Money may offset the issue, but giving it for free unconditionally does not solve income inequality. Economists must persist in addressing the underlying causes that drive such disparities. A UBI may be advantageous, but it is not a standalone solution; it is merely a part of a more expansive solution yet to be developed.
In a 2022 report by the World Bank, income inequality in the Philippines hovers the concentrated 17 percent of national income on the top one percent earners, while the bottom 50 percent shares only 14 percent. It shows the lopsided division and contrast of income, wherein the wealthy may satiate themselves in almost everything while the poor endure what is available near nothing. When theory becomes a reality, is Universal Basic Income (UBI) the radical solution to this socioeconomic dilemma?
A UBI provides every individual, regardless of employment, status, or attitude, unconditional cash payments regularly from the national budget (Straubhaar, 2017). Advocates of UBI conceive it as a floor to stand on, a guarantee that income no longer begins at zero, potentially uplifting people above the poverty threshold with consistent and unconditional financial support (Widerquist, 2023).
Alaska, for example, has been implementing a Permanent Fund Dividend of annual disbursement of about 1,600 dollars to permanent residents of the United States. This dividend payment contributes to poverty alleviation and does not significantly decrease aggregate employment or willingness to work (Jones & Marinescu, 2018).
While UBI is universal, this characteristic may be a drawback. Not only does it evade the real challenge of income inequality, but it also adds fuel to the flames by causing inequity. It does not differentiate between the rich and the poor, thus distributing resources evenly across all societal layers, regardless of need. Therefore, those with dire needs might receive the same amount as those already well-off, leading to a failure to address effectively the root causes of income inequality.
Furthermore, the concept of “free money” in UBI is misleading. Everything has an equivalent opportunity cost. The money must come from somewhere, likely from increased taxes (even from the poor), which is not a plausible approach (Greenstein, 2019). Hence, income redistribution of UBI creates a paradox where it may alleviate poverty in some cases but exacerbate it in others by reducing public budgets for essential services.
Despite the studies showing the benefits of UBI, implementing it is costly. Lowrey (n.d.) states that its enactment would require approximately $3.9 trillion yearly in the US. While in the UK, a restructured tax and benefits system to support UBI would cost about £28 billion. It raises the consideration of whether UBI is a sustainable model.
UBI offers a financial platform—not an alternative to living a fulfilled life (Wendt, 2021). Affordable public services, such as healthcare, education, and housing, remain vital, especially in the Philippines, where socioeconomic conditions are challenging (Africa, 2022). Considering UBI as an all-in-one substitute for all other publicly financed support would mean neglecting the fundamental needs of the citizens.
Money may offset the issue, but giving it for free unconditionally does not solve income inequality. Economists must persist in addressing the underlying causes that drive such disparities. A UBI may be advantageous, but it is not a standalone solution; it is merely a part of a more expansive solution yet to be developed.
Income inequality necessitates an equitable income distribution, not a universal shortcut.
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