Universal Basic Income | Explained by Dhruv Rathee - YouTube

Greetings, friends!

Consider this-

How would you feel if I tell you that the government, without any conditions, would give you 1000 rs for free ?

And not just once. The government will give you 1000 rs for free every month

And not just you, every citizen of the country would get 1000 rs for free every month

How would this make you feel?

You might think that this is sheer madness. This is not possible

And that I am joking

But this is an economic policy which is being seriously considered in many countries in the world today

Infact, it is also being implemented in many places across the world today

This economic policy is called Universal Basic Income

Universal- that is, for all

Basic Income- that is, a basic level income being given to every one for free

In today's video, let us find out how a basic universal income works

What are its benefits and drawbacks?

What will be the consequences if it is implemented?

And is it even possible to implement it?

Come, let us find out

First of all, the most important question- What is the point of Universal basic income?

What was the need for the government to distribute money for free to everyone?

Is money now growing on trees that the government is doing this?

What is the reason behind this UBI?

One of the most important reason is the job losses that are happening and will happen due to automation and AI

Experts believe that there will be so many job losses that not everyone will be able to secure a job in the future

And the people would not be able to bear their expenses in the absence of a job

So it is necessary to give them some money for free to help them afford a basic standard of living

So that they are able to afford food and a house and live a good life without a job

Let me give you some examples of job losses due to automation

Today, self check out counters have been installed in the supermarkets of many developed countries

Normally, a person sits at the counter in supermarkets and scans the barcodes of your items

And then you pay your bill and leave

But self checkout counters have been installed in many countries

You can scan the barcodes on your own and leave. So, there would be no use of those employees

Similarly, self checkout screens have been installed in McDonald's in many countries

where you order and your food arrives. No body would stand there and take your order

So, that job stands lost too

Robot vacuums have also been released recently

(Earlier) you employed someone at your house for cleaning. That employment might no longer be needed

after some years

Self driving cars are also being manufactured today

Tesla has already become self driven to quite a large extent

If such cars are manufactured, then there would be no need for taxi drivers

So you will notice that in every sector, in some way or the other, there will be job losses on different levels

as and when technology and automation advance

And this would be observed in almost every sector and that too, very rapidly in the coming future

So Universal Basic Income is being talked about to compensate for all of this

But talking about very recent events, ever since the corona virus crisis has unfolded,

there have been so many job losses already ans so many businesses have floundered

That the idea of UBI is being considered almost in a fast forward manner

For instance, Spain has declared that it has already started the implementation of a UBI scheme

under which 462 Euros will be given to every citizen, every month

Basic minimum earnings for everybody so that there is nobody that is having to sleep on the street

So guaranteed basic income or universal basic income?

100 percent... I think that's really important

There are people in this country who would call that a nanny state, you know?

And some people will call it that but I think that it will come about one day and I think that...

Out of necessity?

Out of necessity

A lot of famous people and entrepreneurs of this world have promoted the idea of UBI

For example, you just heard Richard Branson. Similarly, Elon Musk also believes that

Universal Basic Income is inevitable. It has to be enforced one day or another

There will be fewer and fewer jobs that a robot cannot do better

And I think ultimately we will have to have some kind of universal basic income

I don't think we're gonna have a choice

Universal Basic income?

Universal Basic income. I think its going to be necessary

There was a presidential candidate named Andrew Yang in the recently conducted primary elections in the US

His entire political campaign was based on Universal Basic Income

He promised a sum of 1000 dollars per month to every American citizen if he became the President

The ones in support of UBI argue that if it is enacted, it would encourage equality in the nation and society

Poverty would be eradicated because everyone would be given enough money to bear his own expenses

and be able to afford a decent standard of living

So nobody would remain poor any longer

Another advantage is that the ones employed in jobs that pay paltry salaries

and those who are compelled to go to their jobs only to bear their expenses,they need not do such jobs anymore

They can quit these jobs

because they would already be provided with a basic income

They can then pursue their hobbies

They can look for jobs that they are actually passionate about

So if you notice, the overall happiness of the society would increase because of this

And it would also spur innovation because in general, the residents of a country

would be working for something that they are passionate about

There would be a positive increase in all three- Productivity, innovation and happiness

