2. Executive Summary

The global economic community has long discussed fiscal redistribution programs that stray from the traditional paradigm of means-tested welfare programs. A universal basic income (UBI) presents an attractive alternative method of redistribution that may limit bureaucratic processes and boosts economic growth.

At the same time however, many have brought up important concerns regarding the effects a UBI would have on the economy. Such concerns range from inflation harming the economy to disincentivizing work and causing a diminishing of the labor force.

Once a fringe economic theory, the prospect of a UBI has seen increasing discussion due to concerns regarding the existing welfare systems or those regarding the automation of future labor. As beliefs about a UBI make it into the mainstream, it has become an increasingly important economic and political consideration to discuss and analyze..

This brief evaluates the prospective benefits and harms the implementation of a UBI would bring from both an economic and political standpoint. We analyze both the history of UBI as a theoretical concept and the attempts to implement a UBI across various countries.

With the background of UBI’s history as a theory of policy, we discuss pilot programs and existing basic income schemes that have been implemented in order to test for the effects of UBI, analyzing both their results and the degree of confidence these tests give us regarding conclusions on the effects a UBI has.

Finally, we review existing literature regarding a UBI’s theoretical economic effects and provide analysis regarding the economic impacts the implementation of a UBI may have and a discussion of strategy concerning the method with which the program would be implemented with regards to political narratives and framing.

3. Background

3.1 What is UBI?

Universal basic income (UBI) is a welfare policy option that has recently begun to enjoy greater political support and attention from mainstream parties. The definitions of what a UBI specifically entails are varying. Some authors believe that a “basic income” must provide enough money for one person to live, while others believe that a basic income is nothing more than an unconditional payment to citizens; however, the majority of authors tend to agree that, at the most basic form, a canonical UBI involves periodic direct cash payment to all members of a society with no phase-outs and no targeting mechanisms.¹

3.2 Historical Variations of UBI

Versions of a universal basic income have seen proposals from economists with widely varying views on the role of government in economic policy. We trace one of the most prominent early versions of the UBI as coming from neoliberal economist Milton Friedman in his proposal for a Negative Income Tax (NIT). The negative income tax works to provide cash payments from the government to residents who are below a set threshold for the tax, meanwhile, those above the threshold continue to pay an income tax to the government. essentially acting as a basic income that phases out over time. For example, if the threshold for positive taxes is set to $1,000, a family with a $600 dollar annual income, given a negative tax rate of 25%, receives a check worth $100 from the treasury.² From the accounting perspective, this approach is essentially equivalent to a UBI with a flat tax rate.

Friedman finds five advantages to the NIT ³

1. It provides support to families solely based on income.
2. Cash transfers act as the most supportive benefit from the perspective of the recipient.
3. It replaces already existing welfare programs (the majority of which Friedman viewed negatively).
4. It saves administrative costs by streamlining the welfare process.
5. It resolves the issue of market price distortion that other policies, advocated for based on distributional considerations, create.

Despite how attractive the NIT may sound given such advantages, eminent disadvantages persist. For one, the program is extremely expensive, which becomes an issue of great concern given the fact that benefits go to non-employed individuals. Secondly, the NIT does not produce enough positive incentives for residents to enter the labor market, leading many to look toward other policy options. As a result of the detractors, policies with more work incentives/requirements, such as the Earned Income Tax Credit (EITC) which will be discussed later, were implemented.⁴

3.3 Past Proposals for UBI

3.3.1 Germany

Against the backdrop of the 2008-2009 financial crisis’s effect on Germany, outspoken advocate for UBI, Susanne Wiest, began her petition for a universal basic income to the German Bundestag with more than 52,000 signatories.⁵ The petition eventually came to an unfruitful end in 2015 when it was rejected,⁶ however, we view this as an important stepping stone in the history of UBI proposals for two reasons:

1. The petition cemented UBI as a tangible proposal in the modern world as one of the first major pieces of legislation related to providing an unconditional cash transfer to all citizens
2. Through gaining enough signatories to be discussed by the German Bundestag, it Demonstrated political will for UBI that would be instrumental for future proposals

Moreover, the advancement of this proposal through the German political system led to the establishment of numerous single-issue parties solely dedicated to the advancement of a universal basic income. Such parties are key to the establishment of widespread support for any UBI proposals as they signal not just political will, but provide a space for focused discourse and action towards the goal of enacting a universal basic income.

