basic income

Universal basic income could be what society needs to endure the next Great Depression.

As technology outpaces the economy, there have been shifts in what a person’s role in working is. With the advent of self-service check-out stations at the supermarket, we needed fewer cashiers. With the advent of mechanized factories, we needed less industrial labor. But looking at the explosion of computer technology, the upcoming shift in the economic landscape could shape up to be cataclysmic.

Being prepared for such a shake-up involves a lengthy discussion that we have to have now, to explore what options are available to us and how to tailor those options to our needs. A popular approach to the coming fiscal crisis is Universal Basic Income (UBI, or Basic) which has a lot of people excited, but may not be the solution the world is ready for.

Can the solution to the next economic crisis be as simple as giving everyone free money?

The Next Depression

basic income
Image: Mixibest/Wikimedia

Tesla is one of many angling to remove drivers from the fleet of cross-country freight dashing America’s highways, and Uber is preparing to ditch the driver as well. Add to that delivery drivers that Domino’s is looking to automate, and well over 5 million jobs are poised to disappear just to driverless cars.

Venture capitalist Kai-Fu Lee declared earlier this year that robotics will replace half of all American jobs in the next decade.

“It is the decision engine that will replace people,” said Lee.

Lee doesn’t just mean jobs at supermarkets or bringing people pizzas, though. He means every industry. Hospitals, banks and insurance industries are “moving too slow” on adapting artificial intelligence. Tech giants like Facebook are, of course, leading the way.

While there is a certain Terminator-esque fear from stories we hear all the time, like Facebook bots learning how to lie, a more immediate and lesser-known fact is that those bots were learning to negotiate.

“Touching one’s heart with your heart is something that machines, I believe, will never be good at,” Lee said, suggesting that service-sector jobs should be ‘first-class’ and implying a safety for creative jobs like invention, insightful thinkpeices shared on your social media channels and media development.

Forbes took a more measured approach, saying social and creative jobs are only safe for now, until our AI develops the ability to intuit and learn in a more human-like fashion. Already, artificial intelligence is capable of writing articulate breaking news stories, as the Washington Post’s Heliograf demonstrated.

With potentially half America’s workforce displaced, the current income inequality issues at the heart of our economy will be exacerbated. Automation will create amazing, record-shattering wealth for companies that no longer need to pay employees, but those now-unemployed consumers will face even worse poverty than exists today.

With unemployment rates set to outpace the Great Depression, the bottom falls out of the economy, and fewer goods and services can be purchased from the new robotic workforce.

Basic Solutions

basic income

The apparent solution to the next Great Depression appears to be Universal Basic Income. The idea is relatively simple — everyone gets money. Regardless of wealth, employment status or other extenuating factors, all Americans would be given a salary. TIME‘s exploration of the concept traced its philosophical roots, perhaps fittingly, to Thomas More’s 1516 book Utopia.

Philosophically, the premise is an adaptation of Thomas Paine’s argument for Basic in 1797 – that everyone is promised some of the success provided by our collective processing power. And in his 1967 book, Where Do We Go From Here: Chaos or Community?, Dr. Martin Luther King Jr. called guaranteed income “the simplest approach” to permanently solving poverty.

Economists at the Roosevelt Institute recently concluded that giving every American adult $1,000 per month would accelerate US economic growth by 1.39 percent if funded through tax investments, and up to 12.56 growth if it’s not revenue-neutral (the current Republican tax plan isn’t either).The potential benefits of Basic promise a staggering potential gain of $2.5 trillion.

The Roosevelt findings are based in an economic theory called “marginal propensity to consume,” which essentially means that people with less money are more likely to spend it where people with more money are more likely to stockpile it.

This is being tested right now by Silicon Valley venture capitalist firm Y Combinator. A handful of people will receive $1000-$2000 per month until 2022. A control group in the study will receive $50 per month. The study will track participants’ use of time and finances, physical and mental health and effects on children and social circles.

“What’s unclear to me,” said Y Combinator President Sam Altman, “is will people be net-happier or are we just so dependent on our jobs for meaning and fulfillment?”

There are a number of small-scale testimonials and programs that exist that have shades of Basic in them, ranging from lottery winners and people collecting long-term annuity payments to the Alaskan Permanent Fund.

