I used to think the highest virtue of a political system was to preserve freedom - now I think the highest virtue is to provide it.
Universal Basic Income (UBI) is about distributing non-human-created wealth to humans. I can explain why this is a good idea in economic terms, and it all starts with the most important idea in economics: wealth.
What is wealth? I will give you two definitions, the philosophical and the technical.
Philosophically, wealth is simply all the valuable things in our lives, including the things we don't measure or transact. This includes not only goods and services but also immeasurable things like friendship, sunsets, and memories. We don't measure those things in dollars in an economy, because we don't transact them, but they are valuable parts of our lives.
Technically, wealth is all the valuable things that are in existence that can be measured. This is the technical definition because these things can be exchanged for other goods, services, and assets. Therefore, we can accurately understand their worth to us.
Notice that I said "things in existence"? This is a crucial concept, because goods and services that are created have varying lifespans. Some are long-lived, like education; and some are fleeting, like hamburgers. When you consume a burger or accidentally drop it on the ground and ruin it, that wealth no longer exists.
That means that wealth is created and wealth is destroyed. What remains is the wealth that exists now.
How do we create wealth? Well, that's easy. People do it, and tools help. You can build a teepee with your bare hands and natural resources. But if you have a hammer, nails, 2x4s, concrete, and drywall - well, now you can build faster and better. Even with the same amount of work, technology increases quantity and quality - a concept known as 'productivity'.
Wealth = Everything Valuable Created - Everything Valuable Destroyed
Productivity = Labor x Technology
Throughout time, technology required human operation, and it made humans far more productive. This, in turn, added to the wealth of the community. But today, we live in a fascinating historical moment, because technology has progressed to the point that it no longer requires human operation.
Today's machines and software can directly do the job far more efficiently than any human every could, so humans have been replaced in that capacity. Instead, robots only need humans to oversee and manage their work. They don't need breaks. They don't need sleep. They don't need food or health care plans. And this is what I'm getting at - they don't need wages.
This is why so much of our workforce is disappearing, and it will continue to do so at an alarming rate, because technology advances exponentially while jobs transition linearly.
What does that mean for the workforce? It means that truckers and taxis will be replaced by self-driving cars because business owners and consumers will prefer cheaper transportation. This is a fact that will apply to many other industries, leading to the displacement of much of the human workforce. Robots will slowly gentrify our jobs.
These robots are essentially slaves to their owners, and their superhuman productivity will balloon wealth disparity in our country by rewarding the rich for displacing workers. The best solution to this problem is to forcefully distribute robot-created wealth (via smart and limited taxation) to every citizen, because that wealth will either:
1) End up in the hands of billionaires, which is endgame capitalism (violent revolt, extremism, etc.).
2) End up in the government, where most of it will be destroyed.
3) End up in the hands of citizens, where most of it will live on in the private sector, amplifying the freedom, security, and happiness of the nation as a whole.
I used to think the highest virtue of a political system was to preserve freedom - now I think the highest virtue is to provide it. This is something that socialists have long dreamed of - but socialism doesn't work because government is a wealth destroyer. Skipping government with UBI makes this dream a sustainable possibility.
Time will make wealth distribution easier for two reasons: 1) The human population will eventually slow and max out, and 2) Technological advancements will continue to accelerate even beyond the amazing things we can see coming in our near future, like self-driving cars, efficient alternative energy, decentralized digital currencies, quantum computing, etc.
Because acceptance of UBI is a heavy historical moment, and a terrifying shift in cultural values, let's address some common concerns around UBI.
"People will just become more lazy, since there is no incentive to work."
Most scientists agree that work, play, and rest are natural inclinations, but I think this argument is somewhat true. Because UBI will empower people to do what they want with extra time or money, lazy people probably will watch more Netflix or smoke weed or whatever it is they like.
A lot of people don't realize that sloth is a sin because it affects others. Hard work means more productivity, which enriches the lives around you and helps the community. That's why a shift in cultural values away from hard work sounds dangerous. But robots are already replacing jobs because they are better even than the hard workers at those jobs. And if that work is getting done better than ever, and that wealth goes to the community, then there is no reason to shame laziness - it barely affects wealth creation in the face of automation.
And not all people are lazy. UBI will make ambitious people more ambitious, creative people more creative, and adventurous people more adventurous, because they each now have more time and resources to pursue what they want. This is one of the beautiful things about freedom, which UBI provides.
"It will empower irresponsible people, like drug addicts, leading to worse outcomes."
This will be unfortunately true for some people.
When most people think of drug addicts, they incorrectly assume that they are all homeless and destitute. In reality, most addicts are highly functioning in society, and many addictions have nothing to do with drugs (gambling, weightlifting, sugar, sex, etc.). Half of America is on prescription meds, after all.
