By Tomiwa Adayemo, Staff Writer
In my previous article, I discussed income inequality and its potential consequences, and argued that addressing tax avoidance should be the first step in addressing income inequality. This week I would like to discuss yet another proposal that deals with income inequality: A Universal Basic Income, a proposal where each citizen receives a fixed, guaranteed sum of money per month, regardless of employment status.
I decided to seriously look into Universal Basic Income after I listened to the Joe Rogan podcast with Andrew Yang, an entrepreneur and 2020 democratic presidential candidate. In the podcast, Yang elaborates on the rise of automation and why he believes that a UBI, which he smartly rephrases as a “Freedom Dividend,” is not only the right thing to do but also necessary. Whatever your political leanings, Yang makes a variety of solid points that any opponent would find hard to counter.
Courtesy of Andrew Yang
Before delving into UBI and the arguments for and against it, it would be helpful to set the scene. The year is 2019 and automation is rapidly occurring in many sectors of the economy, siphoning and eliminating previously attractive jobs. Manufacturing jobs are often cited as the first casualty in the progress of automation, but the truth is millions of jobs have been automated away and millions more are on the chopping block in the coming years. Forrester predicts that in 2018, automation will cause the destruction of 13 million US jobs as it creates 3 million. In 2021 it predicts 9 million US jobs will be destroyed and non-created. Notice that far more jobs are being destroyed than created, thus drastically reducing the offsetting potential of automation. Some argue that a simple and practical solution to automation would be to re-train the individuals that have lost jobs. This would be fine but for the simple fact that it is impractical to assume that someone who has worked his/her entire life in a certain field will be able to seamlessly transition to another. A small minority will. The overwhelming majority won’t. Truck drivers are not going to suddenly develop a passion for coding. Furthermore, government funded retraining programs have an abysmal success rate in the range of 0-15%.
Courtsey of International Business Times: The Robots are here
Given these facts it’s not hard to see why an allegedly radical proposal like a UBI can be touted as the light at the end of a tunnel. In addition to softening the blow from people who lose their jobs to automation, a Universal Basic Income would also encourage entrepreneurship. People would be more emboldened to take risks with business ventures because the presence of a UBI will soften the blow of any failed ventures. Failed entrepreneurs will be less likely to end up on the streets begging for scraps. The presence of a UBI would also put more disposable income in the hands of consumers, boosting the economy. Yang argues that a UBI would be the “greatest catalyst for new jobs, entrepreneurship, and creativity we have ever seen.”
The potential cons of a Universal Basic Income are just as numerous. The most often cited argument is that the presence of a UBI would discourage individuals from looking for work. After all, why would anyone work if they will get a fixed sum that will take care of their basic needs. It’s a good question, and the solution to this can be found in the words of conservative economist Milton Friedman who proposed a rebate that would be “low enough to give people a substantial and consistent incentive to earn their way out of the program.” The second most frequently cited argument against a UBI is the cost. Estimates of the cost of implementing a UBI are in the trillions of dollars which sounds astronomically high until you realize the United States is already spending trillions on at least 80 welfare programs. Moreover, a UBI can be modified to reduce cost. In the first paragraph I defined it as a fixed sum given to every citizen. It could be a fixed sum given to every citizen over 18 and citizens who earn less than 10 million dollars a year. Policies to clamp down on tax avoidance could be implemented and the marginal tax rate on people who earn millions increased, with the tax rate on people who earn billions radically increased. Conditions could be added to the program like becoming a felon means you forfeit your right to your dividend. This will kill two birds with one stone, reducing both poverty and crime. A UBI would indeed be expensive, but to label it as idealist is, in my opinion, inaccurate. It’s very much practical and its already in effect. Alaska’s Permanent Fund Dividend (PFD) pays nearly everyone in the state $2000.
The robots aren’t coming, they’re already here. Millions will lose their jobs and a lot do not have the skills to compete in the modern-day workforce. We’ve already gotten a glimpse of the impact of this. In 2015 more Americans died from drug overdoses than from car accidents and gun homicides combined. A major factor? Unemployment. Towns in which manufacturing jobs were lost saw the most increases in opioid deaths. A study from the National Bureau of Economic Research finds that as the unemployment rate increases by one percentage point in a given county, the opioid-death-rate rises by 3.6 percent, and emergency-room visits rise by 7 percent. Whatever your ideological leanings, it’s time to seriously take a look at a Universal Basic Income. Personally, I believe it’s time for the richest country in the history of the world to begin properly taking care of its citizens.