Money For Nothing…

Context: Large doles of cash transfers as Universal Basic Income (UBI) is an impractical and immoral idea.

Reforms in welfare in the US:

• Initially, the welfare was simply perceived in the form of tangible support by the government, for e.g giving out cash transfers.
• However, they were thought of encouraging people to stay unemployed and just do occasional informal jobs.
• Welfare was reformed in the mid-1990s by Bill Clinton. Welfare payments to mothers with children were limited to those actually working or joining work-training programmes. This was called ‘workfare’, as opposed to traditional welfare.

A case against UBI:

• Promotes inefficiency: In the US, cash transfers to support unemployment during the pandemic has led to a further shortage in the labour force.
  • 3 factors for low labour force participation rate in the US:
    • First, despite vaccination, several workers worry about catching Covid if they restart working.
    • Second, labour mismatches are widespread: unemployed actors and journalists are unwilling to take up jobs as waiters or pizza deliverers.
    • A third major reason is that large cash doles allow unemployed people to live fairly well without working.
• India’s additional concerns against UBI: Infeasible in a culture of freebies and subsidies
  • Political parties promise freebies and subsidies, resulting in wasteful administrative expenditure, corruption and diversion to the non-deserving.
  • Thus there little scope for abolishing subsidies and implementing UBI and it becomes impractical and immoral.

Studies supporting the case for UBI

• A study conducted by Abhijit Banerjee and others in 2015 ‘Debunking the Stereotype of the Lazy Welfare Recipient, found that there was no significant drop in the workforce due to these programmes.
  • They analysed government cash transfer programmes in Honduras, Morocco, Mexico, the Philippines, Indonesia and Nicaragua,
  • Similar results came from a pilot project in Madhya Pradesh.