Can Basic Income Help Solve Climate Change?

The culprit in climate change is capitalism — both corporate capitalism and state capitalism. The system must be changed. A central tenet of capitalism is that everyone must participate in the market for labor. We reflect this knowledge when we say: Everyone has to have a job. Which is to say, Everyone must have a stake in continuing the system.

But what if no one needed a job? What if you had enough income to live on and never had to work another day in your life? That, in essence, is the promise of universal basic income (UBI). The government gives everyone cash with no strings attached. It is an old idea with a new application. Decades ago, libertarians and socialists championed the idea, and during the Nixon administration, the United States almost passed it. Today, the idea has been given new life as one answer to the biggest problem we face as digitalization destroys jobs — how will people buy things? The UBI answer: simply give everyone enough money to live on. They can still work if they can find a job, but they don’t have to work to stay out of poverty.

Support for the idea is coming from all quarters. Libertarians support it as a much easier and simpler way to alleviate poverty and shrink the federal bureaucracy at the same time. Socialists and progressives support it because of its effect on poverty and the view that UBI can unleash new forms of creativity among the public. Labor leader Andy Stern, the former head of SEIU, supports it in his newest book Raising the Floor, as a way of addressing new joblessness among working people. Even leading capitalist investors like bond king Bill Gross see basic income as a new reality and one that will be good and necessary for the economy.[i]

The UBI Concept

UBI is easy enough to grasp conceptually. The government simply gives people money without regard to work. In the United States, one idea gives $1,000 per month to every adult in the country. Married people net $24,000 per year from the government. Although not quite middle class, the amount is enough to keep people above the poverty line.[ii] Bolder proposals would give more money to help ensure people can be in the middle class.

For those of us conditioned in capitalist morality, this idea is an abomination. Give everyone something for nothing? No way! We’d create a nation of sloth! Everyone would quit working, and then what would we do? Yet the idea has come to the fore again as the world stares down a juggernaut that is going to prevent most people from working anyway. Digitalization, roboticization, automation, and artificial intelligence are going to replace most jobs. While this is easy to see, the consequences of such a change are not.

As many have asked, what are all these people going to do when their jobs are automated or robotized? How will they occupy their time? How will they obtain money, food, and the necessities of life? How will they keep their homes? Millions of people will be without jobs in a short period of time. Right now, the lowest wage jobs in the world are being replaced with robots. Bangladeshis are losing their jobs because shoemakers like Adidas are automating production by replacing people with robots.[iii] More and more manufacturing is being replaced by robots, but so are service jobs of all kinds. Here are a few highlights:

• Financial services firms are using AI to write stock analyses and reports
• Retail companies are testing robotic greeters
• Fast food is deploying robots to build hamburgers
• 3D printers are manufacturing all kinds of parts
• Driverless cars will soon be eliminating taxi and Uber drivers, and driverless trucks — which are already being used in mines — will be delivering freight
• Hospitals are using robotic bins to move everything from pharmaceuticals to laundry around the hospital

The only job category that is immune requires the physical presence of a human being — think of live musical performances or sporting events. One can watch them on television, but actual presence changes the experience. The point is to be with the person you are with because of what they provide as an experience for you — and no robot or media will replace that. Beyond this category, it is hard to see a sector of the economy that is safe from automation, AI, and robotics.

A Solution: Universal Basic Income

Basic income is being touted as the answer to this problem, and in the short run, it probably is. UBI provides cash so that people can meet their basic needs. With enough income to provide basic needs, work is a choice rather than an existential coercion. People would be free to create and grow businesses without the threat of homelessness, but they’d also be free to choose to do nothing. As a society, we would need to accept this reality.

On the other hand, if the jobs do not disappear all at the same time, the $24,000 per married couple could dramatically increase purchasing power. It would function at the family level like a $24,000 per year raise — that much more money for spending, saving, investing, or purchasing durable goods. Economic growth would take off because, unlike tax cuts, most of the money goes to people who will spend it.

If UBI does not come into being as the transition to an automated, robotized future occurs, there are some unattractive alternatives. One possibility is the enormous swelling of the social safety programs currently in place — the precursor of which we saw in the substantial growth of social security disability benefits following the 2008 financial crisis. Recipients rose from 7.1 million in 2007 to 9.0 million in 2014 — an unprecedented growth rate. At the time, unemployment ran out and there weren’t any other programs available, so people have turned to the only program they could find.

