Overview

What if the government just gave everyone free money? No questions asked. Rich or poor. Working or lazy. That is Universal Basic Income (UBI). It sounds crazy, but as robots take more jobs, it might be the only way to keep capitalism alive.

Core Idea

The core idea is The Floor. A guarantee that no one falls below the poverty line. It replaces the messy web of welfare programs (Food Stamps, Housing Assistance) with a simple check.

Formal Definition

A periodic cash payment delivered to all on an individual basis, without means test or work requirement.

Intuition

  • Welfare Trap: Currently, if you get a job, you lose your welfare benefits. So you are effectively taxed 100% on your earnings. It discourages work.
  • UBI: You get the money no matter what. If you get a job, you keep the UBI plus your salary. It encourages work (theoretically).

Examples

  • Alaska Permanent Fund: Every resident of Alaska gets a check for ~$1,000-$2,000 a year from oil revenues. It is basically a mini-UBI.
  • Finland Experiment: They gave 2,000 unemployed people €560/month. Result: They were happier and less stressed, but they didn’t find more jobs than the control group.

Common Misconceptions

  • People will stop working: Studies show most people keep working. They just switch to jobs they like or go back to school. The only groups that work less are new mothers and students.
  • It’s too expensive: It would cost Trillions. To pay for it, you’d have to cut all other welfare and raise taxes significantly.
  • Negative Income Tax: Milton Friedman’s idea. If you earn below a certain amount, the IRS pays you. It’s mathematically similar to UBI.
  • Automation: The main argument for UBI. If AI does all the work, how will humans buy things?

Applications

  • Freedom Dividend: Andrew Yang’s 2020 presidential campaign platform ($1,000/month). It brought the idea to the mainstream.

Criticism / Limitations

  • Inflation: If everyone has more money, landlords might just raise rent.
  • Dignity of Work: Some argue that work gives life meaning, and paying people to do nothing is bad for their soul.

Further Reading

  • Bregman, Rutger. Utopia for Realists.
  • Yang, Andrew. The War on Normal People.