Consideration For a Universial Basic Income

Julius Perez, Reporter

What if you automatically received a $1,000  check from the government every month, free of charge? No it’s not a form of welfare, and it’s not a version of a tax cut or benefit. It is real money, all yours, no strings attached. It’s called Universal Basic Income (UBI), a system where you and everyone else in the country receives a baseline income from the government.

Advocacy for UBI has grown in recent years. So much so that Andrew Yang, a business CEO, is running for president based on the goal of implementing UBI into the American economy. He is running on unconventional ideas, yet he’s in the top 6 of democratic candidates in the race to win the nomination from their party. 

Yang’s policy proposes that every American citizen over the age of 18 receive $1,000 a month, what he calls a Freedom Dividend, for the rest of their lives. No one will have to meet any income or age requirements, and they won’t have to fill out any forms to apply. Everyone, from single mothers to billionaires, would receive the dividend. 

The idea is not a new one. First mentions of a UBI-like system started in the Renaissance. American founding father Thomas Paine called for a “natural inheritance” of 15 pounds to everyone over 21. During the Civil Rights movement, Dr. Martin Luther King Jr. called for a “guaranteed income that sustains life and decent circumstance.”

This version of UBI would cost the US government $3.9 trillion to provide for just one year. According to the center on budget and policy priorities, annual federal tax revenue is predicted to be $3.6 trillion in 2019, and the National Deficit has reached 22 trillion. 

However, President Trump’s budget of $4.7 trillion for the year of 2020 was approved by Congress, adding $1.1 trillion to the deficit.

Yang proposes a value added tax in order to bring in extra revenue to pay for the Freedom Dividend. The value added tax would be a tax on the goods and services a business produces, adding $800 billion to federal revenue. 

Yang also proposes cutting part of the current welfare system in order to pay for the dividend. 

AP Economics teacher, Jason Gray, recently gave an article to his class about the growth of automation within the American workforce. In that article there was a brief mention of UBI as a possible solution to the fallouts of this development. 

“People in lower classes would probably benefit the most,” Gray said. “They could use the money to pay off debts and invest in their futures.”

However, Gray remains skeptical about the idea of UBI. 

“I always try to see both sides of every issue. I try to think about the ways this will help but also the possible drawbacks this could have too,” Gray said. “I think UBI is something we should carefully consider before implementing. We shouldn’t rush into it.”

Gray does, however, give Yang credit for starting the conversation about possible solutions to the rapidly changing unpredictable economy.

“I think it’s good to have it in the discourse, and it will be interesting to see where it goes,” he said.

Senior Stephanie Ayala sees many benefits of UBI.

“I would be a $1,000 richer,” Ayala said. “I’ll use it to pay bills, like utilities, and save it up to buy a new car. I don’t think you should get it if you don’t work though. If you don’t work, you shouldn’t be compensated.”

UBI has the potential to benefit many people who are struggling financially. According to Intereconomics, a European platform for economic and social policy debates, having a UBI system like the Freedom Dividend, will increase the GDP by 12 percent because more people have more spending money, which drives up demand for products.

Some of people’s concerns for UBI say that poor or homeless people will just spend the money on drugs and alcohol. A 2013 study by the World Bank, an organization devoted to funding and educating developing countries, saw that when government handouts were exchanged for straight cash most homeless people didn’t spend it on alcohol or drugs. They found that receivers of the money purchased more candies, chocolates, and meals at restaurants. 

Another concern is that if people get their salaries from the government that they will become lazy, stop working, or stunt the economy. In 1970, UBI was tested in a Canadian town and found only about 1 percent of people stopped working and on average only 10 percent of time was cut out of the typical work day for most people. The majority of people in these percentages did so to take care of children, continue schooling or find better jobs.

Tram Phan, a senior who works part time, said she wouldn’t save her monthly $1,000.

“It would be easy to say I would save it, but I would most likely spend it on things I like, like food or entertainment,” Phan said. “ I would save money from my job instead and use the extra money to buy stuff I would like.”