With the increase of workplace automation and robotics, the fear of rising unemployment has many economists and policymakers worried how a displaced labor force will survive. The response to this potential economic dilemma has been the proposal of providing income to everyone via universal basic income.

The growing use of robotics, machine learning, and automation in service and manufacturing jobs means the shrinking of the human labor force. In response to this rising concern, economists, business leaders, and policymakers have started embracing an old idealistic concept providing continuous stable income to those rendered unemployed by the latest technological phenomenon: universal basic income (UBI). However, along with the pros and cons to this idea, supporters and detractors wonder: Where will the money come from to provide financial income for everyone?

What is Universal Basic Income?

In its simplest form, UBI is a fixed, monthly cash payment given to each adult citizen regardless of income or work status, unconditionally, to provide for basic living expenses. The funds would come from either a government or public organization regardless of other income sources individuals may have and distributed on either a weekly, monthly or yearly basis.

Some UBI proposals call for even children to receive a cash payment, while others call only for recipients over 18 years old. UBI is excluded from means testing, no requirement for anything to be performed in return, and would be a fundamental citizen’s right. Groups such as Basic Income Earth Network (BIEN) support UBI but also “oppose the replacement of social services or entitlements, if that replacement worsens the situation of relatively disadvantaged, vulnerable, or lower-income people.”

Some proposals call for a yearly amount of $10,000 while others want a monthly $1,000 stipend. But the goal is to provide recipients with a standard of living above the poverty line. For example, the Finnish government implemented a two-year pilot program in January 2017 involving 2,000 individuals receiving a monthly cash payment of $587, guaranteed regardless of wealth or employment status. Ontario, Canada, is experimenting with UBI this summer by providing 4,000 residents from ages 18 to 64 with an annual income of $12,616. Currently, Alaska has a form of UBI in which it sends annual cash payments to each resident in Alaska from an investment fund with revenues from the state’s oil industry. In 2015, Alaska paid $2,072 to each man, woman, and child in the state.

UBI originated in 1516 in Thomas More’s Utopia in which the character, Raphael Hythlodaeus, proposed “some means of livelihood” or a payment for food. Subsequently a similar idea for basic income was proposed by Thomas Paine in 1792. The economist, Milton Friedman, also endorsed basic income which became the Earned Income Tax Credit. Martin Luther King, Jr. supported UBI to fight poverty creating a level playing field for lower income families. In 1971, the Nixon Administration attempted to pass legislation through Congress for basic income benefits for poor families.

Why propose UBI?

The primary reason that UBI is being advocated by certain groups and individuals is due to the growing worry that robotics, artificial intelligence, machine learning, and automation will take jobs from the human labor force.

Elon Musk, Tesla’s CEO, believes that UBI is necessary, fearing that automation will replace humans. Sam Altman, Y Combinator’s president, started the Basic Income Project since he feels that increased automation will ultimately lead to an eventual implementing of UBI. Mark Zuckerberg, Facebook’s co-founder and CEO, stated in his May 2017 Harvard commencement speech that UBI would encourage innovation and “make sure that everyone has a cushion to try new ideas.”

Automation will grow globally, from driverless cars to pizza-making robots, but along with it will be the consequence of less workers needed even if it means cheaper products, done faster, and more efficiently. The ranks of unemployed workers will grow but they will need a steady stream of income in order to survive and pay for goods and services automation will provide.

Pros and cons

Like anything else, UBI has its benefits and negatives. Among its benefits is that UBI could possibly lessen global poverty while alleviating societal inequalities in order to help those with abysmal quality of life. “The important thing is to create a floor on which people can start building some security.

If the economic situation allows, you can gradually increase the income to where it meets subsistence,” states Guy Standing, professor of development studies at the School of Oriental and African Studies in London. UBI could be a powerful tool in increasing workers’ bargaining power giving them more bargaining chips in negotiations, thereby increasing wages. UBI also allows workers to take more courses to increase their skill set or learn new ones in order to make a career change. It could also encourage more individuals to start new businesses since they would have a basic income to rely on.

Among the negatives critics feel could hurt the intentions of UBI is that people would no longer have an incentive to work, thereby encouraging idleness and stifling national economic growth. Another negative is that UBI is possible only in wealthy nations since they have the financial and economic resources to promote such a scheme.

Underdeveloped and poor nations lack the financial and economic wherewithal for UBI and could possibly fall further behind wealthy, developed nations. A final criticism is paying for UBI. Critics have charged that it would cost the United States approximately $3.2 trillion to give $10,000 UBI to each citizen. To pay for UBI could mean implementing negative interest rates by banks, a value-added tax, and special taxes.





















Can UBI work?

The promise of new technology can help from increasing economic growth to curing diseases. But the side effects are still being contemplated by economists and policymakers including job loss by workers. UBI must be seriously discussed as to whether it can alleviate financial and economic problems or create new ones. There is still time to contemplate solutions, but that time is growing short.