What Is Universal Basic Income? Everything You Need To Know About UBI … In 11 Minutes
Next Time Someone Asks “What Is Universal Basic Income” You Can Sound Authoritative – And Change Humanity
What Is Universal Basic Income?
Universal basic income (UBI) is a model for providing every person with an unconditional sum of money — regardless of employment status, income or resources. It is designed to enable a baseline standard of living and improve wealth inequality.
Why Am I Hearing So Much About UBI Lately?
Second to the question what is universal basic income is the above puzzler. In recent years, UBI has captured the imagination of academics, tech visionaries (Mark Zuckerberg, Elon Musk, and others) and various politicians — right across the political divide, crucially — mostly because fears of greater wealth inequality across the globe are growing.
Traditionally, UBI policies have been aimed at mitigating the economic effects of income and wealth inequality. This application has become even more relevant considering the rising inequalities reported in both developing economies and Organisation for Economic Co-operation and Development (OECD) countries.
It’s no coincidence that the number-one goal (out of 17) of the United Nations’ Sustainable Development Goals is “end poverty in all its forms everywhere”. Additionally, goal 10 is “reduce inequality within and among countries”.
Paradoxically, technology is advancing the argument to embrace UBI by enabling it through innovation, and also by effectively making large swathes of the global workforce redundant. Indeed, by 2030 up to 800 million workers — one-fifth of the world’s workforce — are likely to have their roles displaced by automatons and because of artificial intelligence (AI), according to a 2017 McKinsey Global Institute report.
The so-called “technological unemployment” looming on the horizon comes at a time when financial wealth inequality is rising. A recent House of Commons Library report calculated that the richest 1 per cent of people on the planet are on course to control as much as two-thirds of the world’s wealth by 2030. And in January 2020 Oxfam calculated that the planet’s richest 162 billionaires — including Facebook’s Zuckerberg — have the same wealth as the poorest half of the world.
Who Are The Biggest Names Backing UBI?
Given the trend towards greater wealth inequality, there is little surprise that the clamour to explore UBI is becoming louder. Andrew Yang, the 40-something founder of Venture for America and a 2020 Democratic presidential candidate, has anchored his campaign to dethrone Donald Trump with UBI. “Let’s put humanity first,” he advises. “It’s time for universal basic income.” Yang believes UBI is imperative for his country’s long-term success. “In the next 12 years, one out of three American workers are at risk of losing their jobs to new technologies,” he writes on his campaign website.
Similarly, Andrew Ng, another young, influential American entrepreneur, reacted to Mr Trump’s presidential triumph in 2016 by posting on Twitter: “More than ever, we need basic income to limit everyone’s downside, and better education to give everyone an upside.” Ng, Co-Founder of online learning platform Coursera, is one of a growing number of forward-thinking business leaders who promote UBI as a means to combat poverty.
Pierre Omidyar, the American billionaire Founder of eBay, has gone further and backed a UBI project. In June 2017 it was announced that his Omidyar Network had invested $493,000 (£386,000) in GiveDirectly, a UBI pilot giving out free money to Kenyans. (For more information on UBI experiments in practice, check out the resources on The Essential UBI Reading List.)
Meanwhile, both Zuckerberg, Facebook’s Chief Executive, and serial entrepreneur Musk — tech visionaries elevated to 21st-century pop-star status, and two of the most recognisable people on the planet — have espoused the virtues of UBI while acknowledging the unstoppable rampage of technology.
Zuckerberg has stated that UBI can spark innovation, through empowering people. “We should have a society that measures progress not just by economic metrics like GDP, but by how many of us have a role we find meaningful,” the Facebook founder said. “We should explore ideas like universal basic income to give everyone a cushion to try new things.”
Whether the motivations are combating poverty, concerns about technological unemployment, or a need to redefine the meaning of work, UBI is gaining momentum and moving into the mainstream of thought leaders. The number of luminaries promoting UBI as a bold social-economic paradigm is increasing all the time.
