Question
"What are some positive and negative effects you could envision becoming a reality in response to the implementation of dividend policies for citizens?" -
Response
In a hypothetical world where there is universal basic income, there would be many positive and potential negative consequences as a result. The first thing that comes to my mind is the impact that it would have on the economy. Given that every citizen would receive an annual baseline income on top of their personal household income, I would interpret there to be an increase in consumer spending. For the most part, this is a positive situation for the overall health of the economy. When money is injected for consumers to spend, small businesses thrive. This allows there to be development and growth in communities. Another thing to note is that when small businesses are healthy, there is more opportunity for employment, which is another green light for economic health. Another beneficial impact that could result from universal basic income is that it would help individuals create better situations for themselves and their families. If a family is struggling to get by in an undesirable area of the country, a baseline income from the government could just be the perfect thing to allow them to move to a more desirable and affordable place.
After reflecting on the potential positive outcomes of having universal basic income, I have thought about some of the possible negative impacts as well. One of my main concerns would be how the money from the universal basic income would be spent by the consumers. As I stated above more consumer spending is good, but too much of it can also be a bad thing. If the majority of citizens spend too much of their added income on things that aren’t necessities or do not allocate enough to savings and investments, then one of the main purposes of the universal income would not happen. This being allowing individuals to relocate to better areas of the country. Another downside that comes to mind is the potential sizable increase in taxes for higher income individuals and corporations. If this happens, then the corporations would be forced to increase the prices of products and goods, making daily necessities less affordable. That being said, citizens receiving the funds from universal income may not benefit financially as much as planned. If prices of daily goods become too steep as a result of universal income, then my other concern would be inflation. The government would likely be pressed to print more money to sustain the income that they have chosen to provide from everyone in the country. As general prices in the economy rise, the value of our currency slowly decreases, which is natural as time moves on, but could be accelerated from universal income.