The artificial intelligence revolution is raising questions about the future of work and the potential need for a universal basic income (UBI) system. While tech titans like Sam Altman claim AI will drastically reshape the economy and necessitate UBI, the feasibility and political viability of such a program remain uncertain.
The cost and funding of UBI: Estimates for the total cost of a national UBI system vary widely, with some critics claiming it would cost trillions annually, while proponents argue the net cost would be a fraction of that after accounting for taxes and offsets:
- Simplistic calculations multiplying the U.S. population by a $10-12k annual UBI yield a total cost of $2-3 trillion, but fail to account for much of this money being taxed back or replacing other welfare spending.
- Economist Karl Widerquist estimates the net cost at $539 billion (2.95% of GDP), largely funded by taxes on the wealthiest, to provide UBI for the bottom third of earners.
- Paying for UBI would require raising taxes, with proposals ranging from taxes on land value, corporate assets, inheritances, or implementing a more progressive income tax system.
Limitations of UBI: While often touted as a solution for technological unemployment, a basic income program would likely serve as a supplement to work and existing welfare programs rather than a true replacement:
- Most UBI pilot programs and proposals involve relatively modest payments of around $1,000-$1,300 per month, providing a boost to low-income individuals but not enough to fully replace a job.
- A recent multi-year study funded by Sam Altman found $1,000 monthly payments helped participants cover basic needs like food and rent, but had limited impact on employment, health, or education and training.
- Critics argue UBI is not a panacea, as the rising costs of housing, healthcare, education and other essentials would quickly eat up any UBI payments without addressing underlying affordability issues.
Political barriers to implementation: The current polarized political climate poses a formidable obstacle to enacting a bold new entitlement program like UBI at the federal level:
- Conservatives and progressives have expressed interest in UBI but often with opposing goals, with the former seeing it as a way to replace the existing welfare system and the latter as a needed expansion of the safety net.
- Veteran congressional policy advisors give a national UBI program “zero or 0.1%” chance of passing anytime soon, citing the difficulty of meshing it with the current system and the need to shore up existing programs like Social Security first.
- While the COVID-19 pandemic showed there are rare “windows” of opportunity for direct economic interventions, it remains to be seen if UBI could gain traction following a similarly massive economic disruption.
Considering alternatives: Rather than pursuing UBI as a silver bullet solution, some argue there are more targeted and effective ways to address poverty, inequality, and economic insecurity:
- Expanding and modernizing existing programs like Social Security, Medicare, Medicaid, and the Child Tax Credit to strengthen the safety net and improve the living standards of vulnerable populations.
- Pursuing “universal basic services” to drive down the costs of housing, healthcare, education, transportation and other essentials, since the rising costs of basic needs often outstrip the impact of direct cash transfers.
- Empowering people to exert more collective control over economic decision-making at the local and national level, rather than relying on individual cash payments to solve structural and systemic issues.
While the idea of a universal basic income has gained prominence in the face of AI-driven disruption, the path to implementing such a program at a national scale remains fraught with challenges around cost, impact, and political feasibility. As economic inequality continues to rise, policymakers will need to consider a range of bold solutions – both new and old – to ensure shared prosperity in an age of automation.
Is a Universal Basic Income System Even Possible?
