Universal basic income.
In some ways, it sounds like a pretty simple plan.
But once you get into it, there's an awful lot of viewpoints about how universal how basic and how much income it would yield to those who get it.
Big Idea.
Lots of moving parts off a lot of polarised disagreement now what Sarah is the US economy reporter over at our partner site bank rate, and she did a great concise explainer of the whole UBI concept recently, which made her the perfect person to bring in here because I don't think you're selling one angle or the other.
Sarah, you seem to go right down the middle with good information.
Well, I think Americans, they really already have an understanding basically about what universal basic income or UBI is.
Just mainly by receiving those stimulus checks from a year ago.
Those are kind of like a sister to what UBI is.
And that's mainly because when we think about UBI, it's universal.
It's unconditional.
It's basically a guaranteed payment from the government, whether you're working or unemployed.
So I think the most well known example is probably something Americans who were paying attention to the to the run up to the 2020 elections.
They probably remember Andrew Yang and his freedom dividend proposal, but I think it when we think about Andrew Yang the Coronavirus pandemic, all of these have really shined a brighter spotlight on what UBI is.
So there's a lot in the name that tells us about it like you pointed out, it's obviously a form of income, cash income.
It is universal, which we'll talk about in a minute.
And it's basic.
It's not meant to make anybody rich, right?
It's meant to be kind of a support net Lifeline level of income.
When you look at the purposes behind it, or what may be a lot of is attracting a lot of economists and even politicians to it is the fact that there really is this government stimulus effect, kind of like the Coronavirus relief checks where if you hand all individuals a certain amount of money that's guaranteed over a periodic.
A point of time it's going to really cycle back into the economy and maybe even address some of these longer run issues like income inequality.
For example, automation.
It's a different kind of way of coming together to solve some of these longer-run problems that have been lingering in the economy for decades.
The fact that it's so universal is interesting.
That gets a lot of people questioning, and saying okay wait a minute, everyone would get a universal income check, even if they make a lot of money and have Been employed gainfully for a long time.
That's part of what universal is Is that right?
Think about it like as a capital you universal in a lot of these instances where we talk about UBI, which is everyone gets a check that's the same amount regardless of whether they're working how much they make, but I think this is kind of where you also open up.
UBI a lot of criticism, which is if you're handing everyone a check, you might end up propping up maybe the top 1% or the Jeff Bezos is of the world who might not really, need an extra money.
Jeff Bezos might get a UBI check Check every month and not even know that's gonna completely hide inside of his income.
You're proposing something like this with more deficit minded lawmakers, they might be a little more hesitant which is kind of one of the reasons why we really think about UBI is a long way in the distance Okay.
So I guess the interesting part here that you're starting to bring us toward, is not to just think of this in terms of we're taking a certain amount of money and we're giving it to x person, but to think about the next step that they pretty quickly turn it into which is an expenditure Into the economy, it's not like the money stays with the person who gets it it's they're almost like a vessel through which to pass it into the economy.
Do you think that that's a more important way to look at this or to look at the person who actually gets it?
I think that a lot of Reasons why economists and policymakers are really attracted to it is exactly what you mentioned, which is the stimulus effect.
And I think you know, the Coronavirus really checks those are really great demonstrations of especially if you're giving Americans money they're definitely likely to spend it especially if they're among the more lower income individuals.
But I think it's beyond just the stimulus effect.
I think it also kind of is a way for some policymakers to potentially want to help maybe reduce income inequality, especially over time.
As we've seen, wage growth has remained pretty stagnant.
For the last several generations of workers, so it's kind of a way of approaching it from a full circle angle with the stimulus effects, definitely as a bonus point.
It sounds like in a lot of cases it's seen as primarily to help people get out of very tough financial straits and then the stimulus effect is more of a it.
I almost hate to call it an add on because it's a huge add on But like you mentioned people who don't have much one of the interesting things about them is that they don't save much they can't.
So it goes in their hands and it goes right out right away.
So I guess the UBI check behaves very differently depending on what socio economic hands.
It ends up in some might invested in Wall Street, others.
It goes immediately to Ford Motor credit and Walmart and Amazon and CVS.
Right.
And I think you know when we take a step back here and also look at the question of how likely UBI is, I think policymakers who are definitely more deficit minded.
We're free Afraid of paying for a program as expensive as a universal basic income would be.
That's part of the reasons why they're really against it because when you prop up everyone you end up getting more money to the people who aren't likely to spend it.
If lawmakers are going to shovel trillions of dollars to a program like this, they want some sort of stimulus kind of bang for your buck.>> The other big issue that you called out in your piece is there's a whole tug of war over whether this is on top of current benefits or if other benefits go away and it ends up being kind of A neutral or a zero sum game, but you change it up.
You say, look, you might not get as much social security but you're gonna get a UBI instead or some other combination.
