The UBI Problem – Universal Basic Income

first posted August 20, 2017
estimated read time: 19 minutes and 13 seconds

Universal Basic income, or UBI, is going to be a necessity sometime in the future. In its simplest form, UBI is when the government gives enough money every month to each citizen to live above the poverty line. This allows every single citizen to afford food, shelter, and other basic human rights even if they never work a day in their lives or if they work 80 hours a week.

Lately, I’ve been thinking a lot about UBI: advantages, disadvantages, and overall why I think that it will eventually become a necessity. I’ve seen a lot of poor arguments against UBI, and I’ll be discrediting some of the more common ones in this article, but before I do, we need to zoom out and take a larger look at the direction society and technology is heading.

Why We Will Eventually Need UBI

Before going into the pros and cons of UBI, we need to talk about why anyone thinks that a system like this is needed to begin with. Luckily, I know of a single word of power that causes cold shivers to shoot down the spines of millions of Americans every day: automation. Come to think about it, “automation” is basically the Avada Kedavra of the work force.

Automation isn’t some Terminator-esque revolution where machines that look like us (or large Austrian men) start taking our jobs in the cornfields, but it is going to displace millions of people from the workforce. And it’s happening right now. Automation doesn’t look like some humanoid animatronic taking your order at McDonald’s, it looks like a kiosk – a glorified tablet running a simple app.

mcdonalds kiosks 600

Cold, emotionless, angry kiosks

Those Kiosks have been in many McDonalds across Canada since 2015. My local one has them and when I first saw them I immediately thought to myself “Why have they not always had these?”. Seriously. As A web developer, I could have designed and coded these things in a couple of days – so what took them so long?

Want to know how I bought tickets for the last 20 or so movies I went to? Hint: It wasn’t by showing up and lining up at the ticket booth. I simply bought them on my phone because it’s 2017 and this technology has been around for a decade. The tickets were emailed to me, and when I showed up, I just scanned the bar codes from my phone and boom – movie time!

Now, you may be thinking that these two examples aren’t very good ones because they seem to only be displacing what are generally considered to be low-paying, part-time, student level work. And that’s a good point. I only chose these because they are “small” changes overall to how our businesses work and how technology and automation are changing society. But that’s just it. Automation is changing not only the way many big businesses are operating, but these advancements are changing how society functions as a whole as well. Businesses are replacing more and more front facing!By front facing, I am referring to the types of employees that customers traditionally are used to seeing and dealing with. employees because it’s cheaper for them to do so, and society is preferring to use these automated systems – whether it’s a kiosk, an app, or a website – because it’s simply easier than dealing with an employee most of the time.

I bring this up as important because, for almost all of human history, automation has increased productivity and profit, and taken the jobs of those who worked mostly “behind the scenes”. When Henry Ford revolutionized manufacturing with the standard production line, the real innovation was an automated process – he used human labor to automate production. Now, however, much of that same automation is done with machines, cutting jobs out of the production line. Automation has always been more productive and cheaper, and it has always reduced the number of available jobs – especially for jobs requiring a low education threshold. Eventually, on a long enough timescale, all jobs will be fully automated. So where are we on this timeline?

The Automation Timeline
– When Do We Need UBI?

It’s no secret that I am advocating for UBI in this article, but I’m not some naive fringe leftist who wants the government to pay for his car. I know that capitalism is the true driving force in our society, and in this case, I think that we should follow the invisible hand on this one. The theory is a pretty simple one when you look at the equation from the perspective of the ones building the tracks for the automation train – businesses.

The reason businesses are utilizing more and more advanced automation is because it is profitable. If the automation, be it either software or machine, is cheaper than dealing with employees, then they’ll do it.

if ($automation < $employees){
// yay! no more employee benefits or sick days or bathroom breaks,
// or sexual harrasments, or wasting all day on reddit

The math really is that simple. That same equation is how every well-run business looks at every decision and can be boiled down to “will doing this increase profits?”, and as the old adage goes, a penny saved is a penny earned.

