I’m a little miffed. I read a lot of comments on social media and published articles about universal basic income. There is a lot to like about it. I follow the information because, as a futurist and an engineer, I try to find solutions that will help us go through the turmoil of the 4th Industrial Revolution and emerge winners. Like any other past revolutions, we need to redesign many core legacy and adapt them to new technologies and ways of thinking. With industrial revolutions, it’s the economy that needs to change the most.
I’ve written an article recently that describes how our employee-based will fail and implode within the next 10-20 years. We need money to buy things to survive. Despite all our technological advancements, over 12% of Americans still live below the poverty line. Most of them need social services of some form to have food and shelter. The lauded greatest economy in the world can’t figure out a way to lift their own citizens out of poverty! It’s a bad joke with all the knowledge, infrastructure and resources we have at our disposal, we can’t agree on how to take care of our brothers and sisters that need help. We have the means and technology today to feed and house everyone. The resources exist, but we built our economy on principles of scarcity and merit by virtue of participating in the production or management of goods. 20th-century concepts that don’t apply to our 21st-century reality.
It won’t shock you if I tell you that human work will soon become a hindrance to productivity. We could take part in the economy strictly as consumers. The reason we work is to produce the goods we want to consume. That’s it. Therefore, we go to work and trade so everyone can consume what we needed. Work as a reason to live is an illusion, a fallacy we tell ourselves to justify working week after week at a job over 70% of us dislike. We created currency to distribute produced goods fairly. If we contribute more to the economy, we get more money, which allows you to consume more of the collectively produced goods.
Since we have no problem overproducing goods and we have management of automated supply chains down pat, why do we remain with a scarcity mindset? Habit and fear.
Let’s imagine 20 years from now. 90% of all paid tasks, ergo, all tasks of perceived value, automated systems and artificial intelligence will do all the work for us. In 2017, that number was 50% according to the McKinsey Institute, and it increases by a few percentile points every year. It is imperative to understand that artificial intelligence can complete new tasks created by technology more and more often. When 2040 comes around, human-level machine intelligence will tackle almost any new job created by technological disruption without human guidance. It is the nature of intelligent systems building on top of each other that it is so.
We are gradually putting humanity out of work. Like the frog in the water that slowly heats up until it boils, the changes are too gradual for us to notice. Unfortunately, if we don’t set up a social parachute for ourselves before we boil, we’ll suffer lots of pain and calamity and our society will have to go through a traumatic radical change of system while on the brink of failure. This too can be damaging to our society and families.
There are things we can do now that can bridge the gap between our current worries of technological displacement and a golden age for mankind. One such low hanging fruit is a universal basic income (or unconditional basic income, a term I favor but I’ll use the more common term here).
Unfortunately, there are many groups out on the Internet that are fighting against a great thing, and so, I write to dismiss the main arguments against I read about.
Universal Basic Income (UBI) is a Socialist Program
First, UBI is a social program, not a socialist program. The nay-sayers use the word socialist because it elicits emotions of fear in people, especially capitalist Americans. Don’t get trapped in the vocabulary. The word socialist describes
UBI is a social program just like many adored and used by most Americans today. Here is a list of all of America’s social programs for reference. I estimate about 98% of Americans use at least one of these programs and they like it. When the government controls the economy, that’s socialism. When private entities control the economy, that’s capitalism. We consider Russia a socialist country. Heck, it was in its name of the USSR (Union of Soviet Socialist Republics). But Russia is not 100% socialist today. Neither is China. Though the government in both countries control many aspects of people’s lives, private businesses flourish and compete with businesses internationally. They too are on the spectrum. America remains fundamentally capitalist, but over the years, have adopted social programs to help their citizens who needed it most and to give benefits or relief to the general population, balancing inequalities and such. The country’s social programs have permitted the American privately run economy to benefit immensely from a healthier, happier population that can live longer and take part in the economy more than ever. America is a capitalist country with a sprinkle of socialist programs embedded in the economy to great benefit to its population. Most OECD countries are somewhere in the middle of the spectrum between 100% socialist and 100% capitalist. Neither is good nor evil.
Adding another great program that ensures people on the bottom of the income scale can eat and have shelter is bad because it’s a social program? Give me a break! At most UBI is an upgrade and expansion of existing social programs everybody loves and uses already!
It’ll Cost Too Much
Cost is at least an intelligent concern. In the US a fair universal basic income may cost upwards of $3 trillion per year. That’s a lot. The American Gross Domestic Product (GDP) is over $19 trillion, so at least America produces enough to pay for it. It’s under that bar, and therefore affordable. Whether Americans want to spend $3 trillion on UBI instead of somewhere else is the real question. It’s all about budgeting. Think of it as taking from one bucket we may not need anymore, like conditional social programs (SSI, welfare, etc.) to pay for an unconditional program. We pay the balance of what is needed by shifting money from entities and individuals who have loads of money to spare., like the wealthy and large companies. Changes in tax laws can help balance income equality and pay for an unconditional income blanket that covers everyone’s basic needs.
However, we must think about how we can organize UBI for all income levels to distribute wealth fairly for the common good. Those of us who have proper revenue levels don’t need the extra monthly income because we’re covered. Yet if we’re making say $1,000 per month extra under the universal basic income plan, then the government could take it back in income taxes. Even though I receive the basic income, I don’t get richer or poorer by it at the end of the year. For the poor though, that $1,000 makes a huge difference. Because their income is too low, that $1,000 is extra money to spend and when the tax man asks for what is due at the end of the year, they don’t have to give any of it back. For the wealthy who have extra dollars lying around and plenty of opportunities to reinvest and make their money work for them, they can pay a lot more than the extra $1,000 that they too receive paying the UBI for several poor people that need it more than they do.
