Universal basic income is money paid regularly to everyone, yet economists strongly oppose it. Why is that? We examine whether basic income is truly a realistic policy by analyzing funding issues, its relationship with existing welfare systems, and its economic impact.
Basic Income: Why Do Economists Oppose It?
There is a policy that receives significant public attention yet faces strong opposition from most economists: the ‘basic income’. Even now, in 2025, it remains difficult to find economists within mainstream economics who support basic income. For instance, positions on the minimum wage are also complex to simplify, but the differences are relatively clear because the minimum wage is intertwined with value judgments about efficiency and equity. However, basic income should not be approached through the binary lens of efficiency versus equity.
We often use terms like “left-wing values” and “right-wing values.” Left-wing values prioritize reducing inequality and poverty and favor big government. Conversely, right-wing values place greater importance on efficiency over reducing inequality and poverty and favor small government. Yet, this framework breaks down when it comes to basic income.
First, let’s clarify the definition of basic income. Basic income is the ‘periodic’ payment of a fixed amount to ‘every citizen’. Disaster relief payments to all citizens during special circumstances like COVID-19 are not basic income. Support payments targeted at children, the elderly, youth, or farmers may share some similarities with basic income, but strictly speaking, they are not basic income.
Many people support universal disaster relief payments but oppose providing basic income annually or monthly. Similarly, many support ongoing programs like free school meals, child allowances, and senior allowances but oppose basic income. It is crucial to distinguish these different forms of support.
Two Positions on Basic Income
The arguments for basic income fall into two categories. The first proposes adding basic income while maintaining the existing welfare system. The logic is that there are people suffering from poverty in the blind spots of the existing welfare system, and universal basic income should solve this problem. According to this argument, it can reduce inequality, but new funding sources must be secured to pay for basic income.
The second position advocates replacing the existing welfare system with a basic income. The rationale is that the current welfare system incurs high costs due to the significant number of public servants required for selection and administration. By paying a basic income, the need for a large public servant organization in the selection and administration process is greatly reduced. Therefore, downsizing this organization would free up resources. This argument shows little concern for reducing inequality and favors a smaller government.
The two positions surrounding basic income are very different. The former is closer to left-wing logic, while the latter is closer to right-wing logic. However, both positions agree that the government lacks the capacity to systematically implement selective welfare. The most straightforward counterargument to left-wing basic income is: “Why not just collect more taxes and use that money to strengthen selective welfare, rather than basic income?” Generally, those who emphasize the importance of addressing inequality tend to be on the left, and the left typically favors a larger government. Yet, advocates of basic income believe more taxes should be collected while simultaneously doubting the government’s ability to distinguish between those who are poor and need government assistance and those who do not. They lack trust in the government’s capacity for selection.
Basic Income: There’s No Way to Fund It
Now we can properly point out the problems with the basic income debate. While there are several problems with basic income, two are central. The first is the issue of funding. A left-leaning basic income proposes adding it to the existing welfare system. Let’s take South Korea as an example. Assuming a population of roughly 50 million, paying each person 1 million won annually would cost 50 trillion won per year. Considering the 2022 government’s total expenditure budget proposal was 607 trillion won, this is a significant amount. Raising an additional 50 trillion won annually is a monumental task, requiring extreme caution. Simultaneously, however, citizens would only receive 1 million won per year. This amount is insufficient for citizens to use effectively. Reducing the basic income amount would lessen the burden of funding the budget, but it would also make the concept of basic income more meaningless. Significantly increasing the basic income amount would further increase the already enormous budgetary burden.
In the Republic of Korea’s 2022 budget proposal, total national tax revenue accounts for 343 trillion won. Of this, corporate income tax revenue amounts to 75 trillion won, and comprehensive real estate tax revenue, which faces criticism for being excessively high, is 7.4 trillion won. Collecting an additional 50 trillion won annually in taxes for basic income would inevitably inflict massive shock on the economy and society. This cannot be resolved through measures like a carbon neutrality tax or a land holding tax.
Some might think that if there’s no money, we can just print it. However, this method could trigger severe inflation, causing major economic turmoil. It might even lead to currency devaluation failures, as seen in Turkey and Argentina. Introducing a basic income through money printing rather than taxation could result in inflation far worse than what South Korea is currently experiencing.
The second problem concerns the government’s ability to select recipients. I believe the first problem isn’t properly addressed either, but even if this issue were somehow resolved, it could be countered with: “Why not distribute that money more to the poor and struggling, rather than equally to all citizens?” The argument is that giving more money to low-income groups, the disabled, the unemployed, those living in semi-basements, children, and the elderly would be better. Proponents of basic income argue that the government cannot effectively identify the socially vulnerable groups mentioned earlier. But that’s not true. Most existing welfare systems already identify and assist those in greater need relatively efficiently. Meanwhile, critics point out that the process of identifying beneficiaries creates social friction with those who miss out. However, reaching social consensus on selection and policy decisions is fundamentally something the government must and can do.
Of course, there are people whom the welfare system fails to identify, and basic income has the advantage of potentially helping them. However, the cost required to achieve this benefit is literally astronomical. The easiest way to reduce traffic fatalities is to ban private car ownership. Advocates of basic income are fundamentally no different from those who propose banning private cars to eliminate traffic accidents.
Why Economists Oppose Basic Income
Perhaps because the arguments against basic income are relatively robust, it’s rare to find mainstream economists who support universal basic income. While there are a few economists advocating for a right-wing version of basic income, there are almost no prominent mainstream economists advocating for a left-wing version.
Abhijit Banerjee, MIT professor, a leading economist in the field of poverty and the 2019 Nobel Prize in Economics laureate, also stated that while basic income could be helpful in developing countries where the government’s targeting capabilities are weak, advanced countries like South Korea have sufficient targeting capabilities. Moreover, proponents of basic income argue that since people dislike paying taxes to help the poor, increasing taxes while returning a portion in the form of basic income would be acceptable. However, the claim that this alone can reduce tax resistance is not valid, as basic income is insufficient while the required tax increase would be substantial. Additionally, basic income could potentially lower support for existing targeted welfare systems. The very argument for basic income implies distrust in the government’s ability to target assistance effectively. Consequently, much of the logic behind left-wing basic income proposals is likely to align directly with the right-wing basic income argument, which seeks to dismantle existing welfare systems and distrusts the government itself.
This also explains why basic income differs from the other income support systems mentioned earlier. While the argument that disaster relief funds should be distributed to all citizens as quickly and as a one-time payment as possible had merit, distributing large sums annually like a basic income is on a completely different scale. Furthermore, unlike disaster relief funds, which have an economic stimulus function, distributing large sums like a basic income during good economic times has almost no effect as an economic stimulus measure.
Free school meals and child allowances also differ from basic income because they serve specific purposes: protecting vulnerable groups and supporting childcare costs. When implementing programs with relatively small amounts, the process of selecting recipients can be difficult and may incur higher costs. Therefore, distributing funds to everyone can often be more cost-effective. However, basic income involves a scale of funding that is fundamentally different from free school meals or child allowances.
Another argument for basic income is that tremendous technological advances are eliminating jobs, so money should be provided in the form of basic income to prepare for situations where people cannot work. However, significant technological and robotic advancement still requires more time. Even considering this, increasing taxes on the wealthy and providing assistance to the poor should come first; basic income is not the solution.
It is true that the current welfare system has vulnerabilities and still fails to provide detailed care for those in poverty. But the direction the government should pursue is to implement appropriate wealth redistribution through taxation and build a larger government to create a more robust social safety net. It is not to embark on a path that no one in the world has yet properly attempted.
