Universal basic income (UBI) is a proposed government program in which every adult citizen may receive a set amount of money regularly. Most models of UBI advocate payment that is not based upon need, a detail that makes no sense to me and certainly will lead to both rejection by voters and will inevitably lead to corruption and waste of money. The proposed use and justification of UBI is to help offset the cost of basic expenses including minimally adequate housing, food, certain essential medications, child care, and others, for those who have an established need and do not have their own adequate resources to survive, i.e. need and resource-dependent.
Much of the renewed interest in UBI appears to be from a fundamental change to the economy—namely, the growth of automation—that threatens to leave many Americans without jobs that pay a subsistence wage = a livable wage, as opposed to the more often cited, but in practice inadequate, minimum wage.
The end goals of a basic income system would seem to be to alleviate poverty and potentially to replace other need-based social programs that require greater bureaucratic involvement. The world economies seem to be repeating past major changes in the economy (see works of Ray Dalio, Thomas Piketty, Neil Howe and the social scientist Peter Turchin), specifically during the industrial revolutions, the great depression, and world wars. The idea of UBI has gained momentum in the U.S. as automation and AI increasingly replace workers in manufacturing and other sectors of the economy. I have noticed increasing discussion of UBI in recent years, and I have attempted to assimilate for my personal use a position paper on this seemingly reasonable concept. Following are my thoughts, as a non-economist, on the overall issues.
The impact of the rapidly accelerating AI on the need for UBI
The advent of AI is laying a strong foundation for increased productivity and GDP growth, setting the stage for a future where UBI becomes not only possible but necessary. As technology continues to evolve and societies adapt to this 'new normal', we probably will witness a profound transformation in our global economic model.
What will ultimately be UBI's impact on economic inequality is a subject of much debate, and certainly resolves around implementation. Proponents argue that UBI can help reduce inequality by providing financial support to low-income individuals and families. However, critics contend that the effectiveness of UBI in reducing inequality depends on its design, funding, and UBI’s interaction with other social policies. For a comprehensive approach to addressing economic inequality, some experts suggest combining UBI with other policies that focus on wealth redistribution and asset-building programs. Leading economist thought-leaders in this area include Thomas Piketty (Capital in the 21st Century, and Gorbis 2017). In essence, UBI alone may not be a comprehensive solution to increasing economic inequality, and UBI’s effectiveness would depend on how it is implemented and integrated into broader social and economic policies.
How will UBI be applied specifically to those dealing with substance abuse issues?
Implementing UBIfor people in the throus of substance abuse and other addictive behaviors will definitely require a thoughtful, careful, and holistic approach that utilized current social and rehab services coupled with the cruel reality of drug dependency. Here are some considerations:
1. Identifying appropriate recipients: It's essential to identify individuals who are struggling with drug addiction, enlisting the help of healthcare professionals, addiction treatment centers and a wider outreach.
2. Tailored support: Customize the UBI program to address the specific needs of drug addicts. This could include additional funds for addiction treatment, counseling, and rehabilitation services.
3. Education and awareness: Invest in education and awareness programs to inform recipients about the importance of seeking help for their addiction and how the UBI can support their recovery.
4. Monitoring and evaluation: Continuously monitor the progress of recipients to ensure that the UBI is being used for its intended purpose only and that individuals are making efforts to overcome addiction. See my following comments on specific areas for appropriate and inappropriate use. Enabling should not be tolerated.
5. Collaborate with addiction treatment centers: Partner with organizations and facilities that specialize in addiction recovery to provide comprehensive support to recipients.
6. Prevent enabling: Ensure that the UBI does not inadvertently enable drug and alcohol addiction, destructive and anti-social compulsive behavious, violent aberant behaviors, and other by offering essential adequate support in the form of goods and services, rather than cash.
7. Access to mental health services: Many drug addicts also suffer from underlying mental health issues. AI will play an increasing role here. Provide access to mental health services alongside the UBI to address these co-occurring problems.
8. Rehabilitation and reintegration: Encourage and support drug addicts to seek rehabilitation and help them reintegrate into society with vocational training and employment support.
9. Social services: Make available social services like housing assistance and food programs to ensure that the basic needs of recipients are met.
10. Evaluate and adjust: Continuously assess the UBI program's effectiveness and make adjustments as necessary to improve outcomes and help recipients on their path to recovery.
Remember that addressing drug and alcohol addiction and compulsive,, violent or socially destructive behaviors is a complex issue, and UBI alone is unlikely to be the sole solution. It should be part of a comprehensive strategy to provide realistic support and opportunities for recovery.
An important issue is what exactly should be covered by UBI? To start this conversation, I offer the following list of areas appropriate for UBI funds:
- Essential medication and access to basic essential healthcare for all citizens,
- Access to basic safe food and shelter
Equally important, and to increase its acceptability by policymakers and citizens, we need a consensus on what should not be covered by UBI.
- Non-essential medications and medical procedures,
- Certain vaccines not already covered by government programs or mandates,
- Sex reassignment,
- Addictive drugs, including heroin, cocaine, methamphetamine, repurposed drugs without established benefit in humans, including xylazine and ivermectin, marijuana,
- Alcohol,
- Weapons,
- Elective recreational activities.
UBI, being universal, certainly has its critics and drawbacks:
- Cost and Sustainability: Critics argue that providing a universal income to all citizens can be prohibitively expensive for governments. Funding a UBI program could lead to substantial increases in taxation or divert resources from other essential public services, potentially straining national budgets [See the commentary by CBPP].
