When I first heard of Universal Basic Income from my friend, I laughed in his face. What an absurd idea. Labeling it as a communist dream didn't even seem to do this pathway to dystopia justice. Clearly my friend had a fundamental misunderstanding of how value is created in society.
A few months later in early 2019, I heard about someone running for president with UBI as his primary policy proposal. Hysterical, I thought. Joe Rogan was going to bring Andrew Yang on as a guest and I couldn't miss the opportunity to mock this guy's ideas for two hours. Except when I watched, I couldn't come up with a single joke.
While I was not outright convinced yet, Yang was able to communicate in a language I found comfort in. He spoke to the upcoming wave of automation among other compelling diagnoses of the economy. This led me to a googling spree that eventually landed me on the blogger that ultimately flipped my view on universal basic income entirely: Scott Santens.
Scott has dedicated his life to studying, speaking, and writing about UBI. And it shows. He has hundreds of compelling articles, done numerous interviews, and was even one of the first people Yang spoke to during the initial stages of the campaign. By immersing myself in Scott's work, my misconceptions began to fall one by one. What follows are the 7 objections I had to the idea, coupled with the articles responsible for guiding me through this mindset shift.
Why should people get free money?
Before getting into practical considerations, there was a moral barrier I needed to clear. Why should people be allowed to take value from society without contributing anything in return? Since I viewed the world as being zero sum, it made sense that I would require this of people.
Except as Scott pointed out to me in this first article, the world didn't start off at zero value. The wealthiest of our ancestors did not create the technology we enjoy today from nothing, they inherited an earth filled with natural resources. So already, in order to enjoy the fruits of that labor, our ancestors were allowed to take value from society with the promise of value being contributed back.
The question then is not necessarily why should people get free money. But rather, what are all the benefits that society can enjoy if people could get free money. UBI could be framed as investing in all of our citizens to enable them to reach their full potential. And as long as poverty exists, we as a society are suffering from that opportunity cost.
There will always be jobs
I acknowledge that poverty exists, but as long as we make technological progress, innovation should be the rising tide that lifts all boats. Every industrial revolution there were cries of job loss, yet we have seen steady increases in the number of jobs through each one. My logic was that for every job loss due to automation, two more would be created elsewhere so job loss is not a problem. Scott's article on the potential impact of self-driving trucks convinced me otherwise.
Here's something I didn't know - truck driving is one of the most common jobs in the United States, with as many as 3.2 million drivers in the industry as of 2015. The industry also supports all the people working at gas stations and diners that serve as pit stops for the truck drivers. The key problem is that most of these people are not college educated. When the self driving trucks come to eliminate these jobs, the jobs they will create will be in offices as engineers, designers, and product managers. Jobs that traditionally require a college degree.
The problem of job automation is not one where we need to be concerned about the total number of jobs. Society needs to figure out how those losing their jobs can adapt towards vacancies that require skills that they do not yet possess. Previous industrial revolutions saw riots in the streets due to society failing to help transition those people towards work with higher demand. How do we manage this transition period? I now recognize the problem that job automation will bring, could UBI really help solve it?
Disincentive to work
Okay, I'm morally on board with the idea and am sufficiently concerned about the future of work. But, I didn't see how the solution connected to the problem. In fact, I was still convinced it would exacerbate the problem, since giving people free money would disincentivize work. Right?
Except, that doesn't even apply to my personal experience. Seeing the benefits of having a fixed guaranteed income from my employer has only motivated me to look for more income streams. Most of the wealthy influences of mine also rave about creating passive income generating assets. So where does my preconception of handouts to the poor leading to a disincentive for work come from?
> "Traditional safety nets are targeted, meaning that only some people qualify, and only if they meet the requirements. What's commonly not understood is that the targeting itself, not the money, creates a disincentive to work".
Now this explanation started to resonate personally. Why would I work an extra hour of work, if the marginal benefit is close to 0? This welfare cliff is what makes it so unmotivating to want to contribute more towards society, since doing so implies a loss of previously held benefits. UBI absolves this issue by providing an unconditional floor that should not deter you from working anymore than a $0 floor does.
In the same article, there's a link to UBI experiments that were conducted by the US and Canadian governments. He breaks down the cohorts of people that were shown to work less. Teenage dropouts going back to school. Mothers of newborns taking maternity leave. I'd argue that these drops in traditional employment are net positive.
So, how does UBI help us manage the transition period? Just as kids and mothers are now empowered to go to school and take maternity leave, employees facing automation now have some breathing room to discover what to do next. People are less likely to stay at jobs in which they are unhappy and more likely to invest in the skill acquisition needed to succeed in the new job market.
