Can a $1,200 Stimulus Check Kick Off a UBI Revolution?
Many of you have likely already received your $1,200 check from the government meant to bolster your bank account in the wake of the coronavirus pandemic. That amount won’t last long, but it’s something — and some hope it will turn into a universal basic income (UBI) program that sticks around even after the virus recedes.
The philosophy of UBI
Over the past year, universal basic income entered the American zeitgeist thanks to one man: Democratic presidential candidate Andrew Yang.
In his pithy renaming of universal basic income, Yang espoused his Freedom Dividend — a monthly check of $1000 — as “a foundation on which a stable, prosperous, and just society can be built.”
Idealistic, right? But of course, like any utopian ideal, it’s more complicated than that.
How it works
According to the Stanford Basic Income Lab, “UBI has roots in social democratic, anarchist, and socialist thinking,” but has been historically proposed by people on both sides of the political spectrum. It has five basic characteristics:
Periodic. Payments occur at regular intervals.
Straight cash. People receive the payments in cash, so they can do whatever they want with it.
Universal. It goes to everyone, not just a subset of the population.
Individual. Payouts come to individuals, not households.
Unconditional. Everyone gets it, regardless of employment status, ability, need, etc.
Thomas Paine, Martin Luther King Jr., and even President Richard Nixon discussed some form of basic income. But today, as people’s livelihoods are being replaced by machines, the idea is growing in popularity.
Increasing automation
As Americans grow increasingly worried about automation, some are looking to UBI as a solution. In a poll published by Pew Research Center in 2019, 82 percent of Americans said they thought that robots would take over most work presently done by people by 2050. Seventy-six percent said this shift would probably magnify economic inequality.
Enter UBI, which could help support those whose jobs are replaced. This argument leads to another: is work even necessary?
The morality of work
Many Americans, particularly those making minimum wage, have to work more than 40 hours per week just to live. Unpaid maternity leave, lack of scheduling flexibility, healthcare tied to employment status, and bans on remote work keep us tethered to corporate bosses.
UBI could be a way to break those chains. Without having to worry about income as much, people could get more time for their families and personal interests. Those with variable incomes (or no income at all) like artists, freelancers, and volunteers would have a financial cushion. It’s also a way to compensate caregivers and stay-at-home parents. Their labor is traditionally unpaid, but it props up our whole economy.
This is why the left thinks UBI is the beginning of liberation from capitalism. Those on the right think it’s a slippery slope toward a total welfare state. Experiments didn’t prove either of them right.
Finland’s experiment
Finland ran a small test in 2017 by providing 2,000 unemployed Finnish citizens with €560 per month. Originally, the experiment was supposed to go on for two years. But it was cut short, and theories concerning the cause of its “failure” varied widely.
The American socialist magazine Jacobin blamed the basic income experiment’s flop on a lack of time and money combined with prohibitive social norms.
The biggest problem with how the public has received news of this experiment is how they interpreted the subject itself. Many treated this social policy test as a predictor of how UBI would pan out on a larger scale. However, Professor of Social Policy at the University of Helsinki Heikke Hilamo clarified that “the Finnish experiment was about partial basic income targeting able-bodied people without work, it was not about universal basic income.”
$1,200 stimulus checks: A real test of UBI?
Our own experiment in UBI is taking place right now, with $1200 stimulus checks directly deposited in many citizens’ bank accounts to combat the economic effects of COVID-19. And this experiment has made it quite obvious that the government doesn’t understand how much the average American needs to survive.
In a comment all too reminiscent of Arrested Development’s Lucille Bluth, Treasury Secretary Steve Mnuchin told CBS that “the entire package provides economic relief overall for about 10 weeks." Although he was referring to the “entire package” -- including small business loans and better unemployment benefits -- this comment still didn’t sit well with many people struggling to stay financially afloat.
Besides the eye-rolling that followed this out-of-touch comment, there were other reactions to this stimulus check plan. For one, where did all this money come from? The plan was passed by some of the same people who called UBI impossible. Does this mean that this was a lie? Was the $2 trillion used for the CARES Act being withheld from us for political reasons only?
Is a universal basic income really economically feasible long-term?
Andrew Yang has an answer for this, too. His solution for funding the Freedom Dividend was to consolidate certain welfare programs and enact a 10% Value Added Tax (VAT). A VAT is applied to a product at every point of the supply chain where the value is added.
In theory, this could work. And Yang still stands behind it. After ending his campaign, he started Humanity Forward, a non-profit that promotes universal basic income and other principles of Yang’s campaign.
There are some major drawbacks to his plan, though. If we consolidated social programs, social security, SNAP, and WIC could all go away — at least in the forms we know them now. The Freedom Dividend money may not be enough as a replacement for these long-standing programs. Other aspects of Yang’s plan, like how it treats those with disabilities, also need some major revisions.
But when it comes to the government giving everyone a check, we’re getting a preview because of coronavirus.
When it comes to the checks, some issues are already obvious: for many, it is taking weeks for the money to show up in their accounts. And scammers are trying to divert the funds from citizens into their own pockets.For a UBI program to work, it would require more planning and precision than the rollout of the checks.
Frankly, none of this answers the question of economic feasibility. It does shed light on the obstacles in the way of establishing UBI. The real question may not be about economics at all, but rather which of our social issues to prioritize first.
Choosing which issue to solve
Nathan Heller, in his 2018 New Yorker article about universal basic income, summarized the possible effects of UBI perfectly: “This doesn’t mean that it’s not a practical idea. It means only that it’s not a magic spell.”
In our current political environment, a universal basic income could be less a guarantee of financial freedom and more a way to pay childcare providers, hospitals, schools, and other necessities that are already guaranteed in other countries. Would we be as desperate for UBI if childcare were subsidized by the government? If Medicare For All were a reality? If college were actually affordable?
On our country’s list of inequality-inducing policies, the only thing bringing universal basic income back to the forefront is the economic disaster that COVID-19 has caused. It could show us which problems, if any, UBI would solve. For now, we have to wait and see what the real problem is — the lack of a higher financial floor or the structure of the system that created it.
Illustration: Jemma Frost 2020
