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Business Impact

The Danger of the Universal Basic Income

Giving everyone a “basic income” is the latest trendy idea sweeping Silicon Valley. It’s a terrible solution to a real problem.

Free money! What’s not to like?

It’s the latest big idea among tech elites, as those in Silicon Valley struggle to cope with growing public unease over the effects digital technologies have had on jobs and income inequality. Dressed up as “universal basic income,” the idea is to give everyone—in some versions, every adult—a fixed sum every month. It’s not a lot of money, but—so the argument goes—it would help people survive as jobs are increasingly lost to robots, software, and automation.

If there are no jobs, it would at least give people something else to do, suggests the New York Times’s Farhad Manjoo: “We’d all be free to become artists, scholars, and entrepreneurs or otherwise engage our passions.”

A government-supplied guaranteed basic income is not a new idea. An earlier incarnation, called the negative income tax, was pitched by the conservative economist Milton Friedman in the early 1960s as a way to curtail the growing government antipoverty programs of that era. In the 1972 presidential campaign, both Richard Nixon and his liberal Democrat challenger, George McGovern, supported some version of the idea. And in recent times, the basic income has regained popularity among some policy makers. This week, it was reported that Ontario is considering a pilot project to begin next year. And there are calls for the U.K. to follow suit.

These initiatives may or may not make sense as an antipoverty strategy to provide people with an economic safety net. And that might be particularly important as digital technologies and automation continue to displace many workers from well-paying jobs.

But among many tech elites and their boosters, the idea of a basic income seems to have morphed from an antipoverty strategy into a radical new way of seeing work and leisure. In this view, the economy is becoming increasingly dominated by machines and software. That leaves many without jobs and, notably, society with no need for their labor. So why not simply pay these people for sitting around? Somehow, in the thinking of many in Silicon Valley, this has become a good thing.

Eduardo Porter, also writing in the New York Times, does an excellent job of debunking this utopian scenario. Still, there is something deeply troubling about the way many in Silicon Valley are embracing this vision. Writing off a large number of people as not relevant to our tech-centric economy would be an enormous waste. What’s more, the income gap between the tech elites and others is already far too large. And it’s hard to know how a basic income would help. Far better for Silicon Valley leaders to use their talents and creativity to deploy more immediate and effective methods of closing the economic  gap they have helped create.

(Read more: New York Times; “Who Will Own the Robots?”; “Technology and Inequality”)

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