UBI is a policy idea that has gained traction across political divides. Leftists see it as a method of income redistribution, and conservatives see it as a way to streamline government disbursements . There is also the cynical take that extremely wealthy libertarians see UBI as a way to keep the peasants from revolting. I’m sure that’s the case for a many of them.
But what even is the point of UBI, and why are people discussing it? The point in recent discussions of UBI in the context of modern-day politics in the United States, as I’ve written about before, is that automation threatens jobs. The example that has gotten used in mainstream discourse, such as by Andrew Yang in his 2020 presidential campaign, is that of truck drivers. We see plainly that self-driving vehicles are coming, and it is only a matter of time before a significant portion of vehicles on the roads are autonomous. Trucks will be among that group, because robots can be employed more cheaply than humans, and they can drive all night without sleeping. They also don’t need health insurance.
UBI addresses this in a way that minimum wages do not, because to get paid a wage you have to work. But, if automation vastly reduces the number of jobs available to people, what good is a higher minimum wage to everyone who is unemployed? UBI addresses this by being universal. People receive their disbursement regardless of their employment status. And, from an idealistic perspective, it is kind of barbaric in our age of abundance that people should have to work just to be able to eat and have a roof over their heads. UBI addresses that as well. The question is whether it addresses it in an effective fashion.
The answer to that is “it depends.” It can address it well, if it is done right. It can also be a disaster if it is just used to eliminate other welfare or entitlement programs. Any UBI that seeks to replace things like social security or Medicaid is suspect unless it is very big. Swapping out entitlements for a UBI that is of lower value to people who need help the most is a nonstarter for anyone concerned with social justice. That is the moral and economic equivalent to advocating for minimum wages that are below the poverty line. From my reading, Yang’s plan does not leave anyone worse off, so it is not a case of eliminating welfare with a lower-value UBI.
I don’t personally love Andrew Yang’s specific proposal for UBI, but I like that he’s talking about it, and I would not scoff at receiving $1,000 per month. That would do a lot for me. It would also do a lot for practically everyone I know, and it’s presently the best offer on the table. I just think that $12,000 per year is not a basic income. That’s below the poverty line in the United States. My own way of thinking about this is that, if UBI is meant to represent a basic income, and if we think a $15 minimum wage also represents a basic income, then why not set it at the equivalent of a $15 minimum wage and have it go up as the US GDP goes up? That is the most honest thing to do, and for a full-time job that works out to $30,000 per year, or $2,500 per month. By that math, Yang’s proposal isn’t even half of what a UBI should be. Keep in mind, too, that people who argue for a $15 minimum wage also argue for universal healthcare, so UBI should in theory be in addition to universal healthcare. Given the way healthcare and income are related — poverty always correlates with higher rates of disease and shorter lifespans — if one is a right, they really both should be a right. Yang has a Medicare for All proposal in addition to his UBI plan, so his Freedom Dividend is in addition to healthcare, which is good and appropriate.
A hypothetical UBI of $2,500/month works out to an enormous number for the roughly 250 million adults in the United States today. $7.5 trillion, to be exact, which is larger than the federal budget in the United States. But, that budget is based on a total revenue of $3.6 trillion derived from a $20.2 trillion GDP. In other words, only 17.8% of the US GDP is getting converted into revenue for the federal government. State government revenue is in the neighborhood of $2.0 trillion, bringing the total revenue captured by state and federal governments to about 27.7% of the US GDP. Most of the GDP that doesn’t end up with government ends up with the wealthy, piling into the trillions of net worth of the top 1%. The total amount of wealth held in private households and nonprofits in the United States is $95 trillion, but 90% of that is in the hands of the top 10%, and almost none of it is in the hands of the bottom 50%. And that says nothing of the vast stores held by for-profit corporations, which also run well into the trillions.
Between hoarded wealth and the vast amount of GDP not currently being collected by taxes, the money clearly exists to fund UBI if the United States has the political will to actually start taxing excessive wealth. There is plenty to fund a UBI that is set to a humane level such as $30,000 per year (and leave enough leftover for people to still get filthy rich if that’s what they want to spend their time doing), and until we start talking about UBI at a level that can sustain a happy, healthy lifestyle, then we are talking about UBI that is not great, but admittedly, better than nothing. If we are talking about a low UBI that also seeks to take funds from other entitlement programs such that the people of least means end up receiving less from the government, then yes, we are talking about a Trojan horse. If we are talking about a libertarian UBI that is a pittance designed to give people the bare minimum such that they don’t revolt, and hinges on the elimination of public schools, Medicare and Medicaid, social security, SNAP, and other programs, then we’re wasting our time. Fortunately, this is not what Yang is proposing with his Freedom Dividend
Regardless of any of this, the cataclysmic problem of accelerating automation in the workplace that UBI is meant to address is real. Jobs are being lost to automation daily, and it’s certain to get worse as robots become more sophisticated. We can ignore this and keep talking about minimum wage as though it will remain relevant, or we can figure out a system that doesn’t punish millions of people for not finding jobs in a world where human labor is of diminishing value.