UBI around the world: Money for all

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  Quantumrun Foresight
• December 2, 2024

Insight summary

Universal Basic Income (UBI) is gaining attention as a potential solution to poverty, providing citizens with regular, unconditional payments regardless of employment status. Several countries have experimented with UBI, showing benefits such as improved well-being and financial security. However, UBI could reshape labor markets, increase automation, and prompt governments to adjust welfare policies and taxation systems.

UBI around the world context

UBI is a concept that has gained global attention as a potential solution to poverty and economic inequality. UBI is a social policy in which all citizens receive a regular, unconditional cash payment from the government, irrespective of their income or employment status. The primary goal of UBI is to ensure a basic standard of living, reduce poverty, and improve quality of life. As of 2024, no country has fully implemented a nationwide UBI system, though countries such as Finland, Brazil, and the US have experimented with various forms of basic income models. 

In 2016, Finland launched a basic income trial providing 2,000 unemployed citizens with 560 euros ($640) per month. Results showed that recipients reported improved well-being, demonstrating the potential benefits of reducing the bureaucratic hurdles typically associated with unemployment benefits. In Brazil, the Bolsa Família program, initiated in 2004, offers a UBI-like stipend to the poorest 25% of the population, helping with essential expenses such as food and school supplies. Furthermore, cities like Santo Antônio do Pinhal have introduced fully operational UBI systems funded by local tax revenues, illustrating how smaller regions are leading the charge in UBI experimentation.

UBI is also being explored in different economic contexts. For example, a 2023 study by the University of British Columbia suggested that implementing a UBI financed through carbon taxes could boost global GDP by up to 130%. This study emphasized that such a system could address poverty and sustainability challenges. Meanwhile, in the US, pilot programs such as the Alaska Permanent Fund, which has provided annual dividends from oil revenues since 1982, offer a glimpse into how UBI might function in a developed economy. However, critics argue that financing large-scale UBI through taxes could be unsustainable, especially in countries with significant informal sectors, like those in many developing economies.

Disruptive impact

With a steady, unconditional income, individuals may feel more secure in pursuing education or career paths that align with their passions rather than financial necessity. The reduced financial pressure could also allow people to take entrepreneurial risks or invest in their communities. However, motivation to participate in the traditional workforce could decrease, especially if the UBI amount is perceived as sufficient for living. Over time, this shift could lead to changes in how people view work-life balance and personal achievement, as more individuals opt for flexible, self-directed lifestyles.

For businesses, UBI could affect operations, hiring strategies, and product development. Companies may need to adapt to a workforce less reliant on employment for survival, potentially leading to a shift in employee retention and recruitment practices. Additionally, businesses focusing on consumer goods might see changes in demand, as individuals with UBI may prioritize spending on different types of products and services, such as education, wellness, or leisure activities. However, some industries could face challenges in maintaining a stable workforce if UBI discourages individuals from taking lower-wage jobs. 

Meanwhile, governments could use UBI to simplify existing welfare systems, reducing administrative costs and improving efficiency. However, financing such a program sustainably could become a significant challenge, particularly in nations with large informal sectors or limited tax revenue. Additionally, governments may need to consider the broader economic impacts, such as inflation, and develop policies to prevent potential negative effects on the cost of living. Furthermore, UBI could reshape social policies, prompting governments to invest more in education and job training to help citizens make the most of their financial security.

Implications of UBI around the world

Wider implications of UBI around the world may include: 

• Reduced reliance on traditional welfare programs, allowing governments to streamline social services.
• People having more financial freedom, which could lead to an increase in entrepreneurship and small business creation in local communities.
• UBI potentially leading to inflation if not carefully managed, causing governments to intervene with new fiscal policies.
• Long-term demographic changes, as people may choose to start families earlier or later, depending on the financial security provided by UBI.
• UBI shifting labor markets, with fewer people willing to take low-paying, manual labor jobs, leading to increased automation in industries like manufacturing and retail.
• Increased spending on education and personal development, as individuals no longer feel constrained by the need to work solely for income.
• Political shifts, as the debate over UBI polarizes voters, with younger generations more likely to support long-term implementation.
• Environmental impacts, as UBI may allow more people to focus on sustainable living practices, such as community agriculture or renewable energy projects.
• Technological advancements in automation accelerating, as companies look for ways to operate with a smaller, less labor-dependent workforce.

Questions to consider

• How could UBI change your approach to career choices and personal goals?
• How might UBI impact the cost of living in your community, and how would you adapt to those changes?