The Case For Universal Prosperity

By Michael Hrenka, Constructive Philosophical Futurist, Radivis.com

Introduction

In this chapter I present two different versions of a universal basic income (UBI). The first part is about a moderate UBI that aims to cover basic living expenses. As short-term goal I propose experimentation with this moderate concept with the medium-term goal to implement it on the national level. It does not matter much which nation is meant exactly, because the logic of the UBI will be basically the same for all nations.

For the long term I propose the introduction of a more generous version of the UBI in the second part of this chapter. Under the right circumstances, this could enable us to enter an era of universal prosperity and great economic and cultural flourishing.

Reasons to consider a universal basic income

In industrial countries the wages of the vast majority have been stagnating since the 1980s [i]. What little growth there currently is flows mainly to the wealthy, increasing economic inequality to dangerously high levels that threaten both social cohesion and further economic growth, due to the demand side breaking away. Economic crises threaten the existence of many people. All of these problems may be exacerbated severely by the coming wave of automation which will most likely create a huge level of technological unemployment. Innovative integrative solutions for these problems are sorely needed.

Approach of this chapter

There are many ideology-driven efforts to promote a universal basic income. While these may be quite convincing to those who share these ideologies, they fail to convince a large majority of the concept.

We cannot allow this to happen, because the concept of a universal basic income has merit beyond narrow ideological arguments, and can profit everyone in one sense or another. That’s why it’s important to leave out ideology as far as possible and choose a more scientific approach that potentially everyone can subscribe to.

The introduction of a radical concept like a universal basic income requires building a large supporting alliance behind it. Ideological arguments threaten the cohesion of this alliance, so they should be minimized in favour of a more empirical approach: Consider the facts of previous experiments with UBI and promote more and better experimentation.

An important component of political and economic systems consists of the psychological and economic incentives of all participants: What structural forces guide their decisions? How can these societal structures be optimized to create better decisions and subsequently better results?

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Part 1: Universal Basic Income

What is a universal basic income?

There are different definitions of a universal basic income. I choose one that allows the analysis of the salient structural components of a UBI separately.

A UBI is an income that fulfils the four criteria of:

  • Universality: Everyone gets it regardless of how much property they own or what other income sources they have.
  • Individuality: It is paid to them individually and directly as money.
  • Unconditionality: It is not dependent on meeting certain activity of lifestyle requirements, like a requirement to accept offers to work.
  • Sufficiency: It is high enough to cover the basic living expenses and enable people to do productive work.

Why a universal basic income

Next, let’s consider these four criteria individually to see why they make sense:

Universality

This criterion may be the most radical of all: Everyone gets a basic income, whether they are rich or poor, young or old, sick or healthy, employed or unemployed.

But why? First of all because it’s easy and simple. The complicated, expensive, fallible, and problematic means-testing that is used to test whether someone has the means to cover their own living expenses without government help becomes obsolete. With a universal basic income nobody will fall through the gaps of the social security system, because everyone is covered under any circumstance. Unnecessary and annoying bureaucracy will fall away.

Another very important point is that getting a basic income independently from other income sources removes the negative incentives for getting work that are present in our current social security systems. Because current social security payments are income dependent, getting a job means that these payments are reduced or stopped entirely. Effectively, this means that income on top of contemporary social security payments are taxed with a rate between 75% and 100%! With the implementation of a universal basic income, this effective tax rate could drop to 0%, or at least to a much more modest level [ii].

Individuality

Everyone gets the basic income individually as money, not as food stamps, vouchers, free services, or anything else. There is no intermediary between the state who pays the income and recipient of the income other than maybe the bank who processes the payment.

Indirect payments, for example to family fathers who could get the payments for the whole family, could be withheld from the intended recipients. In that case, the income would be ineffective, because it doesn’t reach those who might need it most.

Unconditionality

There is no requirement to work or get a formal education for qualifying for the universal basic income.

Having any conditions apart from age or place of residence on a universal basic income would necessitate a huge bureaucratic apparatus which would have to check whether these conditions are actually met. This would not only represent an unwarranted intrusion into the privacy of everyone, but it would also increase the cost of a UBI significantly and unnecessarily.

If such conditions were in place despite of their cost, they could be wielded as tools of coercion by the state. However, the state already has a sufficient and strictly checked and balanced tool to regulate the behaviour of its citizens: the legal system. If an offense is not sufficiently bad to fine or imprison a person, it cannot be so bad that it warrants the reduction of a guaranteed basic income (which would effectively be a fine that had to be paid regularly).

