Universal Basic Income or Basic Income

A 21st Century Political Question

This work will assume government programs like welfare, food stamps, Medicare, the earned income tax credit, and the like have benefited society. This paper will assume that if America was to abolish entitlement programs, America would be worse off. Perhaps if welfare was entirely replaced by private charities, poverty would no longer be with us, but this paper will assume otherwise.

This paper will also draw a distinction between Universal Basic Income and Basic Income. UBI is a system in which everyone (poor, rich, whoever) receives a certain amount of money every year, while BI is a system in which only certain people who don’t make a certain amount of money receive money from the government. The first isn’t means tested, while the second is means tested. Currently, I think most people who hear about UBI conflate it with BI and assume UBI is means tested, because by “universal,” there seems to be two understandings:

1. UBI assures that everyone in a country will make at least $10,000 or so a year, and hence every year, in a country, everyone receives $10,000—no strings attached.

2. UBI assures that everyone in a country will make at least $10,000 or so a year, and hence those who make over $10,000 receive nothing, those who make $8,000 receive $2,000, those who make nothing receive $10,000, and so on.

In this paper, the term “UBI” will refer to definition one, while “BI” will describe definition two. These distinctions made, some positions to consider:

1. UBI with welfare is likely unaffordable, unless UBI proved an incredibly insignificant sum.

2. UBI without welfare might lead to a diluting of the aid those in need receive: people on welfare will be worse off under UBI. Additionally, UBI would probably cost more than the current welfare/entitlement state, though the removal of welfare bureaucracy may increase efficiency.

3. BI with welfare might be affordable, and may provide needy Americans with extra income, no strings attached, that they could use on whatever needs they know they have that welfare fails to provide. 

4. BI without welfare might be affordable but would need to be high enough so that those on welfare received the same amount of aid and so that it was politically viable. If BI proved to be more efficient than welfare, to increase the sense of dignity those had receiving it, and other possibilities, even if it cost the same as welfare, BI would easily be worth implementing, but admittedly all that would be accomplished is one welfare would be traded for another.

Note 1:

To determine if BI or UBI was affordable and perhaps even cheaper than the current welfare state, we would have to determine how much money would be saved by erasing the entire welfare state (tax loopholes, tax credits for children, food stamps, Social Security, etc.) and then calculate the costs of BI at $10,000 per qualifier, then $15,000, and so on until we determine what is the most we could set BI and still break even. After we determine the numbers, if there were certain welfare programs we wanted to add back, we could, lowing BI as needed. Do note that it would be important to make sure that BI is not less in benefits than the amount those on welfare currently receive.

Note 2:

An appeal of UBI over BI is likely in the name of simplicity: everyone would receive $2000, for example, no questions asked. It would be deposited into everyone’s accounts electronically. Not only is the simplicity appealing, but also the idea that if everyone was receiving UBI, there would be no stigma attached to receiving it. However, UBI could be unaffordable, but perhaps UBI could be maintained using the tax system to make UBI ultimately like BI. Come tax season, those who made over a certain amount would need to pay their (extra) UBI back in taxes, as determined by the progressive tax system. Yes, this would mean that for some people UBI was a process of “receiving money and just handing it back,” but this would maintain the simplicity and dignity of UBI over BI, and may actually reduce complexity, because the IRS wouldn’t have to be so worried about sending out tax refunds. In many ways, UBI would equate to many people receiving their tax refunds gradually throughout the year, versus all at once. Will some people fail to have saved enough to pay taxes on their UBIs come tax season? Possibly, but that is a problem people face now, and the idea of people receiving a “loan” every month without having to apply for one or perhaps be at risk of predatory lending seems worth the risk (given the importance of liquidity and the money supply, though there might be a risk of inefficient coordination—we’d have to see). Furthermore, perhaps those who fail to pay their taxes would simply have it added to their taxes next year, and after five years they would stop receiving UBI altogether? Various strategies can be considered.

Note 3:

BI as opposed to UBI might hinge upon the question of whether it is true or false that it would be a more efficient and dignified welfare system than our current one. (Keep in mind that this paper is assuming that the welfare state is overall good.)

I

What are some objections against all forms of “guaranteed basic income,” rather UBI or BI?

Argument (A1): People won’t work.

Counter (C): Sitting around doing nothing is boring: it is part of human nature to work. Comfort can compel people to act because comfort can be empty, especially if people are trained to be created—an educational question which permeates O.G. Rose.

