New Report Claims UBI Would Grow U.S. Economy By $2.5 Trillion

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Above Photo: From futurism.com

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Researchers from a U.S. think-tank have released a report detailing how a universal basic income could impact the overall economy. Based on their research, a UBI of $1,000 per citizen per month could help the economy grow by the trillions in just eight years

UNIVERSAL BOOM

The premise for a universal basic income (UBI) is simple. Every citizen of a country receives a fixed monthly or yearly income from the state. This basic income doesn’t come with any strings attached to it, and every person is eligible for UBI regardless of their employment or social status.

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Those who support such a program typically argue that UBI could provide much-needed financial security as we approach a future of widespread intelligent automation, but according to researchers at the Roosevelt Institute, UBI could do so much more.

In a recently released report, Roosevelt Institute research director Marshall Steinbaum, together with Michalis Nikiforos at Bard College’s Levy Institute and Gennaro Zezza from the University of Cassino and Southern Lazio in Italy, asked an all-important question: How would a UBI policy impact the macroeconomy? Most expect UBI to have a positive impact on extreme poverty, yes, but what will it do to benefit the economy as a whole?

Apparently, quite a lot — growing it by trillions of dollars, to be specific.

The new study based its forecasts on three basic income scenarios. According to the first of these, if adults are given $1,000 every month, the U.S. economy could grow by 12.56 percent after an eight-year implementation. With current GDP pegged at $19.8 trillion by the Congressional Budget Office, this translates to a total growth of $2.48 trillion.

In the second and third scenarios, a monthly UBI of $500 and $250 could lead to a GDP growth of 6.5 percent and 0.79 percent, respectively. It’s also worth noting that the report used an economic model that assumed that growth is constrained due to low household incomes, which the researchers note is debatable.

UNIVERSAL BOON?

Proponents of UBI now include experts from various fields, including some of the tech industry’s most prominent figures and entrepreneurs, as well as some of the world’s leading economists. Yet, just like any radical idea, UBI isn’t without its skeptics, and the biggest source of concern for these critics is funding. Just how would a government pay for a UBI program?

An obvious answer would be through taxes, but according to the Roosevelt report, this set-up would essentially be pointless for the economy: “When paying for the policy by increasing taxes on households rather than paying for the policy with debt, the policy is not expansionary. In effect, it is giving to households with one hand what it is taking away with the other. There is no net effect.”

Whether the source of funding for a UBI system is taxes, debt, or even space, the only way to truly determine how it would affect the economy and individual citizens is by putting it into action. Several trial programs are already in motion, including ones in Finland and Canada. Germany also has a small trial in progress, and Hawaii is looking for ways to institute its own UBI.

These trials and reports like the Roosevelt Institute’s are an important first step toward assessing the viability of UBI, and so far, the system looks promising. According to the authors of the report, “If the macroeconomy behaves in a way that’s consistent with how it has in the recent past — and there’s every reason to believe that’s the best place to start — then enacting an unconditional cash transfer certainly wouldn’t harm it and would probably do substantial good.”

  • Andreas Bimba

    Sorry but a UBI is just plain wrong. The best economists available such as Professor Bill Mitchell, Randall L Wray, Stephanie Kelton, Warren Mosler, Pavlina Tcherneva and many others have proven that a UBI would be hugely inflationary at a liveable level of income as it does not add significantly to the productive capacity of the economy. In addition affluent people and businesses will resent paying taxes to support large sections of society and this would be a perpetual and growing political problem. If ‘created money’ is used to fund the UBI inflation is unavoidable. The only affordable UBI will be a pittance, condemning millions to a life of poverty.

    No the answer is to ensure near to full employment and minimal underemployment through fiscal stimulus arising from well targeted national government net spending, a humane and adequate social welfare system and a well designed and administered Job Guarantee program which acts as the employer of last resort.

    http://bilbo.economicoutlook.net/blog/?p=23719

  • John Schoonover

    Full employment is a great idea, but it doesn’t work anymore. Late capitalism is awash with univestible capital with no new ways to put it to work in sight. That is the situation that is driving calls for UBI.

    In effect, capitalism has reached its limits to growth on this planet. It has filled its evolutionary niche to the point that its further expansion is at a virtual standstill. Without growth, capital dies.

    UBI is, in essence, a desperate attempt to continue the existence of capitalism on life support while what we really need is an economy that provides to each according to his needs in exchange for accepting from each according to his abilities.

  • TecumsehUnfaced

    Isn’t uninvestible capital what we should be taxing with a vengeance? It’s a sign that wealth has seriously over-accumulated in the worst places.

  • kilna

    “affluent people and businesses will resent paying taxes to support large sections of society”

    Many affluent people and businesses buy our politicians to export our jobs to the lowest bid, send our young over to die in someone else’s desert, and profit by denying children cancer treatment. I do not have much sympathy for parasites, they are welcome to resent it all they want.

  • Calgacus

    Full employment works now, always worked, will always work. It is really, really easy to have full employment. The government gives a job to anybody who shows up and wants to work. The idea that the the capitalists must be in charge, that government can’t easily ensure productive full employment is 100% capitalist propaganda, 100% an insult to one’s native intelligence.

    Andreas is right. UBI is a really old trick of the bilionaire class to keep themselves in charge. On the other hand, the guy that said that about abilities & needs also said a job guarantee would end (aufheben) the capitalist system, but that seems to be forgotten.