Universal Basic Income (UBI) is a system in which every member of society—regardless of their economic situation, age, household size, employment status, and so on—is guaranteed a minimum income. In other words, it’s money that you get for simply being alive.
And as the threat of automation continues to loom, and new UBI trials continue to pop up around the world, it’s an idea that is gaining more and more traction.
Indeed, Canada, Kenya, and Finland are just some of the nations that are already investigating how UBI might work in practice, and some of the most successful people in the world—like Elon Musk and Mark Zuckerberg—are getting behind the idea.
Now, a new voice is lending support to research into UBI.
In her latest book, What Happened, Hillary Clinton asserts that she seriously considered a proposal for universal basic income for all Americans. The idea would have been funded by carbon and financial transaction taxes but, ultimately, she asserts that she abandoned the proposal because, at the time, she thought that it wasn’t truly “realistic.”
Now, it seems that she is rethinking that initial assessment.
Rethinking Old Ideas
To clarify, Clinton asserts that, in the end, she scrapped her UBI plans because they seemed to be at odds with her stance on renewable energy, as funding it could have “perversely encourag[ed] the continued extraction of fossil fuels.”
Before I ran for President, I read a book called With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough, by Peter Barnes, which explored the idea of creating a new fund that would use revenue from shared national resources to pay a dividend to every citizen, much like how the Alaska Permanent Fund distributes the state’s oil royalties every year. Shared national resources include oil and gas extracted from public lands and the public airwaves used by broadcasters and mobile phone companies, but that gets you only so far. If you view the nation’s financial system as a shared resource, then you can start raising real money from things like a financial transactions tax. Same with the air we breathe and carbon pricing.
Once you capitalize the fund, you can provide every American with a modest basic income every year. Besides cash in people’s pockets, it would also be a way of making every American feel more connected to our country and to one another—part of something bigger than ourselves. I was fascinated by this idea, as was my husband, and we spent weeks working with our policy team to see if it could be viable enough to include in my campaign. We would call it ‘Alaska for America.’ Unfortunately, we couldn’t make the numbers work. To provide a meaningful dividend each year to every citizen, you’d have to raise enormous sums of money, and that would either mean a lot of new taxes or cannibalizing other important programs. We decided it was exciting but not realistic, and left it on the shelf. That was the responsible decision. I
If you aren’t aware, the Alaska Permanent Fund was created by Alaska Constitution Article IX, Section 15. It’s goals, according to the official website, are as follows: To provide a means of conserving a portion of the state’s revenue from mineral resources to benefit all generations of Alaskans; to maintain safety of principal while maximizing total return; to be a savings device managed to allow maximum use of disposable income for purposes designated by law.
Thus, like the Alaska Permanent Fund, ‘Alaska for America’ would have established a universal basic income for all Americans.
The final passage of the text in this section is what is most notable. Clinton writes, “I wonder now whether we should have thrown caution to the wind and embraced ‘Alaska for America’ as a long-term goal and figured out the details later.”
While the jury is still out on whether or not the system is truly viable, and at what scale it is viable, the fact that so many notable voices are seriously contemplating the idea is, at the very least, worthy of note.
It might seem odd for tech entrepreneurs to take an interest in income distribution policy. But an increasing number of high-profile Silicon Valley executives are endorsing universal basic income(UBI), a system in which everyone receives a standard amount of money just for being alive.
Virgin Group CEO Richard Branson became the latest mogul to endorse the radical idea, writing in a blog post that “most countries can afford to make sure that everybody has their basic needs covered.”
On the one hand, basic income is a way to reduce poverty, but tech folks like Branson also see it as a way to solve the growing problem of robot automation, which they themselves are helping to create.
Here are some of the highest-profile entrepreneurs who have endorsed UBI.
Basic income advocates have long argued that the security of getting regular income would encourage people to take risks and invest.
Butterfield, CEO of the messaging app Slack, seemed to agree when he wrote on Twitter in early August that “giving people even a very small safety net would unlock a huge amount of entrepreneurialism.”
In February, the eBay founder donated$493,000 through his philanthropic organization, Omidyar Network, to an experiment in basic income taking place in Kenya later this year.
The experiment is put on by GiveDirectly, a charity that delivers cash transfers to people in East Africa as a means to lift the from poverty.
The findings will be “unlike those of any past study and provide evidence-based arguments to shed light on the discussions around the future of work and poverty alleviation policies,” according to a February statement.
In the wake of Donald Trump winning the US election, Ng, co-founder of Coursera and chief scientist at Baidu, wrote on Twitterthat “More than ever, we need basic income to limit everyone’s downside, and better education to give everyone an upside.”
Ng has expressed his support for basic income before. In January, he said at the Deep Learning Summit that basic income deserves serious consideration. He also claimed the government should help fund lifelong education to keep the workforce strong.
The president of Y Combinator, Silicon Valley’s largest start-up incubator, Altman has repeatedly come out in favor of basic income, arguing that the robot-run economy will almost certainly materialize this century.
Y Combinator has launched a basic income experiment in Oakland, California to see how the system works in reality. Roughly 100 people are receiving $2,000 a month, no matter what.
Musk, the CEO of Tesla and SpaceX, told CNBC in a recent interviewthat “there’s a pretty good chance we end up with a universal basic income, or something like that, due to automation.”
He added that he couldn’t foresee any other solutions to the threat of robots taking everyone’s jobs than a system of basic income. Since automation would make cause both unemployment and economic output to rise, society might have no choice but to distribute a portion of the money to everyone equally.
In his May 2016 investment outlook, Gross, co-founder of investment advisory firm Pacific Investment Management, suggested the US should spend money on “a revolutionary new idea called UBI — universal basic income.”
UBI emerged in the 1960s, so technically it isn’t new, but Gross understands that it’s still radical to most people. “If more and more workers are going to be displaced by robots, then they will need money to live on, will they not? And if that strikes you as a form of socialism, I would suggest we get used to it,” he said.
Kurzweil, a futurist and the co-founder of Singularity University, has expressed an interest in UBI to cover the basic necessities in life.
“You’ll do something that you enjoy,” he said. “That you have a passion for. Why don’t we just call that work?”
A founder of several companies and now a partner at venture capital firm Union Square Ventures, Wenger has written extensively about the benefits of UBI on his blog.
Most people, Wenger wrote in May, “have resigned themselves to the fact that their earlier dreams of what they wanted to do in life will not be realized.” He says economic inequality is to blame, and a future of basic income could help rectify those missed opportunities.
O’Reilly, CEO of O’Reilly Media, has said he doesn’t necessarily believe the hype that automation will threaten US employment. But he does acknowledge that UBI is a good idea and “just the beginning of the discussion.”
For O’Reilly, what’s important is that work gives people both meaning and identity.
That’s how a basic income system could truly be successful, he says. It would reshape the definition of work itself, and give people more flexibility to do the things that feel most personally fulfilling.
Facebook co-founder Chris Hughes is an active supporter of UBI, telling NPR in September that the system could go a long way toward rebuilding Americans’ faith in an economy many people see as “broken in many ways.”
“Rather than try to restructure our economy so it looks like the 1950s, I think we have to be honest with ourselves,” he said.
Since jobs are already disappearing, Hughes urges people to consider what systems we’ll need to create if millions more follow.
Facebook CEO Mark Zuckerberg is one of many famous tech celebrities that believes everyone should have some amount of basic income. Now, one more voice is joining in to support the social media creator’s idea, and its Slack CEO and co-founder Stewart Butterfield.
Butterfield isn’t only known for making the team messaging app, but is also the co-founder of the Yahoo-owned, popular image website Flickr. On Twitter, the CEO shared his stance on the matter, saying that just by giving people a small amount, people may be more open to pursuing entrepreneurial idea and investments.
Butterfield joins Tesla CEO Elon Musk, Y Combinator president Sam Altman, and Microsoft co-founder Bill Gates. Zuckerburg has spoken repeatedly about his opinion on unconditional basic income (UBI), and has pointed to Alaska’s UBI program as as example the U.S. could learn from. Musk, in February, said the rise in autonomous technology will greatly impact the workforce, and could eventually force government to introduce a basic income program.
Despite the number of people in favor of the concept, knowing how much it is, and knowing how it works, it’s hard to tell if it will be incorporated any time soon, or at all. The idea of a “free handout” or “free money” doesn’t sit well with everyone, and some would probably prefer to earn their wages with hard work.
Furthermore, not every wealthy tech luminary and philanthropist agrees with UBI. Dallas Mavericks owner Mark Cuban, for example, has called it “one of the worst possible responses” to the evaporating job market. That said, he also believes existing safety net programs should be better, if only to be more efficient and able to distribute more money with cheaper operating expenses.
Universal basic income is the idea that every citizen should receive an amount of money from the government to meet their needs, regardless of age, race, gender, or even need. It has been billed as a solution to a variety of current and potential societal problems, including AI automation, poverty, and people losing the ability to allocate their own time.
However, the key question is how would it be paid for? Especially when individuals like Robert Greenstein, founder and president of Washington think tank Center on Budget and Policy Priorities, estimates that even a fairly modest amount of $10,000 per person per year would cost upwards of $3 trillion.
A novel idea, though, is using the huge amounts of money tied up in space to fund a program — the argument rests on the tenet that space is the property of all, and therefore should benefit all. The money lies in two main fields: space tourism and space mining.
Space tourism is set to explode as an economy. With the democratization of space occurring at an ever faster rate, it won’t be long before it becomes commercial — that Richard Branson is working on a space airline is a testament to the reality of the idea. Companies will charge handsome fees for the luxury of experiencing zero-gravity and staying in space hotels. So why not channel all of these profits, or at least tax the companies, in order to ensure that an international area benefits everyone?
Space mining also has the potential to be a billion — if not trillion — dollar industry. Companies that propose mining space objects like asteroids and planets — which include, to name a couple, Deep Space Industries and Planetary Resources — for precious metals like gold and platinum have already won traction among investors. This is probably partly due to an asteroid containing five trillion dollars worth of platinum passing by earth in 2015.
The argument leveled at these industries is similar to that aimed at space tourism — why should those who can afford to monopolize space be allowed to, and why should they be the only ones to profit from a zone that all of us have an equal claim on? The Outer Space Treaty of 1967 states that “the exploration and use of outer space shall be carried out for the benefit and in the interests of all countries and shall be the province of all mankind.” Using the profits from space exploration, travel, tourism, and mining to provide financial relief for the world’s citizens would certainly meet that criteria.
There’s going to be a lot of unemployed people replaced with technology and if we don’t start dealing with that now, we’re going to have some real problems.
Cuban added that he hasn’t seen an equal transformation to the workforce in recent memory:
We’re going through a transitional period where we’ll see more disruption driven by artificial intelligence than we’ve seen in the last 30 years.
It is the latest in a series of warnings that the sports tycoon has issued about the 21st Century’s AI revolution. In February Cuban Tweeted that “Automation is going to cause unemployment and we need to prepare for it” — but, unlike others, he disagrees that universal basic income (UBI) is a solution to this, Tweeting that it is “one of the worst possible responses” to the potential crisis.
Solutions to Automation?
Cuban joins other industry leaders in warning against AI. Bill Gates told the BBC that “the intelligence is strong enough to be a concern.”
Stephen Hawking has also weighed in on the debate, apocalyptically telling the Guardian that “the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”
However, while leading figures in the technology industry agree that AI will he highly disruptive, they vary on their solutions to the problem. In contrast to Cuban — who Tweeted that we should optimize existing support networks by making them “more efficient so more money can be distributed with far less overhead” — Bill Gates, Founder of Microsoft, believes that taxing robots is a temporary solution. Gates believes UBI is a good long-term plan, although society is not ready for it yet.
Mark Zuckerberg, Founder and CEO of Facebook, is situated at the pro-UBI end of the spectrum, telling Harvard graduates that “We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas.”
Imagine a group of five people. They have an income distribution of $10, $20, $30, $50, and $100. Someone gets the BIG idea of everyone putting 40% of their money into a hat, and dividing the result equitably between everyone.
That means $4, $8, $12, $20, and $40 goes into the hat. That’s $84, which when divided by 5 is $16.80.
Another way of looking at this result is that the amounts paid were -$12.80, -$8.80, -$4.80, $3.20, and $23.20. The poorest three people paid negative amounts (negative taxation), meaning they received money, and the richest two people paid positive amounts (positive taxation), meaning they lost money.
If we add up the negative amounts and the positive amounts, we see that the poorest three received a total of $26.40, and the richest two lost that same amount. That is the amount of money that physically changed hands, even though everyone put money into the hat, and everyone got money from the hat.
Okay, so here’s the question: how much did it cost to make sure everyone received $16.80? Was it $16.80 multiplied by five, so $84? Or was it $26.40?
The answer is $26.40, which is 31.4% of $84. The true cost is less than one-third the false cost!
This math problem is what’s needed to understand the cost of basic income. Every time someone multiplies the number of people receiving basic income by the amount of basic income, they are saying the correct answer to the above math problem is $84, and that is entirely incorrect. They’re calculating the false cost. Such a mistake can also lead to assumptions of inflation, which are just as mistaken.
Here’s another math problem. What is the cost to provide you $12,000 in basic income if you are asked to pay $12,000 to receive it?
The answer is $0. It carries no cost. If 1,000 people fit the exact same example, the cost is 1,000 x 0, and that’s still zero. Multiplying 1 million by 0 is still 0. That’s how zero works.
The true cost of basic income is thus the amount of money provided to net receivers, not net payers (who all cost nothing), minus the amount net receivers put into the hat.
A basic or citizen’s income is not an alternative to a negative income tax. It is simply another way to introduce a negative income tax if it is accompanied with a positive income tax with no exemption. A basic income of a thousand units with a 20 percent rate on earned income is equivalent to a negative income tax with an exemption of five thousand units and a 20 percent rate below and above five thousand units. — Milton Friedman
However, for a cost estimate to be even more accurate, we then need to subtract out all the programs replaced by basic income, and all the tax credits replaced by basic income. That total is in the hundreds of billions of dollars range depending on the choices we make, certainly not the $3 trillion gross range or even the $900 billion net transfer range.
Meanwhile the full costs of people not having basic income, aka the costs of not eliminating poverty…?
