Automation and Universal Basic Income: Transitioning into the economy of the 21st century.
Owen Wendell-Braly
Professor Dochterman
WRIT-150
10/4/2021
Universal basic income is a social security that guarantees a certain amount of income to every citizen within a given governed population. For the purposes of this paper, however, the proposed income is $1000 per month and the given population is all American citizens over the age of 18. Though the idea has long been thought of as unrealistic and to many, unnecessary, in today’s day and age with automation having wiped out millions of jobs, income inequality being at a record high, all the while tech giants such as Amazon and Google continue to profit off our data at wildly high rates; the once obscure reasons for a UBI in America are now more comprehensible than ever. As time goes on, economic inequalities will continue to grow as millions more Americans will lose their jobs to automation, however, there is no current plan to help us overcome what is the greatest technological shift the world has ever seen.
Some say a universal basic income in the US is unnecessary, however, I argue that with a shifting economy due to the increasing automation of jobs, a universal basic income is necessary to combat poverty and support families as we transition into the economy of the 21st century.
Though its fame is relatively new, universal basic income, or the general idea that governments should provide their citizens with some sort of fixed income, has existed for centuries. In Alaska, the Permanent Fund Dividend or PFD, which is a funded by oil revenues derived from the state, has provided Alaskan citizens with payouts of around $1,000 per year since 1982 and has effectively wiped out extreme poverty in the area. The idea here, and in a universal basic income model, is that by putting a perpetual dose of money into citizens’ hands — especially those at the very bottom of society — things such as mental health, relationships, our overall happiness and additionally, job growth and our economy will all improve. Studies have shown that most of this is true. Mental health, overall happiness and relationships have all been shown to go up while “the dividend had no effect on employment”. Thereby nullifying a common presumption that a UBI would make people lazy and less willing to work.
The need for a universal basic income has not always been clear. I would argue that until the past decade a UBI would have been neither feasible nor logical because there would have been no real way to fund it and no legitimate reason to create it in the first place. However, over the past 10 years technology has advanced at a blistering pace. Since 2015 we have automated away more than 4 million manufacturing jobs and what was done to those jobs will soon be done to retail jobs, call center jobs, fast food jobs, truck driving jobs and on and on throughout the economy. A 2013 Oxford University study predicts that nearly half of all U.S. jobs will be lost to automation within the next 10 to 20 years while 2020 democratic presidential candidate Andrew Yang predicts that about one third of current US jobs will be lost to automation within the next 12 years. This is not to say that there will be no more jobs in 12 or 20 years — rather, it is to say that the economic landscape of jobs in America is set to undergo a massive shift and with it, a massive number of American workers and families will be displaced and forced to undergo a massive change as well.
The most effective way to help Americans navigate through this shift is by providing them with $1000 per month, funded by a simple value added tax. This would guarantee that all Americans benefit from automation, not just big companies. It would provide money to cover the basics for Americans while enabling us to look for a better job, start our own business, go back to school, take care of our loved ones or work towards our next opportunity.” A value added tax, or VAT, which would be the primary source of funding for a UBI in America, is very simple at its core. It is essentially a tax on the goods and services a business produces. Andrew Yang’s proposal (which I fully support) is to implement a 10% VAT tax (half of the average European VAT of 20%) in the United States which would in turn generate $800 billion in new revenue primarily coming from companies such as Google, Amazon, and Facebook, all of whom pay zero in VAT right now, and are all so illusive in avoiding fair taxation as it stands in our current system. Deeper into the math — we currently spend between $500-$600 billion per year on welfare programs such as food stamps, disability etc. The majority of this spending will go into UBI when people decide to opt in, however, people who prefer to maintain their current welfare systems will be given the option to do so as well. This makes it a win-win for the American citizen as they can decide to keep their current subsidies or opt into UBI instead. Furthermore, scientists predict that American spending will decrease another $100-$200 billion primarily as a result of less homelessness, a lower number of inmates in jails, and less time spent in hospitals. Finally, by putting more money into people’s hands the economy will inevitably grow because of it. The Roosevelt Institute projects that under a $1000 per month UBI model, the United States’ economy will grow by about $2.5 trillion and will create 4.6 million new jobs as well. According to Yang, this would generate approximately $800-$900 billion in new revenue from economic growth. The aggregate accumulation of funds generated by these taxes coupled with small portions of other tax streams also targeted towards slowing tech giants like Amazon and Google, would be enough to cover the cost of a UBI of $1000 per month for every adult in the United States. With such an unknown future, the enactment of these laws would effectively give every American citizen an economic safety net while also increasing national health, decreasing incarceration, homelessness and poverty, and growing the economy as a whole.
Over the past year it is clear politicians and citizens alike are becoming more open to the idea of a UBI in America. Time Magazine wrote that “elements of Andrew Yang’s platform have in the space of two months gone from being dismissed out of hand in Washington to winning broad bipartisan agreement.” Furthermore, among American voters, overall support for UBI rose from 43 percent to 49 percent, with republicans backing it at 30 percent, democrats at 66 percent, and independents at 48 percent. Most notably, 72 percent of American citizens ages 18 to 34 favored UBI [as well]. This is all to say that along with a true need for UBI in America, there is also growing corresponding support, showing that this is something we should no longer look at as crazy but rather as a solution to an increasingly closer problem. When put into practice, a UBI will effectively decrease poverty, fight the negative forces of our increasingly automated society, and support our citizens and families as we transition from the economy of old into that of the 21st century.
