Over the course of the last week, the idea of universal basic income (“UBI”) has gained support from prominent politicians including Mitt Romney, Alexandria Ocasio-Cortez, and presidential candidate Tulsi Gabbard (yes, she is still running for the Democratic nomination). They and others believe that UBI can be one of the most effective ways for us to relieve some of the economic challenges which are presenting themselves to millions of people all across America in the face of the coronavirus pandemic and all of the associated impacts created by necessary social distancing.
Andrew Yang should be given a ton of credit for effectively legitimizing this concept as a result of his presidential campaign which ended just a little over a month ago. His signature policy which he called The Freedom Dividend proposed a universal basic income of $1,000 per month for every American adult. I remember the first time I heard Andrew talk about it at length with Joe Rogan on Joe’s podcast about a year ago. I had heard of the concept before that but was convinced of its merit for the first time that day.
The concept of UBI is not new. The idea was raised in some form or another by the founding fathers, Thomas Paine, and even Martin Luther King, Jr. who said,
“I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”
More recently, in 2017 the concept gained support from Elon Musk and Mark Zuckerberg while the year before that Obama said, “we’ll be debating unconditional free money over the next 10 or 20 years.” My speculative prediction if you had asked me a few months ago would have been generally in line with Obama’s, that we might see some form of UBI come to fruition in the USA in the next two or three presidents. Today, I think chances are we very well may see it in the next two or three weeks. This is one of the positives that I believe will come from the tragic pandemic that the world is battling right now.
While universal basic income will help a lot of people now in the midst of this crisis, the more common argument prior to these unforeseen events was that it would be needed to counter joblessness as a result of accelerating automation. Andrew’s example using truck drivers was what first caught my attention because I recognize that most of these jobs will be replaced by autonomous vehicles in the next few years and, as Andrew points out, there are over 3 million truck drivers in The United States today. That represents about 2% of all US workers. More generally speaking, Andrew’s website cites McKinsey in suggesting that up to 1/3 American workers will lose their jobs to automation by 2030. His answer is universal basic income. The argument is not that $1,000 per month is enough to live your normal life, but that it is enough for humans to satisfy their basic needs like food, clothing, and shelter. Maybe it is not even enough for that just yet, but it is hard to argue that it would not meaningfully help those who need it most today, and those who will need it most when, not if, they lose their jobs to automation.
The best argument for and explanation of universal basic income that I have found is in Albert Wenger’s book, World After Capital. He calculates that a UBI which pays $1,000/month to adults (18 years and older), $400/month for teens (12 years and older), and $200/month for children (younger than 12) would cost about $3 trillion per year. This, of course, is not a trivial amount of money by any means, but if you consider that The Federal Reserve injected $1.5 trillion into the economy last week, and that by Albert’s calculations his proposed form of UBI would increase tax revenues by another $0.7 trillion, you realize that those two sources alone (summing to $2.2 trillion) would just about cover the cost of instituting UBI as per Albert’s proposal for the rest of the year ($2.25 trillion to cover 9 months from April through December 2020). That is all without touching the government’s existing annual budgets under normal circumstances, which of course would need to be a part of the equation to sustain any sort of UBI model in the long-term.
If you are interested in learning more about universal basic income, I highly recommend you listen to the Joe Rogan Podcast with Andrew Yang and read the “Economic Freedom” section in Part 3 of Albert Wenger’s book, both of which are linked above.
It seems silly for me most days to be writing about things that are not somewhat related to all that is going on in the world today. After all, I spend a lot of my time trying to understand how the world works and what the future holds, and those are the kinds of things I most enjoy writing about. That said, I am decidedly going to try to write about some positives that I see coming from all of this, precisely because they are so much harder for me to see than the negatives. I believe in the utility of positivity, so long as it does not serve to excuse irresponsibility (i.e. “everything will be OK sooo I am going to throw a party and invite everyone I know”). One of those positives I believe will be a temporary institution of UBI in the US, leading to a more general acceptance of the concept, significantly increased favorability ratings for it, and accelerated progress towards its implementation in perpetuity.
In a world with so much excess, everyone should have enough money to cover basic human needs.