3.3.2 Switzerland

During Switzerland’s June of 2016 referendums, the citizens were given the opportunity to vote on a UBI proposal. The initiative was introduced without an exact quantification of income that would be distributed; however, the group that submitted the proposal had suggested a $2,525 per month basic income for every adult,⁷ just more than $9,000 below the Swiss poverty line.

Additionally, there was a somewhat concrete proposal for financing the proposal. Utilizing three revenue streams— transfers of income, shifting social security payments to finance a UBI, and any additional costs that would be paid for with other taxes— the proposal provided one of the few attempts to pass a UBI proposal through the public with an idea for a funding method. However, this may have led to its demise.

The total cost of implementing a UBI would be an estimated $214 billion, even after factoring in the costs that are offset by the provided financing methods, an additional $25.7 billion would have to be financed through other means. In the end, the referendum concluded with a disdainful outcome for UBI with rejection amassing 76.9% of Swiss voters.⁸

Recognizing the pitfalls in public support that appear inherent to UBI proposals, we plan to analyze the manners in which UBI is marketed to the public, and how that affects public support of the policy. More importantly, however, whilst in the process of rejecting such proposals, we observe Parliaments and the public, such as that of the Swiss, submitting complaints about the possible negative economic effects of a UBI which ought to be addressed.

3.3.3 United States: Andrew Yang

2020 Presidential Candidate Andrew Yang brought renewed prominence to the concept of an American UBI. Leveraging UBI in tandem with a fearful automation narrative, Yang found his support through a commitment to the narrative that a ‘freedom dividend,’ essentially what he renames the UBI, would allow for a shift towards a “human-centered capitalism.”⁹

Yang’s foundational work, his book The War on Normal People, breaks down his reasons for concern in a system without UBI with three overarching points.¹⁰

1. The section “What’s Happening to Jobs” describes Yang’s view that American jobs are in the process of failing to keep up with population growth, pointing to the evidence that jobs have seen a retarding growth rate since the late ’70s. Extrapolating this data, he sees it as unlikely that we see a long-term maintenance of strong employment rates due to the decreasing proportion of jobs relative to the population looking for work.
2. To Yang, artificial intelligence (AI) is another pressing issue that threatens labor of all forms. Fortunately, this narrative is already being fed to the American public at a highly elevated level; currently, in fact, roughly two-thirds of Americans see AI as a threat.¹¹ Yang has upheld this narrative, which added somewhat to his popularity during his 2020 bid for the presidency, seeing it as a direct threat to the job security of both blue-collar work, such as trucking, and white-collar jobs, such as doctors or accountants.
3. Relative to CEOs, Yang points out that the growth in wages of the top 1% has massively outpaced the growth of their workers, rising from a ratio of 20:1 in 1965, to the exponentially larger 271:1 in 2016. In his view, compensation for workers has stagnated, automation has increased, and inequality has proliferated.

In recognizing and pushing these issues endlessly, Yang brought some of the most common UBI narratives into the American mainstream political zeitgeist. His freedom dividend would provide $1,000 per month to all Americans over the age of 18. Analysis from his website speaks to a permanent economic growth of “12.56 to 13.10 percent—or about $2.5 trillion by 2025—and [an] increase [in] the labor force by 4.5 to 4.7 million people.¹²

