Universal Basic Income

The Universal Basic Income (UBI) has come back into public consciousness with Switzerland holding a referendum on the idea and I think some dbag from a tech incubator is “researching it.”

The Swiss referendum was pretty bad. I think 22% of people voted for it but supporters of UBI declared that a victory. I think they underestimate how many people would come out to be against it if it were more likely to pass though.

Most of the articles about UBI focus on the idea that AI is going to take everyone’s jobs and then a UBI will be necessary for actual people to have any money. Maybe that will happen but So what? If it happens we can vote for a UBI then! AI could take over a lot of things that humans do now without destroying many net jobs as long as people still value having people do things. Ever seen a sign outside of an ice cream parlor advertising their “hand-dipped” cones? People like a human touch, so as long as humans own the companies with the AIs and therefore make the money and can spend it, its very likely that they will spend it on having other humans do things for them. Already most people work in the service sector.

Another pro-UBI argument is that the current welfare state has high implicit tax rates for certain people, meaning like if a single mom on TANF gets a job she might lose nearly as much in benefits as she gains in earned income. That can be a problem, but it effects a fairly small number of people for a fairly small amount of income. If she starts making a decent amount of money her marginal tax rate will go back down. On the other hand, paying for a UBI at a level high enough for people to live on would require really high taxes on everyone so instead of a few people facing a high marginal tax rate on a small amount of income, everyone else would face a really high marginal tax rate on all their income.

UBI proponents like imagine that if people are free from the need to work they will do more innovative or creative things instead. There are a couple of reasons to disbelieve this. One is that in the US, most young people already have the equivalent of a basic income. Its called living at their mom’s house. See the movie “Stepbrothers” for an example. Since that’s available to the top half of the income distribution at least, giving it to everyone wouldn’t add a ton. Another reason why you should not expect to see a creativity boom if there was a UBI is the example of Saudi Arabia. For decades the Saudi government has employed most Saudi citizens in undemanding, well paying jobs. They could afford to do it because of their enormous oil wealth. What’s been the result? Saudi Arabia is not a tech hub. Culturally its backwards. They have to import people to do the actual work. No one will talk about Saudi Arabia or the other gulf states in the context of UBI but they are much closer to the real experience than most small scale western experiments.

Finally, UBI advocates say that we can get rid of a lot of the existing welfare system, including social security and maybe medicare with one simple program. That would be nice but here is the thing, what about people who squander their UBI payments? What about people who need more help, due to disability? We’d still need a welfare system on top of a basic income to avoid people starving in the streets. In my next post I will lay out an alternative vision for a basic income that also solves the immigration issue and everyone will hate it!