In his book Utopia, published in 1516, the English philosopher Thomas More proposed a basic income for all. In more recent times, the idea of a universal basic income (UBI) has been championed by numerous philosophers, economists and political leaders.
The idea is very simple. All citizens are entitled to receive a periodic and unconditional cash transfer from the government that is adequate to cover basic necessities.
The five key features of UBI, according to the Basic Income Earth Network, include periodic rather than one-off transfers, cash rather than in kind transfers such as food, payments to individuals rather than households, unconditional payments without a requirement to work or even express a willingness to work, and that such income is paid to all, i.e. basic income is “universal” in character.
Finland, Spain, Kenya and Togo have already experimented with different types of basic income schemes. In the United States, the influential economist Milton Friedman proposed, in the early 1960s, the idea of a negative income tax, i.e. those with incomes below a certain amount are entitled to receive cash support from the government rather than paying tax. Several scholars have argued that a basic income, in combination with other social services, can be an effective strategy to reduce world poverty. And since the cash transfer is universal, UBI would help create social cohesion and reduce the poverty trap for low-income families. Critics of UBI claim that the costs are too high and that it is extremely difficult for societies, especially those with populist leaders, to agree on who should receive what. Some also believe that UBI will make people more inactive and erode work culture and that there is no point in giving cash to every member of society, especially the rich.
But supporters of UBI argue that it is more efficient to give the same level of income support to all of the same age than taxing it back from those who do not need it.
The United Nations Development Programme has recently appealed for a temporary programme of cash transfers targeting almost three billion people living in poverty, which could be an effective strategy to combat the worldwide surge in Covid-19 cases.
The cost of such an ambitious effort to provide a time-bound basic income to people living below or just above the poverty line in 132 countries is estimated to be around $200 billion every month.
Given the size and importance of the informal economy in most low-income countries, where large parts of the population are not covered by social protection programmes, a temporary basic income would enable individuals and their families to stay at home while giving governments the tools to effectively enforce periodic lockdowns and help local businesses.