Counter to the Counter (CC): Yes, many people will use the money as leverage to get out of jobs they don’t want to be in better ones, to start businesses, to pursue passions, and the like, but some will use the money to justify wasting time, and if 20% of the population were to do that, there would be a massive social problem.

Counter to the Counter to the Counter (CCC): These are problems possible under the current welfare state: basic income would do away with welfare bureaucracy and remove “receiving welfare” as a unique excuse for inaction. BI or UBI would be more likely to promote social mobility than welfare, and in removing the social stigma, people wouldn’t be afraid to talk about it or to be in public where they might be asked about their job, day, or use of time. It is possible that people on welfare currently end up “bumming” because they are trying to avoid social dynamics which cause shame. Removing that, and how people behave on welfare might be entirely different—and more productive.

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A2: Inflation, price adjustments, and the like will cancel out all basic income gains.

C: Basic income can be tied to inflation.

CC: We cannot tie basic income to healthcare, food, etc.—all the things that the current welfare state covers. 

CCC: We can.

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A3: People on disabilities and with “special needs” would be ruined under a basic income: it wouldn’t come close to covering their medical expenses.

C: Basic income doesn’t have to replace disabilities and “special needs” programs: for those who apply to such and are accepted, they will be taken care of on a program different from basic income.

CC: Basic income then wouldn’t remove welfare, just some of it: disabilities programs would stay in place. The devil will be in the details. 

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A4: What people need isn’t universal basic income, but “universal basic jobs” (UBJs).

C: That would easily prove ideal, but who would provide the jobs? How would the government assure the jobs are permanent? As there will be waste under a basic income, there would easily be lots of waste under a “guaranteed job” system. Why not just give people the money directly and let them decide what they need to do with it? Additionally, a UBJ system would easily encourage growth of special interest groups, of which as Jonathan Rauch argues in Government’s End are a major problem.

CC: Many of the jobs provided by the government make the country a better place through infrastructure spending and so on. Who would do that kind of work if everyone was provided a basic income? How could we assure there were enough doctors (for example) who were also distributed in their locations so that when we needed one a doctor could be accessed? We often say we don’t like being forced to go to work, but we probably wouldn’t like it when we wanted to eat out or hurry to a hospital if nobody was forced to be there to attend to us…

CCC: How basic income is received and handed out would easily have to be like the “progressive tax system” in order to avoid a “basic income cliff” like there currently can be with “the welfare cliff.”

CCCC: The devil will be in the details.

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A5: Robots are not going to all take our jobs—the need for basic income is overstressed. People have been saying for a thousand years that technology was going to ruin our economy, and yet the economy has only grown. Let’s not throw in the towel so early, because establishing a basic income is just that: throwing in the towel.

C: What has changed the game is artificial intelligence: self-driving cars, for example. When cars were first invented, yes, they destroyed the jobs of all the horse and buggy drivers, but cars still needed someone to drive them. The AI technologies coming out now are not simply tools but workers, and they are rapidly improving. AI technologies are like humans, not mere hammers. To keep unemployment down, it’s as if we will have to provide jobs not just for people, but also for artificial intelligences, which reproduce rapidly and cheaply in comparison to human workers. Also, as the election of Trump makes clear and the 2008 Financial Crisis, using data from the past to determine what is going to happen next isn’t always reliable…

CC: There are millions upon millions of jobs in this country: it is unimaginable that robots will replace them all. Jobs will always be with us. In ten years, perhaps we’ll have blacksmiths again because people value craft goods in a world where robots reproduce everything cheaply. The market will adjust.

CCC: Indeed, it is doubtful that robots will replace all jobs or even half of them: robots will replace some lawyers, but not all; robots will do for lawyers some of the work they do now, but not all of it. Additionally, AI will result in some jobs being created: people will have to take care of the robots, for example (unless robots are made that can do that too). All that said, if robots were to replace say just 20% of jobs, in a country of 350 million people, that would be 70 million people who were on the streets, potentially desperate and hopeless, and that could lead to skyrocketing crime and social unrest. And besides, even if an unemployment crisis wasn’t on the verge of happening, basic income might still be a better and more efficient program than welfare, and on those grounds alone, it could be worth implementing.

CCCC: If regulations were removed with the minimum wage and markets freer, the costs of hiring someone would be low enough that businesses would maintain high employment: they could in fact be cheaper than robots, making basic income unnecessary. Additionally, as robots take jobs, citizens will adjust to make sure they get jobs that aren’t automated.

CCCCC: Has there ever really been a “free market” though?

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A6: BI as opposed to UBI is just another form of welfare: replacing welfare with it is to replace welfare with welfare. The current system is working, and so this is an unnecessarily risk.

