The Covid-19 pandemic shows why interest in UBI is growing

2020 put Universal Basic Income (UBI) on the map. Long a policy option that has intrigued those on the left and the far right, this year UBI finally caught the attention of the general public. Between the Andrew Yang campaign and the coronavirus, the concept of direct cash infusions to people is suddenly being talked about as a serious policy option in a way that was unfathomable even a year ago.

The surge of interest in UBI comes at an opportune time not just in relation to the coronavirus pandemic but a world on the precipice of intense automation that threatens to eviscerate jobs and undermine the economy for workers in ways that were previously unimaginable, but that have some forewarning in the present crisis.

The Covid-19 Pandemic perfectly illustrates why Universal Basic Income, or straightforward cash infusions, are likely going to be necessary as jobs are lost to automation. The potential speed and scale with which technology will disrupt and remake the economy means traditional responses will not be enough. While there has long been plenty of handwringing over the moral hazard of giving people money directly by disincentivizing work. Even in America that opposition tends to evaporate when there is no work, or when people are literally not supposed to be going to work.

“They didn’t cause this. Their business isn’t closed because of anything they did wrong. They didn’t lose their job because of anything they did wrong.” — Fed Chair Jerome Powell

As the Covid-19 crisis continues to burn through the economy like wildfire, generating record-breaking job losses, furloughed workers and disrupted gig economy work, the need for assistance divorced from employment status is increasingly apparent. Already, there is signifiant discussion of who won’t be getting a stimulus check. Students, the elderly, the disabled, and immigrants are excluded. Because of the qualification and the fact that 2018 tax returns are being used for those who didn’t file early, many may not get their pay out next year, or even have to pay it back.

All of this means that the stimulus will not be as effective for families and individual citizens as it could be. By eliminating means testing and making payouts universal, money would get into the pocket of consumers faster for immediate use in the economy. The $1200 per-person sum being discussed is not nearly enough given the likely duration of the disruption, but that also means the cost of fully funding a program to include every American would still be less than the amount of stimulus being flushed out to banks through Federal lending programs and corporate bail outs. It should be pointed out that none of these employ anything like the form of means testing placed on individuals. Instead, the easiest way to take care of people is to simply provide everyone with an immediate cash infusion — which sounds a lot like UBI.

At its core, the economic problems caused by the Covid-19 pandemic are not that different from what could potentially occur with the widespread automation of jobs (albeit on a less intense timescale). Ultimately, how do we as a society respond when jobs disappear en masse, and something causes widespread disruption and displacement of the workforce? Especially when those changes are beyond the control of the workers displaced? The track record of American policy makers has not been good — ask any factory town in the rust belt. But whereas previously these losses tended to be localized to particular communities or sectors, automation is likely to be much more widespread in the future and produce a pattern that at its height may be strikingly similiar to what we are experiencing now.

With the curent focus on the pandemic, concerns over automation may seem misplaced, but it is worth noting that the coronavirus outbreak is likely to further accelerate automation. Suddenly, in addition to labor costs humans also present a threat as a potential disease vector and liability in case of future pandemics. Businesses already looking to take people out of the equation are now even more motivated to do so, especially when it comes to delivery and warehouse work, where automation threats are already within striking distance. Even once the current pandemic is behind us, the pressures to automate those jobs that can be done by a computer or robot will be intense. Laws and policies to disincentivize such shifts can slow the transition, but it will be difficult to permanently keep companies from following the technology. And for every job that is automated, it’s not clear a new job will be created. A Guaranteed Jobs Program, the frequently offered alternative to UBI, seems increasingly anachronistic — an old school solution to a problem that has long surpassed the current reality, and seems even more ill-equipped to deal the future.

Critics of UBI argue that it will undermine and further erode the social safety net right at the time we need to be expanding it, but I’ve argued before that UBI can be what we make it. It should be an enhancement and expansion to existing programs, not a replacement. But doing nothing, or insisting on the same set of policy tools that have served since the response to the 1930s Depression isn’t cutting it anymore. Not now. Not with the challenges we face first with Covid-19 in the near term, and the even bigger challenges with automation in the years to come.