On December 2nd, 1942, a team of scientists led by Enrico Fermi came back from lunch and watched as humanity created the first self-sustaining nuclear reaction inside a pile of bricks and wood underneath a football field at the University of Chicago. Known to history as Chicago Pile-1, it was celebrated in silence with a single bottle of Chianti, for those who were there understood exactly what it meant for humankind, without any need for words.
Now, something new has occurred that, again, quietly changed the world forever. Like a whispered word in a foreign language, it was quiet in that you may have heard it, but its full meaning may not have been comprehended. However, it’s vital we understand this new language, and what it’s increasingly telling us, for the ramifications are set to alter everything we take for granted about the way our globalized economy functions, and the ways in which we as humans exist within it.
What actually ended up happening when they faced off? Lee went on to lose all but oneof their match’s five games. An AI named AlphaGo is now a better Go player than any human and has been granted the “divine” rank of 9 dan. In other words, its level of play borders on godlike. Go has officially fallen to machine, just as Jeopardy did before it to Watson, and chess before that to Deep Blue.
“AlphaGo’s historic victory is a clear signal that we’ve gone from linear to parabolic.”
So, what is Go? Very simply, think of Go as Super Ultra Mega Chess. This may still sound like a small accomplishment, another feather in the cap of machines as they continue to prove themselves superior in the fun games we play, but it is no small accomplishment, and what’s happening is no game.
AlphaGo’s historic victory is a clear signal that we’ve gone from linear to parabolic. Advances in technology are now so visibly exponential in nature that we can expect to see a lot more milestones being crossed long before we would otherwise expect. These exponential advances, most notably in forms of artificial intelligence limited to specific tasks, we are entirely unprepared for as long as we continue to insist upon employment as our primary source of income.
This may all sound like exaggeration, so let’s take a few decade steps back, and look at what computer technology has been actively doing to human employment so far:
Let the above chart sink in. Do not be fooled into thinking this conversation about the automation of labor is set in the future. It’s already here. Computer technology is already eating jobs and has been since 1990.
All work can be divided into four types: routine and nonroutine, cognitive and manual. Routine work is the same stuff day in and day out, while nonroutine work varies. Within these two varieties, is the work that requires mostly our brains (cognitive) and the work that requires mostly our bodies (manual). Where once all four types saw growth, the stuff that is routine stagnated back in 1990. This happened because routine labor is easiest for technology to shoulder. Rules can be written for work that doesn’t change, and that work can be better handled by machines.
Distressingly, it’s exactly routine work that once formed the basis of the American middle class. It’s routine manual work that Henry Ford transformed by paying people middle class wages to perform, and it’s routine cognitive work that once filled US office spaces. Such jobs are now increasingly unavailable, leaving only two kinds of jobs with rosy outlooks: jobs that require so little thought, we pay people little to do them, and jobs that require so much thought, we pay people well to do them.
If we can now imagine our economy as a plane with four engines, where it can still fly on only two of them as long as they both keep roaring, we can avoid concerning ourselves with crashing. But what happens when our two remaining engines also fail? That’s what the advancing fields of robotics and AI represent to those final two engines, because for the first time, we are successfully teaching machines to learn.
I’m a writer at heart, but my educational background happens to be in psychology and physics. I’m fascinated by both of them so my undergraduate focus ended up being in the physics of the human brain, otherwise known as cognitive neuroscience. I think once you start to look into how the human brain works, how our mass of interconnected neurons somehow results in what we describe as the mind, everything changes. At least it did for me.
As a quick primer in the way our brains function, they’re a giant network of interconnected cells. Some of these connections are short, and some are long. Some cells are only connected to one other, and some are connected to many. Electrical signals then pass through these connections, at various rates, and subsequent neural firings happen in turn. It’s all kind of like falling dominoes, but far faster, larger, and more complex. The result amazingly is us, and what we’ve been learning about how we work, we’ve now begun applying to the way machines work.
One of these applications is the creation of deep neural networks – kind of like pared-down virtual brains. They provide an avenue to machine learning that’s made incredible leaps that were previously thought to be much further down the road, if even possible at all. How? It’s not just the obvious growing capability of our computers and our expanding knowledge in the neurosciences, but the vastly growing expanse of our collective data, aka big data.
Imagine programming a computer to recognize a chair. You’d need to enter a ton of instructions, and the result would still be a program detecting chairs that aren’t, and notdetecting chairs that are. So how did we learn to detect chairs? Our parents pointed at a chair and said, “chair.” Then we thought we had that whole chair thing all figured out, so we pointed at a table and said “chair”, which is when our parents told us that was “table.” This is called reinforcement learning. The label “chair” gets connected to every chair we see, such that certain neural pathways are weighted and others aren’t. For “chair” to fire in our brains, what we perceive has to be close enough to our previous chair encounters. Essentially, our lives are big data filtered through our brains.
The power of deep learning is that it’s a way of using massive amounts of data to get machines to operate more like we do without giving them explicit instructions. Instead of describing “chairness” to a computer, we instead just plug it into the Internet and feed it millions of pictures of chairs. It can then have a general idea of “chairness.” Next we test it with even more images. Where it’s wrong, we correct it, which further improves its “chairness” detection. Repetition of this process results in a computer that knows what a chair is when it sees it, for the most part as well as we can. The important difference though is that unlike us, it can then sort through millions of images within a matter of seconds.
Go is famously a more complex game than chess, with its larger board, longer games, and many more pieces. Google’s DeepMind artificial intelligence team likes to say that there are more possible Go boards than atoms in the known universe, but that vastly understates the computational problem. There are about 10¹⁷⁰ board positions in Go, and only 10⁸⁰ atoms in the universe. That means that if there were as many parallel universes as there are atoms in our universe (!), then the total number of atoms in all those universes combined would be close to the possibilities on a single Go board.
Such confounding complexity makes impossible any brute-force approach to scan every possible move to determine the next best move. But deep neural networks get around that barrier in the same way our own minds do, by learning to estimate what feels like the best move. We do this through observation and practice, and so did AlphaGo, by analyzing millions of professional games and playing itself millions of times. So the answer to when the game of Go would fall to machines wasn’t even close to ten years. The correct answer ended up being, “Any time now.”
Any time now. That’s the new go-to response in the 21st century for any question involving something new machines can do better than humans, and we need to try to wrap our heads around it.
We need to recognize what it means for exponential technological change to be entering the labor market space for nonroutine jobs for the first time ever. Machines that can learn mean nothing humans do as a job is uniquely safe anymore. From hamburgers to healthcare, machines can be created to successfully perform such tasks with no need or less need for humans, and at lower costs than humans.
Amelia is just one AI out there currently being beta-tested in companies right now. Created by IPsoft over the past 16 years, she’s learned how to perform the work of call center employees. She can learn in seconds what takes us months, and she can do it in 20 languages. Because she’s able to learn, she’s able to do more over time. In one company putting her through the paces, she successfully handled one of every ten calls in the first week, and by the end of the second month, she could resolve six of ten calls. Because of this, it’s been estimated that she can put 250 million people out of a job, worldwide.
Viv is an AI coming soon from the creators of Siri who’ll be our own personal assistant. She’ll perform tasks online for us, and even function as a Facebook News Feed on steroids by suggesting we consume the media she’ll know we’ll like best. In doing all of this for us, we’ll see far fewer ads, and that means the entire advertising industry — that industry the entire Internet is built upon — stands to be hugely disrupted.
And now even the White House, in a stunning report to Congress, has put the probability at 83 percent that a worker making less than $20 an hour in 2010 will eventually lose their job to a machine. Even workers making as much as $40 an hour face odds of 31 percent. To ignore odds like these is tantamount to our now laughable “duck and cover” strategies for avoiding nuclear blasts during the Cold War.
All of this is why it’s those most knowledgeable in the AI field who are now actively sounding the alarm for basic income. During a panel discussion at the end of 2015 at Singularity University, prominent data scientist Jeremy Howard asked “Do you want half of people to starve because they literally can’t add economic value, or not?” before going on to suggest, ”If the answer is not, then the smartest way to distribute the wealth is by implementing a universal basic income.”
AI pioneer Chris Eliasmith, director of the Centre for Theoretical Neuroscience, warned about the immediate impacts of AI on society in an interview with Futurism, “AI is already having a big impact on our economies… My suspicion is that more countries will have to follow Finland’s lead in exploring basic income guarantees for people.”
Moshe Vardi expressed the same sentiment after speaking at the 2016 annual meeting of the American Association for the Advancement of Science about the emergence of intelligent machines, “we need to rethink the very basic structure of our economic system… we may have to consider instituting a basic income guarantee.”
Even Baidu’s chief scientist and founder of Google’s “Google Brain” deep learning project, Andrew Ng, during an onstage interview at this year’s Deep Learning Summit, expressed the shared notion that basic income must be “seriously considered” by governments, citing “a high chance that AI will create massive labor displacement.”
When those building the tools begin warning about the implications of their use, shouldn’t those wishing to use those tools listen with the utmost attention, especially when it’s the very livelihoods of millions of people at stake? If not then, what about when Nobel prize winning economists begin agreeing with them in increasing numbers?
No nation is yet ready for the changes ahead. High labor force non-participation leads to social instability, and a lack of consumers within consumer economies leads to economic instability. So let’s ask ourselves, what’s the purpose of the technologies we’re creating? What’s the purpose of a car that can drive for us, or artificial intelligence that can shoulder 60% of our workload? Is it to allow us to work more hours for even less pay? Or is it to enable us to choose how we work, and to decline any pay/hours we deem insufficient because we’re already earning the incomes that machines aren’t?
What’s the big lesson to learn, in a century when machines can learn?
I offer it’s that jobs are for machines, and life is for people.
Disclaimer: Futurism only supports products that we trust and use. This post is in partnership with Abundance 360, and Futurism may get a small percentage of sales. Want to take a class with Peter Diamandis? Click here to learn more!
There’s little question in my mind that advances in artificial intelligence and robotics will significantly displace humans in the workplace over time. I’m not talking about every job, but it’s my belief that most of today’s jobs (as currently configured) will eventually be performed by AI and robots or in partnership with AI and robots. In the beginning, the jobs displaced by technology will be those that are dull, dangerous or dirty. But eventually, it will include jobs like surgeons, anesthesiologists or diagnosticians.
What jobs will we lose first?
Retail workers are most vulnerable to AI replacement. When I’m shopping at Whole Foods or CVS, my goal is to get in and out of the store as soon as possible. As such, I imagine a near-term future in which an AI agent will guide me rapidly to the exact aisle and shelf to help me find the product. Then, as I leave the store, the system will charge me automatically – no need to stop, stand in line and pull out my wallet. Taking it one step further, imagine a future where I never go to the store in the first place. My refrigerator can sense that I’m low on milk or eggs, order it all from the store, and have those products delivered by autonomous vehicle or drone. In this near-term scenario, all I do is take the products off my front doorstep and stock them in my refrigerator.
High-level autonomy like that is already underway. Over the last few months, in Seattle, Amazon has established a store called Amazon Go, which is a cashier-less retail store for Amazon employees only. The reason it’s only for Amazon employees is that they’re doing tests to see how it works. Currently, Amazon employees access an app, enter the store, and then simply take what they want off the shelf.
That’s it. A system of cameras and sensors can observe what they’re taking and how many, and Amazon charges the correct amount to their account. All they do is walk out — no checkout and no cashiers. The tech isn’t perfect yet, which is why Amazon is doing this as a test, but it will get better and it will ultimately become how many stores transact purchases.
Will some stores choose humans over AI?
It’s possible, but I doubt it. Imagine comparing two stores: one that embraces the technology and another that does not. The store that’s fully autonomous enables you to walk in, get your products, and leave twice as fast — and, by the way, those products are cheaper because the business doesn’t have overhead due to employees. How will the autonomous store compare to a retail competitor that offers slower and more expensive services? The store that employs humans and has a slower, more expensive customer experience will go out of business, and those jobs will ultimately disappear. For those who are cashiers, wondering when this wold happen — I would imagine it’s probably not in the next couple years —likely within five years, and definitely within the next decade. Knowing that, how do we prepare ourselves?
Here’s my question: what did you want to do when you were younger? Did you always want to be a cashier? Or, did you want to be a nurse, teacher or to travel the world? Ultimately, going back to your early passions and taking on the education needed to achieve your earlier goal(s) is what’s needed. Take caution, though, as those jobs may also get displaced by AI and robots. We’re heading into a period where technological employment will cause us to struggle, both with how we find meaning in our lives and with how we earn our living.
Incredibly important experiments are going on today with Universal Basic Income (UBI), a methodology in which everyone is paid a salary, whether they work or not. UBI will help ensure we have food on the table, insurance, medical care, and so on, but it’s not going to solve the issue of giving meaning to our life. This is something we need to think about and solve — not in 20 years or 10 years, but in the next five years. This is one of the important conversations taking place at my Abundance 360 Digital Seminars, check it out if you want to learn more.
An excursion is always a learning experience. That was certainly true for Facebook founder and CEO Mark Zuckerberg and his wife Priscilla Chan when they visited Alaska. The social media entrepreneur was impressed by the various social programs he found in America’s Last Frontier, particularly a basic income initiative that Alaska’s been running since 1982.
The Alaska Permanent Fund Dividend (PFD) is a basic income program that allots $1,000 or more per citizen. “[A] portion of the oil revenue the state makes is put into [the PFD],” Zuckerberg wrote in a Facebook post. “Rather than having the government spend that money, it is returned to Alaskan residents through a yearly dividend.”
Another basic income Zuckerberg learned about is by Native Corporations in Alaska. These privately owned corporations that develop land run and owned by Native Alaskans give annual dividends to to their native shareholders according to the resources they develop. “So if you’re a Native Alaskan, you would get two dividends: one from your Native Corporation and one from the state Permanent Fund,” Zuckerberg wrote.
UBI’s Biggest Hurdle
Under a universal basic income (UBI) program, individuals receive a fixed amount of income regardless of their social or employment status. UBI is an old idea that’s become more popular recently as a potential response to unemployment due to automation, but it is not without critics. An issue these critics often bring up is funding. Zuckerberg was impressed by how the Alaskan basic income model solves this. “[I]t’s funded by natural resources rather than raising taxes,” he wrote.
In the end, Zuckerberg thinks it’s all about mentalities. “[W]hen you’re profitable, you’re confident about your future and you look for opportunities to invest and grow further. Alaska’s economy has historically created this winning mentality, which has led to this basic income,” he noted. “That may be a lesson for the rest of the country as well.”
