Economic Freedom
If you were to quit your job right now, could you afford to take care of your needs? And if you are retired, what would happen if you suddenly stopped receiving your pension? If you are supported by a spouse or partner, could you still afford food, shelter and clothing without them? If you could no longer meet your needs in any of these situations, you are not economically free. Your decisions on how much of your labor to sell and whom to sell it to, whether to stay with your partner and where to live, are not free decisions.
Many people in the US are not free in this sense. A recent survey asked respondents if they had enough money to pay for a $1,000 emergency, and 60 percent said they did not (Leonhardt, 2020). Other studies have found that about 75 percent of Americans over the age of forty are behind on saving for retirement, and somewhere between a quarter and a third of all non-retired adults have no savings at all (Board of Governors of the Federal Reserve System, 2020; Backman, 2020). This data predates the COVID-19 pandemic which wreaked further havoc on the finances of many Americans.
If you are not economically free, you are not able to participate freely in the knowledge loop, which is why economic freedom is a cornerstone of the Knowledge Age. We must make people economically free so that they have the time to learn new knowledge, from practical skills to the latest theoretical physics. We need them to create new knowledge using what they have learned. And finally, we need them to share this knowledge with others.
Participation in the knowledge loop has never been more important: we have massive problems to overcome, including the COVID-19 pandemic and, above all, the climate crisis. To do so, we must be able to embrace automation rather than feel threatened by it.
Universal Basic Income
Economic freedom is a reality for the wealthy, for tenured professors and retirees with pensions and savings, but how can we make it a reality for everyone? The answer is to provide everyone with a guaranteed income to cover solutions to their needs, including housing, clothing and food. This income wouldn’t depend on whether someone is married or single, employed or unemployed, rich or poor—it would be unconditional (also referred to as ‘universal’).
At first glance, this idea of a ‘universal basic income’ (UBI) may seem outrageous. Getting paid simply for being alive—isn’t that akin to socialism? Where would this money come from? And won’t people simply descend into laziness and drug addiction? We will examine each of these objections to UBI in turn, but let’s first consider the arguments for UBI as a way of achieving economic freedom.
Concerns about economic freedom are by no means new. When the American republic was in its infancy, economic freedom was within the reach of those involved in the colonial project. There was plenty of land available to settler colonialists, and they could hypothetically make ends meet through small-scale farming (also known as subsistence farming). Thomas Jefferson considered formalizing the idea of land grants as a way of ensuring a free citizenry. It is important to point out that this land was being taken away from Native Americans, who were losing both their land and their freedom, on the basis of the so-called Doctrine of Discovery (“Discovery Doctrine,” 2020). Even back then, observers such as the philosopher and political activist Thomas Paine (1797) understood that land that could be appropriated and allocated to settlers as property would run out at some point, raising the specter of a time when landless citizens might have to rent themselves out as laborers in order to provide for their needs, leading him to conclude that an alternative to land would be to give people money instead. The idea of increased freedom through direct cash transfers thus dates back to the earliest days of the American republic.
If you don’t find this argument for UBI compelling, consider the case of air. We can all afford to breathe air because it is free and distributed around the globe (important side note: regulation is required to keep it clean—there were many problems with air pollution during industrialization, and it is estimated that more than seven million people still die around the world every year from air pollution) (World Health Organization, n.d.). Our freedom is thus not restricted by having to find air, and the power of UBI would be to make us equally free when it comes to our other needs, by making food, housing and clothing affordable for everyone.
As I argued earlier, our technologies are sufficiently advanced that we are capable of meeting everyone’s needs. Farming can generate enough food for everyone. We can easily make enough clothing and provide everyone with shelter. It is the knowledge and capital that humanity has created that have made this possible. And our technological progress is accelerating while global population growth is slowing, so all this will get easier—that is, as long as we generate enough new knowledge to overcome the problems we are facing, starting with the climate crisis.
The question is not whether we have the ability to meet everyone’s needs, but whether our economy and society distribute the resources fairly, and that is where UBI comes in. A UBI enables markets to function without forcing people into the job loop. It lets everyone freely choose whether and how much to participate in these markets and how much to devote to personal relationships, the pursuit of meaning, curiosity and creativity, etc.—freeing up attention and enabling people to form new communities in more affordable geographies (e.g. smaller cities or the countryside).
