What if you were guaranteed an income every month just for being alive?
The check wouldn’t make you rich, but it would cover basic living costs, and you could spend it any way you wanted.
That’s the idea behind universal basic income, a movement that has captured interest on a global scale. It’s a concept that’s gained support across both sides of the political aisle. In fact, many Silicon Valley leaders insist guaranteed income is the solution to potential wage loss thanks to job automation.
How would a universal basic income work, and what do opponents have to say? Read on to find out.
What is universal basic income?
A universal basic income (UBI) would guarantee a set income to every citizen. You’d get a check every month from the government, regardless of your other income streams or employment status.
Unlike current forms of assistance, a universal basic income wouldn’t have eligibility requirements, and you could decide how to spend the check. The money would truly have no strings attached.
This income would not replace the need to work. Rather, it would guarantee a minimum salary to cover basic needs. What people did next would be entirely up to them.
A history of the universal basic income movement
Universal basic income gained popularity in the 1960s and 1970s. Martin Luther King, Jr. was an advocate, stating, “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”
And President Richard Nixon, with the support of libertarian economist Milton Friedman, proposed a partial basic income plan to Congress. The plan was passed by the House of Representatives but lost traction in the Senate.
Today, the movement has seen a resurgence across the world. A few countries are piloting basic income projects for a few thousand residents. Tech companies and non-profits have also joined the movement.
Is there any data on universal basic income?
In the 1970s, the Canadian province of Manitoba experimented with a basic income in a small town of 10,000. This MINCOME experiment found that mental health improved, hospitalizations went down, and teenagers stayed in school. Plus, fewer than one percent of men reduced their working hours.
Beyond the MINCOME experiment, there isn’t a ton of data yet on the effects of basic universal income. A few studies have suggested that guaranteed income alleviates poverty and improves health and educational outcomes. It could also empower workers by giving them the freedom to choose work worth doing.
Arguments for basic universal income
There are several arguments in favor of a universal basic income. First, supporters say that it would alleviate poverty and the dangers associated with it. They point to the MINCOME experiment as evidence that basic income can improve physical and mental health and promote education.
It could also stem the tide of rising inequality and increase workers’ bargaining power. With the promise of income no matter what, workers could be more selective about work and wages. Liberals tend to support UBI for these reasons.
Conservatives and libertarians tend to appreciate the straightforward model of UBI. It could replace complex government assistance and social welfare programs while helping aspiring entrepreneurs start small businesses.
Finally, several Silicon Valley and business leaders have been vocal in their support of guaranteed basic income. Their reason? The changing economy. More and more jobs are being automated, yet many employees are working longer hours than ever before.
A guaranteed income could free people from unnecessary work. It could also give people more free time to shape the economy of the future. According to futurist Ray Kurzweil, a guaranteed paycheck could mean “you’ll do something that you enjoy, that you have a passion for. Why don’t we just call that work?”
Criticisms of the movement
One major argument against universal basic income is that it would be too expensive. Opponents believe it would be too great a financial burden to implement on a large scale. Conservatives also suggest that it would disincentivize people from working. Rather than alleviate social problems, they say, it could aggravate them.
Finally, some liberals point to the movement as a distraction from government assistance programs. They favor programs that help those most in need. A universal basic income would provide money to everyone, regardless of socioeconomic status.
Could a universal basic income take hold in the U.S.?
At this point, universal basic income programs remain small and experimental. In San Francisco, tech startup Y Combinator has a pilot project that gives $2,000 a month to a few dozen Oakland residents.
Most other projects are happening in other countries. Finland has launched a pilot project, while Canada and the Netherlands may not be far behind.
In Kenya, non-profit GiveDirectly is raising money to launch one of the biggest experiments yet. It seeks to use a phone-based system to distribute money to 6,000 people over the next 10 to 15 years.
We can’t predict the future, but the movement has been growing. Researchers will continue to collect data on the results of these pilot projects. Who knows what could happen if the results are positive?
A universal basic income may seem overly idealistic, or even utopian. But James Surowiecki writes in The New Yorker that the same was thought of Social Security and Medicare just a few years before they were implemented.
Tesla founder Elon Musk certainly thinks it’s a possibility. During an interview, Musk told CNBC, “There’s a pretty good chance we end up with a universal basic income, or something like that, due to automation. I’m not sure what else one would do.”
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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