What is Universal Basic Income (UBI)?

Sinead Li

Why are people proposing it?

There’s the rise of automation to contend with – 57% of all workers are at risk of losing their jobs, especially those in developing countries. And it’s not just workers in the manufacturing industry… it expands to mail-carriers, farmers, and more. 16.9 million Americans have already lost their jobs as a result of this automation, and its predicted that 46.2 million more will in the future.

This is different from general unemployment: Companies won’t be laying off workers because they have no more money to support them, but instead because there are simply better options out on the market. Nowadays, the cost to purchase a machine can be paid back in labor within two-three years – in other words, let’s say that the machine was first purchased for $1,000. Within two-three years, that machine can earn back that $1,000… and eventually, it’ll be operating to only earn money for the company, unlike human employees. So, the economy will still be intact and perhaps even booming, while all of these people are losing their jobs.

So how can we can stop this? Some suggest retraining these workers into jobs unaffected by automation… but these programs have a success rate of between 0 and 15%. Others think that a basic living income should be guaranteed – and that’s the premise of Universal Basic Income.

Why are people for it?

  1. Basic income security
  2. Could result in people pursuing their passions, contributing to the good of society through creative means outside of the traditional workplace – for instance, Harper Lee wrote To Kill A Mockingbird when he was guaranteed a year’s worth of salary from his family friends with a note that read ‘You have one year off from your job to write whatever you please.’
  3. Could grow the GDP (calculations for the US put it at ~12% in eight years)
  4. A way to “calm down” the masses – many fear a popular revolt due to growing income inequality
  5. A more moral argument: the country ought to do this for its citizens that face unemployment due to technological advancement, something they can’t control; a sense of egalitarianism that challenges the consequences of capitalism; etc.

Why are people against it?

  1. People might not work as hard (or at all): 33% of employees were engaged at work, 16% were miserable, and 51% were only physically present – Clearly, many people feel trapped within their jobs. Would UBI make that 67% all quit?
  2. According to a paper by two economists at Berkley, UBI may favor those rich over those poor, thus exacerbating the wealth gap. Moreover, the wealth in the hands of the elderly or the disabled would redirect to others; as would the wealth in the hands of those with children to those without.
  3. Governments can’t afford it long-term: The Center on Budget and Policy Priorities says that a $10,000 basic income would cost 3 trillion (to put that in perspective, social security costs $988 billion) – and even if other similar programs were cut, the National Bureau of Economic Research says that it’d still require major government expenditure.
  4. Inflation
  5. Detracts from more important issues, like a fairer wage, especially with rising concerns about worker exploitation under Uber-like business models.

Has it been tried in the past?

Canada, 1970: ~1% of people stopped working, mostly to care for children. People worked ~10% less, and most used this extra time to go back to school or look for better jobs.

Finland, 2017: People were happier and employment levels remained the same.

How could we implement it in the US?

The “income” part of UBI would be around $1,000 a month, or $12,000 a year – enough to be right above the poverty line. Andrew Yang is running his 2020 Democrat campaign on this idea.

What about welfare?

UBI more or less guarantees money without any conditions. It’s often thought of as an alternative to welfare, with proponents arguing that welfare simply comes with too many strings attached, thus restricting personal freedom and oftentimes the growth that comes along with it.

Where does this money come from?

It could eliminate the costs of welfare, as mentioned before, but a program as the scale of UBI needs other means of funding… Yang suggests a tax on companies that would benefit from automation: “So the way we pay for a universal basic income is by passing a value added tax which would get the American public a slice of every Amazon transaction and Google search.” However, some argue that this method may be efficient towards the extreme – if UBI could raise its funds like this, then so could other federal programs… some of which may expand the size of the government.

How would people spend the money? There have been studies on whether or not US citizens would spend this money on drugs or alcohol… The answer? No, at least not for those in poverty – in fact, wealthy Americans are much more likely to do so; it’s a stereotype with little grounding in reality.

Sources

  1. https://phys.org/news/2019-02-universal-basic-income-people-happier.html
  2. https://futurism.com/images/universal-basic-income-answer-automation
  3. https://www.dissentmagazine.org/article/false-promise-universal-basic-income-andy-stern-ruger-bregman
  4. http://time.com/5528621/andrew-yang-universal-basic-income/
  5. https://www.youtube.com/watch?v=kl39KHS07Xc
  6. https://psmag.com/economics/a-universal-basic-income-might-hurt-poor-people-more-than-help
  7. https://www.inverse.com/article/53900-universal-basic-income-would-be-cheaper-than-expected-andrew-yang-declares