The idea for a universal basic income, or UBI, goes back a long time.
In the 1970s, the Nixon administration tried to pass something very similar to a negative income tax. Some libertarians, including Charles Murray, championed it in the 2000s. Andrew Yang, who ran in the 2020 Democratic Primary with a version of the UBI as his main policy platform, called for the federal government to provide $1,000 to every adult per month in the country, regardless of need. 
More recently, some cities such as Stockton have run test programs of a smaller version of a UBI. Per the Vox article, “Everywhere basic income has been tried, in one map”, Alaska, “since 1982… has given each citizen an annual check just for being alive, effectively wiping out extreme poverty. The money — which can range from around $2,000 per person when oil prices are high to $1,000 in cheaper gas years — comes from the Alaska Permanent Fund, a state-owned investment fund financed by oil revenues. Economists investigated whether the payment were leading people to work less and found that “the dividend had no effect on employment” overall. (It has, apparently, had an effect on fertility, encouraging families to have more kids.)”
I think the concept of a UBI is fascinating and may ultimately be the most important policy of the 21st century. In this essay, I’d like to examine the pros and cons of a UBI. In order to do this, we’ll define our terms, look at possible payment methods, and likely outcomes of this policy.
A universal basic income can take many different forms. At a national level, Senator Corey Booker proposed, while running in the 2020 Democratic Primary for President, a “Baby Bond” that would be funded by the federal government. The government would invest a set amount of money for a child at birth and, when that child turned 18, they would be given the amount, principal and interest. In Booker’s vision, this would also be a tool to alleviate poverty with the children of poor parents given a larger “base” to start from at the time of their birth. 
Other ideas have been floated including a UBA – Universal Basic Asset. Peter Barnes, in an excerpt of his book published on the website Evonomics, states that “an archetypal, albeit theoretical, example of universal property is the ‘sky trust’… proposed in Who Owns The Sky? It is archetypal because it includes features of pension-like funds and fiduciary trusts simultaneously. In it, a fiduciary trust is charged with protecting the integrity of the atmosphere (or one nation’s share of it) for future generations.  It auctions a declining quantity of permits to dump carbon into our sky, and divides the proceeds equally.“
With the alternatives out of the way, let’s use Yang’s model as a basis and look at the pros and cons. 
Let’s start with the cons. 
The first and probably most obvious concern is the cost of the program. The Tax Foundation hangs a price tag on Andrew Yang’s policy of 2.8T per year. For a sense of perspective, the US Federal Government took in 4.7T (per IRS.gov) in fiscal year 2023. Even if you believe that waste, fraud, and abuse would be eliminated or nearly eliminated, this only accounts for roughly 100B of federal spending. That leaves us with a 2.7T yearly deficit. Let’s see what programs would have to be enacted to make this revenue neutral:
I used Chat GPT to look at this analysis, so take this with a grain of salt. 
Here is what we would need: 
1. **Wealth Tax:** 2% on wealth over $1 billion. Per Chat GPT, US Billionaires are estimated to be worth over 4.5T. Applying a 2% wealth tax nets us $90B. 
2. **Land Value Tax:** 2% on the value of land. Total land value is estimated to be about 25T. Applying a 2% land value tax would bring in around $500B. 
3. **Financial Transaction Tax:** 2% per trade. Total annual trading volume in the US is estimated to be over $100T. While this assumes that volume remains unchanged, it would net by far the most revenue at $2T annually. 
Are these politically heavy lifts? Yes, yes they are. Any of these laws would require a political fight, often with entrenched special interest groups with deep pockets who benefit from the continuation of the status quo. Just to give one example – the National Association of Realtors, not often seen in the same light as Big Pharma or Big Tech, is the second leading lobbyist group in the country behind only the US Chamber of Commerce (per Statista). 
