Can Universal Basic Income End Racial, Gender & Wealth Inequality?

The concept of a universal basic income (UBI) — where the government provides a certain level of income to its citizens — has been gaining popularity in recent years.

Cities in Italy and the Netherlands performed UBI trials last year, and Finland just rolled out its own highly anticipated UBI program. Ontario, Canada, is preparing for an ambitious basic income trial. The trailblazing non-profit GiveDirectly is investing $30 million into a system in Kenya. India is contemplating a UBI policy to combat poverty, and leading candidates for office in France and South Korea are running on basic income platforms.

No longer is it just a pipedream for socialists — people as diverse as conservative intellectuals, Silicon Valley libertarians, labor rights leaders, Black Lives Matter activists, lifelong technocrats, Nobel Prize winning economists, and even former President Barack Obama have endorsed the idea.

Recent research into a short-lived basic income project in Manitoba, Canada, found successful results — health, school enrollment, work-life balance all improved. And other small-scale efforts have shown promising outcomes.

"We can deliver independence."

UBI is as simple as poverty-reduction gets. Everybody in a specific group — whether a targeted demographic or an entire citizenry — receives a recurring stipend to provide a baseline of financial security.

But its potential is as vast as any social effort ever conceived. In the years ahead, as automation transforms economies, inequality rises, and populations boom, a basic income could solve many of the world’s most pressing problems.

“Nothing gets to the problem of inequality of assets more [than a basic income],” Jason Murphy, a professor at Elms College and a board member of the US Basic Income Guarantee Network Committee, told Global Citizen. “We can deliver independence.”

Others, however, are careful to warn against grand pronouncements.

“Tackling poverty is a really difficult issue with a lot of complicating variables,” said Matt Zwolinksi, founder and director of University of San Diego's Center for Ethics, Economics, and Public Policy.

“Providing people with a sufficient standard of life,” he said. “That’s what really unites all the different proponents from all the scenes.”

“Beyond that basic level of agreement, there’s a wide range of disagreement.”

Robots Are Coming

The billionaire technologist Elon Musk has been sounding the alarm on robots for years.

“There will be fewer and fewer jobs that a robot cannot do better,” he recently said at the World Government Summit. “And if my assessment is correct … then we have to think about what are we going to do about it? I think some kind of universal basic income is going to be necessary.”

Few developments have made a basic income seem more urgent.

In the US, the No. 1 job held by men is truck driving. In total, there are 19 companies working to have fully functional driverless vehicles on the road by 2020.

“That’s the moment people say, 'Holy crap, it’s not a 10-years-away problem,’” Andy Stern, the former president of the Service Employees International Union and UBI expert, recently told Global Citizen.

“Driverless trucks are the key driver here,” Stern, who spent years researching and writing a book on the topic, said. "I think people can understand that there are 3.5 million truck drivers, 5 million workers who support them, that it’s largest job in 29 states, and we’re a couple of years away from terminal-to-terminal driverless trucks."

What happens to these workers, especially as the rest of the labor force is similarly affected by automation, competition for remaining jobs intensifies, and downward pressure on wages expands?

“Every intervention from deregulation to trickle-down [economics] to education has not worked or is not big enough to deal with the problem,” Stern said.

An End to Extreme Poverty

Large-scale technological displacement has always occurred, from cotton mills in the 19th century to assembly lines in the 20th century. Because of this, many basic income advocates don’t want to see the discussion end up in this hypothetical cul-de-sac.

“[Automation is] not my reason for thinking [a basic income] might be a good idea,” Zwolinksi said. “I think people are worried about making the case for this policy hinge on such a contingent possibility for a problem that isn’t here yet.”

There are more compelling reasons to focus on a basic income, advocates argue. At the top of the list is the potential to mitigate poverty.

The Brookings Institute argues that lifting all people in the world above the point of extreme poverty would cost $80 billion. This costs a little more than half of the current global budget for foreign aid.

Now, of course, bringing people a more robust form of prosperity would cost more money — extreme poverty is earning less than $1.90. In the US, ending poverty based on US criteria would cost hundreds of billions to trillions.

But to many, that’s a cheap price.

“You have to think about what is the goal of the economy?” Karl Widerquist, associate professor at SFS-Qatar, Georgetown University, told Global Citizen.

“The first and primary goal of the economy should be to meet every citizen’s basic needs,” he said. “So every citizen has food, shelter, clothing, and a cushion of income so that they’re not going to be destitute.”

A UBI would give people the freedom to leave bad, demeaning, and unhealthy jobs, thus reducing exploitation in the labor market.

