The Argument for Universal Basic Income

Officially the world's largest poster, Geneva, Switzerland.
Officially the world’s largest poster, Geneva, Switzerland.

On June 5, 2016, the citizens of Switzerland decided NOT to allow their government to give them free money. The neutral Western European nation, population 8 million, held a public referendum in which the question was this: should the government provide all Swiss adults with a guaranteed salary equivalent to US $30,000 a year? Unsurprisingly, most Swiss said no, with 77% of voters against.

Why did the Swiss vote against the world’s first real UBI initiative? Because they don’t need it. The country is one of the most economically empowered in the world, with the highest wealth per adult citizen, a progressive social welfare policy, and one of the lowest unemployment rates in Europe at just 3.7%. But would Universal Basic Income – giving each adult citizen enough money to cover basic living expenses – help solve and salve the chasms of unemployment and income inequality? In a country as large, heterogeneous, and discordant in beliefs and ideology as the United States, could UBI one day be economic reality?

Universal basic income, as it has been dubbed, is an over two hundred year old idea. Pioneered by Thomas Paine in a 1797 pamphlet “Agrarian Justice,” he proposed giving every adult over 21 regular payments of 15 pound sterling. Since then, the concept has evolved, taking on many names: unconditional basic income, social dividend, citizen’s income, negative income tax. UBI seems simple enough to explain: an economic system in which all citizens of a certain age are given a guaranteed annual income. However, the ramifications of such an economic overhaul, especially in Western, capitalist societies, leaves many hesitant to fully accept UBI as the future. It shifts the status quo a bit too radically.

Still, people’s gut reactions to UBI tend to jump right over the river called Nuance and into the sea of Assumptions. “People won’t work,” many proclaim, “It’ll encourage laziness”. Others still cry, “It’ll bankrupt the government! We couldn’t afford it!” Some believe that Universal Basic Income would change work irreversibly – and it would, just not in the cataclysmic ways they envision. Workers would be far more empowered than they’ve ever been, and I think that is truly what scares us. It scares the elites because an economically empowered populace has something they likely didn’t have before: options. It also scares workers, who have internalized what they do for a living, and the process of “earning a living,” to such a degree that willingly receiving a “paycheck for nothing” seems wrong, if not downright shameful.

But work is already headed towards drastic change. Many jobs will, in the near future, be performed by machines. With a UBI, work could change in other ways. The five-day workweek might drop to four days. Long-term unemployment and perhaps even the concept of unemployment altogether could cease to exist. Citizens could take as much time from the workforce as they’d like without the stigma of being deemed “unemployable.” Personal and passion projects, and maybe even relationships, may come to be more valued than jobs, work, and making money. We could see a population become more active in volunteer work, shunning fierce individualism in favor of an altruism that used to be integral to the American way. UBI threatens America as we have known it to be for some time, and that’s why it’s so dangerous. At the gut level, many of us don’t want it, and if a UBI bill were drafted tomorrow, it would never make it through Congress.

This is why, to argue for a Universal Basic Income, you’d have to know the many, many arguments against it. Most critics rail against UBI for purely economic and elitist reasons, failing to grasp its larger significance, to see the ways in which it could radically transform society.

One problem with spreading awareness about UBI is that even the people most qualified to talk about it – economists, journalists, thinkers – don’t seem to have a solid grasp of it, which leads to a lot of misinterpretation and misinformation. Even this guy, who wrote a piece lambasting UBI critics, fails to understand that a universal basic income is just that: a basic income. He instead suggests eliminating tax breaks like the standard deduction in favor of giving all Americans $2,500 a year through a kind of tax rebate program (which Bush notably tried back in 2008). I don’t think UBI would work as direct tax rebate because it would completely derail the current tax code in a way that would negatively impact millions of people, and the goal of a UBI in my estimation should be to reform not obliterate systems already in place (unless they really need to be).

Max Sawicky has been one of the foremost critics of universal basic income. A former member of the Economic Policy Institute (EPI), he argued that the “objectives” of a UBI would be outweighed by the “specifics” of it – how it would be implemented. He goes on to offer some alternatives, amounting essentially to patchwork on existing programs – raising the minimum wage (even though it will never catch up to inflation), and “federalizing the TANF program.” These fixes would “keep with our current system and political culture,” he writes.

Maybe he doesn’t get the nuances of a UBI because he believes so much in the way things are. And therein lies the problem. These economists, for all of their education and knowledge, aren’t able to grasp that UBI isn’t about tax policy or welfare – it’s about leveling a playing field ravaged by rampant free market capitalism and corporate greed for too long.

Universal basic income could, and would, work in the United States, and in most rich, Western economies. The US already spends over $1 trillion across dozens of federal and state public welfare and entitlement programs. With the implementation of a UBI, most components of Social Security, Medicaid, TANF, SNAP, and other programs would be scaled back or cut completely. Unemployment insurance would be dramatically scaled back.

Let’s go back to the single biggest economic reason people argue a UBI could never work in the United States: the government would go bankrupt trying to pay every adult a base salary. Who says the burden must fall completely on the government? While U.S. federal revenues are only about $3.4 trillion, our GDP is easily ten or fifteen times that. Ultimately, UBI is about wealth redistribution. With non-profits and charities currently testing UBI pilot programs, and Silicon Valley, with a combined wealth that is unfathomable, being one of its fiercest advocates, funding could come from a variety of sources, philanthropic and federal.

