A Case for UBI: Combating the Robot Workforce

Review: 'Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World' by Annie Lowrey

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July 29, 2018

What if we just . . . gave people money? That's the solution to poverty, at once simple and revolutionary, a variety of thinkers across the political spectrum have offered in recent years. Specifically, they posit a "Universal Basic Income," or UBI: A set amount of cash that every individual in society would receive each month, no questions asked.

In her new book, Atlantic contributing editor Annie Lowrey tells the story of the UBI in impressive and readable detail without breaking the 300-page mark, combining policy-wonk analysis with on-the-ground reporting in places where the UBI is being given a test run. And while she's an unabashed supporter of the concept herself, she does not shy away from airing counterarguments and frankly discussing the political obstacles. Even readers who come away from the book unconvinced will come away from it better informed.

The wisdom of a UBI heavily depends on the context. Broadly speaking, there are three settings where a UBI is being considered. One is the developing world. The second is the robot-dominated future, a world where human work won't be of much value. And the third is, well, here and now: the present-day First World. The case for a UBI is much stronger in the first two settings than the third, though there are numerous ongoing experiments that should demonstrate in better detail the consequences this policy will have in each.

Lowrey devotes some chapters to the global poor. In Kenya, the author sees a success, with villagers using their money—about $22 a month, sent directly to their phones—to invest in capital such as goats, home improvement, and just generally keeping heads above water. (This contrasts with other charitable efforts that don't always hit the mark—Lowrey finds the place teeming with Toms shoes.) Certainly, further experiments and careful studies might reveal some gaps in this narrative, but it seems worth exploring as a way to help the poorest people in the world catch up to the economic juggernauts of the West.

The poorest of India face a different problem: Their rapidly developing country operates a sizable safety net, but it's plagued by inefficiency and fraud. A computerized system requires people to show up at the same store each time they want subsidized food, making it difficult for them to migrate from place to place throughout the year (a common practice among Indian farmers). About half of the system's grains are apparently stolen. Replacing this setup with cash sent straight to individuals' phones seems like an obvious step up, though of course the cash, like the current benefits, could be targeted at the poorest Indians rather than given out to everyone.

At the other end of the economic spectrum and far into the future, it also seems rather likely that a UBI will be necessary when robots take over the workforce. In the past, labor-saving inventions like tractors—while disruptive to workers trained in specific industries—have generally, in the end, freed people up to expand the economy by taking new jobs that machines were still incapable of doing. Eventually, though, we're going to get to the point that a robot can do just about anything a person can do, and cheaply. There will be no work left for people, especially those with lower cognitive skills.

At that point, we will be amazingly wealthy as a society. The question will be how to distribute all that amazing wealth. (The pitchforks will come out if all the money simply goes to the creators and owners of the robots, which is one reason that UBI enthusiasm runs so hot in Silicon Valley.) A UBI will not be some sort of cure-all—there remains the question of how people will fill their time and find meaning when work is gone—but it seems like a pretty commonsensical place to start.

A UBI is a lot less sensible right here and right now, though. In making her case for it, Lowrey puts forward a number of standard liberal criticisms of the modern welfare state, and especially the U.S. welfare state, presenting the UBI as a superior alternative. There's much to disagree with in her analysis, and even if she's correct in her diagnosis, there are better ways to address these problems than by sending everyone in the country $1,000 a month, no questions asked. (That's the amount she pinpoints as enough to survive on but not much more. It's obviously far higher than the amount that keeps people from starving in poor countries and can add up quickly for bigger families.)

Lowrey notes, for example, the central claim of the recent book $2 a Day: that in America, more than a million families with children are living in Third World conditions, bringing in less than $2 per day for each person in the household, thanks to conscience-shocking holes in the safety net. This assertion has been controversial from the start, and earlier this month the economist Bruce D. Meyer presented new research that would seem to debunk it entirely. (To be fair, the research came out too late for Lowrey to include it in the book.) Poverty is a serious problem, but $2-a-day "extreme poverty" is incredibly rare in the United States.

