The case for UBI
If climate change, nuclear standoffs, Russian trolls, terrorist threats and Donald Trump in the White House don’t cause you feelings of impending doom, you might think about artificial intelligence. I’m not just referring to big-brained robots taking over civilisation from us smaller brained humans, but the more imminent possibility they’ll take over our jobs.
This doesn’t mean a future without jobs, as some doomsayers predict. But robots will almost certainly push down wages in all the remaining human-touch jobs (child care, elder care, home health care, personal coaches, sales and so on) that robots can’t do because they’re not, well, human.
Advancing technologies aren’t the only cause of this predicament, but notwithstanding Trump’s claim to the contrary, technology is a bigger culprit than trade.
What’s the answer? Here in the Bay Area where I live, where inventors and engineers are busily digitising everything, many civic and business leaders are touting something called a universal basic income, or UBI. It’s universal in the sense that everyone would receive it, basic in that it would be just enough to live on and cash income rather than voucher-based, like food stamps or Section 8 housing.
Several recent books have provided good background briefings for what a good UBI prograe could be, including those by the labour leader Andy Stern, the Facebook co-founder Chris Hughes and the Belgian academics Philippe Van Parijs and Yannick Vanderborght. To these offerings, Andrew Yang, an entrepreneur, adds his own, somewhat breathless version in The War on Normal People. Annie Lowrey, a contributing editor for The Atlantic, provides a similarly upbeat, although more measured, assessment in Give People Money.
The two books cover so much of the same terrain that I’m tempted to wonder whether they were written by the same robot, programmed for slightly different levels of giddy enthusiasm. Both cite Martin Luther King Jr, Richard Nixon and Milton Friedman as early supporters of a UBI. Both urge that a UBI be set at $1,000 a month for every American. Both point out that with poverty currently defined as an income for a single adult of less than $12,000 a year, such a UBI would, by definition, eliminate poverty for the 41 million Americans now living below the poverty line.
UBI’s critics understandably worry that it would spur millions to drop out of the labour force, induce laziness or at least rob people of the structure and meaning work provides. Both Mr Yang and Ms Lowrey muster substantial research to rebut these claims. I’m not sure they need it. After all, $12,000 a year doesn’t deliver a comfortable life even in the lowest-cost precincts of America, so there would still be plenty of incentive to work.
But how could America possibly afford a UBI? A $1,000-a-month grant to every American would cost about $3.9 trillion a year. That’s about $1.3 trillion on top of existing welfare programs — roughly the equivalent of the entire federal budget, or about a fifth of the entire United States economy. Both authors come up with laundry lists of potential funding sources — from soaking the rich (raising the top tax bracket to 55 per cent, enlarging the estate tax and implementing new taxes on wealth, financial transactions and perhaps even the owners of the robots and related devices that are displacing jobs), to instituting a carbon tax or a value-added tax.
Whatever the source of funds, it seems a safe bet that increased automation will allow the economy to continue to grow, making a UBI more affordable. A UBI would itself generate more consumer spending, stimulating additional economic activity. And less poverty would mean less crime, incarceration and other social costs associated with deprivation. “You know what’s really expensive?” Mr Yang asks. “Dysfunction. Revolution.”
If these measures still aren’t enough to foot the bill, Lowrey suggests making a UBI less universal by taxing away UBI payments to high-income earners and reducing other forms of social insurance (for example, eliminating food stamps and welfare programs). As a last resort, she writes, a UBI could be implemented as a kind of negative income tax, by which government simply ensures that every person or household has a certain minimum yearly income.
But there’s a logical flaw in her argument. Once a UBI is no longer universal or even basic, it’s hard to see the point of having it in the first place. More troubling is Ms Lowrey’s blurring of the distinction between a UBI that redistributes resources from the superrich to the growing number of vulnerable lower-income Americans and one that merely turns programs for the poor into cash assistance. The latter may be warranted, but it wouldn’t touch America’s growing scourge of inequality and economic insecurity, which will be made worse as robots take over good jobs.
A core challenge in the future will be how to redistribute money from the ever richer owners of the robots and related technologies to the rest of us, who are otherwise likely to become poorer and less secure. This is not just an economic challenge but also a political one. As we know from recent history, vast fortunes translate directly into political power, and such power effectively resists redistribution. Sadly, neither of these authors discusses how to deal with this paradox.
A world inhabited only by robots, their billionaire owners and a large and increasingly restive population is the plotline for countless dystopian fantasies, but it’s a reality that appears to be drawing closer.