Universal Basic Income

Universal Basic Income (UBI) is an unconditional cash payment, meaning given regardless of factors such as income level or race, subsidized by the government. UBI is often a staple and found in socialist and welfare countries/states. UBI’s purpose is to provide the citizens of a state or country with enough money to provide basic living necessities such as food, water, and shelter. Some claim UBI to be a solution to poverty and threats to jobs, such as artificial intelligence, while others claim it as fiscally and morally irresponsible.

Johanna Perkio, faculty member of the University of Tempere, author and editor, quotes Olin Wright, who claims that Universal Basic Income is a “compass leading to the fulfillment of a utopian world.” Perkio also notes that Wright considers basic income to be a central instrument for directing the development towards the principals that direct from Capitalism to Socialism. According to Perkio, Universal Basic Income would “allow developing more multi-faceted perspectives on work and moving towards more sustainable lifestyles, where payed work and consumption would play a lesser role than today (10).

In agreeance with Perkio, Stephen Woodbury, Senior Economist for the W.E. UpJohn Institute for Employment Research, both agree that UBI has a positive and proven track record of success. One example listed is the Alaska Permanent Fund Dividend. Woodbury states “every society should provide its constituents with the means to meet their basic needs (314). Woodbury’s article isn’t simply praise for the welfare-style system, however. Woodbury does

acknowledge that Universal Basic Income is disputed by economic professionals, and does have some noticeable downfalls. One example is when Woodburry says “A UBI policy does have some drawbacks, people may be less motivated to work… such worries have prevented UBI from being implemented on a larger scale” (315).

Ian Goldin, Daniel Sage, and Patrick Diamond are listed antagonists towards UBI. In solid disposition, Sage and Diamond fundamentally question the efficacy of Universal Basic Income. They bring into doubt whether or not UBI is the solution to profound social and economic disruption, and asks the question of whether or not there are better options to deal with numerous societal issues. One example is when Sage and Diamond point out that while voters tend to poll that they support paying higher taxes for better social services that do not always turn into real voting behavior, which does not serve well for Universal Basic Income.

Sage and Diamond’s opinions compare with Ian Goldin’s. Ian Goldin begins notes the threat of job loss from artificial intelligence. He alludes that the request of possible solutions comes in a timely manner, however he makes clear that turning to Universal Basic Income is a bad answer. Goldin makes five points against UBI. These points are summarized into financial irresponsibility, higher inequality and poverty, social cohesion, incentives to participate, and the postponing of discussion of future jobs. Goldin is concrete in his belief that UBI is a quote “red herring” in the solution of job completion from automation and AI. He says “by reallocating welfare payments from targeted areas to a generalized transfer to everyone, the amount that goes to the most deserving is lower.” Goldin claims that if UBI were established to provide everyone with a modest level of living, it would be unaffordable and lead to ballooning deficits,

which would have to be made up for by higher taxes and/or reallocation from other areas such as health and education.

One of the driving factors propelling the discussing of Universal Basic Income, is the threat of mass job loss/layoff from automation. As technology continues to improve and become more wide spread and easily distributable, many jobs are being replaced by machines and artificial intelligence. Computers are being designed to code themselves without the need for human input, and you may even notice at your local supermarket that a cashier has been replaced by an automated checkout. Robot to worker ratios are rising rapidly in factories around the world, and as their numbers grow, the cost of their implementation shrinks. The developing world is most at risk with countries like Ethiopia and Nepal having over 80 percent of jobs at risk, while the developed world isn’t much better off, with states in the United States having over 50 percent of jobs at risk of being automated. UBI would allow people to survive if their job became automated and allow them to find other work to provide additional income to pay for non-essential wants. The biggest questions are things like how much money should be given, and how would it be paid for. Average proposals approximate $10,000 annually as being adequate with increases to taxes, negative interest rates, earnings from investments, decreases in military spending, sovereign wealth funds, and resource based revenues.

To discuss UBI, which is an issue that is disputed both fiscally and morally, factual studies must be conducted to reach decisions. Modeling the Macroeconomic Effects of Universal Basic Income is a research study of the macroeconomic effects of Universal Basic Income written by Michalis Nikiforos et al. The study examines three versions of unconditional cash transfers, models them into financial plans, and compares the effects to the Levy model’s

baseline growth rate forecast. The study is quoted in saying “Our results are very clear: enacting a UBI and paying for it by increasing the federal debt would be expansionary, because it would increase aggregate demand. When the policy is first enacted, economic growth is higher than in the baseline as the economy converges to a larger size. Within eight years of enactment, growth returns to the same rate as in the baseline, with output at a permanently higher level” (Nikiforos 4). The study concludes that a supplemental income of $1,000 for all Americans would increase U.S. Economic growth by 12.56% over the span of eight years. This study is conclusive with three other sources listed that claim that Universal Basic Income is a benevolent social addition.

Universal Basic Income is a social construct should be supported for a number of reasons. For one, people should not have to trade the time of their lives, sometimes over forty hours a week, working at abysmally low wages, to provide themselves with living necessities such as food, clothing, and shelter. It is the duty of government to protect the people and provide adequate resources for the pursuit of a promising life. When all of a person’s paycheck is being used for food, clothing, and shelter, it is very hard to make any advancements in life, such as saving money for retirement, for a business, or sending oneself or ones kids to college. Second, many economic experts agree that UBI would have a positive impact on the economy. Having more people with more money to spend commercially contributes to a better economic outlook. Third is the simple fact that today’s society revolves around making money by working, and that millions of people’s jobs are at risk of being lose due to automation. If people are lose their jobs in very quick succession, it is possible for an economic collapse to occur. Implementing UBI could prevent this, while hosting a myriad of other positive social benefits.