Experts Say Universal Basic Income Would Boost US Economy by Staggering $2.5 Trillion
In addition to helping counteract any automation-caused unemployment, a universal basic income could also provide a huge boost for the US economy, according to a new study from the Roosevelt Institute. They predict a $2.48 trillion increase in the nation’s GDP after eight years of UBI.
UBI in the U.S.A.
In recent months, everyone from Elon Musk to Sir Richard Branson has come out in favor of universal basic income (UBI), a system in which every person receives a regular payment simply for being alive. Now, a study carried out by the Roosevelt Institute has concluded that implementing a UBI in the U.S. could have a positive effect on the nation’s economy.
The study looked at three separate proposals: a “basic income” of $1,000 per month given to every adult, a “base income” of $500 per month given to every adult, and a “child allowance” of $250 per month for every child. The researchers concluded that the larger the sum, the more significant the positive economic impact.
They projected that the $1,000 basic income would grow the economy by 12.56 percent over the course of eight years, after which point its effect would diminish. That would translate to an increase in the country’s gross domestic product of $2.48 trillion.
For the purposes of their study, the researchers assumed that the UBI in the U.S. would be funded by increasing the federal deficit. They also investigated the potential effect of funding it by increasing taxation on households, but found that route to be less effective.
“When paying for the policy by increasing taxes on households rather than paying for the policy with debt, the policy is not expansionary,” they wrote. “In effect, it is giving to households with one hand what it is taking away with the other. There is no net effect.”
Other Side of the Coin
The increased use of artificial intelligence (AI) and automation in the workplace might mean there’s less work to go around in the future. Proponents of universal basic income say it could help society avoid the problems caused by this increase in unemployment, but not everyone is so confident that such a scheme is the answer.
Max Sawicky, a former economist at the Economic Policy Institute, has argued that a basic income would not address the underlying problems that cause income equality and unemployment, such as an insufficient minimum wage and a lack of support for unions.
Additionally, restructuring welfare into a stipend given to all adults might make it more difficult to deliver targeted aid to those that need it the most — many proposals for UBI programs would see food stamps, unemployment checks, and other benefits discontinued to foot the bill.
Joseph Stiglitz, a Nobel Laureate economist and an advisor to the Scottish government, shares similar concerns. Scotland is currently pursuing universal basic income trials, and in an interview with BBC News, Stiglitz said that a broad program might not be the best use of the nation’s available money.
“Should the scarce money be used to give everyone a basic amount, or should it be targeted at those who have particularly strong needs? I think there needs to be some targeting,” he said.
The biggest barrier to implementing a UBI in the U.S. on a large scale is the fact that it’s never been done before, successfully or otherwise. The $2.5 trillion boost to the economy predicted by the Roosevelt Institute could only be attained if the U.S. were to commit to giving every adult $1,000 per month for eight years, and that’s quite a huge commitment for something that may or may not pay off.