Imagine a society in which everyone, regardless of economic status, age, household size, and location, was guaranteed a minimum income — a no-strings-attached safety net that was not affected by work income or anything else. That’s universal basic income (UBI), and the idea is gaining traction as trials of the idea are taking place around the world. Canada, India, Kenya, and Finland are all investigating how UBI for every citizen might work in practice.
Some of the most successful people in the world are getting behind the idea, although not everyone agrees about the utility or practical application of UBI. Here’s what some of the world’s most prominent individuals in the world think about UBI.
Musk, CEO of SpaceX and Tesla, spoke about UBI at the World Government Summit in Dubai earlier this year. Musk said that, due to mass disruption in employment caused by automation, “I don’t think we’re going to have a choice. I think it’s going to be necessary. There will be fewer and fewer jobs that a robot cannot do better.”
Cuban, television personality and chairman of AXS TV, is no friend of UBI, and favors fixing current welfare programs more than creating UBI programs. Although he sees automation changing the job market as a serious problem, he calls UBI programs “one of the worst possible responses.”
no. I think it’s one of the worst possible responses
Zuckerberg, CEO of Facebook, told the audience for his speech at the Harvard commencement ceremony that he favors UBI as a driver of innovation. “We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas,” he said as part of his speech.
Clinton, former First Lady and U.S. presidential candidate, said of UBI that she was “not ready to go there,” but instead favored expanding earned income tax credit. She said in an interview with Daniel Roth last year that she was concerned about the many people who continue to be unemployed, and argued “we’ve got to help create better opportunities for them without just giving up and saying, ‘Okay, fine, […] you don’t really have to do anything anymore.’ I don’t think that works for a democracy and I don’t think it works for most people.”
Gates, co-founder of Microsoft, isn’t opposed to the UBI concept, but he doesn’t think the time is right to implement it. Gates feels that resources are too limited to make it happen now, and instead more targeted programs need to happen first. “Over time, countries will be rich enough to do this,” Gates said during a AMA on Reddit. “However, we still have a lot of work that should be done — helping older people, helping kids with special needs, having more adults helping in education.”
Wozniak, co-founder of Apple, told Robin Paul he agrees that there ought to be a minimum standard of living for everyone and feels that material needs for all people should be met. However, he stressesdthat some people in society are in much more distress than others, and need more assistance. Since this is the case, UBI might not be enough for them.
Former President Obama has not officially stated a position on UBI, although last October he told Wired that there was no question it will be part of the coming debate surrounding automation: “Whether a universal income is the right model — is it gonna be accepted by a broad base of people? — that’s a debate that we’ll be having over the next 10 or 20 years.”
Some of the most common questions ever asked in regards to the idea of a universal basic income (UBI) are in regards to the details. “How much income? Who gets it? Who pays for it? How is it paid for? What does it replace?” These are all great and important questions, but the answers vary from person to person, because the answers are a matter of personal and political preferences when it comes to fine-grained details. With that said, after years of studying basic income, below you will find what I currently believe in May of 2017 are the details of an optimally designed UBI blueprint.
First, how much are we talking about? In the United States, I suggest starting with the definition of poverty we already use, and eliminating poverty entirely. According to 2017 federal poverty guidelines, this means if we were to pass legislation tomorrow, it would need to be $12,060 per adult citizen and $4,180 per dependent under 18. The amount for kids is imperative so that income floors scale according to household sizes. A child basic income is also in large part a revenue neutral consolidation of existing expenditures presently unequally distributed. However, for reasons I will explain below, I suggest adding 10% to each amount, so $13,266 ($1,105/mo) per adult citizen and $4,598 ($383/mo) per citizen under 18.
Taking into consideration that we are talking about US citizens only (which would also incentivize legal immigration) who comprise an estimated 92.8% of the population, this particular basic income design requires finding about $3.4 trillion in total (not net) revenue. This may sound like a very big number. It is. Some people even just stop right there or decide we have to eliminate ALL government programs to do it. But it’s not as big as you may think, and we don’t have to eliminate everything to use a great deal of existing revenue.
Welfare State Reform
First, there are welfare programs we can eliminate entirely once basic income is enacted into law. Food and nutrition assistance programs ($108 billion) and temporary assistance for needy families ($17 billion) for example would both be better accomplished by simply giving people money without conditions. TANF especially needs to be fully replaced for reasons I’ve described previously. It’s important to note my plan will not touch health care, child care, or housing, although we will still spend less on all of these for reasons I’ll explain further down.
Second, there are welfare programs in existence that we don’t tend to see as welfare because they are targeted mostly toward those at the top of the income and wealth spectrum. They’re called tax expenditures. Such invisible welfare programs that disproportionately reduce tax bills are essentially the same thing as not reducing taxes and just giving people money, and so they too can be entirely replaced by basic income. They include: the earned income credit ($73 billion), the child tax credit ($56 billion), home ownership tax expenditures ($340 billion), married filing jointly preferential tax treatment ($70 billion), the tax break on pensions ($160 billion), fossil fuel subsidies ($33 billion), and treating capital gains differently than ordinary income ($160 billion).
Next, there are existing programs that can be considered as proto-basic incomes that are mostly achieved through the Social Security system like retirement pensions and disability incomes. I believe these programs should be reduced because they were designed without basic income in mind, but should function supplementally in a way that shifts some revenue to the basic income revenue pool, in a way that leaves all recipients better off. This can be achieved by replacing just one of every three dollars with basic income.
For example, someone receiving $1,500/mo in Social Security right now would instead receive $1,000/mo in Social Security in addition to their $1,105/mo in basic income, for a new total of $2,105/mo leaving them $605/mo better off. Someone receiving $2,100/mo in disability income would instead receive $1,400/mo in addition to their $1,105/mo in basic income for a new total of $2,505/mo leaving them $405/mo better off. Applying this method yields the following revenue shifted to UBI: Social Security ($324.2 billion), SSI ($20.6 billion), veteran pensions ($29 billion), and unemployment insurance ($13 billion). I also recommend lifting the cap on Social Security so that everyone pays in no matter how much they earn, which would raise an additional $380 billion.
At this point I’d like to introduce some new taxes, none of which involve raising any tax rates on ordinary salaries and wages, and all of which are highly progressive when combined with basic income.
Carbon Tax (Fee and Dividend)
The most important new tax for the survival of our species is in my opinion a revenue-neutral carbon tax. I suggest starting at $50/ton with annual increases of $15/ton. The result would be an immediate $150 billion in the first year that would grow annually in a way that results in a basic income that also grows annually, and carbon pollution that shrinks annually. Using a model provided by the Carbon Tax Center, I’ve calculated that In just five years, it could be providing everyone over $100 per month and have reduced CO2 pollution levels to a third of what they were back in 2005, while going on to cut them in half by 2030. By 2040 it could be distributing $1.5 trillion to all citizens as co-owners of the sky they’re paying more to pollute 60% less.
I suggest a financial transaction tax starting at 0.34% based on a microsimulation by Urban-Brookings which concluded it as the maximum rate before changes in behavior result in revenue decline. This would be a tiny but very progressive tax on the financial transactions of mostly the wealthiest (the top 1% own about 50% of all financial investments and the bottom 50% own about 1%) that would raise an estimated $75 billion and make financial markets more stable by putting a price on destabilizing and rent-seeking high frequency trading.
It may come as a surprise to learn that money itself is a public good that’s now almost entirely created into existence not publicly by government “printing” but privately as digital accounting entries on commercial bank ledgers. Since this money creation is free for banks, and interest on it is charged, the interest is essentially a private tax that serves as a tool of upward redistribution. It’s welfare for bankers. By replacing debt-based private money creation through seigniorage reform with debt-free public money creation, and simultaneously removing the ability of banks to create new money, we could not only fund basic income in a way that requires no taxes, but it could also help prevent future bank-created market crashes. Considering that the M1 money supply has been expanded by $2 trillion since 2008, that’s about $213 billion per year we could have instead just created ourselves in the hands of all citizens equally, no taxes required.
Whereas income taxes are direct and unavoidable as long as earning income through work is required to live, consumption taxes are indirect and avoidable because they’re only paid upon purchase. We are familiar with this in the US in the form of sales taxes, but sales taxes are only applied on the final product. A value-added tax is applied at each step along the chain of production, and thus is a tax far more difficult to evade paying.
A 10% VAT could generate around $750 billion per year in new revenue. It would also function as a clawback mechanism for basic income similar to a negative income tax with a 10% clawback rate, where individuals consuming more than $132,660 per year would pay more in taxes than what they receive in UBI, while all those consuming less would receive more in UBI than they pay. Essentially, with a 10% VAT, everyone spending more than $132,660 would be funding their own $13,266 basic income and thus carry no cost to any other taxpayer.
A 10% VAT applied to all purchases in the US would also raise the poverty line about 10%, which is the reason the basic income I recommend is 10% above the existing federal poverty line. Also, for those who fear the idea of people taking their basic incomes and earning no additional income, it would mean that aside from the other 90% that gets transformed into wages and salaries through purchases of goods and services, 10% of their basic incomes would go right back into funding everyone else’s basic income.
Last but not least, in fact in my opinion most important of all economically in the long-term as a new tax to increasingly replace existing taxes with, is a tax on the unimproved value of land — aka land-value taxation or LVT. Not to be confused with property taxes that tax what’s built on land, LVT taxes the total value of real estate minus what’s built on it. The owner of a high-rise apartment building providing homes to hundreds of families would pay the same tax as an identical adjacent lot that stands empty, thus providing a disincentive to idle speculation and an incentive to develop unused and underused space.
The value of land is perhaps the best example of all of the wealth we all co-create, because the value of land depends entirely on everything and everyone that exists around it, not on it. If all your neighbors burn down their houses, your house will be worth less. If all your neighbors fix up their houses, your house will be worth more. The increase in value is clearly collectively (not individually) generated.
Since the 1980s, housing prices in the US have increased by 5% on average (minus the real estate bubble creation and burst), which means a 5% tax levied on land values and distributed to all as basic income would be distributing the value created by everyone to everyone. It would raise an estimated $750 billion and function as an entirely unavoidable tax on both corporations and individuals alike. It would also serve alongside the VAT as an additional clawback mechanism, where all owners of land totaling more than $265,320 would pay more in LVT than received in basic income.
This combination would be hugely progressive, not only economically but racially, because the top 10% own 78% of all non-home real estate, and where the median white household has around $76,000 in home value wealth, the median black household has only around $1,500 in home value wealth. In other words, under this plan, median white households (not counting any other taxes but LVT) would potentially be net receivers of $9,466 in basic income and median black households would be net receivers of $12,966 in basic income. For those hoping for a UBI that provides extra as reparations, this plan achieves that by clawing back less from African Americans, not for being African American, but for being systematically excluded from property ownership for centuries.
This proposed basic income plan is not only fully funded at this point, but has surpassed the mark by over $300 billion. However, I’m still not done, as I firmly believe basic income needs to (aside from being indexed to inflation) grow as productivity grows, so now we need to look at ways of accomplishing what is effectively indexation of basic income to the automation of labor.
As I’ve written about previously, Alaska points the way forward as a model to expand upon. Economic rent should be diverted from rentiers and back to citizens through recognition of citizen co-ownership of natural common assets like water and minerals, and social common assets like big data and patent royalties, with that revenue feeding into a national fund whose purpose is universal dividends. There are some very clever methods of achieving this already being proposed. Renowned economist Yanis Varoufakis has suggested that because taxpayer money has funded so much of the technology around us, like for example the iPhone, the process of filing for every new IPO should involve a percentage of those shares being added to a giant sovereign wealth fund, like in Alaska, whose dividends will pay into the total basic income pool. Robert Reich has suggested that because governments are the ones providing patent and trademark protections for the technologies that are eliminating jobs, that a share of the profits from that protection should go to citizens as the condition of such protection.
Just as an annually rising carbon fee could be returned to us all as a dividend for our co-ownership of the air, I suggest that an annually rising intellectual property fee could be added to any intellectual property wishing to be monopolistically excluded from the public domain, with the revenue returned to us as co-investors of the government granting such protection. I also suggest that big data should be seen as a new form of property being digitally created by everyone through everything we do, and that as a result, citizens should see a percentage of the money derived from it as a big data dividend. Companies like Facebook could pay into the basic income pool a percentage of what they earn from selling our data as a royalty for mining us like oil fields.
There are a lot of ways to grow basic income from something that just covers the purchase of essentials into something more like a prosperity dividend that covers far more than the basics over the decades to come. Let’s figure them out. The automation of human labor demands it, as does human flourishing.
One of the main points of division among supporters of basic income is the choice of eliminating the welfare state or supplementing it. I’ve already covered how this is a false choice with my suggestion of a partial transformation of the Social Security system into a top-up program of payments of reduced size, but there is I think a key point to consider as a grand compromise. If considered identical to ordinary income for the purpose of welfare qualification, the basic income will raise people’s total incomes above the point of qualifying for many existing welfare programs due to their very means-tested nature. This would greatly reduce the benefits many programs provide, some even to nothing, just as working a job would, without actually eliminating anything at all.
Take Medicaid for example. Right now to qualify, one must be earning less than 138% of the poverty line. This means that if we treat a basic income set at the poverty level as an increase of everyone’s earned incomes, only those earning 38% of the poverty line right now will still qualify for Medicaid after UBI, just as they would no longer qualify after getting an equivalent raise through their employer right now. That could effectively lower the total Medicaid bill from $650 billion per year to under $200 billion. Those earning more than 38% of the poverty line who previously received Medicaid would instead receive ACA (assuming it isn’t repealed and replaced) subsidies to afford private health insurance in their state market exchanges, and those currently receiving subsidies who are earning more than 300% of the poverty line right now would no longer qualify for them.
Looking beyond Medicaid at all means-tested programs designed to help those living in poverty, lifting everyone above the poverty line would result in many programs becoming entirely pointless based on their own existing definitions of deciding who is deserving of help and who isn’t. If the only people deserving of help are those earning less than $12,000 per year, then after UBI is enacted, no one is deserving of that help anymore having newly joined the ranks of the undeserving.
