3 min read

Universal Basic Income

Universal Basic Income
Photo by micheile dot com / Unsplash

Hey friends!

Over the past couple of months I have been looking into Universal Basic Income (UBI), a concept being considered as an alternative to welfare systems in a growing number of countries around the world.

What is UBI and how does it differ from a welfare safety net?

Universal Basic Income is a socio-political approach in which the government pays out an unconditional, non-taxable income every month to every citizen ie. your employment status is irrelevant, you don't need to apply, there is no criteria to satisfy, and your wealth/asset level doesn't matter - there is no strings attached.

The basic principles of UBI are:

  • the amount paid to each person is enough to keep them above the poverty line
  • an unconditional and secure minimal income allows people to focus on pursuing further education and/or finding a job which suits them better and they enjoy doing
  • in order to keep their employees and make their jobs more appealing, employers need to provide better working conditions and pay to keep their employees

UBI is a complex and controversial topic, with many arguments for and against its introduction:

  • Reduces inequality
  • Improves general well-being
  • People will misuse the funds
  • Rich people don't deserve it
  • Current proposals are too vague
  • It's too expensive
  • Discourages work

There's plenty to read on this topic. This will give you a good idea of what it's all about.
Universal Basic Income Explained – Free Money for Everybody? UBI

Are there any examples of UBI in use?

No countries have implemented a UBI as I have defined, however there have been many trials conducted worldwide since the 1960s.

Some current/recent examples include:

  • A pilot program (2019 - 2022) in Gyeonggi-do (the province surrounding Seoul in South Korea) implemented UBI to support young people who were having a hard time finding employment. It paid 175,000 24 yo participants the equivalent of around US $100 each month, regardless of their circumstances. The politician responsible for the project, Lee Jae-myung, did not get re-elected (missing out by 0.73 of the votes) which saw the project come to an end
  • A 3 year study in Germany (which started in 2020) comparing the experiences of 120 volunteers - receiving a UBI of €1,200 every month - to a group a of 1,380 people not receiving the payment

UBI in Korea Starts with The Youth Basic Income Project in Gyeonggi-do
Germany is beginning a universal-basic-income trial with people getting $1,400 a month for 3 years

How could a UBI be funded?

In the Korean trial, funding was achieved through land possession tax, while the German trial relied on donations. Advocates of UBI suggest a full scale program could simply replace existing welfare programs, therefore redirecting taxation and government funding currently assigned to benefits and pensions.

In terms of inflation, Seoulz stated this about the Youth Basic Income project in South Korea: "The Youth Basic Income project was not done by printing money but rather through a land possession tax. They collected tax from real estate and paid it back to the people. Therefore, this did not lead to inflation."

In conclusion, UBI is an interesting idea, particularly in terms of its potential to reduce poverty, increase happiness and improve general wellbeing. What do you think?

Thanks for reading!

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Have a great week!
Cheers, Toby