Is Universal Income / Basic Income Feasible from an Economic Point of View?
The concept of universal income or basic income (UI/BI) has garnered significant attention in recent years. While many argue that it is morally and socially necessary, the practical question remains: is it financially viable from an economic perspective?
Financial Feasibility
Financing a universal income program is not a straightforward problem, but it is certainly attainable. The idea is to design a system where sufficient income is provided to everyone, enabling them to fulfill their tax obligations and support governmental operations. This requires a rigorous understanding of tax policies, government spending, and economic realities.
Automation and Economic Shifts
Historically, the rise of automation has led to profound economic shifts. As the cost to produce necessary goods and services approaches zero, the value of labor to produce those goods dwindles. This phenomenon is primarily due to automation, not offshoring, which is a common scapegoat. Automation has rendered some goods and services non-essential, forcing people to seek alternative sources of income.
Scientific Fiction Models
The concept of universal income has been explored in various scientific fiction models. One notable example is the model developed by Lois McMaster Bujold in her Vorkosigan series, particularly on the planet Komarr. In this universe, everyone owns a minimum stake in the economy, which includes a share of the labor of automation. This ensures a stable income for all inhabitants.
Other models propose a minimum monthly income, with basic needs being met through general distribution or expanded safety net programs without stringent need-based requirements. These models aim to alleviate poverty and ensure everyone has a safety net.
Impact of Automation on Employment
The rise of automation is leading to a significant shift in the job market. Manual labor is increasingly being replaced by machines, leading to issues similar to those seen during the collapse of slavery in the 19th century. Machinery took over many jobs that once required unskilled labor, resulting in high poverty rates, particularly in urban areas.
The challenge lies in ensuring that the profits from automation benefit the general population, including their descendants, rather than just the factory owners. If the shift is captured by the owners of machines, it can drive wages down, leading to increased inequality.
For instance, the decline of manual typists due to automation illustrates how essential work can rapidly become unnecessary. Just as scribes were rendered obsolete, modern technological advancements have rendered many clerical positions defunct.
Transition to Universal Income
The transition to a system where universal income becomes a norm is a gradual process, one that has been underway for centuries since the advent of industrialization. As technology continues to advance, the number of necessary jobs for humans will decrease. Eventually, there will be insufficient job opportunities to support the workforce, necessitating a redistribution of income.
From an economic standpoint, universal income is financially feasible. Instead of subsidizing businesses, the government can directly subsidize consumers, who in turn spend money on goods and services, stimulating the economy. This approach, while seemingly artificial to modern eyes, has proven effective historically, such as the shift from subsistence farming to wage labor.
Therefore, the economic feasibility of universal income is high when approached with the right policies and a comprehensive understanding of automation's impact on the job market.