Additionally, no discussion of the cost of basic income and the savings it stands to provide is complete without asking the cost of not implementing basic income. How much are we spending right now on the full costs of poverty, inequality, and insecurity in the form of all the crime, poor health outcomes, worse educational outcomes, and reduced productivity for example that would not exist with basic income? I’ve attempted to calculate this myself, and I think the amount, whatever it is, is greater than the cost of this UBI plan. In other words, basic income entirely pays for itself by reducing countless other costs that we currently consider entirely normal to pay, across all of society. Basic income is akin to a vaccine, or a strategy of fire prevention versus fire fighting. It’s an ounce of prevention instead of a pound of cure.
The above combination of revenue sources and entirely new funding methods has the potential to bring in multiple existing constituencies — each already advocating for these ideas albeit separately — while also enhancing the ability to adjust the basic income over time by creating a series of new economic dials. Additionally, by simplifying the income tax code and implementing these new taxes, fees, and royalties universally as part of putting money into the pockets of citizens directly without strings instead of indirectly with strings, citizens may show greater support for further improvements over time, to increase the basic income or further redistribute existing tax burdens.
There is also a purposeful modularity to this plan, where parts can be pulled out and implemented on their own, as strategic steps toward the larger plan. For example, the passage of a national carbon fee and dividend policy should be seen as successfully taking a big step toward a full UBI, as would initiatives to get such policies implemented at the state level. If everyone is already receiving a $100 per month carbon dividend, a full basic income policy is then $100 per month cheaper to implement. Full UBI implementation would then also be less of a shock to the economy with people going from $100 per month to $1,100 per month instead of from $0 per month to $1,100 per month. (Note: phasing in UBI over a matter of say five years may still be wise though.)
A key detail of any well-designed basic income plan is to make sure it is at the very least indexed to rise automatically with inflation so that the value does not erode over time. But an optimally-designed basic income in my opinion will rise with the growth of the economy as a whole. At the moment, this means automatic indexation with inflation-adjusted GDP. However, being that GDP itself needs to start being questioned, especially after the adoption of basic income where everyone is more able to engage in unpaid work untracked by GDP, we will at some point need to index basic income to this new measure, whatever it ends up being, that’s a more accurate reflection of our increasing wealth generation and our growing technological ability to do more with less.
Additionally, a counter-cyclical element is optimal, so that during recessions, the basic income does not shrink along with the economy. This is one of the reasons I believe the citizen seigniorage element to be so important, so that in times of economic contraction or even inability to hit yearly inflation targets due to exponential technological deflation, this component can be ramped up by the Federal Reserve without the need for legislative process, to function as essentially quantitative easing for the people (QEP), and also ramped down in the case of an overheating economy.
To illustrate this, think of a basic income of $1,500 per month where $1,200 of it is indexed to real GDP, $100 is new money, $100 is the carbon dividend component, and $100 is the natural and digital resource-based national wealth fund dividend component. In the case of economic contraction, the $1,500 part may shrink to $1,400, but the Fed could then decide to increase their $100 to $300 to stimulate the economy in time of need. Once the economy is growing again, this amount could then be reduced back to $100, or even $0 if inflation targets are surpassed and it would be preferred to interest rate hikes.
Meanwhile, the $1,500 component could be adjusted at any time by adjusting the tax components. Perhaps the LVT would be seen as especially effective and thus increased from 5% to 10% for an extra $200 per month for everyone. Or the VAT could be increased or decreased to disincentivize or incentivize consumption while adjusting the amount of basic income or other taxes.
And the $100 national wealth fund component? That would be growing year after year as IPO stock after IPO stock gets added to it, such that it would hopefully after decades, surpass the tax-funded component of the entire basic income package. In total, it could all then be considered as far more than basic income. It could be prosperity income.
Hopefully this all helps illustrate what I mean by economic dials and UBI optimization. The basic income should be designed with flexibility and long-term viability in mind. It should operate as a platform we construct above the poverty line, that we can continue ratcheting up year after year ever further above the poverty line, but at any point adjust and optimize through ongoing funding method decisions.
By combining tax reform and welfare reform along with the introduction of new non-income-based taxes, especially those designed to correct for market externalities, where the resulting revenue goes to all citizens equally, I believe basic income can more strongly appeal to both the left and the right, and through its adoption, we can simultaneously introduce long-needed additional improvements like the public creation of money, the reduction of greenhouse gases in the atmosphere, the discouragement of rent extraction, the sharing of naturally created and collectively created wealth, and the predistribution of the great wealth being generated by the technology we all effectively paid to research and develop.
This is my proposal for a better future. What’s yours?
In the opening of the film 2001: A Space Odyssey, viewers are shown a historic moment in time where primitive man used the first tool. It was a bone, and used like a club, it allowed a physically weaker group to overpower a physically stronger group. The story is of course fictional, but at some point in time we as humans did use our first tool, and ever since that day, directly because of our tool usage, we as a species have been able to accomplish increasingly more with increasingly less. Buckminster Fuller referred to this process as “ephemeralization.” The theoretical endpoint of this process exists as an asymptote that we can only approach but never reach, where we gain the ability to accomplish everything with nothing. This should sound great. It is. But there’s a catch. There’s always a catch.
What’s the Catch?
The catch is of our own making. The catch, and it’s a big one, is two-fold. First, we require the exchange of money for the basic necessities of life like food and shelter. And second, we require the exchange of work in order to obtain money. The result of this pairing is that we systematically require the exchange of work to stay alive. So as long as everyone can exchange their labor for income, moral issues of involuntary servitude aside, everyone can then theoretically survive in a system where private property is established and enforced. However, tool use throws an unavoidable wrench into this system.
That Wrench is Technological Unemployment.
The ability to find paid work is rooted within supply and demand. If there is a demand for your labor, and few can supply it in the same way you do, you will do well. If many can supply it just like you, you may not do so well, but you may also manage to get by if you’re lucky. However, we’ve been busy building tools far beyond those made out of bone, and these newer tools are increasingly able to meet our demand for labor without any need for us. So the question becomes, if machines can supply the demand for labor, and at a lower price point, what happens to the ability of living human beings to work, and therefore to live, and even to obtain what all the machines are producing?
There can only be three solutions to this self-created conundrum based on our two-fold catch. We can either stop requiring the exchange of money for basic needs, essentially making certain things like food, water, and shelter entirely free. Or we can guarantee that everyone can always find paid work for enough income to exchange for the fulfillment of basic needs. Or we can stop requiring the exchange of work for money by paying everyone an income whether they work or not, and the amount would just need to be sufficient enough to cover basic needs.
The first option would destroy the price system for basic goods and services. This would in turn destroy the ability to calculate just what to produce, how much of it produce, and where it’s needed. This option is a planned economy for basic goods and services. The second would guarantee that in a world of machines able to do an increasing amount of work better than us humans, the work we could guarantee to ourselves would be increasingly pointless — the equivalent of digging holes and filling them. This is the job guarantee (JG). The third would fully preserve the price system and entirely avoid the pitfalls of unnecessary work. In fact, it would not only preserve the price system, but enhance it, and it would not only avoid the creation of unnecessary work, it would reduce it. That third option is the unconditional basic income (UBI).
If technological unemployment is the Gordian knot of the 21st century, basic income is the sword that cuts through it. By simply severing the connection between income and work through the unconditional provision of an income for life always sufficient for basic needs, the fear of technological unemployment is removed. It doesn’t stop there though, because the right to a basic income has repercussions beyond the removal of fear, and these repercussions are themselves systemically transformative.
To understand just how transformative basic income thus stands to be, we must first more closely examine the full magnitude of technological unemployment as something that is not a problem that exists in the future, but one that is already here. To claim everyone is just crying wolf is false. Sheep are actively being eaten as we speak. We just don’t choose to see it. Then we must look at the economic system we’ve created with new eyes to see the core problem that’s been with us for so long we accept it as normal, and that’s the inability of anyone without sufficient property to say no to working for those who own most of it. And finally we must come to recognize our interdependence within an economic system where our growing productivity is our common heritage, and thus our common wealth no one person or group can claim a monopoly to. As productivity grows with ongoing automation, as too should the basic income grow as a kind of prosperity dividend. What is at first basic should eventually be the right of every citizen shareholder to the vast wealth of an automated nation.
Warnings of oncoming technological unemployment have been with us for over a century. Over and over again someone has called attention to the ability of capital in the form of machines to replace labor in the form of humans. This fear has been expressed so often, people refer to it as the Luddite Fallacy. It’s actively considered fallacious to point out the very real potential that machines can do the work of humans to the point that human labor sees as much demand as horse labor after the introduction of cars. And so here we are today, where very smart people are looking around at all the jobs that still exist and are actively being created, and then claiming it as evidence in support of a perceived fantasy of technological unemployment. The thing is, we aren’t looking closely enough at the jobs we have, because we need jobs, and thus it’s in our own interest to not look closely enough. Never underestimate the unwillingness of someone to see the reality, if their lives depend on seeing a fantasy.
The invention of the computer did indeed change the way we work forever. Beginning in the 70s, we have been eliminating jobs involving a medium amount of skill — consider, for instance, manufacturing as we replaced car assembly line workers with robots. And what jobs we couldn’t automate, we used our new technologies to pack up and ship offshore to places like China and India where labor was cheaper. In place of those jobs that made up the heart of the middle class, we created and grew the service industry in its place. For decades we’ve created more and more low skill jobs — think fast food restaurants — to fill the holes in the labor market cored out by technology. Since 1990 even the growth of jobs defined as involving routine tasks has ended. More than that, because not having a job and simultaneously not being impoverished is something we’ve never really allowed as a real choice, we’ve perpetuated and even created jobs that need not exist.
In an article for Strike! Magazine in August of 2013, David Graeber refers to this kind of employment as “bullshit jobs,” e.g. lobbyists and telemarketers as opposed to actually important work like refuse collection and nursing. This is what’s likely behind the huge percentages of people all over the world who don’t feel engaged or even feel actively disengaged by their jobs — estimated at 87 percent. People are increasingly spending their days in jobs where they are not actually working, plastered instead to their social network feeds and smartphones. People are clocking in 47 hours of work a week in jobs that require only 40 and oftentimes working for only 25–30 hours. This is a huge drag on productivity and a monumental waste of human potential.
Meanwhile, it’s more than just the binary situation of job or no job. Jobs themselves have been in the process of transforming from full-time decades-long careers to a series of non-full-time alternative jobs that are bounced among in terms of years, months, and even hours instead of decades. This century alone something new has taken over, and that’s the growth of these forms of alternative work where people are no longer really considered employees but alternative workers. Such alternative work is in the form of temp agency workers, on-call workers, independent contractors, and freelancers. Some call it the 1099 economy, short for the different form required by the IRS at tax time for “nonemployees.” In fact, since 2005, all nine million net newly created jobs are in this sector.
It’s the rise of short-term and self-employment where employee benefits and rights have gone by the wayside, and though many love the greater sense of autonomy, a greater sense of insecurity comes right along with it. Even more recently the gig economy has been born, where self-employment has been taskified, and it’s up to everyone to patch together sufficient income on a minute by minute basis, never knowing for sure if they’ll be able to cover the rent like they once could with a long-term, steady paycheck.
All the above is the invisible flock of sheep being eaten one by one as we turn our heads away and claim technological unemployment is a fantasy. Technological unemployment cannot exist in the way we’ve always feared, where no new jobs are created as a result of elimination, as long as we require the existence of jobs. We will instead fill that hole with useless jobs, and jobs ripe for replacement as soon as the technology becomes cheaper than the cost of desperate workers willing to work for handfuls of pocket change in order to get by. Technological unemployment is so much more than actual unemployment. Because technology allows the greater granularity of breaking jobs into tasks — taskification — another facet of technological unemployment is technological underemployment. In other words, it’s not just about automation, it’s about atomization.
Meanwhile our existing safety nets are not built to handle such realities. It’s one thing to maybe once in a lifetime need to meet with a program administrator and jump through their hoops for financial assistance. It’s entirely another for bureaucracy to become a perpetual fact of life, where you never know if you’ll meet the requirements, and you must make the decision of whether taking that part-time job/gig as an Uber driver is even worth it if you’re going to lose your benefits and be faced with the possibility of trying to jump through all those hoops all over again. Our safety nets are not built for flexibility. They are sticky. They ensnare. They trap. What we need is a firm non-stick springboard of a floor that lies underneath everyone and requires no bureaucracy. It would always be there. It would be under full-timers. It would be under part-timers. It would be under sub-contractors. It would be underneath everyone in the gig economy. It would even be under would-be entrepreneurs. Unconditional basic income would be such a bureaucracy-free universal floor built for maximum flexibility and propulsion.
The time to prepare ourselves for the future was yesterday. The effects of technology are not around the corner. They’re in our past and they’re here right now. And it’s directly because we’ve never instituted basic income, and in so doing made working fully voluntary, that we’ve not allowed our jobs to disappear without replacement. The boy cried wolf, and the boy was right. We just happen to have created a world where seeing dead sheep is considered delusional, when really the world where we create useless work and look the other way as inequality grows and economic security shrinks is what’s truly delusional. The granting of a basic income will release us all from this collective delusion.
The Missing Right
What lies at the heart of the invisible sheep problem is our inability to say no to jobs. Without that power, we are effectively enslaved. To live we must eat. To eat we must have money. To have money we must sell our labor. There is no real option to just live off the land with our own sweat because all the land is owned. And so we must toil for those who own land. There is no other name for that but slavery, but we don’t call it that. Instead we call it the labor market. But anyone interested in free markets must care about free people within those markets, and the only way for people to be free is to be granted the right of refusal to work for others.
Once one understands how important the right of refusal is, much more comes into focus. There can be no individual bargaining power without the right to refuse. Being able to walk away means being able to negotiate the true value of human labor. If human labor were thus priced accurately in a free labor market, low demand jobs would be rewarded more because fewer people would be willing to do them unless paid sufficiently, and where the cost of human labor becomes higher than the cost of automation, machines can be welcomed to fill that job.
Think garbage collector. If no one wanted to do that work for $30,000 per year because they already have a basic income of $12,000 per year, an offer of $100,000 per year in additional income would attract many to do that job. If the cost of automating that job is the equivalent of $90,000 per year, automation is then the cheaper option and no one need do that job anymore. The result is the complete transformation of a social system built around a goal of full employment, where everyone has a job, to a new goal of full unemployment where as many jobs as possible are offloaded to machines, granting people the ability to pursue whatever is most important to them as living breathing humans with limited lifespans.