Sufficiency

The UBI must at least be high enough to cover the most basic living expenses, meaning food, shelter, and clothing.

If it doesn’t, then additional social security payments would be required – thus undermining the simplification of the system and other advantages that a UBI would otherwise enable.

Additionally, the UBI must be high enough to enable people productive participation in society – which is what the word work should actually mean. Expressed more concretely, the UBI enables people to do meaningful work, whether in a self-employed manner or in a job working for someone else.

In our current time this requirement means that the UBI should cover the costs of

  • reasonable transportation
  • an internet connection
  • a computer and the electricity for its operation
  • at least minimal health care

Without these requirements, people cannot be expected to meaningfully participate in the labour market. So, the UBI needs to provide for these basics (where they are not already provided for by the state in some other way), otherwise the economy would suffer from opportunity costs of potential workers not being able to enter productive jobs, because they are too poor for doing so.

In other words, the UBI should enable people to work for free if they choose to forfeit any kind of luxury. This also means that a minimum wage becomes optional, because no wage is required to sustain the existence and basic productivity of workers. With a sufficient UBI, people would work for achieving their personal goals and wishes, and not for sustaining their existence.

Can it be implemented realistically?

Implementing an insufficient basic income could be easily be done by cutting all current social security payments and using the money that was spent on them to finance a quite modest basic income. But in that case, there would be a lot of people left with an insufficient basic income trying to get by somehow without the possibility to get additional income from social security. This would most likely create more trouble than it’s worth.

Realistically, a sufficient universal basic income cannot be easily achieved right now without increasing some taxes. The real question therefore is: What kind of taxes should be used to finance a UBI?

It is reasonable to expect that a UBI would have effects that save government spending, for example due to lower crime rates and overall better health, reducing health care costs. Such effects have been observed in various studies testing a UBI or a related scheme [iii],[iv].

However, it would be unreasonable to assume that these savings would make the UBI finance itself completely, so that the necessity to increase taxes would disappear. In the following, I briefly explain a few categories of taxes that can play a major role in financing a UBI.

Land value tax

A land value tax (LVT) [v] is basically a usage fee for land. The amount paid depends on the unimproved land value only, which is the market value of the land minus the value of the buildings, private property, and improvements on the land.

In some sense, a LVT is an economically optimal and quite untypical tax, because it doesn’t create any economic disincentives for productive activity, but actually creates incentives to use land optimally! Therefore, introducing a LVT also has the potential to increase economic growth.

A LVT is also progressive in the sense that mainly wealthy landlords would pay the tax, while those who don’t own land don’t have to pay that tax.

There’s also the fact that evading a LVT is very difficult, because land cannot be hidden or moved.

A practical issue with a LVT is that it might be a hard political challenge to introduce it.

Consumption taxes

Consumption taxes like the value-added tax incentivize saving money and disincentivize spending it on rather unnecessary products.

Generally, consumption taxes behave regressively, because wealthier individuals typically spend a smaller fraction of their income on consumption, while poorer individuals have to spend a large fraction of their income on necessary living expenses.

With a UBI, this regressive tendency of the consumption tax is reduced, because the basic costs for living are already covered by the UBI.

Consumption taxes can be increased for certain kinds of goods. This makes sense if these goods are problematic in some respects, for example if they cause health issues like addictive drugs. Legalizing certain currently illegal drugs and taxing them highly (unless their users get a medical prescription for them) may make more sense than continuing a costly and ineffective war on drugs.

It would also be possible to tax “luxury goods” very highly in order to introduce some progressive effects to consumption taxes. Unfortunately, the classifications of good into basic goods and luxury goods can be quite problematic in general. It could be argued that with a UBI this classification is not strictly necessary, because the costs for the most basic goods are already covered by the UBI, so that people would spend all additional income on some form of relative “luxury” anyway.

Income taxes

Income taxes are levied on personal income and company profits. Income taxes on personal income encourage companies to replace workers with machines, since machines don’t pay income taxes.

This has led some thinkers (for example, Braus [vi] and Winfield [vii]) to come up with the idea to introduce a tax on automation, which should be used to finance a UBI. However, an automation tax would require complex measurement and regulation of automation. Furthermore, it would discourage automation and thus slow progress and make the country in which the tax was introduced less competitive.

If the automation encouraging effects of individual income taxation are to be avoided, replacing individual income taxation with consumption taxes, land value taxes, and taxes on company profits would be a viable alternative.

One of the few advantages of income taxes is that they allow for a rather fine grained control of tax progression. They can be used to regulate income inequality towards optimal levels even when other measures for doing so prove to be insufficient.

