no benefit from doing so.

There is however a rarely mentioned alternative that I advocate that would be easier to implement, and easier to pilot.

A Caregiver Basic Income.

How this would work is fairly simple. If you are a caregiver of any sort for another relative, you would receive a basic income check. A caregiver could be:

An adult raising a child (or children).

An adult caring for another adult (parent, sibling, spouse).

The CBI would be one check to one person, for whomever they are caring for. If they are caring for one person, they get one CBI check. If they are caring for 10 people, they get one CBI check. If two people are caring for one person in the same household, they get one CBI check.

A CBI would reduce an often tremendous burden of care needed for the elderly or disabled. It would also help parents give their children much better guidance, as well as education from home in addition to school. It would also help bond families better. There would be motivation to stay together, help one another. Not just figure out a system to gain some sort of payment from the government, or toss an aging parent into a nursing home, or give up a child for adoption due to poverty, or the need to work 2, 3 jobs. Yes, people have worked terribly like this in the past. But the question is, should they honestly have to? Does it really make their lives that much better? Benefit their children? Keep in mind, the amount of a CBI would hardly be enough for someone to live on, let alone live well on.

Finally, it is my belief that some form of UBI is inevitable. It will be discussed more and more as technology and artificial intelligence either wipes away, or changes jobs faster than jobs will be created. It will also happen when younger people come into more political activity, and are pragmatic about it (most youth tend to be, ahem, idealistic when it comes to politics!). I still believe it is going to take years, perhaps in the 2030s, when UBI programs are fully implemented to some degree. It is my belief that while states, even smaller municipalities can attempt a program, it is really on a federal level that a true UBI will need to be to fully succeed. A CBI however could certainly be tested and run on a state level.