As with any fiscal proposal, however, Yang saw political pushback. Somewhat abnormally, many Republicans chose to champion his push for UBI. Numerous Trump-supporting Republican voters moved to support Yang,¹³ leading to a parallel shift from some of their represented officials.¹⁴ On the other hand, his implementation methods draw criticism from the left due to what many see as an underwhelming implementation strategy. As Jeff Spross of The Week explains his view on it, “Under Yang's plan you would choose to keep your current benefits or take the $1,000-a-month UBI instead. In other words, rather than stacking atop the existing welfare state, Yang's Freedom Dividend would replace portions of it depending on recipients' voluntary decisions.” Moreover, he, and many others on both the left and right, take issue with the rhetoric of automation and joblessness. This narrative, Spross seems to argue, shifts the optics the general public people view UBI with from something that could be a generally preferable policy option, into a solution for the “robot apocalypse.¹⁵” This mixed opinion of Yang eventually led to an early withdrawal from his bid for the presidency after receiving a meager number of votes from voters in New Hampshire’s primary.¹⁶

3.4 Standing Political Will

Despite the fruitless efforts for the implementation of a UBI outlined above, recent information appears to demonstrate an increasingly widespread inclination towards the implementation of a UBI. To look back at the German example, we find that the prospects of the proposal would have been greatly improved were it introduced today. At the time many of the German public were still unfamiliar with the idea of a universal basic income, however, the implementation of what was, at the time, viewed as a radical policy proposal has made its way to the mainstream, making it more plausible to believe that a new proposal would be likely to pass, or at least see more support than the original proposal amassed. In fact, a poll from YouGov in July of 2022 found that 55% of Germans would support “the government introducing a universal basic income in [Germany].”¹⁰ Such a turn is reflective of a global shift toward a hospitable view of UBI. The reasons for a similar change occurring around the globe are varying; however, a key reason has been the COVID-19 Pandemic.

During the COVID-19 pandemic, numerous countries adopted universal direct payments to individuals, and many people began to view UBI in a somewhat more positive manner. As people were exposed to the idea of a UBI through the payments many governments gave to their citizens, many were familiarized with the idea in a positive manner. Steven Bush of The New Statesman explains his thinking before the pandemic as being not closed-minded, but rather, simply skeptical. After witnessing the manner in which people are unable to garner income during pandemics, however, Bush changed his mind. Nevertheless, his reasoning as to why he supports UBI currently, as a way to prevent administration issues that arise when pandemics arise,¹⁷ appears to fall into critique in the same manner that Yang’s narratives for UBI did. To supporters of the UBI, the notion that it is simply a way to prevent the negative effects of low probability events such as pandemics, of course, this is a contentious point in itself, incites disagreement as it again shifts the optics of UBI and discourages the idea that UBI is in itself a policy option that would positively impact the economy.

Despite what may be viewed by some supporters of UBI as a negative framing for the policy, it appears to still be helped heavily by the support Covid has helped to create. In Spain, for example, there was an extensive UBI experiment launched that would provide roughly $1,145 for the nation’s 850,000 poorest families.¹⁸ As well, for the general population, it was found that the people's opinions shifted towards the pro-UBI stance at a magnitude of 60-70% six months into the pandemic relative to data collected during the first month. The data suggested that simple administrative processes and the ability to recover from unpredicted economic shocks were two of the driving factors behind people’s support for UBI.¹⁹

4. Pilot Programs

4.1 Stockton, California

In the background of an already socially progressive and quite liberal state, Mayor Michael Tubbs and the Economic Security Project saw an opportunity to experiment with a guaranteed income (GI). In a small-scale project, they chose 125 people at or below the median household income level for whom the Stockton Economic Empowerment Demonstration (SEED) would provide $500 per month for 24 months.²⁰ The reasons for doing so were varied; however, the city’s large percentage of people who live below the poverty line as well as a number of other socioeconomic challenges for citizens of the area made it an ideal location for a test.

The results of this test were well documented and allowed for ample analysis to be done. From the SEED themselves, it was found that the control group had 1.5 times more income volatility than those receiving the GI, and the number of people who could afford unexpected expenses within the treatment group increased by 27% within a year, whereas there was only an increase of 3% in the control group. Moreover, those in the treatment group were able to make more payments on their debt, showed signs of enhanced well-being, saw a 12% increase in the number of recipients holding full-time jobs, and allowed for more self-determination.²¹

From this study, it is seen that there is a considerable increase in the well-being of those who receive unconditional cash transfers, in spite of that, we can not interpret this study as one we can extrapolate results from due to its means-tested nature through providing a GI only to those below the median household income level.