Where do you think that that stands in terms of being,
Negotiable or is that where this whole thing's gonna hit the rocks and grind down?>> I think this is definitely where it's going to get a lot more complicated because there's just so many different viewpoints for how you kind of implement something like UBI in addition to entitlement programs, and even I mean Andrew Yang, for example, we've been talking about him
I mean, he even proposed kind of consolidating a few of these entitlement programs while in addition to taxing corporations to pay for something like his freedom dividend.
It's definitely kind of uncharted territory.
Here as far as how you implemented in addition to your entitlement programmes, which a lot of Americans obviously want to leave intact,
Which brings me to a line in your headline of your piece you said universal basic income explained, and why these free cash handouts remain unlikely What do you think the prognosis is for UBI as we sit here in mid 21,>> I think you definitely kind of have to take a step back and look at who's in the white house right now.
And President Joe Biden.
He's not been shy about proposing lots of infrastructure spending about $4 trillion.
Right now we're kind of on the table.
And he has lots of priorities in this bill.
But universal basic income is not one of them.
So that really does kind of suggest it's not really a priority for his administration.
One thing that really struck me when I was writing this article is that about 54% of Americans are against something like universal basic income and that's according to a Pew Research Centre study.
As you pointed out also in your article, the universal part helps make it a little simpler because there's not a ton of complicated means testing.
Hence Jeff Bezos gets a check also, which is going to drive some people crazy.
But the idea that it's just everyone seems to make it At least foreseeable or comprehensible because otherwise to add a new means test to on a no 200 and something million potentially eligible adults, isn't that?
That seems like that Department of the government or on huge expansion of IRS or Treasury or whoever would run this thing.
But even more broadly, if you're talking about economic stimulus, you might have some individuals who are living in more expensive markets, meaning their incomes don't really go as far as it would maybe in a In a smaller city so I think, you know, taking looking at individuals as income levels or even whether or not they're employed as a way of means testing could kind of distinguish really the point of something like UBI.
That's interesting.
You bring up different zip codes and metros, that alone is a huge factor $1,000 a month, let's say.
San Francisco or New York is a completely different thing than $1,000 in North Dakota.
So that's always what's interesting here is I always hear this talk about a single amount for any American and there's no consideration of where you live and that's an utter night and day difference bringing out the Coronavirus really checks again.
I mean, just because it really is the best example I guess of what we know about you.
UBI and sort of how it would work.
I mean, Treasury Secretary Janet Yellen has even talked about how means testing could potentially even exclude people who are unemployed or not employed.
I think it's when you're looking basically at income as a whole.
And choosing whether I mean, deciding whether or not to exclude people, it really complicates the issue and makes it a lot more hard a lot harder.
The last thing that comes to my mind is you mentioned some of the pilot programs that have happened.
There's been at least a handful that I've read about and I'm sure you've read about.
They all as far as I can tell have been funded with grant money.
Or some kind of pilot money that came from not a regular source that taxpayers had to vote on or sign off on.
And you mentioned the numbers, the Pew numbers the 54% against, and I guess 45% you reported from that study are four and then the rest are kind of, I guess, in the middle and undecided.
So that I guess is a huge question is not just getting UBI off the ground, which we've done in a few markets.
By getting it off the ground as some of these taxpayer funded.
Even taking a step back here and kinda analyzing how all these pilot programs came to provision.
I think what we really know here is that it's very difficult to kinda stimulate how [UNKNOWN] work and even to study how it might stimulate the economy in a way, especially I mean another issue here With these kind of pilot programs as your some of them are kind of picking and choosing random people to receive these checks, and a lot of experts that I talked to, for this article pointed out that you know that, that that is kind of a step along the way to simulate what UBI would be like, but it's a little bit different.
And so I think, you know, the main point of UBI is this universal basic income and so it.
It's a big challenge to assess how it would look in the real world.
So I guess what I'm taking away from my conversation with you is we need to think about UBI.
Not just as where it goes in its first iteration, but then where it goes after that, where does that person spend it?
And see it as a broader economic stimulus plan and I think a lot of people, their hackles get up when they get to the personal level and say, why is my money going to that person?
Who's not working?
That's the complaint we often hear.
And instead, people should back up and say, well wait a minute.
It's nuanced and beyond that.
It's going through that person to perhaps the company that you work for.
The Coronavirus can Pandemic really kind of offered us this real world example about how the macro economy works.
And even two years ago, I think a lot of people might not have understood that every dollar you spend at a grocery store or a mom and pop firm.
It does cycled back into your community and your economy.
And so I think Coronavirus pandemic, obviously the stimulus checks are a great example of that.
And then UBI is just really another way of kinda echoing this process.
It also reminds us very clearly that an economy is a wheel that keeps turning all the time, right.
That's the thing keeping money moving.
And that's, and that's gonna, I think we're gonna be reminded of that as we as we as we all have to become somewhat expert on UBI and And realize that we're gonna have to make our voice heard about however we feel about.
All right, well, it's been an interesting talk.
I've been talking to Sarah Foster, she is US economy reporter with Bankrate.
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