The right to refuse is even so important it lies underneath all other rights. Do you really have the right to free speech as long as you’re afraid of being fired? How many times have you wanted to say something, and decided against it, just in case? When was the last time you considered taking to the streets in an act of civil disobedience, but feared the repercussions to your present and future employment? How many times has someone somewhere not voted out of fear they’d be late for their job, and potentially lose it? For those who most value the right to bear arms, do you really have that right if you can’t afford to purchase the arms? To what else can that be applied? How many things in life do we think of as right that don’t truly exist due to lack of money or fear of economic destitution?
Arguably, it’s the right to a basic income that makes all other rights actually possible. People become free to speak their minds with the fear of destitution off the table. People become free to march in the streets and to get to work late because voting was more important. With a guarantee of economic security, all other rights are empowered. Without the recognition of economic rights, all other rights are infringed. Basic income is our missing economic right, from which our other incomplete rights become complete.
Finally achieving the ability to say “No” after the adoption of basic income changes the rules of the game entirely. It represents the dawn of recognition that any advanced society should pursue not full employment, but full unemployment. Society prospers when every member within it is fully free to prosper.
The Return of Common Wealth
No one person can claim 100% ownership of their wealth. It’s all fractions of the whole. As the saying goes, no one person can make a pencil. As simple a creation as that seems, it is the collective work of humanity. The wood comes from somewhere. The graphite comes from somewhere else. The eraser and what comprises it comes from elsewhere. Shipping networks transport raw materials that are made into component parts that are manufactured into a finished product that is shipped all over the world. More than that, no one alive thought of the pencil. That person is long dead.
We all prosper because of knowledge from the past, passed down to us. This is our collective “something for nothing” we all enjoy on the one hand, while deriding the idea of something for nothing on the other. Civilization itself is something for nothing. It is the result of billions of interdependent parts working together as part of a social system known as humanity.
Land value too is its own clear example of wealth created collectively. When something we own goes up in value as the result of our doing nothing, that added value is the result of everything and everyone around the land, not anything we ourselves did. Similarly, transport a piece of high-priced metropolitan land into the middle of nowhere, with no one else around, no resources, no infrastructure, no nothing, and the value of the land becomes nothing. It should be clear that the increasing value of land should be shared with the ones creating the value, which is everyone.
Advancing technology is also common wealth, the result of those today standing on the shoulders of the giants of the past. Additionally, it’s even the result of tax dollars being invested into the public research and development that makes all the advancements possible. The iPhone wasn’t created in a vacuum by Apple. It was built on the technologies pioneered by government-funded research. Big data isn’t created in a vacuum either. It is the result of our collective interactions. It is the mining of natural resources where the mines are each and every one of us, and the ore is the information we all create through our interactions with each other. Market research firm IDC has estimated that by 2019, the US market alone for big data and the tech to mine it (and by it I mean us) will be worth $98 billion.
We are completely surrounded by uncompensated commonly created wealth. Now, this isn’t to say that 100% of all wealth should be shared among all equally. It’s simply the recognition that a fraction of all wealth should be justly shared with everyone, because that fraction is created by everyone. And as productivity continues to grow, as our society continues to achieve more and more with less and less — Fuller’s ephemeralization process — that productivity should be recognized as the shared creation it is and compensated appropriately.
This is where basic income becomes more than basic income. The idea of a basic income is simply the starting point. It is the recognition that at the very least, our collective wealth creation and our right to say no to each other in a technologically advancing world should be met with an absolute minimum of sufficient access to resources to have all our basic needs met. And as technology continues to advance and productivity continues to grow, our unconditional access to all resources should grow as well because we are all in some way contributing to all of it. In ways impossible to measure, we interdependently grow our collective prosperity, and it should be recognized with a growing dividend — a prosperity dividend — universally provided without condition.
As prosperity continues to grow, the eventual endpoint of basic income is thus an amount of access to resources that can only be considered effectively infinite. By effectively infinite, I mean the ongoing process of ephemeralization through advancing technology will allow the meeting of wants and needs with fewer and fewer resources. Whereas 20% of a $20 trillion economy is $4 trillion, 20% of a $200 trillion economy is $40 trillion, which is the difference between a $12,000 per year basic income and a $120,000 per year prosperity dividend. The higher the minimum amount, and the cheaper the goods and services possible to spend it on, the harder it is to spend all of it, and therefore it increasingly becomes effectively infinite.
Once everyone receives as a minimum an amount of access to resources that goes so far that most people find it difficult to ever actually “spend” it, and work is increasingly motivated not by money but by the pursuit of meaning, money itself loses meaning. The result is something more like an economy based on resources instead of money, where what is possible is measured by if we can physically achieve it instead of if we can “afford” it. Some may call this postcapitalism. Others may call it a Star Trek economy. Still others may call it a resource-based economy. But it doesn’t really matter what we call it, because it lies beyond, and only if we make that first all important step together — unconditional income.
The connection between work and income must be severed. That Gordian Knot of our own creation must be undone. Our growing insecurity must be ended. Our inability to say no must be abolished. And our interdependent creation of our thus far uncompensated common wealth building must be compensated.
An unconditional basic income achieves all of these things. It is far more than what some see as “a few crumbs” tossed to the great masses as compensation for technological unemployment. Basic income is the abolition of enslavement once and for all, and the beginning of a new kind of society built on higher achievements of purpose than just toil for paychecks. It is the destiny of a species that picked up its first tool and imagined a way to use it to achieve all that could not otherwise be achieved without it.
Is basic income a sufficient response to technological unemployment? It’s more than that. It’s the most important response of all. It is a collective step that is humanity’s next giant leap.
The above essay is a pre-edited and updated version of my chapter published in the book: Surviving the Machine Age, published by Palgrave Macmillan.
Innovation and forward-thinking may be Hawaii’s two biggest exports in 2017. Earlier this month, the state earned the distinction of being the first in the U.S. to formally accept the provisions of the Paris Climate Agreement after President Donald Trump decided to withdraw the nation from it, and now, Hawaii is taking the lead in embracing yet another innovative idea: universal basic income (UBI).
Today, Hawaii state representative Chris Lee wrote a Reddit post about House Concurrent Resolution 89, a bill he says he introduced in order to “start a conversation about our future.” According to Lee, “After much work and with the help of a few key colleagues, it passed both houses of the State Legislature unanimously.”
Lee also mentioned the development via Twitter:
Hawaii first state to declare everyone deserves basic financial security; begins eval of universal basic income #UBIhttps://t.co/RsvM95tEFs
The bill has two major provisions. First, it declares that all families in Hawaii are entitled to basic financial security. “As far as I’m told, it’s the first time any state has made such a pronouncement,” wrote Lee. The second provision establishes a number of government offices “to analyze our state’s economy and find ways to ensure all families have basic financial security, including an evaluation of different forms of a full or partial universal basic income.”
The congressman thanked “redditors” in his post, as he said the site became his first resource in considering UBI, and added a Reddit-standard TL;DR at the end: “The State of Hawaii is going to begin evaluating universal basic income.”
A Step Forward
Under a UBI program, every citizen is granted a fixed income that’s not dependent on their status in life. Despite the current focus on the concept, it actually isn’t particularly new. In fact, former U.S. President Richard Nixon actually floated the idea back in 1969.
However, the benefits of such a program have become more appealing in light of recent technological advances, specifically, the adoption of automated systems that could result in widespread unemployment.
Of course, the implementation of any major UBI program requires a great deal of political will. As Lee wrote, “Planning for the future isn’t politically sexy and won’t win anyone an election […]. But if we do it properly, we will all be much better off for it in the long run.”
Researcher Katja Grace at the University of Oxford’s Future of Humanity Institute and a team surveyed 1,634 of the leading artificial intelligence researchers from all over the world about when they believe intelligent machines and the AI that powers them will surpass human intelligence in a variety of contexts. 352 of the experts responded, and the team then calculated median responses. The results of the probe were presented this month.
The experts predicted that within the next decade, AI will outperform humans in tasks like driving trucks (by 2027), translating languages (by 2024), and writing high school essays (by 2026). The consensus was that other tasks such as writing a bestseller (2049) or carrying out surgeries (2053) wouldn’t be quite so imminent. Interestingly, the experts (who answered in 2015) predicted that AI would not surpass humans at Go until 2027 — yet that’s already happened. This suggests the sobering thought that in general their predictions may have been far too conservative against AI.
Still, even if we go with the estimates the experts provided — and these were attendees of two of the most significant AI events in 2015 — there is a 50% chance that AI will surpass human intelligence in all areas within about 45 years. AI researchers from Asia think it will happen in 30 years, while AI researchers in North America think it won’t happen for 74 years.
Getting Ready For AI
Regardless of which estimate is accurate, there isn’t much time left before AI will be capable of taking over any — if not every — job that exists right now. This means that the time to address the potential fallout from this change to our economy and culture is right now. Canada, as well as many other countries, is preparing for the automation age by investing in training and education. Many here in the U.S. have called for more investment into affordable education for the same reason.
This week Mark Zuckerberg spoke to the latest class of Harvard graduates, offering advice about the future and inspiration to grow on. Among his ideas was the notion that universal basic income (UBI), a standard base “salary” for each member of society that can help meet our basic needs regardless of the work we do, is worth exploring.
UBI pilot programs are sprouting up all over the world, including one in Oakland, California sponsored by Y Combinator. Many are modeled in part after the State of Alaska’s long-term “Permanent Fund” which distributes a dividend to every resident so they can share in the wealth gleaned from the state’s natural resources equally.
While the successfulness of such initiatives can be analyzed several different ways, Zuckerberg emphasized to graduates the need for metrics that go deeper than standard economic measures — metrics that can help foster innovation.
“We should have a society that measures progress not just by economic metrics like GDP, but by how many of us have a role we find meaningful,” Zuckerberg told the Harvard graduates and their guests. “We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.”
The Time Is Now
This idea that basic income supports more innovation as well as human rights is perhaps what has made it such a popular idea among Silicon Valley tech minds. In fact, this public endorsement from Zuckerberg is not all that cutting edge — he is one of the later proponents of UBI by Silicon Valley standards, joining the likes of Tesla’s Elon Musk, eBay’s Pierre Omidyar, and Y Combinator’s Sam Altman. Bill Gates agrees that UBI is a good idea, and that we’ll be ready for it soon.
UBI isn’t just a Silicon Valley thing. Andy Stern, the President Emeritus of the Service Employees International Union (SEIU), has recently written a book that sets out a detailed plan for making UBI work here in the U.S. Timotheus Höttges, the CEO of Germany’s largest telecommunications company, Deutsche Telekom (DT), also supports UBI because it supports social stability in the age of automation.
UBI pilot programs will hopefully show strengths and benefits of different strategies, and data from Alaska can suggest how such programs can survive the test of time. As pilot programs succeed — and early results seem to indicate that they will — expect more experts to endorse UBI.
Universal Basic Assets (UBA) have been suggested by the Institute for the Future (IFTF) as a more progressive and fair way to challenging inequality — which, at this point, is staggering. Currently, according to Oxfam, eight people own as much wealth as half of the world’s population.
This inequality will become more severe with the exponential increase of two factors: The first is climate change, which creates “climate refugees” due to water and food shortages as well as the wars that start as a result. The second is advancements in artificial intelligence (AI) and automation technology, which will displace many workers. Stephen Hawking has recently added his name to the growing list of scientists worried about the impact of AI on middle class jobs.
UBA has been proposed as a way of averting economic disaster by properly assessing and distributing our resources to meet the needs of every person. It can be seen as an evolution of the concept of Universal Basic Income (UBI), which gives every citizen, regardless of how much they earn, a set amount of guaranteed money. The biggest criticisms of this concept are that it is hugely expensive, not all individuals have equal skills in managing money, and that — as Lenny Mendonca of NewCo Shift wrote in an opinion piece — “it is giving crumbs to pacify rather than means to participate.”
The IFTF defines UBA as “a core, basic set of resources that every person is entitled to, from housing and healthcare to education and financial security.” Rather than just focusing on money, the IFTF divides assets into three categories: First, private assets owned personally, such as housing, land, and money. Second, public assets owned collectively and usually managed by a government, which can include anything from the police force to public art galleries to national parks.
And third, open assets owned by neither an individual nor the government, but by a defined group. Resources in this category are epitomized by how open-source software operates today. John Clippinger, founder of the Institute for Data-Driven Design, said this category usually evolves with society, giving the example of British Common Law in an interview with Forbes, “It was constantly reinventing itself around the circumstances, and there was no single point of control.”
Better Than UBI?
The IFTF is still early in its planning stage, so its members are vague about exactly how they propose to implement UBA. Their model going forward is to:
Catalyze a community to create a “new economic operating system built on universal basic assets.”
Conduct research, particularly on open assets.
Launch experiments from which they can forecast the kind of society we can create.
However, there are some key issues that will have to be faced in order to change the economic operating system:
Firstly, there is the issue of quantification. In order to distribute something equally, there must be a way of measuring it in order to assign the same amount to each individual. While this is fairly simple with private assets (money can be counted, land measured in feet etc.), it becomes murkier when applied to the IFTF’s categorization of open assets.
Secondly — and linked to the above point — while private and public assets lie within a country’s borders, open assets do not. An example of this could be the air we breathe. So even if we can find a way to quantify open assets, how will we be able to distribute resources that we do not own, and cannot be owned?
Finally, if a problem with UBI is that not everyone has equal financial management skills, then the same criticism can be applied to asset management.
Douglas Rushkoff states in Economics Is Not a Natural Sciencethat “The marketplace in which most commerce takes place today is not a pre-existing condition of the universe.” UBA is a promising means of making the economy a more equal space. However — like any new idea — there are some problems it has to overcome first.
You may not recognize his name, but Andy Stern clearly knows a thing or two about working with people. He’s President Emeritus of the fastest-growing union in North America, the Service Employees International Union (SEIU), and a Senior Fellow at the Richmond Center, Columbia University One. Stern’s educational background is in education and urban planning, and he regularly speaks to audiences about entitlements, fiscal policy, healthcare, immigration, and the future of the labor movement. Under Stern’s leadership, the SEIU grew by more than 1.2 million workers and generated numerous national and global organizing campaigns, such as Justice for Janitors, Kids First, Sodexo, and There Is No Place Like Home.