4.2 Namibia

After receiving independence from the South African government, Namibia became one of the countries with the highest levels of income inequality, a trend that has continued to this day. Despite having halved the poverty rate within the country between 1993 and 2016, the Gini index, a measure of income inequality, the most recent measure in 2019 found a Gini Coefficient of 64.2.²² For reference, a country like the United States was measured to have a Gini Coefficient of 39.7 in 2020.²³ The reason for Namibia’s stark income inequality is largely traced back to the legacy of apartheid colonialism and the processes within which it is manifested. Attempts to address the legacy of colonialism have been made, however, such attempts seem to have failed in their goal of addressing income inequality in a worthwhile manner. Thus, groups in support of a basic income grant argue that it will redress the long-lasting wounds in a more effective manner.

First coming from the Namibian government’s tax commission, the supporters of the grant proposed N70$ per person per month, believing that sustainable economic development in Namibia could only come once inequality had been addressed. This proposal was later provided with a great deal of support by the Evangelical Lutheran Church of Namibia. In their adaptation of the proposal the income per person per month was N100$ for each person under the age of sixty, as sixty is when such persons become eligible for a social pension. The group gained some level of support and saw a pilot program implemented in Otjivero in 2007 lasting until 2009.²⁴

Currently, support for the basic income grant is subdued and likely will not see re-ignition unless groups such as those who supported it previously step back into the nation’s political scene. Nevertheless, we can observe some results and observations from the grant including but not limited to reduced poverty, preferable economic development, increased work effort, a decrease in child malnutrition, and a nearly 50% decrease in the poverty rate.²⁵

Despite the apparently superior results of this project, it is difficult to truly understand just how effective the grant was. The reason for this largely comes down to the fact that the main source of information about the results the BIG produced appears somewhat unreliable once it is placed under scrutiny. Numerous drawbacks make it nearly impossible to make a proper ruling as to what the results of this program were. The authors often failed to provide proper explanations for their results, did not attempt to follow up on their findings, a biased group that overlooked its implementation, and the lack of a control group all make this experiment less than helpful for a true determination of the effectiveness a UBI carries with it.²⁶

4.3 The Netherlands

UBI has been an issue in Dutch public policy for decades, starting in the mid-1970s. However, the first application of a basic income to Dutch society occurred between October 2017 through December 2019, when several municipalities were given the chance to implement “basic income experiments,” which were aimed at giving people extra earnings on top of the benefits they already received, and possibly helping them find work. Launched in 11 municipalities, 3 treatments were given to participants.²⁷

1. The exemption group. They were expected to be proactive and help themselves find work, and were exempted from work and reintegration obligations.
2. The intensification group. These participants were given extra support in finding work through additional contact with their person at the municipality office and intensive mediation.
3. The release group. When participants found work, they were still given up to 50% of their benefits, compared to the standard rate of 25% or 0%. They were rewarded for finding work.

Although the size of the experiment was meaningful, due to its decentralized nature as it was performed by different municipalities without one overarching plan, conclusions from this study are difficult to create. As a result, the research concluded that the effects of this program were largely insignificant.²⁸ Nevertheless, most municipalities that conducted the experiment were said to be content with the results, and, although there were no major policy reforms, the political scene of the Netherlands became more hospitable for a UBI.²⁹ Of course, however, it is tenuous to claim that this one experiment truly changed the political scene on its own. Thus, despite a promising setup the Netherlands trial proved mostly fruitless.

4.4 Finland

As a nation widely known for its strong social programs as a fundamental part of its governmental system, it seemed only a matter of time until Finland would experiment with a Universal Basic Income program. In this experiment, they chose a randomly selected group of two thousand unemployed people aged 25-58 to receive the treatment and they used a group of 178,000 unemployed people who received normal benefits for unemployed citizens.³⁰ The experiment would last for two years as a way in which the government would gather data.

