About Nick: i am an economist based in malaysia. I write about development economics, while sneaking in a pop culture reference or two.

Exploring the Case for an Unconditional Basic Income

Published in The Edge Malaysia, 12 - 18 December 2016.

In my most recent article in this newspaper entitled, “A World Without Unemployment,” (The Edge, November 19 – 25) I posited a world where technology – especially artificial intelligence and machine learning – would render the majority of jobs today obsolete. To address this mammoth problem, I suggested a radical shift in mind set – to stop glorifying work for the sake of work but to re-think the concept of work as a means of pursuing purpose or telos.

Space constraints prevented me from discussing the policy mechanism for achieving such a goal and this essay intends to, as best, deliberate that policy – a universal basic income (“UBI”). In essence, a UBI is a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money, typically from the government, regardless of their initial levels of income. The UBI aims to ensure that every single individual or household has enough to enjoy a decent standard of living regardless of whether they have a job or not. Even those who are willfully jobless will still receive a UBI.

If this seems counter-intuitive, it should as it goes against two basic principles that we typically hold of welfare systems. First, under the UBI, even those who refuse to work and contribute to society receive assistance; most welfare systems are predicated on helping those who cannot help themselves not those who choose not to. Second, the UBI is permanent. There is no ‘sunset clause’ for recipients; many believe that welfare systems should be short-term in nature, preventing recipients from treating welfare benefits as a long-term crutch.

Those are valid and very real objections. However, before I address them, I will first make the case for the UBI. Firstly, from a human rights perspective, if we believe that there are basic human rights that should be accorded to all individuals, and if those basic human rights cost money then we need to either provide those rights or provide the means to attain those rights. Secondly, if we believe that wave after wave of technology will make jobs become obsolete more rapidly, the UBI will serve to stem this wave, rather than simply riding it. The UBI allows for a system which disposes of the traditional notion of employment, enabling people to lead decent lives even without jobs.

This is because the UBI provides a safety net to everybody. Therefore, if a person does not want to work as a cashier in a supermarket just to pay the bills, that person does not have to. Instead, she is free to pursue whatever purpose or telos she wants or, she can choose not to pursue anything at all. After all, if we believe that a free market system is the best system to increase individual choice, then the UBI – contrary to what some may think – is perhaps the most free market measure of all. People would be free to pursue their telos, whether it is to become an economist, an investment banker, a carpenter, a musician or an entrepreneur.

The most popular critique to a UBI is that it may create a culture of people who just do not work and hence, there will be a loss of productivity and innovation in the economy, stunting economic development. I offer three counterarguments to this. First, if people do work less, and spend more time on leisure, so what? Why is having more leisure a negative notion – leisure is, after all, a key portion of most conceptions of a ‘good life.’ Second, the UBI does not prevent people from earning higher incomes if they want to. It just puts a floor on what every household receives. If a household wants to work longer to make more money, that household is welcome to.

Third, and most importantly, while it is true that there will be those who choose not to work at all, there will still be a huge population of people who work because they enjoy their work. If an important part of a job is the dignity that comes with it, then the UBI is a conduit towards supporting that dignity. After all, passion will still drive people to invent, to create, to serve, to teach, to cure. Steve Jobs would still work on Apple even if already received a basic income. What a UBI gives is the opportunity to do what you really want –more waiters would become inventors, and more garbage sweepers would become entrepreneurs.

Thus, turning back to the first objection earlier, while it is true that there will be recipients who do not contribute to society, the potential benefits of the UBI – unleashing entrepreneurs, artists and inventors – will overwhelm the costs of these non-contributing recipients. On the second objection, there is nothing wrong with someone being on permanent welfare if they choose to do that. If we truly believe in choice, then people should have the right to do nothing if they so choose. The UBI is not guaranteeing a life of luxury or even comfort; just a decent life.

In my mind, the primary challenge facing the UBI is funding. If governments are to provide a basic income for all households, the number could be astronomical. With approximately 6.5 million households in Malaysia, even an annual UBI of, say, RM40,000 per household would require the government to spend RM260 billion per year. While there may be some mitigating measures – including only providing funding to households who make below the basic income level, or introducing progressive consumption taxes, or implementing carbon taxes, the strain on the government to achieve the funding every year would be enormous.

However, the UBI is not just some pie-in-the-sky policy that is light years away from happening. The UBI has been implemented and is being implemented around the world. In experiments conducted in the 1970s in the United States and Canada, recipients of the benefit worked two hours less in a forty hour work week, dispelling, to an extent, the idea that people would work far less under a basic income. Further, in Manitoba, Canada, the only two groups who worked significantly less were new mothers and teenagers – the new mothers spent more time with their infant children, and the working teenagers put more time into schooling.

More recently, in Ontario, Canada, the local government has announced plans to run a basic income pilot beginning in 2016. Finland and the Netherlands are developing plans to study the idea. In Silicon Valley, Sam Altman, the president of Y Combinator, has set out to organise a basic income study in the United States, based in Oakland. In June 2016, the first referendum on a UBI was held in Switzerland – the vote lost, but 23% of voters supported the UBI. There may still be some ways to go but the UBI is slowly establishing itself in mainstream policy discussion.

A world without unemployment is not as radical as we might think. A policy is already in the works to enable such a world, breaking the link between jobs and livelihood. Further, as people get to pursue their telos, the dignity they feel that comes with their chosen work will be strengthened. Innovation will not stop; creativity will not stop; enterprise will not stop. Let technology make jobs obsolete. The UBI can unleash the human spirit, and humanity will be just fine.

Improving Productivity is Meaningless without the “Why”

A World Without Unemployment