There has been a push, even from some billionaires themselves, to raise tax rates on the ultra wealthy. A wealth tax would be challenging to implement simply because we haven’t done this before but, I believe, there would be broad support if it meant the funding of the UBI – which is probably necessary to reduce inflationary pressures which come from, in part, an increase in the money supply. 
The financial transaction tax would also, IMO, be a relatively easy lift – half the country doesn’t own stocks and many in Gen X and Gen Y see the financial industry as deserving of whatever punishment comes its way stemming from the 2008 recession. Michael Sandel, who is a professor of political philosophy at Harvard, points to the often ineffectiveness of the financial industry of spreading prosperity widely and condemns what he sees as rampant speculatory practices at the expense of taxpayers. This view is shared by many.
I actually think the biggest hurdle here is probably the land value tax. Many in the middle class own their own homes and see an increase in their home value as a given, a sort of piggy bank for their elder years. Any attempts to meddle with anything that could bring property values down is fought against. We see this in the backlash to building housing in many areas of the country – NIMBYism. 
The Tax Foundation looked at Yang’s proposal to pay for the plan and this is what they wrote:
“Yang’s proposal is to provide $1,000 per month ($12,000 a year) to each adult citizen. A core feature of the Freedom Dividend is that individuals would need to choose between their current government benefits and the Freedom Dividend. As such, some individuals may decline the Freedom Dividend if they determine that their current government benefits are more valuable.
The benefits that individuals would need to give up are Supplemental Nutritional Assistance Program (SNAP), Temporary Assistance for Needed Families (TANF), Supplemental Security Income (SSI), and SNAP for Women, Infants, and Child Program (WIC).
To cover the additional cost of the Freedom Dividend, Yang would raise revenue in five ways:
* A 10 percent VAT (Value Added Tax)
* A tax on financial transactions
* Taxing capital gains and carried interest at ordinary income rates
* Remove the wage cap on the Social Security payroll tax
* A $40 per metric ton carbon tax
They also calculate that Yang’s plan wouldn’t be revenue neutral: “Overall, we estimate that his proposal to provide a $12,000 unconditional cash transfer, paid for by tax increases and slightly lower federal spending on other programs, would end up increasing the budget deficit by about $1.5 trillion each year even after accounting for offsetting reductions in government spending and changes in economic output.”
The positives here are that there are several ways to raise the revenue, some being heavier political lifts than others. 
What are the other possible downsides to this program? Like any massive program, there would be unforeseen circumstances that may be negative. It could be everything from a reduction in the labor participation rate or in military recruitment. It’s also possible that benefits would need to be cut from current social spending in order to pay for the UBI. If the program is a replacement (and not a supplement) to current spending, there may be disruption in the lives of those who depend on these programs currently. 
Even if we find a way to pay for the UBI program and even if the benefits are clearly explained, there will be difficulty. For one, all programs compete with all other current (and potentially future) programs for funding. Given Andrew Yang’s relatively poor performance at the 2020 Democratic Primary, it is likely that voters are not yet ready to acknowledge the importance of the UBI when comparing it to other potential programs. It’s also possible that the program is just not that significant for a number of people, especially those who are likely to be democratic primary voters – more college educated and affluent than the average citizen. My personal viewpoint was that while Yang was viewed favorably, his signature policy was not embraced fully, even by the party more open to governmental spending to solve societal issues.
There will also be those that say that, no matter what, money should not be handed out, no strings attached. I believe this is a relatively small number of people but it’s important to note that they exist and may push against the policy. 
The political reality is that the UBI is, perhaps oddly, a difficult sell. I’ll touch upon this after the break. 
Before we talk about the pros of the program, let’s briefly touch on the road to getting a UBI passed. 
