Fri. Feb 26th, 2021

During 2020 The Democratic presidential primary race, candidate Andrew Yang, proposed sending $ 1,000 every month to all US citizens 18 and older. Dubbed the Freedom Dividend, his idea gave him the role of devoted supporters, although the concept itself is not new.

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Freedom dividend is a form of universal basic income, commonly called UBI. The idea of ​​UBI has been promoted until 1795 in the writings of Thomas Paine. However, with COVID-19 epidemic Except millions of unemployed For 2020, the idea of ​​guaranteed income has become more attractive in recent times.

Those supporting UBI say that this is an easy way to distribute aid to vulnerable populations. Others worry that such a system will be expensive and discourage workers Looking for a job. Opinions change, but many countries are already experimenting with the UBI system and reportedly succeeding.

What is UBI?

The concept of UBI is simple. “It’s a check every month from the government with absolutely no justification,” says Wayne Winegarden, Senior Fellow of Business and Economics, a free market think tank based in the Pacific Research Institute, San Francisco. In other words, it is money disbursed by the government to everyone regardless of their income or need.

One of UBI’s earliest proposals came from Paine, a lawyer for American independence, who may be known for his publication of the pamphlet “Common Sense” in 1776. Two decades later, he published another pamphlet, titled “Egregian Justice”, which suggests making European leaders. A National Fund. From this fund, Pine recommended everyone reaching the age of 21 after 50 years of age and then 10 pounds to 15 pounds sterling per year.

While Pine was looking for a way to compensate those who had no land, modern UBI proposals usually focused on reducing poverty and providing economic security. They are often envisioned as a simple replacement for existing forms of public assistance, such as the Supplemental Nutrition Assistance Program, commonly known as food stamps.

Says that UBI is efficient and effective

An important advantage of the UBI system is its simplicity. “It’s a quick, effective way to get dollars into individuals’ hands,” says Jill Shah, president of the Shah Family Foundation.

Providing direct payment to all removes bureaucracy from affiliation with existing aid programs. There is no need for the government to spend time and money reviewing applications and monitoring benefits. UBI also ensures that no one falls through the cracks, and it removes the stigma of receiving public assistance.

In addition, providing UBI can boost entrepreneurship as people feel comfortable starting a business or changing jobs. “It makes one defense mechanisms Charles Clarke, an economics professor at Tobin College of Business at St. John’s University in New York City, says people are allowed to go from job to job and back to education.

Some concern about cost, discouraging work

However, others worry that UBI may negatively affect the workforce. Peter C., an economist at the American Institute for Economic Research. “I fully understand the sentiment behind the promotion of UBI, yet I think it has many unintended consequences,” says Earle.

Earl indicates vast differences the cost of living Across the country. Depending on the size of the payment, UBI may allow people in some parts of the country to live comfortably without working. This may give firms the labor to migrate from low cost areas to high cost areas. Doing so can increase costs – and prices for all.

In addition to job and inflation concerns, Earle maintains his inevitable thinking that UBI will become a political football as people adjust junk pay for factors such as a person’s income or cost of living. “More jobs and stable prices do everything that UBI does without risk first,” says Earl.

There is also the question of why the government should pay people with enough assets to support themselves. While Winegarden sees value at UBI as a simple means of distributing public assistance, he says it makes no sense to provide payment to those who do not need income support.

“If (the government) paid every household in America – all 128 million – just $ 1,000 a month, the total bill would be $ 1.5 trillion, which is about 35% of the current federal budget,” says Winegarden.

UBI vs Negative Income Tax

While UBI is currently attracting the most attention, the negative Income tax Another way is proposed to help reduce poverty in the country. Introduced by Professor Milton Freedman at the University of Chicago in 1962, it asked the federal government to make cash payments to low-income people through the income tax system. Income bracket.

From these negative tax payments, it was believed that the government could reach more people than existing aid programs, reduce expenses and complexity, and end the disintegration of work done by a higher tax rate. Many experiments involving negative income tax were conducted in the 1960s, most in New Jersey. However, the concept never caught on.

“There is a waste contained in taking money and getting it back and sent back,” says Winegarden. This may be one reason why UBI proposals are so attractive to some, as they abolish much of the bureaucracy associated with conducting government programs.

Examples of UBI in action

Currently, no country offers UBI to all its residents, but there are examples of the concept in action. Alaska has distributed long checks to its residents each year from funds created with oil revenues. In Brazil, the city of Marika has been making regular payments to its 42,000 residents since 2013. In Ireland, parents get 140 euros per month for every child under 16 years of age.

Unemployment is increasing with the COVID-19 epidemic and Job insecuritySome have renewed their calls for a nationwide UBI. “A few years ago, I never would have said that, but now I’m not so sure,” Earle says.

In Chelsea, the first monthly payment of $ 200 to $ 400 from the Shah Family Foundation program received 2,000 participants at the end of last year. Although it is still early, Shah says that preliminary data has been encouraging. There is no indication that cash is discouraging people from working, and the field of food insecurity has seen positive effects. “We will see what we think will have an impact on the local economy,” says Shah.

Even after the epidemic passes, there may be a case for UBI. “Wages have stalled for 30 years,” according to Clarke, who has studied the UBI proposals extensively and was part of a project exploring the issue for the Irish government. With the exception of women with children, providing money to supplement these wages is unlikely to discourage people from working. “It’s an argument that people make, but there’s no evidence,” Clarke says.

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