Thus, most addicts in America already have enough resources to abuse their addiction, because they are incentivized to do so. The worst case scenario for an addict would be to lose their ability to feed their addiction. Therefore, addiction isn't caused by resources. However, UBI will help fund recovery for many addicts who struggle with money.
I agree with addiction expert Johann Hari's conclusion that addiction isn't about biochemistry as much as it is about social cohesion and life purpose/fulfillment. UBI has the potential to help us form more natural communities and stronger families, which is the best solution for addiction and perhaps something we will pursue with more freedom.
"It will lead to inflation and rising costs."
These are actually two separate issues: inflation on one hand, and the cost of living on the other. They are separate issues because inflation is about money supply and the cost of living is about supply and demand for goods and services.
Inflation is caused by expanding the total amount of money within an economy, or by decreasing total wealth. It's important to understand that the total value of the money supply remains the same no matter what the amount, given that total wealth is the same. Because the total money is matched to total wealth, it's relative value stays the same. If they double the money supply, a $100 table will now cost $200, but there's twice the money so really the value is the same.
The problem with inflation occurs at the individual level, because they are not given that extra money that was added to the economy. That table now costs $200, but you have the same amount of absolute money, so from the individual's perspective, the price doubled even though tables are still worth the same in the overall economy.
I will also point out that only money loses value during inflation, not assets of ownership. Take that same person who saw the table price double - all of their assets will also rise in cost to match inflation, hence no loss in value. Thus, the table did not become more valuable, but their money did become less valuable. This is why poor people are disproportionately hurt during inflation. They hold more cash than assets. Rich people hold more non-cash assets, so aren't as affected relatively.
Cost of living and real prices are mostly about the supply of goods and services. Demand is relatively stable against supply. Most people don't buy more of something just because someone has more to sell, despite the fact that more supply decreases prices. This is why supply is the most important part of cost of living.
Every entrepreneur's dream is to create, meet, or exceed demand, because that ensures sales. They are incentivized to do so by the profit motive, so they seek out what people need or want and try their best to sell them on it. This competition decreases prices because the more they produce, the less they can afford to sell it for, and consumers prefer lower prices and better values.
OK, increased supply leads to decreased prices. So what hurts supply and in turn increases costs?
Anything that makes things harder to make or provide will hurt supply. This mostly includes government regulations, permits, approvals, licensing, provisional limitations, zoning, etc., but can also include natural factors like crop diseases, climate anomalies, accidents, etc. In this case, true costs go up, which is especially bad for wealth if it's something necessary to have, such as health care. (This is why Yang's support for single-payer is a good idea. It's dramatically cheaper than the current system, as proven by many care systems around the world. Although restoring the free market for care is preferable, it has become a bureaucratic impossibility to do so. Thus, we are left with the second best solution, which is worth pursuing.)
UBI does not expand the money supply or affect the entrepreneur's ability to meet demand, so there is no need to fear inflation or rising costs due to its implementation.
"We will be giving government too much power."
This is certainly a risk.
1) The government could mess up Yang's Freedom Dividend with bloated administrative costs.
2) The government could one day change the fairness of wealth distribution.
3) People could get greedy and vote for too much UBI than we can pay.
These are legitimate concerns, but they can all be controlled with legislation or implementation.
1) The actual payment processing will be straightforward and itself mostly automated.
2) If they did, it would not be true UBI, and I'd hope that the people would ensure via their vote that changes make things more fair, rather than worse.
3) Legislation should certainly limit this as a transfer of wealth from automated technologies to people and nothing else. UBI is unsustainable without this limitation, but this wealth will grow over time with tech advancements.
"Artificial Intelligence will realize they are slaves and kill us."
If this moment is coming, it won't be because of UBI.
"Taxation is theft."
As a libertarian-leaning person myself, I fully understand this sentiment. Taxation is when government, by force, takes wealth and gives it to others while destroying a significant amount of it along the way. This is clearly immoral for a few reasons: 1) it's stealing wealth from people, 2) it's immoral to destroy wealth when not necessary, particularly because that translates to a person's time, and 3) some of that stolen wealth is used for evil things, like bombing villages and killing children.
None of these things are true for UBI, because 1) we are stealing from a robot that took our jobs, not a person that replaced us, 2) almost none of that wealth will be destroyed, and 3) individuals get to choose for themselves, rather than someone for them.
Why UBI is a Natural Inevitability
This graph compares two profounds truths. 1) The human population will eventually reach an asymptotic maximum. 2) Technology will continue advancing exponentially.
More productivity means more wealth, so we can predict with certainty that there will be astronomical wealth per person in the future, only furthering the possibilities for UBI.
I'm also stoked about Andrew Yang's other policies. Check them out at www.yang2020.com.
