Introduction
It is important to note that the United States has become the most prominent nation on the planet because it was willing to be the first to implement a free market economy coupled with proper democracy. However, the given framework likely has already exhausted its benefits for the most part, and the US must embrace a new model to lead the uncertain future with the universal basic income (UBI) system. The UBI is an effective solution since it will address poverty, automation, and unemployment while simplifying the existing welfare programs, strengthening economic security, and promoting entrepreneurship.
Overview
Before addressing how and why the UBI system is the imperative solution for a fairer and more sustainable future in the United States, it is critical to define it first. The UBI refers to the universal basic income approach, which is essentially a social welfare proposal offered to all citizens of the US. It is a specific sum of money guaranteed to each recipient, regularly received in the form of cash (Haagh, 2019). There are no work or status conditions attached to the UBI payments, which means both the rich and the poor will be beneficiaries of this income.
Poverty
Firstly, poverty has always been a major socioeconomic problem both in the United States and globally, and UBI can demonstratively address it on the basis of empirical evidence. It should be noted that partial UBI programs have already been implemented in areas with high poverty rates with a high success rate, indicating its massive potential if integrated fully. For example, since 1982, the Alaska Permanent Fund Dividend (PFD) has provided an average of $6,600 USD for a family of four, which led to a 22% reduction in poverty among rural Alaska Indigenous people (Berman, 2018). In other words, the PFD program was effective on the partial scale, and it is not unreasonable to deduce that it would be even more potent if conducted properly. Berman (2018), the researcher of PFD, concluded that “Alaska PFD has been highly effective in reducing high poverty rates among the state’s rural Indigenous people” despite being partial UBI (p. 171). Therefore, UBI can play a significant role in reducing poverty and inequality by offering a basic income floor for all citizens, as it enables individuals and families to meet their essential needs.
Economic Security
Secondly, UBI can benefit the economy greatly by strengthening the economic security of the United States, which has always been vulnerable to financial crises and recessions. The prime benefit comes in the area of employment and labor market resilience. Since UBI can provide all Americans with a predictable and stable source of income, this sense of security will translate into less likelihood of bank runs and a drastic reduction in consumer spending (Haagh, 2019). In other words, there will not be a dangerous ‘snowball’ effect as a result of panic, where financial markets crash, and the government has to bail out large corporations (Haagh, 2019). Instead of rescuing these large organizations with taxpayer money, UBI will prevent any need for such measures. The reason is that UBI will alleviate panic and anxiety during unstable financial periods since all people are secure that they will have some resources to rely on. Reduced consumer spending to secure funds makes businesses and banks unprofitable, which is why they have to reduce costs by firing employees. UBI will ensure that there always will be consumer spending taking place, minimizing the risk of unemployment.
Entrepreneurship and Employment
Thirdly, not only UBI makes the economy more resilient, but it promotes entrepreneurship and innovation as well. Essentially, UBI acts as a safety net for people to rely on when taking risks, and entrepreneurial activity is always risky pursuit. UBI will increase risk tolerance for average Americans, making them more entrepreneurial and innovative, which means more businesses and jobs. The employment created by the latter is of high-paying quality because UBI does not discourage people from working but rather bolsters the labor supply. De Paz-Báñez et al. (2020) “have not found any evidence of a significant reduction in labor supply. Instead, we found evidence that labor supply increases globally among adults, men, and women, young and old” (p. 9459). In other words, more entrepreneurship translates into a larger number of job openings, which creates competition for labor, increasing wages and benefits offered. In addition, under UBI, people can allow themselves to retrain or reeducate themselves for specific positions creating a more fluid labor market. As a result, the combination of these factors shows that UBI creates reduces unemployment, creates high-paying jobs, and promotes entrepreneurship and innovation.
Welfare
Fourthly, the UBI can fully replace the welfare system in the United States, which will make it simpler. The common criticism of the measure is that UBI is not sustainable since it will not have enough money to distribute to each American in a meaningful amount (Haagh, 2019). The response is that the UBI will essentially render all forms of existing welfare programs useless as a unifying welfare system. In other words, it will funnel the money spent on welfare into UBI, which will additionally free the money spent on administrative costs towards UBI payments.
A major problematic element of welfare programs is the stigma or discrimination against those who receive welfare benefits. UBI will entirely eliminate this issue since all Americans will be receiving the UBI indiscriminately. This will remove any need to identify and track the people eligible for payments, with the greatest benefit being delivered to the people who need it the most. For example, the UBI payment will not have a massive and significant impact on a millionaire or billionaire (Haagh, 2019). However, it will be life-changing for people with low socioeconomic status, people with disabilities, single parents, and the elderly.
Automation and Job Displacement
Fifthly, the UBI will have immense value as a practical and logical solution to the artificial intelligence and advanced robotics explosion. With the latest developments in AI, extensive automation of white-collar roles, ranging from office management to software development, may occur. Once robotics reaches the necessary level, even blue-collar and labor-intensive jobs could be automated. Consequently, the UBI system will be a highly valuable tool to alleviate the potential widespread unemployment in the near future (Dermont & Weisstanner, 2020). In addition, it could function as a transitional stage from contemporary capitalism to a novel economic system where human labor no longer serves as the primary driving force.
It is evident that the projections of the past years on AI development were underestimating the rate of progress. The current system has no reasonable answer for massive job replacements expected in the near future as AI quickly. Before, it was argued that it was blue-collar jobs that would be automated first, followed by knowledge labor market or white-collar jobs. However, the opposite is likely to be true, where AI can overtake many knowledge jobs by itself, but it will need advanced robotics to automate labor-intensive jobs (Dermont & Weisstanner, 2020). Considering the fact that the US is a major service or knowledge economy, the given prospect can cause massive social turmoil in the current capitalistic system. It will mean that AI will solely benefit big institutions and the wealthy, while the masses will be jobless and in poverty. Thus, the UBI offers an equitable solution to this significant challenge of the future either as a transitory tool toward a better economy or as a permanent solution.
Conclusion
In conclusion, the implementation of UBI can effectively tackle poverty, unemployment, and automation issues, and it can streamline the current welfare programs, enhance economic stability, and encourage entrepreneurship. As American society moves forward, it is crucial to recognize that the United States’ global dominance has resulted from its willingness to pioneer a free market economy in tandem with a robust democratic system. Yet, as the advantages of this framework begin to wane, the nation must be open to adopting new models, such as universal basic income, to navigate the challenges of an uncertain future. It is important to note that by addressing poverty, automation, and unemployment, UBI has the potential to transform the current economic landscape. As a result, it will foster a more equitable and innovative society where human labor is no longer the sole driving force behind economic success.
References
Berman, M. (2018). Resource rents, universal basic income, and poverty among Alaska’s Indigenous peoples. World Development, 106, 161-172. Web.
De Paz-Báñez, M. A., Asensio-Coto, M. J., Sánchez-López, C., & Aceytuno, M. T. (2020). Is there empirical evidence on how the implementation of a universal basic income (UBI) affects labor supply? A systematic review. Sustainability, 12(22), 9459. Web.
Dermont, C., & Weisstanner, D. (2020). Automation and the future of the welfare state: Basic income as a response to technological change?Political Research Exchange: An ECPR Journal, 2(1), 57-71. Web.
Haagh, L. (2019). The case for universal basic income. Polity.