Can Universal Basic Income Mitigate the Disruptive Impact of AI and Automation?
As artificial intelligence and automation continue to transform the global workforce, societies face unprecedented economic and social challenges. High-profile layoffs at companies like Tesla, Google, Microsoft, Nike, and Amazon underscore the urgency of finding solutions. Nearly 40% of business leaders expect to reduce their workforce this year, with around four in ten planning to replace workers with AI.
The rapid technological advances raise critical questions: Will there be enough jobs in the future? And who will hold these positions? AI’s ability to perform human tasks is leading to widespread job displacement. Young people, already grappling with high levels of anxiety and mental health issues, will be competing with machines for fewer jobs, exacerbating the mental health crisis. Could universal basic income (UBI) provide the stability and purpose needed to address these societal challenges? Leading experts offer insights and implementation strategies for UBI.
The Challenge: Mental Health and Education in an Automated Era
The World Health Organization reports that one in seven adolescents globally suffers from mental disorders, affecting their education and overall well-being. Harvard researchers Howard Gardner and Wendy Fischman, in their 2023 study on higher education, found that students often face mental health challenges and a sense of alienation. They argue that higher education in the United States has lost its primary focus: fostering broad thinking, clear expression, exploration, and openness to transformation. This holistic approach is essential for preparing students for a rapidly evolving job market.
While AI and automation may not entirely eliminate jobs, they create a demand for skills not currently emphasized by today’s education systems, says Evelyn Forget, a renowned economist specializing in health and social policies. "There is a significant mismatch between the skills workers bring to the market and those required by new jobs," she explains. Forget contends that UBI can provide financial stability for workers to retrain and adapt to new industries. "UBI can allow workers the time to return to school, acquire new skills, and enable older workers to transition to retirement with dignity," she adds.
Guy Standing, an economist and author of The Politics of Time: Gaining Control in the Age of Uncertainty, highlights the destabilizing effects of economic inequality and insecurity. "The AI revolution is concentrating income and power among property owners, leaving a new class—the precariat—insecure and fearful," Standing observes. He argues that UBI can provide a financial safety net, allowing individuals to pursue meaningful activities and reducing mental health issues caused by economic stress.
Karl Widerquist, a political theorist and economist at Georgetown University-Qatar, asserts that UBI can significantly impact education and mental health by providing financial security. "Studies have shown that UBI helps students stay in school and perform better, and it enables people to find jobs that match their talents," Widerquist explains. He emphasizes that UBI can relieve financial pressures, which exacerbate mental health issues and hinder educational achievement.
Implementing UBI: Expert Strategies
Careful planning and sustainable funding mechanisms are crucial for implementing UBI. Forget, Standing, and Widerquist offer insights on achieving this transformative policy.
Funding UBI
Widerquist explains that UBI is more affordable than it seems, functioning as a refundable tax credit. "The real cost is the net cost—the difference between taxes paid and UBI received," he states, estimating this net cost at about 3% of GDP. He suggests funding UBI through taxes targeting the top 1%, including land value, resources, and rent taxes, wealth taxes, and higher income taxes for the wealthy. "Reducing giveaways to the wealthy could alone raise more than 3% of GDP," he notes.
Standing proposes an "eco-fiscal policy" to create a Commons Capital Fund, financed by levies on activities that cause ecological harm or result in the loss of common resources. "A Commons Capital Fund—a sovereign wealth fund as exists in over 80 countries—should be established, funded by levies on activities causing ecological harm or loss of commons," Standing recommends.
Forget advises integrating UBI into existing social welfare programs to minimize bureaucratic hurdles. "By incorporating UBI into existing structures, we can reduce the bureaucratic obstacles that often hamper social welfare programs," she suggests. This gradual approach can help manage the transition and mitigate potential economic disruptions.
Phased Implementation
For a phased or incremental approach to UBI, Widerquist points to Alaska's model, which uses oil revenue to fund a small UBI for residents. "We could have done the same with cannabis legalization or broadcast spectrum giveaways," he notes. He also highlights efforts in Oregon to introduce a corporate tax supporting a small UBI. "Reducing the political power of wealthy donors is crucial for implementing UBI," Widerquist asserts.
Economic and Social Benefits
Standing and Forget emphasize the broad economic and social benefits of UBI. UBI can provide a financial safety net, reducing economic insecurity and inequality while allowing individuals to pursue meaningful activities, Standing argues. "Most people work out of necessity, not fulfillment," Standing states. UBI enables people to engage in meaningful activities, fostering a more engaged society.
Forget points to the social and health benefits demonstrated by the 1970s Mincome experiment in Canada, where participants were 8.5% less likely to be hospitalized. "A basic income could significantly reduce healthcare costs," she notes. Financial stability also allowed families to prioritize education, breaking the cycle of poverty.
UBI and Mental Health: A Vital Connection
According to the Resolution Foundation, over one-third of young people aged 18 to 24 experience common mental health disorders like depression and anxiety. Poor mental health impedes young people's ability to succeed in education and the labor market. Standing stresses the importance of addressing this crisis: "Insecurity breeds fear and susceptibility to demagoguery. A basic income could help reverse this trend by providing young people with the security they need." Forget adds, "Financial stress exacerbates mental health challenges. A basic income could provide the stability young people need to focus on education and personal development."
Overcoming Misconceptions About UBI
Despite its potential, UBI faces misconceptions. Critics argue it is unaffordable, will reduce work incentives, and provides "something for nothing." However, Standing's research and numerous UBI pilots worldwide debunk these myths. "Evidence shows that UBI increases work participation and enhances mental health and educational outcomes," he asserts. Examples include the Finland Basic Income Experiment, the Give Directly pilot in Kenya, and the Stockton Economic Empowerment Demonstration (SEED) in California.
Widerquist addresses another common criticism: the belief that "people don’t want to work." He contends, "The problem has never been lazy workers; it has always been employers lobbying to keep wages low. UBI can change this dynamic."
The Economic Impact of UBI
Widerquist believes UBI will positively impact economic growth and inequality. "UBI will significantly reduce inequality. Taxes targeting the wealthy and UBI for everyone will instantly increase equality," he explains. Research shows that UBI helps children stay in school and improves their academic performance, while enabling individuals to find jobs suited to their skills.
Next Steps
To harness UBI's transformative potential, policymakers should focus on the following strategies:
Gradual Implementation: Integrate UBI into existing social programs to minimize bureaucratic hurdles.
Support Education and Reskilling: Ensure UBI provides financial stability for continuous learning and adaptation.
Promote Mental Health: Address the mental health crisis among young people by reducing financial stress through UBI.
Sustainable Financing: Establish eco-fiscal policies to fund UBI sustainably.
Integrating UBI with comprehensive educational and social reforms can help build a society that values human dignity, purpose, and collective well-being.