The issues related to inequality and economic disparities always have topical for human civilization. The uneven distribution of wealth has become the central theme of endless conflicts around the globe. In fact, economic inequality can be considered to be the primary factor of the class stratification of society. In order to address the problem, prominent economists, politicians, experts, and activists have proposed an array of solutions. In recent years, the notion of universal basic income (UBI) has acquired particular importance. The idea of providing each household with a certain amount of money has been actively discussed as a means of eradicating poverty and inequality. The idea’s proponents claim that the UBI is an effective instrument, which would enable a better quality of life for hundreds of millions of people. Nevertheless, such propositions tend to disregard the economic impact of the universal basic income. Instead, it has the potential to increase the degree of uncertainty in the already complicated environment. This essay argues that the implementation of the UBI will not alleviate the issue of income disparities, reviewing it from a purely economic perspective.
In its general understanding, the idea of universal basic income is presented in a similar manner across various contexts. According to the concept, each person should be entitled to a specific amount of income on unconditional terms. The exact amount of funds is to be determined individually for each particular nation. Ideally, it should exceed the basic sustenance level, thus allowing people to have a broader range of needs covered. Proponents assume that the UBI is bound to alleviate the stress experienced by those who are forced to take unpleasant jobs for the sake of survival. Simon Lewis dedicated a considerable portion of his opinion-based article to universal basic income. The author lists the UBI among the key aspects of a well-functioning society of the future. Lewis states that the implementation of this idea is expected to increase people’s quality of life and reduce global consumption levels by a significant margin. This forecast is based on the idea that the current elevated level of consumption is conditioned by the pursuit of reward after hard work.
Nevertheless, it appears possible to view the discussed matter from a different perspective, which would dictate an entirely different outcome. First of all, the envisaged reduction of consumption levels appears to contradict current trends. The rise of consumerism has been observed across nations, and the tendency remains strong in the 2020s. Today’s industries develop at an unprecedentedly rapid pace, presenting new benefits of modern civilization more quickly than ever. Consequently, consumers are eager to purchase and test the new advancements, which often happens at the expense of more relevant elements of sustenance (Campbell 2018). Evidently, the demands and desires of society constantly evolve, and the introduction of the UBI will resolve the issue. If universal income is provided, the demand-conditioned aspects of the market are only going to increase, thus prompting industries to respond by an elevated supply. For example, if a person receives an additional $1000 per month, the current trends suggest that they will be more likely to spend it on various means of entertainment rather than more basic needs. Changing the patterns of consumption is a major objective, but it would require a profound shift of global mentality.
Furthermore, the idea of a universal basic income deserves additional research in terms of its macroeconomic impact. As established above, the idea of the UBI is unlikely to instigate short-to-mid-term positive results on a scale of individual consumer behavior. However, it is equally projected to have major repercussions for the global economy. In the 21st century, the vast majority of developed nations rely on capitalist principles. Within this framework, purchasing power plays a crucial role in determining the state of the market in terms of supply, demand, production, and prices. In other words, the value and the cost of a specific product or service are determined by its necessity and the number of consumers who can afford it. In this regard, the UBI ventures beyond the principles of the modern economy (Hoynes and Rothstein 933). If each household receives a specific, fixed sum on an unconditional basis, the default level of wealth will simply move from zero to the UBI amount. Consequently, the market will react to the innovation, adjusting its key parameters in kind. In the end, the expenses will increase proportionally to the current state through inflation.
The idea of the universal basic income, as it is, demonstrates a broad array of variables, which are often ignored by its proponents. In his article, Simon Lewis argues that the implementation of the UBI will be a major step toward an equal society. According to these ideas, less financially secure people will be able to provide themselves with basic needs while having a portion of their budgets left for other purposes. However, this presentation of the idea does not necessarily eliminate the idea of economic disparity. Fouksman and Klein write that the questions of power and class relations remain the most serious impediments to the UBI. The situation will not dramatically change, as wealthy people will receive the basic amount, as well. If there are to be specific criteria, excluding certain groups from the UBI framework, it will contradict the very basis of the notion. The UBI is supposed to be universal, and imposing limitations will revert the concept toward the territory of welfare. In this case, the initiative will face similar issues as welfare distribution in the context of systemic discrimination and power abuse.
The universal basic income represents an area of intense interest for researchers and the public, in general, due to its perceived potential in terms of resolving profound economic issues. The idea of the UBI has attracted many proponents who continue to promote it as the key to a prosperous future. The concept implies that each citizen is to receive a guaranteed payment on a universal basis, meaning that less fortunate social groups can enjoy financial security and better quality of life. In reality, the UBI is far from being an inherently positive phenomenon for a variety of reasons. First of all, additional funds are unlikely to cause a major change in terms of consumer behavior patterns. This process is projected to be long and difficult, only being attainable through profound education in the area of financial literacy and environmental awareness. In addition, the UBI has the potential to disrupt the fundamental economic concepts upon which capitalist societies are based. Overall, it is possible to conclude that the idea of universal basic income in its current state is far from optimal, as its practical disadvantages outweigh the perceived benefits.
Works Cited
Campbell, Colin. The Romantic Ethic and the Spirit of Modern Consumerism. Palgrave Macmillan, 2018.
Fouksman, E. and E. Klein. “Radical Transformation or Technological Intervention? Two Paths for Universal Basic Income.” World Development, vol. 122, 2019, pp. 492-500.
Hoynes, Hillary and Jesse Rothstein. “Universal Basic Income in the United States and Advanced Countries.” Annual Review of Economics, vol. 11, 2019, pp. 929-958.
Lewis, Simon. “Four steps this Earth Day to avert environmental catastrophe.” The Guardian, 2021. Web.