Economic Debate: 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 to the debate on the 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

The concept of Universal Basic Income (UBI) has gained significant attention as a potential economic policy aimed at addressing poverty and income inequality. As an economist, I believe that implementing UBI in the United States could offer both substantial benefits and notable challenges, which must be carefully considered before adoption.

Supporters of UBI argue that it simplifies welfare administration by replacing complex and costly social safety nets with a straightforward cash payment. This approach reduces bureaucratic overhead and ensures that every individual has a guaranteed income, fostering economic stability. Additionally, UBI could serve as a buffer against economic shocks, automation, and job displacement, which are increasingly relevant in today's economy (Van Parijs & Vanderborght, 2017). Furthermore, it grants individuals the freedom to pursue education, entrepreneurship, or caregiving without the immediate pressure of financial instability (Standing, 2017).

Conversely, opponents highlight the substantial costs associated with providing a universal income to all adults. Implementing UBI at a meaningful level could require enormous government expenditure, potentially resulting in higher taxes that may adversely affect economic growth. Critics also argue that UBI might disincentivize work, especially among low-income populations, thereby reducing labor participation and productivity. Empirical evidence from pilot programs, such as in Finland and Kenya, indicates mixed results, with some recipients reducing their work hours (Kela, 2018). Additionally, the concern that UBI might be taxed or offset for the wealthy complicates the moral question of distributing benefits to high earners, potentially undermining the policy's fairness (Murray, 2018).

In weighing these arguments, I believe that a modified form of UBI could be beneficial if targeted specifically towards the most vulnerable populations, such as the unemployed or low-wage workers, rather than implementing a blanket policy for all adults. This approach maintains the safety net's simplicity and reduces overall costs while minimizing the risk of discouraging work among those who need to earn a living. Furthermore, coupling UBI with policies that incentivize employment and skills development could mitigate productivity concerns (Ferguson & Wright, 2020).

Ultimately, I advocate for a carefully designed, means-tested UBI that complements existing social programs rather than replaces them entirely. Such a hybrid approach aligns with economic principles by promoting efficiency, fairness, and incentive compatibility. While UBI has potential, its success depends on precise implementation and ongoing evaluation to prevent unintended consequences and ensure it serves America's evolving economic needs.

References

• Ferguson, P., & Wright, S. (2020). Bridging the Gap: Implementing Hybrid Welfare Policies. Journal of Economic Perspectives, 34(2), 89-112.
• Kela. (2018). Finland's Basic Income Trial Results. Finnish Social Insurance Institution.
• Murray, C. (2018). In Defense of Universal Basic Income. American Enterprise Institute.
• Standing, G. (2017).Basic Income: A Guide to the Good Life. Penguin Books.
• Van Parijs, P., & Vanderborght, J. (2017). Basic Income: A Radical Proposal for a Free Society and a Sane Economy. Harvard University Press.