Universal Basic Income: 3 Issues to be Addressed Before Implementation is Feasible

The idea of Universal Basic Income is so intuitive that even as a child, I pondered about it without giving it a name.

“If some people have excess wealth and others are struggling to get by, why don’t we just divide up a pool of wealth so that everyone is guaranteed a minimum amount of money so no one has to starve?”

This topic is incredibly important to me because a successful implementation of UBI would directly eliminate extreme poverty by guaranteeing a monetary “floor” for everyone to meet basic standards of living. So why haven’t we implemented it yet? In this article I will explore some of the key concerns with UBI and suggestions on how to address them.

🍂 Please take a seat, sip some coffee, and come chat with me in the comments! 🍂

See this cup of coffee? It’s for you. Drink up.

Quick Definitions

So what is Universal Basic Income?

Simply put, it is a government program where all citizens receive a standardized amount of money regularly.

• Today’s coffee chat is primarily about a UBI that pays just enough for people to live above the poverty line. In the USA in 2022, that accounts for a monthly payment of ~$1,135 for every adult and $395 for every child.
• The context of this article is widely US based, and the set of issues surrounding implementation may vary in other countries.

Issue #1: The cost is unrealistic at this point in time.

📌 At this point in time, UBI that brings every US citizen above the poverty line would cost ~$3.6 trillion per year.

That’s more than half of the proposed federal budget for 2022. Supporters have proposed various means for funding, but every proposal has flaws.

Cutting Existing Welfare Programs

The US is projected to spend ~$1.7 trillion on welfare in 2022, which makes up multiple essential services like Social Security and Medicare. Not only is this much less than the $3.6 trillion required to implement UBI, cutting existing services would harm millions of people who depend on these welfare systems. Not all the services provided by welfare are monetary, such as access to quality education or healthcare. As such, people would miss out on these direct benefits if they were simply given cold hard cash as with UBI.

Value Added Tax

This popular proposal has been endorsed by presidential candidate Andrew Yang and adopted in multiple European countries. The basic idea of a VAT is producers pay taxes throughout the production process, which differs from a sales tax where consumers pay all the taxes at the end. This allows more taxes to be collected from producers. In addition, to keep prices competitive, the IMF estimates that only ~30–40% of the total taxes from a VAT is passed down to consumers, which means businesses usually end up shouldering more of the burden.

Nevertheless, a VAT would still raise prices on all kinds of goods and services, and if done at a scale meant to provide $3.6 trillion of extra funding for the US budget, prices would surely rise to a point that makes a $1,135 monthly payment obsolete.

Other means of cutting costs or raising taxes are equally inadequate as they either eliminate crucial services from those in need or face stiff opposition from taxed populations. Overall, these proposals are not enough to make up the $3.6 trillion necessary to fund UBI while still leaving enough cushion space for other areas of investment.

Issue #2: UBI will pave way for massive automation, and that is something we should be careful about.

If people were to quit high-demand jobs because of the income floor provided by UBI, how would businesses fill those jobs? An obvious answer is through automation, which is becoming cheaper and faster as technology continues to progress. However the encouragement of more & more automation could leave the production of wealth in the hands of a select few technology experts.

What does the future of automation hold?

“The more the wealth of a nation comes from the productive citizens of the nation, the more the power gets spread out and the more the ruler must maintain the quality of life for those citizens.”* *CGP Grey, Rules for Rulers**

“We may have reason to believe that automation — similar to how oil has thwarted democratization in some countries — will concentrate more power in the hands of autocrats, thereby reducing the leverage of other elites and the middle and working classes to demand more participation in decision-making.” Hannah Sloan, IoT For All

If the general population is not educated on technology yet they begin to depend on automation as a source of wealth, they can easily be manipulated by those who do have that knowledge. This could be through misinformation or straight up force. Automation enables all kinds of new power sources that could be abused, including pervasive surveillance systems, [data-led psychological targeting](https://blogs.lse.ac.uk/businessreview/2019/11/21/rethinking-privacy-in-the-age-of-psychological-targeting/#:~:text="Psychological targeting" is the practice,help of psychologically informed interventions.), and increasingly realistic digital fabrication. This description my seem far-fetched or pulled out of a sci-fi novel, but these technologies addressed already have extensive development, as I have linked. I believe that in considering the future, we must be prepared to address possibilities unfathomable in the present moment because our society will constantly be striving for more technological innovation.