Lowrey also makes the usual criticisms of the 1996 welfare reform. Some of these have merit—Temporary Assistance for Needy Families, the program the reform created, is not exactly a model of government competency. Nonetheless, the law seems to have reduced poverty over the long term by making work more attractive than welfare, especially when combined with work subsidies such as the Earned Income Tax Credit, as Scott Winship powerfully documented in a 2016 Manhattan Institute report. Put simply, work requirements and work supports are a potent combination for relieving poverty and encouraging self-sufficiency—and the defining feature of the UBI is that it provides financial support regardless of work.

That's not to say the American safety net is perfect, of course. There are too many different programs with different criteria providing too many different benefits, and some aspects of the UBI are attractive by comparison. But as Lowrey notes, incorporating those aspects does not require adopting the UBI wholesale. We could, say, consolidate the safety net and give out more benefits as cash, rather than as in-kind aid such as housing and food stamps. Even the far left could pursue its agenda quite aggressively—increase welfare spending, weaken work requirements, hike the minimum wage, regulate working conditions more strictly, start a government jobs program—without taking the final step and declaring war on Americans' core attitudes toward the importance of work.

To put it bluntly: For the foreseeable future, there is simply no reason that able-bodied adults should be guaranteed the option of living off taxpayers without being asked to help themselves at all, and little reason to think the public will stand for it.

Lowrey is aware this attitude will be common in the United States (and elsewhere) for years to come. That might be why she downplays the possibility that a UBI would decrease work effort to begin with—and stresses that if work effort declined, part of the drop would come from people taking time off to go to school or care for relatives. The research on the question, however, is mixed at this point. As the economist Edward Glaeser noted in his Wall Street Journal review, the much-debated "negative income tax" experiments of the 1970s may have reduced work by up to a quarter.

Furthermore, Lowrey's own arguments imply the effect on work could be substantial—one reason she supports a UBI is that it would give employees more bargaining power by ensuring them the option of living without work. (A worrisome side effect that she mentions only briefly is that this would make illegal-immigrant labor even more attractive.) Presumably a decent chunk of the workforce would need to actually exercise this option to make it a credible threat to the country’s bosses. Also worth noting: Even without a UBI, Americans are gradually leaving the workforce, relying in part on government programs to support themselves. If the UBI decreases work effort, it will only be accelerating a current trend.

And finally there's the question of cost. A $1,000-a-month UBI isn't quite impossible, but it's a hell of a stretch at $3.9 trillion annually—roughly equal to the entire federal budget. Even if we denied the benefit to those making at least $72,000 or receiving Social Security, and also eliminated food stamps and cash welfare, we'd be looking at a $1 trillion yearly bill: the equivalent of $3,000 from every man, woman, and child in this country. Lowrey suggests paying for this smaller initiative by instituting a financial-transaction tax, hiking the estate tax, and adding a new top tax bracket of 55 percent.

I don't share some of my fellow conservatives' preoccupation with the income taxes paid by the rich, but the idea of taking more than half of each additional dollar someone earns, and doing so to guarantee an income sufficient to live on for everyone even if they literally do nothing, doesn't sit well even with me. Not to mention that such a dramatic tax hike would make it even harder to find money to pay off the debts our irresponsible leaders have already accrued and continue to accrue each year.

Of course, Lowrey's funding proposal also draws attention to the fact that there really is no such thing as a Universal Basic Income. If we send a $1,000 check to everyone once a month, some people's taxes are going to go up by more than $1,000 a month to pay for it. Over time this fact may recede into the background of people's minds—but it won't if we cut costs by denying the benefit altogether to people who make high incomes. And either way, you can bet that if a UBI proposal ever gets close to passage, think tanks will run the numbers and publicize who the winners and losers will be. The losers will be furious and disproportionately wealthy.

The Universal Basic Income deserves the attention it's gotten. It's a promising way to help the very poorest people in the world, and it may be the future for all of us. Oddly enough, though, the very people most likely to read Lowrey's book live in the societies that are least likely to benefit from it.

Robert VerBruggen is a deputy managing editor of National Review.

Published under: Book reviews