Facebook's CEO Mark Zuckerberg's commencement address to Harvard's class of 2017 on May 25 included a suggestion that appears to be gaining increasing support among contemporary business leaders. In his address Mr. Zuckerberg proposed that: "we should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas." For us, on the west coast, this came on the heels of a similar recommendation made by Tesla CEO Elon Musk and Y-Combinator president Sam Altman, which was quoted in an article written by Marisa Kendall for the Bay Area News Group, and published on May 21st. Initial responses to these suggestions indicate that the concept is not well understood by the public at large, and, for many, appears to be something entirely new and coming out of left field.
A substantially similar proposal was first published in 1797 when Thomas Paine, in a pamphlet titled "Agrarian Justice," advocated for what he called "asset based egalitarianism," a social insurance system for young and old financed by a 10% tax on inherited property. During the 1960s and 1970s other proposals emerged. Economist Milton Friedman, in his book "Capitalism and Freedom" (1962), proposed a "negative income tax," while Austrian Nobel Laureate economist Friedrich Hayek in "Law, Legislation and Liberty" (1973) made the case for a Universal Basic Income as well. President Nixon once even contemplated a policy that would have provided "unconditional income for all poor families." (Rutger Bregman, "Nixon's Basic Income Plan," Jacobin, May 5, 2016.)
A Universal Basic Income (UBI) refers to a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money in addition to any income received from elsewhere. With technology and automation changing the labor market at an increasing pace, and as new technologies replace working conditions, in many minds the question for the future becomes how to best provide economic security for all. Former Secretary of Labor Robert Reich produced a column entitled: "The "iEverything and the Redistributional Imperative" (March 16, 2015). In it Reich postulates a little gadget called "iEverything"," which will give us anything we need, and which will be here before we know it. He suggests, however, that once it arrives we won't be able to buy it, because there won't be any paying jobs left. Researchers estimate that almost half of all U.S.jobs are at risk of being automated in the next two decades. Reich and others conclude that because of the speed of technological change a universal basic income will eventually be inevitable.
It is tempting to compare today's technological revolution with the industrial revolution that started in the mid 18th century. Both of these significantly transformed society. At a superficial level, however, we should recognize two important differences. The industrial revolution matured over a period of a hundred years or so. The pace of change was relatively slow, giving workers more time to adjust. Although many workers were shifted from being highly skilled and valued specialists into a fairly cheap, easily replaceable unskilled labor force, they did not typically lose their ability to make a living. The revolution we are experiencing today is much more rapid, giving many workers not enough time or resources to shift into new marketable skills. Elon Musk and others foresee an impending robot revolution expected to leave a trail of unemployment in its wake. "Futurism," a newsletter designed to "cover breakthrough technologies and scientific discoveries that will shape humanity's future," report that robot to worker ratios are rapidly increasing, currently running from 1.64 per 100 workers in the U.S. to 4.78 per 100 workers in South Korea. It projects that occupations like insurance underwriters, farm laborers construction workers, fast food cooks, truck drivers and mail carriers are among the many that are at risk.
Proponents of the UBI approach argue that it will free welfare recipients from the paternalistic oversight of conditional welfare-state policies. They suggest that traditional welfare schemes create a disincentive to work, because they cause people to lose benefits at the same rate that their income rises. They project that UBI will be affordable because it serves as a substitute of a wide range of social welfare programs. Since most people are above the median income level, they will, in fact, financially underwrite a basic income for all through their income tax. They look at UBI as a promise of equal opportunity, and a new starting line set above the poverty line. Opponents basically disagree on all counts. Even though they might support the "trickle down" concept, they don't see it here.
Several countries have experimented with some form of UBI. Alaska implemented its own brand in 1982. Its system is called the Permanent Fund Dividend (PFD), which is derived from earnings on investment of the Alaska Permanent Fund (APF), a portfolio of diversified assets. Because of market fluctuations, the amount given to Alaskan residents vary. Canada, Finland, The Netherlands, and numerous developing African countries have also started to experiment with this approach. In June of 2016 Swiss citizens participated in a referendum asking whether a form of UBI should be incorporated into their constitution. The proposal was to provide a monthly income of 2,500 Swiss Francs to each citizen. It failed with 76.9% of voters voting against.
Even though many are still uncomfortable with the idea of giving people money simply for being a citizen, the heightened interest in these kinds of proposals suggest that intelligent people from all walks of life contemplate an impending need to address the negative consequences of a technological revolution that continues to pick up speed. Current conditional welfare-state policies may well be obsolete, and need rethinking.
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