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Universal Basic Income - A Quick Fix to Poverty?

Employment under stress

From solving the basic mathematical problems, to solving daily life problems, computers and technology have evolved at an unimaginable pace over the last few decades. It is the forever evolving technology with the unprecedented speed of evolution that has changed how humans look at life. The development of Artificial Intelligence (AI) has changed the way things used to function. Industries which used to be labour intensive are turning capital intensive. Now the machines can not only build cars, but the cars can drive by themselves on the road, there are robots which can replace the waiter in a hotel or restaurant, and there are various back end technologies in our daily use devices which are analysing the data we feed in to bring out the needed results, making our lives simpler. The development of AI, at such a faster pace, holds the capacity to take over the repetitive jobs and the jobs which are done by the unskilled labourers, making them jobless in the upcoming years. Even the financial crisis and the latest pandemic has raised the unemployment rate to a higher level, bringing the people of all the countries into an uncertainty about the future of their jobs and income.

In order to improve employment opportunities and reduce poverty, countries spend millions in poverty alleviation programs to help citizens sustain life. These programs involve bureaucratic energy to verify who is the appropriate beneficiary of a particular scheme and supervising the implementation of the hundreds of programs running simultaneously. With respect to India, it has been observed that there are difficulties in reaching the right beneficiaries. One of the examples include a report by Stranded Workers Action Network (SWAN) that showed 96% of migrant labourers did not receive rations by the government of India after the lockdown in April 2020. These schemes are leaky in nature and the money of the taxpayers often ends up in the pockets of middleman and shady NGOs.

Introducing Universal Basic Income

This brings us to a point where we feel the need for a program, such as the Universal Basic Income (UBI) which can potentially replace all the existing schemes. UBI is an unconditional regular payment of money to individuals for their life sustenance, which has been in talks for a few years now. This program helps in reducing the work of bureaucrats, money gets transferred to every beneficiary directly, the middleman is out of the picture, and everyone receives a basic income to live their life with ease.

This program is promoted by several renowned economists namely Milton Friedman, Peter Diamond, Christopher Pissarides, industrialists namely Elon Musk and Mark Zuckerberg , and politician Andrew Yang whose election campaign was based on UBI. There are opponents of the program who believe that an unconditional payment disincentivizes work, reduces productivity and is unaffordable for the governments to pay everyone.

Looking at the Pilot Projects

There have been several pilot projects going around the world to test the idea of Universal Basic Income in order to understand how humans would react to such a programme if implemented. In these pilot projects, researchers take two groups to study the impact of UBI, one group is provided regular payment of money unconditionally, while the other group is the control group which is kept the way it is to see what improves for the first group compared to the controlled group.

There are many countries where UBI pilot projects have been tried, namely the United States, Canada, Spain, Kenya, China, Japan and more. Most of these pilot projects have given positive results such as increase in happiness, better sanitation, higher enrolment and better attendance in school, improvement in health, etc. However, at a few places, no change in behavior was reported. The best part is, there were no negative consequences of unconditional payment given to people.

Let's look at a study done in India. In the state of Madhya Pradesh, a pilot project coordinated by the Self Employed Women’s Association and funded by UNICEF in the year 2011 and 2012 included two studies to understand the behaviour of people reacting to a UBI scheme. In the first study, every person in the family in eight villages received a monthly payment: 200 rupees for adults and 100 rupees for each child (paid to the guardian). After one year, the payments were increased to 300 and 150 rupees, respectively. Meanwhile, 12 similar villages acted as a control group receiving no basic income. In the second study, an income of 300 rupees per adult and 150 rupees per child was given to the families of one tribal village for the entire trial. Another tribal village acted as a control group. The results of these studies were highly positive as they led to improvements in sanitation, quality food and school attendance of children.

Most of the programs have shown that a basic income program, apart from boosting health, happiness and school attendance of children, also increases trust in social institutions and reduces crime. Through the pilot projects it was observed that not all places showed positive results, there were a few instances where no improvements were seen but the people didn't show any negative impact of receiving regular monetary transfers. This tells that it's the time to look at a better solution to all the problems and build a happy society.

UBI-a need for the future?

UBI will be able to solve the problem of potential decline in employment caused by AI over the years, it will help in reducing pressure on the governments and their employees to handle various schemes simultaneously, and will be able to reach every individual who is in need of support for life sustenance. This will not only increase happiness among the citizens, but will also encourage them to take time while finalising their career, and the youth will be motivated to look more at innovations than at grabbing jobs to just satisfy basic needs of life. There should be more pilot projects on a higher scale in order to assess the impact of UBI, so that it helps in building a scheme that captures all the schemes and delivers better results. Now the question is, will UBI be a burden on the government or will it be a game changer?

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