Massive Inflation
So I like that we are smoothing the slope that people need to climb to get out of poverty. But, wouldn't UBI just lead to massive inflation, leaving the poor back to where they were before receiving welfare benefits? Scott knew I would ask that.
He exposed a fundamental misunderstanding I had about inflation - it's actually the relationship between the money supply and the goods produced. If money is printed faster than goods produced, we get inflation. If goods are produced faster, then we get deflation. UBI's implementation does not require more money to be printed, it is a simpler model for redistribution than our current bureaucracies.
Since the amount of basic goods such as groceries and milk would be bought at about the same levels, we wouldn't see prices increase. In smaller trials, only luxury goods have only been shown to experience price increases. In a startling result from one of these small trials, Kuwait saw it's crazy high inflation decrease from over 6% in 2008 to under 4% in 2011.
How do we pay for it?
Fine, universal basic income is starting to look like a good idea. But is it even practical? Giving every citizen a thousand dollars a month would cost about 3.5 trillion dollars a year. Wouldn't the increase in taxes to fund this spending just crush the middle class?
While details of funding plans vary person to person, Scott offers the most detailed and actionable one I've seen by far. There are a couple of high level ideas across most funding plans that make that 3.5 trillion dollar sticker price easier to wrap our heads around:
Most of the existing conditional cash transfers and tax exemptions would be removed in favor of the much simplified alternative in UBI.
New taxes around natural resources and general consumption is complemented well with a UBI as it shifts the burden of taxation from income to spending.
Poverty becomes expensive through healthcare and prison costs. Alleviating poverty would save those expenses
When I consider that in 2019 the US federal government alreadyspent 4.45 trillion, the prospect of simplifying and standardizing that spending becomes extremely appealing.
Why should I receive it?
At this point there's only one last question I had before going all in on this idea: why should I get UBI? I'm someone who's doing pretty well without the government income and there are thousands of people wealthier than me. Shouldn't we optimize this subsidy for the people who need it most?
It wasn't until I read Scott's deep dive on TANF (Temporary Assistance for Needy Families) that I realized how ineffective and expensive conditionality is. For every current welfare recipient, the federal government has to fund caseworkers to make sure recipients are still "qualified" for the assistance, as well as pay for a bunch of other bureaucratic expenses (forms, offices, etc.). And how effective is all this bureaucracy in ensuring the benefits go to the right people? In a case study done in Wyoming, less than one percent of people who live below the poverty line received TANF assistance.
The story doesn't stop at how difficult conditionality is to implement. It also refers back to the incentive revelation I had earlier. The incentive for many is to prove their own financial insecurity in order to receive help. This means that people are less willing to engage in behaviors that could help them climb out of the financial bind they are in for fear of losing their conditional assistance.
The emphasis in UBI should not be on the Income. It should be on the Universal. Ensuring that the income is available for our wealthiest citizens is a small price to pay when compared to the price of conditionally excluding them.
Non-Partisanship
He did it. Scott has convinced me that UBI is a policy that could bring enormous progress to society through its simplicity and disproportionate impact for those in need. But there was one last emergent property of this policy that gives me hope that it could actually be implemented. Scott showed me that UBI is actually bipartisan, with both a capitalist defense and a socialist one.
With several studies showing an increase in entrepreneurship, capitalists should salivate at the thought of three and a half trillion dollars being in the hands of people instead of the government's. With several of those same studies showing a decrease in income inequality, socialists should also be excited by the prospect of blue collar workers having higher bargaining power against exploitative employers. In a time where the prevailing narrative is how divided the United States is, it seems impossible to be able to push for any idea that could appeal to multiple ideologies. UBI rises to this challenge.
The misconceptions I had with this idea came from a place of ignorance. I am greatly appreciative of the work Scott Santens has done to help convince me and many others of what ideas are possible for tackling poverty. You may not be convinced after this one article, and that's okay. I wasn't either. But as Scott once concluded:
"To be against UBI is understandable as long as one misunderstands UBI. But to be against UBI once one fully understands it... that’s what’s truly difficult to understand"
I still plan to add some images, but wanted to get the draft out there to start getting some feedback :D.
I was originally going to do just an idea strategy, but this idea has so much breadth to it that I made it a little more personal through the lens of a person strategy of someone who's lesser known in this space!
Areas for feedback:
Is it too long? Should I cut a section?
Is there a compelling story behind the curation? Or does it feel like articles were slapped together?
Were there any leaps in argument I made that weren't convincing?