Basic Income and the Future of Work

There was a time when the word “computer” referred not to the silicon-based digital computer that has revolutionized work in the last half century, but to flesh and blood employees hired to perform rote mathematical calculations. NASA once employed rooms of them to calculate flight trajectories for the emerging space program. These positions disappeared with the advancement of digital computing technologies capable of performing the same calculations with exponentially increasing speed, reducing a bustling warehouse full of employees to the small handful of programmers needed to encode the guidance problems for a digital computer to solve.

Compare any auto factory today with those of yesteryear and you find a similar phenomenon—robots have replaced a sizable chunk of the human workforce. The same is true of many mining and agriculture jobs. Computation, automation, and robotics have reduced the need for menial and sometimes dangerous human labor across broad swaths of the economy, while increasing production efficiency and vastly reducing costs to the end consumer.

With these revolutions has come a crisis of work which has still not reached its peak. Automation is taking the place of human laborers in areas of the economy once insulated from these effects. Self checkout kiosks have become more and more commonplace, reducing cashier staff in supermarkets and big box stores. Self driving vehicles are just around the corner, threatening to displace some 3.5 million trucking jobs. Chatbots are becoming increasingly more powerful and ubiquitous, reducing the need for call center workers. The A.I. revolution will not only affect low-skill jobs, but also make incursions into more repetitive cognitive tasks now performed by human workers.

Stated thus, the prognosis for the future of remunerative work looks bleak indeed. But there are also positive consequences and opportunities to be found in this technological revolution, as well as mitigations to the negative effects of the displacement of workers brought about by it. One proposed response to these trends is a universal basic income, or UBI, an unconditional payment issued regularly to all citizens.

UBI is an old idea, extending at least as far back as the American Revolutionary and pamphleteer Thomas Paine, who suggested in Agrarian Justice that a land value tax should be assessed on property owners and paid out in the form of a citizen’s dividend and old age pension. Similar proposals have been advanced since, but none have yet been enacted on a national scale. Mainstream interest in the idea has recently been rekindled largely through the presidential candidacy of Andrew Yang, who has made a citizen’s dividend funded by a value added tax his signature issue. Another candidate, Pete Buttigieg, has proposed a similar citizen’s dividend funded by a carbon tax.

As will soon become evident, the proposal of a universal basic income has many merits, extending far beyond its mitigating effect on the labor market displacements brought about by the A.I. and automation revolutions. The idea has faced much backlash, however, often being met with <incredulous look>, “Free money?! That’d never work.” <scoff>. As it turns out, many pilot studies have been done, in a variety of nations, localities, and cultural contexts, with results that may surprise the scoffers.

A common worry people seem to have in response to the suggestion is that giving people money with no strings attached is likely to encourage loafing and laziness. This intuition is quite strong in many people critical of the proposal, but the mass of empirical data we have seen from these multifarious pilot studies suggests that it is largely erroneous. Not only do we not see laziness as a result of receiving unconditional payments, the opposite seems to be true in many cases. Entrepreneurship, career and educational attainment, along with other measurable factors of economic and social well being have been shown to increase under these programs.

A Finnish study on basic income undertaken over 2017-2018 in fact found a slight increase in the number of days in employment by basic income recipients with respect to the control group not receiving payments:

The experiment did not have any effect on employment status during the first year of the experiment. The number of annual days in employment for the group that received a basic income is on average about half a day higher than for the control group. Overall, receipt of any positive earnings or income from self employment, either from the open labour market or the subsidised labour market, is about one percentage point more common in the treatment group.

Another pilot study in Uganda found that unsupervised grants as part of a youth opportunity program had the result of increasing the entrepreneurship and productivity of those who received them:

Grant recipients invest some in skills training but most in tools and materials. After four years, half practice a skilled trade. Relative to the control group, the program increases business assets by 57%, work hours by 17%, and earnings by 38%. Many also formalize their enterprises and hire labor.

One study of a Canadian basic income pilot did note a reduction in work, but primarily in two groups—new mothers and working teenagers still in school. It seems the worry that people will simply quit working when provided with a basic income is overblown. It’s also worth remembering at this point that one of the chief motivations for a universal basic income in the first place is the steady reduction in the need for human labor across the economy. It is not a shortage in the supply of labor we should be worried about, but a shortage in the demand for it.

Economic factors aside, one key takeaway from these basic income studies is the beneficial effects that the additional income had on several factors of well being among the people receiving it, including in areas which might seem unrelated at first glance. Such outcomes as fewer hospital visits, higher life satisfaction, more confidence in the future, increased ability to concentrate, and even increased trust in other people were noted as compared to controls in these pilot studies.

One of the most crucial, but often overlooked benefits of a universal basic income is its ability to enlarge the fundamental freedom of the citizenry. Proponents of capitalism often idealize the relationship between employer and employee as a mutually beneficial contract entered into freely among equals. This does not align with the economic reality faced by many, however. Franklin Roosevelt articulated this point in his Second Bill of Rights address, saying:

We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. ‘Necessitous men are not free men.'

