Universal Basic Income - Will it work?

By Daniel Kong

Sunny Hills High School

Universal basic income (UBI), popularized by former presidential candidate Andrew Yang, has now entered the realms of possibility. 

But what is UBI?

According to TheBalance, universal basic income is “a government-guaranteed payment that each citizen receives.” Specifically, in Andrew Yang’s case, the government would provide monthly payments of $1,000 to every American adult citizen. In other words, any licensed American over the age of 18 would have a passive income of $12,000 annually. 

Earlier this week, Twitter CEO Jack Dorsey announced that he would be donating $3 million for “#guaranteedincome programs in cities across the country.”

This system sounds great on paper, but is it realistic?

There are several UBI experiments going around the nation but on a significantly smaller scale. For example, in Stockton, California, Mayor Michael Tubbs has been overlooking a project known as the Stockton Economic Empowerment Demonstration (SEED), which started in 2019, where 125 random Stockton residents are given $500 monthly for 18 months. The results have been positive so far, but this isn’t an accurate representation of what would happen if this were to happen nationwide. Not to mention, there are many flaws that come with a plan that sounds incredulous. For one, there wouldn’t be enough funding for this type of project, at least right now. 

Yang proposed implementing Valued Added Tax (VAT), a tax on the production of goods or services a business produces, as well as taking funds from current welfare programs. Yet, this would not be nearly enough with over 209 million adults in the United States. That would roughly add up to $209 billion annually. 

“I’m not sure that [UBI] would be good in the long run for the US economy with the national debt being as high as it is,” said Liane Cha, an 11th grader attending Oxford Academy.Additionally, UBI would cause significant inflation throughout the country, ruining the current value of money. With every citizen over the age of 18 receiving a flat amount of money annually, there are several ways that people can take advantage of the system.

If American adults start receiving additional money from the government, sellers will start increasing the prices of their products, knowing that the consumers will have enough money to buy the product, whether they like it or not. As a result, this would cause major inflation, with the value of money decreasing and prices increasing. UBI would also disincentivize Americans to work because they have a guaranteed monthly income. “I’m against a UBI because it’s basically the government giving out guaranteed, free money,” said Eunice Kim, an 11th grader at Cypress High School, “People are receiving free money from the government because of COVID-19 and as a result, they aren’t going back to work knowing that they’ll have a big fat check waiting for them.”