I'm looking for feedback and critiques of an idea. Universal basic income is an increasingly popular idea, but most agree that it would be terrifically expensive. Assuming that the goal of UBI is to provide everyone with enough liquidity to participate in the economy, would a universal basic loan work just as well without costing as much on paper?

Specifically, the government would make available a no strings attached personal loan to every citizen, to be paid back at some future date (e.g. 12 months in the future), with the interest rate set according to whatever monetary policy makes sense at the time. The interest rate may also carry with the size of the loan, the term, previous good repayments etc.

Optional follow up: could this also replace the tax system, in that the interest rate could be set high enough to be used as the money drain in the economy instead of income tax?

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    $\begingroup$ Have you seen the movie "In Time"? $\endgroup$
    – Giskard
    Commented Apr 4, 2020 at 17:32
  • $\begingroup$ Nope, does that movie feature this kind of idea? $\endgroup$
    – alcorn
    Commented Apr 4, 2020 at 19:35
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    $\begingroup$ The first 5 minutes of the movie are pretty good. At 18 everyone gets a relatively big endowment from the government. But most families are poor and are already in debt, so a lot of people immediately use their endowment to repay part of their families already existing private sector loans. And then they have nothing again. $\endgroup$
    – Giskard
    Commented Apr 4, 2020 at 20:41
  • $\begingroup$ Is it necessary to pay the loan back or is the citizen allowed to treat it as a permanent negative balance? If repayment is required then this is nothing like UBI because there will be people with maxed out loans they can't repay, which is equivalent to today's homeless people, but worse. If repayment is not required then what stops a citizen from taking out a trillion dollar loan and buying a billion TVs? $\endgroup$ Commented Sep 23, 2021 at 12:42

1 Answer 1


This website is supposed to be technical questions and not opinion-based, so I will try to respond to two technical questions I can extract from the question.

The first question: is the loan “less expensive”? The obvious response is: how big is the loan? Note that if the loan is not too large, it would be similar to student loans, an existing programme. The analysis of the programme would overlap that of student loans. However, the loan programme being cheaper is an apples-to-oranges comparison: what happens when a person cannot pay back the loan? They are cut off from support, which is what the UBI provides.

There are other questions here about Universal Basic Incomes, which may help answer questions.

The second question I see is whether the loan rate could replace taxes. This seems implausible with the current size of government. The US Federal government has a current tax take that bounces around 20% of GDP. (Other countries will have a larger tax burden, but there are also state and local taxes in the US.) At a loan rate of 5%, that would require the loan principal to be 400% of GDP to match amounts. A debt level of 400% of GDP is well above private sector debt levels seen in practice, and would probably unsustainable (could not be paid back). Although my comparison is somewhat apples-to-oranges, it indicates that taxes are much larger flows than plausible interest payments.


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