It’s time for a serious discussion about basic income

The idea of universal or unconditional basic income is gaining ground at the same time as artificial intelligence and machine learning are the subject of serious analysis. Anybody reading this article should understand that this is something I write about pretty often and is really just an excuse to provide a collection of interesting links that will explain some of the topics covered much better than I can. Please, take the time to read them.

The idea of ​​a universal or unconditional basic income is no longer the preserve of liberals to simplify and limit the role of the state and consolidate all welfare and subsidies in one, or leftists hoping to eliminate poverty and inequality, and is increasingly simply a matter of necessity as deep learning takes over from humans. In a society where machines are much better doing virtually any job, the only logical option is to begin to understand work as something machines should do, freeing up humans for other tasks.

That said, there is still a lot of opposition to the idea that work should be something we do only to fulfill ourselves, to contribute to the common good or to earn more income: the idea that work somehow dignifies us or pays for some kind of original sin is still deep-rooted in many societies.

Arguments that work is for machines because they simply do most things better is being put forward by visionary leaders like Elon Musk, and is studied in countries as diverse as the United States and India. The Swiss may have rejected the idea overwhelmingly in a recent referendum, but does not mean it is conceptually wrong, simply that some of the fundamental dilemmas have yet to be explained properly, namely how to manage the pull effect on immigration such a move would undoubtedly have, along with the question of finding the money to finance the payment of an amount sufficient to keep everybody above subsistence level, unconditionally.

In that regard, the math is simple: to give each of the 322 million people living in the United States a basic income of $10,000 a year would cost $3.22 trillion. But if we subtract the 45 million pensioners who already receive a basic income through social security, along with the 70 million people who earn more than $100,000 annually, and who would return more than the amount of their basic income through tax, we’re getting close to the trillion dollars the US pays out to deal with unemployment, poverty, homelessness, food coupons, etc. If we then eliminate the cost of administering welfare, then we’re really starting to get somewhere.

Still have second thoughts? For example, why should you work and pay your taxes while your neighbor decides simply to live on basic income? How to avoid feeling like you’re paying their standard of living? Imagine this: one household brings in $100,000 a year, the other, zero. Under the current system, the state would tax the wealthy 10% and pay that $10,000 to the poor, who are not allowed to work. Under a hypothetical second system, the state would collect 20% tax from the rich, but send to both households, rich and poor, a check for $10,000. Both systems generate quantitatively the same result, but while in the former, the rich have the feeling they are subsidizing the poor; under the second they contribute to a system to create a universal and unconditional income that benefits them as well. There are convincing arguments that answer most doubts. The only thing that cannot be countered is irrational opposition along the lines of “that doesn’t sound right to me”.

There is another, more powerful argument: ​​universal basic income is not through our taxes, but instead technology pays for it. Understanding “The Accelerating TechnOnomic Medium (ATOM)” (pdf), requires a certain grasp of economics, but its theorist, Kartik Gada, basically states that technology is the cause of the largest deflation in history, but that this is systematically ignored by all economic models. Technology-based goods quickly lose their value: an iPhone we pay a thousand euros for is barely worth two hundred a couple of years later. At the same time, more and more objects made by man have an increasingly high technological component, while at the same time, one iPhone replaces a dozen objects previously purchased separately — from diary, organizer, camera, radio, music player, video, calculator or whatever you want, because “there’s an app for that”, meaning that deflation has gone from being negligible when technology had a small role in our lives: 0.5% of the World economy in 1992, and that today has reached more than 2% of the total, which is far more powerful than central banks can deal with by pumping money into the economy. None of the known economic models know how to deal with technological deflation.

An increasingly outdated focus on ‘Real’ GDP, instead of Nominal GDP, has led to a primary cause of economic sluggishness and weak job creation being overlooked. It is erroneous to assume that low inflation does not correspondingly decrease Real GDP growth.

Universal or unconditional income becomes therefore the only way to fight the deflation brought about by technology: this means not only starting to pay it now, but updating it by 20% annually to counter the effect of deflation. That would mean sending every American a check for $5,000 annually, which by 2025 would be $25,000 and in 2030, around about $100,000 just to be able to avoid deflation generated by technological progress.

It is also important to understand that the increase in basic income would not mean an increase in inflation that would lead to basic goods increasing their price, because basic income is calculated exactly to counteract the force of deflation, and thus avoid a scenario of hyperinflation.

Such a scenario simultaneously solves two problems: technology unemployment and technology deflation. We might usefully ask ourselves not only how this would affect the way we work, but also how it affects something as complex as copyright and intellectual property in our modern times: what happens when artists do not create to survive, because their survival is guaranteed by basic income, simply because we live in a world of overabundance.

As can be seen, universal basic income is not as simple as sending a check to everyone or that by ending work humanity will slide into decadence. We’re talking about a new economic model, the only one able to take into account the effect of powerful technological deflation, and increasingly, an absolute necessity. We need to prevent, on the one hand, rising unemployment and inequality, which will only lead conflict, and at the same time the absurdity of continuing to try to manage territorially an infinite number of isolated units in a world the internet connected a number of decades ago.

Utopia? Not at all. We need to advance the discussion and make politicians understand that it is the only way forward. And if we don’t move forward, we’re going to end up in a place none of us is going to like.

(En español, aquí)