C: The benefits outweigh the risks.

CC: No they don’t.

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A7: Neither UBI or BI is affordable without raising taxes intolerably.

C: That certainly seems to be the case with UBI, especially if kept alongside the current welfare state, but that might not be the case with BI alongside welfare or UBI/BI replacing welfare, depending on the size of the basic income. That would have to be discussed, and it should be noted that reforming taxes (perhaps replacing the current system with a flat tax, for example), should perhaps be done alongside the establishment of a basic income in order to increase funds.

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A8: Charles Murray argues that UBI will improve how people socially relate to one another and families will be more apt to take care of one another and demand for lazy members to stop making excuses (they have UBI, so have none)—but this is a pipedream.

C: There is plenty of idealism to go around on both Liberal and Conservative sides. However, the welfare state concentrates power in the hands of a few to address the country’s problems, while basic income might decentralize the power and spread the resources to fix problems across the many. If the welfare state fails, power and assets being so concentrated, the consequences might be incredibly dire; however, if there are examples of basic income failing, with the power decentralized, the shock to the system might not be nearly as great. Furthermore, considering Friedrich Hayek, under basic income, there is a higher chance the resources will be used efficiently, seeing as those who live in a given location are more likely to know what is needed in that location then people who live far away in D.C. If all basic income did was decentralize power and lessen the severity of failure, this alone might be strong enough reason to adopt the program.

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A9: Basic income would never be passed to replace welfare, only with it, which is unaffordable.

C: If the argument could be made that basic income was a more efficient welfare state, even Conservatives who weren’t receiving anything from it might support the initiative.

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A10: We don’t have good numbers to prove that basic income will be better for society versus the welfare state.

C: There has yet to be a social experiment in which people receiving a basic income knew it was permanent versus temporary, and hence cannot get hard or reliable numbers on how the program would work.

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A11: If BI was $20,000, the person working to make $21,000 would actually be putting all those hours in for $1,000, which most would find absurd. Hence, lots of people making say $24,000 or even $30,000 might cease working so that they can receive BI, increasing costs and lower tax revenue. Furthermore, those making $40,000 a year, if basic income was $20,000, would feel like they were only working for $20,000 a year, demotivating them.

C: That argument wouldn’t apply to UBI though, seeing as the perhaps making $40,000 would receive $20,000 a year just like everyone else. Also, if there is a welfare state, this problem will exist: the question is only if “the cliff” is any better or worse compared to the current system. Perhaps with basic income minimum wage would be erased and businesses could hire people to do only $1000 worth of work? Hard to say.

II

Though not an exhaustive list, some possible reasons to support some form of basic income (either UBI or BI):

1. Basic income could accomplish all the previous gains of welfare with the added bonus of giving people more dignity.

2. Basic income would provide the needy with money that they were completely free to use on anything they wanted, and considering Hayek (and how there is also far more information a central organization can’t know then can), this extra money would help people address concerns the government could never even imagine, let alone address.

3. If everyone knew that everyone else was receiving basic income every month, no one could claim they were totally helpless: the way people in a society interacted with one another could change for the better. 

4. Basic income would provide women with a form of maternity leave: they could stay home with their children as needed. The burden for maternity leave wouldn’t be levied directly on the shoulders of businesses (though of course they would have to pay for it through taxes).

5. Those who need help to survive wouldn’t have to constantly interact with bureaucracies, which can be frustrating and demeaning. This isn’t to say there is no place for those kinds of bureaucracies, but it is to say that less would be more.

6. The costs of basic income could be easier to predict, map out, and plan compared to the unpredictable costs of the welfare state, which could climb steeply over the next ten years.

7. With basic income, people would have more leverage in negotiations with employers: they’d have “walkaway money,” per se. 

8. Basic income would be a kind of welfare that could be used on anything without a new bureaucracy having to be created: people could buy train tickets to move to places with lower costs of living, airplane tickets, etc. Additionally, when people bought food at the grocery store, they wouldn’t have to use an alternative form of payment like EBTs, an act alone which can make people feel embarrassed and undignified. If Deirdre McCloskey is correct and dignity is central for unlocking economic success, a welfare state that restored dignity would be a state that created prosperity.

9. Poverty is a main cause of crime, and basic income could erase poverty, saving us billions on the prison system, crime enforcement, and the like.

10. Citizens could be less desperate: they may not own a house, but they wouldn’t have to worry about starving tonight.

11. If basic income helped erase poverty and hence crime, the association of those in poverty with crime would gradually break down, helping end various stigmas.