Like many other people right now, this supporter of the working stiff has quite a bit to say about universal basic income (UBI), but his new book, “Raising the Floor,” is one of just a few sources of detailed information about how UBI could practically be implemented in the U.S.
Since the idea behind UBI is to meet every citizen’s basic needs, like housing and food, without discouraging work and industry, Stern’s plan would pay all 234 million American adults $1,000 a month, placing them at about the federal poverty line ($24,000 a year for a family of four). In the future, the amount would increase automatically based on the GDP’s growth. This will prevent those in power from trying to stagnate the dollar amount, a problem that has surfaced with regards to the minimum wage.
“…the best way to end poverty and prepare for the future is some kind of guaranteed income.” – Andy Stern
Paying everyone and not just a select few is likely to make the system more popular and longer-lasting. Society as a whole should benefit as workers will be more readily able to change jobs or take on new pursuits. But how would we pay for this? $1,000 a month for everyone would cost approximately $2.7 trillion annually, which represents around four to five times the size of the defense budget and 15 percent of the GDP. In his book, Stern proposed paying for the $2.7 trillion as follows:
Cancel most existing antipoverty programs, which cost about $1 trillion a year, including food stamps ($76 billion a year), housing assistance ($49 billion), and the Earned Income Tax Credit ($82 billion)
Cut military spending
Phase out most tax expenditures (tax breaks), which currently cost $1.2 trillion a year
Implement a federal sales tax and a financial transaction tax
Entitlements are often derided for their complexity, which is why the simplicity of UBI is so appealing to so many. One flat benefit for everyone, no questions asked, means very little bureaucracy or red tape. As more and more countries trial UBI programs, some of the concerns about the strategy may finally be put to bed.
GiveDirectly will be providing a UBI to more than 26,000 Kenyans across 200 villages this year, some for 12 years, some for two years month by month, and some for two years as a lump sum. In this way, GiveDirectly will be studying the feasibility of various UBI models.
However, seemingly just as many experts believe UBI will work. Frank Stilwell, a professor emeritus in political economy at the University of Sydney, argues that UBI is necessary due to society’s technological changes and feasible so long as wealth is more equitably distributed. Scott Santens sees UBI as a social vaccine against poverty — if we invest an ounce of prevention in UBI, we can avoid poverty in our society and the pound of cure it necessitates.
Brad Voracek, who holds a degree in applied mathematics in economics and computer science from Berkeley and a master’s in economic theory and policy from Bard College, thinks proponents of basic income and job guarantee programs should be supporting either option or even pushing for a combination of both, because UBI does not discourage working. Finally, Elon Musk says that AI will force governments to implement UBI.
Of course, plenty of people don’t want to give benefits to anyone at all, let alone everyone, and many of those people are politically powerful. Still, this challenge isn’t something that scares Stern. He believes we could see UBI become a rallying point for governmental reform in the age of automation.
“Any time you try to write specific laws, all of the weeds tend to grow larger and people don’t necessarily see the grass,” Stern told Fast Company. “But I think there will be a huge conceptual agreement at some point that the best way to end poverty and prepare for the future is some kind of guaranteed income. In 10 or 15 years, there’ll be a stronger sense, particularly for people born in the 21st century, to just let people make their own choices, which is what the Internet has allowed us to do already.”
Dutch historian Rutger Bregman gave a TED talk on universal basic income (UBI) in which he explored this loaded question: Why do the poor make such poor decisions? His answer was simple: people in poverty save less money, eat less healthful foods, and do drugs more often because their basic needs are not met.
UBI is the simplest, fastest way to meet those needs for everyone, without danger of unfairness, Bregman argued. It is his position that the need and the means to establish UBI already exist, and only action and the will to implement it remain unfinished.
“Poverty is not a lack of character. Poverty is a lack of cash,” he told the TED crowd of more than 1,000 people — inspiring the crowd onto its feet.
This standing ovation was a sign of the groundswell of support for UBI in the U.S., a movement which has its roots in the technology sector. As artificial intelligence (AI) and the changes it will inevitably cause in the labor force creep ever nearer, Silicon Valley thought leaders are searching for ways that humans and AI alike will be able to thrive in a 21st century economy. Sam Altman of Y Combinator, Pierre Omidyar of eBay, Chris Hughes of Facebook, and Elon Musk of Tesla all see UBI as an essential part of the solution. Other influencers are taking note, too; Venture capitalist Chris Sacca tweeted that Bregman’s remarks were, “devastatingly provocative and enlightening.”
UBI And Automation
Based on the enthusiastic response from the TED crowd, the U.S. may have the will to implement — just not the action quite yet. With this will can inspire action remains to be seen, but a spate of UBI trials around the world is bringing the concept into the mainstream. In Finland, Kenya, and Oakland, California, UBI experiments are already happening. Later this year the Netherlands will begin a trial as well.
On Monday, April 24, Premier Kathleen Wynne of Ontario shared the specifics of the Ontario Basic Income Pilot which will be trialled for three years starting this spring. This UBI program will provide income to a total of 4,000 people from Hamilton, Lindsay, and Thunder Bay, with the goal of making findings that can be generalized to the rest of the province.
These experiments are taking place now largely in anticipation of automation, which experts say is coming soon regardless of anyone’s feelings about it. And while some argue that UBI cuts against a free market system, other experts point out that UBI actually enables a truly free market for laborers in which people have more freedom to seek out meaningful work and pursue it. The ability to make better choices for ourselves may be the greatest benefit we draw from the age of automation — if Bregman is correct, at least.
On Monday, Premier Kathleen Wynne of Canada announced the details of the Ontario Basic Income Pilot, a universal basic income (UBI) program that will begin this spring and run for a period of three years. A total of 4,000 people from three areas – Hamilton, Thunder Bay, and Lindsay – will be receiving income.
Ideally, under a UBI program, every citizen of legal age — regardless of social status and employment situation — is eligible to receive a fixed amount of income with no strings attached. This basic income can be given either on a regular basis or in lump sum. In the case of the Ontario UBI program, the Toronto Star reports, the recipients will be chosen randomly.
“The project will explore the effectiveness of providing a basic income to people who are currently living on low incomes, whether they are working or not,” Wynne said in Monday’s speech. “People participating in our pilot communities will receive a minimum amount of income each year — a basic income, no matter what.”
Single adults between the ages of 18 and 64 are eligible to receive $16,989 annually. Meanwhile, couples would be given up to $24,027 and persons with disabilities would receive an added $6,000. “It’s not an extravagant sum by any means. For a single person, we are talking about just under $17,000 a year, but even that amount may make a real difference to someone who is striving to reach for a better life,” Wynne explained.
The debate is an ongoing one. The viability and effectiveness of UBI still needs to be proven, and running pilot programs like Ontario’s is the best way to go about it. As the Canadian Premier said in her speech: “We want to find out whether a basic income makes a positive difference in people’s lives […] and whether it is an approach that deserves to be adopted across our province as a whole.”
The concept of universal basic income (UBI) has been thrown around a lot lately. The idea itself isn’t new, but recent developments — particularly the advancement of automation that threatens jobs in a number of industries — have made UBI a worthwhile consideration.
UBI is a fairly simple concept. It entails giving a fixed amount of money to people without any stringent conditions or qualifications. Essentially, every person in such a program would receive basic income regardless of their social situation or employment status. As such, experts believe that UBI could level the economic playing field while simultaneously improving social welfare programs.
Implementing such a program, however, isn’t that simple, and just like any novel idea, UBI has its own set of critics and skeptics, including billionaires Bill Gates and Mark Cuban. Concerns include the source of the funding, how the money should be allocated, and the question of taxation. Some critics warn that UBI would make people lazy and less productive.
This sense that UBI would change people’s attitude toward work was the primary reason why the German government rejected a petition from some 50,000 Germans for a basic income back in 2009. However, a Berlin-based startup is determined to put the system to the test.
Mo’ Money, Fewer Problems
Mein Grundeinkommen (My Basic Income) covered the problem of funding through donations received by 55,000 supporters via a crowdfunding model, and now, 85 people, including 10 or so children, are each receiving one year’s worth of monthly payments of 1,000 euros ($1,063) through the program.
The company’s founder, Michael Bohmeyer, asserts that no one involved in the program has become lazy or less productive because of it. “Everyone sleeps more soundly and no one become[s] a layabout,” he said, speaking of his startup’s beneficiaries.
This does seem to be the case, according to Valerie Rupp, one of Mein Grundeinkommen’s recipients. “Without day-to-day pressures, you can be more creative and try things out,” she told public broadcaster ARD. She explained how she was able to start working as an interior decorator while still taking care of her baby.
For University of Freiburg economist Alexander Spermann, Bohmeyer’s UBI startup is a “poorly thought out” solution for a number of social questions. He told AFPthat Men Grundienkommen has only succeeded in answering the question, “What would I do with a blank cheque if I got one for Christmas?”
However, in order to really find out just how effective or ineffective UBI could be, more programs that test this model need to be implemented. Already, several countries and institutions are involved in UBI trial runs, including Finland and one startup that uses cryptocurrency for basic income payments. Other test programs are also in the works, so we should know very soon if UBI is the answer to our automation woes.
Basic Income (or Universal Basic Income [UBI] when applied to an entire population), is, according to Basic Income Earth Network, “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.”
So, in short, it’s a baseline income that is given to all. It is given outside of work, assistance programs, certain qualifying factors, etc. There is the possibility of implementing both full and partial UBIs, and it is a solution that has been posed to issues of unemployment, especially in the age of automation. Some think that, as more and more jobs are made obsolete by technology, UBI could be what saves a large percentage of the population from desperate circumstances.
Many argue that UBI could alleviate poverty as automation-caused unemployment becomes a very real threat. One potential benefit of a UBI is that, unlike bureaucratic and often flawed assistance programs, it could, theoretically, legitimately level the playing field. Opportunities like education, career advancement, and self-betterment that are often only afforded to the wealthy could become accessible to much larger populations.
Other experts see implementation of a UBI as a necessity. In fact, according to Elon Musk, in the age of automation, “I am not sure what else one would do.”
A Colossal Cost
But, there are many who are not on board with this potential plan. According to some experts, a $10,000/year UBI could add approximately $2 trillion to federal spending annually. Others are more focused on the possible effects that could arise from people who might no longer benefit mentally and emotionally from working for their salary.
There are also those who do not think that job displacement due to automation will be an issue for many decades (despite current predictions that say we are closer than that). Erik Brynjolfsson, a researcher at MIT’s Sloan School of Management, pointed out that the U.S. still has a large number of unfilled job openings, and was quoted as saying,
The idea of a basic income is a good one in a world where robots do most of the work, but we probably won’t be there for 30 to 50 years. While automation is replacing many jobs, it’s also creating new ones. There’s still plenty of unmet needs and work to do, so the right strategy for the current situation is to prepare people for those new tasks…we’re not rich enough to afford a basic income that will provide everyone with a decent standard of living without having to work.
Even if there is a large drop in earned income in the near future, there are alternatives to a UBI that several experts support. For example, Robert Gordon, an economist at Northwestern University, suggests that, rather than create a entirely new benefits system, the best option for the U.S. is to expand and improve existing safety-net programs, especially by increasing the Earned Income Tax Credit. This would present people with a continued incentive to work, even if it was for few hours or lower rates.
“I’d make benefits more generous to reach a reasonable minimum, expand the Earned Income Tax Credit, and greatly expand preschool care for children who grow up in poverty,” Gordon said to the MIT Technology Review.
Experts will likely continue to debate whether a UBI will alleviate poverty and solve inequality issues in the ways that we need and hope for, but perhaps not for too much longer. We may soon have more concrete evidence on the costs and effectiveness of UBIs as several countries begin implementing them. In fact, Finland has already started testing the waters.
Google’s program, Waymo, experienced only 124 disengagements over the course of 636,000 miles—19 percent fewer than in 2015. Almost all of those miles were in Mountain View, which offers uncrowded suburban streets; most of the interventions were triggered by discrepancies in software or hardware.
GM’s program, Cruise, tested exclusively in San Francisco. Cruise cars drove 9,776 miles during the reporting period with 181 disengagements—a rate of just under 2 percent. Even those that weren’t at the top of the class like Google and GM are decent students; for example, Nissan’s robocars required human intervention only once every 247 miles during the testing period, down from once every 14 miles in 2015.
Beyond the issue of gaining the trust of the public, other challenges remain. Sensors for these cars must be compact, reliable, and affordable; they also need to work in tandem with detailed maps and other references so vehicles can interpret what they sense. In unexpected situations, contextual clues like body language help people make abstractions, but this isn’t easy for machines. Legislation is not yet consistent when it comes to self-driving cars. Ethical issues are another problem that arises when computers have to make value judgments in “the lesser of two evils” scenarios. Finally, cybersecurity is a real concern for autonomous vehicles, which could potentially be hacked and used by criminals and terrorists.
Furthermore, optimized driving by every car on the road means less traffic and fewer issues with parking. Automated driving also frees up countless hours of time for people who would previously be sitting in traffic, forced to pay attention to the road. Automated vehicles should also increase the efficiency of the shipping industry, bringing costs down overall. Finally, self-driving cars would drastically reduce fuel consumption—by about 90 percent, according to the Department of Energy.
The downside to self-driving cars taking over the roads includes massive shifts in the American workforce. Millions of transportation jobs are likely to be lost, for example, along with other jobs that depend on the transportation industry in its current incarnation. However, as AI changes our economy in this and other ways, it will also create new jobs.
Each year, robots and artificially intelligence systems cause unemployment rates to increase as more and more jobs become automated. And when you stop to take a look, the numbers are harrowing.
In Canada, a study conducted by the Brookfield Institute for Innovation + Entrepreneurship found that a staggering 40 percent of Canadian jobs will be taken over by machines in the next few decades. In the United Kingdom, a study conducted by Oxford University and Deloitte, a business advisory firm, found that 850,000 public sector jobs in the region will likely be lost by 2030. In Southeast Asia, an estimated 137 million workers are in danger of losing their jobs in the next 20 years. Meanwhile, a study by the Oxford Martin School has found that 47 percent of jobs in the US will be automated in the next 20 years.
