Thinking Out Loud About UBI: Introduction

The long view of work and income and the economy for we in the lower ranks of the financially fortunate is a tricky one, I think. I have a few thoughts on this topic, and usually they are expressed in tweets or other short-form discussions, but each time there’s a lingering “there must be a picture I can draw for myself about this” thought that grows in the back of my mind, and it has ultimately lead me to want me to write down what I’m thinking and see where it takes me.

To start this journey, I’ll begin with my own background so there is a basis for where I’ve come up with some of what I’m thinking about this. Clearly, by writing this set of missives about this process here for anyone to read, I’m inviting constructive criticism and, more optimistically, some fruitful discussion about how this picture actually forms so that it looks good from any angle.

About Me

I graduated from Harvey Mudd College with a degree in Engineering, with a minor focus in Economics. Among my minor classes was one called Money & Banking by Professor Gary Evans, and it was every bit as interesting as those before me had described. Somewhere in there we learned about T accounts and loans and the machinations that make up our own economy, with the reminder at the start and end of each class, “Buy a house. It’s an investment and you get to live in it for free.” That has not been precisely true between the completion of that semester and today over short timelines, but on a sufficiently long timeline, we can hope that that is still true for the masses.

I’ve been an “Engineer” for about 25 years now give or take. I put that in quotes because some people read that word and think different things, among them that I might imply that I am a PE. I graduated from a reasonably prestigious college with a degree, and I have performed Engineer-like tasks in various professional endeavors over the years, so I prefer to think that I am an Engineer, and while I have not gone through an apprenticeship program and attained some level of certification along the lines of the EIT/PE tract, I have also not decided to simply refer to myself as an Engineer by taking some short courses and tacking it onto a job title. I point all of this out because I do NOT have a degree in economics, nor have I held a position that required my minor focus in economics, nor have I continued any sort of formal continuation of an education in economic theory. I’m reasonably confident in my Engineering chops, but when it comes to this discussion, I am calling myself a layperson with an opinion, bases for that opinion which I will explore, and an open mind.

Initial Thoughts

With the hype surrounding big thinkers hitting YouTube and The World, I find it interesting that there is now a popular focus on philosophy and psychology and how they interact with society and religion and vice versa. The likes of Sam Harris and Steven Pinker and Jordan B Peterson and and even Stefan Molyneux, of course the late Christopher Hitchens, and countless others (I’m literally recalling from a list of YouTube videos I’ve consumed in the last week or so, I’m not intentionally leaving anyone out), have brought some fairly deep thinking and highly opinionated discussion to the fore, which is ultimately a good thing whether you agree with them or not.

That last bit there is essential for any discussion, by the way, so I’ll be more specific. A willingness to discuss and learn is a good thing, so that even though I do not agree with a lot of what Molyneux might have to say, and while I do find interesting a number of things that Peterson says (in particular his classroom lecture videos, which seem far less stilted than some of the now-popular match-ups we see on YouTube), I am not in any camp, nor am I eager to take a particular side. This is not a political or ideological rant, but a discussion and perhaps an exchange of ideas (which I’m kicking off with a presentation, and that exchange will likely not take place here, so perhaps this is my CV for the purpose of future discussion). There is a line-item veto here.

So I will include some philosophical items in this list with this in mind (and keep this in mind throughout my presentation pieces on this topic… and in fact, in general):

