- Universal basic income is quickly evolving from a fantastical idea into economic reality.
- Several countries are testing it and figures like Elon Musk and MrBeast have endorsed the concept.
- Here's an in-depth look at UBI, its origins, and its major benefits and costs.
Universal basic income has made giant strides from its origins as a utopian vision toward becoming economic reality.
Basic income trials have been conducted in countries as varied as Kenya, Finland, India, and Canada. Tesla's Elon Musk, YouTube star MrBeast, and former Labor Secretary Robert Reich are among the high-profile champions of the concept.
Yet the idea of handing out money with no strings attached strikes many people as alien, questionable, or even just plain wrong.
Here's a closer look at UBI, its history, and its potential advantages and possible downsides.
What is UBI?
A universal basic income is generally defined as a recurring cash payment to all individuals in a population regardless of their wealth, with no restrictions on how the money is spent and no repayment expected.
Experiments have been relatively small-scale, and many have targeted lower-income populations rather than everyone to keep costs down, garner political support, and maximize the payments' impact on poverty.
Where did the idea come from?
People have proposed variations of UBI since at least the 1500s, when Spanish humanist Juan Luis Vives called for everyone to be given food even if they'd gambled away their money, as he believed nobody should die of hunger.
American revolutionary Thomas Paine proposed a national fund in 1797 that would pay some money to citizens every year after they turned 21.
Dr. Martin Luther King Jr. touted the concept in 1967. The civil rights leader hailed it as a tool to redress historical racial discrimination and temper widespread poverty and unemployment in the Black community.
Legendary economist and free market champion Milton Friedman defended a similar idea: a negative income tax. He said it might help the poor without distorting the market, and lessen the government's role in determining who deserves support.
The list of proponents has expanded in recent years to include Sen. Bernie Sanders of Vermont, technocrat Andrew Yang, OpenAI CEO Sam Altman, and many other high-profile individuals.
What's the point of UBI?
Proponents of UBI say it reduces poverty, strengthens the social safety net, promotes health and happiness, and combats the stigma around welfare.
Simply giving people money can help them to afford basics like groceries, clothing, shelter, and transportation. Covering the costs of daily life has only grown harder in recent years, as food, fuel, and rent inflation has jumped to 40-year highs, and credit card, car loan, and mortgage payments have ballooned due to surging interest rates.
A guaranteed income can also give people the confidence, security, and freedom to know they won't starve or be evicted if they lose their jobs or quit. They might want to start a business, stay at home to raise their children, care for relatives, invest in training or education, or manage a sickness or disability.
Regular cash payments may help to relieve the stress and worry of paying bills, saving for college or retirement, or losing access to means-tested support. Basic income recipients in a Finnish trial reported higher life satisfaction, improved health, and lower levels of depression and loneliness.
Making universal payments might also lessen the stigma around receiving government benefits, avoid some of the costs and mistakes of administering means-tested support, and provide a safety net for the wealthy if they run into financial trouble.
As for Musk and other technologists, they predict that artificial intelligence will render millions of workers obsolete, making it necessary to provide a basic income for those out of work to survive.
What do critics say?
Critics say that UBI erodes the incentive to work, encouraging laziness and idleness. They also warn that recipients might waste the money on shopping, vacations, gambling, liquor, cigarettes, or drugs.
Other skeptics question why wealthy people should receive money they don't need, and caution that paying it for it would require higher taxes or budget cuts.
Dave Ramsey has criticized the concept as "straight out of the Karl Marx playbook." The personal finance guru and radio host bemoaned that people build character by overcoming challenges instead of getting bailed out.
It's quite possible that UBI saps work ethic. But it might also lead to higher wages, job satisfaction, and productivity, as people could afford to be more picky about employment and hold out for better pay.
How do supporters respond?
Regarding how the money is spent, UBI fans say that's not a serious concern.
"The evidence from trials is that participants tend to spend most of the money received on the basic needs of everyday life," Jack Kellam, the head of operations at Autonomy, told Business Insider.
Moreover, an analysis of 30 pilot programs in the US involving nearly 8,300 participants found more than half the cash grants went toward food and groceries, transportation, housing, utilities, healthcare, and education.
Other experts say people's spending shouldn't be scrutinized. Douglas MacKay, an associate professor of public policy at UNC-Chapel Hill, told BI that trying to control spending is "paternalistic" and fails to treat recipients with dignity — as adults and equals who are "fully capable of governing their own lives."
Moreover, there's strong evidence that poorer people don't use drugs, alcohol, or tobacco at higher rates than wealthy people, and drug addiction is often triggered by mental illnesses like depression.
"To the extent that UBI relieves people from misery, we should expect it would decrease 'vice' spending," Karl Widerquist, a philosophy professor at Georgetown University-Qatar and the author of several books about UBI, told BI.
As for the rich getting richer and the question of funding, Kellam said that most UBI advocates envision it alongside a more progressive tax system.
"Many of the wealthiest individuals would be 'net' losers in the system: though they receive payments, because they would be taxed more, they would overall be less well off," he told BI.
An open question
Universal basic income remains a largely theoretical idea that could have significant — and unpredictable — impacts on wealth inequality, human welfare, labor markets, and entire economies.
But tests and trials at different scales and across myriad countries and contexts are putting the concept through its paces, and promise to reveal whether it's an effective way to combat poverty, fight stigmas, deal with AI, and help people live healthier, happier, and more stable lives.