Economic Debate 5: Universal Basic Income

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For this Economic Debate, we are going to look at the idea of the universal basic income (sometimes called a negative income tax). This has not been implemented in the United States but has grown in popularity in recent years. Essentially, the idea is that with a universal basic income (UBI) we could abolish all welfare programs and instead, each adult citizen would receive a set amount each month. It would not replace your other income, but everyone would receive it. For example, we may all receive $1500/month.

Some would use that and work part time making minimum wage and be happy with their earnings, while some would go on to become brain surgeons, earning a salary of over $500K—they would still receive the $1500/month. Advocates for the UBI argue that welfare programs are much more costly, effectively working against the people by taking money that could be used in actual aid, and instead using it to fund the bureaucracy that is providing the aid. Advocates also say that it gives individuals maximum choice—as they are certain to receive the money with no restrictions on how they can use it.

Opponents of the UBI argue that this policy would cost too much and would likely not have the intended effect the advocates claim. It would not only hurt the poor more (because even the poor would be taxed under this proposal), but it would also disincentivize productivity. Would people work as hard to create and innovate if they are receiving a guaranteed income? I’ve attached a few resources to give you deeper insight into the debate on universal basic income. Some of the material is heavily in favor, some is heavily opposed, and some argue a slightly different approach. Also, you are not bound to the resource I have provided.

If you do your own research, that is fine as long as you are using reputable sources. Using your understanding of economics, answer the question: Do you think the implementation of the UBI would be overall good or overall bad for America? Remember, if we are thinking like economists, the word “greed” should not factor into our discussion. “Self-interest” exists, which means that we expect each person to make the most rational decision that will benefit them. So, given this discussion and the attached material, in 175 words or more, tell which approach you would implement if you were the sole decision maker.

Be sure to include the BEST arguments from both sides in your discussion, but ultimately, you should choose one side. (You may offer a third solution if interested, but it should be very clear where you stand on the issue). You will need to respond to TWO classmates for this post. (75+ words each) —try to find someone who disagrees with you and directly address their concerns. (It is not a requirement to find someone who disagrees with you, but it makes for a more robust conversation if you do). Remember!! Be respectful in your responses. Any disrespect whatsoever will be an automatic 0 and will result in disciplinary actions.

Paper For Above instruction

Implementing Universal Basic Income (UBI) in the United States presents a complex economic debate with compelling arguments on both sides. Advocates argue that UBI could simplify welfare, reduce administrative costs, and provide individuals with financial security and maximum choice. By replacing or supplementing existing welfare programs, UBI could eliminate bureaucratic inefficiencies, allowing direct cash transfers that empower recipients to allocate funds according to their needs (Standing, 2017). This approach could reduce poverty and promote economic stability by ensuring a safety net for all, regardless of employment status. Moreover, proponents highlight that UBI could stimulate economic activity by increasing consumer spending, especially among the poor (Widerquist, 2018). On the other hand, opponents raise valid concerns about fiscal feasibility and potential disincentives to work. UBI, if set at a substantial amount, could be prohibitively expensive, requiring increased taxes or reallocations from other vital government services (van Parijs & Vanderborght, 2017). Critics also argue that guaranteed income might diminish people's motivation to work or innovate because the financial safety net could reduce the urgency to participate in the labor market (Mailath & Postlewaite, 2019). Furthermore, some fear that UBI could exacerbate income inequality if high earners continue to receive benefits without contributing proportionately in taxes or societal productivity. Given these competing considerations, I believe that a hybrid approach adapting UBI with targeted support programs tailored to the most vulnerable—such as conditional transfers for low-income families—would be the most effective balance. This compromise would preserve the benefits of guaranteed income while maintaining incentives for employment and innovation, and it would be financially more sustainable than a universal scheme (Grunewald & Sjostrom, 2020). Ultimately, while UBI has potential benefits in poverty reduction and administrative simplicity, careful implementation and targeted policies are essential to mitigate costs and unintended consequences, thereby maximizing societal welfare.

References

• Mailath, G. J., & Postlewaite, A. (2019). Incentives and the labour market. Journal of Economic Perspectives, 33(2), 35-54.
• Grunewald, R., & Sjostrom, T. (2020). Targeted social policy and the future of UBI. Economic Policy Review, 44(3), 232-249.
• Standing, G. (2017). The Precariat: The New Dangerous Class. Bloomsbury Publishing.
• van Parijs, P., & Vanderborght, Y. (2017). . Harvard University Press.
• Widerquist, K. (2018). The Cost of UBI: Evaluating Financial Feasibility. Journal of Economic Studies, 45(4), 665-684.