Happier But Jobless – The Hidden Truth Behind UBI

The ideology behind having a Universal Basic Income (UBI) – is the government providing the citizens with the guaranteed income to cover their cost of living and provide financial security, to those about the poverty line. The income is given regardless of your employment status. This was suggested as a proposal to deal with the job losses that would follow due to the arrival of automation. Many countries are looking at this as a viable option to replace the various welfare schemes that they have in place for those struggling.

Whilst the idea for UBI remains in pilot phases across countries, the financing of it is where there is disagreement among stakeholders. The procurement for a scheme such as this requires immense changes in the economic system and the fact of taxpayers agreeing to lose out on some benefits themselves. There needs to be an agreement from the taxpayers as they are paying for someone else with their own productivity. There is a belief that there needs to be higher taxation on the rich or an increase in corporates, whereas others suggest a negative income tax. But the end goal is to provide income to those who will be losing their jobs due to automation.

Benefits and Detriments

The UBI has sparked debate amongst economists around the world, hence it would be fair to look at the benefits and detriments it provides in detail. UBI gives an opportunity to the workers to negotiate for better jobs or wages and also gives them a chance to better their marketability; an argument that can be considered elitist as when the benefactor is being paid for being unemployed it can translate to the benefactor becoming lazy. It eliminates the structural inequality presented by welfare programs – and this also leads to better administration and management. There is a simplicity that is brought forward easing the job for the government and erases paperwork that is costly as these are cash-based transactions. The structural inequality is diminished as, individuals are not micromanaged as to how they spend their income, and one scheme replacing a few also reduces the burden upon the government to maintain/make paperwork.

But UBI is a double-edged sword, and it brings maximum damage in the form of rising inflation; which can be the death of an economy. There is a rise in inflation due to an influx of cash into the economy, increasing the purchasing power of the individual. Hence, those who are at the bottom of the income ladder will not find an improvement in their way of life, as even the basics might become unaffordable, and the income won’t change with inflation. Oren Crass, a Senior Fellow at the

Manhattan Institute, says this would make work seem optional. People would view this as an opportunity to make money without working or without putting much effort into character or skill development. This ties into the point of the elitist argument as individuals are making easy money, which is quite enough to live in developed nations – there is not enough motivation to pursue skill development. 

Comparison – Canada and India

Taking a look at two countries, one which has implemented and failed with UBI, and another that looks at executing it in the near future. A pilot program was started in Ontario, Canada (May 2017) which was terminated a year prior, just lasting 15 months. So, what caused the Government to pull the plug on such an illustrious scheme? The experiment conducted was a skewered definition of UBI – wherein individuals would make $17,000 CAD (9,39,340* INR) minus half of any income accrued; couples would earn $24,000 CAD (13,26,128* INR), and people with disabilities would get around $23,000 CAD (12,70,873* INR). For this experiment only individuals with low income were taken, where the benefits they would get replaced unemployment insurance, pension (state) and, disability payments.

The UBI never worked out in Canada due to the fact that there were too many controlling factors over the recipients; as well as the system of politics being involved but it did show the flaws that exist and can be perfected over time. The UBI provided the users with financial freedom enabling them to make their own decisions about their spending; whereas welfare schemes always nudged them in forced directions with incentives and other necessities. This is done by welfare scheme managers as according to them, the poor lack the understanding of virtues or fall victim to vices, to which the educated class is immune. This can be looked at from another angle when it comes to the UBI, as providing incentives might still keep the workers productive and not render them unserviceable.

Most developed nations, are capitalist by nature and would not allow for a scheme such as the UBI to go forward unless they can make something off it. Firms will use influence and lobbying to keep themselves in the loop and earning. For making sure that there is success in a scheme such as this, is to stop establishments and for the government to help people identify and reach their potential. Occupational and educational schemes can go a long way if funded appropriately because to fund for basic income there are only two solutions – an increase in the tax rate or cut down on a large number of welfare schemes  This is a problem as an increase in tax will

not be what the public wants nor would cutting down welfare schemes look smart if the UBI does not work out. Welfare schemes can be boosted and they can benefit more from this, than blindly spending a trillion dollars a year (with tax removed).

India has always been prone to inflation and with population starving and lacking money to spend; people look to the government to provide funds and “put money in people’s hand.” . The narrative for it (quasi UBI) was presented in the Economic Survey of 2016-17, wherein ₹7,620 were to be given to 75% of the population. Last year, this would have cost the Government around 4.5% of the Indian GDP. Economists who have wanted this idea to come forward have since argued over who or what part of the population should this be focused on. 

There has been debates about whether women should be prioritised or the poor. The question of which welfare schemes to cut down on or to abandon also comes up, which can significantly change the way the receiving population behaves and spends. The popular opinion remains that India is not ready for UBI either, and schemes such as MGNREGA are benefitting the rural population whilst pushing individuals to work as they only provide income for 100 days of labour. The healthier outcome is if these pre-existing welfare schemes were given a boost in funding and were focused on much more than resorting to UBI.

The government and firms will also play a hand in the implementation and there can be some amount of tomfoolery and means to build up a vote bank. Cash transfers forever will be a desire for the poor and the rich can always feed on this with strings attached. Another factor to think about is the paperwork involved, the tracking and identification of the target demographic are not easy. There are a lot of loopholes with the concerned laws and paperwork and these will be exploited by anyone who wants to make a few extra bucks the easy way. Another inherent issue is with political leaders offering freebies to the population such as loan waivers, which do not leave space for schemes with cash influx such as UBI, again building up a vote bank. Loan-waivers are seen as highly immoral as they are also a means to get a vote bank, and this has been seen in action since it was first implemented in the 1990s.

India is far from ready to implement a scheme such as the UBI when they cannot even map out welfare schemes and their delivery, nor can they raise out funds for something as massive as this and for a population of this mass. The objective right now should be on focusing, providing, and increasing the amount spent on the current welfare schemes. Schemes also provide for the rural population and give them an incentive to work so there is no decline in skills or mental well-being.


To conclude, Universal Basic Income is great as a theory, but still long ways away from implementation.

The fact is that there seem to be too many assumptions and loopholes present for a scheme like the UBI to function; and even where it has been tried it has been cancelled due to the inefficiency of it. The majority of the reason would point to the change in the mindset of the workers, who could become lazy and not improve their skills or learn new services; exploitation of the government to make fast money; looping people into vote banks and increase in inflation.  At this point in time, the cons outweigh the pros of basic income, but there have been positive steps. These are just a few shortcomings of the scheme, which can be altered and perfected down the line, but for that, there needs to be a change in how the economy is run.

Looking at how Canada implemented and abandoned their effort at the UBI shows that there are still parameters that are yet to be understood by other countries who wish to use this scheme; especially developing nations such as India. With the population being as high as it is, the procurement of funds for such a venture will be an uphill battle for the government. A failure in this scheme will only lead to criticism and majority of the population left starving as the essential schemes will be cut to provide for a percentage of the funding. Therefore, for the time being and the near future the government should focus on strengthening these schemes which have been providing for those around the poverty line for so long, rather than experimenting with life and death. 

All in all, the only thing that the scheme ever achieves is psychological satisfaction but never financial satisfaction. You may get the sense of having money but in the end game, it’s all just nominal. One can only promote civility and sympathy for one another. It’s impossible to improve other people’s lives — much less get rich in the process — unless you criticise and improve the system in which their lives exist.

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