COVID-19 may strengthen the case for universal basic income, or an idea like it.
- The COVID-19 pandemic has thrown millions of Americans into unemployment, highlighting the impracticality of living paycheck to paycheck, which a shocking number of Americans must do. Yet pandemic unemployment is just a glimpse of the fallout the US can expect in a future where more and more jobs are automated.
- Is universal basic income the answer? In this video, a range of experts from economists to entrepreneurs and historians explore different facets of basic income, like why we need it, how it’s different to welfare, and how we’ll pay for it.
- Yanis Varoufakis, Greece’s former Minister of Finance, explains why he’s not in favor of a UBI tax, but rather the creation of a public equity fund: “[T]hese days capital is socially produced … Take for instance … the capital stock of Google. To a large extent it is produced by all of us. Every time we search something on the Google search engine, we are adding to the capital stock of Google. This is not just a consumer transaction. So, if capital is socially produced why are the returns to capital privatized? On what basis?”
What’s your favorite argument for (or against) UBI? Let us know in the comments!
ANDREW YANG: Universal basic income is an idea that's older than America, where Thomas Paine was for it at the founding of the country, [he] called it the citizen's dividend. Decades later, Martin Luther King, Jr., was for it and he championed it before he was assassinated in 1968. And Milton Friedman and a thousand economists signed the studies in the late '60s saying this would be tremendous for both the economy and society. It received so much support that it passed the House of Representatives twice under Richard Nixon in 1971 and the only reason it didn't become law was that Democrats in the Senate wanted an even higher income threshold. So, universal basic income has been with this country for a long time and it actually became law in one state in 1982, where now every person in Alaska gets between $1000 and $2000 a year—no questions asked—from a petroleum dividend. It's wildly popular, has created thousands of jobs, has improved children's health, has decreased income inequality, and it was passed by a Republican governor who made this argument to the Alaskan people: Who would you rather get the oil money—the government who is just going to mess it up or you? And the Alaskan people said "us" and now it's so popular that a majority of Alaskans, which is a deeply conservative state generally, the majority of Alaskans said they would accept higher taxes to pay for this dividend moving forward.
My plan, the Freedom Dividend, would pay every American adult starting at age 18 $1000 a month or $12,000 a year. This would push every American adult to just below the poverty line, which is $12,770 a year right now. But this money would get spent in main street businesses, on car repairs, food and tutoring for your kids, the occasional night out, a hardware store. It would go right back into our economy and would create two million new jobs, would grow the consumer economy by eight to ten percent, would make our families and communities stronger, would improve children's health and nutrition, would improve everyone's mental health and productivity, it would decrease domestic violence and hospital visits. So, universal basic income is a powerful policy that helps improve human welfare and that's why I'm proposing it.
But does America really need it?
NEWS ANCHOR: The Labor Department is out with the jaw-dropping new numbers.
NEWS ANCHOR: Unemployment claims skyrocketing with 6.6 million people filing in the last week alone.
NEWS ANCHOR: It's still 1.5 million. It's still an enormous number.
NEWS ANCHOR: One of the clearly worst parts of what's happened over the last couple of months is it has taken a much worse toll on the African-American community.
WOMAN 1: I feel sad because I can't provide for my kids like I normally would.
MAN 1: Be uncertain about today or tomorrow you're just living moment to moment.
NEWS ANCHOR: Salcido had to lay off her all-Latino staff.
SILVANA SALCIDO ESPARZA: It's time to say goodbye to Barrio Cafe Gran Reserva.
NEWS ANCHOR: They do the jobs that other people don't want to do.
WOMAN 2: I'm ready to go back. I need to go back.
NEWS ANCHOR: Wall Street is set to open up higher.
NEWS ANCHOR: The NASDAQ set a record and passed the 10,000 mark.
NEWS ANCHOR: What a tear stocks have been on.
NEWS ANCHOR: There's a huge disconnect. You've got 30 million people out of work and the stock market and the NASDAQ is at record highs.
DONALD TRUMP: Together we built the greatest economy in history and now we have to bring it back.
LARRY KUDLOW: We still have a lot of hardship but it looks like we've hit a turning point.
SAAGAR ENJETI: More than 30 percent of Americans have not made their full housing payments for July, including 19 percent who made no housing payments at all.
NEWS ANCHOR: A nation in crisis and rapidly reaching an economic turning point. Americans started this year working; our unemployment rate was at a 50-year low, yet somewhere between half and three quarters of all Americans were living paycheck to paycheck, and that was before the pandemic, before the country shut down and put tens of millions of people out of work.