Some have proposed methods for doling out UBI, usually with conditions, as there should be. Recently Charles Murray of the American Enterprise Institute put forth his basic income plan in the Wall Street Journal:  grant every citizen a total of $13,000 a year, with $3,000 to be put towards their healthcare. Here’s how my universal basic income would work. Each adult citizen or permanent resident would receive an annual gross income that is 150% of the poverty line. So somewhere around 16,000 to 20,000 a year. A portion of that income would be automatically diverted into a tax-free retirement account, let’s say 10%. Another portion, let’s say 20% would be put into a personal healthcare account. The rest would be taxed at a flat rate. This forces citizens to invest in themselves, and also encourages them to continue to work, because whatever is left after healthcare, retirement costs and taxes are taken out is nowhere near enough to live well on, but would no doubt give a nice boost to the struggling classes.

Socioeconomic tensions create many of the ills of society. Ultimately, American capitalism is about competition. It engenders a fierce individualism in all of us – every (hu)man for self – and devalues cooperation and human potential. We have become the wealthiest nation in history because of this, but as noted by Andrew Flowers of FiveThirtyEight, capital is no longer scarce. We’ve created enough wealth: the last big scarcity is attention. What would we choose to focus on, to do with our time, if we didn’t spend most of it earning enough, in most cases, just to survive?

A UBI levels the playing field, as everyone receives it. How we choose to use our “social dividend” is, of course, up to each of us. But at least we have that option now. UBI as an idea is ultimately about empowering people, who can then decide how and what they will spend their time and energy on, whether that means creating artisanal products, or playing World of Warcraft, or choosing to be a perpetual student.

Of course, this leads to the single biggest logical argument against UBI. Basically, it’s this: if you give people money, they won’t work. Why is this assumption wrong? Can anyone tell me? This assumption is wrong, because to paraphrase Charles Murray, “The problem isn’t work, but idleness.” For the people who want to work and do work, and the people who want to work but can’t work (for any number of reasons to complex to dig into here), the opportunities for meaningful work will increase. Those who live idle lives or lives of leisure will choose to continue doing just that. Again, it all comes down to choice.

When people have enough money to meet their basic needs, and even save a little for future goals, everything begins looking up. Perhaps the biggest single UBI experiment to date, dubbed MINCOME, was conducted by the Canadian government and the province of Manitoba from 1974 and 1979. Every eligible family in the town of Dauphin, pop. 10,000, received an income. The study data, though abandoned, was unearthed by economist Evelyn Forget in 2004, resulting in a research paper titled “The Town With(out) Poverty”. What Forget discovered when looking at the data collected about these families who received the guaranteed income was that they had better health outcomes – less mental health hospitalizations, accidents, and injuries. The high school completion rate went up during the years of the study, and young women were much less likely to have children before age 25. Most tellingly, Manitoba’s guaranteed income experiment brought most of its recipients above Canada’s poverty line.

As with the MINCOME experiments in 1970s Canada, recent cash transfer experiments, such as the pilot program run by Give Directly in Kenya and Uganda, have revealed that when you give people money, especially the poorest among us, they tend to invest in themselves instead of excessively spending on vices such as drugs and alcohol (another fear expressed by UBI naysayers).

I don’t see how poverty is beneficial to anyone. Some argue that there is a point to poverty, that it is even essential to the structure and functioning of society. But the only thing that poverty contributes to society that is even remotely “useful” is a systematically oppressed underclass to fill low-wage service jobs. It also creates dysfunction in families, communities, and society: crime, physical and mental health issues, abuse, neglect, and the list goes on. With a UBI granted to everyone, regardless of status, we’d see healthcare costs fall, crime stats fall. Why does anyone need to rob or steal if their basic needs are being met? Of course, you are never going to fully eradicate crime or poverty or any other social ill, because these are deeply complex phenomena whose origins lie in the darkest corners of the human condition. But UBI would be a hell of a fucking start, and we are at the perfect time in history to kick-start it.

America needs to change. We can’t keep up the level of prosperity that we’ve been at for the last 60 years or so because we’re seeing that it is coming at a very human cost. This country has not directly invested in its people in over 50 years, since the days of Lyndon B. Johnson, and even those systems, so visionary at the time, are now obsolete or nearly so. Instead, we over-invest in corporations and ramp up defense spending to the point where we are #1 in the world at it. The Right to Life, Liberty, and the Pursuit of Happiness, so beautifully invoked in the Declaration of Independence nearly 250 years ago, has been replaced by The Right to Debt, Drudgery, and Pursuit of Things.

UBI is a beautiful idea because it encourages people to invest in themselves, their communities, industry, and their country, rather than encouraging dependence upon beleaguered government programs and stigmatizing those in need in the process. It will usher in an era of post-work, in which what you do isn’t so important, but what you choose to do is. It will end poverty as we know it. Is UBI the future? Or the now?

One thought on “The Argument for Universal Basic Income

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