So as more and more workers are replaced by automation, the workforce starts to decrease across the nation and unemployment rises. This is obviously a bad thing because the unemployed become a burden on the government, have a significantly higher chance of depression, and all the rest of the fall that comes with not being able to support yourself or family – but capitalism doesn’t care about any of that. A company doesn’t care if the employee they just laid off becomes a burden on the government, and they don’t care if that person battles depression or cannot support their families. They just care that they are now more profitable.!Please note that I’m not saying that people working in these companies don’t care, I’m just saying that a business has one goal – profit. A business has no morality and feels no guilt.

But what happens when the amount of no to low-income people become so great that the sheer lack of customers decreases a company’s profits? This is when businesses will be begging for UBI because it puts money back into their potential customers’ pockets. But when will automation displace enough of the workforce to become the catalyst needed for UBI?

With recent and upcoming technology advancements, I think the answer is “sooner than you’d think”. I don’t know what the number or percentage of unemployed people needs to be, but I do think that it’ll be one of those “play it by ear” type situations. Ultimately, there will be two determining factors.

  1. Can our current systems (Welfare, Unemployment Benefits (EI), etc) be enough to sustain the influx of the newly unemployed?
  2. Are enough businesses seeing reduced profits from loss of customers with income?

I think that the first factor will come into play much sooner than the second. The government already severely underfunds unemployment programs, and thus will feel the squeeze both financially and politically before businesses step in to protect their profit margins. But I do not think this will be enough to jump-start UBI because, at the end of the day, it’s simply easier for the government to add additional funding to their existing programs. We can’t afford any kind of UBI without big business on our side. The problem is that this doesn’t solve anything, only buys a little bit of time for a real solution, and would ultimately be harmful. This is why I think that it will need to be capitalism to the rescue.

The Catalyst

So we know that automation has been slowly displacing workers for a very long time, so why suddenly so much talk about UBI? What’s changed? What’s changing right now is, once again, that we are starting to automate jobs that have traditionally always been safe from automation processes. Jobs like cashiers, bank tellers, construction workers, journalists, advertising, customer support, secretaries, even lawyers! This is happening all around us and is creating a big shift overall. If you have a job that has a large portion of repetitive tasks, I have bad news for you. These changes happening all around us are not the problem, but they do represent the direction we are heading into. Technology has lowered the cost of automation to the point where some businesses are finally accepting that their workers are detrimental to profit.

What is about to change as technology grows and becomes cheaper/more accessible, is that not just low-end positions will be replaced, but entire industries. The most common job per state in America is a Truck Driver, a job that will soon no longer exist. Tesla, Google, Uber, Toyota, BMW, Volvo, Nissan, Ford, GM, and at least ten more MAJOR companies are committed to making self-driving vehicles a reality. What happens to all of the taxi drivers, delivery drivers, truck drivers and so on when automated vehicles become mainstream?

self driving truck

Otto, the self-driving commercial truck

Tesla claims to have fully autonomous driving ready to go in 2018. Uber and Volvo have agreed to a $300 million alliance to develop driverless cars and have already made their first delivery – 50,000 beers. Google claims to have their version ready for the road by 2020 – and theirs is truly autonomous as they won’t even have a steering wheel or breaks.!They’ve driven well over 2 million miles in autonomous mode and have only had two accidents. The first was when the car wasn’t in autonomous mode and the human driver got into a fender bender, and the second was when a man amazed at seeing a self-driving car, lazily rolled into the back bumper at a red light. Toyota invested $1 billion into self-driving technology and also have a 2020 release date planned. GM invested $500 million into Lyft to get fully electric and self-driving cars. You get the idea.

Now to be fair, some driving situations will always require an employee – just not to drive. For example, instead of employing a bus driver, companies will employ a bus helper, or bus security or something. The primary purpose of this employee isn’t to drive the bus but to simply help those who need it, such as helping an elderly man get aboard!Is it too much to hope for human kindness that another passenger could help this hypothetical man?. Most taxies won’t be driven, but some will have an employee if requested for those who need additional assistance with luggage or special needs. Delivery trucks might be able to drive themselves, but they can’t load and unload themselves, yet.

What I’m saying is that automation is going to turn all vehicle-related jobs and industry on its head, and a lot of people are going to lose their jobs, but not straight away. Driving is really only a transferable skill to another driving job, so what are all of these people going to do? Good luck getting a full-time job in the service industry as those jobs are being automated not to mention rarely offer full-time positions. Luckily it won’t be like, 2020 we have automated cars, 2021 no one drives anymore. There will be a transition phase as companies learn to trust the new technology, that same technology becomes cheaper and smarter, and they are able to eat the large up-front cost of the vehicles.