Finally, progressive taxation of company profits can also be used to create more innovative markets. Big companies can use economies of scale and therefore have some decisive advantages over smaller competitors. This encourages the emergence of problematic monopolies and oligopolies. Taxing large profits of big companies higher can help to even out the field in order to establish a more competitive and performant market.

Green taxes

Green taxes, also called environmental taxes are taxes on environmental pollutants. They should ideally be paid by the polluters themselves in order to create an incentive to use more environmentally friendly methods.

A relatively often discussed green tax is a tax on CO2 emissions, called a “carbon tax”. It should be paid by the users of fossil fuels. It was recently proposed to use a carbon tax to fund a small universal basic income in the USA [viii].

Because companies usually pass on the costs of environmental taxes to the consumer, green taxes effectively act as consumption taxes. Green taxes are also rather regressive, in that low income households use a relatively large fraction of their income for fossil fuels [ix] . Overall, green taxes behave quite a lot like specific consumption taxes, and they may be beneficial to incentivize the transition to a sustainable economy.

Social dividends

An alternative or complementary way to financing a UBI through taxes is to pay the UBI out of a fund that collects dividends from publicly owned capital, for example national resources or government owned (shares of) corporations.

A most notable example of such a fund is the Alaska Permanent Fund [x] which is financed by oil revenues. It already implements a kind of insufficient UBI for all residents of Alaska, though it is not totally unconditional: People who were convicted for a felony, or were incarcerated for having committed one, don’t get a payment for that year.

Wherever nations own large natural resources, they could use them to finance a significant part of a UBI. Were this possible, it would be preferable to using income or consumption taxes.

But what about government owned companies? Considering the fact that most states are highly indebted [xi], the prospect of them buying or creating companies in order support a UBI with their profits seems highly unrealistic, even if that was a politically and economically uncontroversial move to make.

Social dividends unfortunately have the drawback that they represent a more volatile income source than tax revenues. Therefore, the UBI fund should ideally have reserves for the case that current revenues from a social dividend are insufficient.

A conservative compromise model

For the rest of this article I assume a model which I see as a suboptimal – but realistic – conservative compromise:

  • Almost all social security policies get slashed in favour of a sufficient UBI.
  • Consumption taxes and income taxes are both increased so much that they can cover any additional cost that a sufficient UBI would impose.
  • Land value taxation and social dividends are not used to finance the UBI, even though that might be seen as preferred solution.

The reason for assuming such a problematic compromise is to demonstrate that a UBI would represent a large net gain for almost everyone, even without an optimal financing model.

What are the likely positive effects of a universal basic income?

It is quite reasonable to expect significant social, economic, and psychological gains from a UBI. Additionally, many different groups will experience quite specific advantages, if a UBI is implemented.

Social advantages

Existence-threatening poverty would be effectively abolished. Currently, there is the possibility for people to lose their job and also to slip through the cracks of the social safety net. This can cause a continuous background of fear, anxiety, and stress, which is of course bad for health, happiness, and productivity.

In general, due to various different reasons, poverty causes people to be unhappy and less productive. In part, this is because being poor is expensive [xii]. A UBI could help the poor to escape the poverty trap and to get better paid jobs.

Additionally, poverty can create high incentives for criminal behaviour. Thus, it should be expected that a UBI will reduce the crime rate significantly, which would increase the safety of everyone.

Economic advantages

It is hard to predict what effects a UBI would have on the economy. Also, the effects would depend on how the UBI was implemented. Nevertheless, it is possible to have some reasonable expectations about how a UBI would change the economy.

First of all, the income distribution would change moderately. Those who profit the most will be those who have almost nothing at the moment. Low income individuals will profit significantly from a UBI. Middle class earners will be largely unaffected, because what they gain from the UBI they will essentially have to finance on their own through their taxes. Only wealthy individuals will see a modest increase in their tax burden. Overall, income inequality will be slightly reduced, and there will be more demand for consumer goods, because now the vast majority of people will have more money to spend.

Most companies will generally profit from this rise in consumer demand, unless they have specialized on selling upper class luxury goods.

However, there is a good chance that the increased consumer demand will stimulate overall economic growth [xiii]. Also, a UBI would make people bolder and would encourage them to start risky endeavours like creating a company, and to take advantage of risky opportunities. More small businesses would spring up and some of them would turn into big businesses eventually. The rate of innovation would rise as a consequence, thus accelerating the increase of living standards for all.

In the long run, everyone would profit significantly.

