Challenges to overcome with Universal Basic Income (UBI)?
Look it’s a hot topic out of Silicon Valley and it is an easy off-the-shelf solution to a likely problem of significant technologically based unemployment. So everyone is trotting it out there as the ONLY solution. From my perspective, I don’t mind the solution (even though it has insurmountable flaws as a stand alone policy), but I think for the health of the discussion it is important to look at some impediments and shortcomings of UBI as well. So that’s what this blog piece will do.
Universal Basic Income is the idea that government will provide everyone (Universal) with enough money (Income) to afford the basic necessities of life primarily food, clothing and shelter, at a basic (BASIC) level so that all people may receive that funding.
#1 UBI is in conflict with basic human traits. I have genuine concern that the proponents of UBI simply fail to understand people. Many people like to work, like to achieve, like to outperform their peers, like to gather wealth, like to changes their social status, like expensive things, like to travel to exotic places. All of those things are diametrically opposed to UBI. Critics of UBI will argue that it will create a culture of malaise, intellectual stagnation, happiness in the status quo. These critiques while not perfect are probably accurate. UBI will drag down the middling portion of the population that might have been energized and incentivized to excel, but became comfortable and complacent in their UBI provided existence. The “American Dream” is the belief that America creates an opportunity to WORK to change one’s economic circumstances. UBI flies in the face of that.
#2 UBI implementation. Living in New York City and rural Kansas are not the same thing, just trust me on that. So how is UBI calculated and provided? Does someone receiving UBI in New York receive more than the person in Kansas? Their food, clothing and shelter will all cost a ton more… If they do, how is that fair or justified? IF we set the level to NY, the Kansas UBI recipient will be rich, plain and simple. IF we use the Kansas baseline, the the New York City recipient will be destitute, homeless, clothes-less and hungry.
#3 UBI — where does this magic money come from? GDP per capita in the US is about $53k per year. In Russia about $14k per year and in China about $7k per year. So that’s challenge one, we have massive global disparity. But also, that number is dramatically misleading. We have certain services that do NOT generate an income that must be maintained before the people can be paid. Debt owed per capita takes that income to zero. IF we don’t pay off the debt, then we must pay interest. Military, government functions. The result is substantially less than $53k per year. However, the US is a wealth country and could probably afford some sort of floor type payment for its citizens. Most of the rest of the world isn’t even close to being able to implement this idea. And this point can be made without even considering what a US based UBI payment ought to be…
#4 Marx tried this concept and it failed MISERABLY, we called it Communism back in the day. Yeah, I’m over simplifying, and that stuff we saw (In Russia and China) wasn’t true Marxism. I also know that UBI isn’t quite the same thing. But UBI supporters would be foolish to ignore this challenge to their case, because people will absolutely associate the two.
#5 Demographics, with declining birthrates in much of the West and an ever-ageing population, the support for a UBI from working class BETTER be augmented by machines, because fewer and fewer workers will be contributing to funding for UBI.
#6 Politics. A proper UBI replaces Social Security, Good luck with THAT discussion. We cannot afford SS and UBI… that’s obvious. And what politician do you know that is willing to make a change to social security.
#7 Cultural — Many in the US don’t like the idea of a free lunch. You would probably have to combine it with some form of government and public service responsibility to even begin to get broad consensus. Or wait for the mass unemployment and subsequent revenue shortfall from income tax revenue before you’d reach any consensus. I think that many proponents of UBI fail to realize that there are some innate characteristics in humanity. Competition, peer comparison, work to define self-worth are a few of those basic human traits that are neglected and in fact set aside in order to implement UBI. I believe this is major hindrance to a straight up UBI. Tie it so a “responsibility of some kind, like 2–4 years of military or social service” and you can justify a pension-like payment over the lifespan of an individual.
#8 Getting things done — this is probably the biggest hurdle to UBI. Nothing much gets done these days unless there is a crisis associated with it. So currently, AI related unemployment remains low. Until it hits the Tsunami threshold, it is unlikely that we achieve the national consensus required to consider it.
In Conclusion, I’m opposed to UBI as blanket payment for no work to people because technological unemployment. I am also opposed to UBI because people want to be Marxist instead of Capitalist. Marxism and Capitalism are belief systems based on the polar opposite views of humanity. Neither is right, both have flaws. UBI TIED to significant social service starting no later than age 25 and lasting for 5 years is a step in the right direction. It replaces much of the paid bureaucracy in government (source of funds for UBI), it provides a stepping stone from education to work for young adults. It justifies a lifelong pension for all citizens. Most importantly, it ties balances between a simple payment to people for existing and the “profit is all that matters” view of wealth creation and distribution.