The Universal Basic Income, if it is ever successfully passed on a wide scale, will have overcome what I see as its major flaw – the difficulty in explaining just what it is for. The Social Security program is probably the most popular current federal program. Part of its appeal is in its simplicity and mission – to help alleviate poverty for elderly people. A UBI would not have this clarity of purpose and would be seen as serving several distinct purposes. For Libertarians, it would fit into their narrative of the state serving a limited purpose and simply redistributing funds – in this version of a UBI, the state apparatus is neutered because it does not have the mission to determine who qualifies for each program. There is also a believe that, through a UBI, waste, fraud, and abuse would be massively curtailed. I just finished reading Mississippi Swindle, which is an account, by the state auditor of Mississippi, of nearly $100M of TANF (Temporary Aid for Needy Family) funds being improperly doled out and spent – this was fraud with a capital F. In his book Poverty by America, Matthew Desmond notes that there are only two places – Kentucky and Washington DC – that disperse TANF as direct cash to those who qualify. Because TANF money is given as block grants to the states, the states have discretion as to how they spend the money. Many states use the funds as a source of funding for disaster prep and relief. If a UBI existed at the federal level, it would be able to bypass these state discretions and provide money directly to citizens, either through a direct payment (direct deposit or check) or a Direct Express card (for those who are unbanked). 
Even with these benefits, Conservatives and Libertarians would have a concern with the total program cost and be hesitant to use the UBI as a supplement to pre-existing programs. Typically, government programs exist to fill a certain need, usually for a vulnerable population. The UBI would be a much harder sell for this group. Desmond also is skeptical; I believe his skepticism falls into two separate buckets. In interviews after the book was published, he seemed skeptical of the UBI due to what he saw as its high cost, though he seems to acknowledge that the current system fails to help a large number of people – those who A). qualify for assistance but don’t know that they do or B). those who qualify but didn’t apply, either due to stigma, pride, or bureaucratic burden (paperwork and the like). I also believe that Desmond fears that a UBI would shift focus away from his main concern – ending poverty – and possibly expand it to other groups who may be in trouble but not to the same degree. I believe he also thinks that, if it were passed, it would be seen less of a supplement to existing programs he likes and more as a means to end them.
At times in the book, Desmond also seems to have concern for working poor people, people who earn too much to qualify for typical assistance but who nevertheless struggle. I’d argue the UBI is a perfect tool for these people to have the burdens of their lives eased, if only a little.
I am in favor for the UBI for a reason I see rarely, if ever, mentioned – the government doesn’t decide who gets it and why. Every program at the federal level determines who is eligible and who isn’t. At the end of this process, you either are or aren’t, you get the money or you don’t. I have never met a person who didn’t struggle at some point in their life – often that struggle was financial but even in times where it wasn’t, extra finances would have been beneficial. 
People without children, people who are atypical, people who have mental illnesses, people who are drug addicts, and people who are obese (among others) will likely never receive federal funding simply for being in any of these categories, though they each come with their share of physical pain or social stigma. 
Okay. Besides what I’ve already laid out, let’s lay out the pros – social cohesion, mitigating against job loss due to social or technological change, and increasing freedom.  
Many books have been written about the dangers and downsides of America becoming a much more individualized country – David Brooks’ The Second Mountain, David Leonhardt’s Ours was the Shining Future, The Last Best Hope by George Packer, and the Tyranny of Merit by Michael Sandel being a few recent examples. 
Each of them, in some way, try to address what they see as flaws in contemporary society, specifically in contemporary America. Their policies range from outside the current Overton Window (Sandel’s idea to have a national debate on wages and dignity, [presumably] allowing for an increase in the wages of essential workers) to well within it (Packer and Leonhardt are relatively simpatico – more money for education, more money for renewable energy – a new New Deal). 
It's possible (and even likely) that there will be trillions of dollars in new spending for education and renewable energy in the future. It’s also possible that this will not do much to curb a feeling of dissatisfaction and resentment that is palpable. 
I recently finished The Fifties by David Halverstam. One of the things that struck me the most was the relative lack of discussion on the building of the interstate highway system which would have cost something to the tune of $600 Billion dollars if had been built today. This is possibly due to the higher amount of trust in the government after the end of World War 2, a time where political consensus was much more easily achieved, or some other factor, but my best guess is that the growing affluence and hope in the country simply made the issue less contentious. The benefit of such a system was well spread and easily identifiable, which helped too. Suffice it to say, today there would be a huge political fight if a project this large tried to get off the ground. 
