By Mariano Torras
Recent concern about the uncertain impacts of artificial intelligence has fueled renewed discussion of universal basic income (UBI). As in the past, much of the conversation depicts UBI as a policy expedient aimed at relieving the adverse effects (presumably inescapable and impending) of technological unemployment. We must, however, rethink the main purpose of UBI. It is a sound policy initiative quite independent of the technology question. By aligning with many of the United Nations Sustainable Development Goals (SDGs), UBI could be a global game-changer. Appreciating this, however, requires looking beyond growth in gross domestic product as the predominant indicator of economic progress.
Nobody questions─or should question─the goal of economic productivity. Yet when we emphasize productivity without a clear end goal we run into complications. We never desire productivity for its own sake; it is always an instrument to help us meet social goals. What, then, are (or ought to be) our goals?
For too long, economics has equated productivity gains with growth in income or gross domestic product. It is increasingly evident, however, that such a perspective is at best limiting and at worst harmful. Our social goals should not amount to material comfort on its own, rather the satisfactions it affords. Freedom, dignity, pleasures, diversions, new challenges─these are but a few of the constituents in our “quality of life”.
Now it is undoubtedly the case that gross domestic product growth is vital for most countries in the global South. To the extent that income enables people to meet their fundamental survival needs and to enhance their life capabilities, its importance cannot be overstated. Yet it is more reason to institute a modest UBI even in the poorest countries, if nothing else as a means of keeping populations out of precarity (related to SDGs 1 and 2). Financing a UBI in a country with a limited budget is of course no trivial matter, but there are means of doing so.
Unwarranted emphasis on income is of far greater import in the case of countries in the global North. Here, most people have met or exceeded the basic requirements for a dignified life; many, indeed, did so long ago. There has never been any question that, beyond a certain income level, we all encounter what economists call a “diminishing marginal utility of income”. The more money we earn, in other words, the less it matters in relation to our time─time available to engage with family and friends, take up hobbies or engage in creative pursuits. While seemingly obvious, the truism deserves far more attention, especially among economists.
Unfortunately, our Western culture of work and productivity rails against such a view. Consumerism and the endless creation of so-called “positional” or Veblen goods—those for which demand increases as price increases—has individuals in the global North continually striving for more. And our penchant for hard work naturally makes many of us recoil at the suggestion of a UBI, since it could signify “rewarding” those who do not work.
Such a view is seriously misguided. A materially comfortable existence is, in many cases, not worth the trade-offs it entails. As the late David Graeber noted in his research on paid office work, employment in industrialized countries is increasingly soul-consuming, with a growing number of professionals questioning their own contribution to society. Graeber encourages us to think, in contrast, of the legions of artists, musicians, writers, filmmakers or even competitive athletes who would gladly accept the near poverty-level wages implied by UBI so that they might devote their lives to their passion (SDG 3). Liberating creative individuals in such a way would surely produce positive externalities for society─something easy to miss, unfortunately, as we continue to privilege quantitative values over more meaningful, albeit less tangible, benefits.
Employing UBI to help us escape the consumerist treadmill would likely produce other indirect benefits. Substitution of intangible social achievements for material consumption would most likely, for example, be associated with responsible consumption and production (SDG 12), potentially helping the world achieve its goal of reducing the most adverse effects of climate change (SDG 13). In addition to promoting well-being (SDG 3), the increased leisure time that would result from a UBI could lead to more innovation (SDGs 9 and 11) as people would have more time to pursue diverse and creative interests instead of languishing in an office. Widespread adoption of UBI would also undoubtedly help combat technological unemployment as a side benefit, which aligns with SDG 8. Despite often not being quantitatively measurable, the above benefits would most likely dwarf whatever adverse incentive effects that might result from a UBI.
Objections on financial or budget grounds must, however, be taken more seriously. Granting everyone an unconditional stipend, however modest, would surely be extraordinarily expensive. It is, indeed, difficult to envisage such a scheme in the absence of substantial tax increases.
Such a policy shift is warranted in today’s world. Inequality, both within and across countries, has arguably reached intolerable extremes. There is no question that the world’s wealthiest people could finance much of the shift to a UBI (SDG 10). The fact that it would be “universal”─i.e. everyone would receive the stipend─could help make the idea more politically palatable. The status quo is unfortunately an impediment to any such plan because extreme inequality reinforces itself through continued rent extraction instead of economic productivity─the precise opposite of what is needed. Some form of redistribution is therefore imperative and, we might even speculate, unavoidable.
Fortunately, since the cost of living in the global South is, on average, so much lower than in the global North, the funds necessary to make a difference are not infeasible. Redistribution on its own is insufficient; widespread UBIs across the global South would require some assistance from the global North (SDG 17). Very much of it could come in the form of debt relief, which, given the external debts of countries such as Ethiopia, Kenya, Sri Lanka and Zambia, would be timely.
As John Maynard Keynes presaged almost a century ago in his essay, “Economic Possibilities for Our Grandchildren”, the truth is that, at least in a simple technological sense, the global North has largely “solved” its economic problem. Yet technology is, always has been, and will continue to be neutral. Even if humanity possesses sufficient specialized knowledge to liberate itself, a gravely and persistently unequal social structure continues to hamper all the world’s countries.
What can be done? While necessary and seemingly inescapable, global adoption of UBI will require a paradigm shift in economics. A new model that more evenly balances quantifiable “productivity” and intangible “quality of life” is as indispensable as it is overdue. As even luminaries such as John Stuart Mill long ago suggested, the global North at least ought to privilege leisure and quality of life over the drudgery undertaken to pursue a material living standard.
Wholesale adoption of a universal basic income in the global North, and a concerted effort in promoting it in the global South, is the way forward.
