The idea of a universal basic income is being floated in the U.S. by Silicon Valley types who quite rightly see the possibility of serious social unrest should tens of millions of workers soon be losing their jobs to automation like self-driving cars, robot factories, and software bots. So, they say, let’s give everyone $10,000 a year as a universal basic income. Woo hoo, you, say, sign me up, free money is great!
Well, maybe not. First off, it would be really expensive. The only way it could be paid for is by sharply raising taxes on those still working and / or by slashing the federal budget of all of those pesky social spending programs. Maybe both. Raising taxes would be deeply unpopular and cutting social spending hurts those UBI is supposed to help. Also, what happens if after a few years, a new administration decides $10,000 a year is too much and cuts it to $2,000 a year? Second, all these proles just barely getting with their new income will be spending it mostly on basic goods and services, which means inflation will surely happen and those good and services will start costing more. Third, and most important, UBI after a generation or so would mean creation of a new prole class, ignored, unwanted, shunted off to live away from cities (because they could not afford to live in them anymore) while our sparkly new tech overlords live in increasing urban splendor, creating ever new ways to automate things and get rid of all those stupid human workers. Sounds like a new feudalism to me.
Automaton is coming. However the solution to millions of newly unemployed is not to shunt them off, separate them from society at large, and make them feel useless. Somehow, we need to find ways for them to feel useful and part of it all. Creating a new underclass is not the answer.
Its first hurdle is arithmetic. Looking at the world’s largest economy alone, a check of $US10,000 to each of 300 million Americans would cost more than $US3 trillion a year, according to Robert Greenstein of the left-leaning Center on Budget and Policy Priorities.
Where would that money come from? It amounts to nearly all the tax revenue collected by the US government. Nothing in US history suggests Americans are ready to add that kind of burden to their current taxes. Cut it by half to $US5000? That wouldn’t even clear the poverty line. And it would still cost as much as the entire federal budget except for Social Security, Medicare, defense and interest payments.
Thinkers on the right solve the how-to-pay-for-it problem simply by taking funding off everything else the government provides, from food stamps to Social Security. That, Greenstein observes, would actually increase poverty. It would redistribute wealth upward, taking money targeted to the poor and sharing it with everybody, including you and me.
There’s not a chance relying on UBI would be respected. Instead it would mostly create a new underclass.
But for those who can’t work or can’t find jobs — and there are millions of these people, and our country has nothing even approaching an answer for them now — a UBI could be a boon, so long as relying on a UBI for income is respected.