But, there is more. Obamacare created huge subsidies for health insurance. The COVID pandemic created the largest Republican-driven spending spree in history in the form of universal cash payments, enormous forgivable loans to businesses of all kinds, and large unemployment subsidies to individuals, many of which rivaled or surpassed what people were making in their jobs. It also generated the now short-lived child tax credit. I’m not judging the worth of any of these programs, only signaling their growth in size and complexity so we can compare that to the simplicity of UBI — writing monthly checks to all Americans.

Another alternative would be an economic collapse and the casting of millions of middle-class Americans into poverty. While this idea may be ideologically pure to those who felt there should be no intervention to solve the financial crisis back in 2008 or the COVID crisis of 2020 to the present, casting millions of people into poverty has a moral repugnance that most people find objectionable. It also hits the elites where it counts — in their pocketbooks. People in poverty can’t buy much. No one wants to see millions of people in poverty, empty grocery store shelves, and general economic malaise. America can do better, we think to ourselves, and we should.

Challenges with Universal Basic Income

Basic income, however, raises many intriguing questions. First, why should basic income be so minimal? Twenty-four thousand dollars per year may keep a couple barely above the poverty line, but it will hardly stave off economic collapse. The consumption power of $24,000 is nowhere near the 2015 median income of more than $56,000.[iv] If a large number of people move from an income of $56,000 to $24,000, you can expect the GDP to take an enormous hit. Seventy percent of our economy is based on consumer purchasing — clothing, cars, restaurant meals, building supplies, and all the other things people do with their money. On $24,000 a year, nearly all of that purchasing power disappears. Sure, people have food and shelter, but that’s it. A massive shift to income levels at 50 percent of the previous is not a recipe for prosperity, even though it may buy us some time.

If we are to have a UBI, we should take out the term “basic.” We don’t need a minimal income, we need an income that can support a thriving economy. I propose that it should be equal to the median income in the country, thereby lifting people into a lifestyle that can support the economic vitality of the nation. Basic income should bridge the gap.

Another reason basic income should be more than basic refers to a common argument for UBI — the unleashing of creativity through art, business, and entertainment. UBI is supposed to give people time for other pursuits. If there are no jobs and the income allows for no extras, however, who will buy the art, who will buy from the new business, and who will buy the tickets for entertainment? Without enough income, you cannot create economic vitality.

Herein, however, a second problem occurs. If there is basic income, the consumption economy of capitalism is supported. This is why traditionally conservative people like investors and economists support basic income — they can see that without it, purchasing power will drop, and when people stop spending, capitalism, as well as their wealth, is in trouble. These people have an instinct for wealth preservation, and that instinct is opening their eyes to the challenges we soon face.

Basic income, therefore, is a two-edged sword. On one hand, we need it to stave off economic collapse and the starvation and deprivation that would go with it. On the other hand, by doing so, we perpetuate capitalism — the very system that is causing climate change. Capitalism is driving automation and it is the cause of climate change. It needs to end to keep the planet habitable, but to end it, we also need automation… and basic income.

The avoidance of the economic shock is a worthy purpose. It will soften the blow for millions of people whether they are employed or not. It will perpetuate some jobs for a longer period of time. It will enable ongoing spending, as well as the purchase of homes. Basic income at a high enough level will preserve wealth for a longer period of time while a new economy emerges. That development is likely to be more gradual and less impactful than the mass loss of jobs, so our economic lives can withstand it.

That said, basic income will require an end date as a policy. While a catastrophic collapse of the consumer economy would hurt everyone, the perpetuation of extraction capitalism will too because it will continue to drive climate change. Basic income can be used to avoid changing the paradigm; indeed, that is likely to be the primary reason it gets created. While that is good in the short run as a cushion, in the long run, it is disastrous and may lead us into exogenous shocks that historically accompany dramatic shifts in socioeconomic systems.

We have a choice. We can refuse basic income and instigate an economic disaster, or we can create basic income and court a climatic disaster. We can only win by properly managing basic income and climate policy at the same time. While this duality seems daunting, they can work together. Once we establish UBI, any argument against climate solutions based on saving jobs and economic growth lose power. UBI, which is created to address job loss, is already in place. Since jobs are no longer necessary for survival, the speciousness of the argument is even more evident.

Universal basic income is required to solve climate change in a socially and morally responsible way. It just has to be managed properly to achieve its purpose.

Note: This is the first of a four-part series on basic income

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This post was previously published on MEDIUM.COM.

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