Universal Basic Income: The Remedy for Poverty?

Universal Basic Income is a government welfare scheme that guarantees each person a fixed amount of income, which is intended to go towards his or her most basic needs (i.e. food, housing, health care) regardless of financial status.

Technology, specifically automation, is said to be the death-knell of so many jobs in an advanced economy. Just walk into your average grocery store or fast-food place, and chances are you’ll find self-serve kiosks waiting to assist customers. Just this year, Amazon rolled out its very first cashierless grocery store in downtown Seattle and plans to open up to six more this year following its successful launch. The e-commerce giant is also known for utilizing thousands of warehouse robots across its fulfillment centers doing tasks such as picking and packing orders for shipment.

According to Forrester, a market research company, automation will eliminate 6% of U.S. jobs by 2021. These jobs include commercial truck drivers and customer service representatives. Uber, for instance, is currently developing self-driving trucks that would transport freight across the United States. In fact, they are already testing self-driving trucks in Arizona delivering goods from point A to point B, but with a driver on board—for now. As low-skilled (i.e. repetitive or routine jobs) employment opportunities take a hit due to rapid technological advancements, the idea of a basic income is being touted as a viable solution to mitigate automation’s negative impact to people’s livelihood.

Universal Basic Income in a nutshell
What if our most fundamental needs are taken care of and we didn’t have to jostle to put food on the table or a roof over our head through a controversial policy known as universal basic income (UBI). It is a government welfare scheme that guarantees each person a fixed amount of income, which is intended to go towards his or her most basic needs (i.e. food, housing, health care) regardless of financial status. Certain parameters, such as age, may vary from different policymakers, but the core principle of a universal basic income remains intact.

Criticisms of UBI
Fiscal conservatives argue that UBI is nothing short of income redistribution. No “new” wealth is ever created, but is simply reallocated within the economy, which doesn’t help grow the economy that is necessary to reduce poverty in the first place. More importantly, a universal redistribution draws much needed funds away from the most vulnerable to those who are more than capable of supporting themselves.

Furthermore, there is concern that by doling out “free money,” people would lose the motivation to work especially if the basic income is comparable to what they are presently making. Critics point out that many adults that could and should work are already unenthusiastic about finding gainful employment under the current welfare model, so an outright payment with no strings attached could further encourage unemployment.

Also, the notion that technology will supplant low-skilled workers significantly provides little evidence, according to UBI critics. Throughout the history of capitalism, the world has seen the cyclical birth and destruction of industries. As costly and inefficient ways of producing goods and services slide into oblivion, technological advancements usher in more efficient ones giving way to new employment opportunities. For instance, agriculture used to be very labor-intensive, but because of the emergence of mechanization, the demand for agricultural labor inevitably dropped. People then shifted their attention away from agriculture and sought opportunities elsewhere like manufacturing.

Why UBI makes sense
According to Fast Company, during the World Government Summit in Dubai, Elon Musk acknowledged that “there will be fewer and fewer jobs that a robot cannot do better,” which underscores the necessity of a universal basic income. Being one of the pre-eminent tech figures today, Musk knows where the future is headed as even his very own Tesla, Inc. is developing driverless vehicles that could drastically impact the commercial trucking industry. Having worked in a trade for 30, 40 years and then suddenly becoming unemployed leaves a person with very few options. It isn’t easy to transition to a new career that requires considerable training or education especially if you’ve dedicated more than half of your life doing something rather simple and familiar.

Surprisingly, some conservative economists like the late Milton Friedman have argued that a universal basic income would significantly reduce government bureaucracy. Instead of having a long list of welfare programs, which are wrought with fraud and waste, everything would be consolidated into one simple “payment.” Friedman viewed this as an alternative that could “replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash,” which if implemented, “would provide an assured minimum to all persons in need, regardless of the reasons for their needs.” Libertarian political thinker Charles Murray agrees and considers basic income as a way to “dismantle all the bureaucracies that dole out income transfers…and instead use the money they spend to provide everyone over the age of 21 with a guaranteed income…”

Lastly, the current welfare model disincentivizes work by making a person ineligible to continue receiving welfare if his income goes over a certain amount. Naturally, a welfare recipient would choose to work less (or not work at all) to maintain eligibility. In contrast, under a universal basic income scheme, a person gets to keep his basic income and whatever he makes on top of that.

The issue of basic income is contentious for a reason. Both sides present some valid and reasonable arguments; and hopefully, by tackling some of them, it would help unravel even in the slightest bit the complexity that is universal basic income.

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