Losing all of those jobs would put a massive strain on the government and society as a whole, but I do not think that it’s enough to need UBI,!Please note that in this case when I’m talking about needing UBI, I’m not talking about “when’s a good idea to have UBI”, I’m talking about “UBI is the only way our citizens can survive”. but once again it points in the direction we are inevitably driving towards. Once the drivers are obsolete and deliveries are automated, how long until loading and unloading is automated? Because automating that would be a hell of a lot easier than the work, knowledge, and funding that’s gone into self-driving technology. How long until inventory is automated? How long until a cold and calculating algorithm chooses where to place products on a kiosk the size of a wall at a grocery store and selecting an item is like using a glorified vending machine? Because we already have that.

So, UBI, when do we want it? I’d say as soon as in ten years. When do we need it, probably in thirty to fifty. But please don’t take my word on it because I’m just some guy writing on his blog.

Common Complaints about Universal Basic Income

UBI is something I’ve heard about, but never really understood before this article. In going down the rabbit hole to learn as much as I could about UBI, why it’s needed, and what people are concerned about, I came across the same three concerns over and over again. Don’t get me wrong, because I understand why these would be knee-jerk concerns, but if you look at the zoomed out picture, I think the following issues will can be mitigated or eliminated altogether.

UBI Will Create a Society Of Freeloaders

The concern here is that a UBI system will demotivate a large population from even attempting to find work. Why would they when their needs are already met, right? Now let me rephrase that in reality. Why would someone who is barely living above the poverty line, unable to afford more than a bachelor apartment and a decade old car – why would this person want to find a part-time job when their needs are already met? We have to remember that UBI isn’t $40,000 a year in free money. It would likely be closer to $15,000 – $20,000, which is certainly no small amount, but is also not enough to afford a nice place, and a car, and gas, and car insurance, and a phone, computer, internet, tv, furniture, food, booze, movie tickets, and so on. UBI is enough to keep you alive and healthy – it is not enough to go out drinking once a week and eat steak every night.

The current welfare system already demotivates people to an extent. If they start working then they often lose their welfare benefits, and in rare cases working for minimum wage is actually worse financially than not working at all. With UBI, your benefits are never cut off, because they are guaranteed. Elon Musk gets UBI, just like I do and that jerk neighbor in the apartment above me who apparently has a fetish for scraping furniture across the floor all day and night. With UBI, there is no risk in finding a job, only reward.

We also need to consider not only why people currently work, but why they do the jobs they do. Yes, there is a portion of the population who are just content with doing nothing, but overall I think they are a very small portion of society that may grow under UBI, but still remain in the vast minority.

People don’t go to medical school or law school because they are content living within the minimum of their needs. They don’t learn engineering, history, or computer science because they are forced to go into those specific fields. They do it because they want to be successful, and everyone measures personal success differently. Maybe the Doctor cares more about the societal respect of being a doctor than the money, or maybe they care more about helping people in need. Maybe the lawyer cares more about making the most money. Maybe the computer scientist just loves the problem solving and challenges that come with the job along with the feeling and validation of figuring something out. Everyone is different, but we all have motivation for the things we do. No one is paying me to write these words, but here I am typing. UBI does not eliminate these motivations. If anything, UBI helps nurture a person’s passion and desire to create or contribute by relieving some of the financial stress that comes with, say, going to school or starting a new business.

There is a reason many retirees go back to work. There is a reason so many lottery winners opt to keep their jobs. There is a reason millionaires don’t make their first million and think “that’s enough for me, I’m going to slow down now”.

UBI Will Create Even More Debt And Those Who Cannot Pay It

This sounds like a valid concern when put into the context of current times. Be honest. When you think of a society where every single person gets free money every month, you worry that a large portion of those people will immediately spend that money on things that are not essentials. If a drug user gets a free check for $1500, what are the chances that this person uses that money to pay rent? What about someone who is just bad with money and spends their check on a new couch that they absolutely didn’t need? Now we have poor people with cocain and nice couches, but who are on the verge of being evicted.

