Bridging the Opportunity Divide

Is the U.S. Ready for Universal Basic Income?

October 5, 2017
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Is the U.S. Ready for Universal Basic Income?
With automation threatening millions of U.S. jobs, a universal basic income could be one solution to help stabilize the economy. Photo by Joe Raedle/Newsmakers
As automation takes a toll on employment, this once-fringe idea is gaining mainstream appeal.

It used to be considered radical. But the idea that a society could ease poverty and increase productivity by giving every one of its citizens a monthly or annual stipend, no strings attached, is no longer a far-fetched one in other parts of the world. And now some progressive leaders in the U.S. are pointing to the economic model’s alleged success in Europe in the hope that the notion takes root here, too.

The concept, known as a universal basic income (or UBI for short), is simple enough: Give citizens enough money every year, gratis, so that they can pay for necessary living expenses, like housing and food. In return, people will have the bandwidth to flex their creativity, become more productive and enjoy a better quality of life.

Not surprisingly, fiscal hawks and critics of entitlement programs are not on board.

“Unfortunately, a welfare state by any other name is still a welfare state. And a [UBI] is just replacing one pricey system for another,” writes Brittany Hunter, an editor with the Foundation for Economic Education. “Unlike the current welfare state, which has standards for determining who qualifies for certain aid, a UBI would be given to everyone. This would dramatically increase the pool of citizens receiving benefits from the state and inflict massive expenses across the board.”

Hunter’s critique came on the heels of a study conducted by the left-leaning Roosevelt Institute, which found that providing $12,000 each year to Americans would increase jobs by 2 percent and grow the economy by $2.5 trillion by 2025.   

Though the idea of a universal basic income in the U.S. has been tossed around for decades, the rise in automation has put the idea at the forefront of current economic arguments in developed countries, where robots are poised to take over more jobs and provide less opportunities in the future.

THE VIEW ACROSS THE POND

In mid-September, the University of Bath’s Institute for Policy Research found that nearly half of Britons would welcome a basic level of income to cover essential needs, with only 26 percent of those surveyed opposing its introduction. The reactions aren’t necessarily surprising, as the Scottish government recently announced plans to test a UBI system by giving citizens £150, or about $200, per week.

Though the move is revolutionary in the United Kingdom, it’s not unheard of in other parts of Europe. Last year, several European countries introduced the idea of trying out basic income, ranging from giving a modest €560 a month to 2,000 unemployed adults in Finland (the equivalent of about $660) to doling out 2,500 Swiss francs ($2,573) each month in Switzerland.

The Swiss held a vote for the monthly stipend in June 2016 — the first time a country has ever put the proposal on a ballot — but it was overwhelmingly voted against by nearly 3 to 1. Opposition groups claimed that the country’s high living standard, combined with its open borders, would make for complications.

Finland, meanwhile, has boasted anecdotal evidence of success, with residents reporting that the basic income has allowed them to start their own businesses and has reduced stress. But some economists argue that the Finnish program, which was implemented to replace unemployment benefits (though recipients are still awarded the monthly stipend even after they secure work), has only pushed people to lower-paying jobs with lower productivity.

“Universal basic income can only succeed if the effort is sustained and widespread — and not available only to the unemployed,” wrote economists Antti Jauhiainen and Joona-Hermanni Mäkinen in The New York Times. “The program should not be intended to force people into low-paying jobs.”

ONE NATION, UNDER UBI

So can a UBI model work in America?

In a way, it’s already here, to some extent. Alaskan residents have gotten a portion of the state’s $55 billion oil fund each year for the past four decades. Last year, the dividend from the fund was $2,052 each for 643,000 Alaskans, before Gov. Bill Walker axed that amount by half.

Farther south in Silicon Valley, the tech incubator Y Combinator has launched a UBl study that aims to provide roughly 1,000 Oakland families with up to $2,000 a month.

“I think it’s good to start studying this early,” wrote Y Combinator President Sam Altman in a blog post. “I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale.”

The reality is that automation in America will reduce jobs for low- and even middle-wage workers by close to 50 percent, according to some estimates, and there is a worry that cashiers who are put out of work won’t exactly be in the position to become engineers overnight. The U.S. has already started to feel the squeeze, with about 5 million jobs lost as a result of automation.

American business leaders and progressive politicians have taken notice. Vermont Sen. Bernie Sanders and Facebook CEO Mark Zuckerberg, among others, have all endorsed the idea of a UBI.

“There will be fewer and fewer jobs that a robot cannot do better,” echoed Elon Musk, CEO of Tesla and SpaceX, earlier this year. “And if my assessment is correct and [jobs are lost to automation], then we have to think about: What are we going to do about it? I think some kind of universal basic income is going to be necessary.”

WANT MORE? GO DEEPER WITH THESE READS ON HOW A BASIC INCOME MIGHT LOOK IN AMERICA:

The Future of Not Working, New York Times Magazine

Modeling the Macroeconomic Effects of a Universal Basic Income, Roosevelt Institute

Why Free Money for Everyone Is Silicon Valley’s Next Big Idea, Fortune

 

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