Universal Basic Income is not Right or Left; it’s Forward
Imagine the following situation: you live in a small village in a developing African nation, and your family is forced to survive on the equivalent of less than one United States dollar per day. Your family does not always have enough food to eat, and day-to-day life is often terribly difficult because of your family’s outright lack of monetary assets. Your situation improves, however, when your family and other families in your community are extended an offer to receive a new source of income which allows your living situation to become more adequate. This situation is soon going to become a reality for around 6,000 people living in dozens of villages around Kenya, and it won’t be the result of new employment. A charity called GiveDirectly is currently in the process of finalizing plans to provide these impoverished Kenyans with a routine distribution of money for at least ten years. GiveDirectly is just one of many entities that are currently contemplating programs such as this one, including government officials in European societies like Finland, and even technology elites in Silicon Valley, California. Although they differ slightly, the arrangements being proposed each fall under the name of one foreign concept: Universal Basic Income.
What is Basic Income?
In his 2016 book, “Free Money for All: A Basic Income Guarantee Solution for the Twenty-First Century,” philosophy professor Mark Walker describes Basic Income as a “middle road between socialism and capitalism.” Although GiveDirectly’s project is considered to be an example of the concept, Basic Income typically refers to a government policy which pledges a sum of money to each citizen simply for existing.
“UBI is one of those rare social programs that has a radical flair, while also finding support across the political spectrum from libertarians to socialists.” Jathan Sadowski, a visiting lecturer in ethics of technology at Delft University of Technology in The Netherlands.
Why might Basic Income become necessary in the coming decades?In September 2016, a marketing research corporation called Forrester released an alarming report claiming that artificial intelligence will have eliminated approximately 6% of all United States jobs by the year 2021. Customer Service representatives are expected to be the first group of U.S. workers impacted by the technological transformation, and taxi and truck drivers will have their occupation threatened shortly after, according to Olivia Solon, a technology journalist and writer for The Guardian.
Driver-free cars like this one may soon become common in Pittsburgh.
“Six percent is huge. In an economy that’s really not creating regular full-time jobs, the ability of people to easily find new employment is going to diminish. So we will have people wanting to work and struggling to find jobs because the same trends are beginning to occur in other historically richer job creation areas like banking, retail and healthcare,” said Andy Stern, the former president of the Service Employees International Union.
The rate of unemployment for the United States checked in at just under 5% in October of this year. This means that, if Forrester’s projections are accurate, this rate will more than double in just five years, bringing the unemployment rate as high as 11% — that’s 1% higher than in October of 2009, which had the peak unemployment rate during the Great Recession. What is going to happen to the millions of people whose livelihood and source of income is eliminated by this rise of technology? How many more jobs will be lost to technology in the decades and centuries to come?
So how would Basic Income work?
Not surprisingly, lack of funding for this type of program is typically an argument against Basic Income, especially from a person hearing about the concept for the first time. Professor Mark Walker claims that nearly every United States citizen would be in a financial position either better than or equal to the position they were in prior to the implementation of a Basic Income program.
If each United States citizen were to receive UBI under the plan that Walker discusses, which involves each eligible citizen receiving an annual sum of $11,400, it might cost over $3 trillion. However, the plan proposes that payments would only be distributed to citizens (not immigrants), not including prisoners, children, or senior citizens — this eliminates about 45% of the population and makes the cost more manageable.
Part of the funding for such a policy in the United States would involve a new tax — about 14%. While this sounds daunting, every citizen making less than $81,000 annually would still benefit from this plan. Below is Walker’s graph that shows the relationship between a citizen’s current income and income after the tax and the UBI payment as well as the relationship between the UBI payment alone and the tax payment alone (listed on the graph as “VAT”). According to Walker, over 90% of the U.S. population will have their total net income increase.
Walker lists a number of other measures that could be taken in order to ensure that the cost of UBI is reasonable, including cutting welfare, cutting military spending, surcharges on incomes over one million, uniform payroll and income taxes, and the elimination of various tax loopholes.
But isn’t this socialism?
It is important to note what Basic Income is not. Basic Income is not communism or traditional socialism. It does not mean an increase in the minimum wage. It is not the same thing as welfare, and it is not meant to allow its beneficiaries to voluntarily terminate all means of employment.
