The transfer toolkit
Universal Basic Income (UBI)
A UBI is a regular, unconditional cash payment to every adult. Advocates include the economist Philippe Van Parijs, whose book Real Freedom for All laid the philosophical case, and the Basic Income Earth Network, which has tracked global pilots since 1986. Real pilots — in Kenya's GiveDirectly programme, Stockton, California, and several other US cities — all show UBI raises wellbeing and has smaller labour-supply effects than critics predicted.
Negative Income Tax (NIT)
A NIT, proposed by Milton Friedman in 1962, pays people below a threshold instead of taxing them. Above the threshold, they pay tax as normal. It integrates smoothly with existing tax systems and avoids welfare cliffs. The US Earned Income Tax Credit is effectively a targeted version of the same idea.
Guaranteed Income pilots
A targeted version of UBI, aimed at specific groups — low-income parents, formerly incarcerated adults, artists — rather than everyone. The Stanford Basic Income Lab tracks more than 150 such pilots worldwide. They produce consistent evidence: regular unconditional cash reduces stress, improves health outcomes, and does not noticeably reduce work.
Baby bonds
Baby bonds were proposed in their modern form by the economists Darity and Hamilton (2010), who argued that giving every child a government-funded endowment at birth would substantially narrow wealth gaps, including the racial wealth gap. The idea has attracted support across the political spectrum. The 2025 US tax law created a smaller, universal version: Trump Accounts, where the Treasury deposits $1,000 for each US-citizen child born from 2025 to 2028, invested in US stock index funds until age 18 (accounts opened from July 2026). It is not targeted at the wealth gap, but it puts a government-seeded endowment at birth into law.
Which of the four tools in this lesson would be easiest to enact in your country, politically? Which would do the most good, economically? Are they the same tool?