#49: Universal Basic Income

Our 49th prompt comes from Neville. He asks:

What do you think of Universal Basic Income? Consider the rising inequality due to automation and a few tech companies taking over economic power.

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Neville,

Fantastic question, especially given the levels of income inequality we are witnessing globally. Universal Basic Income (UBI, also known as unconditional/guaranteed basic income) is a type of social security where all citizens (or residents, depending on where you are) of a country receive a guaranteed amount of money either from the government or in many cases (at the moment) an institution carrying out an experiment.

The thinking behind it is as follows: due to advancements in technology, and how they have reshaped our society, many people have/will continue to be rendered redundant at the workplace and lose their jobs. As a result, while the corporations (and people) behind these technologies continue to prosper and make more and more money, more and more people will be unable to have an income/afford their needs, such as food, shelter, clothing, education, healthcare, and so on. Which is why global levels of poverty are the lowest they’ve ever been yet income inequality keeps growing.

UBI normally involves everyone in a given society receiving a fixed amount of money (that should be able to cover one’s needs/expenses that come with living in that society) to do with as they please, regardless of what they are doing with their lives. It could be paid out every week, every month, or even every year. Some people suggest that it be paid out in a lump sum upon becoming an adult. Some critics call it “getting paid to be alive.” However, I see it as a viable solution for ensuring that nobody lives below the poverty line.

In 2016, GiveDirectly, a nonprofit organization, announced a US$ 30 million UBI experiment that will cover nearly 27,000 people in Kenya, with more than 6,000 of them receiving UBI monthly for 12 years. Their goal is to assess whether UBI leads to a change in economic status (income, assets, and standard of living), time use (work, education, leisure, and community involvement), risk-taking (migrating, starting businesses), gender relations (especially female empowerment) and aspirations and outlook on life.

I believe that it will. The safety net that UBI provides will allow more people to aim for self-actualization as opposed to mere survival, and will lead us closer to the sort of society that John Maynard Keynes envisioned we would have by now (working 15 hours a week and spending most of our time on leisure.) The critiques of this approach include the following: UBI will stifle productivity and disincentivize work; or that it is too expensive and countries can’t afford it. All the critiques I have come across, however, are rooted in the glorification of capital/work over human wellbeing, the folly of which I have discussed here before.

As we continue to ask ourselves whether UBI really is the best approach, we also need to ask ourselves why we are willing to be enslaved by capital.

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This post is part of a daily writing experiment that I’m running for a year. I’d love it if you took part! 🙂

2 thoughts on “#49: Universal Basic Income

  1. The UBI has often been framed as a tool to fight poverty and income inequality. Proponents claim that there are other emancipator benefits which are tied to UBI; by providing an income cushion, people will be free to take risks with their jobs and invest more in education. (1)However, there are important factors which are being overlooked by the proponents of UBI. In addition, the social-economic models which are used to support its pros are fundamentally flawed and the referred case studies often have an insufficient sample size.

    Firstly, how “Universal” is UBI? In this globalized world, companies outsource manual labor from developing countries. Hence, developing countries will bear the brunt of losses due to automation and logically should benefit most from UBI. However, will developed countries be willing to support this model? For example, if Tesla develops fully autonomous vehicles, drivers in Kenya will lose their jobs. Most of the revenue will go to Tesla and under the UBI system, a greater proportion of the revenue from the Kenyan market should be channeled back to Kenyans. With growing nationalism, will Americans accept this? UBI seems to be still fixed within national boundaries and if it were to truly work, all citizens of earth should be included.

    Secondly, the experiments and case studies which are used to support UBI overlook some basic factors. GiveDirectly targets a payout spanning over 12 years to around 6,000 people which represents a mere 0.0125 % of the population using a rough estimate of 48 million Kenyans (a) . Although the emancipator effects are explicit, the model fails to account for other economic shocks which might result in the case of a complete roll-out. Better references would have been made had the Swiss people voted in favor of a guaranteed basic income in the June 5th referendum (2). An overwhelming majority voted against the plan (77 %) citing it’s impracticality in a country with net immigration (although I suspect that facts were contorted in order to provide an emotional argument – “these immigrants, they are taking our jobs” kind of rhetoric. But, that’s beside the point). Ours is a capitalistic market which is controlled by the laws of supply and demand. In the case of a complete roll-out, a UBI might drive inflation to extreme levels and might even lead to more inequality. In addition, UBI works under the premise that those who enforce it have the best interests at heart. However, given our Kenyan “System ya Majambazi”, the model will crash because a portion of the money will “sublimate” through corruption and other government inefficiencies. As Mae Ellie O’Hagen puts it,