Perhaps another way to frame this, great public work projects, perhaps paradoxically, may be easier to enact when the economy is doing well. 
In the same way that we know that, no matter the size of the scandal, there will be another NFL season, no matter what the players and owners need to do to come to a collective bargaining agreement. Why? There’s too much money not have another season. 
What happens when there is the opposite feeling, when there is the feeling of regression, that we are on the downward spiral?
The concept of deaths of despair, as laid out in a book by married economists Anne Case and Angus Deaton with that title, can be summarized as the increase of deaths by alcoholism, drug abuse, and suicide by American middle-aged white people, mostly men. Recent data has called some of their findings into question but the idea - poorly educated white men being left behind - has taken hold in the political imagination. The book Strangers in their own land, written by sociologist Arlie Russell Hochschild, is heavily quoted in Sandel’s The Tyranny of Merit. The book interviewed several working-class whites to understand the relationship between themselves, the government, and the oil and gas producers who are almost the only providers of high-paying jobs for people with little or no formal education. There is likely a large overlap between this group and the group written about by Case and Deaton. 
You may be asking yourself – why are we spending so much time talking about this particular group in regards to a UBI?
In short, they seem to be the group that is most dissatisfied with the current system – or at least the group where the dissatisfaction has taken on the most obvious and extreme forms – deaths. 
Let’s say that the political consensus shifts and something akin to what Packer and Leonhardt are proposing is enacted. A Factcheck.org article from 2019 entitled, “How Much Will the ‘Green New Deal’ Cost?”, writer Jessica McDonald notes that, “Robert Pollin, an economist at the University of Massachusetts Amherst, thinks it’s entirely possible to get to net zero by 2050 by spending around 2 percent of GDP each year, or around $18 trillion in total.” I hate to beat a dead horse but this is 30X what the interstage highway system cost. Technological advancement would almost assuredly drive this cost down but, for the thought experiment, let’s use this as the ceiling for likely government intervention. Let’s also assume that this program, through reducing the cost of environmental pollution saves the US Government enough money to offset a free college for all law – this is about $70B per year, per a Forbes article called “The Surprising Cost of Biden’s Free College Tuition Plan.” In Packer’s Last Best Hope, this is essentially what he calls for at the end of the book, an America he calls “Equal” America. 
The programs envisioned by Packer and Leonhardt, if done competently, would benefit millions, directly and indirectly. However, they are not universal programs - The people that Case and Deaton or Hochschild write about, if offered free college would probably just laugh; the push towards renewables, they would likely see as an attack on their livelihood, if they worked in the petroleum or coal industries – or if they worked in auto manufacturing where the number of movable parts required for an EV is far, far fewer than required for internal combustion engines.
To be fair to Leonhardt and Packer, I can’t recall if either of them had a position on a UBI in their books. I will also point out that both are very pro-union and believe that the dearth of unionized labor has caused wage suppression – though Leonhardt comes to a number that is lower than one might think given the amount of debate on the topic – somewhere between 7% and 10%.
Nevertheless, if these programs come to pass, it’s not clear to me that they would do anything to reverse the feelings of alienation that this cohort feels. College sounds like a solution to all problems…for people who have gone to and finished (and benefitted) from college. We see that, as time goes on, the people who attend and finish college tend to have parents who have finished college. From a NCES report entitled “First-Generation Students” published in 2018:
The share of students enrolled in postsecondary education whose parents had not attended college (often referred to as “first-generation students” in the literature…has also declined: between 1999–2000 and 2011–12, the proportion decreased from 37 percent to 33 percent. 
