Universal Income: Basic or High?

I wanted to respond to an article recently posted by Scott Santens because he’s highlighted something I see as a major problem in basic income discourse. Elon Musk has been talking about “Universal High Income,” which he distinguishes from regular Universal Basic Income (UBI) in two ways: a) it’s higher, and b) it presumably exists somewhere in the medium-to-long-term future, not the short term. This has annoyed Scott in ways that I both agree and disagree with. The debate reflects a broader misconception about the relationship between technology and UBI.

Raining Money

In Scott’s view, Elon’s statements are consistent with his tech-utopian persona but conveniently punt UBI off into the future so that he can avoid being taxed to fund it in the near term. I do happen to agree with Scott that UBI is something we can and should do right now and probably could have done more than 100 years ago. But I also totally get where Elon is coming from with the “High” part. He has the right intuition here: sufficiently advanced technology is indistinguishable from magic, and if you have enough of it, then there’s really no reason why we shouldn’t all live in a world of abundance; ask, and you shall receive. The question is, how much is enough? When is this post-scarcity utopia going to happen? How much automation do we need before the promised day finally arrives? I’m kind of impatient for it.

The relationship between technology and UBI is not one in which technology reaches some unknown threshold, and then suddenly, UBI will happen. If we wait for the Singularity and for AI to descend from the heavens and deliver us a post-scarcity future, then we’ll be waiting forever. Basic income is not something that will happen to us as a result of our uncontrolled and inevitable development of God-level technology, nor is it out of reach until some unspecified and unknowable tech level at which magic becomes possible. When UBI happens, it will happen because we make it happen for reasons that make sense to us.

I’m not just saying this because I’m impatient, and I want basic income now. I’m saying this because it doesn’t make sense to think of a discrete “yes or no” threshold of technological advancement existing. The development of technology is a smooth curve, and any chosen cut-off point at which UBI becomes practical and/or necessary is completely arbitrary. “Level of technology” is a very relative concept—the technology we have today would literally have been considered magic 100 years ago. We don’t need molecular nanotechnology, or general artificial intelligence, or Star Trek replicators in order to have basic income. What is necessary for UBI to happen is an economic framework that does not try to use wages to buy what the machines produce.

People are right to draw a link between automation and basic income, but the nature of that relationship is not binary; it’s continuous. Technology affects the level of UBI that we can afford, not the feasibility of UBI itself. Every large economy has a natural rate of basic income that depends ultimately upon its productivity, i.e., the efficiency with which we can use labor to create stuff. As UBI’s critics (and advocates) are quick to point out, UBI reduces labor incentive, making it harder to recruit people into the workforce when they already have Universal Basic Fuck You Money. On the flip side, it gives everyone more money to buy the stuff that people with jobs are creating. Clearly, this is very much compatible with a world in which technology allows us to produce more stuff with fewer workers. But it’s very important that basic income is neither tied to a particular level nor a particular time. It’s a balancing act; UBI needs to be calibrated to the capacity of the real economy, and that process of calibration is necessarily an incremental process in which we start small and gradually feel it out. Much like central bank policy, there will be some level of voodoo involved, and people will constantly argue about it. But no one will be saying that the UBI should be zero.

This isn’t just an Elon Musk thing. Most people, when they float the idea of basic income, tend to situate it somewhere comfortably far off in the future. And in a sense, they’re right that basic income does not belong in today’s world. But this is not because of a lack of automation; it’s because we don’t know how to reason about it economically. We are used to thinking of jobs as our primary source of money, we are used to thinking of money circulating, and we are used to thinking of government spending being funded by taxes. These ideas make UBI seem infeasible, and they must be challenged. For as long as mass production has existed, people have easily grasped that automation can and should free us from labor. But the lack of a coherent economic theory has always made it difficult to imagine basic income existing in today’s world.

In fairness to Scott, he makes most of these same points later in his article, and he has always argued that UBI should increase over time. He also correctly points out that we need some money to be distributed conditionally via wages to provide a labor incentive. Doctors should receive more money than unemployed people; thus, there is a sweet spot to be found when calibrating the level of UBI. What I’d like to add is the idea that this sweet spot is actually the highest level that UBI can feasibly be without causing inflation. The purpose of the economy is to serve the people, and the purpose of basic income is to provide people with the money to purchase the economy’s output. A basic income that’s as high as it can be (again, in real terms) is synonymous with an economy that produces as much as it can. Why would you want UBI to be any lower than that?

Basic income implies a world in which people’s real aggregate spending power is never limited by wages, only by how much stuff the economy can produce. Whatever the private sector can produce that people want, basic income ensures they will have the money to buy. It’s a world in which spending power is limited by output instead of output being limited by spending power. It’s a world in which the profit incentive to serve everyone, not just the people with jobs, is as high as it meaningfully can be, and that is why basic income will be “high.”

I’ll finish with what I think is a great quote from the end of Scott’s article:

At some point the universal basic income would be a universal high income, but it would still by definition remain a universal basic income."

Scott Santens

The Greshm Institute agrees.