12. A form of basic income might save us from having to solve remarkably difficult “pricing mechanism problems” like “the pricing of digital assets,” which Anthony at Intrinsic Research Co. works on.

13. Basic income might help with the problem of “timenergy,” as discussed by Theory Underground.

14. If the “college monopoly on credentials” was deconstructed, seeing as people have a “retraining school” available to them with the laptop, a form of basic income could help people gain a space in which they can teach themselves new skills through the computer for the job market. Right now though, after citizens graduate, people never seem to have time to learn.

15. People might pool together their basic incomes to finance social needs, like schools, post-offices, and the like, perhaps helping revive community, social capital, etc., as discussed by thinkers like Robert Putnam.

III

“The Creative Concord” by O.G. Rose argued that Capitalism thrived to the degree the average person was creative; that way, unemployment would stimulate creation and production, and “the artifex” (“creator class”) could keep the material dialectic from self-destructing. Ironically, it is though creativity that can lead to mass automation and the possibility of employment, as it creates the leisure in which we can be bored and the leisure in which our creativity can abound. If it is unrealistic that creativity can be taught in mass quickly, then we must be aware that the robotic success of our technologies may soon lead to mass unemployment; we must be aware that large portions of society may soon need help from the welfare state. If the current welfare state cannot handle this increase in need, then we will have to reinvent it, and BI or UBI seem to be possible ways to do so. However, a robust debate is needed to help iron out the details, and at the end of the day both UBI and BI might prove doomed. Hard to say, but if were thought of both as in the business of possibly increasing creativity, then the two might unlock an artifex the likes of which the world has never seen before. Perhaps it is only such an increase in creative possibility which would make humanity ready to compete with AI?

Will mass automation require people to have ways to invest in robots like they currently invest in companies through Wall Street? Will UBI or BI be financed by AI productivity? Could the government pay people to volunteer? This in mind, will employment be replaced by volunteering, where we aren’t paid to be plumbers but instead volunteer to be plumbers because that is what people need? There are many questions, possibilities, and unknowns, and we should also note the dangers: Thomas Sowell points out (for example) that youth crime increases with raising minimum wage, which suggests that crime goes up when people have nothing to do. Might not basic income give people free time which they use to get into trouble? Easily, and so it might prove important that there are ready social incentives to incubate “intrinsic motivation” and social resources for people to better themselves (say through “The Liminal Web”). There are real risks to financing people outside of work, but it’s also the case that AI might force the risk—the question is only if we will manage the risk well (also, if we’re not going to get rid of “minimum wage” or other welfare programs, the problems described by Dr. Sowell will still be with us, so why not try to reduce the bureaucracy?).  

In my opinion, most of the conversation about a need for either BI or UBI has been negative, which is to say we need basic income because either AI will cause mass unemployment or because most jobs are a waste of time. I don’t deny the validity of these arguments, but I would suggest that we need positive arguments for basic income, such as that they might help grow the artifex, creating conditions for spreading “Absolute Knowing,” help sustain “digital assets” like what is found on “The Liminal Web,” improve the efficiency of government aid, and the like. Basic income might prove a blessing versus just a band aid, but right now we speak mostly of it as treating a wound. Indeed, we need to treat our wounds, but it would be nice to imagine the possibility of flight as well.

Notably in Belonging Again, O.G. Rose has been concerned with the possibility of spreading the conditions for “Absolute Knowers,” Nietzsche Children, and the like, which is deeply connected to the question on if “intrinsic motivation” could be spread and shared. It is possible that a form of basic income could be part of how we address this concern and improve “the dialectic between energy and creativity,” which could positively increase “demand” exactly as Keynes argued was necessary. In not having to worry so much about “external pressures,” we might create space in which people can focus on their own intrinsic values and concerns, improving the quality of their “demand,” character, and decision-making. Overall, this might help people train to be better “subjects,” and also communities like those on the Liminal Web (which help people become better “subjects”) might prove far more sustainable, being low in cost to maintain (a YouTube channel is cheaper than a building, for example, for good and for bad), which is to say the costs needed to maintain “digital assets” and digital resources might be covered to a degree by the basic income mechanisms. Perhaps not entirely, and there is a danger here where communities appear which don’t add value that then cannot be readily tested to determine if they add value or not, so even if there is basic income, a system like what is discussed by Anthony at Intrinsic Research would still easily be needed. Still, the point is that a mechanism of “basic income” might be part of what we need to pursue and design so that we could “belong again,” but time will tell.

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