The results of the program appeared to deal a major blow to supporters of the Universal Basic Income. As the experiment continued, data piled on demonstrating a failure to follow through with commonly held narratives regarding Universal Basic Incomes such as those that indicated that it would increase employment and encourage more to move into work. It was found that the experiment produced a largely insignificant change in the employment rates of the unemployed Finnish citizens.³¹ Fortunately for supporters, however, wellbeing did increase. Average life satisfaction increased roughly 0.5 points from an average 6.8/10, erasing the life satisfaction gap between employed and unemployed people.³²

Despite the positive and negative aspects of this experiment for supporters or detractors of the universal basic income, some authors have identified flaws in the experiment which may make the experiment mostly unusable as a reliable base of information. Jimmy O'Donnell of The Brookings Institution found that the social attitudes regarding basic income changed during the experiment in a manner that would skew results. Additionally, a tight policy budget and a desire to quickly implement the program meant that certain parameters that would have made the test more effective were not able to be put into place. Moreover, the treatment group ended up gaining less assistance than people in the control group due to the conditional nature of their basic income and other assistance programs.³³ Thus, it becomes extremely difficult to draw any strong conclusions from the Finland experiment.

5. Existing Implementations of UBI or Basic Incomes

5.1 Iranian Basic Income

In the Autumn of 2010, Iran began its form of basic income with a cash subsidy, known as this as it replaced earlier price subsidies, that would be paid to each citizen. This subsidy would amount to roughly $40 US dollars per month, $480 per year, and $2,300 for a family of five.³⁴ Given the monthly income of the average low-income Iranian person, around $150,³⁵ this amount was substantial for them. The most interesting part of this subsidy is the financing structure; unlike the majority of basic incomes, their proposals, or their grants, this scheme is financed without any additional revenue streams. This is largely due to the extreme wealth granted to the government by its oil and gas exports; nevertheless, it still provides an interesting experiment through which we can examine basic incomes.

The basic income system of Iran came largely as a result of the view that there must be a change to the costly and ineffective system of commodity subsidies that largely benefited the already wealthy. Thus, the system was introduced as a simpler and more effective version of an already existing universal subsidy. Interestingly enough, the system began with an attempt at targeting. Requiring those who would like to opt-in to the system to register and then be classified into one of three groups that would determine one’s eligibility for cash transfers, means-testing was an initial part of this system. Means-testing was, however, phased out as a result of discontent from citizens and the embarrassing position it put citizens in, causing the shift towards a truly universal basic income.³⁶

Given such an apparent failure, Hamid Tabatabai isolates six implications we can observe from the Iranian Basic Income:

1. Especially when a minority of a population will be excluded from the targeting mechanism of a program, the costly manner in which attempts to target aid is so often a victim was shown to be truly inefficient, making the argument for extending benefits to “the rich” too.
2. A requirement to report income kept out well of individuals who did not want to disclose that information.
3. A government will at times appeal to those who do not need the additional cash not to take it, as the Iranian one did.
4. Involuntary exclusion may arise when those who so badly need the program are oblivious to the knowledge of its very existence.
5. Universal entitlements of cash transfers lead to uniformity in terms of the amount each person receives, regardless of age or location.
6. By requiring new applicants to still register in order to receive the cash subsidy the government was able to build up a greater national databank on the state of the nation.

Nevertheless, the most important observation about the Iranian Basic Income is that of what effect cash transfers have on labor supply. Due to the cash transfer amounting to 28% of the median per capita household income, many criticized the program as one that would disincentivize work. Despite the criticism, the cash transfer in Iran was found to have no negative effect on labor supply, in fact, in some cases, the impact is actually positive, particularly for “women and men in industrial and service sectors.”³⁷ This is a particularly profound observation as it appears to discredit many of the leading arguments against UBI; however, it can not fully discredit the critics as, due to a unique combination of socioeconomic factors, such as the extremely high unemployment rates and unique situation of markets in Iran, the results found could be skewed in a manner that would not replicate itself in other nations.