Industrial society presents us with two different ways of allocating resources. In one, individuals participate in a market economy; in the other, governments provide for people’s needs. Those options form the extremes of a spectrum that has a variety of ‘hybrid’ arrangements in the middle, such as government-subsidized housing, for which people pay reduced rent. UBI broadens the scope for market-based allocation, thus reducing reliance on an ever-expanding government sector. In that regard it is the opposite of socialism and communism, which rely predominantly or even entirely on government allocation.
Right after the Second World War, only about 5 percent of people in the US were employed by government, which comprised about 42 percent of the economy (U.S. Bureau of the Census, 1949; OECD 2021a). In the Soviet Union, by contrast, most of the working population was employed by the state, which owned close to 100 percent of the economy, but that system turned out to be much less effective at allocating resources. Nevertheless, the size and scope of government spending has gradually expanded in the US and in Europe. In many European economies it now accounts for more than half of the economy.
Food, clothing and shelter are obvious solutions to human needs that a UBI should make affordable, but a UBI could eventually also cover the cost of education and healthcare. That might seem ambitious, given how quickly education and healthcare costs have risen over the past decades, but technology can be expected to make both of these far more affordable in the near future.
Technological Deflation
If you’re struggling to take care of your needs, the world will seem like an expensive place. Yet the data show that a lot of things have been getting cheaper for some time. In the US, as the chart below shows, the price of consumer durables has been falling since the mid-1990s.
Source: Federal Reserve Bank of St. Louis, 2021d
The decline in the price of consumer durables has been made possible by technological progress. We are getting better at making stuff, and the automation of production and distribution is a big part of that. While this will hurt you if you lose your job as a result, if you have money to buy things it will help you. And with UBI everyone will have money, which as prices fall over time will buy more and more.
The decline in the price of consumer durables has made adequate clothing easily affordable. Technology is also driving down the cost of smartphones, which will themselves be essential in making education and healthcare more affordable. This declining trend will only accelerate as we begin to use technology such as additive manufacturing (also known as ‘3D printing’), manufacturing products only when they are needed and close to where they are required (Crane & Marchese, 2015). Additive manufacturing technology is even making it much cheaper to put up a building, with various structures around the world produced in this way in recent years, and one California company now offering small houses 3D printed in 24 hours for sale (Orrall, 2020).
Another way housing can be made more affordable is through improved sharing of existing housing. Digital technology, including the services offered by companies such as Airbnb and Couchsurfing, make such sharing vastly easier (note: a degree of regulation is required to avoid detrimental impact on some local housing markets). Despite such progress, it still costs a fortune to live in places where demand for housing exceeds the available supply, such as New York and San Francisco. With UBI, people can choose to live where housing is more affordable.
In recent years, the city of Detroit gave away houses as an alternative to demolishing them, and in some rural areas of the US you can rent a home for as little as a few hundred dollars per month (Macguire, 2014). In fact, there are around 30 million units renting for less than $600 a month, accounting for 25 percent of the national rental stock (The Joint Center for Housing Studies of Harvard University, 2020). The most affordable way to do this is to share a place with friends. This could simply mean having roommates or go as far as purchasing and fixing up an abandoned village as friends of mine have done in Germany. Many people can’t currently take advantage of these opportunities, since they can’t find a job in these locations. By contrast, UBI provides geographic freedom. People who want to move would no longer be trapped in expensive cities just so they can meet their basic needs (often by holding down multiple jobs).
One large group of people is already free of the constraints of work: retirees. And sure enough, many people move away from expensive cities when they retire, to places where real estate is more affordable. When considering the cost of shelter, rather than analyzing how much people need to pay to live where they live today, we should therefore look at what the cost could be in a world that has UBI. Crucially UBI doesn’t prevent someone from applying their entire payment to whatever rent they are currently paying. That is the great power of providing cash which is completely fungible, meaning it can be used to purchase anything (unlike say a housing voucher which could be applied to housing only).
