The Universal Basic Income Is An Idea Whose Time Has Not Come

The Universal Basic Income Is An Idea Whose Time Has Not Come

Does it seem odd that those who made their billions by applying their ingenuity and skill to create technological advances now recommend establishing a nonworking class?
J. David Patterson
By

From almost the beginning of the Industrial Revolution, people have alternatively celebrated and feared the effects of machinery on their economies and cultures. The current iteration of this fearful joy tells us that automation will make too many people unemployable and, in its darkest mood, that artificial intelligence will undertake a war to eradicate humanity.

As Nikhil Reddy of the Huffington Post puts it, “The melancholy truth is that this is a certainty – these machines will come to do our work better than we can – so we must maintain a plenary focus on protecting the financial and occupational interest of those whose jobs are up for grabs. The solution – receiving troves of support from the likes of Bill Gates, Elon Musk, Mark Zuckerberg, and Richard Branson – is universal basic income.”

The concept of universal basic income (UBI) is that the federal government would guarantee that everyone receives a minimum income regardless of circumstance to offset the horrible effects of automation and AI which represent the successful advance of technology. Under this theory, the culprit, technological success, will put people out of work and irrevocably reverse the course of business in a market economy, as we know it, if the United States does not implement UBI.

Don’t Be Creative Like Me

Don’t get me wrong here: I’m not down on billionaires. I want everyone to have the opportunity to be one. But, before going further, does it seem odd that the successful billionaires noted above, who made their billions by working hard, applying their ingenuity and skill to create enormous and rapid technological advances they now warn against, now recommend establishing at taxpayer expense a nonworking class? They created corporations that succeeded because they hired talented people equally dedicated and willing to work long hours to make the dreams of the companies’ creators become reality.

These entrepreneurs developed technologies including artificial intelligence and labor-saving robotics that gave birth to complementary technological advances. Now, these folks believe it is the interest of business in the United States to institutionalize compensation for not producing, for not being creative, for not exhibiting the very spirit that they proved makes a successful business. There is something fundamentally wrong with this thinking.

Reading and listening to the techno-billionaires’ argument reminds me of the Mark Twain quotation that opens the movie “The Big Short.” “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

To that end, the UBI argument rests on two premises that “just ain’t so.” First, there is the idea that machines will replace jobs, for a net reduction in jobs. Second is the belief that giving money to people for doing nothing will have a positive overall effect. Yet the evidence is exactly the opposite to what these imaginative billionaires argue.

Tech Innovation Always Creates New Jobs

First, what was clearly a technology boom during the 1990s saw a fairly low unemployment rate. In fact, at the height of the technology bubble, unemployment was at its lowest during the decade, 4.0 percent. Throughout the history of the United States from the industrial age of the early 1800s, there is no evidence that would draw the observer to the conclusion that technological advances increased the number of people permanently displaced from the labor force.

The important evidence these billionaires ignore is that while technology does make some jobs extinct—Pony Express riders, Morse code telegraphers—it also creates new jobs requiring different skills. With each new invention, innovation, or industrial discovery, more jobs were created. Where there isn’t numerical equality between the old and new jobs, some people will be forced to rely on government aid for the time it takes to retrain into a new job (which already exists, by the way). But not so many to require so massive and permanent aid as “universal basic income.”

In Jeremy Pollard’s article in Control Design for Machine Builders, “Is technology replacing jobs?” Pollard refers to Mark Bertolini, CEO of Aetna, a $60 billion Fortune 50 health-care benefits company, who argues, “Now, consider that the banking industry has expanded the number of tellers at their branches because they have built more branches. They embraced automation such as ATMs, which meant lost jobs in the short term, but they also realized they had much more money to provide better customer service, so they put that money back into their businesses by providing construction jobs, management positions and teller employment to the tune of 100,000 teller jobs since 2000.”

Reddy goes on to explain in his article that UBI is based on the foundational concept that unconditional income increases job security, mitigate the pangs of work-based stress (snowflakes arise), and engenders the freedom to explore business prospects without monumental risk.

Let’s stop right there. What job security is there in paying people to do nothing? Job security is based on whether there is a continued market for the workers’ services or products, and on the quality of the workers’ output at a price customers are willing to pay. The fundamental flaw in UBI thinking is that a) the arguments for it are based on assertions only, no relevant data, and b) that when you pay people for doing nothing, you can expect to get what you pay for.

People Are Trouble When They’re Not Working

As early in our American history as in the Jamestown colony of 1610, we learned the painful lesson of what happens when many rely on the labor of the few willing to work. Captain John Smith was prompted to issue the order, “He that will not work shall not eat.” Apparently, some of the early settlers believed they did not have to work and that the local Native Americans would continue to provide them food. Smith’s order suggests otherwise.