I'm saying "would be" because all of this is an assumption

It has not been tested on a large scale anywhere

So these are positive assumptions that might happen because of it

Third- The families would get more time to spend with one another

If someone wants to work part time and does not want to remain employed full time,

then that's also a choice

It would no longer be a compulsion to remain employed full time

And if somebody wants to go back to school or enroll in a university for a course,

then there would be time for that too

There would be no need to join a job right at the start

which happens quite frequently with the lower section of the society

They are forced into child labour in order to bear their expenses

The fourth advantage is that since it is a universal scheme,

that is, it applies to everyone, without any conditions and without any paperwork

It would diminish (the need for) bureaucracy

The government can save money in administrative costs

The government would not need to keep a check on whether someone is misusing the scheme

or whether someone is not following it correctly or not

or if the money is being siphoned off elsewhere where it should not go. All of it would not happen

In the normal unemployment benefits or other welfare schemes of the government

it is extremely difficult to regulate to make sure that the money reaches the right destination

Let us now move to the negative points

What are the arguments of those who are against the Universal Basic income?

The first argument is quite obvious- which might have come to your mind as well

when I had said in the beginning of the video that everyone would get money for free

If everyone would get money for free, then the people would become lazy

Nobody would want to work

And if no one would want to work, how would the society and the nation progress?

Everyone would become lazy and take free money to run their lives

This is the negative argument

You will notice that this too, is an assumption

On the positive side, the assumption was that the people would feel more motivated to pursue their hobbies and passion

Similarly, the negative side is arguing that the people would become lazy

I will tell you later in the video which one out of the two, has a higher chance of happening

where I will talk about experiments

What was the actual reaction of the people when a real life test was conducted on it?

The second negative point is that if everyone is distributed free money

then this would result in an inflation in the economy

The value of money would depreciate

How would that happen? Consider that you're giving everyone money for free

So the people would want to spend money on different things

And if they want to spread on different things then the demand of those things would increase

And the producers of these goods and services would want to produce more

But if the supply chain does not allow the production of more items

then they would raise the cost of their goods

They would see that the demand of the things have risen so much in the economy,

then they think about raising money and making more profit

And if the prices rise, then those things would become unaffordable again

So the value of the basic income would fall

So the value of money would depreciate and the situation would remain as it was

The money with the people does not have enough value to buy things

So, then, basic income would no longer remain basic

This too, is an assumption

How inflation works is a very complex topic

If you want, I can make a separate video on what are the reasons behind inflation

The third reason is that the people might become over dependent on this money

Think about it: If Universal Basic income is being enacted in a country for a period of 10 years

The people would become so used to the free money that comes from the government

that if that money stops coming in for whatsoever reason

then the society and economy would crash completely

Because the people are not self sustained on their own

The people do not know how to bear their expenses without that money

So the entire economy would crash completely

Fourthly, it is argued that this will pose a disadvantage for the poor people

Consider it- a man from the poor class, middle class and rich class

All three of them are given the same amount of money in the name of basic income

It can provide a decent living standard for the very poor

to help him bear his expenses

For the middle class people, this would be some extra money that they can spend on further luxuries

And for the rich class, the money from the basic income is actually useless

For them, the amount is so less that it is of no use to them

So, there is a disadvantage for the person belonging to the very poor category-

taking this basic income as compared to the middle class and rich class

So, in some sense, inequality is increasing because of it instead of decreasing

And the fifth point- the most important one- the money that is being spent by the government on UBI

to give money to the people

Where will this money come from?

It would be extremely costly for the government to give so much money to everyone

And the second thing is that the government would have to compromise

If the government was spending money on constructing better schools and hospitals,

Now the government would have to divert money on order to give money to the people for free

which, arguably, is not the correct utilization of money

It would be better to use that money to improve public services

Here I'd like you to weigh in- You have heard both the positive and the negative points

Which do you think is stronger- The positive side or the negative side regarding this Universal Basic Income?

Write down in the comments below, I want to know your opinion

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Reverting to our topic, let us look at the experiments conducted on Universal Basic Income worldwide

What have been their results?

Was the positive side stronger or the negative side stronger?

The first experiment is from FInalnd which was the first European country to test Universal Basic Income

In the period between January 2017 and December 2018

the Government of Finland chose 2000 unemployed Finnish people

and they were given 560 Euros per month, without any condition

An analysis is still ongoing and the results of this study have still not arrived. They'd be here by the end of this year

But preliminary results have revealed that in general, in the people who were given this basic income,

improvements in health conditions and their happiness levels were observed

but if we talk about the employment level, there was no improvement there

That is, it did not so happen that the unemployed people began getting more job opportunities

A second example is that of Ontario, Canada, where 4000 people were randomly selected

between the ages of 18-64 and a basic income was provided to them

This experiment began in 2017 and it was supposed to go on for three years

But the government changes in July 2018 and the new government decided not to waste money on this

