What Should Universal Basic Income Look Like?

Andrew Yang made it news, but we need a better plan.

Livia Gershon | Longreads | September 2019 | 9 minutes (2,264 words)

Andrew Yang, presidential candidate, serial entrepreneur, and icon of Silicon Valley futurism, has a vision. As you know if you’ve ever heard his name, Yang supports a universal basic income, $1,000 a month paid by the government to every American citizen, from part-time baristas to millionaire bond traders. To Yang, the UBI, as it’s called, is the answer to nearly every question about the economy. For out-of-work machinists, it’s a cushion that would make it possible to reorient to a new job. For would-be entrepreneurs, it’s the cost of ramen and a bed while they hustle to get off the ground. For stay-at-home parents, it’s recognition and support for crucial unpaid labor. For down-on-their-luck towns, it’s an economic stimulus plan.

“This is the trickle up economy from our people, families, and communities—up,” Yang told Face the Nation in August. “It will create over two million new jobs in our communities because the money will go right into local mainstream businesses, to car repairs, daycare expenses, Little League sign-ups.”

The plan is ambitious. Yang estimates that it will cost $1.3 trillion, more than a quarter of the current federal budget. That’s probably part of its appeal to the mismatched collection of libertarians, former Bernie Sanders supporters, and tech guys who have helped put Yang within the top ten candidates in a crowded Democratic field.

The plan is also deeply flawed. Yang’s diagnosis of the problems that exist in the U.S. economy pits successful people against “normal” ones, preserves the status of the wealthiest Americans, and fits into a vision for federal spending that isn’t all that progressive. Yang’s campaign is doing an effective job of introducing the idea of universal basic income to millions of people, but it’s not showing how transformative a guaranteed stipend can really be.

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Over and over in debates and TV appearances, Yang has described automation as the key driver of economic change. “A wave of automation and job loss is no longer a dystopian vision of the future—it’s well under way,” Yang writes in The War on Normal People (2018). “There’s a growing mass of the permanently displaced. Automation is accelerating to a point where it will soon threaten our social fabric and way of life.”

For the moment, the trouble most people face isn’t being replaced by a robot, it’s being exploited by powerful companies.

In service of his argument, Yang showers readers with statistics and anecdotes: a devastating decline in factory jobs since 2000 and a rise in the number of potential workers who aren’t in the labor force; a computer program that can write a financial brief as well as a human can and a machine that can 3D print a passable pizza. “Right now some of the smartest people in the country are trying to figure out how to replace you with an overseas worker, a cheaper version of you, or, increasingly, a widget, software program, or robot,” Yang writes. “There’s no malice in it. The market rewards business leaders for making things more efficient. Efficiency doesn’t love normal people. It loves getting things done in the most cost-effective way possible.”

But Yang’s warnings about automation don’t stand up against much scrutiny. The unemployment rate is remarkably low right now, and many of the workers who left the labor force in recent years have since reentered it. For all the jobs that have disappeared from factories, others have opened up in health care and food service, and there’s little sign of 3D printers and robots replacing line cooks and nurses any time soon. Even Yang’s go-to example, self-driving trucks replacing decently paid drivers, is less clear-cut than it might seem. No one really knows how long it will take to get vehicles driving themselves safely on all kinds of roads in all kinds of conditions. Even if technology advances rapidly, self-driving trucks will still need human support for quite a while—a driver on board monitoring the AI or someone watching the truck remotely, and maybe a human to take the wheel once the truck gets off the highway and has to deal with cyclists and potholes on city streets.

The end-of-jobs rhetoric isn’t completely implausible in the long term. It could be that advances in machine learning and robotics will eventually transform the human relationship to work. But for the moment, the trouble most people face isn’t being replaced by a robot, it’s being exploited by powerful companies. The drop in manufacturing jobs matters because it represents a shift: from work that unions spent decades improving to service positions, which employers have largely managed to ward off from labor-organizing. Journalists aren’t being replaced by story-writing AIs, they’re being squeezed out by Facebook and Google, which maintain a stranglehold on ad revenue. Drivers may have to worry about autonomous vehicles someday, but their biggest problem at the moment is companies like Amazon that demand high-speed deliveries but deny employees the pay, benefits, and protections that union companies like UPS traditionally provided.

