Should the Government Give Everyone a Basic Income? What Do You Think?

Like it or not, the increasing displacement of paid labor by automated systems and robotic machines may in fact be inevitable, as technology continues to get cheaper, better, and faster.

Concerns about the rising levels of unemployment apparently caused by this inevitable increase in automation have led to a growing debate about whether Western democracies ought to begin providing what’s known as a “Basic Income” to their citizens – that is, a regular payment to every living adult, regardless of income or employment status, funded by taxpayer dollars.

Technologists and futurists are starting to mention this issue more frequently. Elon Musk, for instance, has said more than once now that some type of Basic Income will almost certainly be necessary in the near future. And Peter Diamandis outlined some of the reasons behind the idea in a LinkedIn post two months ago.

Of course, there have been periods of technological progress in the past that have resulted in highly disruptive change, but in the past what we found was that many new jobs were created as other jobs were eliminated. Today, however, many argue that we’re reaching a turning point, and that robust job creation may no longer happen so easily, because accelerating improvements in technology are outpacing human skills faster than new skills can be learned. Indeed, technology may be on the verge of automating nearly every economically useful “skill,” other than consciousness itself.

The optimist will look at technological progress and argue that we are entering a period of technologically created plenty, with rapidly declining prices for everything, and a radical increase in leisure time. But the pessimist will argue that this cornucopia will not be distributed equitably, because the profits generated by economic activity are flowing increasingly to the owners of the machines and automated tools, while workers have much less to show for their efforts, because so much less labor is required.

Right now, unfortunately, the pessimists seem to have more facts on their side. For one thing, an increasing number of citizens really aren’t able to find full-time work. Unemployment rates don’t tell the full story, either, because many workers are making considerably less than they used to, while others have dropped out of the labor force altogether. Average incomes are in fact still rising, but not median incomes, which means that income growth is almost exclusively confined to higher income groups. Median incomes are stagnant or falling.

Statistics show that the median, inflation-adjusted income for male workers in the US peaked in the early 1970’s! 

If we try to depict what an increasingly unproductive and under-employed labor force would look like, statistically, the picture we would draw is exactly what we are seeing today – lower incomes that continue to erode away steadily, while most higher-income jobs are not yet affected, and are still benefiting from the economic leverage that technology provides.

What I find interesting about a Basic Income is that it has something to offer the political right as well as the left. Imagine, first, that the government were to give every single adult US citizen something like $1,000 a month as a Basic Income, whether they were working or not. For the left, this is without question an ambitious social welfare idea, guaranteed to require an immense increase in government spending with a concomitant increase in taxes (although these taxes will have to be imposed more on capital and assets, rather than on middle-class incomes, which will continue to shrink).

For the political right, on the other hand, a Basic Income could have the advantage of eliminating or radically scaling back nearly all other kinds of government-provided welfare payments – for unemployment, food subsidies, housing, child care, education, and so forth. These programs involve a tremendous amount of government spending that is purely administrative in nature and extremely counter-productive, economically speaking. It’s entirely possible that the savings from their elimination would pay a large part of the bill for a guaranteed Basic Income.

No one really knows how the economy (and society) would be changed by introducing a Basic Income. A few, isolated tests and experiments have been launched or are being readied for launch, in countries ranging from Finland to India. And there was a famous Basic Income experiment in Canada several decades ago. The data from these and other experiments do show that some people will tend to work less if they have the chance. But the data also show that a Basic Income tends to stimulate additional economic activity – particularly entrepreneurial activity, because the penalty for failing with a new venture is not as dire when there is a Basic Income net to stop your fall. In India, for instance, introducing a small Basic Income radically increased the volume of small, productive businesses and craft operations launched by the poor.

Politically, there is already a rising sense of discontent with what’s increasingly portrayed as a “rigged system.” This is a big factor behind not just Donald Trump’s recent election, but also the Brexit vote in the UK, and the rising chorus of voices on the far right and the far left throughout Europe. If we want to deal with the underlying causes of this ominous political volatility, then it might be time to think about how and under what conditions a Basic Income policy would make sense.

Because technology won’t wait. Nor, it seems, will the middle-class voter.

[Comments to this piece are welcome, because this is the kind of thing we who are in business need to discuss. As a courtesy to those who may feel differently than you, however, I thank everyone in advance for making an effort to keep comments civil, and as politically neutral as possible.]