The Universal Basic Income UBI debate has been revived because technological progress is changing the relationship between the individual and the economy. The nature of jobs and wealth in today’s world has called many to question the current economic order and seek alternatives.
These developments in particular are driving the basic income debate:
- The economy in a number of nations; including the United States, is no longer capable of providing full employment. That is a job for everybody that wants one, or has the capability to work. The cause of this is automation and digitalization which eliminate the need for many workers.
- Our existing mechanism for wealth redistribution; jobs, is no longer working. The bottom 50% of Americans own just 12.8% of the wealth, as recently as 1970 they owned 20.8% research by economists Thomas Piketty and Emmanuel Saez indicates.
- Wealth is increasingly no longer tied to jobs in today’s world. Income inequality is growing; because most wealth in today’s world is generated by investments and technology. This favors the wealthy; who own the machines and investments, at the expense of the middle and working classes who rely on salaries for income.
- Research by Piketty indicates that the incomes of the wealthiest one percent of the Americans grew by 300% over the last 30 years. During the same period the incomes of the poorest 50% of Americans stayed flat.
- Existing welfare arrangements are not designed to deal with this situation. For example unemployment insurance offers relief for short term joblessness. Benefits might not be available to a person who finds a “job” that pays far less than one lost to automation.
- The existing welfare system in some countries discourages work. An unemployed worker that takes a job might trade a reliable benefit for an unreliable wage. Welfare benefits might actually be more valuable and useful than some jobs. In the United States, an unemployed person that takes a job might lose Medicaid, and have to buy an expensive health insurance policy. This encourages many people not to work or to work off the books for cash.
- The existing bureaucratic social services system is inefficient, expensive and often fails to provide aid to those who need it. For example a person might be denied benefits because he or she or owns a car, owns real estate or stocks, has a bank account or works at a part time job.
- Many people in today’s world; such as gig economy workers, are in situations that the welfare system was not designed to deal with. An Uber driver faced with a slow stretch; or an injury that prevents her from driving, might be ineligible for benefits even though she is completely broke. A person working at a part time “job” is “employed” but might not make enough money to rent an apartment, yet she might not qualify for benefits.
- Modern technology such as digital wallets and payment apps makes it possible to cheaply and quickly distribute money to large numbers of people with little or no bureaucratic infrastructure. This means UBI might be cheaper than modern welfare systems which require legions of highly paid clerks and social workers to function.