16 BENEFITS OF A UBI FOR BUSINESS AND THE ECONOMY
This is the continuation of a series that explores the pros and cons of a Universal Basic Income (UBI).
The first in the series examined the need for a UBI and compared it with Welfare and a Job Guarantee.
The second explored how a UBI can be funded without increasing taxes or debt, or taking money from other programs, or causing excessive inflation.
The third article proposed a way to implement a UBI with very little risk
The fourth in the series identified the Benefits for Individuals
This article looks at the Benefits for Business and the Economy.
The last considers the Benefits for the Government and the People
A Universal Basic Income (UBI) will Deliver:
- 24 Benefits for Individuals (see here)
- 16 Benefits for Business and the Economy
- 19 Benefits for Government and the People (see here)
FOR BUSINESS
Boosts Profits and Investment
1. A UBI would boost profits and investment as the money is spent into the economy, increasing the value of each business
Delivers Zero Cost Wage Rise for Low-paid Workers
2. A UBI would provide a substantial wage increase for low-paid workers — taking pressure off employers.
Promotes Automation and Productivity While Sustaining Demand
3. As automation and virtualization shed labour and drop costs, the UBI will sustain demand. A UBI could even promote automation as a result of workers requiring higher wages to compensate for onerous jobs. These changes can be managed without social cost by setting the UBI to keep the labour market in dynamic balance — as explained in the third article.
Increases Labour Flexibility
4. With their basics covered, more people may be willing to work fewer hours, sharing the available work with others — important as automation takes hold. Spain is already looking at a 4-day work week[1], with The Australian reporting other initiatives[2]. This flexibility would remove the need for business to manage absences, or employ temporary labour at extra cost, as the people who are job-sharing can work out how to cover absences between them.
Increases Labourforce Participation
5. Trials have shown increased labourforce participation arising from a greater confidence to go out and seek a job without any concern about the loss of benefits — increasing the pool of labour for business.
Improves Employer/Employee Work Relations
6. Without the ever-present threat poverty due to job loss, some studies show conscientiousness and agreeableness improve significantly.
Reduces Bureaucracy Related to Meeting Current Welfare Job Applications
7. A UBI would free business from engaging with applicants who apply simply to meet their ‘mutual obligations’, without any real prospect of getting the job.
Reduces Reliance on Debt
8. Extra sales generated as the UBI is spent can fund expansion, in lieu of some borrowings.
FOR THE ECONOMY
Targets the Most-Needy to Limit Inflationary Pressures.
9. Despite everyone receiving the same weekly amount, the UBI can be targeted to the neediest in the community by treating it as income under the current welfare system, and by recovering it on a sliding scale from earned income via the tax system. This ensures the payment is ‘universal and unconditional’, while the recovery of the UBI based on income limits inflationary pressures. The third article explains the idea in more detail.
Boosts Small Towns and Depressed Suburbs
10. The UBI would not only help its recipients, but it would also help local businesses, indeed whole communities, to remain viable as the money is spent in regional towns and depressed areas of our cities that have low income levels — especially as more people choose, and are able, to work remotely from home.
Increases Economic Activity
11. While the immediate benefits of the UBI would flow to individuals, local businesses and communities, the money would soon percolate through the whole economy increasing turnover and profit, driving investment and employment nationwide. While this is a positive in economic terms, it also highlights the need to shift to a sustainable circular economy (topic for another day).
Promotes Entrepreneurship and Creative Endeavours
12. A broader range of people would have the security and mental space to start new businesses and explore new creative opportunities.
Improves System Stability
13. With the UBI replacing some debt-based money with newly created debt-free money — it would help to stabilize the economy by lessening the need for individuals, businesses and government to borrow to finance all economic activity. This would mitigate the business cycle and reduce financial stress.
Increases Savings and Home ownership
14. While marginal, the evidence[3] is again positive, showing some small increase in savings and home ownership.
Results in a Better Educated, Productive and Creative Citizenry
15. Due to the improvement in cognitive ability and the time to focus on ‘self-improvement’, a UBI will help to lift the overall level of education, enhancing productivity and entrepreneurship.
Makes Australia More Competitive
16. A UBI will make Australia more competitive by enhancing entrepreneurship and facilitating automation and providing a better educated and more flexible and committed workforce, due to the underpinning security provided by the UBI.
The last in the series identifies 19 Benefits for Government and the People
[1] https://www.theguardian.com/world/2021/mar/15/spain-to-launch-trial-of-four-day-working-week
