UBI and the End of the Road
Through a political landscape clouded by soundbites, hidden agendas, and meaningless bickering, a dangerous future largely unaccounted for hurtles towards us. The ‘optimistic’ estimate from the OECD suggests that AI and robots will replace 14% of jobs in developed countries (saying nothing about the more easily automated jobs that dominate in some developing economies). A 2013 paper by Oxford academics Carl Frey and Michael Osborne estimated that this number could be as high as 47%. Regardless of which estimate you choose, that’s at least 13 million jobs in the US alone. For comparison, The Great Recession wiped out 8.8 million US jobs between 2007 and 2010. The only thing standing between us and this future is time — decreasing by the second as technological capabilities surge.
What will be done when self-driving cars put 3 million truckers out of business? What will be done when bank tellers, secretaries, cashiers, and manufacturing workers become obsolete? Despite their potentially devastating answers, these questions are dwarfed on the national scene by fringe ones about cakes, email servers, transgender bathrooms, and voter ids. Soundbite news and the outrage cycle have fattened the profits of media companies but deteriorated our political clarity. In the Confusion Olympics of government propaganda, Russian disinformation, and fake news, it may actually be CNN and Fox that win silver and gold. It is obvious that effective solutions to complex problems cannot be found through clickbait and 2-minute debates. Two minutes to get high ratings and the most retweets necessitates that the least complex, most controversial versions of ideas get spread— widening divides that can only be bridged by nuance. We need a political conversation that prioritizes solving important problems, not yelling about controversial ones.
How can humans thrive when they create no market value?
The human age has been marked by our superiority. If there was a complex task that could be done, our brains were the only things capable of imagining the task, let alone solving it. We beat the game of natural selection to build our own world with its own rules. We now protect our natural predators rather than fearing or killing them. But this era of dominance will come to an end. A superintelligent AI will leapfrog humans on the food chain, becoming vastly superior at medicine, law, engineering, and physics. The two options are to either halt the evolution of AI, kneecap progress, and preserve our status, or continue advancing intelligence and deal with the consequences.
AI is cheaper and more efficient than human workers, and like all software, is easily scalable. Businesses will have no choice but to replace human workers with AI to compete in the market. The only jobs remaining will be the most theoretical, most complex, and most creative. The level of education required to compete in this economy will be astronomical — none but the wealthiest and most intelligent will survive. Income will necessarily come to depend on sources beyond our own work, either through a means-tested welfare system as currently exists or through a more radical program such as UBI (Universal Basic Income).
UBI, in its most popular form, is a monthly payment made to all people in a certain age range. $12,000 a year for each adult and $4,000 a year for each child would cost about $900 billion in the US. This money is meant to be used for housing, food, and other basic necessities like medicine and healthcare. In an economy with fewer low and middle-skill jobs, UBI wants to ensure a basic quality of life for those who would otherwise fall into destitution and homelessness. To its advocates, UBI is a pathway to the future of human existence. No longer will we have to work at jobs we hate from 9 to 5 just to put food on the table. Instead, our time can be spent pursuing our passions in art, music, or sport, no longer encumbered by our financial responsibilities. UBI, in this sense, represents freedom.
However, many looming questions remain to be answered. Even traditional means-tested programs have been shown to decrease the incentive of its recipients to work. Will UBI do the same on a larger scale? We already spend $2.7 trillion on welfare programs. How can we afford the additional burden? How can we trust that this money will be used for its intended purpose?
Experiments in UBI
From 1974 to 1979, the Canadian government worked with Manitoba to pilot a UBI program called MINCOME. The MINCOME experiment remains one of the most influential case studies of UBI, especially in the developed world. According to Andrew Flowers from FiveThirtyEight,
Families receiving MINCOME had fewer hospitalizations, accidents and injuries… Mental health hospitalizations fell dramatically. And the high school completion rate ticked up… with 16-to-18-year-old boys, in particular, more likely to finish school. Younger adolescent girls were less likely to give birth before age 25, and when they did, they had fewer kids.