Dauphin, Manitoba in Canada attempted a version of Basic in the 1970s, dubbed “Mincome“, or minimum income. The effects were largely positive, encouraging education and reducing poverty. The findings of this experiment concluded that people were unlikely to drop out of the workforce as well, despite concerns that Basic compromises work incentive.

Economics podcast Freakonomics dove deep into Dauphin and results of other experiments into Basic back in 2016 as well as its controversy. It supported Dauphin’s findings, but also explored the political arguments, and problems.

The Arguments for Basic Income

basic income

Basic looks broadly appealing as the world and economy continues to change. It fits with liberal fiscal principles, including the philosophy of marginal propensity to consume.

Basic is a cash injection into an economy, particularly into the vulnerable and marginalized groups served by the social safety net. Some forms of Basic like mincome only impact those in the direst need. And that’s actually the strongest conservative appeal of Basic.

“In my version, every American citizen age 21 and older would get a $13,000 annual grant deposited electronically into a bank account in monthly installments.” said Charles Murray of the American Enterprise Institute. “The UBI is to be financed by getting rid of Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare.”

Silicon Valley also loves Basic. The more people who are freed from their jobs as bank tellers or driving long-haul freight the more people are freed up to work on contract work at TaskRabbit or invent the next big disruptive technology. And of course, there’s something of a guilt factor. Silicon Valley is pioneering the technologies that will cause the next depression, so having a hand in weathering it may be a consolation prize to displaced American workers.

“If technology eliminates jobs or jobs continue to become less secure, an increasing number of people will be unable to make ends meet with earnings from employment,” Y Combinator Research Director Elizabeth Rhodes told Quartz.

But some worry it’s the consolation prize given for the downfall of economic liberalism.

The Arguments Against Basic Income

basic income

A major facet of most forms of Basic is using it to replace the social welfare programs that already exist. While some see that as a positive, such an act might give pause as well.

Far from being forays into post-capitalism, The New Inquiry sees Basic as a means to extend capitalism forever.

“The aim is pacification, not liberation,” argues Inquiry author Carmen Petaccio. “A universal basic income is, in the most cynical sense, a subtle kind of doomsday prep for the tech billionaire, a means to diffuse the revolutionary potential of the working class by supplying them with the absolute bare minimum, just enough to keep them almost happy, fat in the apps.”

Petaccio also warns that Basic might be anything but universal, denying both a social safety net and the benefits of investments in Basic to undocumented people. Felons and other ‘undesirables’ might also be denied Basic based on who decides who gets paid.

In that way, Basic could be used as a cudgel to make certain problems in out society worse. Written by the wrong hand, Basic could make a lot of marginalized communities’ lives harder and may discourage the poor and middle-class from working to better these societal problems.

The nature of work is, after all, the biggest critique.

Concerns that people receiving Basic will stop working for meaningful things altogether is central to many critiques of forms of basic income. While little effect has been noted in the small-scale studies done thus far on primary income earners, secondary and tertiary income earners did show a marked drop in labor force participation.

Altman of Y Combinator isn’t too concerned on that point, however. Even if past data proves wrong on a larger scale, he isn’t concerned.

“Maybe 90 percent of people will go smoke pot and play video games. But if 10 percent of the people go create new products and services and new wealth, that’s still a huge net win,” said Altman.

Is it time for Basic Income?

basic income

As the research continues and the threat of economic collapse looms, the question of Basic is raised with more urgency and frequency. Politically, accepting Basic in America would be a challenge, with it seeming to be too liberal a policy for today’s politicians to seriously discuss.

And practically, the idea is probably not ready yet either. There hasn’t been a large-scale study done of Basic. The pilot program that many eyes were on in Finland was little more than a publicity stunt, leaving a lot of questions with few concrete answers. How would Basic impact an economy? How would Basic impact inflation? Right now, the answers are theoretical.

What it is absolutely time for, however, is asking those questions. In a country where basic healthcare is controversial, starting a national dialogue on basic income may be an uphill battle. But if we had a national conversation about social safety net programs in 1928 or about big bank regulation in 2007 maybe we would’ve been ready when the storm came to sweep us all away.

Or maybe it’s only after catastrophe that we can build something that can weather that storm.

 

Katelyn Kivel is a journalist and political scientist in Kalamazoo, Michigan. Follow her on Twitter @KatelynKivel.

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