The Alternative Potential: Universal Basic Income
Within the past two years where Covid-19 has induced economic turmoil, devastated industries, and caused widespread job disruptions, the case for universal basic income has become increasingly strong. The proposal for a guaranteed universal basic income (UBI) requires the government to make a recurring certain amount of payment to an individual regardless of any qualifications or requirements. The idea of a UBI no doubt provides an alternative to marching straight back into Capitalism, yet there are many complications concerning the definition and feasibility of implementing a UBI.
The definition for a UBI differentiates across various interpretations, but there is a defining characteristic. The UBI is similar to many need-based programs, only that it contrarily states that all adults heedless of income and employment status are eligible to receive this specific monthly payment from the government. Indisputably, the adoption of such a program would intensify its strain on wealthy taxpayers or include an increase in value-added taxes; however, many UBI propositions have incorporated other sources of funding. For instance, Mongolia (the only country with an ongoing nationwide program) supports its citizens not through direct payments, but through making its citizens shareholders of a coal company named Erdenes Tavan Tolgoi (ETT) that would pay them regular dividends (Yorgun, 2020). This was locally named the resources-to-cash scheme, and in 2019-2020 the plan disbursed 96,480 tugrugs (USD 34) to each Mongolian citizen. Spain and South Korea were other countries that engaged in national UBI programs during Covid-19, the latter initiating in 2021. Within the United States, Alaska runs a UBI program providing an annual payment of $1000 to $2000 to each of its citizens based on revenues from coal and mining (A Guide to Understanding Universal Basic Income, 2021). The San Francisco UBI program targets artists and racial minority populations (A Guide to Understanding Universal Basic Income, 2021). While no existing country has committed to a long-term full-scale UBI, the merits that a UBI has in uplifting struggling lower-class individuals and slowing the widening income gap remain attractive arguments.
A more extreme advocation for UBI that applies specifically to well-developed countries was put forth by Robert Reich, former US Secretary of Labor and current UC Berkeley professor. Reich argues that the concept of scarcity bears relevance only to less-developed countries, and that in the case of economies of abundance, a minimum income will instead allow a better distribution of the abundance. He presents this argument through discussing technology as a double-edge blade, elucidating how it plays a role in improving life standards yet simultaneously widens the inequality of income, wealth, and political power. Technology, as Reich argues, generates tremendous returns to its well-fortuned owners and investors while displacing many workers. For example, the innovation of driverless cars and Uber are instances of conveniences that result in the unemployment of countless individual drivers. Consider also Amazon, which has benefited its consumers but displaces retail workers (Reich, 2016). Widespread displacement of workers from these industries has forced many to work in industries that robots are incompetent in, namely, the personal attention sector. These jobs, such as nursing or homemaking, require an element of emotional connection that artificial intelligence currently lacks. This increasing number of workers in a single sector results in excessive labor supply, effectively reducing wages and thus the phenomenon of a shrinking middle class. The lack of aggregate demand, increasing inequality, and widespread economic insecurity pose long-term challenges to the economy—ones that Reich proposes to solve through a universal basic income (Reich, 2016).
In reality, the execution of a guaranteed universal basic income stimulates much debate surrounding its attainability. Theoretically, there are many commendable rewards of the UBI. Reich, along with many other supporters of the UBI, regards a UBI to allow people to explore possibilities regardless of whether or not the product positively contributes to the Industrial Revolution’s definition of “high productivity.” This would include career paths in the arts and humanities, or lifestyle choices that currently do not provide monetary gain. The UBI also addresses the complication of the shrinking middle class, increasing inequality, as well as deteriorating work-life balance. It is, in many aspects, a needed solution that encourages individuals to pursue their interests or ideas that truly engages them in an enrichment of social and individual development.
Supporters of a universal basic income have claimed that existing social experiments all prove that providing a UBI would not disincentivize people from working (Hughes, 2020). As Reich states, “people want to work”; work, it seems, has become a presumed part of daily routine rather than an obligation. However, this justification is flawed. Even if an individual maintains their previous level of work when becoming part of an existing UBI initiative, there is no evidence to support that this would hold true when a nationwide inclusive UBI is implemented. Individuals who receive need-based financial support are a special case—they are incentivized to work due to general pressure around them. When everyone receives a guaranteed income, no one is the exception to payments, and the feasibility of such a scenario is thus highly questionable.
To achieve a guaranteed universal basic income requires tremendous reconstruction of current social values and views, a leap extremely hard to achieve. The question of where to draw the lines between a desired UBI and a system matching that of a controlled economy also lies unclear, as the latter experiment, as history has demonstrated, fostered an economic failure. The difficulty of an UBI lies in that of human psychology. Why or how would an economy sustain itself when work is no longer incentivized? Industries that require rigorous structure would no doubt collapse, especially those in financial areas. Whether or not there will be a way to at least gradually change the deeply-integrated ideas of what work is or should be, and whether the UBI will ever be recreated as a realistic notion, remain questions open to discussion.
Edited by: Andrew McArthur
Work Cited
Hughes, C., 2020. Opinion | Why Americans Need a Guaranteed Income (Published 2020).
[online] Nytimes.com. Available at: <https://www.nytimes.com/2020/05/01/opinion/universal-basic-income-coronavirus.html> [Accessed 15 November 2021].
Itsuptous.org. 2021. A Guide to Understanding Universal Basic Income [online] Available at: <https://www.itsuptous.org/blog/guide-understanding-universal-basic-income?gclid=Cj0KCQiAhMOMBhDhARIsAPVml-GBza2tTw6tH6z7SWupYYp-GArR1r8Zhh322SDMEss2iYiVE4-D1qQaAvucEALw_wcB> [Accessed 15 November 2021].
Jong, F., 2021. UBI self-defeating unless funded by rental value capture – Point A – RSF. [online] Schalkenbach.org. Available at: <https://schalkenbach.org/ubi-self-defeating-unless-funded-by-rental-value-capture-point-a/?gclid=Cj0KCQiAhMOMBhDhARIsAPVml-GmkukQFGk4MMXbOm_p-cgy50NyS54TbSRDbeyWZS4maVumP3Osa7saAvJ5EALw_wcB> [Accessed 15 November 2021].
Reich, R., 2016. Robert B. Reich: Technological Change and the Inevitability of Unconditional Basic Income. [video] Available at: <https://www.youtube.com/watch?v=YFhismScVq4> [Accessed 15 November 2021].
Yorgun, M., 2020. Mongolia’s resource-to-cash transfers | BIEN — Basic Income Earth Network. [online] Basicincome.org. Available at: <https://basicincome.org/news/2020/09/mongolias-resource-to-cash-transfers/> [Accessed 15 November 2021].