- Inequity: Some believe that a universal approach doesn't effectively target those in greatest need. UBI may provide unnecessary financial assistance to individuals who are already well-off while not providing enough for those facing severe economic hardships, potentially exacerbating income inequality.
- Workforce Participation: Critics argue that a universal income might disincentivize people from working, as they would receive money without the requirement of employment. However, studies have shown mixed results regarding the impact of UBI on workforce participation [UBI, U Chicago].
- Budget Allocation: Allocating resources universally to all citizens may not address specific societal challenges effectively. Critics suggest that targeted social programs could better address the diverse needs of different demographics and address specific issues, such as healthcare, education, or poverty reduction, more effectively [Money for Nothing. Brookings].
- Political Feasibility: Implementing a universal income may face significant political challenges and resistance due to concerns about its cost and potential economic consequences. This can hinder the feasibility of enacting UBI policies
Everyone asks: Where will all the money come from? Potential sources for UBI include:
- Redirecting the interest on national debt
- Diminishing foreign wars and military aid
- Expenses through the Military-industrial complex
- Revising the payment for pharmaceutical and healthcare complex
- Addressing Income and asset redistribution and maldistribution
- Collection of taxes from hidden assets
- Maybe a “needs test” for social services including social security, Medicare, and retirement before 65.
Criticisms of UBI
Despite its promise to curtail poverty and cut red tape, UBI still faces an uphill battle. Perhaps the most glaring downside is cost. According to the nonprofit Tax Foundation, former Presential candidate Andrew Yang’s proposed $1,000-a-month “Freedom Dividend” for every adult would cost $2.8 trillion each year (minus any offsets from the consolidation of other programs).
Yang, ever the dreamer, proposed covering that substantial federal budget expense, in part, by reciprocal shrinking the size of other social programs and imposing a 10% value-added tax (VAT) on businesses. He also proposes ending the cap on Social Security payroll taxes and putting in place a tax on carbon emissions that would contribute to his guaranteed UBI.
Whether that set of proposals is enough to fully offset the cost of the Freedom Dividend remains a contentious issue, however. An analysis by the Tax Foundation concluded that Yang’s revenue-generating ideas would only cover about half its total impact on the Treasury.
Among the other criticisms of UBI is the argument that an income stream that’s not reliant on employment would create a disincentive to work. That, too, has been a subject of debate, although certainly seems reasonable. Yang has suggested that his plan to provide $12,000 a year wouldn’t be enough to live on. Therefore, the vast majority of adults would need to supplement the payment with other income.
While UBI has its merits, including poverty alleviation and simplification of social welfare systems, there are valid concerns regarding its universality. Critics argue that it may strain government budgets, not effectively target those in need, and potentially discourage workforce participation, among other challenges. The decision to implement UBI in a universal or targeted manner depends on the specific policy goals and the economic and political context of a country.
Basic Income support for eligible needy citizens should, in my opinion, be universal for several compelling reasons:
- Simplicity and Efficiency: UBI should serve to simplify social welfare systems by providing a fixed, unconditional minimum sustainable floor income to every eligible citizen, reducing the need for complex means-testing and administrative overhead. The devil is of course in the details, centering around the words Eligible and Equitable. This simplicity may reduce bureaucratic inefficiencies and lower administrative costs, as discussed in the World Bank's guide on UBI.
- Poverty Alleviation: UBI should help reduce poverty by providing a financial safety net for citizens in need, especially those in vulnerable or low-income groups. It ensures that no one would fall below a certain sustainable safe basic livable income threshold, contributes to poverty reduction, and improves living standards (as mentioned by a recent Brookings Institution report).
- Economic Stability: UBI can stimulate economic activity by increasing consumer spending. When everyone has a guaranteed basic floor livable income, they are more likely to spend money on essential goods and services, thereby boosting demand and supporting businesses, as indicated by Investopedia.
- Flexibility: UBI provides eligible citizens with the freedom to choose how they allocate their funds, whether for education, healthcare, starting a business, or covering basic needs. This flexibility empowers people to make decisions that align with their unique circumstances, as noted by UNC College.
- Social Cohesion: UBI promotes social cohesion and reduces income and asset inequality by ensuring that everyone benefits from economic progress. It helps bridge income disparities and fosters a sense of inclusivity in society, as emphasized in the cited World Bank's guide.
- Future of Work: In a rapidly changing job landscape with automation, AI, and gig work, UBI can provide a safety net for individuals facing job disruptions, as discussed in CNBC's article on UBI in the USA.
In summary, a universal approach to UBI is an interesting, stabilizing, equitable approach to simplify welfare systems, could at least contribute to the alleviation of poverty, stabilize the economy, empower individuals, enhance social cohesion, and address the challenges of the evolving job market, making it a compelling policy option for the USA and many countries
UBI may provide a working solution to mass unemployment caused by AI-driven automation by offering financial support, promoting inclusive growth, stabilizing the economy, encouraging innovation, and allowing for policy adaptation to changing circumstances. However, the success of UBI in this context depends on its design and implementation alongside other supportive policies and programs.
This is a subset of my more complete discussion of UBI - a non-economist view. The complete article can be found on my personal blog https://dhmarks.blogspot.com/2024/02/should-basic-income-floor-be.html
Your comments are always welcome
References that I have found helpful.
Ray Dalio, Principles For Dealing With The Changing World Order: Why Nations Succeed And Fail.
Thomas Piketty, 2017. Capital in the Twenty-First Century
Neil Howe and Peter Turchin). The Fourth Turning is Here.
How do I get to UBI and post labor economics? Decentralized ownership and the new social contract, by David Shapiro. https://youtu.be/T3O_BNexdEg?si=PUqs0fe9g2V0VLAk
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