Psychological advantages

With a UBI, personal motivation will shift. The pressure to work in order to maintain one’s existence is lowered. Therefore, people will be more positively motivated to work towards achieving their personal goals, rather than to work in order not to die. This opens up the question what it is that people actually want for themselves, and they get the opportunity to think about that in more depth. Also, with a solid unconditional income, they have more autonomy to follow their own goals, rather than to conform to arbitrary social expectations which might be ill suited for them.

According to the psychological self-determination theory [xiv], there are three basic psychological needs: Autonomy, competence, and relatedness. A UBI strengthens the autonomy of individuals, because they can do what they want without falling into the risk of losing their unconditional income. Thus, they can focus on achieving competence and strengthening their relatedness to others. Thus, they will be more likely to thrive.

When it comes to work motivation, there have been many experiments which demonstrate that people who are more motivated by the desirability of a task in itself perform better than those who are motivated by external rewards like money (see the book Drive by Daniel H. Pink [xv]). The higher the UBI, the more one should expect motivation move from the problematic extrinsic motivation to the more benign intrinsic motivation. This line of reasoning will be especially important for the second part of this chapter.

Advantages for specific groups

In addition to those general advantages, it’s worth pointing out some specific effects for different groups within the population.

  • Workers benefit from higher motivation, more flexibility, a better working climate, more opportunities for further training, and more safety for creating their own small businesses.
  • Freelancers can focus more on delivering high quality products and services.
  • Students profit from higher flexibility and can choose to devote more of their time for studying without going into debt.
  • Business owners profit from higher consumer demand, more motivated workers, and suffer a milder catastrophe in the case of bankruptcy.
  • Unemployed people have more time to look for a job that fits to them well – sparing companies and themselves from a lot of frustration. They are also much more motivated to work for relatively low wages, because they can keep most of what they earn.
  • Chronically sick and disabled people also have more motivation to get healthy and find a job they can still perform in.
  • Pensioners similarly can be much more motivated to do some work for which they are paid.
  • Wealthy people profit from higher security and a high degree of economic and political stability. There’s no need to build bunkers to hide from the pitchforks [xvi].

How could a UBI be introduced?

There are many different possibilities for introducing a UBI, each with their own distinctive advantages and disadvantages.

Introducing a UBI at once

Theoretically, a nationwide introduction of a UBI that replaces most social safety systems could be done immediately. Of course, you might think “the sooner, the better”, but while the advantages of a UBI might arrive soon, all kinds of possible disadvantages would arrive at the same time. If it’s implemented the wrong way it cause significant negative consequences and would deter other nations from introducing a UBI.

Unconditional incomes for specific groups

Instead of starting with a universal basic income for everyone, it might be considered to create unconditional incomes for specific groups first, for example students or pensioners. This may be slightly less risky than introducing a UBI all at once, but there’s also no good justification for choosing this approach.

Gradual vertical introduction

With the argument that some advantages of a UBI might be seen even when introducing it at a low level, it could be introduced very gradually while lowering other social security payments by the amount of the UBI.

A gradual transition like this may be best to minimize problematic disruptions for individuals and systems, but it would also fail to provide the full advantages of the UBI to anyone. Also, it would be a relatively expensive way to introduce it, since all of the current bureaucracy would still exist during the transition period.

Local introduction

All of the studies about basic incomes have been done locally, so the introduction of a UBI may start locally, too. For that purpose, it would be introduced in select cities immediately, indefinitely, and completely. Those cities would be the perfect bases for long-term experimental research. If problems arise within these cities, we will learn how to fix them before the UBI is introduced on a larger scale.

Once the results on the city level have been proven to be sufficiently positive, introduction of the UBI may move on to the regional level, and then the national level. This way, ideally, a UBI could be eventually introduced in all nations.

A side-effect of this approach is that the model cities and regions would probably become very attractive and that many people move to those locations. This has actually happened in the UBI experiment in Namibia in which there was significant migration into the village that paid a UBI even though immigrants would not receive it!

Overall, this is probably the best way to introduce a UBI, because it can demonstrate the positive effects (especially the long-term effects) quickly and without huge costs. Also, the risks of this approach are quite minimal.

Counterarguments against UBI

Let’s proceed with responding to some frequent counterarguments against introducing a UBI.

People will stop working

Proper economic considerations and empirical findings [xvii] tell us otherwise: People would work more, on average, if there was a UBI, rather than less.

Those who temporarily do stop working usually have a very good reason for doing so, for example studying or caring for a child.

