The idea of Universal Basic Income (UBI) polarizes and divides. Proponents believe it is necessary with AI, and robotics disrupting the workforce, and human laborers becoming a relic of the past. Detractors believe that it create a society which values laziness over hard work, and where all sense of purpose is lost.
Both groups make solid arguments, what is needed is more data. Currently, one of the side effects of the COVID-19 outbreak, is that multiple nations have implemented UBI without calling it that. While the United States paid a one-time lump sum of $1200 to all single adults who reported adjusted gross income of $75,000 or less on their 2019 tax returns, other countries such as Australia, Canada, and New Zealand have been more generous.
Canada is the simplest program to understand, they will pay $2000 a month for up to 4 months to any Canadian who has lost their job due to COVID-19. This is a program called the Canada Emergency Response Benefit (CERB). We will explore why this is important.
What is Universal Basic Income?
Stanford simply defines UBI as “a periodic cash allowance given to all citizens, without means test to provide them with a standard of living above the poverty line”. Furthermore, “It varies based on the funding proposal, the level of payment, the frequency of payment, and the particular policies proposed around it”.
The idea is to protect all members of society so that no one is left behind. When members of society are not living in poverty, they are less likely to turn to crime, which results in reduced policing and incarceration rates. These same citizens are more likely to educate themselves, to donate time to charitable causes, and to contribute to society in other important ways.
Who Believes in Universal Basic Income?
There’s something in common with proponents of UBI, they are generally involved in technology, and they have a firm understanding of how disruptive AI and robotics are going to be, and they recognize that unless a shift in society is undertaken, that many jobs will be lost, and that poverty will increase exponentially.
Richard Branson states the following:
“I think with the coming on of AI and other things there is certainly a danger of income inequality.” Branson tells CNN.
He continued by stating “the amount of jobs [artificial intelligence] is going to take away and so on. There is no question”technology will eliminate jobs. “It will [UBI] come about one day.”
Elon Musk did not mince words:
“I think we’ll end up doing universal basic income,” Musk stated at the World Government Summit in Dubai. “It’s going to be necessary.”
In a separate interview Musk stated “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” says Musk to CNBC. “Yeah, I am not sure what else one would do. I think that is what would happen.”
Mark Zuckerberg is a huge proponent of UBI:
“Now it’s our time to define a new social contract for our generation. We should explore ideas like universal basic income to give everyone a cushion to try new things,” says Zuckerberg.
Universal Basic Income Pilot Projects
There are currently multiple pilot projects in many diverse regions. In Finland, a two-year pilot scheme is taking place under which 2,000 unemployed people have been given 560 euros per month. When interviewed many of the recipients of these funds reported more happiness, less stress, and the ability to take risks, such as pursuing other forms of employment, or education.
Ontario, Canada previously ran a pilot program with 4000 unemployed people which ran for one year in the communities of Thunder Bay, Lindsay, Hamilton, Brantford and Brant County. Under this project, a single person could have received approximately $17,000 a year, minus half of any income he or she earned. A couple could have received up to $24,000 per year. People with disabilities could have received an additional $6,000.The program ran until the government pulled the plug, citing a lack of funding.
Other pilots projects have been operational in Scotland, Kenya, The Netherlands, and even California.
All of these pilot projects suffered from the same issues: Lack of funding, a small sample size, too narrow of a location, and poor data collection.
The UBI Opportunity
The CERB program in Canada is UBI in its truest sense. It provides a payment of $2,000 for a 4-week period for up to 16 weeks which is more generous than most countries during the COVID-19 outbreak. The current number of enrolled Canadians is in the millions, this means the sample size is large.
Other benefits of CERB, is unlike most UBI pilots you have a sample size in many regions instead of one specific region. UBI can then be tested in multiple settings such as small towns, suburban areas, and in large cities. Since the amount of money collected does not change, the impact of this subsidy could then be studied based on the cost of living in each region. $2000 a month for someone in remote Nova Scotia, may be more impactful than the same amount in expensive urban environments such as Vancouver, and Toronto.
What I recommend is that instead of trying to fund a UBI pilot project from scratch, something which has failed multiple times in the past, is that a supplementary fund is initiated to study the impact of UBI in Canada when government funds are used.
An additional small amount of money could be paid to Canadians who choose to enroll in an anonymized data collection program. Each Canadian could receive an additional $200 to participate, they would need to outline where the funds are used, for what purpose, as well as how they feel regarding the program.
The purpose of this study would be to fully understand the mindset of the recipient of these funds. Is a sense of purpose lost? Or is the relief of not falling below the poverty line enough for people to choose to educate themselves online for future employment opportunities? These are the type of questions that we need to ask, and we currently have the largest unintended UBI pilot program in the world to ask those important questions.
After all, while the current high levels of unemployment are due to a virus, in 2030 it might be automation caused by AI which results in a similar level of unemployment.