5.2 Alaska Partial Basic Income

Soon after large oil and natural gas extraction began in Alaska, massive royalties were given to the state government. However, due to a general distrust of the government on the behalf of the public and a recognition that the reliance on natural resource money would eventually have to end, the money was placed into a permanent fund which would both save some for future generations and productively invest it into the economy. The money was not originally used to pay a dividend to Alaskan citizens but, Gov. Jay Hammond, is on record stating that when he came into power his aim was “to transform oil wells pumping oil for a finite period into money wells pumping money for infinity.” ³⁸ With this goal in mind, the fund would pay a dividend for all Alaskan residents of one to two thousand dollars per year called the Alaska Permanent Fund Dividend (PFD).

The program was not originally politically popular, with many believing there concurrently exist better uses of the money. Nevertheless, fears about how people would use the additional funds subsided over time and the program became engrained in Alaskan politics so much so that advocating against it would, today, be considered “political suicide.”³⁹ As such, the program has many opportunities for insightful research, although, due to Alaska’s position as a state some issues appear as well such as the difficulty of gauging labor outcomes while isolating the causes in specific programs such as the permanent fund. There have been attempts to study the effect on labor, however. From a study conducted by Michele Cafasso, estimates between 1979 and 1985 that part-time employment increased and work hours decreased. In addition, people’s mechanical skills decreased and people accumulated more analytical, fundamental, and social skills as a part of their work portfolios. Overall, however, they conclude with a warning regarding the limitations all studies into the Alaskan program could have due to the difficulty of matching Alaska to any other area areas (control groups), qualitative differences between Alaska and other states, and the difficulty of mitigating for unique to Alaska trends in comparisons.⁴⁰

In addition to such limitations, there is an important difference to recognize between this model and that of the Universal Basic Income. The Universal Basic Income grants cash transfer amounts unconditionally, however, the Alaskan model is qualified as a partial income as it is reliant on the previously accumulated wealth of the government from royalties.⁴¹ Despite such difficulties, some researchers continue to draw results based on what has been observed in Alaska. Hannah Loeffler, for example, has found that despite changes to the partial income amounts, political turnout increases due to universal cash transfers.⁴² In addition, Richard Dorset has found that an increasing size of the dividend reduces property crime and some authors have attempted to isolate the PFD as causing a 22% decrease in indigenous poverty between 2011–2015.^{43, 44} Overall, although the PFD appears to have demonstrated some positive results due to its implementation, it is extremely difficult to draw any conclusive facts or ideas from this project.

6. Political Considerations

6.1 Opposition

Given the storied position of contention that welfare holds in the contemporary political scene, any form of a novel fiscal redistribution program, such as UBI, will fall under intense scrutiny. As such, the radical, in regards to most nation’s existing programs, nature of a UBI will inevitably bear the same level of scrutiny if not more. In accordance with the wide net approach UBI systems take towards fiscal redistribution, the conservative position has developed to understand UBI as “‘socialism and the re-distribution of wealth.’”⁴⁵

Despite some polls demonstrating bipartisan support for UBI,⁴⁶ conservatives largely disregard the viability of UBI for numerous reasons, we isolate 4 reasons here. To clarify, however, these are an overarching general list of disagreements we have seen throughout our research, it is by no means fully exhaustive nor universalizable to all conservatives.