    UBI cannot be a progressive initiative as long as the people with the power to implement it are hostile to the welfare state as a whole.(3)

    Currently, pilot tests are being carried out by well meaning private institutions and NGOs. Can you imagine the chaos which will be experienced if G.O.K were to implement it?

    Thirdly and closely tied to my second reason, UBI cannot combat inequality – this is just a utopian dream. If all basic human needs are met, there will be a fierce competition in luxury goods which might drive inequality further. If UBI is truly universal, then the wealthy citizens are entitled to receive their share. Given the tendency of human beings to compare themselves with their contemporaries rather than their worse past, I envision an outcry from the masses to bar the wealthy from receiving their share – and UBI will be reduced to a welfare system.

    In conclusion, UBI is a “sexy”, emotionally appealing idea whose effects have been overstated. In addition, proponents overlook many factors which render it impractical. This does not mean that we should not worry about the millions of jobs that are about to disappear because of automation. Personally, I believe that the impact of automation has been overstated and this might be linked to the recent focus on Artificial Intelligence. As with any new technology, the short-term impact is overestimated while the long-term impact is underestimated. Automation will be a process of creative destruction. There will be new jobs created in the maintenance and other industries which will emerge as a result. However, unlike the Industrial Revolution, the new jobs are bound to be highly skilled and this might lock out low skilled workers. How can we solve this? I prefer making technology more inefficient. Yes, more inefficient! This way, our “dumb” machines will be able to accommodate low skilled workers to a certain extent. I think I heard this from Michio Kaku (b) when he predicted that in the future it will not be uncommon to make systems more inefficient. For example, instead of rolling out fully automated cars, we can decide to have a certain portion of our cars fully automated to cater for the physically challenged who cannot drive on their own. The rest of the population can be “relegated” to semi-autonomous cars. Also, I expect more companies to employ technology to augment their worker’s skills rather than to supplement them. This is what Maurice Conti refers to as “The Augmented Age”.

    In this era, your natural human capabilities are going to be augmented by computational systems that help you think, robotic systems that help you make, and digital nervous systems that connects you to the world far beyond your natural senses. (4)

    It is highly likely that companies which integrate people with machines seamlessly will be the most successful.

    * I wonder if you’ll read all this. Neville is my kid bro and we argued about UBI a lot. He showed me your entry yesterday and I just had to reply. Anyway, we’re fervent Otherwise listeners. Keep up the good work 🙂

    1. Surowiecki James. “A Case for Free Money ”, The New Yorker, June 20th 2016. http://www.newyorker.com/magazine/2016/06/20/why-dont-we-have-universal-basic-income
    2. BBC News. “Switzerland’s voters reject basic income plan. ”5th June 2016. http://www.bbc.com/news/world-europe-36454060
    3. Conti Maurice. “The Incredibel Inventions of Intuitive AI.”, Ted talks , April 2016. https://www.ted.com/talks/maurice_conti_the_incredible_inventions_of_intuitive_ai?
    4. O’Hagan Mae Ellie. “Love the idea of a universal basic income? Be careful what you wish for. ”,The Guardian, 23rd July 2017, https://www.theguardian.com/commentisfree/2017/jun/23/universal-basic-income-ubi-welfare-state
    (a). World Bank 2016 population data
    (b).Couldn’t land on the actual video

    1. I love your response!! So cogent! I read all of it, and the resources you shared. 😀 I would hope that Kaku’s vision becomes a reality, but we all know how greed/hunger for power work against us. My concern (as is yours, if I read your sentiments correctly) remains human well-being, and I am all for a solution that puts this at the centre. It may or may not be UBI, it may or may not be planned inefficiency, but conversations/research on this should increase because this matter is urgent/important. Thank you for your support, stay tuned to the pod/keep reading the blog! 😀

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