WE ALL KNOW WHERE WE'RE HEADED:

There are three major critiques of Universal Basic Income: Cost, Inflation, and Incentive.

To provide 1000 dollars a month to every American citizen today, the headline cost would be about $2.4 trillion a year. The federal budget is around $4 trillion a year, distributed between mandatory spending (i.e. Social Security and Medicare--about $2.4 trillion), discretionary spending (i.e. military programs--about $1.11 trillion), and interest on federal debt (about $364 billion). With that in mind, $2.4 trillion sounds pretty steep.

But there are other avenues through which UBI could be paid for. If the gains from artificial intelligence and new technologies were harnessed, there would be a surplus of wealth to invest into the economy. Yang has proposed instituting a value added tax on all goods and services, at every level of production and distribution, putting the onus on large companies who benefit most from automation.

This is estimated to generate almost $1 trillion in national revenue, and when we take into account the $800 billion spent on welfare that would decrease in the wake of UBI, along with the tax revenue generated from the extra $1000 a month circulating back into the economy and the 100s of billions that would be saved in healthcare, incarceration, and homelessness services, the Freedom Dividend could end up paying for itself. That is not to mention the potential value gains from having a population with higher rates of education, health, nutrition, and productivity that are estimated to improve with UBI according to a number of studies on already existent trial runs. (The state of Alaska, the leading example, instituted a dividend for its citizens over 30 years ago primarily funded by oil money, and Yang is quick to note that technology is the oil of the twenty-first century.)

That is optimistic. Allocating funds from the myriad social programs already in place into a UBI could prove to be a dicey process, and taxing powerful corporations has never been child's play. Another issue often brought up against a UBI platform is the prospect of inflation. If more wealth is being distributed across the population, won't that make for increased prices and lead to a decrease in the value of money?

According to Yang, inflation has been low for years because globalization and technology have been helping reduce the cost of goods and services, and there is no good reason to believe that trend wont continue. Even after the 2008 financial crisis, when the U.S. government printed $4 trillion, we have not seen a meaningful rise in inflation. If the Freedom Dividend were indeed able to pay for itself through a value added tax, the liquidation of other social services, and a general stimulation of the economy (the Roosevelt Institute estimates economic growth of about 13 percent and an increase in the labor force by about 4.5 million people), the money supply circulating in society would not increase substantially. This would produce little to no inflation. Yang also points out that the central areas of inflation tend to fall into the protected dysfunctional markets of housing, health care, and education rather than consumer goods where prices are actually falling.

Finally, one of the most common and reflexive arguments leveled against UBI is that it mirrors the fundamental flaw of the Welfare State: the absence of a stable incentive structure. If every American citizen is going to receive free money with not a single qualification or requirement, won't we all just become more lazy? I find this to be the least compelling argument against UBI, largely because it fails to acknowledge the actual problem with welfare policies. The issue with welfare is not that it creates no incentive, it is that it creates a disincentive. If a person is on disability, for example, getting better would mean getting off the dole, so there is actually an incentive not to re-enter the job market. If a single mother is on welfare and bringing a husband into the picture will suspend that monthly check, then she will be less inclined to find a husband. It is subtle shift in one's thought process that enhances an underlying feeling of dependency. The issue with welfare is not that it's free money; the issue is that the requirements necessary to receive welfare benefits tend to reward failure and punish success.

Tweet   @brothersjudd