1. Philosophies: Because most UBI systems are based on a specific cash transfer amount to individual people, it bypasses recognition of the key familial institutions in conservative thought.⁴⁷
2. Price: Due to the universal nature of a UBI, it is inherently an expensive endeavor that many conservatives are starkly against for a variety of reasons such as beliefs in fiscal responsibility, lowering the deficit, or more commonly the tax hikes that many believe would be required.^{48, 49}
3. Cutting means-tested programs: Despite the common narrative regarding welfare as being a negative one from the perspective of conservative parties, especially in the US, conservatives still prefer these over a UBI. The reason for this is largely because for many the cost of a UBI necessitates mean-tested programs that target those with low or modest incomes in favor of a program that, in their view, essentially redistributes wealth upwards by now providing everyone in a society the same amount of cash transfers while cutting off existing cash transfers to those of low or modest incomes.⁵⁰
4. Disincentivizing work: Because our current programs target solely those who have “significant work records,” people remain largely incentivized to work. However, through providing cash transfers to all people it is believed that UBI will disincentivize people from participating in the labor force.⁵¹

6.2 Framing

Given what we now understand about the opposition to UBI, it becomes clear that we must consider how to best frame the discussion to gain political support. It has been demonstrated throughout the political history of almost every nation just how important the framing of certain policies, especially those that regard changes to fiscal policy, are to their success and adoption. We isolate 3 ways that such framing commonly occurs.

6.2.1 Automation

Automation has long been a factor in labor politics, but as AI has developed further, more and more Americans have begun to fear for their jobs. Even with the somewhat basic generative AI engines we have, reports from institutions such as Goldman Sachs expect it to affect upwards of three hundred million people’s jobs.⁵² Given an already sizeable impact, more than half of all Americans now express worries that their jobs will be automated,⁵³ and this number is likely to only grow with coming innovations.

Capitalizing on these fears may prove to be a highly productive method for engaging with the general public on the question of UBI. AI automation is likely coming, and people will be put out of their jobs. However, this automation will increase economic growth which brings an additional benefit: the ability to tax this growth and create a way to redistribute the wealth created by AI.⁵⁴ This would likely occur through a higher value-added tax (VAT) on the purchase and installation of machines to automate work and on the goods and services produced. Fortunately, the implementation of a VAT has already been demonstrated to allocate proper budgeting for a UBI program,⁵⁵ and with the roughly $8.6 trillion increase in wages and salaries and $3.9 trillion in expected future government revenues without adjusting taxes thanks to AI,⁵⁶ it appears highly feasible that the VAT on future AI revenues could work to finance a UBI without much difficulty.

In leveraging the automation narrative, politicians access and utilize a prominent discussion in modern politics to not only demonstrate UBI as a solution to an issue but also essentially intertwined with any reasonable solution to the automation issue. In clearly demonstrating the aims and funding mechanisms of the UBI, the framing that takes automation deeply into account appears to have the potential to be highly powerful and influential as a way to appeal to the American populace.

6.2.2 The Welfare Trap

One of the most common concerns regarding the welfare system that makes its way to the American political limelight often is that of the welfare trap: a process in which the structuring of many means-tested welfare programs disincentivize low or modest-income people from increasing their income as they would lose their benefits and end up worse off.⁵⁷ Although this hypothesis is difficult to test and conclusive evidence regarding the existence of the welfare trap on a broad scale and systemic level has not yet been produced, conservative pundits consistently warn about its existence. For example, with Biden’s welfare programs, fellows of the Heritage Foundation warned heavily that the programs would keep Americans trapped on welfare.⁵⁸

Due to the simplicity of a UBI, it does away with perverse incentives that may exist in welfare programs and will encourage people to remain working and especially engage in jobs that increase their social mobility or income. Although this will address important concerns many conservatives have, our research has indicated that many conservatives still prefer these means-tested programs to a UBI.⁵⁹ Additionally, this argument may backfire as doing away with perverse incentives essentially means increasing people’s will to work, therefore increasing labor supply. This stands in contrast to the narrative regarding automation which may be damaging as, if the belief that automation is coming is proven true, increasing labor supply would run opposite to the goals those focused on automation would have.⁶⁰

6.2.3 Moral Reframing

The intent of moral reframing in regards to the argument for UBI is to provide a values-based approach to advocacy that bridges partisan divides. This approach stresses an evaluation of cultural beliefs and appeals to those beliefs such as individual liberty, freedom, and autonomy.

