Universal Basic Income: How To Point, Fire, Aim With Macroeconomics

A universal basic income won’t be politically palatable or solve our core problems. But the good news is that we may not need it…

Politicians like to solve big problems with ideas they can reduce to quick soundbites. Unfortunately, they’re often in the business of writing laws and raising support for their ideas while faceless bureaucrats are left to try and implement them on the ground. Even if those ideas become difficult to fully deploy (like the ACA), or backfire when they fail to achieve what they set out to do (like No Child Left Behind), they gain legislative momentum and become extremely difficult to change. The politicians don’t want their signature accomplishments to be repealed and the bureaucrats really don’t want to get caught in the middle of trying to implement opposing, complicated laws only to relive the same battle in a few years. So when considering if a recently popular idea of giving everyone a basic income simply for existing will solve the human damage caused by globalization, automation, and an ever widening gulf between the 1% and everyone else, we should carefully discuss the implications and the consequences before doing anything rash and disconnecting work from the basics of living.

Now, don’t take criticism of the concepts behind Universal Basic Income as an argument in favor of the status quo. That clearly doesn’t work anymore, even for those benefitting from automation and global trade. For the people referred to as “the creative class” by pundits, the best case scenario is to be trapped in offices where managers are still mentally living in 1957 and with e-mail and IM to constantly prod them into doing just one more thing. For the traditional working class, the lack of work-life balance is a luxury as the choice is work for less and less when we account for inflation, to one day be laid off for a robot. Even worse, the trend is accelerating as more and more jobs are being done by software, reducing the entry level positions needed for workers to start climbing the corporate ladder, putting nearly half of all jobs at risk of being made obsolete. This is why techies everywhere almost suffered a collective aneurysm when they heard the inane statement by our new Treasury Secretary that AI won’t take any jobs from humans for at least 50 years, despite this exact thing happening for almost two decades now.

Self-driving cars and trucks, or just better AI-powered public transport, will take millions of human drivers off the road. Software that powers through paperwork in minutes eliminates the need for a mailroom, much less have anyone working there to start out with a company and build a career. And with ever smarter robots, fewer and fewer manufacturing jobs will require human intervention. So while companies will grow ever more profitable in the future and new plants are no longer built overseas for meager savings that will be eaten up by customs and licensing costs, they will end up with fewer and fewer people in their offices. Jobs will change to something a lot more like they were in the past, based around projects and on demand, and the cliche 9-to-5 gig will be remembered as little more than a historical blip that petered out after just four generations. They have to. The rules we all follow today for a normal workday or workweek come from factory jobs at the turn of the 20th century and were adopted by offices when the modern service industry took off in the 1950s, then never updated.

Proponents of UBI are on board with this logic and argue that this update to how we think about jobs and how we’ll work in the future has to entail what they see is an imminent break between capitalism and life. (Which is the cue the Six Degrees of Marxism players in the audience were expecting.) Since a machine army can do many of the jobs humans used to and we don’t really seem to have a plan or a need for more humans to catch up, isn’t linking all the basics required for their existence to jobs they’re probably going to lose a few years from now cruel and pointless? And what happens when all those people are completely obsolete in the new economy? With machines taking their jobs and not giving them back, how will they buy food? Afford to pay rent? Where will they live when their every potential source of income dries up? Would anyone be cruel enough to let people like this just starve on the streets because there’s no longer a job for them to do?

Unfortunately, the answer to that last question is yes, there are people who quite literally think they deserve whatever happens to them, both in a major political party with a lot of power, and among the traditionally liberal, pro-safety net peanut gallery growing sick and tired of populism. In the broader sense of the question, it would obviously be asinine to treat flesh and blood people in the same way we’d treat a junk car or a broken fridge. And it is a politically attractive proposition to just give everyone enough cash to meet their basic needs, and allow them to add on to this guaranteed income by working in a new job for which they can now receive training thanks to all those UBI stipends they can use to pay for tuition while keeping a roof over their heads and the lights on. But remember that the party currently with a majority in all branches of government spent a tenth of its healthcare bill on how to make sure no lottery winners get even a day of tax credit they don’t deserve. Can you tell me with a straight face they would ever be on board with UBI? It would take a generational shift to change their minds.

