The Indignity of Universal Basic Income

There is an increasing push to implement some form of Universal Basic Income (UBI), especially among tech elites who believe that advances in robotics and artificial intelligence will bring about mass technologically-driven unemployment. Andrew Yang, the founder of Venture for America, is running for president on the belief that a UBI will resolve many of the woes of the losers of economic transition in recent decades. There is something to be said for the idea of UBI as a more efficient replacement for today’s bureaucratic welfare systems. And if it were somehow feasible, it would certainly attest to the great wealth accrued by rich nations. Its virtues in theory, however, don’t negate the problems of proposing it as a response to anxieties about automation.

The intentions of today’s UBI advocates bear only a passing resemblance to the arguments from efficiency or the moral desert of citizens that once were cornerstones of the debate. Instead we hear of UBI as the only option for dealing with the threat of mass automation. Even Yang, who has run a quite positive and optimistic campaign about the future, takes for granted the reality that mass automation will create a class of losers. These arguments for UBI carry with them a stench of elitism, with the belief that as technologies improve, the labor of the masses will inevitably become less valuable. As a result, it is easy to see UBI as a policy incentivizing elites to care less and less about the structural problems that affect working class people, preferring to simply buy off their complacency.

This complacency becomes more likely if UBI is implemented as a first response to the problems of technological transition. As new technologies change the economic landscape there will undeniably be significant job churn, but the long run implications of this churn depend on short run decisions. If, in the short run, companies invest in creating more human jobs, managers are more attuned to the benefits of human workers and seek to leverage them alongside machines, and policymakers remove labor market barriers that make finding a job more difficult, then the long run effects will be more and better jobs. If, however, policies take short term unemployment as a given, and implement a UBI to spur demand while not fixing structural issues, the types of jobs created in the long run will not be those that provide more opportunity. The belief that UBI will allow people time to retrain and search for employment neglects the important role that policies like this play in shaping the types of new jobs being created.

Should UBI diminish the need for structural change in the short term, it will make these changes even harder to accomplish in the longer term. If automation continues apace without emphasizing the need for humans throughout, and labor market barriers continue to prevent adequate matching, encouraging more automation, the magnitude of future changes needing to be made would increase. This difficulty would present a challenge for policymakers, whereas the lever of the UBI would appear as a solution. It is easy to imagine that once a UBI is in place, it would be seductive to simply raise the amount paid out rather than address real issues.

This represents a fundamental indignity to workers. UBI as a response to automation does not tackle head on the opportunities and challenges of the new digital economy. It does not address competition dynamics online, nor does it address inequality. It doesn’t introduce market mechanisms for data that would allow for competition to flourish. It doesn’t address tax structures that make capital preferable to labor. What it does do is make addressing these issues that much more difficult. Moreover, it does nothing to reduce either dependency or state control over economic activity.

A UBI as a response to automation is a solution that prefers to buy off the silence of displaced workers while allowing entrenched elites to reap the majority of the benefits of new economic opportunity. This is not an optimistic vision, but an arrogant one.