It cannot be financed

The quota of state expenditures to gross national income (GNI) of industrialized nations typically lies between 30 and 60 percent. Most of the expenditures are comprised of social spending. If such a state decided to spend 30 percent of its GNI on a UBI and limited other state expenditures to 25 percent, it would have roughly the quota of France, and a lesser quota than Denmark. France and Denmark are nice countries that have a properly working economy. So, they are a proof that such high expenditures as are required for financing a UBI don’t have catastrophic results.

But how much do 30 percent of the GNI of different nations represent? Here’s a list of what 30 percent of the GNI per capita would mean for different nations as UBI per year (in US Dollar; source: Wolfram Alpha GNI estimates for 2013):

  • Switzerland: $27,200
  • Australia: $19,600
  • USA: $16,000
  • Canada: $15,600
  • Germany: $14,200
  • Japan: $13,900
  • France: $13,000
  • UK: $12,500
  • Italy: $10,800
  • Spain: $9,000

These values are slightly higher if the full UBI is restricted to persons of age 18 and older. It is often suggested that children only get 50% of the UBI that adults would receive.

It happens that these values are roughly at the level of sufficiency for the respective nations. Therefore, a UBI can be financed.

Rich taxpayers and corporations will flee the country, so the UBI is unsustainable

A UBI would increase consumer demand and may lower labour costs. This should make any country introducing a UBI attractive to investors even if taxes are high.

Also, rich people and corporations rather use tax evasion schemes than actually leaving the country. That will hardly change with the introduction of a UBI alone.

Immigration will become rampant and make a UBI unsustainable

This may become a real issue if other nations fail to introduce a UBI, too. If anything, this is an argument for international cooperation and coordination when it comes to introducing universal basic incomes.

And if it really turns out to be problematic, immigration still can become more tightly regulated.

A UBI would cause inflation

Inflation mainly depends on how much money is created. No additional money needs to be created for a UBI, because it is covered by taxes. Nevertheless, there are a few theoretical arguments that suggest a UBI might cause inflation anyway. Interestingly, real world experience from partial basic incomes suggests that a UBI might actually reduce inflation to healthy levels [xviii].

Additionally, if a UBI would turn out to increase economic growth, then it would actually have deflationary effects. These can easily be compensated by creating more money.

Part 2: Universal Prosperity

What is universal prosperity?

My idea of universal prosperity is that we can lift the living standards of everyone to a really decent level within the next decades. This “prosperity” life standard would include the following:

  • Acceptable shelter and clothing
  • Really healthy food
  • As much education as desired
  • A generous amount of transportation within the country
  • Multiple vacations per year
  • Good medical treatment, including preventive and regenerative treatment
  • Frequent participation in cultural events
  • Computing devices with high speed internet connections
  • 3d printers and sufficient feedstock materials for printing a large variety of goods
  • Some extra money left for donations

These requirements would be contrasted with what I don’t consider necessary for a “prosperity” lifestyle:

  • Owning a large flat or house
  • Owning a private car, yacht or jet (in the coming decades we will probably get used to take self-driving cars)
  • Owning any kind of “luxury” items
  • Being able to fly around the world multiple times a month
  • Using all of the very latest high end top notch tech gadgets
  • Having lots of saved money or assets
  • Having a personal human or robot butler
  • Hanging around in expensive clubs, restaurants and hotels
  • Getting the very best education from one or more private human teachers
  • Being able to afford the very best services for everything

All of these things might be nice, and people of course have the right to aspire to achieve them through hard work, but they are not a requirement for a happy life.

Under very optimistic circumstances, we might have universal prosperity by around 2040 within the current industrialized nations.

How could universal prosperity be reached?

The word “universal” indicates that everyone should be able to have this “prosperity” life standard. Because not everyone can work or owns lots of capital, we need a UBI to achieve this goal. Unfortunately, even the wealthiest nations would have to increase taxes to insane levels to finance a UBI that would grant prosperity to everyone. So, this is hardly a viable option.

What can be done however, is introducing a UBI at a merely sufficient level, say within the next ten years, and then coupling the amount of the UBI to the level of economic growth. Because a modest UBI should stimulate economic growth, this is a much more realistic path to universal prosperity than waiting 25 years and introducing a generous UBI only then.

Apart from that, we cannot wait 25 more years before introducing a UBI, because technological unemployment will be rampant long before 2040. Not dealing with that trend proactively will most likely ruin the economy.

Once technological unemployment really takes off, it will be necessary to increasingly tax capital gains, as income taxes from labour will break away.

