‘Universal Basic Income’ is a hot topic in tech – with leaders like Elon Musk and Bill Gates claiming it will improve our lives. But what is it?
What is Universal Basic Income?
Universal Basic Income (UBI) is a proposed economic system that would pay every citizen a modest salary, regardless of their income or wealth.
Most UBI models suggest around $1,000/month for each adult, which is hardly lavish – but enough to get by.
Why might Universal Basic Income be a good idea?
UBI proponents argue that a basic income for each citizen would improve their quality of life and encourage entrepreneurial activity, by reducing the risk of going freelance.
People could become free to try more fulfilling things:
- Start businesses.
- Make art, apps and creative expressions.
- Spend more time learning and doing things they enjoy.
Isn’t Universal Basic Income just socialism?
Critics accuse UBI of ‘socialism by the back door’ and point to socialist countries like the Soviet Union, North Korea, Cuba, China and Venezuela – where any economic growth has been at the cost of human liberty.
However, it’s important to note that whereas socialist systems typically involve abolition of the free-market and private property ownership (core aspects of capitalism), UBI simply augments a free-market capitalist system.
UBI doesn’t stop anyone from owning property or building a business.
With UBI, property would remain privately owned; goods would be traded for capital; and everyone would be free to create and sell products and services to generate wealth.
Actually, some argue that UBI could result in MORE entrepreneurs than today – whereas most socialist regimes banned free enterprise.
Why is Universal Basic Income a hot topic?
UBI is gaining attention in response to the wave of automation that’s sweeping across the West and replacing workers with software and machines.
Tech leaders from Elon Musk (Tesla) to Bill Gates (Microsoft) have voiced their support for a universal basic income, to compensate for increased unemployment.
‘Universal income will be necessary over time if AI takes over most human jobs.’ – Elon Musk
A report by PricewaterhouseCoopers suggests that leading economies could have a significant percentage of jobs at a high risk of automation by the early 2030s:
- 🇺🇸 United States: 38%
- 🇩🇪 Germany: 35%
- 🇬🇧 UK: 30%
- 🇯🇵 Japan: 21%
The report also lists sectors that are at high risk of automation.
- 🚛 Transportation and storage: 56%
- 🏭 Manufacturing: 46%
- 🏬 Wholesale and retail: 44%
- 🚑 Health and social work: 17%
Jobs requiring lower levels of education are the most likely to be automated.
While the report suggests that some high-skilled jobs are created by automation (usually industrial design or maintenance), a paper by the USA’s National Bureau of Economic Research looking at employment between 1997 and 2007 concluded that for every new robot added to the workforce, between 3 and 5.6 jobs are lost in the local area.
For each new robot added per 1,000 workers, wages in the surrounding area would fall by 0.25 and 0.5%.
Are there potential alternatives to UBI?
If lost jobs and declining wages are caused by increased automation, what are our potential solutions?
One solution is to simply halt automation.
Given the obvious benefits to businesses, halting automation would require complex legislation by government and domestic companies would become unable to compete against counterparts in countries where automation was legal.
UBI is an alternative solution to mass unemployment.
And UBI could reduce risk for anyone looking to invest time making new products, services and businesses – which will benefit the economy as well as individual well-being and career satisfaction.
Research suggests that low-skilled, dangerous and unpleasant jobs are most likely to be replaced first – and given that these aren’t roles people usually do for fun, it’s arguably a net benefit to our society if machines can do them instead.
But if our current economic system dictates that the automation of unpleasant work comes with a downside (increased unemployment), isn’t that a strong argument for evaluating our economic system?
How could we fund UBI?
Uncertainty about how to fund UBI is the main barrier to implementation.
But just as automation is demanding a new economic strategy, it’s also a potential solution for funding it.
Replacing people with software and robots can heavily reduce operating costs, thereby increasing margins on the goods produced by companies. Many proponents of UBI argue that this extra cash should be used to fund a universal basic income – although they disagree on how.
Bill Gates has suggested taxing robots highly on their effective earnings. Others have proposed increasing corporation tax, in lieu of the fact that companies will enjoy enhanced profits if they lay off their human workforce.
Another crucial factor to consider is the de-centralisation of the means of production – with 3D printing likely to result in most homes having the ability to produce objects, clothes and food; and vertical farming heavily reducing the growing cost and delivery distance of crops to homes.
These technologies could significantly reduce the cost of things we need and therefore the effective income (adjusted to inflation) required for a family to enjoy a specific quality of life could be substantially lowered.
A lower cost of living and/or a guaranteed, basic income would grant more freedom and flexibility to the average person for exploring activities that are creatively or intellectually satisfying – to the benefit of individual well-being and collective creative and scientific wealth.
Ultimately, UBI’s greatest obstacle is trying to challenge prevailing, socially-conservative ideas about work, responsibility and motivation that have existed for generations; for example, the belief that it’s better to perform a low-skilled, menial job than to spend most of our time having fun with family and friends.
Critics of UBI often suggest that most people will chose to do nothing all day if given the choice – but research suggests that successful companies are disproportionately started by people from inherited wealth, which supports the argument that an economic safety net will encourage risk-taking, rather than dis-incentivise it.
Ultimately, UBI challenges us to re-evaluate our deepest ideas about humanity’s purpose – both on earth today and into the stars, tomorrow.
Were we born to perform repetitive, dull tasks for most of our waking life; even when machines are increasingly able to perform them for us?
Or could we all serve a higher purpose and tap into the creative flow that’s reserved for a small elite of artists, athletes and musicians, in our current economic system?
Given humanity’s impressive progress so far, there seems cause for optimism.