The Disney movie “WALL-E” provides a more contemporary portrayal of what happens when people are rewarded for not doing anything to sustain their existence, living in a completely robot-served world. Humans spend their days of leisure aboard a large space cruise ship with butts fixed to hovering chairs and taking their meals through straws so as not to have to exert the effort of chewing their food. Their bodies suffer bone loss from inactivity and they become so fat that movement is difficult. The point is that being rewarded for inactivity creates a societal idleness.

Researchers from the Roosevelt Institute (RI) looked at data results from two UBI pilot examples in North America. First was the Alaska Permanent Fund Dividend, a program that redistributes oil revenues through annual payments to every Alaska resident amounting to about $1,000 to $2,000 yearly. Second was the Eastern Band of Cherokees’ casino-dividend program dividing casino income generated by the reservation’s gambling industry with payments of several thousand dollars to each tribal member annually. They also examined “negative income tax” programs in select Canadian and U.S. communities in 1960s and 1970s that provided taxpayer-funded household rebates covering basic living expenses.

The researchers found “no effects on the labor market supply.” But there is one small problem. There is no commonality between the “pilot programs” that the RI researchers claim as relevant surrogates and what UBI advocates are proposing . Receiving one payment annually of a few thousand dollars in no way equates to monthly UBI payments from all working people to every American. Additionally, the taxpayer-funded household rebates back in the 1960s and 1970s have absolutely no relevance to the 2017 tax structure and welfare system. To draw any conclusions from such 40- to 50-year old results gives new meaning to the phrase, “scientific method, what scientific method?”

Universal Basic Income Is a Ponzi Scheme

Julia Seymour takes a more critical viewpoint based on economic responsibility in her article “Fast Company Hails Universal Income As ‘Economic Stimulus,’ Omits $2.8 Trillion Price Tag.” Seymour explains the RI research was touted in Fast Company as if it were “not a giveaway; it’s a permanent economic stimulus.” Not mentioned was that the cost of even a $1,000 per month UBI would be $2.8 trillion in deficit spending. That’s on top of our current $20.170 trillion federal debt.

The cost of even a $1,000 per month UBI would be $2.8 trillion in deficit spending. That’s on top of our current $20.170 trillion federal debt.

UBI is a Ponzi scheme. How much tax revenue will have to be extracted from the shrinking number of taxpayers to fund it? UBI would be socialism at its worst, and cannot possibly work. As Margaret Thatcher once said, the problem with socialism is that you eventually run out of other people’s money. Like all Ponzi schemes, UBI would collapse on itself.

To be fair, the technology billionaires are not the only apologists for UBI. There are the “utopianists” who now raise the potential for “Utopia for Realists” with unconditional payments to people for not working. In her article, “The False Promise of Universal Basic Income” published in Dissent, Alyssa Battistoni makes the case for UBI through Rutger Bregman, a Dutch journalist and UBI apologist.

Bregman believes worries about automation creating more non-productive “Waste of time in front of the TV Lose our purpose in life” behaviors are “charmingly naïve.” Rather, Bregman takes the position that, “We aren’t bored to death, we’re working ourselves to death.” Now, here is a European journalist lecturing on the burden of work where the 30-hour workweek is the norm and “cradle-to-grave” socialism makes the phrase “we’re working ourselves to death” incomprehensible. It’s already become clear that European welfare states cannot fund the current arrangement, let alone any expansion through a UBI system.

The United States Is Not Europe or Africa

Battistoni ends her article conflating ideas from experiments in guaranteed basic income in Dauphin, Canada in 1970, Namibia, Kenya, and Uganda, as well as socialist economies such as Sweden’s. Although it should be obvious, the United States is not Canada, Namibia, Kenya, Uganda, or Sweden.

Business in America built on unflagging work ethic will continue to be the cornerstone of what the United States is as a nation.

The United States is not like any other country historically, economically, or culturally. So, what Battistoni begins disguised as an honest treatise exploring the various aspects of UBI ends with a Marxist harangue about how the those who produce have an obligation to disperse their earnings to those who don’t, because those who produce create income inequality they are responsible to fix. We learn that at some level UBI is a ruse to divert the reader from Battistoni’s real purpose, which is to convince people that the United States should adopt the failed Marxist maxim, “from each according to his ability, to each according to his need.”

Business in America built on unflagging work ethic will continue to be the cornerstone of what the United States is as a nation. To quote former Vice President Joe Biden, “your job is about your dignity. It’s about your self-respect. It’s about your place in your community.” Biden was, in that at least, entirely correct.

America has drifted away from our famous work ethic for more than 30 years. Once there was shame attached to participating in government welfare programs. No longer. We need to recover the dignity of work, and that cannot be done through UBI, which is just another flavor of welfare.

Technology has allowed our nation to increase in prosperity and create a continuously expanding job market. Listening to UBI advocates, one would believe that technological advance is, by definition, self-destructive. It is not. UBI is just a bad idea, like so many that have gone before it.

Mr. Patterson is the senior vice president at SMA, Inc. and former principal deputy undersecretary of defense, comptroller under President George W. Bush. Patterson’s comments and opinions are his own and do not reflect the opinions of organizations with which he is affiliated.

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