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Universal basic income: the pros and cons

By:  Rosemary McEwen | 28th May 2021

Enthusiasm for a universal basic income (UBI) has renewed since the pandemic. With UBI, all citizens would receive a guaranteed minimum income. So, what are the pros and cons of this policy?

What is universal basic income?

With UBI the state pays a basic amount to all individuals, regardless of their own wealth and circumstances. The payment should be unconditional. ‘Universal’ means that Richard Branson would get the same amount as a office cleaner. 

Citizens can use the payment for anything. An extra monthly income could help them to survive in lean times and avoid debt. If the money is surplus, it makes sense to save as well as spend. Or take the opportunity to invest.

Many countries have experimented with various forms of a guaranteed minimum income. There is soon to be a pilot of UBI in Wales.

This type of income is not a handout, but an entitlement.

One of the leading advocates for universal basic income, Guy Standing, explains: “A basic income would be partial compensation for loss of the commons, which belong to all of us equally, but which have been appropriated by privileged elites and corporations to generate private wealth.”

Critics of UBI are concerned about individuals becoming dependent on the state for income, particularly if the payment is insufficient.

Good or bad, UBI would have a transformative effect in three main areas. Let’s take a look at the pros and cons of UBI.

1. Universal basic income and work

Would UBI have a positive influence on employment?



2. Benefits or basic income?

Can UBI replace benefits?



3. Universal basic income and the economy

Can UBI boost the economy?



Is universal basic income fair?

Unconditional payments are an acknowledgement that everyone has the right to share in a wealthy economy. All contributions to society are rewarded equally, whether made by a CEO or a carer. Those who don’t need the money might donate it to charity.

With the same money going to all, there is a danger that state education and health could be underfunded. People on a low income may lose out on services that others are able to pay for. This is why some commentators prefer the concept of universal basic services instead, which could extend to free shelter, food and transport.

What should universal basic income be used for?

For those on a low income, UBI can provide a safety net and an opportunity to create an emergency fund.

For anyone fortunate enough to be part of the forthcoming UBI pilot in Wales, putting the money in a savings account would be a very wise move. As with any guaranteed minimum income, it might not be permanent.

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