Most of the discussion focuses on the immediate effect it will have on people’s lives. Very few people are looking at the long-term impact. That’s the major focus of this blog posting.
But first, let’s look at the cost of UBI.
According to a 2020 study by the conservative think tank, the Fraser Institute, a monthly federal payment of $2000 to Canadians between the ages of 18 and 64 would cost $464 billion a year. Per capita, that is similar to estimates by a recently released study on UBI commissioned by the B.C government.
This is an enormous amount given that the federal government only brought in $338.8 billion in revenues in 2019, and ran a deficit of $19.8 billion. As for taxing the rich more to pay for UBI, the Fraser Institute study estimated that collecting the entire disposable income from those earning over $250,000 a year would be sufficient to cover only 25 percent of the program’s cost.
The extensive use of tax havens by corporations would also make it very difficult to get money from that sector.
Given the cost, if we get UBI, the monthly payment will, in all probability, be a much lower amount. However, even a $600 version of UBI would still represent over 40% of government expenditures and could come with cuts to existing programs. It’s why so many anti-poverty organizations and left wing think tanks are opposed to UBI. They believe that low monthly payments, coupled with a contraction of government services, could exacerbate poverty rather than reduce it.
They have a point. But what worries me even more is what UBI could mean for future generations. Here are five questions I think UBI advocates who genuinely believe the program will lead to a better world need to grapple with.
Will UBI be an obstacle to finding solutions to the looming job crisis that is predicted?
A 2013 report out of Oxford University estimated US job losses of 47% over the next few decades due to advances in automation. This was backed up by a 2020 survey of large businesses done by the World Economic Forum. Business leaders estimated that the time spent on current tasks at work in their corporations by humans and machines would be equal by 2025.
This scenario suggests a need for government to actively begin creating jobs in the manner of the New Deal during the Great Depression. But where will the money come from, both now and in the future, given the massive financial commitment government will be already making if we get UBI?
Who really profits from UBI?
The billionaire class (Bill Gates, Mark Zuckerberg, Jeff Bezos, Elan Musk, etc.) are in favour of Universal Basic Income. So too are 120 Canadian CEOs and business owners. And why wouldn’t they be? Maintaining consumption in the past has always been tied to employment and adequate wages. Those UBI monthly payments, not just to people who need the money for basic needs, but to many in the middle class who don’t, will stimulate and subsidize consumption even as the automation related layoffs roll out. There will also be very little pressure to raise wages for two reasons. One is the monthly top-ups workers will be receiving. The other is the growing surplus of laid-off workers, many of whom will want to find work. Expect higher profit margins for owners and shareholders with UBI.
Where there are winners, there are always losers. One that UBI enthusiasts are perhaps not considering is the environment – an environment that is already deeply scarred by too much disposable stuff. Should government be facilitating this by promoting the consumption of more stuff? UBI for everybody will do that.
Will UBI lead to greater inequality?
In the past, reductions in inequality happened because workers were able to collectively threaten to withdraw their labour. Just as outsourcing jobs to other countries shifted that power dynamic between workers and employers in 20th century Canada, so too will the automation revolution. Only this time it won’t be just blue-collar work that is affected. Algorithms are expected to substantially reduce middle class jobs, including managerial positions.
The effects could be long term. The speed of IT breakthroughs has no historical precedent and is evolving at an exponential rather than a linear pace. We really don’t know where it’s going to take us. If we don’t focus on creating new and different jobs, jobs that can’t be replaced by robots and algorithms, we could end up with a huge, powerless, unemployed and underemployed underclass. A worst-case scenario would take us right back to the massive inequality and exploitation of the 19th century when 10% of the population owned 90% of the wealth.
Do we really want to leave the responsibility for job creation entirely to the private sector? In choosing UBI with its huge costs that is exactly what we are doing.
Will UBI weaken democratic government?
It isn’t just that UBI deprives government of the funds to create jobs, or introduce a national pharmacare or dental care program, or put much needed money into affordable housing, public transit, day care, etc.
In prioritizing payments directly to people rather than through institutions, UBI reinforces the neoliberal belief that “the Greater Good” is best achieved through individual effort. I worry that UBI will lead us further down the path that former British Prime Minister Margaret Thatcher articulated when she said “There is no such thing as society”. Milton Friedman, the principal articulator of the belief in market control of human destiny, was an advocate of Universal Basic Income. That should raise alarm bells.
Is there a better way that government can spend money to help people?
In January 2021, a report commissioned by the BC, NDP government to assess the viability of introducing UBI in B.C. was published. More than 40 experts participated in the 518 page study which in the end rejected UBI as a way forward to create a more just society. Researchers made 65 recommendations that included reforms to social services, taxation, labour standards, housing, disability assistance and income support.
It is an excellent report, but what it doesn’t do is directly address the job losses predicted through advances in automation. An approach that does do that, is a Job Guarantee program to all those who want to work, paid for by the federal government, but designed and administered at the local level by local groups.
This is not workfare. The emphasis would be on jobs that care for communities and the environment they live in – jobs that can’t be replaced by robots. For an understanding of what this kick-start to a “people’s economy” might look like, you could check out our short eight minute video. It’s based largely on the work of American academic Pavlina Tcherneva.
Sigmund Freud said that “Love and work are the cornerstones of our humanness.” Of course, he meant that the work has to be meaningful. Much of the work in our consumer-oriented society does not meet that criterion. The work place has become far more exploitative and precarious than it was 50 years ago when I and other baby boomers entered it.
The consequences are sobering. According to a 2020 report by the Parliamentary Budget Office, the top 10% of the population now owns 56.5% of Canadian wealth, the top 20% holds 73.5% and the bottom 40% just 1.2%. As for income, the above BC report claimed that one in three single BC working age adults were living in poverty. Expect those statistics to worsen as robots and algorithms continue to displace jobs.
UBI enthusiasts, in my opinion, are too optimistic about long-term outcomes. The underlying UBI assumption is that the future will be governed by the same norms that apply in the present, and that
- enough jobs will still be there for those who want them.
- wages will not stagnate and could rise as workers have the option to turn down lousy jobs.
- public services won’t be cut or privatized.
- UBI payments will be sufficient and keep up with inflation.
- unions will still have some power.
- the majority of those who aren’t working and can’t find work will be content with this, thanks to their monthly UBI income.
- Government’s ability to act in the public interest will still be there.
What if the above suppositions ultimately end up as wishful thinking? That could happen. What UBI supporters are not recognizing is the ways in which UBI, albeit unintentionally, will strengthen corporate power at the expense of democratic choices. The consequences could be both unforeseen and unpleasant, as the corporate world rarely acts benevolently of its own volition. History has shown us that.
I understand the attraction of UBI. At first glance it seems so fair and egalitarian. But, for all of the reasons I’ve detailed above, I believe it could be a Trojan Horse. There has to be a better way to reduce poverty and growing inequality.