CHRIS HUGHES: I think that there is an emerging consensus that the economy, amongst voters, that the economy is not working for most Americans.
How did we get here?
JILL LEPORE: So, when the country was founded in the 18th century, its framers subscribed to an idea that progress is moral and that idea of progress came from Christianity, that pilgrim's progress is a journey from sin to salvation. Enlightenment philosophers like the guys who drafted the founding documents of the United States didn't share that, necessarily share that particular Christian notion of a journey from sin to salvation but they understood progress and the United States and its founding as an experiment would lead to political progress because it was designed to improve the lives of the most people, that people would act in a sense of a common endeavor, as a republic, that our obligations would be to one another in the form of community and that we should understand achievement as moral progress. That changed over the course of the 19th century when progress came to have a real technological cast. If you think about the railroad, the telegraph, the camera. People began to think about progress as advancing like a train on a linear track and each machine would make the world better because things would go faster, and goods would become cheaper. And very quickly that idea of moral progress was replaced by progress as prosperity.
So, by the 1980s there's such a reckless, a heedlessness in American businesses and it's the great mergers age, the kind of 'Wall Street' grubbiness, kind of like that Michael Douglas movie moment, that "greed is good" thing, that this heedless innovation is fine because this is how this 'creative destruction'—you know, this Schumpeter term that gets recycled—this is the engine of economic growth and nothing else matters: the public good, moral integrity, decency, goodness for more people, the health of the republic, all that matters is: Is it innovative? And then, by the 1990s: Is it disruptively innovative? Which is even more radically innovative that it disrupts existing models of business and disrupts existing industries. And so, you get this real embrace of heedlessness as an American value or as a corporate value, which is a complete abdication of the spirit of progress. And it's also designed, the whole ideology, it really is like a religion, it's very cult-y, the idea of disruptive innovation. It's designed to refute its own critics, it's designed to refuse critics, because among its principles is that the past doesn't matter. No one should ever study history or care about the past because if you're going to be a disruptive innovator, if all that matters is novelty, you don't want to know—if you're going to invent a new ride service you shouldn't study taxi dispatch because it will interfere with the creative destruction that you're capable of and it will limit your vision and it will make your disruptive innovation insufficiently innovative and insufficiently disruptive, so you have to abdicate the past. There is no concern with the past. People want to criticize you for failing? Oh no, failure is actually a virtue of disruptive innovation. It's a very self-contained explanation that, in my view, introduces an extraordinary amount of disequilibrium into a political system that is a republic, that is actually designed on the idea that, in many ways, businesses have to have the public interest at heart because the government is protecting their capacity to do business by creating civil order and safety for the transportation of goods and government provides all kinds of services that make it possible for businesses to thrive, therefore, businesses too have to be concerned with a healthy social and political order, with avoiding wild inequalities of wealth and income, with avoiding wild political turbulence. But disruptive innovation isn't concerned with any of those things, disruptive innovation is concerned with blowing things up.
ROBERT KAPLAN: If you lose your job in a city in this country, it's probably as or more likely that the reason you're losing your job is not globalization but it's technology-enabled disruption. It's changing. People are attributing it to globalization but it's probably as or more likely to be due to the fact that businesses are increasingly replacing workers with technology. Whole industries are being disrupted.
ROBOT: Hello, everyone. I'm a sorting robot. I know I look cute, but my skills are a lot more impressive. I can identify the information on each of the parcels effectively and sort them out precisely. My friends and I can process as many as 18,000 parcels in an hour.
TUCKER CARLSON: Why should we be worried about automation?
ANDREW YANG: Well, if you look at the backdrop, we automated away four million manufacturing jobs in Michigan, Ohio, Pennsylvania, Wisconsin, Missouri, and those communities have never recovered. Where if you look at the numbers, half of the workers left the workforce and never worked again and then half of that group filed for disability. Now, what happened to the manufacturing workers is now going to happen to the truck drivers, retail workers, call centers, fast food workers and on and on through the economy as we evolve and technology marginalizes the labor of more and more Americans.
I think it's going to be disastrous, where if you look at truck drivers alone, being a trucker is the most common job in 29 states, there are 3.5 million truck drivers in this country, and my friends in Silicon Valley are working on trucks that can drive themselves because that's where the money is. We can save tens, even hundreds of billions of dollars, by trying to automate that job.
