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What is universal basic income? A beginner’s guide

universal basic income
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Next to animojis, The Handmaid’s Tale, and millennial abbreviations like “suh” and “TD” that make us feel terrifyingly old and out of touch, universal basic income is likely one of those things you’ve heard people talk about at some point in 2018.

If you’re too busy/lazy to crack a textbook, however, have no fear: we’re ready to fill you in on the massive economic proposal that’s exciting everyone from certain high-ranking government government officials to Elon Musk to that brooding guy/gal in your life who dresses in black and uses phrases like “late-stage capitalism” and “accelerationist critique” far more than seems healthy.

What’s this “universal basic income” I hear so much about?

Universal basic income is a proposed form of monetary social security that would be made available to every citizen or residence of a particular country. There are five essential characteristics inherent in the idea:

  • It’s a sum of money paid at regular intervals
  • It’s paid in cash money rather than, say, food stamps
  • It’s paid to individuals
  • It’s paid without any means testing
  • It’s paid regardless of how willing (or unwilling) a person is to work.

The exact amount that you’d receive would like vary from country to country, but the figure people keep coming back to in the U.S. is around $10,000 per year. That’s not going to make you rich, but it also means you could meet your basic needs without having to be reliant on work. Not that you’d necessarily have to give that up…

Wait, so you can work as well?

Of course. That’s what we were referring to with the bit about a person’s willingness to work. This isn’t an unemployment benefit, although — should you wish to sit in your apartment and watch every single movie and TV show ever committed to Netflix — you’d be able to do that without starving. If, on the other hand, you were so inclined to work you’d be able to top up the amount of money you receive by adding a paycheck on top of it.

This means that, theoretically, you’d be able to turn down less rewarding jobs that you’d otherwise have to take in order to keep a roof over your head — and perhaps even become a bit more of an entrepreneurial risk-taker, since you’re supported by the safety net of basic income.

Is this a new idea?

Not really. The core ideas behind universal basic income date back centuries. For example, in Thomas More’s 1516 book Utopia there’s a discussion of a scheme to “provide everyone with some means of livelihood” since this proves a much more positive way of building society than simply punishing those who steal food to live by sentencing them to death. Others (such as More’s colleague Johannes Ludovicus Vives, mathematician and political activist Antoine Caritat, English philosopher John Stuart Mill, and more) built on the concept over the following centuries; each developing the idea even further.

More recently, the idea of basic income has had a resurgence in popularity as a possible means of addressing the massive wealth inequality in society.

So if it’s about money, why do people keep talking about robots?

Ah, yes, the robots. Never mentioned in Thomas More’s Utopia as a key element of universal basic income, the reason why robots and AI are now regularly part of the conversation is because of the threat that they pose to many people’s employment. The ratio of robots to workers is increasing dramatically around the world, and the cost of implementing those robots grows ever cheaper, while their skills increase.

According to one 2013 study, an estimated 47 percent of current U.S. jobs will be automated in the next 20 years. With mass unemployment looming, universal basic income could be a radical solution.

Well, that settles it for me then. Who could object to such a brilliant scheme?

Unsurprisingly, there are a few objections to this. The big one, naturally, is who would pay for it. The United States alone has around 250 million adults, all of whom would qualify for basic income. If everyone gets a tax free $10,000 (because it’s not really a basic income if the government takes some of it back in the form of tax) that’s $2.5 trillion per year. Proposals that might help cover this include things like slashing military funding, using carbon taxes, sovereign wealth funds, getting tech giants to help pay for it, and more.

Given the scale of this initiative, however, it would take some radical rejigging of the U.S. economy — and that’s before you even start to think about the folks who might drop out of their professions and stop contributing to the national GDP because they no longer need to work 40 hours a week in a job they dislike.

Can’t the 1 percenters pay?

Well, it’s not quite as straightforward as that. Firstly, $2.5 trillion a year is a lot more than even the likes of Tim Cook and Mark Zuckerberg have hidden under their mattresses. There are plenty of other questions it raises, too.

For example, would employers use it a subsidy to lower wages for certain oversubscribed jobs? Would it simply make products and services more expensive, in the same way that dual income households caused a rise in property prices? Would this be used as a replacement for all other welfare programs, and could this hurt instead of help people? It’s an intriguing idea in theory, but there’s a whole lot of small print that would have to be worked out — even if it was affordable.

Has anyone actually tried this idea?

A few key studies have been done. One 2012 study carried out in the Republic of Ireland worked out that basic income could be affordable if people were taxed 45 percent of their income. This would lead to overall income increases for the vast majority of people. If you’re talking about actual practical attempts at implementing this, there have been a number of pilot schemes around the world.

In Ontario, three communities have been selected for one such scheme, which will be trialled over the next three years. As part of the trial, 4,000 individuals between ages 18 to 64 will receive a minimum income of that meet certain criteria, and provide them with a minimum income despite their employment status of CA$16,989 ($13,685) or CA $24,027 ($19,361), minus 50 percent of their earnings from work. No-one has yet tried to roll this out on a grand scale, though.

Watch this space.

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Luke Dormehl
I'm a UK-based tech writer covering Cool Tech at Digital Trends. I've also written for Fast Company, Wired, the Guardian…
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