Will a universal basic income reduce inequality?

In The Black

The idea of a universal basic income has divided economists for years. Some argue that the payment offers a solution to poverty, while others say it would do little to address inequality.

At a glance The concept of a universal basic income (UBI) has been a divisive one among economists for many years, but has recently attracted renewed interest amid the economic fallout from COVID-19. The interest in a UBI stems from an overall sentiment that current economic policies have not delivered adequately and that more radical measures are needed. Economists are concerned that a UBI can compromise the public funding of vital services such as health and education, and believe reforms of the welfare system are a better approach.

It should come as little surprise that the once-radical concept of a universal basic income (UBI) is now openly discussed among some mainstream economists as a possible means of reducing social inequality.

After all, the widespread economic fall-out of the COVID-19 pandemic has shaken many people’s faith in the free market, with mass job losses on a scale not seen since the Great Depression.

In April 2020 – a mere month into the pandemic – a YouGov poll in the UK found that 51 per cent of the public supported the introduction of a UBI, whereby all adults would receive a guaranteed monthly wage, regardless of their employment status.

According to Professor John Quiggin, vice-chancellor senior research fellow with the School of Economics at the University of Queensland, the renewed interest in a UBI is partly explained by a feeling that the economic path we are on “hasn’t really delivered on its promises”.

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