Why Don’t We Start Giving People Free Money?

Posted on by Figuringgitout

Like BR1M or Prihatin, but for everyone, regardless of wealth, race, gender, religion, etc. Every. Single. Person. Gets. Money. For. Free.

YOU GET MONEY! AND YOU GET MONEY EVERYONE GETS MONEY - Oprah Winfrey Meme | Meme Generator

This is what commonly known as Universal Basic Income, or UBI for short. Such is a concept that I’ve just learned after reading a book by Annie Lowrey, an American journalist who writes on politics and economic policy – “Give People Money: The Simple Idea to Solve Inequality and Revolutionise Our Lives“.

Bought this Big Bad Wolf sale.

As you know, Figuringgitout is all about me figuring out the world, especially the financial world. So whilst this UBI idea is not new, it’s a foreign concept for me and I’m intrigued by this whole idea. If you’re like me and wish to understand this concept, I’ll share what I learned from this book and my subsequent research on UBI. But I’ll stay on my lane and share my view from a commoner’s perspective who lacks the sophisticated understanding of the working of our economy and the impact of UBI on the nation’s economy because well, I’m no pro.

WHAT IS UNIVERSAL BASIC INCOME?

I like that the book explains this concept like I’m 5 and so I would like to reproduce the exerpt here:

Imagine that a check showed up in your mailbox or your bank account every month.

The money would be enough to live on, but just barely. It might cover a room in a share apartment, food, and bus fare. It would save you from destitituion if you had just gotten out of prison, needed to leave an abusive partner, or could not find work. But it would not be enough to live particularly well on. Let’s say that you could do anything you wanted with teh money. It would come with no strings attached. You could use it to pay your bills. You could use it to go to college, or save it up for a down payment on a house. You could spend it on cigarettes and booze, or finance a life spent playing Candy Crush in your mom’s basement and noodling around on teh Internet. Or you could use it to quit your job and make art, devote yourself to charitable works, or care for a sick child. Let’s also say that you did not have to do anything to get the money. It would just show up every month, month after month, for as long as you lived. You would not have to be a specific age, have a child, own a home, or maintain a clean criminal record to get it. you just would, as would evey other person in your community.

This simple, radical, and elegant proposal is called a universal basic income, or UBI. It is universal, in the sense that every resident of a given community or country receives it. It is basic, in that is is just enough to live on and not more. And it is income.

There you have it – Universal Basic Income, i.e. everyone gets money.

WHY DO WE NEED UNIVERSAL BASIC INCOME?

Some of the arguments in support of UBI are:

  • In a UBI paradigm, society would ensure that every person’s basic needs were met, no longer leaving health coverage, housing, and food to the markets. With those needs met, individuals would be liberated to do what they wanted, whether it was tackling hard work for low pay, starting a business, caring for a child, or doing something artistic.
  • The prospect that our jobs will be taken over by robots and technological advancement. When that happens, many will lose their jobs. Hence, a UBI would be necessary to keep the masses afloat.
  • A UBI would act as straightforward income support for families outside of the top 20%, e.g. M40 and B40 in Malaysia.
  • To solve the income stagnation that the middle class is currently facing. A UBI would radically improve the bargaining power of workers, forcing employers to increase wages, add benefits, and improve conditions to retain talent.
  • A UBI could be a powerful tool to eliminate deprivation / extreme poverty.
  • Just giving everyone money regardless of their circumstance could reduce the complexity of government and beaurocracy of the welfare system.

For the sake of understanding this concept in the most direct and simplistic way, I would just write on how UBI help people in extreme poverty, based on this book.

WHAT WOULD PEOPLE DO WITH THE MONEY?

Passing out cash to the poor this way raises a few obvious questions such as:

  • Wouldn’t it make people lazy, in effect paying them to stop working?
  • Wouldn’t people waste the money? What if they squandered it all on alcohol, drugs, and cigarettes, thus reducing its intended antipoverty effect?

This question is one of the many questions that lead many to oppose the implementation of the UBI system.

