A Capitalist Case for Universal Basic Income

How Universal Basic Income (UBI) could alleviate modern day problems and fix capitalism.

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Theodore Wai

Shuttered businesses and restaurants led to unemployment and poverty during the Coronavirus pandemic. “If we could provide Universal Basic Income alongside other policies that help the working class, it would be great,” said Declan Hilfers ’21.

Our economy is not working.  Amidst a global economic crisis and a botched response to it, our Federal government has failed to be anything but incompetent.  As progressive Democrats, corporate Democrats, and Republicans alike bicker in Washington D.C., the country’s economy continues to slide downhill with over eight million Americans falling into poverty, an unemployment rate of 7.9%, and no stimulus package in sight.  While many blame the failures of our economy on capitalism, America’s economic failure has little to do with the market itself, but instead is due to cronyism and a dysfunctional social safety net.  

While it was a fringe idea a few years ago, the idea of providing a Universal Basic Income (UBI) entered into the mainstream conversation, in part due to the unexpected success of Andrew Yang’s recent presidential campaign.  UBI is unique among welfare proposals, garnering support from all sides of the political spectrum.  For everyone from socialists to Hillary Clinton to Milton Friedman, one of the greatest economists of all time, the idea of a minimum income has long been proposed to help eradicate poverty.  Currently due to the ongoing Coronavirus pandemic, the future of the job market looks more uncertain amidst high unemployment and the worst recession in nearly a century.

A Universal Basic Income would provide a financial floor for every citizen in America, as well as economic and financial security.  While a UBI of one thousand dollars each month is not a sufficient amount to live on for the average person, it will certainly allow many to meet many of their basic necessities, to survive during economic recessions, and to secure some financial protection.  Furthermore, a stronger and more reliable social safety net is needed as automation begins to eliminate millions of jobs and  the job market struggles to recover.   “I think Universal Basic Income is a good idea and would help lots of people,” said Declan Hilfers ’21.  “The current welfare system is not extensive enough.”

Our current welfare system discourages some workers from finding a job, as the benefits received dwindle with the more money that you earn.  In addition, despite spending, on average, $48,000 dollars per person, our welfare system and the American War on Poverty has largely failed.  A Universal Basic Income would replace much of this welfare state, replacing it with a single monthly dividend.  Not only would UBI downsize our bloated government bureaucracy and provide a basic income to those who need it, but it would also encourage entrepreneurship and investment as financial freedom becomes more accessible.  “Universal Basic Income outshines some other welfare systems in the sense that individuals are able to allocate those resources better than the government can, because individuals know what is best for themselves in their specific situations,” said Michael Le ’21, a supporter of Universal Basic Income.

The question then lies in whether a Universal Basic Income is feasible.  Opponents of UBI often cite the high cost of its implementation as an obstacle. While it is true that programs such as Andrew Yang’s Freedom Dividend would cost well over two trillion dollars, our current welfare system alone already costs that amount. In addition, the money distributed would immediately be pumped into local communities, corporations, and businesses.  In turn, this would create local jobs, revitalize small businesses, and stimulate the creation of business.  Thus, the economic gains created by Universal Basic Income would pay for its costs.  A Universal Basic Income would also be funded by VAT (value added tax), a consumption tax which would ensure all Americans would share in the wealth generated by automation and innovation.  

Capitalism is the greatest economic system devised by people.  Its power to create economic growth and stimulate innovation has resulted in unprecedented increases in human development, quality of life, and poverty reduction.  The conditions that led to its spread have resulted in the abolition of slavery, women’s rights, and the concept of natural rights. Yet as we approach the age of automation, where science and technology will create more wealth than we could have ever imagined, we face the danger that working people will not have their fair share of such wealth. It is not necessary to totally upend the current system, nor is the answer to our crises any form of government collectivism.  It is not necessary to innovate new institutional forms or experiment in untested policy areas, as it was back in the early 1900s.  The creation of a better, stronger welfare state, along with better government policy is all that is needed.  With a few such reforms, the average American, and indeed, the average global citizen, could be living a life of increased, incomprehensible luxury.    

“Universal Basic Income outshines some other welfare systems in the sense that individuals are able to allocate those resources better than the government can, because individuals know what is best for themselves in their specific situations,” said Michael Le ’21, a supporter of Universal Basic Income.

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