Universal Basic Income: low G high N

Universal Basic Income (UBI) became popular in 2016 after it was adopted by a few Western countries.

In UBI, money is given to poor people without any strings attached. This makes it a bit different from Conditional Cash Transfers (CCT) which imposes conditions that the poor must meet.

What’s Wrong with Universal Basic Income?

In Supereconomics, Universal Basic Income is low G high N.

This is because it does not add to productivity unlike microfinance.

This is why studies have found 2 flaws in UBI:

1. It contributes little to alleviate poverty as a whole
2. It is expensive to administer

Adam Smith, the founder of Economics, would be against UBI because:

• It can only be measured in nominal value
• It acts as an expense instead of as a capital
  • There is no guarantee that the recipient will use it for education to build up his knowledge, or to buy healthy food to build up his body

In towns principally supported by the residence of a court, the poor are maintained by the spending of revenue. The inferior ranks are generally idle, dissolute, and poor.. In mercantile and manufacturing towns, the poor are maintained by the employment of capital. They are generally industrious, sober, and thriving.. It is better, says the proverb, to play for nothing than to work for nothing.

A

Adam Smith The Wealth of Nations Simplified, Book 3

Development banks want UBI for them to find use for their idle money which is of no value when not circulating.

Therefore, UBI is an easy sign that the profits in lending are very low, that banks have to find radically new business models.

Governments of democratic countries like Brazil and the Philippines want it because it lets them placate the poor and prevent the rise of Communism or terrorism.

Unofficially, it helps politicians buy votes*.

The abandonment of UBI in Finland and Bolsa Familia in Brazil are proofs that UBI is not sustainable.

Our solution to UBI is BUR or Basic Universal Revenue, explained in the solutions section.