Amongst other concerns are:

  • After receiving a monthly basic income, people would drop out of the labor force, leaving the country to rely on a smaller pool of workers for taxable income to be distributed to a bigger pool of people who are no longer working.
  • With a UBI, the country would lose the productivity of its people, hence affecting the economy.
  • By implementing UBI, the country would have to spend a lot of money, hundreds of billions, each and every year, in order to give out money to everyone, which would require taxes to be increased. This might slow the economy down, and cause rich people and big corporations to flee offshore.

Is that the case though? I love this one real-life example given by the author – a test-case in Kenya by GiveDirectly, which shows the impact of the UBI program on the recipients.

REAL-LIFE IMPLEMENTATION OF UNIVERSAL BASIC INCOME

GiveDirectly is an NGO that initiated a UBI program in this one rural village, which is very poor that eating in public is considered rude. So what GiveDirectly does is giving every person in the village 2,280 shillings (equivalent to RM83+/-) every month for 12 years.

The results were life-changing for many, and the risks are found to be minimal.

In the village, the idea of waste – as well as the idea of not trusting people with cash – seemed absurd. It was not just that the villagers seemed uninterested in wasting the money, or stopping working, or spending it on frivolous things. It was that their ingenuity with and excitement for the capital far outstripped anything I imagined. They were not charity cases. They were businesses waiting to start, individuals striving to prosper, families searching for a better life. The main thing they lacked was cash.

The author observed the impact of the basic income on the villagers, and it’s very heartwarming. Some of the real-life examples:

  • A man with a drinking problem who had been working giving taxi rides using another man’s motorbike used the GiveDirectly money to buy his own motorbike and started his own small business. His income has gone up and he has also stopped drinking so much.
  • Another man started saving the GiveDirectly money for fishing nets so that he could catch tilapia in the lake. When was asked why he had not saved money for nets before, he simply said, “I could not”.
  • A grandmother who took care of her family of eight was happy with the GiveDirectly money because she could afford more and better food for her family.

It is apparent that these villagers use their GiveDirectly money in the best way they see fit, according to their own circumstances. That’s why it’s argued that giving cash is often the efficient option to help those in extreme poverty.

… cash is more valuable to its recipients than in-kind gifts, such as food or bed nets or sports equipment. If you’re hungry, you cannot eat a bed net. If your village is suffering from endemic diarrhea, soccer balls won’t be worth much to you. “Once you’ve been there, it’s hard to imagine doing anything but cash,” Michael Faye, the group’s cofounder, told me. “It’s so deeply uncomfortable to ask someone if they want cash or something else. They look at you like it’s a trick question.”

Of course they want the cash.

So that’s the simplified version of the concept and mechanism of the UBI system, especially in a destitute society.

IMPLEMENTING UNIVERSAL BASIC INCOME IN MALAYSIA?

In the Malaysian context, it has been pointed out that the many different forms of government relief assistance, such as Prihatin cash aid, Penjana, and 2021 Budget stimulus packages in Malaysia, could well be the start of a full-fledged UBI system in the future. Of course, it’s not UBI in its purest form as the assistance is targeted, as compared to UBI which is supposed to be giving cash to everyone with no condition.

Here are two interesting articles on the plausibility of the implementation of UBI in Malaysia:

  • An article from 2018 by a Malaysian economist, Azri A. – Malaysia, it is time to talk about Universal Basic Income where the author showed his calculation of basic income that every Malaysian would get if we’re to implement the UBI system (RM480 by the way), but he’s of the view that the nation is not ready for the full-fledged implementation of UBI system just yet.
  • An article from 2020 by a former MP, Dr Jeyakumar Deveraj – Implement a modified universal basic income scheme urgently where he suggested implementing a modified universal basic income scheme or UBI, which would pay RM1,000 monthly to the households listed in the Bantuan Prihatin Negara scheme.

I guess in the meantime we can run a study to see what’s the impact of the many relief assistance to the rakyat? What do we do with the assistance they receive? Do we waste the money unnecessarily, e.g. spending RM1,080 of i-Sinar money (his own EPF money btw) to put up speed bumps on road? Or do we put the money to good use, e.g. paying rent, utilities, and buying food?

Universal Basic Income is indeed a simple idea but its feasibility is still uncertain and debatable. On a personal level (without looking at the larger scale), I would love to receive a monthly basic income because it would mean having my basic necessities covered every month which would give me the space to focus on my work while exploring other ventures in life that I won’t do otherwise.