Food is another area where technology stands to offer massive gains. While some argue that genetically modified foods hold the key to feeding the planet affordably, other near-term breakthroughs don’t carry the potential issues that GMOs pose. Indoor vertical farming, for instance, allows for a precise delivery of nutrients and light to plants, as well as enabling huge increases in future productivity through the use of robotics. It also allows food to be grown much nearer to where it is consumed, reducing the costs associated with transportation. In the extreme, using new hydroponic systems, lettuce, tomatoes and other vegetables can be grown right inside of apartments. Over time, as these innovations progress, they will add up to significant cost reductions and increases in availability of food.
Technology also promises a dramatic decline in the cost of education. Over the last decade, the availability of online learning resources has grown rapidly, including many free platforms, such as the language learning app Duolingo. In addition to online courses such as edX and Khan Academy, there are millions of blog posts that explain specific topics. And of course, YouTube is bursting with educational videos on a near-infinite range of subjects, from sailing to quantum computing.
There is evidence that the exorbitant rise in the cost of college tuition in the US is beginning to slow. When analyzing this data, we must remember that there is a huge amount of inertia in our educational system and job market. Many employers continue to believe they must hire graduates from the best universities, which drives up prices for higher education, with a ripple effect that extends all the way down to private nursery schools. This year, Google announced that they would be offering specialized six-month programs for fifty dollars a month, which they committed to treating as equivalent to four-year college degrees in their own hiring (Bariso, 2020). It will be some time before most students turn to free or affordable online resources for all their learning needs, but at least the possibility now exists. The COVID-19 crisis has shown the potential of online education, with schools all around the world switching from in-person instruction to prevent the pandemic from spreading faster.
Healthcare is a similar story. Per capita spending in the United States far exceeds that of other countries, having risen much more quickly than the rate of inflation for many years, but that hasn’t translated into better care. For instance, Cuba has for many years had an almost identical life expectancy to the US, despite spending less than a tenth of the amount on healthcare per capita (Hamblin, 2016). Debates have raged as to whether the Affordable Care Act or other legislative interventions will decrease healthcare costs or increase insurance premiums. Regardless of these issues, there are a number of reasons why we can count on progress in digital technology bringing down healthcare costs.
Source: OECD, 2021b
First, digital technology can make prices on medical procedures more transparent, enabling more competition to push prices down (this could be assisted further by regulation). Second, with people using technology to track their own health data, we can live healthier lives and require less care, especially over the long term. And third, technology will lead to faster and better diagnosis and treatment. The online medical crowdsourcing platform CrowdMed has helped many people whose conditions previously went undiagnosed or misdiagnosed. The Human Diagnosis Project (Human Dx) is also working on a system to help improve the accuracy of diagnoses.
Figure 1 is a platform that lets doctors exchange images and other observations relating to medical cases, and Flatiron Health pools data on oncology patients to enable targeted treatment. In addition, a number of companies are bringing telemedicine into the app era: HealthTap, Doctor On Demand, Teladoc Health and Nurx all promise to dramatically reduce the cost of delivering care.
You might think that a large proportion of healthcare cost results from pharmaceuticals rather than doctors’ visits, but in fact in the US they account for only a tenth of total health spending (The American Academy of Actuaries, 2018; OECD, 2019). However, technology will likely drive costs down here, too. One pharma entrepreneur told me about the potential for personalized drugs that could dramatically improve the effectiveness of treatments for a wide range of conditions that account for large expenses, including many cancers, motor neuron disease and Alzheimer’s. And in the longer term, technologies such as CRISPR gene editing will give us unprecedented abilities to fix genetic defects that currently result in large and ongoing expenses, such as cystic fibrosis (Mosse, 2015).
But Isn't Deflation a Bad Thing?
You might be confused by my presentation of deflation as a positive thing. Economists, after all, tend to portray it as an evil that should be avoided at all costs. They are primarily concerned about growth as measured by GDP, which they argue makes us all better off. They assert that if people anticipate that prices will drop, they will be less likely to spend money, which will decrease output and lead owners of capital to make fewer investments, resulting in less innovation and lower employment. That, in turn, makes people spend even less, causing the economy to contract further. Economists point to Japan as a country that has been experiencing deflation and contracting output. To avoid this scenario, they argue for policies designed to achieve some amount of inflation, including the Federal Reserve’s so-called ‘quantitative easing’, which is intended to expand the supply of money and thus increase the nominal prices of things.