Make it ecological

When it comes to economic growth, there is valid criticism that it usually entails ecological degradation. However, that doesn’t need to be the case, since increases in efficiency through the use of better technology can create growth that doesn’t cause additional ecological costs.

Rather than demanding a stop of the economic growth paradigm, we should focus on “ecological growth” [xix], which would be based on

  • A transition towards renewable energy sources
  • Higher energy efficiency, for example through better reuse of “waste heat”
  • Sustainable agricultural practices [xx]
  • Circular economy [xxi]
  • Vast gains in general efficiency made possible by a very high degree of automation through pervasive use of robots and artificial intelligence

A focus on technological solutions doesn’t automatically generate ecological growth, but if a decidedly technological approach is combined with intelligent regulations that favour ecologically sound alternatives, economic growth can very well become ecologically sustainable.

For that purpose, we may need to replace simple conventional economic metrics like GDP and GNI with metrics that consider the ecological costs of economic activities. The Sustainable National Income [xxii] and the Genuine Progress Indicator [xxiii] are good examples for such “eco metrics”.

By coupling the amount of the UBI to the “eco metrics” SNI or GPI, rather than the GDP or GNI, people would have an incentive to demand ecological growth. I call such an “eco-growth coupled” universal basic income a Sustainable Universal Prosperity Income (SUPI).

How the Sustainable Universal Prosperity Income would work

The SUPI starts with a UBI at a merely sufficient level which is introduced in a certain year, say 2025. This year would be the reference year of the SUPI. From then on it will only be adjusted to inflation and the change of the chosen eco metric.

For example, if the inflation rate is 2%, then the UBI payments will be increased by 2%, preliminarily. Next, we need to consider the change of the eco metric. If it has increased by 3%, then the SUPI will increase by about 5%. This increase comes from 2% inflation and 3% eco growth. However, if the eco metric has decreased by 1%, the SUPI will only increase by 1%, which won’t be enough to compensate for inflation. Consequently, the purchasing power that people get from their UBI will decrease – because some problematic economic activity has degraded the environment.

If the nation managed to generate an average eco growth of 3% over 25 years, by 2050 the SUPI will be at 209% of the sufficiency level of the reference year (this is automatically adjusted for inflation). This could be enough to generate sustainable universal prosperity.

Such a high level of ecological growth may be optimistic, but the positive stimulus from the UBI, increased thermodynamic efficiency, and efficiency gains from the use of robots and artificial intelligence could make it possible.

Why would a SUPI be a good idea?

The idea to give everyone more money than they need to stay alive, healthy, and productive for free may seem quite excessive at first glance. That’s why there need to be really good arguments in favour of such a system. Even though there are some valid philosophical and ideological arguments for a generous universal basic income, I restrict myself to ecological, social, psychological, and economic arguments that can ideally be accepted by everyone.

Ecological reasons

Sadly, the current ecological footprint of the Western world is unsustainable. We’d need much more than one single planet to sustain that lifestyle if everyone in the world adopted it. There are different ways to react to that fact, but the most rational approach is to aggressively use intelligent technology and policymaking to reduce our ecological footprint even while increasing our standard of living.

A SUPI would of course be a foundational piece of intelligent policy-making. Conveniently, it can also accelerate further technological innovation, as is explained further below.

Because we live on Earth and depend on the environment that it provides to us, we should naturally have a strong incentive not to destroy it. However, in the face of more immediate economic pressures this basic sensibility all too often takes a backseat. This is why politics and economics need to be realigned so as to support the natural incentive to protect our natural wealth. If people’s incomes directly and immediately depend on the state of the environment, they get useful feedback that can stimulate them to demand a transition to a sustainable economy.

With a “normal” UBI there’s the problem that the increased consumer demand could accelerate economic activities that degrade our environment. This issue is not absolutely dismantled with a SUPI, but at the very least a SUPI creates the right conditions and incentives that support the creation of an ecologically responsible economy. People who suffer from relative poverty simply don’t have the “luxurious” option to buy “ethical” products that don’t contribute to the destruction of the environment.

Finally, people receiving a SUPI can easily choose not to work in a job that has detrimental social and ecological impacts. When companies with unethical business models notice that it gets really hard to them to attract and keep workers, then they are likely to reconsider their strategy. After all, with a SUPI, the company leaders themselves don’t really need to run such a business anyway.

Social reasons

In the next decades automation will eliminate a vast number of jobs and many of those who will have lost their jobs won’t be able to find a replacement job soon. More work can be done by less people. And the average level of qualification required to get a job will most likely rise significantly. So, an increasing number of people will require further education and training. With a SUPI they get the chance to focus on that, instead of being forced to take kind of job they can find.