What say you?

58 thoughts on “Why Don’t We Start Giving People Free Money?”

  1. Hello.

    Thanks for quoting my work. The article I wrote was back in 2018 when pandemic, quarantine, and work-from-home were still jargons to us. Several points have changed:

    1. The official poverty line has been raised to RM2,208. Using the same rule of thumb, the amount that should be distributed will be around RM1,325.
    2. Whether we’re ready or not for a full-scale UBI, I think there is an urgency for this matter to be brought up to the national level. The pandemic has severely affected everyone through loss of income, jobs, and so on. It doesn’t have to RM1,325. Even RM500 per month is good enough to help everyone to buy food and pay the bills.

    Azri A.

    Reply

  2. I have been surfing online more than three hours today,yet I never found any interesting article like yours. It is pretty worthenough for me. In my opinion, if all web owners and bloggers made good content as youdid, the net will be a lot more useful than ever before.

    Reply

  4. Reading your article helped me a lot and I agree with you. But I still have some doubts, can you clarify for me? I’ll keep an eye out for your answers.

    Reply

  12. Thank you for all of the efforts on this web site. Kim enjoys doing investigations and it’s obvious why. Most of us notice all of the dynamic mode you offer practical tips and tricks on the web blog and as well as foster response from the others on this point and our favorite girl is understanding a lot. Take pleasure in the remaining portion of the year. You’re the one conducting a first class job.

    Reply

  15. I’m also writing to let you understand what a useful discovery my friend’s girl experienced reading your web page. She mastered lots of things, not to mention how it is like to possess an ideal coaching spirit to make a number of people easily know just exactly specific specialized topics. You really did more than our own expected results. Thank you for displaying those great, trustworthy, explanatory as well as fun tips on this topic to Kate.

    Reply

  18. I precisely had to say thanks once again. I’m not certain the things I might have tried in the absence of the type of recommendations provided by you regarding my concern. Certainly was the frightful matter in my circumstances, nevertheless understanding this well-written mode you managed the issue made me to cry for gladness. I’m just thankful for this service and in addition have high hopes you are aware of an amazing job you are always getting into educating most people through the use of your website. Most likely you haven’t encountered any of us.

    Reply

  21. I’m just writing to let you know of the great discovery my cousin’s child undergone reading through your blog. She picked up some things, which included what it is like to have an awesome giving spirit to have many people just fully grasp certain impossible subject areas. You truly exceeded readers’ expectations. Thanks for coming up with those informative, safe, explanatory not to mention unique tips on your topic to Lizeth.

    Reply

  22. I as well as my guys ended up viewing the good secrets and techniques located on your web page and then immediately got an awful suspicion I never expressed respect to the blog owner for those techniques. All of the men became certainly very interested to study all of them and now have very much been taking advantage of those things. We appreciate you genuinely well accommodating and also for considering such magnificent useful guides most people are really desirous to learn about. Our own sincere apologies for not expressing gratitude to sooner.

    Reply

  24. Thank you for each of your hard work on this web site. My mum delights in getting into research and it’s really easy to understand why. We learn all about the compelling ways you deliver practical thoughts via your blog and as well boost participation from some others on the theme and our child is starting to learn so much. Take advantage of the remaining portion of the new year. You have been conducting a brilliant job.

    Reply

  28. I have to voice my gratitude for your generosity for all those that have the need for help on in this issue. Your real commitment to getting the message throughout had become wonderfully good and has all the time allowed those much like me to reach their desired goals. This helpful tutorial denotes a lot a person like me and much more to my fellow workers. Warm regards; from all of us.

    Reply

  31. I precisely wished to appreciate you all over again. I am not sure the things that I would’ve worked on without the entire creative concepts revealed by you directly on my concern. Completely was a very terrifying situation for me personally, but spending time with the expert approach you resolved the issue took me to weep over joy. I am just happy for this guidance as well as hope that you realize what a great job you were putting in training the mediocre ones through your website. I am certain you haven’t encountered all of us.