ROBERT KAPLAN: Workers are far more likely today to lose their jobs or have their functions changed because of the technology-enabled disruption. Technology is replacing people. And, in addition, because of technology-enabled disruption, consumers have much more pricing power; they have the ability to shop with technology, that's putting much more pressure on businesses in terms of pricing pressure and businesses don't have as much pricing power. And that probably is rippling back through impacts on workers and their wages and may even be encouraging businesses to increasingly replace workers with technology.
CHRIS HUGHES: Often times the UBI is talked about, these days at least, in the context of the rise of the robots and pending technical unemployment, as a lot of people call it. And my view is that very well may happen. There's also a good argument by a lot of economists and other folks that this time is not different. What we know is that the future is already here and work and jobs in America have already come apart.
NEWS ANCHOR: When the coronavirus hit the U.S. economy it came fast and furious.
NEWS ANCHOR: There's the circuit breaker 25 49 48 and the bell.
NEWS ANCHOR: The nation went into a panic stocking up and shocking our supply chain as millions began working and teaching from home, our skies and airports emptied out, normal life canceled as millions of businesses big and small closed, pushing us into the worst global recession in history. Roughly 50 million unemployment claims filed in the span of just four months.
CHRIS HUGHES: I mean of all the jobs, nearly all the jobs that we've created in the past decade, have been part time, contingent or temporary. These kinds of very unstable, lumpy jobs—jobs with lumpy income cycles—and a guaranteed income of $500 a month would be a powerful force to stabilize the lives of people who need it the most. In some ways it's a down payment, if the robots do indeed rise and self-driving cars are on the roads in five years as some technologists predict, it will be much easier to build on a foundation of a guaranteed income of something like $500 a month than to begin afresh. So, my view is the idea of a guaranteed income is to solve the problems of today and in a way that it could be implemented immediately.
I've worked on cash and specifically using cash as a tool for economic mobility for several years now, first internationally and then domestically. And the thing about it is it asks fundamental questions about trust. If you give people money, can you trust them to make the decisions that are best for them? Will they use it responsibly or irresponsibly? And I think there's a sense, particularly in American culture, that is pervasive, of concern, that if you're going to give this money to young men they're just going to put up their feet and play video games or there's this pervasive myth of the welfare queen that people just want to stay home and live on government benefits. And I think the challenge for those of us who believe that those are very much myths is to amplify the stories, the kind of stories that I hear nearly every day.
"But we already have welfare!"
YANIS VAROUFAKIS: Universal basic income is a brilliant idea, especially in view of the failures of the welfare state. If you look at the welfare state now it has grown into a kind of securitized, weaponized system against the poor. It is a system for humiliating the poor, for putting them through various hoops to prove that they are "deserving poor". It's a very expensive system, both in terms of the emotional effect that it has on the people that have to prove that they deserve benefits and also in terms of the actual economics of it. So, the idea that everybody should have an income, independently of whether they are rich or poor, that comes from the collective and then that can be the basis for them to unfold their talents and their creativity without having to do demeaning work. This is a great idea. The question is where is this income going to come from?
Tax the rich?
JEFFREY SACHS: What I know, as an economist that has worked all over the world, including in the poorest places in the world, little bits can save lives and make futures for the children of this world at unbelievably low cost and it just gets me that we have $10 trillion here and we have kids who are hungry, dying and out of school over here. It's mind-boggling. Mind boggling to think of Jeff Bezos, for example, with a net worth, personally, individual net worth of, hold onto your chair, how about $163 billion. That's a lot of money. I'm myself an Amazon user. I think it's an awfully good service and product that he's developed, but $163 billion in a world where a lot of his workers struggle to get by, a lot of the people in Seattle, where Amazon is headquartered are homeless, where there are incredible needs that for a tiny fraction of that wealth could keep millions of kids alive and in school, you have to say, alright, the world economy is dynamic but it's not really exactly fair and it's not really oriented towards addressing everyone's basic human rights and needs, and can't we make the connection? And the answer is we have to. So, my thought is, at a minimum, $10 trillion? Come on put in at least one percent—that's such a tiny amount because your wealth grows at much more than that—put in one percent of your net worth per year minimum to help the kids. One percent of $10 trillion is $100 billion. And if you take out your paper and pencil or your Excel Spreadsheet you can show that for $100 billion a year, one percent of the net worth of just 2208 individuals, you could get every kid in school all the way through upper secondary education and you could establish universal health coverage for everybody in every low income country in the world. That's a pretty good gig for 2208 people. But they've got to get on with it. I think they have enough yachts, enough mansions, enough of everything, and it's really time for that wealth to be deployed for the purposes of our generation of children who utterly and desperately need it. And I say do it voluntary or if you don't do it voluntarily, fine, we'll put on a levy.