What Is The History Of UBI?
To answer what is universal basic income it is a good idea to consider a brief history lesson. UBI has been theorised about, in one form or another, for at least five centuries. London-born Renaissance humanist Sir Thomas More hinted at the manifold benefits of an unconditional basic income in his controversial 1516 masterpiece Utopia, about an imaginary, ideal island state.
Through the narrative, More, who would later become Lord Chancellor, argued that applying UBI would be a cleverer way of fighting theft rather than sentencing thieves to death (and, in turn, would result in fewer murders).
The concept of UBI has been written about, and built upon, in the centuries since Utopia. English-born American political activist Thomas Paine, for example, wrote about it in the 17th century. Payments, he suggested, should be made “to every person, rich or poor … because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above the property he may have created, or inherited from those who did.”
Over 200 years later Karl Marx imagined a post-capitalist industrial economy of such collective wealth that it would leave all people free to “hunt in the morning, fish in the afternoon, rear cattle in the evening and criticise after dinner”.
According to Marxism, the emphasis “should not be on redistributing the wealth that has already been created in society (through taxation and welfare, etc.), but rather on having collective and democratic control over the means by which new wealth is created — that is, the means of production.
“If such a rational plan of production was implemented, then questions of taxation, inheritance, redistribution, welfare, and so on, would quickly disappear.”
How Does UBI Work In Practice?
While a majority of the OECD countries have experimented with small-scale, targeted welfare programmes, none have hitherto made unconditional payments a fundamental part of their offering. However, the rising popularity of UBI programmes in contemporary discourse reflects a rapidly changing political landscape.
Pleasingly, there is an ever-growing list of UBI pilot schemes and experiments that have enjoyed positive results. Here we mention some — but far from all — of them. Here it’s important to note that research is being done at leading academic institutions and many trials have been done, but all findings are just initial. Further, there is not just one, universally accepted approach to UBI, but rather, multiple modes of application.
Arguably the first real-world application of large-scale UBI was pioneered by Herbert Hoover, president of America from 1929 to 1933. Before he was sworn into office, and after the First World War, Hoover led the American Relief Administration, which provided food to the inhabitants of Central Europe and Eastern Europe.
In the immediate aftermath of the war, the program delivered more than four million tons of relief supplies to 23 war-torn European countries. At its peak, the programme employed 300 Americans, more than 120,000 Russians and fed 10.5 million people daily.
That mission and its smaller-sized predecessors — the United States Food Administration and the Committee for Relief in Belgium (both also headed by Hoover) — are thought to be the first global aid programmes operating at such a scale. UBI had been theoretical until that point.
More recently, GiveDirectly, an American charity, has undertaken a randomised control trial in Kenya — this is believed to be the largest-scale UBI experiment in a third-world country. For the $30-million project, approximately 21,000 people receive some type of cash transfer, with more than 5,000 enjoying long-term basic income, in over 100 villages selected on the basis of extreme poverty.
The hope is this experiment will be able to capture the community-level effects of basic income — rather than on an individual level. On the GiveDirectly website, a long list of chronological testimonials highlights how a little money can go a long way and is especially life-changing for those most in need.
Tusade, one recipient of UBI, after accepting a second payment of $449, wrote: “Some improvement in the hygiene and sanitation has been realised in my family.” James, who received an initial payment of $467, commented: “The biggest difference in my daily life is that I have bought a bull for ploughing.”
As mentioned above, the Omidyar Network — headed by Pierre Omidyar, the American billionaire Founder of eBay — has invested $493,000 in the UBI project. A blog post on the Omidyar Network website made the point that “it is clear that cash transfers have an important role to play in alleviating poverty and empowering people”.
Similar projects have been completed in, among other nations, Canada and Finland. Regarding the latter, the Finnish government began a two-year trial UBI scheme for 2,000 unemployed people that gave each individual €560 a month.