Moral reframing has demonstrated surprising results due to its ability to adapt UBI to fit into the moral views of Americans who would otherwise oppose the program largely along partisan lines. In fact, research from the Stanford Department of Psychology has demonstrated significant shifts in people’s perspectives of fiscal programs depending on how it is morally framed,⁶¹ indicating it to be a highly important part of any proposal to prescribe a UBI for a country.

7. Economic Effects of UBI

7.1 Effects on GDP

Because a UBI will provide greater access to wealth for lower-income people who are more likely to spend it, the UBI contributes positively to economic growth and stimulates the economy. The redistributive effect trickles up and produces long-term growth.⁶² In fact, the Levy Institute has concluded that there would likely be a permanent increase in GDP of roughly 12.56% to 13.10%, or $2.5 trillion.⁶³

7.2 Effects on the Labor Force

One of the most common concerns for a UBI is the idea that it will discourage work. However, we have largely seen throughout both case studies and the models produced by institutes such as the Roosevelt Institute that this claim is largely unsubstantiated by evidence.⁶⁴ Additionally, a report from Harvard and MIT regarding seven trials in developing countries concluded that there was no significant change in the employment rates.⁶⁵ Indeed, a UBI can actually encourage job retraining and incentivize employers to improve low-quality jobs in order to compete with the option of non-participation, increasing productivity and stimulating the economy.⁶⁶

7.3 Effects on Secular Stagnation

Secular Stagnation refers to a theory of the economy that the US economy developed structural issues which create a chronic shortfall of aggregate demand relative to the productivity of an economy.⁶⁷ Many have observed this issue as a prevalent cause of slowed growth in the US economy since 2008.⁶⁸ Although there is much debate regarding the existence of secular stagnation as acting on the current US economy,⁶⁹ no scholars are making the argument that it will never return.

With the very likely prevalence of this issue coming back to the US economy, the impact of UBI must not be forgotten. Fortunately, the Roosevelt Institute analyzes exactly this. What they have found is that increasing the amount of money in the hands of people generally, will spur increased aggregate demand which can work to lessen the effects of secular stagnation.⁷⁰ Given the broad-scale implications that secular stagnation can have on an economy, UBI can function essentially as an automatic stabilizer for secular stagnation by consistently creating aggregate demand.

8. Conclusions

Given our research, the implementation of a UBI in the United States would be desirable; however, in the process of doing so, our research has revealed certain strategies to be key.

In the implementation of a Universal Basic Income (UBI), the significance of moral reframing cannot be overstated. While economic and logistical aspects are crucial, the success of any UBI initiative hinges significantly on societal acceptance and moral consensus. By reframing the discourse surrounding UBI from a mere economic policy to a moral imperative, we can catalyze societal support and overcome resistance. Highlighting the inherent ethical values through a shift in perspective fosters empathy for the program which is crucial for garnering sustained public and political backing essential for successful UBI implementation. Therefore, integrating moral reframing within the discussion and implementation of UBI is imperative to maintain political integrity and popularity for any politician.

In addition, many shortfalls from the UBI program manifest when it is paired with cuts to other programs or the introduction of novel taxes. Thus, we believe that using what we have found in the automation chapter of this brief, that a VAT could finance a huge portion of the UBI, will be the best way to ensure economic benefits we have outlined come into being and are not overshadowed by other economic issues.

Thus it is clear that a UBI presents a compelling solution to various societal challenges yet accompanies its fair share of benefits and drawbacks. A UBI has the potential to alleviate poverty by providing a safety net for all citizens, boost our GDP, and mitigate the impacts of secular stagnation. At the same time, however, the execution of a program that is financed well and one that is implemented without much criticism is highly difficult.

Acknowledging these benefits and challenges is crucial in crafting a nuanced perspective on UBI. While its potential to reshape societal welfare and provide economic security is promising, careful consideration of its implications, coupled with rigorous testing and adaptation, is essential for successful and sustainable implementation. Ongoing debate and research will be imperative to the successful implementation of a UBI by policymakers.

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