However, in a world where digital technology drives technological deflation, this reasoning is flawed. GDP is an increasingly problematic measure of progress because it ignores both positive and negative externalities. For instance, on the side of positive externalities, making education and healthcare radically cheaper could lower GDP while clearly making people better off. A second flaw in economists’ reasoning is that it assumes technological progress requires growth in paid production. A great counterexample is open-source software, which has driven a lot of technological progress outside of the traditional economic model. Increases in economic, informational and psychological freedom will allow us to accelerate the knowledge loop, which is the foundation of the progress that enables technological deflation.
Technological deflation is what puts society in a position where UBI becomes both possible and increasingly helpful. The total price of all the solutions that a person requires to take care of their needs has already started to decline, and will be lower still in the future. Technological deflation is what allows people to break out of the job loop.
UBI is Affordable
With all this background information, you might wonder how much a universal basic income should be. My working proposal for the United States is $1,000 per month for everyone over the age of 18, $400 per month for everyone over the age of 12 and $200 per month for every child. These numbers might seem low, but bear in mind that the goal of UBI isn’t to make people well off—it’s just to allow them to take care of their needs without being forced into the job loop. Our collective thinking about the amounts required is muddled because we have mistakenly come to embrace the fulfillment of our unlimited wants, instead of focusing on the freedom to find purpose that comes from being able to take care of our needs. In addition to showing that capital is no longer our binding constraint, this is the second crucial reason for the earlier section on re-establishing a clear distinction between wants and needs. We should also remember that technological deflation will make fulfilling our needs progressively cheaper, while UBI won’t be introduced overnight. My numbers are intended to work over time, as some other government programs are phased out and a UBI is phased in.
Let’s consider these numbers further. While everyone will spend their UBI in different ways, a possible allocation for an adult might break down roughly as follows on a monthly basis: $400 for housing, $300 for food, $100 for transportation, $50 for clothing, and $50 for Internet access and associated equipment, with the balance spent differently each month (for example, on healthcare as required).
You might wonder why I propose a lower payment for children and teenagers. The answer is, first, we can meet many of their needs more cheaply than we can for adults. And second, there is historic evidence that the number of children people have is partially determined by economics. UBI should not incentivize adults to have more children, so as to ‘skim’ their income. That’s especially important because, again, we want the birth rate to decline globally so we eventually reach peak population.
When you calculate how much money would be required to provide a UBI in the United States, based on the 2019 population, you wind up with an annual figure of about $3 trillion (U.S. Census Bureau, 2019). While that is a huge sum, it represents just 14 percent of the economy as measured by GDP in 2019, and under 8 percent of gross output, which measures not just final output but also intermediate steps (U.S. Bureau of Economic Analysis, 2020; Federal Reserve Bank of St. Louis, 2021e). Where will this money come from? Two sources: government budgets (paid for by taxes) and money creation.
In the US in 2019, the total revenues of all levels of government from taxation and fees were on the order of $5 trillion, so the money for a UBI could, in theory, come from redirecting existing budgets (OECD, 2020). There would then be another $2 trillion of money for critical government activities, such as law enforcement and national defense (the budget for the latter was $0.7 trillion in 2019) (“Military Budget of the United States,” 2020). Setting aside the question of the political process that might allow such a reallocation to be accomplished, it is not ruled out by sheer arithmetic.
UBI would also substantially increase government revenues. At the moment, nearly half of all earners don’t get paid enough to owe federal income tax. Once people have a UBI, every dollar earned from work, or from other sources such as interest or capital gains, could be taxed. For instance, if you are currently single and earn $10,000 in employment income, you do not need to file a federal income tax return. With a UBI, that could be taxed at a rate of 25 per cent, generating $2,500 in tax revenue. This could provide as much as $0.3 trillion based on a back-of-the-envelope calculation. People who already pay taxes would of course also effectively be paying back some of their UBI through these taxes. Applying a 25 percent tax rate to that group, which would receive roughly half of all UBI payments, would decrease the required amount by an additional $0.4 trillion. In other words, the net amount required for a UBI with a 25 per cent federal tax rate applied starting with the first dollar earned would about $2.3 trillion.
