Universal Basic Income: The Key to the Economy of the Future
The push for universal basic income (UBI)
Universal basic income is the idea of regularly providing community members with a guaranteed income. The concept of UBI was initially developed as a solution to poverty and income inequality. However, in the new age of job replacement through machine learning and AI, UBI has once again become a topic of discussion across the world.
In 2021, Senator Kim Pate, alongside Member of Parliament Leah Gazan, introduced bill S-233, advocating for the establishment of a national framework for a guaranteed livable basic income. Since its inception, it has been passed through the Senate and is currently being considered by the Committee of National Finance.
History of UBI
The idea of implementing universal income is not new. Manitoba created the MINCOME experiment in the 1970s. The experiment's goal was to test the real-world feasibility of a universal basic income system. In Winnipeg, Dauphin and parts of rural Manitoba, participants were selected based on income levels, age and health. The test used a form of guaranteed income from negative income tax provided to selected households.
Between 1974 and 1979, when the MINCOME experiment took place, hospitalization decreased by almost nine percent. Experts have correlated this decrease directly to the financial security introduced by the program; secondly, specifically in rural Manitoba, the high school completion rate increased. Midway through the experiment, 100 percent of students in Dauphin were enrolled in their last year of secondary education.
MINCOME's results were very promising. However, poor economic conditions forced the experiment to end prematurely. Inflation and increased unemployment caused a surge in the number of families who were eligible for MINCOME.
Manitoba's MINCOME experiment is an excellent case study on universal basic income's social and economic implications. Guaranteed paychecks will drastically reduce poverty, stress on the healthcare system and empower the next generation through education. However, MINCOMEs abrupt end highlights a major flaw in the system. A society over-dependent on government stimulus is highly exposed during economic turmoil.
Economic implications of UBI
A government-supplied universal basic income would have several implications for the Canadian economy. The safety of having UBI as a last resort discourages workers and will lead to an abuse of the system. During the pandemic, the Canada Emergency Response Benefit (CERB) program was criticized for Canadians taking CERB payments fraudulently, with one report of an ex-CRA agent who embezzled almost $ 20,000 CAD through the program. The CERB disaster highlights a fundamental flaw in government payment programs. When given the opportunity, people choose not to work and abuse these programs, which were developed in good faith.
Secondly, the artificial injection of money into the economy will surge inflation. A similar phenomenon occurred during the pandemic. To stimulate the economy during the COVID-19 pandemic, these injections were necessary to keep the economy afloat. However, the economic implications are clear. The consumer price index reached monthly increases of eight percent during 2022. A universal basic income would have similar effects, increasing prices and overall cost of living.
The costs of a truly universal basic income are very high. Motivating hard-working taxpayers to continue to work their jobs when others are reaping the benefits alongside the inflation caused by the artificial increase of money in the economy is difficult to sell to Canadian citizens.
An Emphasis on Social Equality
Universal basic income comes at a high cost, but the concept is based on sound theory. Giving impoverished populations a livable income will increase the social welfare of a society. The MINCOME experiment demonstrated UBI's ability to reduce poverty and overall social wellbeing by stabilizing income for at-risk populations.
It is estimated that only 50 percent of felons can get a job after prison. For many, after prison, life is a struggle of paying rent and putting food on the table. Programs such as a universal basic income could make the difference between living out on the street and being able to start a new life for those who have been to prison.
Similarly, A universal basic income system would be an invaluable lifeline for populations with barriers to entering or, in some cases, re-entering the workforce. As shown through the MINCOME experiment, UBI gives these populations sufficient income to live. At the same time, they are able to develop their skills through education and eventually become self-sufficient citizens contributing to the workforce.
Universal basic income is a valuable tool in reducing income inequalities. It provides a safety net for people who do not have a backup plan when things go wrong. For at-risk populations, UBI could mean the difference between life and death. A universal basic income system would positively impact many Canadians' lives if implemented correctly.
Building The Economy of the Future
Modern technology is evolving at an unprecedented pace. Artificial intelligence has taken the world by storm, being inserted into almost all aspects of life. Computerized work is putting people out of jobs. McKinsey predicts that "By 2030, activities that account for up to 30 percent of hours currently worked across the US economy could be automated".
Artificial intelligence is here to stay. As such, the human job market will undergo a significant shift. Several jobs will no longer exist in the future. As people continue to be unemployed due to AI, universal basic income may be the key to smoothing out these changes.
As people get replaced by AI, they must train new skills to find new jobs. UBI provides an efficient and cost-effective opportunity for workers to build new skills and re-enter the workforce. The support of UBI will help decrease long-term unemployment in the wake of the AI revolution.
The Role of UBI in Society
Universal basic income is a revolutionary idea in theory. Implementing a successful UBI system is a more complicated endeavour. The economic implications of such a program raise the discussion of benefits vs costs. The answer is more complex than a yes or a no; a dollar figure can not accurately measure the social wellbeing of a society.
UBI has an incredible opportunity to have a meaningful impact in Canada. With the rise of machine job replacement and AI, universal basic income creates an exciting possibility of a jobless future. Machines handle mundane and repetitive tasks and society is left to pursue its interests and passions. A society where people work to develop their passions rather than solely focused on earning a living.
Universal basic income is an economic tool that will create an equal playing field for generations to come. Instead of being bent on earning a living, the next generations can have the opportunity to explore their passions. UBI has the ability to revolutionize innovation, allowing people to follow their dreams and reach their full potential, leading to a happy and motivated society.