It’s rare for people to complete their first bachelor’s degree in their 40s or 50s. I believe there is also an exaggeration to how many people are truly left out of college because of the cost. A quick tangent – take two people: Alice and Bill. Alice decides to go to college and she forgoes 4 years of wages in order to attend. She also takes out 30K in debt. When she gets out of school, she makes 60K a year. Bill stays at his job in retail and makes $15 an hour and works full time. After 10 years, their income would be – Alice $360,000 (60K times the 6 years she was actually working) and Bill - $300,000.  Does this scenario make assumptions? Of course – it’s probably not likely that someone working would have absolutely no raises for 10 years. However, it’s also likely that raises would get eaten by inflation. It also assumes that Alice would graduate in 4 years. The broader point, of course, is that for a likely scenario, even accounting for debt, most people are better off having gone to college and completed, at least financially.
I do think, however, we aren’t being honest with people if we are saying that all students should go to college. Some simply don’t have the maturity or intellectual horsepower required to finish and forcing them to go would be a disaster, both in time and money. Freddie DeBoer has written about this extensively. There has to be another way for people (especially working people without access to generational wealth) to make enough to not feel like they are constantly on the precipice of poverty.
This has been a very long way of saying that one of the main benefits of the UBI would be an increase to social cohesion. It’s one thing to say that we are all in this together and it’s another to try to convince the janitor that they could be a CEO one day and that the child of the CEO could one day be a janitor. Does the UBI by itself achieve this? No but because the majority of the funding for the UBI would come from the ultra-wealthy, the benefits would be widely shared and allow for a greater mobility and, as I noted above, a feeling of greater possibility.
Is this achievable with other policies? The best answer to this question is the dreaded, “Yes but”. The first policy that comes to mind would be a universal healthcare system. The problem with this is the obvious – even if you could demonstrate to people that a new system would be more cost effective and cover more people, there would be massive retaliation against any changes to the status quo. If you want a real-world example of this, the book The Ten-Year War by Jonathan Cohn outlines the fight for the affordable care act and the fight to protect it after it was enacted. Deaton and Case point to a rise in healthcare costs as a major factor in the rise of deaths of despair, so it’s very possible that such a system, if enacted, would “raise the floor”, as it were. Of course, if, in efforts to cut costs, middle and upper middle-class professionals (doctors and nurses) were harmed, they have tools at their disposal to push back. Those at the bottom of the healthcare income chain (home health care workers) less so. The social cohesion would be gained by preventing anyone from having great amounts of medical debt (one of the main reasons for personal bankruptcy) and ensuring everyone is covered, to some degree of care. 
Obviously, this doesn’t do anything to increase mobility for those who are relatively healthy and / or who have (relatively) low medical costs, so we are back to the question of universality. 
In short, I think the answer is that a universal healthcare program will almost certainly have winners and losers – and lots of them. The amount of social resentment after a universal program is enacted may, in fact, go up, not down. A UBI would harm some people – the money has to come from somewhere – but the number negatively impacted would be relatively few. It’s also important to note that most people, especially those at or near the poverty level, would likely spend all or most of the money they received to cover necessities not currently being met. Due to the current levels of wealth concentration, those who would pay for the UBI would also benefit from increases to their businesses, in all likelihood.
The second pro would be a tool to offset the rapid changes to workforce participation brought on by technological changes and globalization. From a 2017 article from CNBC entitled “What Billionaires and business titans say about cash handouts in 2017 (Hint: lots!), writer Catherine Clifford notes that, “the rapid acceleration of robotics and automation technology has led to fears of significant job loss. At the end of 2016, billionaire tech titan Elon Musk said the job losses would be so severe, the government would be forced to pay people to live. ‘There is a pretty good chance we end up with a universal basic income, or something like that, due to automation’, Musk told CNBC in an interview last year. ‘Yeah, I am not sure what else one would do. I think that is what would happen.’ 