While Universal Basic Income, like socialism, does involve a fair amount of redistribution of wealth, it does disassociate itself from the conventional ideals of socialism through a couple of significant factors. First, under a system of UBI, citizens continue to make all spending decisions independently. Even more importantly, means of production remain in the hands of private corporations, whereas the means of production would be publicly owned under a traditional socialist ideology.
Which other governments are considering Basic Income programs?
Compiled by the charity company GiveDirectly, the chart below presents a number of entities which have implemented policies that resemble UBI (including Manitoba, Canada’s “Mincome” which was discussed above) and set them apart based on which criteria of UBI they meet.
Here are a couple of other situations in which Universal Basic Income is being actively contemplated:
Finland, already a progressive European society, is among the nations which may have Universal Basic Income programs in the near future. The Social Insurance Institution of Finland will control the distribution of government money to 2,000 Finnish citizens in order to boost the Finnish economy and to propel more people into the workforce, according to Raine Tiessalo, a contributor for Independent, a United Kingdom news source. The recipients, Tiessalo says, will be given €560 euros (about $600 USD) of non-taxable currency each month beginning in 2017. Finland’s Social Affairs and Health Ministry claims that, “The objective of the legislative proposal is to carry out a basic income experiment in order to assess whether basic income can be used to reform social security, specifically to reduce incentive traps relating to working.”
This year, business leaders in Silicon Valley, California have arisen as some of the most outspoken advocates of Basic Income. A pilot UBI experiment publicized in late may of 2016 by a business incubator called Y Combinator may pave the way for similar future programs in the U.S. Y Combinator’s study will provide 100 families in Oakland, California, with around $1,000 to $2,000 each months for somewhere between six and twelve months. Among other reasons, Universal Basic Income has become a possibility for these business leaders because it would allow them to pay their entry-level workers an even lower wage than they already do. According to The Guardian contributor Jathan Sadowski, this is due to the fact that these entry-level workers would have enough money from their Basic Income subsidies to survive after a significant drop in wages that would save a significant amount of money for large corporations. Sadowski says in his June 2016 article, “UBI can, in some ways, be seen as welfare for capitalists.”
In June 2016, Universal Basic Income was proposed in a referendum in Switzerland, but the referendum failed to become anything more.
Has Basic Income worked anywhere else in the past?
One of the more prominent cases of UBI was called “Mincome,” and was conducted in the 1970s in Manitoba, a Canadian province. Roughly 1,300 Manitoban residents received checks from the government on a monthly basis. According to James Surowiecki, a Financial Page contributor for The New Yorker, Mincome was implemented in order to ascertain the effects of this kind of program. The program was terminated by a conservative government in 1979, and nothing more came from Mincome until an economist began to investigate the results long after the end of Mincome. Evelyn Forget discovered that, during Mincome, there was a significant rise in the amount of young people who continued their education, and there was a decline in hospitalizations among Mincome’s constituents.
An 8,000 square meter poster which was put in the Plainpalais square in Geneva, Switzerland by Basic Income advocates.
Matthews, Dylan: A charity’s radical experiment: giving 6,000 Kenyans enough money to escape poverty for a decade http://www.vox.com/2016/4/14/11410904/givedirectly-basic-income
Sadowski, Jathan: Why Silicon Valley is embracing universal basic incomehttps://www.theguardian.com/technology/2016/jun/22/silicon-valley-universal-basic-income-y-combinator
Solon, Olivia: Robots will eliminate 6% of all US jobs by 2021, report says. https://www.theguardian.com/technology/2016/sep/13/artificial-intelligence-robots-threat-jobs-forrester-report
Surowiecki, James: Why don’t we have Universal Basic Income? http://www.newyorker.com/magazine/2016/06/20/why-dont-we-have-universal-basic-income
Tiessalo, Raine: Finland tests giving every citizen a universal basic incomehttp://www.independent.co.uk/news/business/news/universal-basic-income-finland-ubi-test-scheme-experiment-a7211241.html
Walker, Mark. Free Money for All: A Basic Income Guarantee Solution for the Twenty-First. Century. Palgrave Macmillan, 2016. Print.