It gets worse. Keep in mind that the cost of living in every county, not just every state is different and this would have to be taken into account when your UBI check is calculated, which means there’s now some government agency tasked with figuring out what your budget should look like. There would quite literally be bureaucrats deciding how much you should spend on fruits and vegetables, and what meat you’re allowed to afford if you’re not also holding down a job giving you the income to buy more or better food or afford a higher rent or mortgage. (Incidentally, this is more or less the same problem as the “prebate” of the libertarian flat tax proposal runs into.) So imagine a future with a UBI where to save money, a very fiscally conservative caucus starts pushing for a bill to relocate those only living on UBI checks in places like LA, the Bay Area, NYC, Boston, Chicago, or any other booming major metro to somewhere with a far lower cost of living, in effect creating nationwide economic segregation.

Furthermore, when basics like education, healthcare, food, and housing are now 200%, 105%, 64%, and 61% more expensive, respectively, while workers saw their incomes stay flat after accounting for inflation, how would a UBI check help without additional steps being taken to somehow curtail all these price hikes? We’d have to keep adjusting it to keep up with rising costs, and while we could plausibly fund the first few years of UBI with money used to fund today’s byzantine, confusing, sprawling network of safety net programs by consolidating them into a single, streamlined one that sends checks to all citizens, we’d have to seriously consider raising taxes to keep covering those climbing costs of the basics. Suddenly, those still employed will wonder why they’re paying so people whose skills are unnecessary are getting all of their bills paid. And it won’t just be conservatives. In the wake of Trumpism, even outspoken liberals worried about the plight of the working class are feeling burned by Trump voters in dire straights, and publicly asking if maybe, just a thought there, but maybe they deserve whatever they get for hating liberals more than they’re willing to accept help if someone other than them might benefit from it because they think that the economy is a zero sum game.

Finally, it would be a big mistake to just assume that we’re close to a society in which machinery does all the work while we can collectively sit back and do whatever strikes our fancy. If anything, having machinery handle almost every mundane activity for us frees us up to create new careers and pursue completely different job paths where the emphasis is on creativity, learning, and research, not making X widgets to fulfill Y orders, or writing one more app to help place and track said orders. Unless we insist on keeping STEM-illiterate, out of touch, wealthy graybeards as our leaders, who are more or less no longer capable of realizing just how much the world has changed in the last 30 years, there’s no reason why we can’t revamp how we teach new and returning students for the jobs of the future, or invest in ramping up all sorts of research and development labs to fight diseases and explore space, to build the world of our retro-futuristic dreams with the help of AI and the vast armies of robot labor we’re creating today. It’s what we’ve been slowly but surely moving towards and idolizing in the West.

So, to recap, UBI would be a political nonstarter, create a lot of bitter class divisions that can be exploited by future politicians, wouldn’t address the structural problems leaving all of the millions it’s supposed to help in such bad economic shape, and that’s a cursory look at it with a critical eye, not even trying to figure out how employers would justify it for what would be effective pay cuts to their existing workforce. But with that said, there are cases in which something a lot like UBI would be extremely effective. When funded by combining and streamlining the existing spiderweb and red tape of various assistance programs into a single fund used to give out a simple cash stipend to those transitioning into new careers, much like Canada is planning to do with their employment insurance scheme, or make up the shortfall for people whose mental or physical disabilities would keep them from participating in the economy full time.

While the traditional 9 to 5 is slowly dying, the problems posed by global economic changes and code or robots taking over new jobs are all entirely solvable. We just need to start electing people who understand that there’s such a thing as change and can implement policies that move us forward to meet the future, instead of pretending that tackling problems that either do not exist, or they refuse to understand, will somehow help restore a golden age that exists only in their nostalgic, rose-colored memories. No UBI check can tackle the big issues they could and address the systemic problems that exacerbated every ill attributed to “globalism” by populist movements. Far from being close to death, capitalism is alive and well, just waiting for new societies with the education and skills to take advantage of its newest toys and useful tools. And a new generation of leaders who understand that it’s the government’s job to help make sure its citizens are productive and up to date with their skills, instead of passively expecting everything to just sort itself out with game theory and kicking those who are already down just a little harder so they’ll be incentivized to suddenly stop being poor.

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