Giving residents a recurring stipend with no strings attached is certainly intriguing.
Universal Basic Income (UBI) offers an intriguing solution to urban accessibility. Despite promising results from experiments, its implementation remains limited. Through its unconditional financial transfers, UBI could make housing more affordable and strengthen socio-economic equity in cities.
Introduction
Affordability, or lack thereof, has been the urban challenge on the lips of millions of people worldwide in recent times. Skyrocketing cost of living has created acute problems for many people in most major urban areas of the world, and has caused serious concerns for and pessimism towards the future standards of life. Many countries have seen wages stagnate while housing shortages have increased the price of home ownership and even average rental dwellings. In the midst of this, the concept of Universal Basic Income (UBI) has emerged as a proposed solution to the growing fear of stagnation or even the precipitous drop of standards of living across the globe.
Although there is no fully accepted common definition of what UBI truly is, the general understanding is that it is a regular cash transfer to a given population with little or no additional requirements but to be part of the target population. If at this point you’re thinking that it sounds utopian, well, you’re right. Thomas More in his 16th century book Utopia, describes a form of universal income for everyone as a solution to common thievery and starvation. There is no argument that this type of policy is firmly enshrined in the socialist egalitarian tradition. In the following article, I will discuss what I view as the benefits and downsides to implementing UBI as a measure to combat urban affordability issues.
Has UBI been done before?
If UBI seems like such a great idea and a solution to affordability issues in major urban cities, why haven't governments ever implemented it before, you say? Well, they kind of have. As of the 1930s, there have been dozens of pilot projects all over the world to study the impact of a variety of forms of UBI on economic and social outcomes in urban environments. Famously, a five year test in Dauphin, Manitoba, Canada from 1974-1979 produced positive results across a variety of social and economic indicators, including mental health, education levels, and crime rates. Similar results were observed in pilot projects in the USA while showing a marginal negative impact on productivity and workplace behaviour. Despite these promising tests, large scale implementation has never really been applied anywhere in the world, despite a vast number of countries having a variety of social transfer and benefit schemes in place.
During the pandemic, Canada and many other countries were faced with huge unemployment and productivity challenges as well as the real potential of an economic collapse as a result of mass layoffs and temporary shutdowns. In response, the Canadian Emergency Recovery Benefit (CERB) and similar programs around the world were launched in order to put money in the pockets of residents and avoid catastrophic economic meltdowns. These programs, especially CERB, were very similar to what a UBI program would look like, in they targeted a large population, with little or no restrictions on the transfer and had the goal to sustain a basic standard of living for all. They all came at a huge price tag. Overall CERB cost over $120 billion for about a year's worth of payments, while the US spent about $800 billion and France spent €155 billion on similar programs.
How it could help make things affordable
Intuitively, you would think that a few hundred dollars more a month would obviously make things more affordable for everyone, and you’d be right. UBI injects liquidity into the hands of individuals and families who might otherwise struggle to make ends meet in high-cost urban environments. With a reliable stream of income, individuals are empowered to allocate funds towards housing expenses without the constant fear of financial instability looming overhead. This newfound financial security can mitigate the anxiety associated with housing affordability, providing a sense of stability that is often elusive in urban settings. In essence, these extra payments supplementing your income would reduce the proportion of it reserved for housing and increase spending in other sectors.
Furthermore, UBI has the added benefit of being egalitarian and adding a socioeconomic baseline for literally everyone. Let’s assume for a moment that the criteria for acceding to the UBI is “adult residing in Canada”. This simple definition eliminates the need for a complex application process, becoming more accessible, reducing administration costs and potentially reaching more people, quicker. Redistributing resources in this way would also contribute to people's ability to stay in their changing neighbourhoods as living costs increase and promote diversity within communities, where individuals from all walks of life can live.
Finally, UBI can have the potential to create alternative living arrangements for people in urban areas. With the reduction of housing and cost of living stress, urbanites can have the leeway to create meaningful environments through placemaking activities. Place making and taking the time to integrate your neighbourhood knowing that an eviction or outpricing is less likely, would contribute to more harmonious neighbourhoods and happier communities. UBI can thus be a catalyst for stimulating and enriching neighbourhoods where people and families can thrive.
So what’s the catch?
UBI is not a panacea. There are very important arguments to consider when thinking about deploying it, even in the best of circumstances. Aside from the obvious cost of the program, which could potentially dwarf healthcare spending as a share of state budgets, there is the matter of how it would affect supply and demand, especially housing. For one, UBI without an adequate housing supply would just be a catalyst for a precipitous rise in rental and house prices. When a significant number of people, especially those living in inadequate housing, suddenly receive supplementary income at the same time and want to move to a more appropriate dwelling, demand goes up and subsequently so do prices. UBI without surplus housing would simply contribute to housing inflation.
Additionally, UBI as a solution to urban affordability can only be one piece of the puzzle and not a standalone solution. Zoning regulations, land use policies and strategies have to be adapted to promote the affordability of neighbourhoods. More money for rent is meaningless if a major issue in your neighbourhood is the lack of healthy grocery stores or transit options. Furthermore, the mental health benefits of UBI can easily be overshadowed by the continued use of fossil fuels as main sources of energy which can degrade our physical health.
The Bottom Line
In conclusion, the implementation of Universal Basic Income has the potential to overcome the systemic obstacles in the way of urban affordability. It can certainly help improve housing affordability in major urban areas. By providing individuals with a financial safety net and fostering greater socio-economic equity, UBI can unlock opportunities for individuals to secure stable housing and thrive in vibrant, diverse communities. However, unlocking the sustainable potential of UBI requires policy interventions and targeted reforms. Without preparing the groundwork by increasing housing supply, and adapting land use and zoning practices, the goals of building inclusive sustainable urban environments where housing affordability is not considered a privilege but a fundamental right for all will never be realized. As mentioned in a previous blog, solving housing supply issues can be tricky and just like UBI, requires firm political will and visions, which many governments have not yet shown.
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