  • The deeper questions about morality and motivation and where they come from and where they lead are beyond the scope of this topic, as far as I’m concerned, but being aware of those questions is probably a good idea, because UBI is, in my mind, a fairly fundamental shift not only in an economy that chooses to implement it, but in the hearts and minds of everyone participating in it. Not everyone will consume Harris and Peterson and others on these topics, but we can see the thinking when topics like welfare and unemployment and college tuition come up in public discourse, particularly around elections.
  • I personally believe that in order to have a “successful” society, which for this discussion we can constrain with borders that form the United States of America (since I live there), the people in that society should thrive. While every person has instants and periods of negativity, in general life should be “good” according to a substantial sample of the population (really, not just statistically).
  • I assume that in our bounded geographical economic society, that if we can maintain a thriving population at or near the carrying capacity of that geography, that the society is self-sustaining. In other words, the people matter.
  • Along that same line of thinking, proactive health care (for longevity, not profit), social education as far as a student can go, and even some aspects of production that contribute to the success of the society, the economy, and the welfare of the population seem to be good ideas. Unfortunately, previous attempts at Socialism haven’t gone so well, and the perception of these ideas today doesn’t help. These things make sense but they are not popular to talk about, and we really can’t know how they might be implemented effectively without the baggage of popular opinion and political angst. Later we can cover farm subsidies, tariffs, medicaid, public schools, student loans, welfare, social security…
  • I am reticent to make fictional media references (ie books, movies), but for the fact that they are useful for the sake of illustration. At some points it will be useful to be familiar with the Morlocks and the Eloi of The Time Machine by H. G. Wells. It might also be handy to have seen The Matrix. I’m sure there will be other such references to illustrate points.
  • I have become a fan of Prof. Mark Blyth, currently a political economist teaching at Brown (that’s an understatement, for more information start at http://watson.brown.edu/people/faculty/blyth ). There have been many Blyth lectures, interviews, and other presentations to consume, about all sorts of relevant topics. He has touched on UBI, but he has covered a few things that figure into my perception of it in more detail. That full employment tends to be inflationary, for example, is interesting to me since if everyone in an economic region (ie The US) is virtually employed by a UBI, then how will the total economy react over time? These we shall revisit.
  • I am aware of some number of UBI experiments that have taken place, many on community or city scale (in the US in particular), some on country scale (most recent news about the UBI experiment in Finland). I have referred to these as “anecdotal” largely because if one knows one is in an experiment, one knows the status of the cat. As well, there are people not participating in the experiment in the smaller-scale scenarios, and the entire economy is not predicated on UBI as it would be in a real deployment. Thus, these are interesting and idiosyncratic, IMHO, and not normative, though I have only recently commenced by proactive journey down this path, my humble opinion could change.
  • I haven’t yet delved into the blockchain and crytpocurrencies as I believe both are a mixture of hype and fraud at this point. The former is technologically interesting, the latter doesn’t pass my smell test. However, it is entirely possible that a fiat currency or currencies could be a part of a UBI economy to augment the “real” money with other forms of value transfer.
  • I have concerns about the Pareto Principle as it would apply to a UBI economy, and I believe the principle is not tested in UBI experiments. Would much of the UBI pool distributed to a population end up moving from the many to the few? Pareto has been correct at least 80% of the time, thus I believe this is a valid concern that I’ll touch on at least 20% more over time.
  • As I am an engineer by education and profession, my view on technology’s role in the future economy is not surprising. Eventually it seems likely that some form of AGI will be self-sustaining, developing new “software” and associated hardware on its own. The illustrative media references will be many here, but reality is as interesting on its own. I automate things for myself all the time so I can focus on other things, but what happens if I automate everything I do? What if it is automated for me and I don’t even have my current level of participation in that process? Small caveat, I’m all Linux, and I find Android to be far too constrained on customization… I realize that a great many people don’t know if they have a problem when tech is hidden away.
  • I believe the privatization of an automated economy (ie robot workers as the growing producer population at the expense of human employment) is troublesome, and I have pondered the democratization of our robot overlords as an alternative. As a family might raise children to work on their farm or to take jobs and contribute back to the household at least for some part of their lives, so to might families “raise” a robot through some form of investment, so that income lost to automation might be made up through this investment. Not thought through completely, but I don’t like a binary view of this situation where people or corporations benefit from automation on the production side.
  • Possibly along these lines, I have some thoughts on the Personal Income Tax we enjoy in the US. I have a lingering notion that the personal income tax should really be replaced by taxes on business, with the associated regulatory changes to make corporate tax dodges and havens less effective to avoid paying into the system. The economy should, in my opinion, be fueled by profit, not living.

Those are a few starting points, and obviously not all of them are hard line positions. In fact most aren’t. Now my specific takes on UBI from both sides:

Pro UBI

  • If people matter, it should be simple to convince ourselves that no person should suffer for being born. Basic sustenance seems to me to be a humane baseline, and a benefit to the whole of a sustainable society.
  • Merely providing goods and services removes choice, which is important to a thriving population. UBI could be spent as any individual sees fit, even to their detriment. The proceeds re-enter the economy and the circle of money continues.
  • If every person in an economy can participate in that economy and society at a basic level via UBI, then indeed some percentage of our population that might not have ascended to “greatness” could attain that activation energy not otherwise available. Too many success stories that are the result of hard work, ability, and an inordinate amount of luck to ignore this potential.
  • According to the Bureau of Labor Statistics, the number of Americans working for the federal minimum wage is at about 2.7% as of 2016. While this doesn’t address local minimum wage earner statistics (the percentage earning a local minimum wage is almost certainly higher), there is some fuel there for the hope that UBI as a new floor for a minimum wage is not an automatic invitation to chill on the couch. Minimum wage made a true living wage seems like a reasonable approach to continuing with a minimum wage.
  • The machinery of an economy operates when there is money flowing through it. Government injection of capital into an economy has shown to have stimulative effects, hopefully this would have similar effects on national scale over the long term.

Anti UBI

  • In the US, UBI on a national basis would be a boon to some and insufficient for others. We already see that with the federal minimum wage versus local minimum wages as an attempt to account for the dramatic difference in cost of living. Have a glance at this article http://money.cnn.com/2017/12/29/news/economy/2018-minimum-wage-increases/index.html . UBI might introduce new dimensions to the local and regional differences in how much it costs to live, much less contribute to society. This is another can of worms.
  • The social security system comes to mind as an example of [arguably] good intentions gone awry. For example, those who reach the FICA cap in January may or may not need to receive a check from social security later on, though it should be available. Depending on the actual implementation of UBI, it may or may not make sense that every single person automatically receives this stipend for every pay period, and this makes an extremely complicated system. Complicated no matter what, IMHO.
  • There is that inflation issue… if everybody has at least the UBI, then prices on goods and services and in general the cost of living can adjust accordingly, which could be good or bad. I might be wrong about this, but if everybody has at least enough, then everybody else could charge just enough, or just a little bit more. I’ll throw in a specific movie reference as food for thought for now, https://en.wikipedia.org/wiki/In_Time

So there it is, my initial conditions for pondering this non-trivial issue. I’ll learn some things along the way and make an attempt to convince myself about the relevance of some of my initial impressions here, and whether my pros and cons need to switch places, etc. Much like The X-Files, my UBI timeline will intertwine with other, completely-unrelated topics and in the end the UBI timeline may not reach a satisfying conclusion. Chris Carter and I may have that in common.

I didn’t want to go link crazy here, but I encourage anyone reading this to search for a few of the things I referred to herein. Mark Blyth is worth the time to be sure, and if you’ve not seen In Time, it is at least food for thought.

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Dan Hugo (แดน)

Software Engineer and Architect, entrepreneurial all-around, Managing Director of Innovate for Vegas Foundation