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Is Universal Basic Income A Good Idea? How To Overcome Poverty In India - FutureIQ

4,958 views Wait, is this logic right? • Nov 15, 2024
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Universal basic income is a guaranteed paycheck to everyone in this world. Will it eradicate poverty in India? Will the world become a better place with everyone getting fixed amount of free money? In this episode, we dive deep into this topic and discuss what will be the pros and cons of UBI. Major schemes like PDS, a Public Distribution Scheme also famously known as the Ration Card in India, and MGNREGA, Mahatma Gandhi National Rural Employment Guarantee Act are already implemented in the country. Can UBI be a contender for these schemes?

Further, we discuss other alternatives to a fixed incomes such as subsidies. UBI was tested in the villages of India and the results were really surprisingly unexpected. Watch the video till the end to know everything about universal basic income and how does it work? Is it actually a good idea for our country and the world? Let us know your thoughts on this topic in the comments down below.

More Videos For You:
You Are Not Middleclass: https://youtu.be/z4Qf44Ti338

Read This Book:
Good Economics For Hard Times By Abhijit Banerjee - https://tapthe.link/goodeconomicsforhardtimes

Sources:
https://futureiq.substack.com/p/free-money-for-all-a-poverty-fix :
https://twitter.com/AaronRichterman/status/1663957463291265032 : Big study of 100+ government UBI programs and impact of those on mortality (fewer people die)!

Hope you enjoyed FutureIQ by Navin Kabra and Shrikant Joshi. Do hit us up on Twitter:
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00:00 Universal Basic Income
00:50 Condition Free Money?
02:55 Subsidies Instead Of Income?
04:45 Avoid Leakages?
06:33 Real Objections
13:41 How much money will it take to give money to everyone?
16:04 Would this lead to inflation?
16:46 Real Cons Of UBI
19:04 AI & Technology Problem On UBI

