Universal Basic Income and the Dearth of Good Ideas

Andrew Yang isn’t doing gangbusters in the Democratic polling, but of the bottom tier Democratic candidates, he was one of two that I found most interesting (the other of course being Tulsi Gabbard).  Although when you aggregate all of his mostly left leaning positions, there is no way I could have voted for him.  However I acknowledge that he was out there with a message that needs to be addressed; and that message?  The Robot Apocalypse of course!  Not the Skynet-destroy-all-humans, but the Skynet-destroy-all-jobs type.

I’ve been worrying about this for several years, and wrote about it in 2014 when I discussed the problem.

Automation over time has made things easier for us since it’s reduced the demand of physical labor, which we’ve benefited from.  But automation is not only continuing to reduce the number of boring, repetitious jobs, it’s now going after higher end jobs.  An Oxford Study predicted that 47% of US jobs could be lost to automation in 20 years.  Burger flippers and baristas for sure, but also lawyers and doctors are at risk. There is a lot fewer tax preparers now then there were in the days before tax preparation software.  So it’s not just low end drudge jobs that will be going away, it’s upper end jobs that require education that used to provide a lot of middle class and upper middle class incomes.

These long term trends will lead to pretty dire economic consequences in our lifetimes.

If these trends continue, with more and newer jobs being for the more educated class and few new low skilled jobs created, what are we going to do with people who are just not smart enough? We are improving automation along the lines of Moore’s Law, but there isn’t a Moore’s Law for human intelligence or ability. That is my concern. Not that we hit the Singularity and every human is unemployed and targeted for termination, but that the gradual change in the economy means few jobs for people on the  left hand side of the Bell Curve. We’ll have a growing cadre of people permanently unemployable no matter how great the stock market is doing or how much increase in GDP there is.

So it’s the economic and social robot apocalypse that I worry about.  And in the several years since I’ve really become aware of the issue, there just hasn’t been a good solution presented.  Yeah I know, “more money for education!”  After all, look how well that’s worked out?  But wait; there is one more go-to idea when the issue of automation eliminating jobs comes up; Universal Basic Income (UBI).

Andrew Yang’s proposal is the Freedom Dividend.”  As Yang’s campaign website put it, “Technology is quickly displacing a large number of workers, and the pace will only increase as automation and other forms of artificial intelligence become more advanced. ⅓ of American workers will lose their jobs to automation by 2030 according to McKinsey. This has the potential to destabilize our economy and society if unaddressed.” 

He’s not wrong about the problem but the solution?

“Andrew would implement the Freedom Dividend, a universal basic income of $1,000/month, $12,000 a year, for every American adult over the age of 18. This is independent of one’s work status or any other factor.”

Whee!  Free Money!

“Other than regular increases to keep up the cost of living, any change to the Freedom Dividend would require a constitutional amendment. It will be illegal to lend or borrow against one’s Dividend. “

Well good luck enforcing that one.

So to the question, what do we do about no jobs, Yang’s answer is simply free money.  However I will give Yang credit. Unlike most advocates of UBI, Yang actually has a way to pay for it, a 10% Value Added Tax.  That is at least a more honest answer than the one you usually get from UBI advocates, which range from “the rich,” some version of Modern Monetary Theory (MMT), or an Ocasio-Cortez-esque “You Just Pay for it.”

Free money sounds great and I can absolutely see the attraction to it.  Would I like an extra thousand bucks a month?  Absolutely!  Most people, and certainly a voting majority, could use extra cash each month.  In fact, it’s hard not to even discuss UBI without fantasizing about what we would do with the money.  It’s almost like lotto winnings, and like lotto winnings, it would wreak havoc on the recipients.

As much as I would love an extra twelve thousand bucks a year, Universal Basic Income is a total disaster as a social policy. We already have some great examples of a society dependent on welfare.  We have ghettos all over this country, of all races, in which cash benefits have totally flipped the incentive structures that a normal society has.  The bourgeois norms of thrift, work ethic, and responsibility have totally broken down in those areas, and I can’t imagine anyone who would want to replicate that nationwide.  In spite of Yang’s alleged safeguards, it’s easy to see how this would reorder politics into those who want to increase benefits (for the people!) and those who want to hold the line.  If history is any guide, the hold the line types are destined to lose.

