When over two dozen Democratic presidential candidates launched their campaigns in early 2019, young entrepreneur Andrew Yang (who was polling below 1%) proposed a $1,000/month dividend to all American adults. At the time, the idea seemed about as likely to happen as the U.S. declaring war on Canada.
Fast forward to 2020: The pandemic and economic recession prompted widespread direct payments from the government for the first time in U.S. history. They were wildly popular and passed with bipartisan support.
Although the checks have been relatively small ($1200 last March, $600 last December, $1400 coming up), they represent the crossing of a Rubicon in American life. The once-unthinkable notion that the government can distribute cash with no middle man and no strings attached can revolutionize our politics. And as we’ve seen with entitlements, once the American people experience a relief program, they typically don’t want it taken away.
The Politics of UBI
The concept of universal basic income (UBI) is often associated with progressives. It’s indeed true that Yang’s idea picked up support from liberal-minded notables like Robert Reich, Keith Ellison, and even Pope Francis. It’s also true that right now a large majority (71%) of Democrats support UBI compared to only a minority (34%) of Republicans. But these numbers are quickly rising on both sides, and the partisanship surrounding the issue is quickly fading.
Support for UBI has the potential to span all quadrants of the political compass. Conservative intellectuals like Milton Friedman and Charles Murray have endorsed the concept of basic income. It fits nicely into the decades-long conservative goal of reducing the “alphabet soup” of welfare programs, replacing them with a disposable income that fosters autonomy and personal responsibility. The universal nature across all income levels helps quell right-wing fears of “redistribution”. As Friedman argued:
“It’s a system which would have the effect of eliminating the separation of a society into those who receive and those who pay, a separation that tends to destroy the whole social fabric”
Washington insiders — seeing the relative success of the 2020 direct payments — are warming to the idea. Mitt Romney has introduced legislation for universal income for families with children ($350 per month for each child under age 5, $250 for each child age 6–17). Progressives like Ed Markey and Bernie Sanders have been advocating for $2,000/month to every American until at least the end of the pandemic. Meanwhile, influential political outsiders like Elon Musk, Jack Dorsey, and Joe Rogan have voiced support for some form of UBI.
The Merits of UBI
In an increasingly automated world, UBI makes a lot of sense. As technology mechanizes our production, speeds up our distribution, and optimizes our time allocation, the sheer volume of necessary human labor decreases. This is a clear trend throughout history. After all, the point of inventing technology — from the plow to the steam engine to the computer— is to make our daily lives easier.
But as industries like transportation, storage, and manufacturing transform at exponential rates, people will inevitably fall out of work. While it’s hard to accurately predict the damage, studies estimate that as much as one-third of the American workforce will lose jobs to automation by 2030.
We can view technology as a net benefit that gives humanity the luxury of working less over time, but to do so we must use some of the productivity benefits to provide a floor. It’s what Yang likes to call “human-centered capitalism”.
Of course, the details of any UBI proposal matter. A bill linked with steep cuts to Social Security and Medicare is categorically different from a clean direct payment. The definition of what constitutes a “living” income will also be the subject of intense debate. I personally think that if our other welfare systems stay intact, $1,000 per month is plenty sufficient. I am cautious of proposals that appear populist but are net benefit cuts in disguise, which is no doubt the type of UBI that conservative “deficit hawks” will endorse.
Many people assume that we couldn’t possibly afford UBI, but it’s more feasible than you might think. Let’s look quickly at the math: ($1,000 per month) * (12 months) * (~250 million adults) = ~$3 trillion per year to pay for UBI. There are a variety of ways to make up that sum, depending on your priorities.
Reversing the 2017 tax cuts and phasing out other tax breaks can raise up to $1.5 trillion per year. Even a moderate cut to America’s enormous military spending would save hundreds of billions. New revenue could be generated by removing the cap on the Social Security payroll tax, implementing a financial transactions tax, etc. This is all assuming that politicians actually care about the balance sheet (most don’t).
The effects of UBI on economic growth and well-being are the subject of ongoing debate. I personally believe that the evidence from UBI trials in Alaska and Europe is encouraging. The bulk of this research suggests that UBI improves happiness, boosts consumer spending, and does not harm personal motivation.
The one thing that seems inevitable to me is that the U.S. will implement some form of universal income in the next decade. When millions of citizens face the reality of automation firsthand, the demand for such government action will increase. And unlike so many progressive ideas, UBI is not dismissed out of hand by billionaires and leaders of multinational corporations. When Jeff Bezos, Mark Zuckerburg, and Elon Musk all support something, it usually has a decent chance of happening.
America already has a universal income for everyone 65 and up, which we call Social Security. It’s not far-fetched to say that one day we will have Social Security for All.