Universal Basic Income (UBI), is a programme that has raised questions across the political spectrum: who will fund it? Won’t it create even greater declines in productivity and cause mass unemployment?
In her new book Give People Money, The Atlantic’s Annie Lowrey tackles these queries by taking us through a number of case studies - from Kenya to Alaska - to explain how our current welfare systems aren’t working.
With the automation of vehicles and the rise of artificial intelligence both looking to be game-changers, Lowrey kicks off by cheerfully forecasting mass structural unemployment. She believes that self-driving vehicles alone could wipe out between 2.2 to 3.1 million jobs in the US. She argues that current redistribution policies employed by the state would not be able to stand up against the longer spells of technological unemployment many look set to face as their jobs become obsolete. UBI would give them cushion needed to obtain new skills and enter new industries.
Predictions about the state of the future labour market aside, a UBI would remedy current inequalities between different races, classes and genders. And Lowrey contends it would also create a sense of inclusion: a chance for each and every poor, disabled and marginalised individual to play an active role in the economy. Caregivers usually receive little to no pay, and on the flip side, many find it impossible to afford childcare - both issues that a UBI would address. Lowrey mentions Sandy J. Bishop, a disabled woman in Maine who reported that she often lost food stamps because of the cloud of paperwork required, to emphasise how the level of bureaucracy in the current system makes it hard for most in need of help to reach it, even when it is available.
Lowrey also highlights the increased bargaining power for workers that a basic income would create. She uses the example of the Ortizes, a family dealing with poverty in downtown Houston by juggling as many as eight jobs at once - even the children are forced to forgo school over low-paying fast food jobs. For families like these, UBI would not only give them something to fall back on, but also allow them to demand better working conditions and wages.
Lowrey assuages worries over a UBI in developing countries while exposing the pitfalls of current aid programmes. In the Kenyan village she visits, there is a massive surplus of Toms slippers from their ‘One for One’ campaign. Rather than wasting money on the transportation of unneeded supplies like slippers and water jugs, we should draw back such a paternalistic approach and instead give those in extreme poverty the funds they need to survive. That’s not to say there aren’t issues with direct cash transfers too: in India where they have replaced old welfare programmes citizens have been plagued with technical issues and there’s been general confusion over the new system. For UBI to work effectively the public must be well educated on the policy and the payments must be easily accessible for all.
A solid case is made for the reasoning behind the UBI, but the book only gets into the nitty-gritty of funding such a scheme (in the USA) in its final chapter. It suggests several tax hikes, including a potential robot tax, as well as the scrapping of all other welfare as it takes its place. The most sustainable route to basic income for the masses would be a Negative Income Tax (NIT), which Lowrey does touch upon, though only briefly.
Lowrey suggests that the NIT would drive people to hide their earnings in order to get more from the tax. She is right in saying that this wouldn’t be an issue with UBI, but with many current welfare programmes and levies like the income tax there are sharp cut-offs, creating a very strong incentive to misreport income or simply work less.
Fraud in any policy is a possibility; what’s important is the level we’re willing to tolerate. The ease with which NIT is implemented makes it a strong candidate over the UBI and it wouldn’t make sense to dismiss it over minor concerns like fraud risk and allow inferior programmes to stand. The NIT reduces the amount of bureaucracy within welfare, providing security to those, who like Sandy J. Bishop, are currently falling through the existing safety net the US government has in place. The system may not sound as flashy as the UBI, where one can envision politicians throwing reams of $100 bills from a helicopter, but it is easier to navigate, and there may be less resentment over withdrawals taking place before the payment rather than after it.
From the mention of a basic income in More’s Utopia to Milton Friedman’s support of the NIT, the notion of providing a baseline for all has attracted the attention of luminaries across the political spectrum and through the centuries. Lowrey has presented a strong case for a basic income in Give People Money. The next step is advocating a feasible policy, like the NIT, that can be executed in the near future.
Emma Weber is a research intern at the Adam Smith Institute.