“It provides a level of stability and security that allows people to take jobs that don’t pay as much or leave jobs where they’re treated badly, which would help correct the labor market,” said Stern.

It would give people the freedom to leave environmentally destructive jobs, thus hollowing out these industries. One of the main reasons why the coal industry is still around, according to Stern, is because out-of-work coal miners make for a compelling narrative to counter the narrative of renewable energy. If these workers had something reliable to fall back on, they would be able to explore other careers and wouldn’t feel so attached to coal.

“The first and primary goal of the economy should be to meet every citizen’s basic needs."

It would reduce racial disparities. As Ta-Nehisi Coates pointed out in a series of poignant articles, white families in the DC area earn on average 81 times more than black families, a disparity that can be found in different degrees across the country. A basic income would begin to address this and many other injustices.

A UBI would give women greater autonomy. Many women work as unpaid caregivers, making them dependent on outside sources of income that they may not have control over. This is particularly urgent in the case of women who experience domestic violence. Oftentimes, women feel trapped in abusive relationships because they are financially dependent on their abusive partner.

It would greatly expand entrepreneurial opportunities. Entrepreneurs today come overwhelmingly from wealthy backgrounds. A UBI would open up this creative capacity to millions more people, thus providing a powerful new engine for the economy.

“A dirty little secret is that entrepreneurs are not the sons and daughters of janitors, but of wealthy people,” Stern said. “[A UBI] will create a lot more entrepreneurial people who haven’t had a lot of assets up until now.”

It would also streamline bureaucracy and allow governments to radically simplify other welfare programs that may have been complicated over time.

And a UBI would give people the freedom to pursue what matters to them — higher education, science, the arts, whatever. Rather than fostering laziness, a UBI could spur people to live the lives they want and seek the best work to supplement this baseline stipend.

“I think the most important economic argument is incentives,” Widerquist said. “We have a really big incentive problem in this country, employers don’t have the incentive to pay good wages if we put all our workers in the situation where they’re going to be homeless unless they take whatever job is available.”

But Who’s Going to Pay For It?

In the US, at least, discussions of a basic income are often mobbed by claims that it will just be a huge, impossible-to-pay-for freebie.

But funding a basic income is an open-ended idea — how much people receive, who receives money, what a basic income would replace, and more, are all up for debate.

For instance, would every adult receive $5,000, $10,000, $20,000 annually? Would this be pure discretionary income, or would it have to cover health care costs?

These questions are being explored in experiments around the world, but currently there are a few main proposals for funding a society-wide basic income.

The first involves taxing pollution, which has the added benefit of cleaning the planet.

“You can’t pollute unless you pay for the damage to the environment,” Widerquist said. “Then you need to redistribute that money in the form of a basic income.”

“Throwing something out is free,” he said “We’re wastefully using up our resources, using up our environment, treating the planet as sinkhole, and it’s a free. That gives people an over-incentive to pollute. We need to tax these things to discourage them.”

“You’re not taking a dime out of the economy, you’re just reorienting what people buy and what people spend on away from the stuff that is wasteful, harmful, and damaging to neighbors to stuff that is less wasteful, harmful and dangerous to neighbors.”

The lowest-hanging fruit would be taxing carbon.

In fact, leading conservatives just pitched US President Donald Trump on a carbon tax, which would then be distributed to US citizens — essentially, a form of basic income. A family of four would receive $2,000 through the plan.

Steeper taxes on carbon could generate more income and expanding taxes to other forms of pollution would add to the total.

Another way to fund a basic income would be a tax on financial transactions. For instance, a .01% tax on stocks would generate hundreds of billions in revenue.

Higher tax rates on the highest income earners could also generate substantial revenue. Redirecting military spending and ending corporate subsidies are two other ways to generate substantial revenue. Right now, states across the US compete to host companies by providing huge giveaways. This race-to-the-bottom strategy ends up costing the country a lot of tax revenue on the whole.

Independently or collectively, these methods could fund some form of a basic income.

It’s not like such a program can happen over night. It would have to gain momentum on a local level before state and federal policies are even considered.

But other dramatic social welfare programs in US history were similarly derided as too costly and fanciful and they are now unquestioned and invaluable — unemployment benefits, Medicare, and Social Security, for example.

A basic income is more far-reaching than all former government programs. And it could also be far more powerful.

“I think the most important reason to be for basic income is the power to say no,” Widerquist said. “It’s wrong for anyone to come between someone else and the resource she needs to survive.”

“We haven’t really reached a full freedom if some people control all the resources that other people need to use,” he said.

TopicsExplainer Finance & Innovation Universal basic income Inequality Wealth Income Basic Income