So, it’s not $3 trillion we need to spend extra. We can organize it to redistribute wealth from rich to poor, to ensure no one is without the resources they need to eat and have a roof over their heads.
Making it unconditional reduces the costs of administrating such a program and it through the tax code amounts balance themselves out. If one year, I do great financially, I’m covered. If the next year, I come on hard times; I have the UBI to cover my basic needs. No need to apply, no conditions, no expiration. It’s just there to catch me if I need it, always.
Bottom line, it can be worked out from the program and proper budgeting. Scott Santens, arguably America’s foremost expert on universal basic income wrote about how it would pay for itself in this article and others.
Free Money Dis-incentivizes Work
It’s silly to even consider that receiving free money will cause massive worker shortages. This is an argument based on popular observations of some conditional social programs like welfare or employment insurance. We all know people that survive on these programs and don’t want to work at all. They’re quite comfortable scratching a living on these programs, even though many could find work if they wanted to. Most people on these programs are there because they are sick, disabled, or unable to work for real reasons. But there are always abusers that think: “If I get money for not working at all, and when I work, the free money goes away, I’d rather just sit around home and take the free money and not work.”. Yep, we have all known someone like that in our lives. There is a rationale to what these people say. Think about it. If you receive free money and working would take it away from you, that’s a disincentive to work. The problem is the condition applied to these programs. They are get-back-to-work programs, not social support programs.
If we didn’t remove the welfare check when the person contributed to the economy, then many would work, because work would give them extra money to spend. There is a tangible advantage of working in those conditions. The concept of work incentive has been tested time and time again in basic income pilots all around the world since the 1970s at least. The latest data came out last year at the tail end of the Finnish basic income pilot program. The results of the pilot were clear: receiving money unconditionally didn’t reduce the amount of work done by recipients. On the plus side, the study found it increased the recipient’s wellbeing too. This is not surprising since all solid basic income pilots implemented in the world say the same thing, even though most have conditional elements to them. Good universal basic income pilots giving solid data must not have a component where the money can be taken away, otherwise, it’s just welfare checks. We know how that works.
Basic income pilots since the 1970s have had amazing effects on communities that received it. Here is a short list taken from the Mincome Experiment, the American GAI experiment, the Finnish Basic Income pilot and the Namibian Basic Income Experiment:
- Crime rates decrease by as much as 40%
- Hospitalization rates decrease by up to 10%
- School completion/enrolment rate increase
- Innovation and business startups increase by up to 300%
- Family work effort reduced by up to 13% (primary, secondary and tertiary earners combined)
- General welfare increased and stress levels decreased
- Family re-structuration rates balloon (marriage, divorce, home changes etc.)
The data repeats itself in all countries that try some form of basic income. The notable result that sticks out in this argument is the definitive reduction in work effort (up to 13% for families). This data comes from the American GAI (Guaranteed Annual Income) experiment from the 70s. This sounds like a disincentive to work but researchers from the University of Toronto have looked at the data and through the primary family earner works a little less (by 1%-3%), the reduction in earnings came from secondary (wives working part-time… it’s the 70s) and tertiary earners (college-year young men and women). The secondary earners were taking more time to take care of children and at home caring tasks while tertiary earners spent more time at school. We consider those activities great to build economic capacity and a better, healthier community.
If we look at the results of the much more recent and shorter-lived Finnish experiment, there was no difference in employment rates or hours worked between the group on the program and the general population. Not all experiments are the same and times have changed since the 1970s…
Since, the reason we’d implement a universal basic income in 2019 is because automated systems can do human tasks better than we can, maybe less work isn’t such a bad thing. Parents using the extra cash to get off work to take care of their children or college-age students spending the extra freedom to spend more time at school is also a good trade-off for our society and our economy.
So, the results are positive.
Why Don’t We Do It Already?
We can budget it, everything that comes from it has a positive impact, it’s just another social program among others and it doesn’t dis-incentivize work. We know most jobs will get automated to maintain productivity growth and our economy will break without workers getting paid and paying taxes. What’s stopping us from implementing a solid universal basic income?
The public is afraid of the unknown. We have never had a universal benefit program that gives free money to abled adults before. We’ve always lived under the idea everyone needs to work to live. We even ask each other “what do you do for a living?” and call it normal. This article will hopefully alleviate some fear.
Another more difficult hurdle to overcome is that many powerful people don’t want basic income to come into play. Doing so would inject more money in the economy, which is good for the wealthy, but citizens would have more freedom of choice. Freedom of choice takes away power from those who control the systems we live with every day.
For the general population, automation without a basic income supplement will make it very difficult for many to purchase goods, and that’s what makes these wealthy individuals wealthy. An economy without a population with purchasing power isn’t beneficial to anyone, the wealthy and powerful most of all. For them, it’s a catch 22. A wider demographic distribution of consumers would purchase more basic goods. On the other hand, they lose power over the poor. Hence their resistance and some disinformation coming from certain news sources and wealthy nay-sayers.
In 20 years, we absolutely must change our place in the economy from producers, managers and consumers to strictly consumers. Human-level machine intelligence will take care of that on its own. We’re on track to get there no matter what happens. Then, we’ll need the ability to consume what we need most to survive without money. We should engineer a way out of the work-to-live concept.
But in the transition towards this future, we need to keep the economy going and us buying what we need. Universal basic income is a great way to empower the whole population while simultaneously reduce crime, healthcare costs, stress and increasing education levels, health, innovation and happiness.
The job market will still exist 20 years from now, but it’ll look like something out of science fiction. We can make it work and avoid unnecessary suffering if we plan things right and implement a UBI as soon as possible.
I urge you to explore the studies for yourself. Don’t take my word for it. Remove your fear of this strange idea of free money. Combined with good old human ingenuity, we can engineer a great world for ourselves and future generations.