Government revenues can also be expanded in ways that accomplish other goals. For instance, we should increase taxation on pollution, in particular greenhouse gas emissions. Taxes are a well-established way of dealing with negative externalities, and we have made good use of this effect. Aggressively taxing cigarettes, for instance, has resulted in diminished consumption and higher gasoline taxes in Europe have contributed to more efficient cars. Estimates of the potential revenue from a carbon tax are around $0.3 trillion per year, and might be even higher. So, between offsets from income tax (which would occur automatically) and a greenhouse gas tax (which we need anyway), the funds needed for UBI could be reduced to about $2 trillion. Though that’s a massive number, social security and Medicare/Medicaid each cost about $1 trillion. So in the extreme, UBI could be financed through a massive reallocation of existing programs.
There is, however, another way to provide much or all of the money needed for UBI. This solution would require moving away from today’s banking system, where the power to ‘create’ money is delegated to banks, to a system where money is issued directly to people instead. In today’s fractional reserve banking system, commercial banks extend more credit than they have deposits, with the Federal Reserve Bank acting as the so-called lender of last resort. For instance, in the 2008 financial crisis, the Fed bought up potentially bad assets to provide banks with liquidity. Europe too has had a policy of ‘quantitative easing’ (often abbreviated as QE), where a central bank infuses large amounts of money directly into commercial banks through loans and asset purchases on highly favorable terms, in the hope that the banks in turn will use this money to extend loans.
The idea is that by extending loans to businesses that need to finance the purchase of equipment or that require more working capital (to hire more salespeople, for example), banks will help the economy grow. But while banks have done that to some degree, they have increasingly focused on lending to large corporations and to wealthy people, to acquire second homes or even for financial speculation. Meanwhile, poor people have virtually no access to affordable credit, and lending to small businesses has been decreasing. The net result has been a rise in wealth and income inequality. Interestingly, this lopsided effect of bank-based money creation was understood as early as the 18th century in the writings of the French banker and economist Richard Cantillon, and has become known as the ‘Cantillon Effect’ (Stoller, 2020).
An alternative system would be to take money creation out of the hands of banks by forcing them to hold demand deposits at the Fed, or the corresponding central bank, in other countries. Known as ‘full-reserve banking,’ this system dramatically reduces risk in the banking sector by eliminating the possibility of bank runs and allows for new competitive banks to be formed without big upfront equity requirements. Credit extension would take place on the basis of long term deposits, and also happen via marketplace lending, as enabled by companies such as LendingClub, for individuals, and Funding Circle, for businesses. Money creation would happen simply by giving the new money directly to people as part of their UBI payments, a system sometimes referred to as “QE for the people.”
What orders of magnitude are we talking about? The terms M0, M1, M2 and M3 are progressively more encompassing measures of how much money has been created in the economy (meaning M3 is greater than M2, which is greater than M1, etc.). In the US, we no longer track the larger monetary aggregates, such as M3, and only use narrower measures, such as M2, and even that measure has been growing by about $1 trillion each year over the last decade. Since the beginning of the COVID-19 crisis, the Federal Reserve has created an astonishing additional $15 trillion of money as measured by M1.
Another way to get a sense of the total magnitude of money creation is by considering the development of debt. US households have about $10 trillion in mortgage debt, $1.2 trillion in auto loans, over $1.5 trillion in student loans and more than $900 million in credit card debt (Federal Reserve Bank of New York, 2020; Fontinelle, 2021; White, 2021). Total household debt can increase by as much as $1 trillion in a single year. US business debt stands at around $35 trillion, about half of which is in the financial sector (Federal Reserve Bank of St. Louis, 2021f; 2021g).
The amount of money created annually is thus in the same ballpark as my proposed UBI. Historically, the idea of the government ‘printing’ money is associated with fears of runaway inflation of the sort that occurred in Germany’s Weimar Republic. There are several reasons why this would not be the case with a proper UBI scheme. First, the amount of new money created would be fixed and known in advance. Second, as we saw earlier, technology is a strong deflationary force. Third, the net amount of money created can be reduced over time by removing money from the economy, which could be accomplished through negative interest rates on bank deposits above a certain amount, with payment collected by the central bank. Alternatively, a system of ‘demurrage’ could be implemented, in which a fee is levied on all currency holdings or the holdings are automatically shrunk (with digital currencies, the latter is now possible automatically).