At times, Yang acknowledges that automation isn’t, in fact, destroying all jobs. He notes that there are growing opportunities for home health care aides but writes that “former truck drivers will not be excited to bathe grandma,” particularly since these jobs are low-paid and offer few benefits. He offers no suggestions about who should do this necessary work—which is performed mostly by women of color—and he presents no proposals to raise salaries or interest in domestic labor.

By talking about disappearing jobs rather than stagnant wages and degrading working conditions, Yang plays into the grandiose self-image of Silicon Valley. Technology only solves problems, according to this view, it doesn’t cause them. Per Yang, the “smartest people in the country” aren’t maliciously exploiting workers for profit. They’re simply creating a better, more exciting world that, unfortunately, leaves “normal” people behind.

His plan takes care not to offend his friends and colleagues in the investor class: it would be funded with a value-added tax, of the kind imposed on goods and services to fund social programs in many European countries. People who receive benefits like food stamps or disability payments would have to give them up if they want to opt into Yang’s UBI. Ultimately, his message isn’t so much a challenge to economic inequality as it is a claim to offer non-ideological assistance. One of his campaign t-shirts reads, “Not left. Not right. Forward.”

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The notion of universal basic income has a long history. In 1795, Thomas Paine, inspired by his encounters with the Iroquois, wanted to give a one-time payment to every 21-year-old, followed by a lower payment each year after they turned 50. Around the same time, leaders of Berkshire County, England, met in the village of Speenhamland, where they decided to confront civil unrest and destitution by providing a universal stipend for the poor. The Speenhamland system, designed to make sure everyone could afford bread (whether they were considered “deserving” or “undeserving”), quickly spread across communities in southern England. The system shut down three decades later, however, after a government commission linked it to public ills such as idleness and overpopulation. Writers from Thomas Malthus to Karl Marx decried Speenhamland as a symbol of the evils that undermine work ethic. But in the 1960s and 70s, historians began reconsidering Speenhamland’s impact, and found that the commission had reached its damning conclusions based on preconceptions about labor rather than evidence.

Since then, the notion of income support has bubbled up all over. In the United States, in the 1960s, a guaranteed basic income or negative income tax—essentially topping off the earnings of anyone whose pay fell below a certain threshold—was a mainstream concept embraced by free-market lovers such as Milton Friedman and Richard Nixon; Martin Luther King, Jr. was a fan, too. Today, the idea attracts appeal across the political spectrum: libertarians like Matt Zwolinski, a philosopher at the University of San Diego, argue for replacing existing public welfare programs with an income guarantee to reduce bureaucracy and loosen the government’s control over people reliant on social services. Liberals like Andy Stern, a former president of the Service Employees International Union, say that a UBI would give workers more bargaining power by letting them turn down exploitative labor.

By talking about disappearing jobs rather than stagnant wages and degrading working conditions, Yang plays into the grandiose self-image of Silicon Valley.

Recently, governments and nonprofits have rolled out UBI trials around the world. In Finland, a pilot program gave a randomly selected group of unemployed people a basic income of $632 a month between 2017 and 2019. It found that the extra cash gave people a greater sense of happiness and security, even if it didn’t significantly improve their job prospects. In Ontario, a pilot program ended prematurely after a new government came to power. In the U.S., small local programs have been rolling out in cities including Stockton and Oakland, California and Jackson, Mississippi. So far, anecdotal evidence suggests that these trials are reducing participants’ stress and improving their sense of well-being.

The idea of an income stipend has been part of the mainstream political debate in southern Africa for years. Since 1998, South Africa has had a large and growing child grant program—essentially a near-universal basic income for anyone under 18—which helps support more than 12 million kids. From 2007 to 2009, Namibia had a promising basic income pilot program. Botswana has a longstanding program of cash and in-kind transfers that is one of the most extensive in the developing world.