This was written back in 2016. Globalization has continued. Robotization has continued. It’s possible that the robots will continue to be able to perform greater functions – we are seeing an increase in the health sector. For example, per Magenta Health Japan “The Japanese government is looking to tech companies in hopes of dealing with the rapidly growing elderly population as well as the inevitability of a dwindling workforce in the coming years. That is why they are turning their attention to the use of elder care robots to be stationed in both nursing homes and private residences all over the country. The government is funding development of these robots to fill a projected loss of 380,000 specialized workers by 2025. The Japanese labor ministry is doing all it can to spearhead the spread of robots in nursing homes and has already spent 5.2 billion yen introducing them to over 5,000 facilities all over the country.”
America has the luxury of a large immigrant population that is willing to work manual labor jobs, so it is not likely that there will be a need for a large robotization force in the near future. However, the more pressing need will come if AI does what many will fear, including Musk – eliminate jobs. I’ve covered AI in past episodes, so I won’t go into great detail here other than to say that we simply don’t know yet what impact AI will have – it could eliminate a great number of jobs or it could be used to supplement current workers without job losses. 
In an article entitled “How Will Artificial Intelligence Affect Jobs 2014-2030”, by Mark Talmage-Rostron, from earlier this year on the Nexford University website, Talmage-Rostron cites a “study by the McKinsey Global Institute (that) reports that by 2030, at least 14% of employees globally could need to change their careers due to digitization, robotics, and AI advancements”. He also writes that “Researchers from the University of Pennsylvania and OpenAI found some educated white-collar workers earning up to $80,000 a year are the most likely to be affected by workforce automation.” 
If this prediction comes to pass, it would create an even greater disincentive to attend college, for most people hoping to become white collar workers. A UBI could be a tool that those without a job could use to brave a period of unemployment or retrain for another role – the flexibility the UBI enables is one of its key selling points.
Finally, freedom. There are several jobs that are difficult to recruit for because they typically don’t pay well in terms of salary – there are several places in the country that currently have teacher shortages; military recruiters do worse in times of low unemployment. The falling birthrate in the US and around the world has caused much handwringing. The reasons for this fall are multiple and too complex to go into in this essay. Suffice it to say, according to a University of New Hampshire article by Kennth Johnson entitled, “More U.S. Women of Childbearing Age, but Fewer Have Given Birth”, “In 2022, there were 21.9 million women aged 20–39 who had not given birth in the United States. This is 4.7 million more childless women of prime child-bearing age than would have been expected given fertility patterns prior to the Great Recession, up from 2.1 million in 2016.” 
As I mentioned above, it’s impossible to say that this change was purely due to the recession (ie. economics). However, economics play a part in almost all major life decisions. For two adults, two thousand dollars per month is 24K a year. Would this be enough to encourage women to have more children? Yes. According to an article I cited in an earlier episode, to get us to replacement levels of fertility, we would need ”a child benefit for the first 18 years of a child’s life worth approximately $5,300 per year in addition to currently-provided benefits, with the range running from $2,800 more per year to $23,000 more per year.” 
Would this solve for the societal preference of many men and women to not have children? No but, for a significant number of men and women on the fence, it would ensure that they would have a basic level of prosperity they could use to start a family. 
Freedom could also be viewed from the perspective of potential artists – writers, musicians, etc – who are unable to reach their full potential due to economic hardship and pressures. A UBI would enable them to, if not permanently, possibly take some time off to further their artistic endeavors.
I believe the UBI would be a powerful tool that could significantly change how people see themselves in relationship to their work and their country. Whether it would be seen as a worthy investment due to its high cost remains to be seen. It also remains to be seen if the reluctance to the UBI is from the messenger, the message, or the perceived downsides (or lack of upsides). I do think that it is something that will be considered more frequently in the future, should AI be the job-killer that some fear it may be.
Thank you for listening to this episode of Elegant Ramblings. If you’ve enjoyed what you’ve heard, please consider liking and subscribing to the channel on iTunes or YouTube. You’ll be able to find show notes there. Hope you enjoyed. Bye for now.