I expect the path to UBI to involve some combination of changes to government budgets, taxation and the monetary system. As we will see later it is also possible that UBI emerges outside of government through a decentralized project using blockchain technology. However we wind up getting there, my back-of-the-envelope calculations above show that UBI is affordable in the United States today. Similar calculations have been carried out for other countries and show affordability even in many lesser developed countries. Economic freedom for all is already within our reach.
Impact of UBI on the Labor Market
One of the many attractive features of UBI is that it doesn’t remove people’s ability to sell their labor. Suppose someone offers you $5 per hour to look after their dog. Under UBI you are completely free to accept or reject that proposal, without distortion from a minimum wage. The reason we need a minimum wage in the current system is to guard against exploitation, but this problem exists primarily because people do not have the option to walk away from exploitive employment. If UBI was in place, they would.
The example of dog-sitting shows why a minimum wage is a crude instrument that results in distortion. If you like dogs, you might happily take the work for $5 per hour. You might be able to do it while writing a blog post or watching videos on YouTube. Government should not interfere with such transactions. The same is true of working in a fast food restaurant. If employees have the option of walking away from a job, the labor market will naturally find out how much it takes to get someone to work at, say, McDonalds. That might turn out to be $5 per hour or it might turn out to be $30 per hour (the former being exceedingly unlikely for McDonalds but might be the case for a local burger joint that people love working at). Finally, with the existence of UBI labor organizing for collective bargaining would become easier, as various tactics currently used by employers rely on the threat of unemployment and the large demand for even poorly compensated jobs from the ‘precariat’ (a term used by Guy Standing to describe the growing group of people who lead a precarious existence as the result of intermittent employment and other forms of underemployment).
One concern often expressed about UBI is that people would stop working altogether and cause the labor market to collapse. Experiments with UBI, such as the Manitoba Basic Annual Income Experiment in Canada in the 1970s, showed that while people somewhat reduced their working hours when they were paid such income, there was no dramatic labor shortage. People will generally want to earn more than their basic income provides, and the increase in the price of labor will make working more attractive. Furthermore, in conjunction with the income tax change discussed in the previous section, UBI avoids a major issue with many existing welfare programs in which people lose their entire benefit when they start to work, resulting in effective tax rates above 100 per cent (i.e. people make less working than not). With UBI, whatever you earn is in addition to your basic income and you pay the normal marginal tax rate on that. There is no benefit cliff and hence no disincentive to paid work.
But what about dirty or dangerous jobs? Will there be a price of labor high enough to motivate anyone to do them, and will the companies that need this labor be able to stay in business? Businesses will have a choice between paying people more to do such work or investing in automation. In all likelihood, the answer will be a combination of both. As we already saw earlier, expensive labor has historically been a driver of innovation. Because our ability to automate has gone up dramatically with digital technology we can in fact now automate these dirty and dangerous jobs. That also means that we do not have to worry about labor-price induced inflation. Put differently, technological deflation can continue even if the cost for some labor increases.
UBI would have three other important impacts on the labor market. The first has to do with volunteering. Currently, there are not enough people looking after the environment or taking care of the sick and elderly. Labor is frequently undersupplied in these sectors, because the demand isn’t backed by enough money, and these activities thus rely largely on donations. Many elderly people don’t have sufficient savings to afford personal care. When people have to work pretty much every free hour to meet their needs they don’t have time to volunteer. Providing them with UBI could vastly increase the number of volunteers (we observe increased volunteering among pensioners, who are effectively already on a UBI).
The second big effect UBI would have on the labor market is a dramatic expansion of the scope for entrepreneurial activity. A lot of people who would like to start a local business, such as a nail salon or a restaurant, have no financial cushion and can never quit their jobs to give it a try. I sometimes refer to UBI as ‘seed money for everyone’: more businesses getting started in a community would mean more opportunities for fulfilling local employment.
Once they get going, some of these new ventures would receive traditional financing, including bank loans and venture capital, but UBI also has the potential to significantly expand the reach and importance of crowdfunding. If you feel confident that your needs are taken care of, you will be more likely to start an activity that has the potential to attract support via crowdfunding, such as recording music videos and putting them up on YouTube. Also, if your needs are taken care of, you will be more likely to use a fraction of any income you receive on top of UBI to support crowdfunded projects.