#futureiq #universalbasicincome

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Transcript

we did an episode on income inequality in India and it had a major effect on a lot of people yeah one of them asked me how can we fix this can we just give money to the poor people there was a comment in the uh in the comment section of the episode on YouTube where somebody named bond to blaze actually said we need Universal basic income correct so yeah I mean we are going to talk about Universal basic in an idea which a lot of people talk about there's lots of experimentation on it and there are lots of misconceptions I am very excited to hear what Na's thoughts are on this U concept of universal basic income so the basic
idea is you give some money a fixed amount to everybody everybody without any conditions absolutely everybody yes why very simple right that if you want to put conditions on who gets the money somebody has to check those conditions right there's lots of paperwork there is lots of corruption and in spite of doing all of that half the people who deserve it don't get it when I say half the people who don't get it these are the government's own figures okay you know the two major uh schemes in India are PDS public distribution scheme which many of you might know as a ration card scheme and the other one is the mnrega scheme which is called mgn Rea or just
rea just the name changes depending on the politics but the idea is that you give um minimum guaranteed income to rural people uh like about 100 days per year of work anybody can get if they want it right so these two schemes are quite popular they work reasonably well but if you look at the actual government figures you find that around 30 to 40% of the money only reaches deserved people 30 to 40% rest of it either goes to undeserved people by their own definition or it just goes in corruption and leakage okay and in addition to this the number of people who deserve this but don't get it is larger than the number of deserved people who get it
okay point is that it doesn't work and you are spending a lot of money in trying to make sure that it only goes to the right people right and all of that money on checking double checking having people be inspectors and so on all of that money is wasted sometimes the amount of money wasted on checking is uh a very large fraction of the amount of money actually going for the beneficiaries one thing you can do just like we did with uh our uh gas right uh is LPG that we can tell the rich people why don't you refuse to take it right so that way which was what I was coming to why not
give people subsidies instead of giving them income like instead of giving them cold Hard Cash because the the risk as most people would point out probably is that they will spend it on alcohol or drugs or some wasted money so we'll come to the second part later the risk but let's talk about uh specifically there are schemes where they say well we will give you rice or we will give you food or we will give you a subsidy on uh uh LPG we will give you a subsidy on education this is before election or after election doesn't matter okay so uh this thing is that this pretty much implies that you rich people sitting in
your laptops believe that you know better than the poor people what they should spend their money on right there are enough studies which show that the poor people have a much better idea on best use of money right you think oh they're undernourished they need money what they probably need is education right or what they probably need is so uh in Abhijit banery and EST thir ofo's book uh they give an example of this right uh they saw a very poor family they didn't have enough food okay but there was a TV and DVD in that house okay and they asked them you don't have enough food why do you have a TV and he
said well TV is more important than food what and who are you to decide it is not right maybe TV gets them information about the weather information about fertilizers information about which political party to vote for right you suddenly in your great uh intelligent uh method decided that they need food more they are smart enough to decide on their own I didn't say a word you said that you said that why not give them why give them money I asked I didn't say we should give them uh that's the implication right that's the whole point of give them money they will see every family situation is different right in some family there is a bright kid and
they are completely okay giving up food to uh make sure that kid gets education a different family uh thinks that you know just by buying a cow they can get out of uh having to do daily laborer work and they can set up uh and they're willing to give up uh other things for I I I agree that decisions about what is beneficial for a specific person should be left to the person themselves both decisions and the responsibility of whatever comes after that decision should be left with the person themselves I completely agree about that the reason I asked about uh giving subsidies versus income is I was trying to figure out if there was another way
to avoid the leakage that you mentioned yeah so by the way the leakage doesn't happen because the money went to the poor people okay that's not called leakage the leakage happens because the rich babo kept the money on the way and if you don't have any conditions then you don't need a Baboo sitting there deciding things and deciding whom to give and whom not to give you just you know you're giving it to everybody you can just you know run an SQL query uh on your comp big Adar computer and just send it to everybody's bank accounts right it's just a click and everybody's accounts get the money direct benit bab's no leakage yeah so let's come to
your real objection okay and I have when I I've have talked about you is not my real objection don't put this on me I'm just like his real objection yeah his real objection I'm pointing to all the viewers so no I have talked about Ubi to people and I have heard this from many people including well-meaning people including people who have been in villages and the primary thing they say is well you give them money and they're going to spend it on alcohol or they're going to waste it or they're going to become lazy it is a very common concern the laziness definitely is a common concern heard across many Ubi implementations and this is not just
India right this is all over the world these concerns exist yeah but has anybody looked at the data there have been around 30 Ubi studies in the world and pretty much everywhere the you just have to look right um let's take a specific example in about 20112 in madhya Pradesh there was a study okay and good scientific study Ubi implementation study with a control arm and a experimental arm okay they picked 20 Villages eight Villages got Ubi and 12 Villages did not get Ubi okay so the villages that got Ubi every adult was given 2 200 rupees per month every child was given 100 rupees per month and the 12 non Ubi Villages didn't get anything did I get those numbers
right 200 rupes are you missing a zero no uh I mean if you watched the previous episode income inequality in India you will realize that this is a big amount for a lot of people in India especially the bottom 20 to 40% right uh we completely have no clue as to what amounts are big and small okay we are in the top half per of India so we need to adjust our expectations accordingly check out that episode if you haven't now let's go through people's objections one by one okay so because you have Ubi and non Ubi you can compare they did a baseline study on in all villages on things like amount of alcoholism uh
amount of debt amount of savings and so on right we'll go through some of those okay and then at the end they compared the two sets of villages to see if there was a difference increase in Alcohol Tobacco zero in the Ubi there was zero in there was no difference in alcoh alol tobacco consumption in Ubi versus non Ubi Villages okay so getting that additional money didn't really go into alcohol and tobac okay also it did not go into random waste because 73% of the houses who received the money used it to reduce debt or increase savings okay so there goes your there goes your theory of oh they will buy motorcycles and they will buy whatever right time spent
working increased in the Ubi Villages compared to the non Ubi Villages increased how does that happen so um because people suddenly feel okay with this money I can do something with my life right uh for example a lot of women moved from daily labor to a small business oh example there is a woman called Tulsa Bay who used the money to buy two buffalos huh used the milk from the buffalos to start a Kya business wow that is smart and entrepreneurial yes and so now she is going to work harder at this business than what she was working earlier correct uh and in general that is true people were 3x more likely to start some small business