UBI as a societal cancer probably won’t discourage those who want the government to make it rain with dollars, but even if UBI was the smartest idea ever, why would you want to institute it now?  Unemployment rates across all demographic groups are at historic lows. It certainly sounds difficult to justify a multi-trillion dollar program for a problem that has not arrived yet, and we don’t have a clear idea when it will arrive.  Of course, when the automation hammer falls, it’s not going to fall on the people who advocate for it now, primarily young people who can’t wait for an extra thousand bucks a month for weed and pizza.  It will hit people, in the way automation advances always have, on middle aged and older workers who suddenly find themselves laid off in their 40’s or 50’s with a set of work skills that are now obsolete. Common sense would seem to dictate that at the point it becomes a real societal problem, a program to provide a bridge for older workers to retirement would make more sense than starting a Freedom Dividend retirement program for people who are just graduating from high school.

The robot job apocalypse is a real issue that needs to be addressed.  The only solution out there, UBI however, is probably the dumbest of all answers. UBI doesn’t fix the problem.  People who are left unemployed by automation will still be unemployed, they’ll just have a long term welfare/unemployment check to buy groceries and pay rent. Of course, I didn’t have a solution in 2014 and I still don’t have one, but I don’t want to make things worse with an idiotic universal basic income scam.  It’s simply an end-stage democracy idea to buy votes.

This election season has the Democrats running on a maximum wish list of items that totaled up, exceed the GDP of the entire world, let alone the United States.  Between a Medicare for all, Green New Deal, Fee healthcare for illegals, and free college for all, the country would have long been a smoking financial ruin before UBI ever got put on the agenda.

Andrew Yang won’t get the nomination, but like reparations, UBI will continue to exist as a Democratic talking point and will probably show up as an issue in every Presidential election from here on out.  Why not?  It’s only money.

The Reparations Gambit

I have been waiting for this ball to drop for a long time.  I thought maybe that 2014 would be the year that the Democrats would pull the electoral ripcord on the reparations issue, but they seemed to drop the ball on it and suffered in the elections accordingly.  Then in 2016 I thought Hillary would pull reparations out of her purse (it was right beside the hot sauce) and close the enthusiasm gap among black voters.  But she was so confident that she couldn’t lose that she decided it could stay in her purse.  Like Trump was really going to beat her?  After all, once you pull the reparations card, it’s out for good.  You can’t change your mind and stick in back in your oversized purse.

But now the issue is out, and it looks like 2020 will be the first Presidential election year (and forever more) that reparations become a real political issue. According to The New York Times, Elizabeth Warren, Kamala Harris, and Julián Castro have all come out in support of some type of reparations.  They are rather vague on the details and price tag, but eh, it’s still early, and besides, those sorts of details are not very important or at least no more important than details and price tag for a “Green Deal.”

By the time we get to the nomination, some form of reparations will be part of the candidate’s agenda and part of the Democratic Party platform.  And it can join the other trillion dollar promises, like Medicare for all, Green Dreams, Universal Basic Income (UBI), Universal Daycare, Free College, and the hundreds of other spending fantasies.  However unlike the other high dollar promises, reparations promise to be eternally racially divisive.

Just what this country needs.

To be fair, slavery reparations do have the tug of moral authority to them.  In a perfect world, I would support them myself. A great evil was done and there should be some sort of compensation for it. However it’s 150 years later. There is no one alive that was a slave, and the practicalities of coming up with a fair and just system to compensate their descendants seem pretty daunting.  I’ve thought long and hard on this subject myself and have yet to figure out a way, or have read of any such plan, that would be workable and just.

Never has the devil been more in the details of a policy than in reparations.  If Abraham Lincoln’s Freedman’s Bureau had been allowed to continue its work, and the newly freed slaves had gotten their 40 acres and a mule, this issue would have been one and done.  But now, who do you compensate?  If, for example, you have theoretical reparations of a $50,000 credit, to be applied to either college or home down payment (the two gateways to the middle class), do you give it to the man, his, son, or his son (assuming all living)?  Should it be given to the oldest living relative in a family, or the youngest?  Or do you just give it to every descendant of slaves from now on?

Of course, that means Barrack Obama, Colin Powell, or Kamala Harris would be entitled to zero reparations since none of them are descendants of American slaves. What about Malia Obama, the President’s daughter?  Would she get half of reparations? And how would you determine eligibility?  There are probably a lot of African Americans who would have a great deal of difficulty laying their hands on all of the documentation necessary to prove ancestry from the slaves freed in 1865.  So would you just go by skin color? Self Identification? DNA?  Imagine, Rachel Dolezal being eligible for reparations. Or imagine the millions of white people with sub-Saharan ancestry thanks to DNA testing, who want their piece of the reparations pie.  If the one drop rule is good for the goose…

But in a way, the very difficulty in figuring out the right policy is a feature, not a bug.  It’s more useful as an issue than an actual policy. And with the added benefit of being racially divisive, it’s the perfect issue for Democrats to run on in 2020.

And every election thereafter.