Many might vehemently argue that universal basic income should be a reality throughout. Though such a basic income model is much operated and hyped in the socialistic culture, the capitalistic economy seems to deny such rights to its citizens quite vehemently.
Though one can state that the combined advantages of anarchism and socialism can make the world of universal basic income come true, such a theory is yet to be tested to confirm its validity.
The topic of universal basic income has garnered much attention in recent times due to the pandemic. This was due to the fact that major societal and income inequality have to the fore which has made the society reconsider the aspect.
Secondly, the automation and the rising concern that technology can potentially widen such inequalities or not has also led many to reconsider the debatable topic of income inequality.
But why is there a high need for such debate during the odious pandemic? it is to be noted that, inequality used to persist even before the arrival of the pandemic. but given that economic woes were worsened during the same, inequality is now at an all-time high.
This leads to a pertinent conclusion that fiscal policy mitigating the same should be concocted as inequality has a high potential of becoming a serious social evil. Secondly, the need for the same also is at an all-time high because it seems abundantly clear that the economic growth is quite likely to be sustainably lower than over the past 50 years.
It is no news that economics is interlinked with the real world in a real sense. Here the economic growth is determined by the population growth and the productivity growth of labor. The latest consensus shows that the population growth has been slowing in emerging economies like China and India.
This implies the fact that now the emerging economies too are joining the west in a declining fertility ratio. This can be corroborated by the fact that there is a piece of considerable anecdotal evidence that empathically shows that many young couples are now increasingly choosing to have one child while many others are simply choosing not to. Thus, it can be argued that the economic growth in the future will be much lower than what it was in the previous years unless productivity growth is rapid.
- Though population graphics might show a grim picture which might hinder economic growth and hence the universal basic income, it is to be noted that penetration of several technologies will effectively help generate step increases in productivity.
2. AI integration is possible through deeper penetration of smartphones into much lower-income populations which can help provide impetus to the efficiency of the labor. On the other hand, corporates too can take full advantage of AI as blockchain technology is efficiently making transactions more efficient.
3. The AI penetration is being complemented with productivity-enhancing technologies that in their recent discovery and usage are acting as a booster of productivity in the current scenario. These technologies include rampant usage of the internet, personal computers, and mobile phones, which are become the norm of the day.
4. But is internet penetration really contributing to rising efficiency and productivity in the market? The answer to the question is affirmative, as on average, the population is already three times more productive than each individual was back in 1961.
5. Though productivity might have been enhanced by the incessant usage of technology and automation, it is to be noted that efficiency usually tapers off quite frequently over a period of time.
6. A major hindrance in such productivity has been the pandemic. the pandemic can be emphatically blamed for the economic slump and the falling productivity that will hinder the acceptance of the universal basic income model.
7. Talking about the current scenario, with falling productivity and falling population rate, falling economic growth is inevitable. Thus, if the growth is going to be sub-2.63% about half the time, as compared to almost 30% of the time in the past, recessions will be much more frequent in the future compared to the last 50 years.
8. It is no news, that during recessions, growth not only slows down but people also lose their jobs, companies fail, and inequality sets in. Thus, public policy needs to address the odious situation Clearly, public policy needs to recognize this and plan for the implementation of UBI, which garners more importance due to such recessionary discrepancies of the future.
9. Thus, if the recessions and slowing economies have to set in, the government should work towards ensuring the future of the citizens with a universal basic income plan to keep them afloat.
10. Though, it should be agreed that implementing such a strategy will require both sensible planning of existing benefits and much higher taxes to emphatically and strategically ensure that sustainable government surpluses exist. But is the government ready to tax the rich and bring about a change in the corporate world?
11. Here, it is also to be noted that raising corporate taxes or taxes on the rich too can contribute to the recessionary forces. Therefore, whatever might be the way, the government will have to risk something or the other.
12. What comes in handy is the fact which methods’ benefits outweigh their costs. While one might argue that there are many models to raise taxes, the best way to do perhaps is the one that does not harm growth.
13. Thus, will the government prove itself efficient enough to make the UBI a reality? It is something the government in collaboration with the central bank will have to figure out.