From Stockton, California Mayor Michael Tubbs to 2020 presidential candidate Andrew Yang, the idea of Universal Basic Income (UBI) seems to be taking root among Millennials and Gen Z who see it as a solution to reducing income inequality and addressing broader issues of systemic injustice.
However, some experts argue that the reality of UBI is far from the utopian ideals that its proponents envision. Let’s take a look at some of the reasons why young people might want to put the brakes on their enthusiasm for this controversial program.
UBI Could Undermine the Social Safety Net
Although UBI policy proposals differ on the specifics, most call for giving all eligible adults a set sum each month, usually somewhere around $1,000. This money serves as a guaranteed income and could be used without restriction, similar to the stimulus checks issued to many Americans during COVID-19.
As you might expect, implementing a program like this would be expensive and could make it impossible to fund programs like Social Security and Medicare without raising taxes significantly or adding to the already-growing national debt.
While Millennials and Gen Z might enjoy a little extra money in their pockets now, they could pay a much steeper price down the road when they are older and in need of services like Social Security or Medicare.
Daron Acemoglu, a professor of economics at MIT, made this argument in a recent piece for Project Syndicate.
“Sacrificing all other social programs for the sake of a UBI is a terrible idea,” Acemoglu wrote. “Such programs exist to address specific problems, such as the vulnerability of the elderly, children, and disabled people. Imagine living in a society where children still go hungry, and where those with severe health conditions are deprived of adequate care, because all the tax revenue has gone to sending monthly checks to every citizen, millionaires and billionaires included.”
In other words, the program that some think will improve systemic inequities could end up perpetuating them even further.
Small Experiments Don’t Always Scale
UBI advocates point to experiments like Stockton, California to demonstrate that the policy works. People use the money to pay down debt and provide for their families and, unlike critics fear, do not quit their jobs and sit on the couch all day at taxpayer expense.
Cases like this make it clear that UBI can work in certain situations, but it’s far from certain that it could work on a national or even statewide level. Rohen Shah of the University of Chicago says such logical leaps are part of the “scale up effect” that’s often misunderstood by advocates and policymakers.
Instead, Shah argues that those who want to implement UBI should consider the “general equilibrium effect,” or the notion that the different parts of the economy are impacted when a policy is applied broadly rather than to a small group of people.
“Pilot UBI programs give some people in one town a UBI check and compare their outcomes with those in that same town who didn’t get a check, Shah writes in the Chicago Policy Review. “The impact of this on national markets is quite different from a situation where everyone in the country gets a check, since this would now cause many other things in the economy, such as prices, to change.”
A Path Forward
Rather than focusing on specific policies like UBI, Acemoglu urges younger generations to take a broader look at democratic values and rethink the society they want to create from the ground up. He writes:
“The solution isn’t to dribble out enough crumbs to keep people at home, distracted, and otherwise pacified. Rather, we need to rejuvenate democratic politics, boost civic involvement, and seek collective solutions. Only with a mobilized, politically active society can we build the institutions we need for shared prosperity in the future, while protecting the most disadvantaged among us.”
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