Episode 27 – Is a Universal Income Realistic?

Welcome Friends, Neighbors and people everywhere. This is your host, Michael Nunes.

Welcome to the Twenty-Seventh episode of my podcast, The Power of Three. I want to help show you how harnessing the Power of Three can lead to a more fulfilling life, a life that celebrates our differences and our similarities, and accepts that we are part of the great web of life.

In this episode, I will discuss an idea that is currently making the rounds. The concept of a Universal Basic Income appears to be on the lips of a great many people. This is not a new idea. I will discuss some of the justifications, and some of the opposition.

A number of prominent people have broached the idea of a universal basic income quite recently. Thomas Paine, one of the Founding Fathers; John Stuart Mill, who wrote the book “On Liberty” and John Kenneth Galbraith, one of the proponents of American Liberalism have all proposed a universal income.

The founder of Facebook, Mark Zuckerbook and the founder of Tesla, Elon Musk, both embrace the concept. So do Bill Gates and Richard Branson. Pilot projects in Finland and Kenya are testing the feasibility. The idea of a universal basic income is that the government will give the money to people, with no strings attached. There is no work mandate, no regulations, and no forms to fill out. What people do with the income is up to them. Most schemes that provide a dole, or money for the unemployed come with conditions. Any work, of any kind, that produces an income is seen as a violation of the conditions of the dole, and it can be taken back. With a universal basic income, not having conditions attached seems to work far better.

Instead of taking incentives away from people, it seems to provide a boost to innovation. In Finland, recipients found that they had the freedom to pursue ideas that were forbidden before. Freed from the regulations surrounding free money, the recipients began developing projects that could produce income.

Jobs are displaced when companies move their facilities to low cost countries, or when companies automate those jobs. People who have learned certain skills can find it difficult, if not impossible to change to other positions. The mindset of people who have worked in a particular position for an extended period only adjusts with time. Sometimes, even that is not feasible. The older a person gets, the more likely it is that they will have difficult adjusting to joblessness, or piecemeal work that does not use their skills.

An increasing number of positions are being automated as technology finds ways to replace them. Sometimes, there just is no alternative to those positions. Technology may also evolve too rapidly for people to make the transition. I found this in IT. When new computer languages arrive and displace the old, many people continue to work in the old languages at first. By the time they are forced to make the transition, younger workers have already swallowed up entry-level positions. Older workers cannot compete, despite their experience in the work force. After a period of time, they become unemployable.

Those jobs available to displaced workers, even in a low unemployment economy, cannot provide the income provided by the jobs lost. It seems as though the economy is reaching full employment, but only in low-wage service jobs with little future and few prospects for advancement. The long hours and low wages make it close to impossible to find more skilled work through education. Additionally, there is no incentive for those low-wage workers. There is no capital to build businesses and few chances for loans. A universal basic income helps to mitigate some of these problems, and also provides a stimulus to the economy.

Jobs created in the new technological age are either very highly skilled, requiring expensive training ad experience, or low skilled, giving little in the way of a realistic income. People in the middle earning years do not have the luxury of spending precious income on education, or the time to invest in these undertakings. It is unrealistic to expect them to swap careers at the peak of their earning capacity and move into more technologically advanced careers.

Traditional welfare is inefficient, and well below what is needed for families. Using means-testing and other conditions for welfare strangled any universal benefit. Conditions make the welfare expensive to operate and complex for recipients. People find it difficult to navigate the system.

A basic income would give workers more flexibility to move to jobs they find more rewarding. Employers would have to compete for workers, forcing them to pay more. That gives the workers more incentive to take jobs they otherwise may not have considered. It gives people more peace of mind, knowing that they can take risks without the fear of losing everything. Even if a business venture fails, people can still survive without destroying savings.

There is some opposition to the idea of universal basic income. The most prominent argument proposes that a social security system encourages laziness and a sense of entitlement. The opposition claims that people no longer want to put in long hours and hard work. Yet, many people living on low wages do work long, hard hours in grinding positions that produce little reward. Hard work itself does not necessarily produce any reward at all.

Recent research shows that boredom can actually stimulate innovation far more effectively than grinding away at an unrewarding job. Work that is not rewarding, that involves repetitive motion, or work that does not provide intellectual stimulation stifles any kind of innovation. A mind involved in repetitive motion eventually switches off. A far more effective idea can be doing absolutely nothing, which stimulates thought.

Also, if future technological innovations reduce available work, people will be doing nothing anyway. A basic income gives people something to look forward to, instead of the dread of homelessness and starvation. If machines can do human jobs more efficiently, what does society do with the people displaced?

Some people may use a universal income to do nothing. Yet, most people far prefer to involve their minds in something rewarding, whatever that might be. A universal income frees people to explore activities that they might never have considered. Involvement in charitable or volunteer work may well increase. A willingness to clean up the environment and create ways to restore forests or other sensitive environments may increase. People may read more, which stimulates the mind, learn a musical instrument or become involved in teaching or other low wage jobs that are nonetheless rewarding.

Western societies have a tendency to treat the poor as criminals, people society does not want to see, people who are perceived as a drain on society. Society does not take into account individual conditions, physical disability, mental illness, or the state of the job market.

A recent analysis of basic income estimated that if every adult is paid $1000 each month, the economy would grow 12.56% over eight years. That translates to $2tn in additional wealth. Currently we rely on giving tax cuts to the wealthy and relying on money to trickle down from a few at the top. Instead, money given to those at the bottom would feed up through the system from the many at the bottom. People can decide how to spend their money rather than the wealthy deciding what they deserve. This allows the people to support those services or products they most need. Businesses that cannot provide services the people want, will vanish.

Basic income would automatically create its own demand for services and products. This does not happen if the money is given to those at the top. People at the bottom have seen their incomes stagnate, which reduces demand for products. This in turn causes a sluggish economy. The wealthy tend to hoard their income rather than spend it to create demand. Giving those funds to the poor will spur economic growth and make for a more equitable society.

How would this income be paid for? Taxes are the obvious answer. An increased tax on the 1%, who take most from the system, is the most obvious source. An increased tax on the top 10% of earners would be successful and allow for a fairer distribution of income. It would reduce the currently unacceptable level of inequality in the economy. It would allow for the provision of medical services for all.

Basic income also has another interesting side effect: less government regulation. This should make the anti-regulation crowd, especially libertarians, happy. With a single program instead of a panoply of programs that produce complexity, there is a single department handling everything. The idea reduces poverty dramatically, which reduces crime and the incentive for crime. Reducing poverty reduces untreated diseases, and a healthier, happier population. This reduces tension in society.

A number of countries have had success with pilot programs. In Manitoba in Canada, basic income ended poverty and reduced hospital visits, while raising high school completion rates. It also appeared to encourage people to use social services more responsibly. Basic income increases savings, economic status, and gave people a sense of control over their lives.

Today, 25% of workers, including 40% of restaurant workers require government assistance just to get by. Wages have stagnated for lower income workers since the 1970’s. A universal income would alleviate that problem. I will continue to examine the universal basic income because of the promise that it holds for the future.

I encourage you to continue to enhance your life with the Power of Three and search for the best possible life to live.

Until next time, go well my friends.

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