The rise of a digital autocracy is just **one of many concerns** revolving an increase in automation. I will not cover all of them in-depth in this article, but here are more issues to be aware of.

• UBI encouraging the acceleration of technological research, which can lead to dangerous technologies emerging such as unaligned AI
• Automation increasing inequality & further disempowering people who don’t have access to a technical education
• Loss of artisanship, independence, and other important cultural values from replacing human labor

Issue #3: Just giving people money doesn’t solve the underlying issues creating the experience of poverty.

A key distinction we often forget about is money and wealth are NOT the same thing.

*“The things that we need for our survival — food, shelter, fuel — are wealth. The things that make us feel good — family, community, entertainment — are wealth. The things that help us to get what we need and what we enjoy — machinery, infrastructure, education — are wealth. Money is merely the tool that we use to facilitate the production and transfer of wealth.” *Malcom Henry, Citizen Network**

UBI might give people money, but it doesn’t necessarily give them control over wealth.

Poverty is the lack of wealth, encompassing both physical and social capital. It is a “complex web of addiction, debt, worklessness, educational failure and — most overlooked — family breakdown.” In addition, having wealth is so much more than having money. It’s also about feeling healthy, connected, and empowered.

There are 42.31 million people in the USA living below the poverty line. Every individual’s experience is unique and people may be in poverty for entirely different reasons.

Where are these people going? Each person’s path is unique.

With all that said, I believe giving a fixed sum of money to people will not solve the root problems leading to poverty nor account for the nuances in experience that define what poverty is.

So does that mean UBI is unattainable?

No, definitely not.

Although UBI is an ambitious program that doubtlessly brings up multiple issues, through careful preparation and research I believe we can one day implement an income baseline for all.

On Funding

We need to continue exploring means of funding UBI, analyzing proposals and their wide-ranging impacts rigorously. There have been many creative funding proposals that perhaps grouped together could be an efficient funding source. Particularly, the idea of using a decaying currency that is “refilled” at the end of the month in a “UBI pot” stands out to me as it puts money that was hoarded and lying idle to use.

Most likely the funding for UBI will come from a thoughtfully balanced combination of multiple sources rather than a singular method. And perhaps, as technology continues to develop, we will see a surplus of wealth so that funding is no longer an issue.

On Automation

UBI is just one factor in a huge discussion around automation and its implications. UBI may encourage the acceleration of automation, but even without it we see a trend towards increased automation regardless. What I want to emphasize, however, is 2 very actionable tasks that should be adequately completed if we were to implement widespread UBI.

1. Access to widespread technological education.

Having a basic understanding of high-potential emerging technologies such as artificial intelligence and blockchain will be crucial for citizens to be active participants in the conversation around a shifting economy. It will enable them to come up with innovative solutions and preventative measures to tackle automation-related issues such as a digital autocracy.

1. More work democratizing & aligning automation.

More resources need to be directed towards making sure technologies facilitating automation are developed to matches our society’s values. This includes creating no-code software and robotics so more people can participate in technological innovation, aligning AI to human ethics, and reforming government responses to emerging technologies, among many other things.

On Addressing Poverty

UBI is definitely not the whole solution to poverty. However, it carries a lot of potential. Money empowers people to buy the resources they need which can make a world of difference in dire situations. Additionally, UBI is universal and its implementation would symbolize the intent to create a higher standard of living for all people.

Alongside implementing UBI, we as a society need to meticulously tackle all the nuances to poverty. This includes doing in-depth research and curating unique programs targeting different communities that account for their non-monetary needs as well. We need to be willing to have difficult conversations around systemic racism, mental health, addiction, and other contributing factors to poverty if we want to really address root causes.

Only with this collaborative effort made up of multiple initiatives, with UBI as one of many solutions, can we make wholistic, lasting change around poverty.

Now it’s your turn.

Thanks for sharing this coffee chat with me! I hope it was able to energize your day and spark some new inspiration around Universal Basic Income. Now, I’m curious to hear your thoughts.

In the comments, let’s discuss these questions! Feel free to share objections as well. Let’s have an open, respectful conversation.

Questions for you:

• What do you think is the most important thing we should do before we implement UBI?
• What can your average citizen do about it?
• What will you do about it?
• Do you think a UBI should ever be implemented, either now or in the future?