It was a waste of money according to them and so they stopped the experiment in the middle

But there were some observations of experts on the basis of the part of the experiment that was conducted

Their observations was that there was considerable improvement in the healthcare cost of people

The government saved money in healthcare because of this

and the people were feeling healthier, in general

A similar story happened in India

The SDF Party in Sikkim said in January 2019

that they would make Sikkim the first state in India to give Universal Basic Income to its people

This was their election promise for May 2019

But they lost the elections in May, 2019 and another party formed the government there

So this could not become possible

You could also say that Rahul Gandhi's NYAY scheme, in some sense,

was akin to a basic income

Albeit it was not universal and there were some conditions attached with it

that only the poorest 20% of the people in India would be given a basic income

This was the idea of Rahul Gandhi

Although, selectively giving money to some people would have created new problems

because one huge advantage of it being universal was that it would reduce bureaucratic oversight and corruption

But if you selectively choose people to hand out income, for example, the 20% most poor,

then this would be a huge disadvantage for the ones who come under 21% poor category

What was proposed by Sikkim's SDF party was actually, genuinely universal

that every one would be its recipient

Reverting to already conducted experiments, there is an experiment that was conducted in India too

in Madhya Pradesh in 2010

Around 20 villages were chosen or testing Basic Income

out of which 8 villages were given basic income

and the rest of the 12 villages were kept separate and used as a control group

to observe the differences in the case of an income being given and an income not being given

What's surprising is that this was one of the first experiments of basic income

where the results were extremely positive

Results showed that the villagers spent more on their food and healthcare

The performance of the children in school improved by 68%

in the villages that were given basic income

The children spent more time in schools, the savings of the families tripled

The new businesses that were started in the village doubled

The sanitation of the village improved

Nutrition improved as well

Poverty declined, Healthcare improved, schooling improved

Its a miracle- so many positive effects were seen

And the first negative theory that I told you about in the video earlier

that the people would become lazy if they got the money

This theory is disproved at least in the case of this experiment

The people did not become lazy and spent the money for their self improvement

Sanitation, healthcare, schooling and business ideas- all improved

Similar results were seen in Uganda where 535 people were selected randomly

a 382 dollar grant was given to them and it was observed that

that job opportunities increased, the people started their own businesses

and there was a positive improvement overall

A very important question is what would it cost the government to roll out a scheme like this?

and where would this money come from?

Calculating in a simplistic manner,

then we can see how much the government will spend per person and then multiply that

with the country's population

For example, in the case of USA, the population of USA is around 330 million

and we assume that 300 million out of them are adults

and the government is going to spend 10,000 dollars per year per person

So 10,000 dollars multiplied by 300 million

The figure is calculated at 3 trillion dollars

This could be the cost that the government would have to pay annually for a scheme of Universal basic income

which is a huge figure

The size of the entire economy of USA is 21 trillion dollars

But at the same time, this is a very simplistic manner of calculation

A lot of experts believe that in reality, the cost of it would be much lower than this figure

because other things are not being taken into account during this calculation

For example, the rich people would take the UBI but they would return that UBI through taxes

The same would happen in the case of upper middle class and middle class

So the people who would actually benefit from the UBI would be the poor people

For example, the economist Karl Widerquist has said that if the UBI is rolled out in a manner

in which every American adult would be given 12,000 dollars per year

then according to him, its cost would be a mere 539 billion dollars per year

that is, only 3% of the GDP

as compared to the 3 trillion dollars that we arrived at by simplistic calculations

Even then, where would the 500 billion dollars come from?

People like Andrew Yang argue that wealth taxes would be imposed to tax the rich more

Or a lot of welfare schemes could be done away with. Money could be diverted from elsewhere

by the government and used here

At present, several such experiments are being carried out during this time in many countries

UK, Germany, France, Kenya, Netherlands, Finland, Sweden, Canada, USA

Experiments regarding the universal basic income is ongoing in all of these countries on different scales

to see how positive or how negative it will be

If you ask for my opinion, I would not say much at this point of time

because not many experiments have been conducted regarding this

I feel that we should wait for a few more years and observe the results of these experiments

on whether it creates a positive or negative effect in the society

I hope you would have found this video to be informative. Share this video

And if you like my work, you can support me on patreon.com/Dhruvrathee

or by becoming a member on YouTube by clicking on the join button

and you will get the link for upGrad.com in the description below

We will meet again in the next video

Thank you