Positive and Negative Effects of a Universal Basic Income

Across the globe, even in this great era of modern development and equality, there are still millions who live in impoverish conditions, and despite their hard labour they are still unable to earn enough income to support themselves and their families. These terrible living conditions can lead to malnutrition and even death by starvation in some cases. However, there is a solution to these problems, the implementation of a universal basic income would drastically improve the lives of millions across the globe, giving them enough income to feed their families and have a higher quality of life.

But firstly, how would the basic universal income work? The idea is that all adults will receive a payment to cover the basic costs of living, regardless of their wealth, employment status or class. The implementation of such a system should end poverty globally, and will allow the earth’s population to live in prosperity and have enough money to receive education.

This concept is not new either, it has been debated for a long time, but there have been little advances in implementing this system on a global scale.

Get quality help now

RhizMan

Verified writer

Proficient in: Social Problems

4.9 (247)

“ Rhizman is absolutely amazing at what he does . I highly recommend him if you need an assignment done ”

+84 relevant experts are online

Hire writer

However, there have been some small-scale uses of this system to test its effectiveness. One such place where this has occurred is in Namibia, Africa. From January 2008 to December 2009, a basic income project was implemented by the Namibian Basic Income Grant Coalition, and the system was implemented into the two villages of Otjievero and Omitara. All adults in the two villages were given the equivalent of 12 US dollars, and despite it being a seemingly low amount, it had a huge impact on the villages.

It was found that malnutrition rates had fallen, school attendance rates has risen and that the community’s income had risen significantly and had become greater than the amount that had been given to them as part of the scheme. This is as the money gave the villagers more money to partake in economic activities and to enterprise to make more money. It was also found that overall crime rates had fallen by 42%, that stock theft had fallen by 43% and that other theft had fallen by just under 20%. This is a prime example of the positive externalities that can occur as a result of a universal basic income, as it will allow the quality of life of the people affected to increase exponentially, resulting in economic growth as a result of increased economic activity, as well as a decrease in negative externalities such as theft as people are no longer forced into crime by their low incomes.

However, despite the seemingly only positive results, there is data to suggest otherwise. Data collected by economist Milton Friedman from pilot schemes in Seattle, Denver and Indiana in the late 1960s to early 1970s showed that the introduction of a basic universal income in these areas lead to a 17% reduction in work effort from men, as well as a 9% reduction in work effort from women, suggesting that the implementation of a universal basic income would lead to a drastic decrease in the output of certain economies as people would rely on the income from the basic income as oppose to working harder in order to earn more. This could lead to major negative externalities, such as a fall in GDP as less goods are produced and sold, as well as unemployment as producers lay off workers due to the fall in demand for consumer goods as less is produced.

Despite the potential economic costs of a universal basic income, a study conducted in Manitoba, Canada from 1974 to 1979 concluded that the introduction of a basic income lead to huge improvements in both the mental and physical health of the population, as it was found that there was an 8.5% drop in hospital visits, fewer emergency room visits fewer incidents of work related injuries and accidents. As well as this, fewer patients were admitted to psychiatric hospitals and there were less reported cases of mental illness. This improvement in health could benefit governments substantially, as less would be spent on health services and so it could be invested elsewhere.

To conclude, whilst I believe that the implementation of a universal basic income would not be a good idea, as it has been proven to have to negative economic effects when tested in certain areas, I believe that an increase in the amount of small scale projects implementing basic incomes to certain areas would be more beneficial to the world, as it appears that some areas have benefitted to a much greater extent than others where this system has been tested, such as in Namibia and Canada, where the positive impacts of a basic income have been huge.