Pros and Cons of the Universal Basic Income in the United States Essay Example

  • Category: Economics, Money,
  • Words: 1957 Pages: 8
  • Published: 29 May 2021
  • Copied: 172

The year is 1969, and while wounds have healed, the scars left by the Great Depression still serve as a reminder of this nightmarish time in the United States’s history. With the public clamoring for answers as to how to avoid another financial crisis, Martin Luther king delivers this electrifying sentiment, “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Just two years later a bill had passed through the House of Representatives championed by president Nixon and backed by 1000 economists that would guarantee an income floor for Americans (Hausman 411). Now fifty years later the idea has resurfaced once again with support from prominent figures such as Elon Musk, Mark Zuckerberg, and 2020 presidential candidate Andrew Yang. America should institute a Universal Basic Income because it will address the problem of automation, bolster the economy, and provide citizens more economic freedom.

With the threat of automation looming on American minds, the United States should implement a Universal Basic Income to address this problem before it is to late. What has been labeled the “Third Industrial Revolution” (Roubini) by some, is the coming wave of machines approaching that threaten citizen’s jobs. The United States department of labour funded a study that found that 47% of jobs were at a “high risk” of being automated. In addition to this there is a negative correlation between education and wage, and the likelihood of losing your job to automation (Frey 254).  This means that the less educated, the more likely there job will be displaced quicker by machines that can do the job faster and cheaper. This seems like common sense in retrospect, but many are not aware just how present this threat is and just how widespread this danger is. 

One excellent example of an industry that is about to be blindsided by the automation wave is the trucking and freight career field. A study done by Princeton University found that, “ we could see the introduction of semi-autonomous rigs and, potentially, broad adoption of the technology within 15 years “(Shanker 85). This very same study found that by automating its freight vehicles, the trucking industry will save 168 Billion dollars annually. Of this number, 70 billion of saving will be saved by cutting labour costs with fleets being entirely autonomous while on highways (Shanker 86). There is simply no hope for human drivers to compete in this field, as autonomous trucks are more fuel efficient, do not make stops to sleep or eat, and do not make human errors. This raises the question however of what will be done about the displaced truckers. A look at the trucking demographics shows that the average trucker is a white male between the ages of 35 and 44 with a highschool diploma and no other job skills (Trucking SOS). With 3.5 million people working in this field, the jobs cuts will be immense and with only a highschool diploma and little other job experience this leaves many of these men with no hope for a secure future.

By implementing a Universal Basic income of 1000$ a month for every American, these truckers will be given the buffer they need to reenter the workforce. Instead of immediately being crippled by bills and pressure that would prevent them from acquiring a new trade or education, instead they will have enough financial security to successfully transfer their career in whatever direction suits them. As shown, in the coming years not just the trucking industry but almost half of Americans will be at risk of losing their jobs to the threat of automation. By providing citizens with this cash in hand every month, the United States is taking a proactive approach and beginning to address this problem early enough to prepare people for this future. 

Another reason the United States should implement a Universal Basic Income, is because it will bolster our economy in a meaningful way. The Roosevelt Institute, which is an organization that works on solving modern day economic problems published a study on the macroeconomic effects of Universal Basic Income. The study found that, “adopting an annual $12,000 basic income for every adult U.S. citizen over the age of 18 would permanently grow the economy by 12.56-13.10 percent” (Nikifros 3). This would be an approximate increase of about 2.5 trillion dollars by 2025. This kind of significant increase would launch Ameep towards financial stability for the coming generation. By supplementing Amerid knrica into the next decade with a strong footing on the world stage, and be an incredible stowing they are better prepared for any financial crisis that could come their way.can incomes and implementing this incredible safety net, generations can rest assure

An excellent example of the effects on a smaller scale of implementing this Universal Basic Income can be realized by visualizing the effects that this would have on a small town. A town of 1,000 people old enough to receive the Universal Basic Income would have an influx of 12,000,000 dollars, into their economy that was not previously there. This is money that can be spent locally invigorating the local business enterprises and providing room for growth of new businesses and ventures. Now if one could imagine this exact scenario playing out on a large scale across the entire United States, one could instantly visualize the immediate and positive benefits that this would have, and how it would benefit everyday Americans on a large scale. It is programs like these that take money away from bureaucracy and put it into the hands of the people to work towards their own best interests, and thus the nations.