And between 2011 and 2014 a basic income pilot — funded by UNICEF and the Self Employed Women’s Association (SEWA) — was conducted in Madhya Pradesh. The trial provided monthly payments to 6,000 residents of randomly selected villages, to another group of tribal communities, and to a control group. Payments were made in addition to subsidised public services such as the distribution of food and fuel to people on low incomes.
Elsewhere, Sam Altman, a 30-something tech luminary, is determined to take on the challenge of bringing UBI to the American public. The former president of Y Combinator — the largest and most well-known startup accelerator in Silicon Valley — and chief executive of OpenAI has said he wants to “totally restructure how society works”. Under Altman’s guidance, Y Combinator has funded a $60 million, five-year UBI research project in Oakland, which is expected to continue until 2024.
What Are The Biggest Challenges For UBI?
Even though the idea of UBI is centuries’ old, it has failed to take off at scale. This is due, in part, to insufficient support in mainstream media and politics.
Perhaps one of the reasons for this is the difficulty of implementation — and more precisely budgetary constraints — plus the need for centralised backing, until now.
The results of many of the above experiments have been inconclusive. So far, all pilots have relied upon the government or local authority to help with administration and funding, and that has been problematic.
Furthermore, UBI seems, well, too utopian for some, while others believe that a meritocracy, rewarding hard work, is preferable for society. An approach that tests UBI by the people, for the people, has not been done yet.
Can Blockchain Technology Enable UBI, Finally?
What if there was an easier way to implement UBI on a global scale, without national politics and budget limits? Could the first successful application of large-scale UBI be spawned from the new innovations brought forth by digital assets and the underlying blockchain technology?
Digital assets and tokenization boast the potential to create new innovations and solutions to known problems in that these new technologies now enable programmable money. For the first time, software code is being deployed to create new financial products designed to fulfil a particular design schema. New products can be created that enable a predefined set of rules.
Imagine a mechanism paying a fluctuating interest rate which changes with the invested amount. The financial concept of the “yield curve”, which currently displays a changing yield according to maturity, could now have a third dimension added to it: invested amount. In the near future, we believe existing challenges to open financial mechanisms such as user experience and identification and identity will be solved by continued innovation in the field.
With cryptocurrency and digital asset innovation, the value of money can be created from the faith, belief and usage of its users through aligning market incentives, and no government involvement is required. Plus, decentralised cryptos and blockchain technology is global in scope by definition. The convergence of blockchain technology, the cryptocurrency revolution, worldwide success of trials, and many thought leaders could accelerate large-scale UBI projects — and sooner, rather than later.
How Can GoodDollar Enable UBI At Scale?
GoodDollar is a not-for-profit initiative that explores how decentralised cryptocurrencies and blockchain technology may enable value creation and distribution, through models based on UBI with the central aim of reducing global wealth inequality. The initiative focuses on improving financial literacy and financial access globally.
Thanks to the advancement and confluence of a number of technologies, such as cryptoassets and blockchain, hope is building that UBI principles can be adopted — by GoodDollar and other projects — to help the poorest people in the world achieve more financial freedom.
Projects in the OpenUBI community are working hard and collaborating to deliver solutions around digital identity — ensuring a user on UBI-based systems such as GoodDollar is verifiable and unique — and governance structures.
GoodDollar’s economic model employs UBI principles, and the vision is that a cryptocurrency (GoodDollar) will be distributed in a fair and transparent way, using “smart contracts” on the blockchain.
The GoodDollar team is preparing to release more specifics on the GoodDollar UBI model throughout 2020. By working with other experts and ecosystem partners to develop a carefully crafted, and fully tested model — to be determined through experiments and pilots — the goal is to develop a sustainable, open system where the least advantaged receive the greatest relative benefit.
Eventually, users — in the developing and developed world — will be able to contribute to a new vision for Universal Basic Income that is based on a decentralised, market incentivized design made possible by blockchain technology.
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