Introduction
The aim of a universal basic income is to eliminate poverty by covering the basic cost of living. That’s why it is also known as guaranteed minimum or citizen’s income. However, whether such a process is sustainable in the long run is questionable. Handy believes that governments should provide financial security to their citizens through a universal basic income but only to those are below the poverty line and/or have no job but are ready to work.
Many governments of the world are considering starting a universal basic income in order to eliminate poverty in their country. Few countries have already launched guaranteed income program to monitor the effects it has on the economy of their country.
The Reasons
Here are some reasons to consider universal basic income –
1. It can counter the negative effects of labor-saving technologies – The advances in modern technology like robotics and artificial intelligence have paved the way for automation of work. From a business standpoint, it makes sense to utilize automation as it helps to boost production levels and increase profit. However, automation of work has also caused many people to face unemployment. Thus, from a moral, political and economic viewpoint, it presents a dilemma.
One way to solve this problem is to tax the productivity of companies who have automation in place and use that money to provide financial security to people who are jobless or below the poverty line. In this age, where productivity has reached unprecedented levels, such a vision may be possible soon.
2. It can help to eliminate poverty – Many countries are trying to improve the welfare of the poor people by introducing subsidies and transfer schemes. However, such type of public distribution system has many leakages and the money fails to reach the poor. As a result, it cannot solve the problems of the people. Instead of subsidizing fuel, food, and water, it is better to transfer a cash amount in the banks of the citizens directly.
This way, they don’t have to purchase anything in order to get the benefits and they can choose to spend their money however they wish.
3. It will allow natural-resource rents to be utilized more efficiently – In oil-rich countries like sub-Saharan Africa, the oil revenue does not pass through the hands of the citizens and go directly to the government. As a result, the citizens are not aware of the magnitude of oil revenue and their right to it. Since citizens are unaware, they don’t scrutinize how the government spends this money and it results in poor public-spending.
If the oil-revenues are shared directly with the citizens and then they are taxed, it would be beneficial for both the citizens and the government. Since the money is now taxed, the government will be more careful about how to utilize the money.
Conclusion
Handy believes that if oil-exporting countries distribute even 10-20% of their oil revenue to their citizens, it can dramatically change the lives of the poor. We may already be at a point where universal basic income is inevitable. So, the best thing we can do is to figure out a way to make it work properly.