The other way this Universal Basic Income would help bolster the United State’s economy would be by increasing our workforce participation rates. The current United States labour participation rate is at 63.1% for those able to work (Trading Economics), a moderate figure at 10th in the world currently.The same study cited previously by the Roosevelt Institute found that by providing the above mentioned Universal Basic Income, the United States would have an increase in employment rates by about 2.1%, adding about 4.5 million Americans back into the workforce (Nikifros 15). The reason the work force participation rate goes up, is because by implementing this America is instituting a system that no longer incentivizes not working. For example under our current social safety net, people receiving government assistance for disabilities can be fearful of taking any jobs, as this may disqualify them from receiving the money they need to survive. No longer will these be the case as a Universal Basic Income is blind to people's socioeconomic backgrounds, and thus they are free to enter back into the workforce with no fear of losing the money they need to survive. 

The final reason the United States should implement a Universal Basic Income is that it will provide the citizens with greater economic freedom.The need for an economy that serves the people has never been more present. 2020 Presidential Candidate Andrew Yang is quoted as saying, “ There are many positive social activities that are currently impossible for many to do because they lack the financial resources to dedicate time to it, including taking care of a child or sick loved one, and volunteering in the community”. This sentiment is dead on when it comes to the current situation of the American people. People do not have the freedom to pursue tasks that do not provide any monetary benefits despite their aggregate benefit to society because they themselves are just trying to stay afloat. By freeing up the American workforce with extra money every month, people be better able to serve their communities and each other fostering an atmosphere that benefits everyone.

The average United States citizen is living paycheck to paycheck, with no way of dealing with any unexpected expenses such as an injury or accident. As of the most recent study done by the National Financial Capability Study, in regards to United States citizens,  “38% spend about equal to their income, and 18% spend more than their income “(National Financial Capability Study 6). This means that 56% of Americans are completely reliant upon their next paycheck for income, placing the majority of citizens in incredible financial instability. By implementing a Universal Basic Income, these people would be given a buffer to free them from this oppressive situation that completely stifles any hope for their futures. With this extra money they will have enough financial stability to seek further educations, invest, or do any other creative venture that’s short term payout was not previously enough to make it viable. Our reliance on the market to determine what is and is not a valid career choice effectively pushes anyone whose talents don’t fall into its scope into the fringes of society with almost no hope of a career. By providing this Universal Basic Income, the United States is rewarding those who choose to go off the beaten path and venture into the unknown, risking their livelihood to benefit all of ours.

Despite the above made points, some are still cautious about implementing such a bold solution to solve current and future financial problems. The first and most clear objection people have is that America will not be able to pay for it, however after digging into the numbers it becomes apparent that this is simply not the case. With the estimated cost after factoring in those who would be paying more in taxes than they would receive in the income, it was found that the estimated cost of implementing a Universal Basic Income of 1000$ a month in the United States would be 900 billion dollars annually (Stanten).As shown in the previously cited study by the levy institute, this Universal Basic Income would increase the United States GDP brining in approximately 500-600 billion dollars a year in tax revenue (Nikifros 6). This coupled with the savings from those no longer on welfare would easily pay for the Universal Basic Income making implementing it a no brainer. 

Other arguments raised against implementing a Universal Basic Income in the United States is that those receiving free money would  just stop working. Although this may come as an intuitive first impulse, the data collected strongly shows otherwise. In a study performed by the World Bank Research Performer, the mostly widely circulated economic journal in the world, the results of targeted wealth transfer programs were studied in 7 independent cases. The results found,” no systematic evidence that cash transfer programs discourage work” (Banjeree 1). These finding seem to show that rather than being a reflection of the truth, the idea that poor people do not work seems to rather be an expression of a systematic bias with no roots in reality this day and age.  

The final argument that is often made against a Universal Basic Income in regards to it addressing the problem of displaced workers by automation, is that America would be better of re educating the workforce. Although it is obvious where this sentiment comes from, a simple look at the abysmal failures of re education programs shows that even in current times they show little promise. The cited study was funded by the United States Department of Labour to evaluate how effective Trade Adjustment Assistance programs are at re integrating people back into the workforce. The study states that the,”Net benefits of the TAA programs as they operated in 2002 were negative” ( Amico 4). In addition to this the study found that only 37% of the people they trained were still working in the field after 4 years. These findings funded by the government show that their very own programs meant to reintegrate displaced Americans back into the workforce are ineffective and can not be relied upon to get us through the coming waves of automation.

The time has come when a Universal Basic Income should once again be brought to the public and governments attention, however this time it should be implemented because it addresses the coming threat of automation, bolsters the economy, and provides citizens with greater economic freedom. The United States is currently on the cusp of another industrial revolution that if not acknowledged and prepared for now, will sweep the American workforce at the ankles leaving the coming generations crippled financially. The risk of acting to early in addressing this problems pales in comparison to the catastrophic damage that will be caused if America acts to late. By rallying together as citizens and calling for proactive economic policies, citizens will make the economy work for us rather than the other way around,

 

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