The idea of a Universal Basic Income is picking up pace all over the world, but are we ready?
How would you like a pre-assigned sum of money credited directly into your bank account, every month, no questions asked? That’s the gist of a Universal Basic Income(UBI), that has the whole world polarized on its perks and perils. The UBI is gaining momentum worldwide and has evoked an endless debate among economists and politicians alike. While the UBI has some strong backing, with the likes of Elon Musk, Bill Gates, Richard Branson and Mark Zuckerberg supporting the concept, many economists still need convincing. While the idea of a UBI is not particularly new, it is increasingly being considered as a measure against growing unemployment rates by governments across the world. So much so, Andrew Yang, a Democratic presidential candidate has based his whole campaign on implementation of UBI. But is UBI the answer to our unemployment woes? And even if it is, is it economically sound?
The Case For
“There will be fewer and fewer jobs that a robot cannot do better; we’re looking at mass unemployment. This is gonna be a massive social challenge and ultimately we would have to have some kind of universal basic income for sustenance. I don’t think we’re gonna have a choice.”- Elon Musk
The heads of the biggest tech companies in the world believe that the breakthrough in AI would be so overwhelming, that around a third of the employable population would find themselves without a job. And we have good reason to take their word for it. Andrew Yang has proposed a $1000 monthly income to all adult US citizens. Now, where does the money come from? And wouldn’t it make people more complacent and unwilling to work?
Well, let’s get into numbers, the total figure for UBI to be implemented in the US comes out to be around $3 trillion dollars. While that is a lot of money, it shrinks down considerably when one looks at the many ongoing welfare and security programs, which means about half Americans are already getting income support. The figure comes down to about $1.8 trillion. Yang proposes a Value Added Tax(VAT) on luxury items and a “Robot Tax” on companies benefiting from the increased output due to advancement in technology.
Now, what most people fail to understand is that this $1000 monthly income will increase their purchasing capacity, and effectively the money will trickle down into the economy itself. So, theoretically, it doesn’t look as big a figure that some economists claim. There’s also a school of thought that believes crime rates will decrease drastically since there will be an incentive for criminals to not get into jail, in order for them to keep getting their UBI.
As for the thought people becoming passive and lethargic, statistics prove otherwise. In the state of Alaska, where UBI is already prevalent, studies have found out citizens are more encouraged to indulge in their passion outside of work, since the start of a UBI.
The Case Against
The main argument against UBI is financing. For a country the size of India, it is fiscally very difficult to entertain the idea of a basic income. Inflation could be triggered because of the increase in demand for goods and services. As a result of inflated prices, the standard of living wouldn’t increase a whole lot.
Also, free income may disincentivize people to get jobs, and make work seem optional. Even though, as stated before, studies show increased productivity among individuals, the scale of the study was not big enough to convincingly prove it.
Another argument is that it would increase dependence on the government and make the economy more prone to crashes and slowdowns.
While the universal basic income does have its pros and cons, after thoroughly researching the topic for weeks, I personally believe there’s no way out of it. The advancement in AI is growing at a phenomenal rate and most skills are becoming redundant by the day. I suppose it is only a matter of time that a developed economy like the US implement it.
Good insightful article
The item missing from the chart is the most obvious one: if $12,000 a year is the minimum income, within a few years the prices of rent, food, and transportation will have increased by $12,000 a year. Basic economics.
And who really believes that all the other welfare programs will go away? That the hundreds of dozens of program heads will give up their turf and hundreds of thousands of bureaucrats and case workers will give up their jobs to live on $12,000/year?
It’s a fairy tale.
Hey Dwyer!
If we take a look at the kind of automation going on, we can safely say that the output of firms will increase manyfold and thus would keep a check on inflation.
Also, the welfare programs might become optional and not go away completely from the get-go.
Although, all of this is much dependant on how governments wish to execute it.
I am not an economist. But, I would love to give you an interesting example of UBI. In the U.S. many military veterans receive a disability check due to invisible and visible injuries. Most of these folks go and lead “normal” civilian lives. I can say that my disability check (basic income) has given me the opportunity to transition, progress in my career and has allowed me the opportunity to survive two recessions and build a startup. I firmly believe (coming from a recruiting business) that we have to implement a UBI to transition away from government assistance, augment SSI, and give a safety net due to the impressive decrease in jobs. Unless we expect every single person in the US to get an advanced education then we will see a huge transformation in this country from a consumption nation to a beggar nation.
I have been reading about UBI as a layperson for a few years now – and I think you’re absolutely right (and so is Elon Musk – though I don’t trust any of those people you mentioned, they are clearly ahead of the curve on many things!). I don’t think there will be a viable alternative to UBI once automation really kicks in – apart from social unrest, uprisings, and potentially, revolutions. It is also the only fair distribution of the overall wealth we all make and the only way to free up all humans (not just the wealthy) to do more than merely survive. So it becomes an ethical argument as well as a practical one to implement it.
Socialism/communism doesn’t work.
Socialism? Look at the Scandinavian countries succeeding wildly. Communism is a system in which the government controls the means of production – employment generally.
UBI is a basic benefit, and the free market is there to allow you greater income should you pursue it. I personally know over 10 people that would finally have the room to start a small business if this were implemented. It has NOTHING to do with communism.
And this is exactly what this is. It’s a back door to totalitarianism, the utter government control over every aspect of people’s lives.
Don’t tell that to the many corporations who ask for and happily accept welfare.
So if robots make the products, humans dont work, no pay, no pay equals no products bought by humans. So why bother having robots make the products.
What I understand here is that they started with depopulation, then created coronavirus knowing well the economy will suffer and people will be unemployed, then, we would have no option than to accept their universal nonsense, robot takes over our jobs and automatically, we would be answerable to them and when we are totally controlled by them ,they give us their vaccines and turn us around at any time . Well calculated but my advice to you all becareful and do not accept such offer
What I understand here is that they started with depopulation, then created coronavirus knowing well the economy will suffer and people will be unemployed, then, we would have no option than to accept their universal nonsense, robot takes over our jobs and automatically, we would be answerable to them and when we are totally controlled by them ,they give us their vaccines and turn us around at any time . Well calculated but my advice to you all becareful and do not accept such offer