Luckily, we already have a possible solution for this. Food stamps. Except we will call them UBI Tokens or something. UBI Tokens can only be redeemed for certain things such as rent or mortgage, food, tuition, and general bills such as phone, internet, and hydro. Maybe a small portion of the monthly tokens can be called Fun Tokens or something and can be redeemed for movie tickets, gas, games or whatever else. Fun tokens can be used for anything because they are fun! Maybe they can have a picture of a clown or something.


Fun token, or Stephen King horror token?

Under UBI, we also need to consider how other industries would be restructured to reflect the current financial stability of the average family. For example, credit will be a lot harder to get for those not working. If a company knows that your only income is UBI, then they sure aren’t going to finance you that $40,000 car or give you a $12,000 credit card. There would simply be too much risk involved for them to do so. It is because of this that I think over the long run, UBI will actually help reduce the debt of the average person by making it harder for those to get credit who probably shouldn’t have had it to begin with.

But what about existing debt? The average American house hold in 2016 has $16,425 in credit card debt. That is an insurmountable amount of debt for a lot of people. For those on UBI and have lost their jobs, that debt probably won’t be going anywhere anytime soon. But for those who still have a job, UBI will go a hell of a long way to paying off those debts, possibly even in just the first year!

Who Is Going To Pay For All Of This?

And here we are at the most important question in all UBI discussions; how are we going to pay for UBI? If we are heading towards a large unemployed future, how can the government afford to pay this much money to citizens who are not, in turn, paying taxes? Kind of a small point, but they would still be paying sales tax and stuff, but that’s still more than 90%+ of the money that the government has to front, so where are they getting it?

What scares most people, especially conservatives or those with wealth, is that the obvious answer is “those with the money”. And this is scary because it doesn’t seem fair. Why should someone who chooses to work, be forced to give money to those who choose not to? What, now the millionaires have to give all of their money away too? The answer is yes – well not all of their money, but yes, they are the ones that will be funding UBI. Or more specifically, it will be big business’.

What you have to remember about the automation race is that there are two lines on a graph racing towards each other at break-neck speeds. The first line is the advancement of automation systems and technology, and the second is the cost to implement and maintain these systems. When the cost gets low enough, it’s bye bye bye workforce. When you think about all of the costs associated with having employees, you’ll see that automation is already the answer across many industries.

With employees you need:

  1. wages
  2. break room
  3. bathrooms
  4. desks/cubicles (if office work)
  5. benefits
  6. vacation pay
  7. insurance
  8. overtime pay
  9. payroll software and systems
  10. human resources
  11. sick days or no-shows or showing late
  12. loss of production on holidays
  13. sexual harassment claims (thanks for the idea FOX!)
  14. workplace injuries and lawsuits
  15. good old fashioned human errors
  16. taxes

And I’m sure there are many more. If I have to buy a $100,000 machine to replace one employee, it’s probably worth it. An employee can only work so many hours a week. A machine can work 24/7.

With UBI, these companies will be more productive because of automation, and therefore more profitable. Now if you take into consideration all of the savings in the above list, it almost feels like they are double dipping in the automation sauce. But what about #16 above, taxes?

The US government gets over $6.56 trillion in income tax every year. For some reason, we all take paying income tax personally. The government is taking my hard-earned money, but is this really the case? You could also look at it from the employer’s point of view. They are pissed that they have to pay X% more money or you won’t take the job, and the reason for the salary increase is because of income tax. We think of it as us paying the tax, but really it’s been your employer paying it all along! So go ahead and thank your boss tomorrow.!Or right now if you’re reading this instead of working, you lazy bum. You better hope your boss isn’t reading too or you’ll lose your job to automation sooner than later.

So when I say that it’s the rich people who will be funding UBI, I meant it, but it won’t be a loss of profit for them. They won’t be pulling a Bill Gates and donating their considerable wealth to the cause. Instead of income tax, we will increase tax for business owners and charge a flat percentage on profits. I’m no financial wizard, so I’m not sure how this would work for companies like Amazon and Tesla who never turn profits because they reinvest all of their money into research and development, but you get the idea. We’ll figure out the math together! At the end of the day, when we get to the point of needing UBI, even with a significant increase of taxes, the owners will be so much more productive and be saving so much more money that they will still be more profitable than before.

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