Nevertheless, sooner or later, many jobs and even companies will become fully automated through advanced artificial intelligence which will even be able to do very creative tasks. Only a small number of people will be able to do any kind of conventional work that creates an income for them. Without a SUPI the existence of most people would become quite unpromising. With their SUPI however, they can choose to do whatever gives meaning to their lives without having to worry about making a living. Great freedom and liberty for everyone can become a reality.

Still, inequality will be an issue even when people don’t need to work for the basic necessities of life. After all, those who have work or capital can still continue to get wealthier while those without only have their basic income. This divide will become increasingly difficult to bridge as the number of available jobs gets smaller and smaller. This is why the basic income needs to rise over time in order to limit income inequality. Otherwise increasing inequality will threaten societal cohesion to a dangerous degree. It is much less likely that there will be civil unrests, uprisings, revolts, or even revolutions if everyone gets a SUPI.

Psychological reasons

The fact that the SUPI is coupled to the economic and ecological wealth of the nation effectively turns its citizens into shareholders. Thus, they have additional motivation to support their nation as effectively as possible. Therefore, interest in politics will probably grow, and people will demand improved methods of democratic or direct participation. Everyone will have a good reason to strive for the holistic optimization of societal systems, because that’s what actually gets them an income raise.

Sure, the influence that an individual may have on the economy at large is very marginal, but you have to consider that the same is true for the influence a single voter has on the politics of a democratic country. If it’s a valid line of reasoning to keep the basic income relatively low because that would save costs, the same line of reasoning could be used to justify the abolition of democratic elections. Costs are a bad reason for denying citizens their empowerment.

The higher the SUPI, the more motivation will shift from extrinsic motivation to intrinsic motivation. With a sufficiently high universal income, people who do work because they find it inherently rewarding and meaningful will be more likely not to bother about using work as a source of income. Instead, they will work voluntarily and for free, because they just want to help the organisation and people they work, or because the work is genuinely interesting and engaging. Money would just be an annoying distraction in that case. After all, extrinsic motivation can negatively interfere with already existent intrinsic motivation, as studies have shown. Purely intrinsically motivated people are happier, more creative, and more innovative.

Therefore, the fraction of work that people are actually directly paid for will in all likelihood decrease dramatically. The purpose of work will shift towards personal accomplishment, solving real problems, gaining reputation, mastering hard challenges, and collaborating with like-minded people.

And indeed, the SUPI creates a solid basis that allows everyone to focus on solving the real challenges that we are faced with: How do we make our lives and the world as a whole better? Everyone will have much better chances to work on his own personal development, and on creating positive change in the world around him, because worries about money will be rather unnecessary.

Economic reasons

Currently, automation is often seen as very negative, because it eliminates jobs. When jobs become much less of a necessity, due to their income generating function being taken over by a SUPI, the negative sentiments against automation will decrease – and may even turn into demands for faster automation. Social and political resistance against automation will disappear. Therefore, the speed of innovation can increase, which should give the economy a big boost.

Actually, the whole incentive situation for automation will change dramatically: With the shift towards voluntary work there is only a need to automate work which people are not willing to do for free. Automation will gradually eat up all the jobs that aren’t inherently rewarding. What remains is work that people do for free. There is much less economic reason to automate jobs that people do voluntarily. Still, even some voluntary workers might be replaced by machines, if the latter are much more efficient than human workers.

In any case, an increasing degree of automation will bolster the supply of all kinds of goods. On the other hand, without a SUPI, consumer demand would at the same time decrease, because fewer and fewer workers would be left to purchase those goods. In fact, at least something like a SUPI will be needed to keep the economy running smoothly.

An increasing universal basic income can keep income inequality at economically optimal levels rather naturally. Consumer demand will be boosted to the level that is required by an increasingly automated supply side. The conventional economy will continue to make sense.