Fortunately, there may be a solution: Universal Basic Income (UBI). In short, UBI is a system which gives every individual, regardless of their economic situation or employment status, a guaranteed income. This income is meant to be high enough that individuals are able to have all of life’s basic necessities—food, shelter, water, heat, and so on. It is believed that this allowance will reduce stress and allow individuals to focus on other pressing concerns that are of vital importance to society, such as raising children, pursuing an education etc.
Universal Basic Income: Debated
Most basic income proposals suggest the money be given out each week or month. However, there are some proposals which suggest that money should be given in a lump sum. Of course, some suggest that money shouldn’t be given out at all, as UBI isn’t a viable economic system.
Arguing in favor of UBI are Charles Murray, the W. H. Brady Scholar at the American Enterprise Institute and a New York Times bestselling author, and Andrew Stern, a senior fellow at the Economic Security Project who was appointed by President Obama to the National Commission on Fiscal Responsibility and Reform in 2010.
Arguing against UBI are Jared Bernstein, a Senior Fellow at the Center on Budget and Policy Priorities and the Former Chief Economist to Vice President Joe Biden, and Jason Furman, a senior fellow at the Peterson Institute and the Former Chairman of the Council of Economic Advisers—where he served as President Obama’s chief economist.
Though not an entirely new idea, universal basic income is becoming an increasingly viable and revolutionary solution to the looming job disruption due to automation. Another revolutionary concept — which is also not that new — is cryptocurrency. Some believe that the union of the two might be the answer to challenges increased automation in the workforce could present.
UBI is all about giving a regular income to people regardless of their socioeconomic status or employment condition. A fixed amount is decided on, which should ideally be enough to cover a person’s basic needs. In the context of automation, however, UBI is being explored as a means to cushion the effects of unemployment. As such, receiving basic income wouldn’t necessarily stop when a person finds a job, like government unemployment programs.
UBI is a simple concept, but as its critics point out, implementation is not so easy. For one is the issue of funding, and whether or not governments could actually approve such a program. That’s where cryptocurrencies come in.
Cryptocurrencies used to have a bad reputation, thanks to Bitcoin and its association to the dark web. However, while it is the most popular, Bitcoin isn’t the only cryptocurrency around. Recently, more cryptocurrencies have been popping up — like Ether and Zcash.
Cryptocurrencies are mined from a decentralized system of ledgers and transactions known as blockchain. In a blockchain, transactions from various sources get recorded and are kept by a network of specialized computers. Usually, these blockchain keepers are “compensated” for their efforts in maintaining in a block with cryptocurrency. This process is called mining. For every digital transaction recorded and stored, a miner is paid in Bitcoin, Ether, or Zcash, depending on which blockchain they are using.
Faster Than Government
Several governments — notably Finland’s — are already implementing a UBI trial program. However, experts say “[a] government solution to this issue will not be swiftly implemented,” according to an article in the BTC Manager. Still, several institutions have begun conducting trials of UBI programs that use cryptocurrencies.
One such program, the first of its kind, is run by a U.S.-based nonprofit called the Grantcoin Foundation. It uses a digital currency called Grantcoin (GRT) to distribute basic income to participants from all over the world. Grantcoin’s UBI program began in January 31, 2016, and has since then distributed digital coins to participants on a quarterly basis. Currently, the program is on its third leg of implementation, and has already distributed digital currency to 1,132 applicants since February of this year.
Another known UBI program running on cryptocurrencies is Daniel Jeffries’ open-source distributed application platform known as Cicada. A unique characteristic of Cicada is that it makes everyone on its network into miners, with everyone limited only to one miner. It’s also based on Distributed Proof of Work (DPoW), which is regarded as being more efficient than Bitcoin’s Proof of Work. As such, individuals can mine even on their mobile phones and get paid for it, creating a UBI system from the bottom up.
These cryptocurrencies can be converted to cash, or used directly to buy goods, eliminating the need for government to fund a UBI program.
“Basic income, and especially universal basic income, requires a secure, tamper-proof ledger that can be audited by anyone to ensure the safe delivery of funds.” — Greg Slepak, a developer for the okTurtles Foundation
As increased automation is set to disrupt employment in various industries by 2020 to 2045 — with an expected 47 percent of jobs lost in the U.S. alone —, it’s crucial to have working options. UBI is one such option. And UBI via digital currency seems an even better one.
When business mogul Mark Cuban tweeted his concerns over the imminent unemployment that could stem from increased automation, Scott Santens assumed that the Dallas Mavericks owner was out to support universal basic income (UBI). Santens, a UBI advocate, replied to Cuban’s tweet, welcoming Cuban into “Team #Basicincome.” Cuban, however, flat out responded by saying that he wasn’t in favor of UBI. “I think it’s one of the worst possible responses,” he replied to Santens.
@scottsantens no. I think it’s one of the worst possible responses
In the above conversation, Santens tried to convince Cuban of the merits of a UBI program. One of the arguments he put forward is what he calls the ‘entrepreneurial effect of basic income’. Cuban replied, saying that he has “spent a lot of time looking at [UBI]. I don’t see those countries [running a basic income program] as being apples to apples.” Cuban also said that there are existing safety net programs today “that need to be more efficient so more money can be distributed with far less overhead.”
Under a UBI program, citizens receive a fixed, regular income from the government regardless of their financial background, employment status, or other qualities. The only qualification is that the recipients are citizens, and typically that they are of legal adult age. One reason behind testing a basic income program, proponents argue, is that it offers a better alternative to existing social welfare programs. Santens told Cuban that current welfare programs “create disincentives” for people to seek jobs. Cuban said it’s something that “can be fixed.”
As of today, there are also several pilot programs running basic income setups. There’s one in Finland, one in Kenya through a charity organization called GiveDirectly, and there is even one that’s blockchain-based courtesy of Grantcoin.
When asked about the challenges civilization is set to face in the near future, Musk began, “deep artificial intelligence, or artificial general intelligence, where you can have artificial intelligence that is much smarter than the smartest human on Earth. This is a dangerous situation.”
I think we need to be very careful in how we adopt artificial intelligence and that we make sure that researchers don’t get carried away. Sometimes what will happen is a scientist will get so engrossed in their work that they don’t really realize the ramifications of what they’re doing.
Musk also relayed concerns that autonomous technology will impact jobs. “Twenty years is a short period of time to have something like 12-15 percent of the workforce be unemployed,” he said, pointing out the extent of how automation will disrupt car-based transportation.
Displacement due to automation isn’t just limited to transportation. Musk argues that the government must introduce a UBI program in order to compensate for this. “I don’t think we’re going to have a choice,” he said. “I think it’s going to be necessary. There will be fewer and fewer jobs that a robot cannot do better.”
Musk believes, however, that the issue goes deeper:
[The] much harder challenge is: How will people then have meaning? A lot of people derive meaning from their employment. If you’re not needed, what is the meaning? Do you feel useless? That is a much harder problem to deal with. How do we ensure the future is a future that we want, that we still like?
His philanthropic investment firm, the Omidyar Network, is stepping up its support of UBI by funding a basic income experiment in Kenya. The experiment is being implemented by charity organization GiveDirectly, which is currently running the small pilot project in a few Kenyan villages. When the program lunches fully in a few months, it’ll be the largest UBI experiment to date with an expected number of recipients exceeding 26,000. These people will receive free money either in a lump sum or spread out over a period of 12 years or less.
The Omidyar Foundation gave $493,000 to fund the program, and GiveDirectly has already raised about $23.7 million of its $30 million target. “Omidyar Network’s foundational belief that empowering people frees them to better themselves, their families, and their communities has great evidence in the growing literature around the benefits of cash transfers,” manager Tracy Williams and partner Mike Kubzansky wrote in a press release announcing the foundation’s support for GiveDirectly’s basic income program.
Testing the UBI Waters
UBI has been getting a fair amount of attention recently, not just because it’s a potential solution for poverty, but also due to the growing concern over job displacement caused by automation and digitization. However, we still don’t know a lot about UBI despite it not being a particularly fresh idea.
“The existing evidence [on UBI] comes from several small-scale pilots, but no study to date has been conducted with sufficient size, rigor, timescale, or universality to truly test the impact of a full-fledged UBI program,” according to Williams and Kubzansky. Larger trial programs are the only way to determine just how effective a UBI system could be, and as such, several nations and institutions, including Finland, Canada, and blockchain-based company Grantcoin, are giving it a shot.
Hopefully, these projects will answer some of the many questions surrounding UBI. Perhaps the biggest of those questions is how it’ll affect its recipients. A basic income isn’t expected to deter people from getting jobs, but UBI critics think it would actually encourage unemployment. Another area of concern is funding such a program. How sustainable would it be? How feasible would it be for a state or an organization? Then, of course, there is the question of its overall impact. UBI proponents in Finland believe that it presents a more efficient and effective alternative to existing social welfare programs. But just how so?
Again, only UBI experiment programs like GiveDirectly’s can help us understand the full impact of UBI, and it’s encouraging that organizations like the Omidyar Foundation are willing to provide support to such efforts.
“Each year, we plan to add 3.5% to the Grantcoin already in circulation,” Grantcoin explains. “This will be given as Basic Income grants to everyone in the world who chooses to participate, growing the money supply in a way that provides equal access to all.” Grantcoin is the first blockchain-based currency that’s distributed globally following a UBI model.
Critics of UBI say that it will create a culture of dependence and laziness. A World Bank study, however, shows the opposite. According to the study, in places where UBI programs are being tested, people consumed less “temptation goods.” Perhaps the recipients of existing basic income pilot programs, like Grantcoin, can attest to how UBI is effective. These pilot programs are designed to figure out how effective UBI could be.
“Grantcoin is already making a big impact in people’s lives — especially people who live in impoverished countries and need this financial support to save for a better future,” said founder and Executive Director of the Grantcoin Foundation, Eric Stetson. To date, Grantcoin’s UBI program has distributed a total of over 20 million Grantcoin (GRT) — worth over $13,000 — around the world. Hopefully, as these grant programs continue, UBI can prove to be a valuable social program that could improve the quality of life for countless individuals living in poverty.
Much has been said, both in favor of and against, universal basic income (UBI). Those who don’t agree with the system dismiss it as a socialist idea. Those who are in favor see it as a chance to reform social welfare programs and a viable solution to the problem of job displacement due to automation and digitization. What is clear, though, is that a UBI program would present a significant change in public policy.
UBI can be summed up as a regular, unconditional cash payment to each individual in a society. It is universal because it considers nothing beyond the person’s belonging to that society; their economic status, employment state, and even level of education are of no relevance. Various schemes of implementation are available, such as whether the payment is distributed monthly or yearly or as a lump sum. For example, in the case of Finland’s pioneer UBI program, the basic income is given monthly.
A unique compilation of papers discussing UBI, “Can Less Work Be More Fair?,” prepared by Australia-based think tank The Green Institute, offers many perspectives into how UBI could be beneficial. Among these papers is one written by Frank Stilwell, a professor emeritus in political economy at the University of Sydney. Stilwell is the coordinating editor of the Journal of Australian Political Economy and is on the editorial boards of Regional Studies, Social Alternatives, and Australian Options, among other things.
Can We Afford It?
One of the primary things UBI critics often bring up is funding. Is funding a UBI program feasible? In his article, Stilwell provides an answer by considering the economic ramifications of implementing a UBI program.
For starters, Stilwell notes that the time is right for UBI:
We have wealth on a scale unknown to previous generations, but we now need to distribute it more equitably and use it more wisely. We can collectively afford social policies, such as a UBI, that would have been impractical in previous eras. The current low-inflation environment is propitious because it does not have the macroeconomic stresses that were evident when UBI was previously being widely discussed in the 1970s and 80s.
Stilwell also mentions that technological changes, i.e., automation, are making UBI a necessity as these changes challenge “conventional assumptions about continuous full-time waged employment as the principal means of generating income.” UBI can also help solve the unequal distribution of income as it “would help provide the necessary income floor.”
To the question of costs, Stilwell provides an answer as well:
The question of how to fund a UBI is fundamental. General taxation is the obvious revenue source. Depending on the level at which the UBI were set and the extent to which it replaced other welfare payments, it would comprise a substantial share of total government spending, probably somewhere in the $100 billion to $300 billion range annually. Consideration could be given to funding it out of a particular earmarked revenue source. Inheritance tax is one such possibility that might be appropriate (as a means of establishing more inter-generational equality of opportunity).
Stilwell goes on to talk about the cyclical nature of capitalist economic systems, with those governments regularly experiencing periods of deficit:
Because a UBI would be an expenditure commitment that is on-going whatever the state of the economy, there is a potential problem of funding it from more cyclically volatile revenue sources. Cyclical variations in budget deficits are already a feature of public finance but could potentially become more pronounced with a UBI.
He sees that situation as being both a positive and a negative, though, as it would provide citizens with a short-term cushion during times of recession, but also put into question whether a UBI system could be sustained for a longer period of time.
Implementing a UBI system isn’t impossible, really, if one puts an effort into it. Certainly, such a program would require a great deal of planning and careful implementation, which is why the countries that are considering it have opted for pilot programs first. As Stilwell concludes in his article, however, discussing UBI might be just as important as actually reaching a decision on whether or not to implement such a system: “The UBI proposal is important to consider because it … directs our attention to the all-important questions of ends and means: ‘What sort of society do we want?’ and ‘How should we restructure our economy so that the desired social outcomes can be achieved?’”
Lets face it. Getting money each month just for being alive sounds pretty great. But with that perk comes a whole bunch of backlash.
Universal Basic Income (UBI) is a concept where all citizens of a country are given a monetary stipend each month in order to survive. The practice is being explored in part as a potential solution to job automation in the future.
But is UBI really such a good idea? Some believe that it’ll act as a giant safety net provided by the government for those facing poverty or unemployment. Others believe that if you hand someone money, they’ll opt to doing absolutely nothing with their lives in return. Countries flashing free money would wave a flag to millions of people while shouting “Come get your cash!”
Credit: Russell Shaw Higgs
Fact of the matter is, UBI has its benefits. In a study led by researchers at the World Bank, underdeveloped nations in particular saw a decrease in the consumption of “temptation goods” when given free cash each month. This would include the consumption of alcohol and tobacco.
“If you tell people money is for a certain thing, then they’re much more likely to spend that money on that thing,” said David Evans, one of the lead researchers in the study. That’s why each cash transfer came with a label featuring a positive intent such as “for improving the lives of your children” or “for starting your business.”
