How the Heck We'll Pay for a Universal Basic Income
What would it take to adopt a basic income? Frank Stilwell, a Professor Emeritus in Political Economy at the University of Sydney, explains the pros and cons.
How would the government pay to provide Universal Basic Income to every citizen? It’s one of the harder questions relating to this topic. Frank Stilwell, a Professor Emeritus in Political Economy at the University of Sydney, says there’s an “inevitable uncertainty” surrounding UBI and its economic consequences, which all depend on how it’s implemented.
In an essay for the Green Institute, titled “A Universal Basic Income: Economic Considerations,” Stilwell walks readers through how a government might go about funding a program as radical as this one. He argues UBI requires further examination before it’s adopted in any national government.
Others have suggested more precise actions that could be taken. James K. Boyce, who teaches economics at the University of Massachusetts Amherst, and Peter Barnes, a co-founder of Credo Mobile, have suggested that assessing the value of our collective inherited wealth would yield billions of dollars in cash:
"Currently, those who benefit most from our socially built assets pay almost nothing to use them. But that needn’t always be the case. We could charge for using key components of our legal and financial infrastructure; for example, modest transaction fees on trades of stocks, bonds and derivatives could generate more than $300 billion per year. Such fees would not only generate income for everyone; they’d discourage speculation and help stabilize our financial system. Similar fees could be applied to patent and royalty earnings, which are returns not only to innovation but also to monopoly rights granted and enforced by society."
Indeed, there are currently a few studies highlighting the social benefits to a UBI, which have shown teens from poor families stay in school longer and mothers buy more time to be with their newborns. However, the broader economic implications are widely unknown, which is why a number of countries, including the Netherlands, Finland, and Canada are all running trials.
Many conservatives think a UBI might be a means to replace the welfare system—one way UBI could be funded. Boyce and Barnes point out that "Past proponents of the idea include the revolutionary Thomas Paine, civil rights leader Martin Luther King, Jr., free-market economist Milton Friedman and President Richard Nixon."
Stilwell argues, “If a UBI is at the expense of public spending on infrastructure, public housing, public education or other public services the pros and cons would need to be carefully assessed. A cost-benefit analysis of these alternatives would not necessarily favour the UBI option.”
Some say it’s all about finding the money, while others, like Kevin Milligan, professor of economics at the Vancouver School of Economics at the University of British Columbia, told Quartz this policy is all well and good, but we can't cover the cost according to his calculations. Still, he believes, “The issues UBI plans to address are important.”
Stilwell and many other UBI advocates agree in creating an evidence base for policy development. It’s the only sensible way to move forward and assess its worth.
“Meanwhile, the UBI proposal is important to consider because it raises a wide range of economic and social issues that we, as political progressives, should be discussing anyway,” Stilwell concludes. “It directs our attention to the all-important questions of ends and means: ‘what sort of society do we want?’ and ‘how should we restructure our economy so that the desired social outcomes can be achieved?’”
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