The third big impact of UBI on the labor market would be the growth of human qua human jobs (credit for this concept goes to Yochai Benkler, who mentioned it to me in a conversation). There are certain jobs that even when we can automate them we will sometimes have a preference for a human instead. Examples of these include food preparation and serving, massage and mental health therapy, and of course arts and crafts. A great example for this desire is the persistence and even growth of live music following the invention of sound recording. There is something special about a performance that results from a sense of shared humanity. It is our intuitive understanding that the performer has an inner life of thoughts and emotions akin to our own that makes live music special. Conversely it can be highly pleasurable to perform for somebody or to cook a meal for someone. UBI will greatly increase the room for people to participate on both sides of these human qua human labor markets.
Other Objections to UBI
I have addressed the three biggest objections to UBI by showing that it is affordable, that it will not result in inflation, and that it will have a positive impact on the labor market and innovation. There are some other common objections that are worth addressing, including a moral objection that people have done nothing to deserve such an income, which is answered in its own section below.
One other objection to UBI is that it diminishes the value of work in society. In fact the opposite is true: UBI recognizes how much unpaid work exists in the world, including child rearing. We have created a situation where the word ‘work’ has become synonymous with getting paid. As things stand, if you don’t get paid for doing something, it’s not considered work. An example of another approach is the one taken by Montessori Schools, which base their teaching on creativity and problem-solving: they use “work” to refer to any “purposeful activity.”
A further objection is that UBI robs people of the sense of purpose that work provides if they stop working or stop looking for work. However, the idea of work as a source of human purpose is a relatively new one, and it is largely attributable to the Protestant work ethic. Earlier, human purpose tended to be rooted in religion, which offered meaning in return for adhering to certain precepts (those might include work as one of several commandments, but not as a source of purpose in itself). The source of human purpose is thus subject to redefinition over time. As we transition to the Knowledge Age, contributing to or sustaining the knowledge loop is a more suitable focus. So is carrying out the responsibilities that we as humans have because of the power that knowledge has given to us.
One other frequent objection is that people will spend their basic income on alcohol and drugs, an assertion often accompanied by claims that the casino money received by Native Americans has caused drug problems among that population. There is no evidence to support this objection: no UBI pilots have found a significant increase in drug or alcohol abuse, and in the meantime the opioid crisis has been the largest drug epidemic in US history. Research shows that, contrary to widely held belief, casino money has contributed to declines in obesity, smoking and heavy drinking (Wolfe et al., 2012).
Some people object to UBI not because they think it won’t work, but because they claim it is a cynical ploy by the rich to silence the poor and keep them from rebelling. Some who voice this criticism genuinely believe it, but others use it as a tool of political division. Whatever the case, the impact of UBI is likely to be the opposite, as Thomas Paine recognized. In many parts of the world, including the United States, the poor are effectively excluded from the political process. They are too busy holding down one or more jobs to be able to run for office—or sometimes even to vote. American elections are held on a weekday, and employers are not required to give employees time off work to go to the polling station. Outside of elections many democratic processes, such as organizing protests or even strikes, relies on people who can contribute time to the effort. UBI will dramatically improve the ability of people to engage this way and thus challenge the status quo.
UBI as a Moral Imperative
Before we examine informational freedom, we should remind ourselves why individuals deserve to have enough to take care of their needs, regardless of any economic contributions they may have made.
Consider the air we breathe. None of us did anything to make it: we just inherited it from the planet. Similarly, no one who is alive today did anything to invent electricity. It had already been invented, and we have inherited its benefits. You might point out that electricity costs money and people have to pay for it, but they pay for the cost of producing it rather than the cost of its invention. Here we might substitute many other amazing examples of our collectively inherited human knowledge, such as antibiotics, the wheel, sliced bread, etc.
We are incredibly fortunate to have been born into a world where capital is no longer scarce. This means that using our knowledge to take care of everyone’s needs is a moral imperative. UBI accomplishes that by giving people economic freedom, allowing them to escape the job loop, and accelerating the knowledge loop that gave us this incredible knowledge in the first place.
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