Universal Basic Income

An answer to the automation revolution?

Published over 1 year ago in North America and Science & Innovation

artificial intelligence poverty usa

Tim cover

Illustration of the threat coming from artificial intelligence (Source: Investopedia)


Artificial intelligence has become a highly discussed topic in the United States, as it is expected to severely impact the current and future workforce. Technology taking over human jobs is not a new phenomenon in the United States; automation has already made a significant dent in the American workforce and will continue to do so in the rest of the 21st Century. The difference between artificial intelligence and automation is that artificial intelligence has the ability to learn and solve human problems, while automation is geared towards merely performing basic, repetitive tasks. Automation affects manufacturing sector jobs, but the power of AI allows it to have an impact on a variety of fields, including education, business, security, and transportation. The rise of artificial intelligence, coupled with the continued progress of automation, is expected to have devastating effects in jobs across all sectors; in fact, 47% of Americans are most likely on the verge of losing their jobs due to these advances. This, coupled with the fact that most Americans do not have the proper training in order for them to adequately acclimate themselves with the jobs of the future, forecasts a grim reality for the United States. This is especially true if society is unable to provide basic needs for those who will be left behind by these advances. The only practical solution that has been offered thus far to deal with this looming threat is some form of a universal basic income.

International job loss in manufacturing sectors due to automation (Source: The Wall Street Journal)


Evolution of Universal Basic Income

Universal basic income, or UBI, is a fiscal policy that would provide citizens with a certain sum of money every year independent of their employment status. It is by no means a new phrase or proposal; Thomas Paine advocated for the policy as early as 1792. Prominent figures from both sides of the political aisle have endorsed universal basic income, albeit for different reasons. The late conservative economist Milton Friedman supported universal basic income as a more effective replacement for existing welfare and entitlement programs. Martin Luther King Jr. endorsed the idea as a way to move a large swath of Americans out of poverty. Today, the loudest cries for the implementation of universal basic income come from the tech tycoons of Silicon Valley, such as Elon Musk and Mark Zuckerberg. Working at the forefront of technological innovation, they see the main problem that lies ahead: mass unemployment for blue-collar workers that are under-skilled in technological or information-oriented fields such as computer programming, architecture or science. Dallas Mavericks’ owner and Shark Tank star Mark Cuban even went as far to say that liberal arts majors hold the skills that are going to be necessary for a future job market encompassed by automation and artificial intelligence. According to Cuban, STEM jobs and almost every other labor sector besides those requiring liberal arts skills will be heavily impacted by artificial intelligence and automation.

Critics of universal basic income, both on the left and the right, emphasize the impracticality in terms of cost and the loss of a fundamental purpose in life for many people. The financial practicality of such a policy is heavily dependent upon the amount of money the government should give out in order for it to truly be a “basic” income, where everyone who is a beneficiary of it can have their most basic needs met. Many in Silicon Valley have proposed a basic income of $1,000 a month or $12,000 a year. Detractors say this is unfeasible as $12,000 a year would cost over $3 trillion a year to provide for the entire U.S. population. This figure is about equal to all of the tax revenue that the federal government collects annually. The Roosevelt Institute concludes that to fully fund this proposal of $12,000 a year, the taxes of the wealthiest 10% of Americans would have to increase from 21% to 35%. This would necessitate a radical transformation in both entitlement spending and tax policy and provoke opposition from liberals and conservatives. Even if the practical challenges of a universal basic income are ignored, the massive change in social practices caused by reducing the need to work could have unforeseeable consequences. Some reports, however, indicate that such a social transformation is unlikely to occur.

Some states are already considering a universal basic income. In June Hawaii became the first U.S. state to unanimously pass a bill in support of a basic income and is currently evaluating implementing a basic income program. Alaska already has wealth distribution policies in place; each resident receives $800-2,000 annually from oil profits on state lands. While the sum does not come close to a livable basic income, the effects on state labor participation are used as evidence by proponents of a universal basic income. Ioana Marinescu of the Roosevelt Institute concluded that Alaskans are no more likely to quit their jobs and become more sedentary as many would like to think. However, when technological changes cause massive job loss and individuals have to depend on a universal basic income for their livelihoods instead of using it as supplementary wealth, their attitudes toward employment may shift.

State Representative Chris Lee (D-HI) led the charge to implement a form of universal basic income in Hawaii (Source: Casey Bussewitz/AP Images)



In response to the expected costs of basic income policies, a study from the University of Michigan found that universal basic income, or as they referred to it, a negative income tax, is actually feasible in the United States. A negative income tax is a system in which people who make less than a certain amount of money annually are given a basic income without having to pay taxes. In this case, every additional $1 made over the poverty line would be taxed at 50%. This would phase out high earners and be able to completely eliminate poverty. They found that setting the negative income tax to the US poverty line with a 50% phase-out rate would cost about $219 billion a year, a much more reasonable figure than the astronomical amounts critics argue a successful policy would cost.  

Artificial intelligence and automation are imminent threats to labor markets across the world. As with climate change, it is in our best interest to expect the worst and to be ready for massive increases in unemployment. Since it is unlikely that Mr. Cuban’s suggestion that we all study the liberal arts will solve this problem, a universal basic income will have to be more seriously considered as non-human labor becomes a dominant factor in the global economy.  

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