Radical Proposal: Universal Basic Income to Offset Job Losses Due to Automation

During his campaign to become the 2020 Democratic candidate for president of the United States, Andrew Yang asserted that technological advances, including AI, will deprive one in three American workers of their jobs during the next 12 years.

To avoid the economic crisis that such job losses would precipitate, Yang proposed that the United States government give every American adult a monthly $1,000 “Freedom Dividend” – also called a universal basic income, or UBI.

Although Yang’s candidacy for president failed, his proposal for universal basic income continues to gain momentum across the country. 

Indeed, Yang says, a recent poll found that about two-thirds of Americans are now in favor of universal basic income. “This is now very much a mainstream policy that we’re going to see implemented,” he says.

In fact, the U.S. government’s stimulus payments to ordinary Americans during the COVID-19 pandemic are considered a type of UBI; and several American cities, including Stockton, California; Los Angeles; Newark, New Jersey; and St. Paul, Minnesota, have recently piloted their own “guaranteed income” programs.

Yang says UBI payments would benefit every American by permanently growing the economy and creating millions of jobs. “A universal basic income would enable millions of Americans to meaningfully transition in the time of economic transformation, including that brought by AI,” he says, “and it would improve our strength, health, and mental health; kids’ ability to learn; our civic engagement; and our public trust, confidence, and optimism.”

Yang presented his UBI proposal anew at Stanford HAI’s “Policy and AI: Four Radical Proposals for a Better Society” conference, held Nov. 9-10, 2021. Below, watch the full presentation.

Universal Basic Income: How It Would Work

The idea of providing a guaranteed income to every adult has been around since the nation’s founding, when Thomas Paine proposed a “tax on heritage” to ensure a basic income for young people starting out without wealth. During the Nixon presidency, a version of universal basic income was almost passed by Congress. And Alaska has paid an annual oil dividend to all Alaska residents since 1982. 

Like Alaska’s program, Yang’s proposed Freedom Dividend has almost no strings attached: All U.S. citizens over age 18 would be eligible.

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The cost of enacting Yang’s universal basic income proposal would be covered by implementing a value-added tax (VAT), which 160 other countries have already done, Yang says. A VAT taxes the value added by every company in the manufacturing and distribution supply chain for every product. And, Yang says in his new book, Forward: Notes on the Future of Our Democracy, “because [the VAT] is baked into the supply chain, it’s impossible to wriggle out of.” 

Yang also theorizes that UBI payments will bring about cost savings due to increased employment, and reduced incarceration, homelessness, and emergency room use. 

Critiques of UBI

Conservative critics worry that guaranteed income programs might affect recipients’ behavior by reducing their motivation to work or encouraging drug and alcohol abuse. But decades of research support Yang’s claim that cash transfers have minimal impact on these behaviors. And early results from a 2-year guaranteed income pilot program in Stockton suggest that programs targeted at low-income people reduce unemployment, allow people to pay down their debts, and improve their emotional well-being.

In addition, Americans’ recent experience with stimulus payments during the pandemic has shown us that this kind of support is immensely helpful, Yang says. “We know that money went to food, fuel, school supplies, and keeping a roof over people’s heads.”

Some other major criticisms of UBIs: They are extremely expensive and might exacerbate inequality rather than reduce it. Benefits programs that target aid to low-income people are effective, these critics say. And paying $1,000 monthly to every American citizen regardless of need is essentially regressive. 

But Yang says making payments uniform reduces the stigma around need-based benefits. In addition, administrative issues often arise with targeted relief, he says, pointing to a recent pandemic-era program that authorized $46.5 billion in aid to renters, 89% of which hadn’t been distributed eight months later. “The fact is, the government does a poor job of administering a lot of these programs,” he says.

Putting cash into the hands of the people who are struggling is a clear win for people and families, Yang says. “Even if you distribute a uniform amount to everyone, the people at the bottom benefit the most immediately.” 

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