Nov 6, 2917 (San Diego) When having discussions about the future form the economy needs to take, there are certain concepts that keep coming up. Universal Minimum Income is one of them. Nor is this concept alien to the United States. As part of the War on Poverty four pilot studies were run in New Jersey, Denver, Seattle and Indiana in the late 1960s and the early years of the Richard Nixon administration.
According to Rutger Bregman, who did a literature review in Utopia for Realist, UBI is guaranteed income, enough to take you over the poverty limit. This money is disbursed, to all in the society, no questions asked. It needs universality, like Social Security, because once it is means tested, it loses support. Ideally UBI will also replace all other areas of the welfare state, including Social Security.
But people will not work right? Wrong. What the initial data showed was that the reduction in working hours was minimal, And those who reduced their working hours were the young who went to college, or new mothers who took some time off to bond with their newborn children.
Those early pilots ended in legislation approved by the House of Representatives, where twice legislation was passed that would set the United States on the way to Universal Income. Nixon was behind those bills. They failed to make it out of the Senate, and in the end the idea died. If you are surprised, it is because this history is not well known.
Fast forwards a few decades. In Finland we are seeing one of the first large European pilots. results will be known starting in 2018, but The Guardian interviewed one of the participants, who was unemployed. What they found is that:
Ask Järvinen what difference money for nothing has made to his life, and you are marched over to his workshop. Inside is film-making equipment, a blackboard on which is scrawled plans for an artists’ version of Airbnb, and an entire little room where he makes shaman drums that sell for up to €900. All this while helping to bring up six children. All those free euros have driven him to work harder than ever.
None of this would have been possible before he received UBI. Until this year, Järvinen was on dole money; the Finnish equivalent of the jobcentre was always on his case about job applications and training. Ideas flow out of Järvinen as easily as water from a tap, yet he could exercise none of his initiative for fear of arousing bureaucratic scrutiny.
Mind you the amount he receives is not the standard of UBI, which would place him above the poverty level. However, it comes with no strings attached. None from the normal welfare system comes after him and demand that he jumps though any official hoops, which has returned his dignity.
In the United States he would be required to get a job, and would see a reduction in his check to match his wages, and if he did not work, he would be cut off the system completely after five years. The system encourages work above all else, and places conditions that put women in a bind, as they also have to find child care. This child care is expensive and is not covered by the system.
Many conservatives in particular believe this is a left wing hair brained idea. But it is currently undergoing a pilot study. In the United States in Stockton California, which is launching a demonstration program.
Solving current poverty is just one potential benefit of UBI. Many experts believe such a system could effectively curb the unemployment surge expected to follow the rise of intelligent automation, in which machines will replace greater and greater numbers of human workers, both those employed in minimum wage jobs as well as those in industries like finance and information technology. Some experts also think UBI could provide an alternative to today’s social welfare programs.
This brings me to the critical point. The future economic system will see major displacement of millions of workers. Automatization and robotics will lead to people not having a job. Your taxi or Uber driver is on the chopping block. There is a good chance your accountant or your doctor will be replaced by robots as well. We know journalists will be displaced by intelligent algorithms. Truckers, and the support industries, will be greatly affected. So what do you do in a society that will have millions of newly displaced workers? Requiring them to work for a pittance, in a service job that will also be automated, will be increasingly difficult. So what do you do when you have millions of both white and blue collar workers with no income? What happens to the economy at that moment? How can that economy continue to function when people have no resources to consume? And by that, I mean pay for their electric or food bill, not just things.
This is why UBI has the appeal it has. It is not just wide eyed utopians who want to change the world, and destroy the welfare system as we know it. No, this is something supported by many people in high technology fields, such as Mark Zuckerberg, head of Facebook, and Bill Gates.
Those who oppose it do so in almost moralistic terms. In their mind this will create a culture of dependence, and people will not work. They will not be productive. Early studies show that people keep working because humans like to work and find fulfillment that way.
Before you think that Conservatives will be immediately opposed to this, there is a conservative case for UBI:
The idea isn’t new. As Frum notes, Friederich Hayek endorsed it. In 1962, the libertarian economist Milton Friedman advocated a minimum guaranteed income via a “negative income tax.” In 1967, Martin Luther King Jr. said, “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Richard Nixon unsuccessfully tried to pass a version of Friedman’s plan a few years later, and his Democratic opponent in the 1972 presidential election, George McGovern, also suggested a guaranteed annual income.
There have been more recent proposals to get rid of social security, and all other safety net programs and replace them with UBI. This is not a dream. Wealthy countries like the United States can afford this. There is more, as Bregman points out, similar pilot programs have been implemented in the global south, from Liberia to Mexico.
Because of globalization and automatization, there will be an increasing need to implement programs such as this one, or face a society that will make anything that Charles Dickens ever described sound like an open and free society with economic opportunity. That alternative should scare us, as we could easily return to the levels of deep poverty that dominated most of human history. There are severe social consequences to that. It could include social unrest like we have not seen. It will mean the end of democracy as we know it.