In Give a Man a Fish (2015), James Ferguson, an anthropologist at Stanford University, argues that the appeal of income supplements in southern Africa is related to its history with colonial exploitation and appropriation of mineral wealth. A politician speaking to poor youth will declare that South Africa is a rich country and ask, “To whom does it belong?” The answer is that it belongs to South Africans, the politician says. “And if it’s ours, then why do we not see any of the benefits?” Ferguson argues that this line of reasoning makes sense even in places where exploitation is less visible, and where wealth comes not from mineral extraction but capital-intensive production. “In fact,” Ferguson writes, “a high-tech factory is today not so different from an oil rig—a huge piece of capital investment that, once in place, pumps out unimaginable amounts of valuable stuff with only small amounts of supervisory labor.” When it comes to profit, he continues, “The key claim here belongs not to the wage laborers but to the members of society, the true originators of economic value.”

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That way of looking at wealth—as a product of society, not of individual tech entrepreneurs—could lead us to a different UBI model. Matt Bruenig, founder of the People’s Policy Project, has sketched one out. Where Yang’s plan takes off from the questionable assumption that automation is killing jobs, Bruenig’s begins with a proposition that’s already true: the richest one percent of Americans owns more wealth than the bottom 95 percent combined. Meanwhile, only 60 percent of American income comes as compensation for labor, which means that 40 percent is earned by virtue of owning stocks, real estate, and other things that don’t involve clocking in. “There’s a small class of people at the top of society, and they own almost everything,” Bruenig told me. “You have a group of people that is able to dominate others.”

Breuenig’s plan builds on an idea conceived by socialist economists in the twentieth century, which Sweden tried out in the 1980s. The plan was to gradually transfer ownership of corporate stock to public funds. Sweden’s initiative succeeded in buying up seven percent of corporations’ stock, but was shut down after a few years, when a more conservative government took over the country.

In the United States, Bruenig proposes creating a national fund that would buy stocks, bonds, and other assets, possibly by using a big tax on capital to raise the initial investment. All adult citizens—perhaps excluding seniors, who already receive Social Security—would have a share in the fund and receive dividends from it each year. As owners, individuals would have the same rights to help steer their course as any other shareholder. To make that work, Bruenig suggests, people could vote by proxy—for example, by assigning their rights to an environmental nonprofit or labor group. In this way, Americans could have influence over corporate leaders just as they do over elected officials.

Nothing quite like this exists now, though Bruenig draws comparisons to the Alaska Permanent Fund, which puts some of the state’s oil royalties toward an annual check to all state residents, and to a similar, much larger, program in Norway. He also notes that the United Kingdom’s Labour Party has endorsed the concept of an “Inclusive Ownership Fund,” which, like his plan, brings the idea of shared wealth solidly into the mainstream. “It’s not totally pie-in-the-sky,” he said.

Looking at wealth as a product of society, not individual tech entrepreneurs could lead us to a different UBI model.

Universal basic income still isn’t particularly popular among Americans, even with a high-profile advocate in Yang. At least in the short term, there are more promising ways to address inequality and corporate misbehavior, including the old standbys: regulating companies, taxing the rich, and encouraging the growth of unions. In the longer term, we might continue to develop the idea.

Ferguson, for one, hopes to someday distribute money across national borders through a global UBI. “If the proverbial ‘man’ were to receive neither a fish nor a fishing lesson but instead a binding entitlement to some specified share of the total global production,” he writes, “then (and only then) would he really be fed for a lifetime.” If AI-based automation really does eventually take all our jobs, or if capitalists continue apace in concentrating wealth, that proposal may gain wider appeal.

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Livia Gershon is a freelance journalist based in New Hampshire. She has written for the Guardian, the Boston GlobeHuffPostAeon and other places.

Editor: Betsy Morais

Fact-checker: Samantha Schuyler