Universal programs in moments of economic transformation prove to endure with popular support. Will it last?
By: Shaby Missaghi
History has a habit of repeating itself. In some ways, the present day feels stuck on loop in the past. During the early 1900s, the Second Industrial Revolution brough about far-reaching improvements to the American economy. The widespread adoption of electric power, railroad networks and improved manufacturing practices completely transformed American life.
This is not unlike the economic transformation we are embarking on today.
With automation, machine learning and other key technologies of the information age, the United States is yet again experiencing an era that will fundamentally change the way our economy works. Much like in past periods of advancement, these changes will prompt us to adapt.
During the Second Industrial Revolution, the United States became more urbanized, less agrarian and overall more productive.
These developments led to unexpected new challenges. Long life expectancy and the disappearance of the extended family under one roof gave rise to widespread financial insecurity — especially for the elderly. The Wall Street Crash of 1929 proved to be a tipping point in the American economy which revealed that financial insecurity. The Great Depression which followed left millions unemployed and struggling to feed themselves. It was especially devastating for senior citizens, who were already vulnerable from failing traditional security systems (assets, labor, family and charity) and faced a poverty rate over 50%.
While not as severe in the long-term consequences, the COVID-19 pandemic did compound the growing problems of income inequality and financial insecurity in the American economy by causing a halt of in-person business that disproportionately affected working class families.
In response to the economic crisis of his time, President Franklin D. Roosevelt enacted the Social Security Act (SSA) in 1935 as a form of “social insurance,” where workers pay into a fund through a payroll tax and collect from it after reaching the age of retirement. Social security was passed as a universal program, with no means-testing elements barring Americans from accessing the fund.
At the time, critics called it anti-capitalist, socialist and unconstitutional. they complained it would promote laziness, reduce the labor force and ultimately hurt employers.
Never in the history of the world has any measure been brought here so insidiously designed as to prevent business recovery, to enslave workers and to prevent any possibility of the employers providing work for the people, said Rep. John Taber (R-NY).Despite the criticism, the SSA passed.
Today it is the most popular and successful federal program in United States history. Now, on the brink of another industrial revolution and with knowledge of the past, we have the chance to reap the benefits of technological change without bearing all of the weight from the problems it could create.
Universal Basic Income (UBI), the unconditional distribution of recurring cash payments to all adults, reemerged in the political space as a means to address the coming changes to the American economy.
In particular, UBI is commonly cited as a system that would help combat the threat of automation displacing millions of workers, which threatens to increase poverty and force blue and white collar laborers alike out of the work force.
The meteoric rise of UBI in public polling after the use of stimulus checks in COVID-19 recovery legislation shows there’s a significant appetite for a program like universal basic income. Support for basic income is nearing majority support among all Americans, and pilot programs have begun in cities all across the nation.
With the growing popularity of UBI, some of the same arguments lobbed at Social Security in the 1930s have been adopted to oppose it.
Claims that a basic income would disincentivize work and that it would cause inflation are not dissimilar to the unproven claims made about Social Security. President Roosevelt had the foresight and commitment to safeguard some of our most vulnerable citizens in one of the nation’s darkest moments with a universal program. Today, our parents and grandparents are grateful for that leap of faith.
We are now at a similar crossroads. Unfortunately, the stakes are higher and the consequences more more dire as the Fourth Industrial Revolution is predicted to be more disruptive to the economy and labor force than any revolution before it. If the trials of the Great Depression and enactment of the Social Security Act have taught us anything, it’s that enduring programs which benefit all citizens become widely popular and efficient at the task of adapting to great economic change.
Time will tell if history will repeat itself again.