Universal Basic Income: A Stepping Stone to the Future
By Ross Turner
Not a New Idea
How often it is that in times of turbulence and upheaval, ideas once thought fantastical suddenly seem quite rational. Such is the case of Universal Basic Income (UBI), also called a “basic income guarantee” or “Social Security-for-all.” The concept was first introduced in the 16th century, with notable advocates such as Thomas Paine and then revived in the early 20th century by Bertrand Russell, but only in the modern age has there been a true necessity and demand for it.
UBI May Be an Idea Who’s Time Has Come
The idea, at its core, is to give every citizen a regular, untaxed sum of money regardless of employment status or income. The thought is that this will raise the poorest recipients out of poverty and help the overall economy by boosting consumers’ purchasing power and economic mobility. Many people, however, have a negative visceral reaction to “handing out” free money, worrying that people will stop working, or worrying about how to pay for such a program in the first place. First, let’s look at why something like Universal Basic Income will be needed in the very-near future.
A Robot Took My Job
Since the Industrial Revolution, technology has displaced workers. Machines were capable of higher productivity than their human counterparts, forcing some to take up work in these new “factories” that housed them. As industrialization spread, businesses, consumers, and workers became dependent on these machines for their livelihoods. Though this technological boom disrupted many traditional professions, it often created new ones, shifting more and more workers from farm to factory, country to city.
Technology Today and Tomorrow
Over time, technology became even more productive, efficient, and cost-effective, shifting workers yet again from manufacturing to retail, from city to suburb. Many economists believed that technology would continue to create enough new jobs to replace the ones it destroyed, but few predicted just how efficient technology would become. Automation has simply become too productive and cost-efficient for businesses to not embrace. And the more businesses automate, the more others do so to stay competitive.
An Economic Shot in the Arm
The result is the rapid and economically incentivized displacement of workers, a shrinking job market, and growing income inequality. Technology is doing more and more of the work, while workers and consumers are less and less able to afford the goods produced. This also hurts businesses, as too few people have money to spend on what they’re selling. A Universal Basic Income is a shot in the arm of the economy, seeking to better circulate the vast wealth captured by a small handful of big businesses and super-wealthy.
With Whose Money?
Aside from the perceived “moral” questions, the foremost concern people usually raise is the cost: how does one pay for such a massive program? The short answer is: it depends. The funding and need itself for a UBI depends on each individual country. For one, it need not be fully universal, though this often helps “sell” it. There are different payout schemes where high-earners receive less or not at all.
Income Inequality Growing
One proposal is to end current welfare programs and use that money for a Universal Basic Income. This would free up that cash, but also eliminate many government agencies and bureaucracy. Another, obvious way is to raise taxes on the super-rich, which is similar in effect to cutting their payouts. Income inequality has grown steadily for 30 years, with America’s top 10% now averaging more than nine times the bottom 90%.
The Projected Price Tag
A combination of cutting redundant government programs, shifting funds from others, and taxing the rich in varying degrees could cover a large part of the roughly $3 trillion annual cost of a UBI, (assuming a $1,000 monthly payment for every adult.) Many might still balk at that price tag, but it’s important to remember that a Universal Basic Income will actually grow the economy, by some estimates as much as $2.5 trillion over 8 years.
Good for Growth
One of the most basic principles of economics is that businesses need consumers to survive, and consumers can’t consume if they’re broke. Giving everybody a monthly income would simply allow people to spend more. According to the Institute for Policy Studies, every extra dollar given to low-wage workers adds about $1.21 to the national economy, while every dollar going toward high-income earners adds only 39 cents. Put another way with a UBI every poor person will spend $1,210 of the $1,000, while the wealthy will only spend $390.
Many Voice Concern
Experimental Universal Basic Income programs have found that many spent their extra money on furthering education, finding a better job, or starting their own business, all of which help the individual and society at large. Still, many are concerned that giving free money will make people lazy, or that they’ll just spend it on drugs or alcohol. On the contrary, drug and alcohol usage went down when people were given a UBI, likely due to reduction of stress and gaining of opportunity.
What Studies Tell Us
As far as laziness, a Canadian UBI study in the 1970’s found that less than 1 percent of recipients stopped working, mainly to take care of children. In the same study, recipients reduced their working hours on average by less than 10 percent. This is in part because Universal Basic Income doesn’t discourage work in the way that welfare programs can. In many cases, earning even a penny over the welfare cap – say, $1,000 – results in a loss of benefits.
A Better Way?
Combined with taxes, bills, and transport expenses, someone earning $1,200 may only come home with $800. For many, it becomes financially rational to stay on welfare and not work. With a Universal Basic Income, working can only improve one’s money situation. Furthermore, welfare often forces people to take poorly paying jobs, keeping them in poverty. A UBI gives people the money and time to search for better opportunities.
No Silver Bullets
Of course, some people will have a moral or ideological opposition to the idea of handing out “free” anything, and the idea of people not necessarily having to work. Yet, this is money that in many ways the working classes have earned many, many times over and have been denied through decades of wage suppression, tax evasion, and countless types of financial trickery on part of the wealthy. People who make their living solely through and inheritance and financial manipulation can hardly be said to work for a living, either. At any rate, a Universal Basic Income is not even an attempted fix to income inequality.
A Financial Floor For the Most Vulnerable
In an economy such as ours, inequality is a feature. A UBI rather is trying to provide a financial floor for the most vulnerable citizens and even the playing field, giving workers leverage for better pay, better representation, and better benefits. However, a UBI won’t address the problem of infinite growth on a finite planet and the unsustainable strain that capitalism puts on the environment. It could, in fact, exacerbate it, with increased demand resulting in increased pollution and resource overshoot. A Universal Basic Income, in this sense, is not a total fix or permanent solution.
Check, Please
In any society, there will always be a small number of people who simply hitch a free ride if they can. But anyone who has been unemployed for long can attest that doing nothing gets boring fast. The majority of people are driven by accomplishment, whether through a job or own their own, and a UBI empowers people to better their situations in the ways that make sense for them. For some, this will just mean getting a better job. For others, it will mean starting a business. And yet others, who may be financially secure already, can pool and invest their UBI into non-profits, political organizations, or charities. It’s a program that can help people survive, thrive, and organize the transition to the next socioeconomic phase of civilization. It’s an acknowledgment, for the first time in a long time, that we are in fact a society, that we have contributed to this wealth over generations, and that we are entitled to a fair and reasonable slice of that wealth by birth. Indeed, that realization itself may be the catalyst for change and the true legacy of a universal basic income.
https://archive.intereconomics.eu/year/2017/2/on-the-economics-of-a-universal-basic-income/
https://en.wikipedia.org/wiki/Basic_income
https://academic.oup.com/wbro/article/32/2/155/4098285
https://buildthefloor.org/
https://ips-dc.org/wall_street_bonuses_and_the_minimum_wage/
https://www.marketplace.org/2016/12/20/world/dauphin
https://web.archive.org/web/20080621140909/http://www.basicincome.org/bien/aboutbasicincome.html
https://www.youtube.com/watch?v=XGMO78A7YJU