Like any welfare handout, MINCOME was a disincentive to work. However, the effect was far milder than expected. In ‘The Town with No Poverty,” a groundbreaking paper analyzing the MINCOME experiment, Emily Forget writes that the disincentive materialized as
a relatively small reduction in work effort by primary earners. Female spouses …tended to take some part of the increased family income in the form of more time for household production, particularly… to finance longer maternity leaves. Tertiary earners, largely adolescent males, reduced their hours of work dramatically, but the largest decreases occurred because they began to enter the workforce later. This delay in taking a first job… suggests that some of these adolescent males might be spending more years in school. The biggest effects, that is, could be seen as either an economic cost in the form of work disincentives or an economic benefit in the form of human capital accumulation.
If the MINCOME model holds true, the primary breadwinner would work fewer hours in a society that is chronically overworked, women would be able to spend more time with newborns in a country without enough paid maternity leave, and teenagers would be more likely to stay in school. Disincentives didn’t seem to be a troubling issue in Manitoba. But even if they were much more significant in a nationwide rollout of UBI, the incentive to work will be meaningless by itself in an economy without jobs.
UBI vs. Targeted Welfare
The reason UBI is superior to traditional means-tested welfare is counterintuitive. While specifically targeting welfare spending towards those who fall in a specific income distribution or meet certain criteria for needs seems like the most efficient solution, it creates an unintentional consequence called the ‘welfare cliff.’ Welfare recipients on the upper edges of qualifying incomes will forgo higher paying jobs because they will lose income in the form of withdrawn government aid. If taking a job will pay $10,000, but this will cause the loss of $11,000 in welfare, economics ensures that many will pass on the offer. The current system has many cliffs, including but not exclusive to TANF (Temporary Assistance for Needy Families), CHIP (Child Health Insurance Program), and Medicaid limits. UBI eliminates these cliffs by providing the same amount to every person, regardless of income. Perhaps more importantly, UBI eliminates the vast bureaucracies required to administer current welfare. Every worker in the bureaucracy that administers welfare and determines if you qualify gets paid a salary from the government’s coffers. This is welfare money that could go directly back to the people, rather than be lost in the cogs of the machine.
What’s in the way?
The MINCOME experiment ended after 5 years when a new political party came into power and funding dried up. Experiments with UBI in the US in the 60’s and 70’s showed similar positive results in education and health, but were prematurely cancelled due to an uptick in divorce rates (note: this may be explained as UBI relieving women’s financial dependence on their husbands). Current experiments by Y Combinator in Oakland and the Finnish government look to continue the legacies of these experiments and provide definitive answers to the questions surrounding UBI.
The largest obstacle going forward will be clearing the haze in our political thought. Two-thirds of Americans believe that most jobs will be done by robots in 50 years. Yet, 80% believe that their job will “definitely” or “probably” exist in the same form. There is a long, uphill battle that must be fought to reshape how we think about our government and the issues that affect us. Small, controversial issues will always be easier to talk about — the hard part is taking a step back and solving the big ones. The opioid crisis, drug crime, the rise of populism, and so many other problems can trace their roots from economic insecurity caused by the destruction of manufacturing jobs and mid-wage jobs around the country. Perhaps if we can solve one large problem, many smaller ones will follow suit.
But prioritization takes more than just changing the focus of our conversations, it means dedicating the requisite resources. That could mean ending the military industrial complex that just approved $716 billion for the military to fight irrelevant wars in Yemen. It could mean streamlining the welfare and tax systems to ensure that the largest corporations pay their fair share. It could mean taxing the data we provide to Google and Facebook and creating a cap-and-trade carbon tax. $900 billion, or whatever the actual cost may be, is a small price to pay for our liberation and future prosperity. UBI must be a part of the national conversation; your kids’ future might depend on it.