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Problems with Universal Basic Income

Better is better

The idea of a universal basic income has been attracting more and more attention lately. It's being advocated by a presidential candidate even. Andrew Yang advocates giving $1000 a month to every citizen regardless of other money they might earn. The UBI is much like the idea of a stipend that I proposed years ago but my proposal was more generous and I thought it would be largely self-financing. Say we set the UBI to $2000 a month and say an employee earned $3000 a month. The employee would get $2000 a month from UBI. The employer would deduct $2000 from the employee's pay and send that to the UBI and cut a cheque for the employee of $1000. So the UBI would be revenue neutral for both employee and employer. If the employee left the job they would still get the UBI and would lose the $1000 from the employer.

This addresses a number of issues. Top of the list is automation which is very quickly making many jobs obsolete. Automation has been with us for a long time now, perhaps since the industrial revolution but is now accelerating at a startling rate. Estimates are that 40% of jobs will be gone in 15 years. These are not just factory jobs. Doctors and lawyers are being affected too. Society has to find an alternative way for people to have an income to live on.

In Canada the poverty rate was almost 10% in 2017. Poverty is not pleasant. I think that in our society poverty is a choice that society makes because it's an essential element of our incentive system. There are lots of jobs that people only take because the experience of not having a job is worse than employment. I've called this 'tormenting the unfortunate' and I consider it to be basically immoral if we don't have to do it. And I admit that most people think that tormenting the unfortunate is just natural because we came from a time when there was often not enough for everyone and there was no way to prevent the unpleantness of (say) starvation if a crop failed. But that's not the case in our society because while automation is removing jobs it is also fabulously productive. I'm thinking that will be a problem because people have to be able to purchase what is made and they can't do that without a good income.

So, the UBI helps in the transition to a time when not everyone works for a living. There will be problems though.

I'll leave aside the problem of people who try to cheat the system since we are already pretty good at dealing with cheaters.

Another problem is that a lot of businesses have low wages as part of their business model. If the minimum wage goes up a lot then so will the price of hamburgers would go up a lot too. And business might drop a lot and lots would go out of business. That might be considered a good thing and not a problem - but it is a thing that would have to be dealt with. Related to that is that it would reduce the ability of people to get rich because there is not as much business. Given the gross economic inequality in our society this might not be bad in the long run but it sure would mean big adjustments in the way society works.

If everyone makes $2000 a month what is to stop landlords (say) from raising the rent so that $2000 in the future would be like $600 now (ie inflation)? There would have to be all kinds of price controls to keep inflation under control. And I've lived through a time of wage and price controls and that was hard to manage and got dropped, so that's an issue we would need to solve.

The point here is that the UBI is the sort of thing that would cause massive adjustments in how the economy works as we adapt to that new situation.

Maybe a harder problem would be one of social control. Right now the necessity of holding a job imposes a lot of discipline on the population. And lots of people enjoy the social structure of a workplace. It is said that the devil finds work for idle hands - and I've seen that to be often true.

In the long run I think the UBI would drive society towards socialism and away from free enterprise. For me this is a feature and not a bug but I know many disagree with me. I don't mean socialism that is communist. Free enterprise makes things for profit and that's not all bad because many good things have flowed from that. But there is no reason why a government couldn't produce things that people need but aren't particularly profitable or profitable enough. But this would be a socialism that was controlled by a democratic society. And democracy seems to be going through a bad patch right now. So a UBI assumes a democratically committed and active citizenry. But heck - we won't get a UBI at all without that anyway. I don't think oligarchs or king Trump would be interested.

What do you think?

Star I present regular philosophy discussions in a virtual reality called Second Life. I set a topic and people come as avatars and sit around a virtual table to discuss it. Each week I write a short essay to set the topic. I show a selection of them here.

I've been thinking and reading about philosophy for a long time but I'm mostly self taught. That is I've had the good fortune to read what interests me rather than follow a course of study. That has it's limits of course but advantages. It doesn't cost as much and is fun too.

My interests are things like evolution and cognition and social issues and economics and science in general.