compared to uh the people in the non Ubi Villages right okay okay agriculture output of Agriculture increased because people used the money to buy either better quality seeds or they used the money to buy fertilizer that is wow education the amount of money spent by people of the Ubi villages on children's education actually increased number of children in school increased the number of children dropping out of school decrease do you want to guess why uh because a a the family can afford to educate the child they can afford to pay the fees and conversely the family doesn't need the child to work to earn extra money Health uh visits to the uh clinics the I mean there'll be like a PE
Primary Health Clinic type thing in these Villages right visits to the clinic decreased because average nutrition improved and also compliance with um the U prescriptions increased I mean if they say take this medication people actually used money to buy those medication and take them so that also increased right just 100 rupes per month per adult and 100 rupees per child yes per month made that much of all of this possible yes there was much more that happened right I'll give you some more examples of non non Financial things okay okay women's situation improved okay the number of women who participated in important decisions in the family that increased the number of women going out outside the house uh to
do some activity increased why because they were also getting the money so now the woman has an independent source of income right so now she can uh you know put her foot down at certain things in the house and she can go do things yeah right and of course this is not you know I know a whole lot of people who have worked with noos who have worked in villages are going to come up with a whole bunch of counter examples and how the husband just takes away all the money and how the husband just drinks and all of that and sure you know that happens some of that happens there are some husbands who are like that but this
is an actual study of the average effect okay no you can't just look at the bad apples and make decisions based on a few bad apples you have to see overall what happened other benefits of this is that this allows people to break the poverty cycle right as you are poor so you can't uh do things you want to do you can't invest in education you can't invest in a business and that's why you remain poor and then it's just become circular whereas once you're able to break out then you can be on a different trajectory one more benefit is that it can improve capitalism okay by that what I mean is that in capitalism the rich
guys have all the power and they can squeeze the poor guys but uh if poor people have an alternative source of income it improves their bargaining power we're talking about 7,000 rupees per person per year that's a small enough amount that it doesn't come anywhere close to what the Communists have in mind okay this is just just very basic that a person shouldn't die of starvation I completely agree with you on that and I'm completely on board with this idea entirely the one argument that you will definitely hear people make in terms in in in in the Indian context is that we have a huge population so 7,000 per month per person is still going to
be a huge number yeah so 7,000 per year okay per year not per month yeah okay so so um and of course the other objection might be that our government will never consider things like that or we cannot afford it right guess what the economic Survey of India has actually discussed this question in great detail right a whole bunch of Baboo economists sat and analyzed this and they have a 40 page report what they say is that if we give 7,000 per year to every adult okay that will cost about 4 .9% of our GDP okay now any economists here are going to start screaming 4.9% of GDP is a huge huge huge amount right yes but but what
that means is that we can skip all the other subsidies we give the LPG subsidy and the PDS and the mg and Rea and all of that right those subsidies themselves right now cost us 3.7% of our GDP those don't have to be given because this will take care of all of those first point okay second point is that about 25% they estimate that 25% of the population can be convinced to not take this benefit right so that reduces the expense further okay two questions one if you take away the subsidies and give a Ubi then aren't you essentially replacing the subsidy money with Ubi no you are replacing a subsidy with money and what
that means means is that the poor people will use the same amount of money but in a better way in a different way in a different way which will be better because they know their situation better than you know their situation right you have decided that they should get 100 days of some boring work somewhere okay they get to decide where to spend that money but uh they'll also be spending more money on things uh they will I see that they were getting subsidy for correct as in some of this money will go towards taking the older subsidy but some of that money they will choose to use elsewhere think of it that way fair
I'm just wondering if that offset is uh enough or if that offset is right the other question I had is yeah won't this lead to inflation because people now have suddenly more purchasing power so um this is one of the unknowns as far as Ubi is concerned there have been uh some studies uh about inflation and if impact on inflation actually not so much studies right but more of uh analysis and um the answer isn't very clear I will include links to studies for people who can look at it but right now you know it's not probably it's not like definitely inflation will increase okay let's come to the um you know real objections real problems with uh Ubi
right once we talked about previously were I think a little philosophical unfounded yeah so uh a real possible problem one of those is this that uh there have been 30 Ubi studies in various parts of the world right including Nigeria and Argentina and so on one problem is that all of these Studies have been small both in terms of size as well as duration uh okay nobody really knows what will happen when it goes to a large scale or when it uh continues for 10 years 20 years 30 years so that is one uh possible problem both the time scale and the skin is not especially I mean you know if I'm going to say that you give people
free money and they'll become lazy over a long term not necessarily shortterm I mean some people argue that Saudi Arabia is an example where people have become lazy because they have money right 2/3 of all Saudi Nationals work for the government and it is claimed that 90% of them do nothing right but the reason Ubi is getting so much air time and so much hype and so many people are talking about it is because the rich people of Silicon Valley are talking about it and the argument is that they are just trying to make it someone else's problem okay the argument is that their software which they are uh creating irresponsibly and which is causing the
inequality in the first place and that's going to become much worse when the AI uh Revolution hits right so instead of them being careful about what technology they built and how they allow it to spread and being responsible rampant is the word rampant yes uh they say that you know what we will not worry about these things we will do what we want and whatever problems happen because of that let's solve those using Ubi right I mean that is an objection I have heard uh people make so these are the issues with Ubi yeah so we've covered both the uh advantages the benefits and also some of the known issues with Ubi but basically what I mean uh what I want to say is
that a this is going to be a problem AI will cause problems in the shortterm if uh longterm it'll probably be good for the world but shortterm it'll cause problems that's the case with every technology uh shortterm it always causes upheaval in the job market no but this one is so fast that it can cause much more upheaval than normal Technologies because most most other Technologies worked on a human lifetime scale yes this one will be years not this years not decades and a lot of jobs are suddenly going to disappear in a few months rather than over a decade which used right so which is why I think Ubi needs to be considered seriously people
have to find out about Ubi and the fact that the first three objections that come to your mind are really not justified and that the data shows that but there might there are other objections which really need to be worked on but if we went rampant with AI I don't I think it's okay to go rampant with Ubi as well yes that's my take on it um I am very honestly very strongly a proponent of Ubi and not just at 7,000 per person per year but probably a little more than that considering the inflation that we we are currently going through without Ubi uh but yeah that's another discussion another topic on another set of people to talk about see
this Ubbi is a contentious topic and I'm sure the viewers will have lots of questions about this please ask your questions in the comments and we will try to give databased answers to them yeah that's what we are all about we are about cold hard data and cold hard facts which is what this is Shri naen future IQ