If one is necessitous, one is thereby under duress in making employment decisions. If one must agree to whatever employment is presently available, no matter how disagreeable the conditions, or face destitution, homelessness, starvation, and hopelessness, one is no less coerced than if one were to have a gun placed to the temple. Lacking the ability to say “no” is a pernicious form of unfreedom, and leaves one exposed to all manner of exploitation. A universal basic income would provide for the most basic needs, preventing this coercion of necessity and allowing people to more freely choose a means of income they find meaningful and worthwhile.

At this point one might be thinking, “What about existing welfare programs? Don’t they provide for these needs as well as a basic income would?” There are several issues with welfare as it currently stands. One is the “poverty trap” effect. Because many existing welfare programs are not universal but means-tested, as recipients make more money, they can lose these benefits. This creates a perverse incentive such that improving one’s career leads to making less income overall, in turn leading to a vicious cycle that encourages the working poor to remain at the poverty line. A universal income, on the other hand, does not go away as one makes more income from other sources, meaning that there is no disincentive to career advancement or entrepreneurship, and no poverty trap as a result.

Another benefit of basic income over traditional welfare is the flexibility it affords to individuals and families. The no strings attached nature of a basic income allows people to spend or invest their money where it will benefit them most. The one-size-fits-all welfare programs that restrict expenditures to one class of expense, such as food or medical care, don’t allow this sort of flexibility, preventing the creative use of capital among recipients.

Perhaps some believe that restricting welfare recipients in this way serves to prevent misuse of funds, not trusting them to make wise economic decisions. It turns out, however, based on the experiments that have been run, that when you entrust people with the budgeting of their own basic income, they don’t spend it all frivolously, but instead invest it in their own present needs and in their future. The particular economic situations individual people and families face are not easily amenable to one-size-size-fits-all policies proposed by politicians or bureaucrats far removed from their particular circumstances.

The “universal” quality of UBI is also politically important for another reason. Traditional welfare has always been vulnerable to political attacks along class lines. Those who oppose welfare have too easily been able to exploit this class division, driving a wedge between those who receive welfare benefits and those who don’t by presenting those beneficiaries as '“takers” leeching off the hardworking taxpayer. By making basic income available to all citizens, this political weakness faced by traditional welfare programs is eliminated, turning what was once a source of division into a source of unity.

At this point, a skeptic might be saying “All this is well and good, but how do we actually pay for such a program? One thing to note is that UBI would allow the consolidation of other welfare programs under its own mantle, with its relative simplicity reducing bureaucratic overhead substantially. As for the general funding mechanism, several different proposals are on offer. Yang has proposed a European style value added tax as the primary source of funding, with other supplemental measures such as taxes on market speculation and polluters. A land value tax has been favored by others, starting with the first American to propose a citizen’s dividend, Thomas Paine. Buttigieg has proposed a carbon tax and dividend. Each has its own particular merits, and they can be combined to produce the level of revenue needed. Using some combination of these proposals, a modest basic income could be provided to all Americans. If we are willing to move beyond the constraints of the Reaganomics era, back to the sort of tax policy that prevailed over the American boomtimes of the 20th century, we could potentially provide much more than that.

Proponents of UBI can sometimes sound like doomsday prophets, heralding the collapse of vast sectors of the labor economy under the weight of A.I. and automation, and the wealth inequality that such a collapse would likely produce. There is another way to view these technological advancements, however, which involves rethinking our preconceived notions about the status of work in human life.

We are facing a future in which much of what humans now call work will be far more efficiently performed by robots or computer programs. This could be a bad thing, or a very good thing, depending upon how the fruits of this technological leap forward are distributed. On the one hand, it could lead to a situation in which the lucky few owners of the infrastructure of automation and A.I. become incredibly wealthy, while the bulk of the people suffers from the lack of market demand for their labor. On the other hand, the reduction in the need for manual, repetitive human labor created by this confluence of technological innovations could be one of the most liberatory advancements in the whole of human history.

In a world where immense economic value is generated without much need for human labor, humans are thereby freed to spend time in pursuits they find meaningful and worthwhile, rather than engaged in the drudgery that has been the lot of the average human laborer from time immemorial. Though there are those lucky few who have made careers out of doing something they truly love, the things most people today do for money are not particularly edifying or intrinsically valuable to them. Most people, out of the necessity of earning a living, sell their precious time and labor to others, in pursuit of ends that are not their own. Automation and A.I. may eventually offer us a future that currently seems Utopian and unattainable, if the wealth generated by these technologies is shared broadly—a future in which one’s life’s work is a labor of love rather than merely laborious.

Such a future may seem far removed from present experience, and skepticism is warranted, particularly within a political status quo that seems unwilling to grapple with any of the defining crises of our time, whether climate change, the ever widening wealth gap, the threat of anti-democratic forces around the world, or the emerging A.I. and automation revolution. The future, however, waits for no one. The automation of human labor is going to continue and accelerate. Whether we take action now to bend the future to our benefit, or by our inaction cast ourselves into the arms of a cruel fate, is a choice we must make.