In order to comprehend the importance of UBI, you really need to understand the rise of A.I., Algorithms and Automation. You might want to start there.
UBI Explained – One version of UBI proposes that every citizen above 21 years old received $1,000 per month (after tax) to do whatever you want with it. You don’t need to do anything to deserve it besides be alive and be a citizen.
Most of UBI conversations boil down to the fear of worst case scenarios. Let’s explore them…
Pro-UBI fear, if we don’t implement UBI then we will face economic turmoil. Algorithms/Automation/A.I. will not only replace physical jobs (think truck drivers) but it will also replace cognitive jobs (think human analysts). This is one of the biggest differentiators of the A.I. revolution as compared to the Industrial Revolution. When this happens, the lower and middle classes will be crippled, resulting in unprecedented amounts of unemployment. Instead of people being ‘unemployed’ there will be the birth of a new ‘unemployable’ class where a whole class of people do not possess any skills to be employed.
Anti-UBI fear, by giving citizens a free handout of $1,000/month they will be disincentive to work. Instead of creating innovation it will backfire, resulting in a large percentage of the population spending their handout on booze/drugs, sit in the basement and play video-games. This will result in massive amounts of people not working, stagnating the economy.
Both scenarios are possible. While there have been a few small UBI tests done (Present day Alaska, pockets in Finland, Canada in the 1970’s) it is unfair to extrapolate that data to see how it would affect urban, suburban and rural areas across the US. But when comparing the downsides, I would argue that a full economic collapse is a far greater negative consequence as compared to a percentage of unmotivated and noncontributing citizens.
Furthermore, many economics believe that UBI will breed innovation. By having a safety blanket of income, UBI would incentivize more individuals to take the leap into entrepreneurship and, naturally, some of the individuals will be successful. If this happens then all we’d need to understand is if the economic positive (of new and created entrepreneurship) outweighs the free-loaders (videogame, drug users). Will it? Once again, without a crystal ball its hard to say. However, based on today’s economic structure it would probably only take one ‘Uber’ to counteract a nation of freeloaders.
Its important to note that $1,000/mo is not a lot of money. It’s below the poverty line. Behavioral economists have mentioned that this will not be enough to have people quit their jobs and it will be supplemental to their jobs.
But how can we pay for it? If we gave each citizen above 21 years old $1,000/mo, that would be $2.36 trillion (197 million citizens @ $12k/year). However, this program wouldn’t necessarily be additive and could serve as a replacement program. Programs like unemployment, social security and SNAP not only have enormous budgets but also require very high levels of administration. Example, for Unemployment there are officials who monitor individuals making sure they are applying for jobs, interviewing, being fired justly, etc. UBI does not require this level of administration. If you’re alive and over 21 years old, you get a monthly check. Social Security is set to payout $1 trillion this year so it seems well within the realm of possibility that we could fund a ~$2.5 trillion initiative
So, what’s the rush? If the jobs aren’t gone now and they aren’t going away tomorrow, why do we need to implement this program now? Simply put, I don’t think we need to, however, technology advances exponentially and politics moves at a snails pace. We’ve already seen tremendous advancements in self-driving car technology which represents one small sliver of what will soon be affected. As we see the technological writing on the wall, I believe it makes sense to start testing UBI programs, learning how people react to it (i.e. the Pro-UBI and Anti-UBI fear arguments) so we’re not unleashing $2.36 trillion on the American people with no idea of what the outcome would be.
In summation, The effectiveness will come down to if the positives (innovation, increased spending) outweighing the negatives (freeloaders, booze/drugs). A minimal UBI of $1k/mo would keep citizens under the poverty line, keeping them working jobs, contributing to society and affording them the ability to live comfortable lives.
Dave Emerson 