Or tax the corporations?
ANDREW YANG: So, the way I propose to pay for universal basic income is based on a problem we have right now in our country, which is that more and more work and value is getting sucked up and soaked up by a handful of technology companies. Amazon, for example, is doing another $20 billion in commerce every year and it's now pushing 30 percent of American malls and main street stores into closing. And so, for the average American, you're seeing your main street stores close and unfortunately being a retail worker is the most common job in the United States. The average retail worker is a 39-year-old woman making between $11-$12 an hour. So, the problem America is facing is that even as Amazon is soaking up more and more value, they're not paying much in the way of taxes. You probably saw the headline where last year Amazon enjoyed record profits and paid zero in federal taxes. And so, the way we pay for universal basic income is we put the American people in a position to benefit from all this innovation by passing a value-added tax, which is something that's already in effect in every other advanced economy. With a value added tax the American public would receive a sliver of every Amazon sale, every Google search, every Facebook ad, every robot truck mile and because our economy is now so vast, at $20 trillion, up $5 trillion in the last 12 years alone, a value-added tax at even half the European level would generate $800 billion in revenue, which combined with current spending, economic growth and putting this buying power into American's hands, cost savings on things like incarceration, homelessness services and emergency room health care, and then the value gains from having a stronger more educated more productive more entrepreneurial population—there's one study that showed if you were to reduce poverty in this country you would actually be increasing GDP by $700 billion just by making people stronger, healthier, better educated and mentally healthier. And so, we're going to be able to pay for this universal basic income if we put in a new tax that harnesses the gains of all these new technological innovations and brings them back to the American people.
Or create a public equity trust?
YANIS VAROUFAKIS: I, personally, don't believe it should come from taxation. And it shouldn't come from taxation for a number of reasons, one of them being political. If you take, for instance, a blue-collar worker that struggles all day in a factory or on a shop floor or working for Amazon, whatever, and you tell him—usually him, it could be a her—that another person will be sitting on the couch watching television being supported by the state to do this, you are creating a huge political clash there within the working class so I'm against that. But, if you say to the population, independently of which social class they belong to, that these days capital is socially produced, capital, capital goods. Take for instance the stock, the capital stock of Google. To a large extent it is produced by all of us. Every time we search something on the Google search engine, we are adding to the capital stock of Google. This is not just a consumer transaction. So, if capital is socially produced why are the returns to capital privatized? On what basis? To cut a long story short, my proposal has been for a number of years now what we call a universal basic dividend. So, I believe that a percentage of all shares, shares of all companies should go into a public equity trust, like a wealth fund for society, and the dividends should be distributed to every member of society equally. So, universal basic income but the income comes from returns to capital not from taxation.
CHRIS HUGHES: When the rubber meets the road there are really big questions about who pays for this and there's, I'm sure, lots of skepticism that tax rates should go up. I think ultimately though the case can be made that this is not just a moral issue that everybody should have basic financial stability, but also a practical one. And if we really want the economy to continue to grow and not face the kind of depression, which happened right after 1929, the year that inequality was last as bad as it is now, we're going to have to think about creative ideas that breakthrough like this. So, my hope is that particularly the earned income tax credit, which has been expanded by every president since Gerald Ford, Republican and Democrat alike, can be a framework for at least bipartisan dialogue if not consensus on a way to reboot the American dream and make sure that people have the economic opportunity that they want and deserve.
RAMESH SRINIVASAN: As a voter in the United States, I would ask our candidates to actually acknowledge and provide proposals that are realistic about how they are going to take care of workers and the middle class in the midst of these massive economic transformations that are aided by private, corporate-run technology that we're witnessing all around us. I would ask our candidates, again, in the United States election, to explain to us how they are going to maintain economic security in a country that becomes more and more economically unequal? How they are going to ensure that technological transitions are ones that benefit all of us? And how they can introduce work of the future where the digital economy actually works for everybody? And more than anything we need to pressure our companies that are making labor and work obsolete in the interest of "innovation"—it's innovation for whom is really the question—We have to ask them for all the jobs, for all the economic security you take away you need to provide us with something too. And here are all the different possibilities we can engage with, from thinking about universal basic income ideas to worker-owned cooperative ideas to regulatory ideas to competitive market ideas. There is a lot out there and I ask us all to maintain a little bit of optimism but push. We've got to push on all fronts. We are at an inflection point when it comes to top-down control over many different aspects of our lives through privatized corporate power over technology. We can work with these guys and try to push them to make sure that they restore balance in our lives.