Universal Basic Income: A brief history and exploration
When we discuss the future of work, how individuals should be compensated and what businesses should do to enforce fair pay, an old idea has resurrected — universal basic income (UBI).
Universal basic income is a model for providing all citizens a specific sum of money as a means to increase equality and eliminate poverty.
The idea isn’t new. Economist and philosopher Friederich Hayek endorsed it in the third volume of his trilogy, Law, Legislation, and Liberty. In 1962, the libertarian economist Milton Friedman advocated a minimum guaranteed income via a “negative income tax.”
In 1967, Martin Luther King Jr. said,
“The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”
Richard Nixon unsuccessfully tried to pass a version of Friedman’s plan a few years later, and his Democratic opponent in the 1972 presidential election, George McGovern, also suggested a guaranteed annual income.
In the United States, the idea is not only being discussed but tested. Some of the pilot programs are implementing a basic income of $1,000/month while other proposals set the amount higher but carve out a certain portion for healthcare coverage.
The Potential Benefits
The most obvious benefit of UBI is that every individual will be guaranteed money to make purchases for basic needs, such as food and shelter.
But those who support UBI say the benefits are much more substantive and long-term than everyone having money in their pockets.
A study released earlier this year on Finland’s UBI pilot program found that recipients reported greater well-being, less stress, improved mental and physical health and more confidence in their futures.
Another argument is that artificial intelligence and other technological innovations will make UBI inevitable. The increase in automation and elimination of factory jobs because of better machines are just two ways, some point out, that could drastically shape the future of work as we know it. UBI could protect everyone from the coming changes.
The Potential Downfalls
Critics of UBI often start with the price tag. The estimated cost would be $2.5 Trillion to $3.0 Trillion annually, no doubt a lofty investment.
Some say programs like social security and other welfare programs need to be eliminated with UBI. The problem with eliminating social security and welfare is they are complex systems that millions use and are benefiting from right now. Their elimination could severely impact users that rely on them, which would ultimately have a negative effect. Perhaps UBI could be implemented in a complementary fashion to existing social programs.
Others even worry a UBI would shrink the labor force, causing a decline in economic productivity. Would individuals be less inclined to work if they knew money was continuously on the way? Yes, critics say, they would; so much so that people would opt out of the workforce entirely. However, it seems this would be dependent on the individual and the amount provided. More research is needed on this topic.
Where to Start and What’s at Stake
What is the right amount? How would you begin to craft a UBI policy? Also, is this the best, fairest approach to include absolutely everyone? Who might be excluded and why?
Whatever is decided with UBI, and whether this idea gets traction, it’s important to consider not only the impact on individuals, but also to the economy, businesses, and the government.
Individuals
For the individual, I believe the way we think about work will completely change. Work will be less of a necessity and more purpose-driven. With a foundation, individuals can take more risks and be more creative. The gig economy may become more of the norm, rather than full-time jobs. Finding meaning in work may increase, or it may not. The question of fulfillment arises.
Businesses
On the business level, the question of how to attract and retain workers becomes critical. Also, what might be the impact on the concept of brands? With a base income, will employees or contractors care less about name brands or brands in general? The quality and fulfillment of work may be the only things that matter. Business models will begin to change with talent, costs, and positioning.
Society
On a societal level, we need to consider if providing a UBI will cause people to become lazy. How will people use their leisure time, especially as the use of AI and robots expands? We also must consider how our society can afford this massive shift, and answer the question: is universal basic income a necessity for this transition to a new economy? How will communities and governments change as a result?
Next Steps: Explore Policy through Civil Debates and Conversations
With many technological and societal changes underway, the future of work will look different than today. The Fourth Industrial Revolution will deliver a distinctive workplace and society, and we need thoughtful policy conversations to determine how a reasonable transition is possible.
Maybe the early conversations on universal income were ahead of their time and now is appropriate to engage in new policy debates. Some presidential candidates are proposing UBI. Rather than dismiss, we need to explore requirements for a transformed, better workplace and society.