    Reply

  34. I just wanted to compose a simple remark in order to express gratitude to you for the lovely facts you are writing on this website. My considerable internet investigation has now been recognized with brilliant ideas to write about with my companions. I would state that that we site visitors actually are really blessed to live in a wonderful site with very many lovely people with great strategies. I feel really blessed to have encountered the web pages and look forward to really more fabulous times reading here. Thanks once again for everything.

    Reply

  36. I’m just commenting to make you be aware of what a fine discovery my wife’s girl gained browsing your webblog. She picked up many issues, including how it is like to possess an awesome helping style to make many people really easily fully grasp specific problematic subject matter. You really did more than visitors’ desires. I appreciate you for showing the informative, trustworthy, edifying and also fun tips on this topic to Jane.

    Reply

  38. I am writing to make you understand of the perfect discovery my cousin’s daughter went through checking your webblog. She came to find a wide variety of things, which included what it is like to possess an ideal helping mindset to get other folks without difficulty fully grasp chosen very confusing subject areas. You really did more than our expectations. I appreciate you for rendering the warm and helpful, healthy, explanatory not to mention cool tips about that topic to Janet.

    Reply

  40. I truly wanted to send a simple comment to be able to say thanks to you for all of the fantastic pointers you are placing on this website. My particularly long internet search has now been paid with incredibly good points to write about with my co-workers. I would repeat that most of us readers actually are very lucky to dwell in a good site with so many awesome people with very beneficial pointers. I feel really fortunate to have discovered your entire web site and look forward to many more pleasurable times reading here. Thanks a lot once more for all the details.

    Reply

  43. Thanks so much for giving everyone such a brilliant chance to read articles and blog posts from this website. It is often so great plus packed with amusement for me personally and my office mates to visit the blog minimum three times per week to find out the newest guides you have got. And definitely, I’m also actually astounded concerning the mind-blowing principles you give. Certain 4 points in this article are unequivocally the finest we have ever had.

    Reply

  46. My husband and i have been now delighted when Emmanuel could round up his basic research out of the ideas he made through your web pages. It’s not at all simplistic just to happen to be releasing ideas which often the rest may have been trying to sell. And we all see we need you to thank for this. Those illustrations you’ve made, the straightforward web site navigation, the relationships you can aid to foster – it’s mostly spectacular, and it’s leading our son in addition to our family consider that this concept is exciting, and that is really indispensable. Many thanks for all the pieces!

    Reply

  48. I really wanted to compose a brief note to be able to express gratitude to you for all of the magnificent tactics you are placing here. My considerable internet lookup has finally been paid with wonderful knowledge to exchange with my two friends. I ‘d mention that we website visitors actually are definitely fortunate to dwell in a great community with many brilliant people with valuable basics. I feel extremely privileged to have seen the weblog and look forward to tons of more awesome minutes reading here. Thanks once again for all the details.

    Reply

  50. Thank you a lot for giving everyone an exceptionally nice chance to read in detail from this blog. It’s always so brilliant and as well , jam-packed with fun for me personally and my office co-workers to visit your web site at the very least three times a week to see the fresh things you have got. And indeed, I’m always pleased for the perfect solutions you give. Selected two ideas in this posting are undeniably the best I’ve had.

    Reply

  52. My wife and i felt so comfortable John managed to finish up his analysis through the ideas he acquired from your site. It’s not at all simplistic just to continually be freely giving procedures which others might have been making money from. We grasp we now have the website owner to appreciate for that. Most of the illustrations you made, the straightforward site menu, the relationships your site make it possible to instill – it’s got all remarkable, and it is facilitating our son and the family consider that the content is cool, which is certainly really important. Thank you for the whole thing!

    Reply

  57. I must express thanks to the writer just for rescuing me from this challenge. After looking out through the internet and finding principles that were not pleasant, I figured my life was well over. Being alive minus the answers to the difficulties you have solved through your good report is a crucial case, and the ones that would have in a negative way damaged my career if I hadn’t noticed the website. That understanding and kindness in touching the whole lot was vital. I am not sure what I would’ve done if I had not come across such a step like this. I’m able to at this moment look ahead to my future. Thank you very much for the professional and amazing guide. I will not think twice to refer the blog to anybody who would need direction on this issue.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *