We are currently facing multiple crises that are negatively impacting people’s lives and overall well-being. These crises include the global financial crisis, austerity measures, climate change, COVID-19, and war. They have led to a decline in the standard of living, decreased well-being, and even reduced predicted lifespan. To make matters worse, the cost of living crisis is rapidly evolving, adding to the burden people face.
One potential solution to alleviate the struggles faced by people is the implementation of a universal basic income (UBI). In the past, during World War II, Western governments took bold steps to address severe crises through massive state intervention. They invested significantly in creating social security systems, healthcare systems, nationalized industry, and other measures aimed at promoting equality. Despite the economic challenges at the time, policymakers recognized the urgency and necessity of these actions. The result was three decades of growth, improved living standards, increased life expectancy, and remarkable technological advancements. This period of progress was only halted by war-induced increases in energy prices that led to inflation.
According to the Financial Times, the policies implemented in the past four decades have left countries like Britain in a state of poverty, with a growing wealth gap between the rich and the poor. UBI has emerged as a potential solution to address this crisis. By providing people with a predictable and largely unconditional income to meet their basic needs, UBI aims to restore social security, promote equality, and support growth in neglected areas of the country. Moreover, UBI can have positive effects on public health overall.
However, there is a common belief that any monetary intervention, including UBI, will trigger hyperinflation similar to what was seen in Germany in the 1920s, Argentina in the 1990s, and Zimbabwe in the 2000s. The fear is that increased consumer spending power will lead businesses to raise prices, creating a cycle where employees demand higher wages to afford goods, thereby increasing production costs and ultimately reducing the overall standard of living. However, there is little evidence to support this view. The inflationary impact of UBI, or any other income-raising measure, depends on various factors such as the state of the economy and tax policies. Hyperinflation typically occurs due to scarcity of essential goods and the devaluation of currencies.
Our current levels of inflation can be attributed to similar pressures faced in the 1970s, particularly the increase in fossil fuel costs driven by ongoing conflicts. If the objection to UBI based on inflation were valid, there would be no intention to create new jobs or raise wages, as both actions increase purchasing power. If inflation were the sole concern, governments would need to reduce wages significantly and impose substantial tax hikes. However, these options are undesirable because people do not want their wages reduced.
UBI is an economically feasible redistributive economic policy that can be funded by taxing resources that contribute little to society, such as wealth and passive income from shares, as well as high incomes at the top end of society. The rich often offshore their resources, which contribute minimally to a country’s financial well-being. In market societies, the fear that UBI would lead to unchecked inflation is unfounded since competition is supported by rising purchasing power, thus mitigating price increases. The alternative to implementing UBI would be to allow areas outside metropolitan centers to suffer and become dependent on the unpredictable nature of finance.
To address our current age of crisis effectively, governments must follow in the footsteps of their predecessors who made transformative investments with significant upfront costs after World War II. These investments led to substantial social outcomes. Solving issues like climate change, pandemics, and social decay is undoubtedly costly. Consequently, there is substantial evidence that UBI is both economically viable and viewed as a necessary tool for promoting social security by voters.
It is crucial to note that the authors of this article are senior research fellows and professors at Northumbria University. They are currently studying the health, health economics, and economic case for Universal Basic Income. This story was originally published under Creative Commons by 360info. The Philippine Daily Inquirer is part of the Asia News Network, which consists of 22 media titles in the region.
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