Universal Basic Income: Preparing for the Age of Automation?

Surprisingly enough, Universal Basic Income (UBI) was first talked about in 1516 by social philosopher Thomas More in his book “Utopia”. He envisioned a society without private property, where everyone prioritises public welfare over personal interests. While More’s idea was largely idealistic and speculative, the concept gained a more tangible and practical dimension in 1797. American forefather Thomas Paine proposed UBI in his pamphlet “Agrarian Justice” as a means to compensate people for the loss of natural resources due to private land ownership.

 

In his pamphlet, Paine argued that the land originally belonged to everyone in common, but with the rise of private property, a compensation system should be established for those deprived of their natural inheritance. He proposed funding this system through a one-time inheritance tax on landowners, which would then be distributed among the citizens. Now, when Paine talked about redistribution, he didn’t mean it equally. He proposed higher income for the disabled and elderly. Despite this, it was still the first time that such a concept had been talked about as a social and economic policy. Paine’s argument highlighted a fundamental issue: providing a basic income to address inequities—a question that remains relevant today. This raises the question: Is there an underlying issue today that necessitates UBI?

 

375 million!!! That’s the number of jobs that could be lost to AI by 2030, according to a recent McKinsey report. This staggering figure represents about 14% of the global workforce. Similar estimates have been reported by Goldman Sachs, PEW, IMF, and others.

 

A major concern in these reports is that automation will disproportionately affect economically vulnerable groups, such as low-income workers who rely on consistent employment to sustain their livelihoods. Although automation may lead to job creation, the transition phase will inevitably be both time- consuming and costly—challenges that many low-income workers cannot afford to bear.

 

This problem underscores the essential need for UBI. With a stable financial foundation provided by UBI, individuals can pursue reskilling and upskilling without the immediate pressure of finding work just to survive. When basic needs are secured, people are more likely to engage in education and training, equipping themselves for the new opportunities that arise.

 

UBI acts as a crucial safety net, ensuring a smoother and more equitable transition as the job market evolves. These findings have been consistently supported by various localized UBI pilot programs conducted in Canada, Kenya, USA, Finland, and other countries.

 

The studies revealed that implementing UBI led to significant improvements in mental health and education outcomes. School attendance increased significantly, and students were more inclined to pursue further studies to secure better career prospects. People in the workforce showed a greater willingness to engage in training to enhance their skills. There was also a significant increase in entrepreneurship, with individuals finally having the financial stability to pursue and develop their ideas.

 

And most importantly, employment rates did not decline; instead, many participants secured more stable jobs, as they were no longer fearful of meeting their basic needs. In several of these studies, employment rates even rose, as individuals were better equipped with the skills necessary for gainful employment.

 

However, a significant stigma persists that must be addressed for UBI to gain wider acceptance. There is a common belief that if UBI were implemented, it would discourage people from working and make them dependent on the provided income.

 

This concern originates from a UBI trial in the late 1790s in Speenhamland, during Queen Elizabeth’s reign. A government survey in the 1830s, the largest of its time, produced a 13,000-page report detailing the effects of UBI in Speenhamland. The report painted the experiment as a failure, citing issues like population explosion, increased disease, and reduced work participation.

 

However, a re-evaluation by historians in the 1860s and 70s revealed that the report was well, completely made up. Much of it was written before the survey data was collected, the questionnaires had predetermined answers, and the responses were mainly from local elites and clergy who held the bias that people were inherently lazy and untrustworthy.

 

The study, despite being debunked, unfortunately continues to have lingering effects today. Many people, including numerous policymakers, still believe that UBI would reduce the incentive to work. This misconception has repeatedly hindered the adoption of UBI as a policy. It is imperative that this bias is addresed promptly, so that UBI can be recognized not only as a solution to the challenges posed by automation but also as a means to alleviate poverty and promote equality of opportunity.