This is just one experiment in many that countries around the world are conducting. They want to see if a little bit will go a long way in the end.
Thus, Finland recently decided to participate in the worldwide experiment. But instead of it being a “universal” basic income, the country will only offer $590 each month for two years to persons who are unemployed, and will continue regardless of whether or not they find work during that time period.
One major clue they hope to uncover is whether or not those who receive the monthly stipends will essentially use or abuse it. One recipient of this stipend is a man by the name of Juha Jarvinen.
He was one of the 2,000 people selected to participate in the study, led by a Finnish federal agency called Keva. He’s a 37-year old entrepreneur with a wife and six children. In 2010, Jarvinen founded his own business, but it shut down two years later. His wife’s salary, child allowances, and unemployment checks were keeping him afloat.
Now with the incoming monthly stipends, he plans to try his hand again at starting a business. “What will I do in the future? In next two years? I start new business as soon as possible. Now I’m free for that. I really feel I have got back my citizenship,” he wrote.
Jarvinen’s motivation to do something greater for his life demonstrates one side of the coin. The other 1,999 participants will determine whether UBI would be beneficial for the majority of people or not at all.
They aren’t alone. The CEO of one of Germany’s largest telecommunications company, Deutsche Telekom (DT), gave his thoughts on the subject of UBI — or bedingungsloses Grundeinkommen — in a recent interview with German daily Handelsblatt.
DT CEO Timotheus Höttges discussed the potential changes in the nature of work as it begins to experience the effects of automation and digitization. “It seems to me that we need to think about completely new financing models,” he said.
Höttges goes on: “There is, however, one thing that I don’t like about the welfare state today: I have to ask for help even if I’ve worked throughout my whole life. The basic income would promise more dignity and might even strengthen entrepreneurship.”
It’s About “Würde”
Of course, UBI is still a largely unproven solution. Höttges acknowledges this, saying he doesn’t really know if basic income will turn out to be the right idea. But what he does know is that current social welfare systems in place are ill equipped to handle the unemployment that automation and digitization would bring about. It’s the same principle behind Finland’s UBI test — to determine a more viable option thats cheaper in the long run than existing social welfare programs.
Those who aren’t for UBI often point out a possible debilitating effect it could have on the employee: with guaranteed income, who needs to work? Höttges believes it won’t be the case. Automation and UBI might actually help workers to develop other skills that’ll be relevant in the coming years. UBI could actually promote human dignity (or würde) more than Germany’s current social welfare system.
I don’t think that a basic income would lead to a society of slackers. Humans define themselves through their tasks. By using activities to make their lives meaningful. This might therefore encourage entrepreneurship and self-employment.
[…] There’s no such thing as a free lunch! We can’t introduce a basic income and leave everything else – taxation, social security systems – exactly as it is. I think that saying taxes on profits must be the basis for a socially just system is a statement of the obvious. It’s all to do with justice, fairness, and solidarity. We must all ensure stability and social cohesion.
With experts backing it up with their own research, and with companies already beginning to take steps toward it, the automation of jobs is all but inevitable. We’re already seeing it, and some people are unlucky (or lucky?) enough to already feel it. We can only go forward, and UBI is one possible path going that direction. The alternative, Höttges says, “is an era of radicalization, fanaticism, and terrorism that we can’t anticipate today.”
With Finland implementing a universal basic income (UBI) experiment that will run for the next two years, it seems that UBI is getting more attention as a viable system. Now, a leading advocate of UBI has said that the government of the world’s largest democratic country, India, is going to release a report endorsing UBI as “basically the way forward.”
The report, which will be part of the Ministry of Finance’s annual Economic Survey, is expected to be released this month. India has had considerable experience with UBI pilot programs in the country. Behind these programs is Guy Standing, a founding member of the Basic Income Earth Network, and he is the UBI advocate who says that India’s report will endorse the system.
According to Standing, the results of the UBI trials they’ve conducted were “remarkably positive.” Speaking to Business Insider, he said:
The most striking thing which we hadn’t actually anticipated is that the emancipatory effect was greater than the monetary effect. It enabled people to have a sense of control. They pooled some of the money to pay down their debts, they increased decisions on escaping from debt bondage. The women developed their own capacity to make their own decision about their own lives.
With a population of 1.3 billion people, India has a growing economy despite a slight setback last year. Still, around 29.5 percent of the population lives in poverty, concentrated especially in rural areas. “People are dragged into poverty due to droughts, declining agriculture opportunities, disease, and so on,” Subramanian said at a university forum, quoted by The Times of India. “So the safety net provided by the government should be quite wide, and that is why [basic income] has some merit.”
An Answer to Unemployment
Standing, however, doesn’t think that India will implement a wide-scale program at the onset. “I don’t expect them to go the full way, because it’s such a dramatic conversion,” he said. But the government now sees UBI as feasible, and that’s the first hurdle to implementation.
The recent spotlight on UBI and countries’ willingness to give it a shot isn’t random — it’s closely linked to the rise of automation. Experts see the system as a potential solution to expected unemployment due to a predicted increase in job automation. According to a study by Oxford University and the Oxford Martin School, around “47 percent of jobs in the US are ‘at risk’ of being automated in the next 20 years.”
This has led Tesla CEO Elon Musk to comment in a CNBC interview that “there is a pretty good chance we end up with a universal basic income, or something like that, due to automation. Yeah, I am not sure what else one would do. I think that is what would happen.”
Under a UBI program, citizens are given a fixed income regardless of their economic status and employment conditions, and the money can also be non-taxable, like in Finland’s version. The system can actually take the place of existing social service platforms, which are often more expensive for governments to sustain, so not only would individuals benefit financially, entire economies could as well. The only way to know for sure whether UBI will work is to try it on larger and larger scales, so we’ll have to wait and see what India has planned for its UBI program.
It looks like 2,000 citizens in Finland will welcome the new year with outstretched arms. These Finns are the lucky recipients of a guaranteed income beginning this year, as the country’s government finally rolls out its universal basic income (UBI) trial run. UBI is a potential source of income that could one day be available to all adult citizens, regardless of income, wealth, or employment status.
This pioneering UBI program was launched by the federal social security institution, Kela. It will give out €560 ($587) a month, tax free, to 2,000 Finns that were randomly selected. The only requirement was that they had to be already receiving unemployment benefits or an income subsidy.
The program allows unemployed Finns to not lose their benefits, even when they try out odd jobs. “Incidental earnings do not reduce the basic income, so working and … self-employment are worthwhile no matter what,” says Marjukka Turunen, legal unit head at Kela.
Just the Beginning
If successful, the program could be extended to include all adult Finns. “Its purpose is to reduce the work involved in applying for subsidies, as well as free up time and resources for other activities, such as making or applying for work,” according to a press release by Kela.
Furthermore, the Finnish government, as well as UBI advocates, may see how this program can end up saving more money for Finland in the long run — as it is less costly than maintaining social welfare services for the unemployed. “Some people think basic income will solve every problem under the sun, and some people think it’s from the hand of Satan and will destroy our work ethic,” said Olli Kangas, who oversees research at Kela, about the program. “I’m hoping we can create some knowledge on this issue.”
Then, of course, there is the looming issue of job loss due to automation. Many UBI proponents, including tech entrepreneurs Elon Musk (Tesla and SpaceX) and Sam Altman (Y Combinator), see the program as the only solution to the problem.
UBI is, without a doubt, controversial. There is an ongoing debate as to whether or not it’s a workable system. Of course, the only real way to definitively find out is to put the system to the test – hence, Finland’s experiment. After its two-year run, the government will have enough data — from the 2,000 participants and a control group of about 173,000 non-participants from the same background — to see just how effective a UBI program could be.
The world is already on the cusp of a new industrial revolution—one that will be brought about by automation based on artificial intelligence (AI).
According to a joint study conducted by Oxford University and the Oxford Martin School, “[…] 47 percent of jobs in the US are “at risk” of being automated in the next 20 years.”
In a recent interview, President Barack Obama also talked about how AI will fundamentally change the future of employment; with downsides in terms of eliminating jobs and suppressing wages.
The world sees automation as the key to achieving more efficiency, across different aspects of our lives. But that efficiency comes at a price—the displacement of countless employees who will soon be replaced by artificially intelligent (AI) technology.
What happens then?
The answer could be universal basic income (UBI)—a policy where all citizens of a country will receive an unconditional amount of money, on top of income they generate through other means. The funds could be provided by the government, or a public institution.
And in 2017, Finland and the Netherlands will begin testing the system.
By January of next year, the program is tentatively set to launch in Utrecht, the fourth largest city in the Netherlands. The system will provide varying benefits to current welfare recipients, following five different models to determine what works best.
In Finland, a randomly selected group of two thousand citizens, who are already receiving unemployment benefits, will receive €560 (around $600) as a monthly basic income. The program will run for two years and study whether this system can help raise the employment rate, lower poverty, as well as reduce bureaucracy and social exclusion.
The Potential of UBI
Considering that UBI is intended to provide an incentive that will spur productivity, and improve quality of life, a key point of consideration is the level of income that should be distributed. Should it be a minimum benefit similar to welfare state schemes? Or a higher amount that would be more appealing? To that end, with everyone receiving enough money to cover basic food, shelter, as well as goods and services, would people lose their motivation to work? Is UBI enough of a response to the pace of technological innovation and automation?
Of course, there’s that all-important question of who’s footing the bill. Since government revenue is derived from its taxing authority, the whole scheme is a little like robbing Peter to pay Paul; after all, if the population is unemployed, where will the government muster the funds to support a universal basic income? The whole system would inevitably collapse.
Still, the implementation of UBI at this scale is still in its early days, but the results from pilot programs thus far have been promising.
In India, where roughly 30 percent of the population lives below the poverty line, pilot studies of basic income grants conducted in 2011 led to more labor and work, not less, which skeptics typically predict. Results showed a shift from traditional wage labor, to self-employed farming and business initiatives. Additionally, the steady flow of income eased economic anxieties, allowing families to focus on their health and invest in the future.
While technological advancements in artificial intelligence (AI) and robotics will clearly make a lot of processes easier and more cost-effective, the impending repercussions need to be addressed before the inevitable happens. As automation begins to take over several jobs, the world is turning to universal basic income (UBI) as a possible solution to the anticipated unemployment it will create, which is estimated to be in the millions by the end of the decade.
In an interview with Vox, Stern talks about how he believes that the American dream is sure to die unless we become proactive about finding a way to keep it alive. “I think that if people don’t intervene right now, it will [die]. Fifty percent of Americans say they don’t believe in the American dream, and they’re justified in believing that,” he says. “People with college degrees are not making anywhere near the kind of progress that their parents made, and that’s not their fault,” he added.
In the interview, Stern tells Vox that he thinks “a tsunami of change” is on the way in the U.S. economy, and he proposes instilling a UBI system to cope with that change. “I believe a UBI is a way to ease the transition, and it’s also a way to provide a floor for people — not necessarily a substitute for work, but a supplement to work that allows them to have a sense of economic security, have consumer buying power,” he asserts. “We want to allow people to be entrepreneurs, to take risks and raise kids and do other things without turning the world into the Hunger Games.”
Unsurprisingly, not everyone thinks a UBI is a good plan. In an article published in the National Review, Manhattan Institute senior fellow Owen Cass counter-argued a $13,000 annual UBI proposal, saying it’s not enough for a person to live on and ultimately a terrible idea.
But Stern and others argue that a UBI is not meant to burden the state to give people an extravagant lifestyle — just enough money to ease the financial insecurity brought upon by automation and technology. Some, like London’s Adam Smith Institute fellow Tim Worstall, believe a UBI system would be “actually cheaper than the current system” of social security, food stamps, and welfare.
Several countries have announced plans to conduct test runs for UBI systems, including the Netherlands, Finland, Canada, and Uganda, so hard data on the practicality and pros and cons of such systems should be coming soon. With an estimated 57 percent of the world’s jobs at risk of being replaced by automated systems, that insight can’t come soon enough.
Though simple in concept, the idea has sparked lively debate.
Proponents of UBI see it benefitting society on a number of levels. In February, Nobel laureate Sir Christopher Pissarides made his argument at the World Economic Forum:
[We] need to develop a new system of redistributions, new policies that will redistribute inevitably from those that the market would have rewarded in favor of those that the market would have left behind. Now, having a universal minimum income is one of those ways, in fact, it is one I am very much in favor of, as long as we know how to apply it without taking away incentive to work at the lower end of the market.
[We] think of basic income as providing a floor, and we believe people should be able to work and earn as much as they want. We hope a minimum level of economic security will give people the freedom to pursue further education or training, find or create a better job, and plan for the future.
The sentiment is echoed by fellow tech executive Elon Musk, who thinks that there’s a good chance we’ll end up with UBI, and Arvind Subramanian, India’s top economist, who has said, “[The] safety net provided by the government should be quite wide, and that is why this [basic income] has some merit.”
The jobless folk can be supported using UBI, and the world won’t be shaken so much by AI and automation. Perfect, right? Not according to those opposed to UBI.
“If you pay people to do nothing, they will do nothing,” Charles Wyplosz, economics professor at the Geneva Graduate Institute, told The Guardian after Switzerland voters rejected a UBI project earlier this year. Luzi Stamm, a member of the Swiss parliament, warned that a UBI system would have wreaked havoc on the country’s immigration: “If you would offer every individual a Swiss amount of money, you would have billions of people who would try to move into Switzerland.”
Meanwhile, Robert Greenstein, founder and president of the Center on Budget and Policy Priorities, warned that implementing a UBI would mean taking money away from the people who really need it, those at the bottom of the socio-economic ladder. His logic is hard to dispute. If you give any money to those at the top, those at the bottom are bound to get less.
Data Weighs More
Regardless of which side of the debate you land on, at the end of the day, data weighs more than opinions. Some data is available on UBI — one study even shows how it can improve your health and not just your finances — but implementing and analyzing a modern pilot UBI program would be the best way to determine if it is the appropriate solution to modern problems.
2017 is poised to be the year we do just that as various governments and institutions across the globe are ready to give UBI a shot. Plans to implement programs by early next year are in place in Canada, Finland, and Uganda. Those trial runs are very likely to tip the scales in this debate one way or the other. After that, it’ll be a matter of either refining UBI to best meet the demands of modern life or looking for an entirely new solution to the problems caused by automation and AI.