But there is more: New economic modes are on the horizon and will complement the conventional economy. Presenting these rather speculative ideas in detail would go beyond the scope of this chapter, so I will only mention them briefly:

  • Personal 3d printers will grant private individuals powerful and effective means of production. People become consumers and producers at the same time. They will often share their product designs freely and openly. Personally customized products will gradually replace uniform mass produced goods.
  • Companies and cooperatives will become much easier to create and run successfully, because with a SUPI people will be much more willing to work for free. However, cooperatives will often prove to be more attractive compared to conventional companies. Therefore, conventional companies will be pressed to adopt elements of cooperatives, so that hybrid company forms will emerge.
  • The non-profit sector will see a massive boom, because with a SUPI non-profit organisations have it much easier to cover their costs. Without having to aim for profits, they can focus on providing the best products and services imaginable – ideally for free! In turn, this will reduce the costs for all organisations, while at the same time improving the overall quality of almost every product.
  • Crowd funded and crowd sourced initiatives will provide exactly the kinds of products and services that are desired. Consumers that so far have merely reacted to the supply side will become proactive and take a leading role in specifying and designing new goods and services. This will range from the design of new forms of electronics to the direction of medical research.
  • More and more digital goods will be shared openly and freely. Reputation systems and reputation economies will support this development further, because sharing will increase reputation. And reputation will be coupled to personal wealth, in turn. Inspired by the fictional reputation currency “Whuffie” in Cory Doctorow’s science fiction novel “Down and out in the magic kingdom” [xxiv], I developed a system called Quantified Prestige [xxv] (Hrenka 2012) that could be used as basis for a reputation economy.
  • New systems to leverage the so-called attention economy are also being worked on – for example the decentralized social network Synereo [xxvi]. Users will be rewarded for interacting with online content and for sharing it with others.

All of these developments will be enabled or supercharged by a SUPI, and they will massively transform the economy. We will live in a Zero Marginal Cost Society [xxvii] in which the cost of very many goods and services will be effectively zero.

Why think about a SUPI already?

Wouldn’t it be better to restrict ourselves to the next step and only debate about the introduction of a “simple” universal basic income?

While it is important to create and strengthen a big alliance that can politically introduce a UBI, there are some important reasons for looking further into the future.

First of all, it may seem intuitively reasonable to restrict a UBI to a merely sufficient level. It may be possible that a UBI is introduced, but only under the condition that it stays at such a minimal level. This would significantly complicate the introduction of a true SUPI, and unnecessarily delay the unfolding of the full potential of the universal basic income idea.

Perhaps even more importantly, a bright vision of a very positive future is sorely needed. People want to thrive and flourish. It would be hard for them to look forwards to a future in which they would be mostly restricted to living on a merely sufficient basic income. Instead, the idea of universal prosperity not only makes a lot of sense, but also provides reasonable hope for a much better future.

Finally, without such a positive vision, people tend to find refuge in extreme ideological positions. The lack of promising secular and moderate visions can drive people to violence, crime, drug abuse, and even terrorism. Hope is very important for the human psyche. When things get really serious, humans will flock to those who promise them hope, no matter how misguided the hope promising ideology actually is. The vision of the SUPI, and the society it can help to create, can provide substantial hope and acts as antidote against ideological extremism.

All these reasons mean that we must talk about the idea of universal abundance as soon as possible. Let’s not waste too much time on half-hearted compromises!

What counterarguments against a SUPI can we expect?

Of course, the idea of a generous sustainable universal prosperity income may seem much more extreme than a “normal” universal basic income. Certain objections are very likely to come up in the debates about a SUPI. Nevertheless, the SUPI idea is quite rational and is not easily invalidated by criticism.

It’s not fair to give people so much money when they don’t even have to work for it!

What is and is not fair is highly subjective and depends on cultural expectations. The fairness argument is a highly ideological one and therefore it cannot be easily dismantled with facts alone. I could argue that the end result of a SUPI would be a world that is much fairer than one without it, but that assertion certainly won’t convince everyone.

Let me therefore try to propose a different perspective: Consider the SUPI as an investment that you make in order to get a very special kind of return – a better society. If people invest into the SUPI they get rewarded with a much better society and a booming economy.

The failure to invest into a SUPI does not only represent a huge missed opportunity, but can be actively dangerous. Everyone depends on having a functioning society around him. If we don’t provide the support to the society that it actually needs, it will sooner or later come crashing down. The typical results of that are very gruesome and can be found in about any history book.

People would get really lazy if they got so much money for free!

According to self-determination theory, humans have the psychological needs of autonomy, mastery, and relatedness. A SUPI would strengthen their autonomy and allow them to find better ways to satisfy their needs for mastery and relatedness. They will be guided by their passions and intrinsic motivation, whether that’s voluntary work, a creative hobby, or just interacting with others in clubs, social networks, or online games. Everyone has the wish to be really good at something, even if it’s just playing a certain game. At the professional level, playing games counts as (e-)sports. And few people would argue that doing sports is being lazy.

Anyway, if prosperity really made people lazy, then the rich would be suffering from a laziness epidemic – from which they would need to be cured by giving away their money, so that they would be forced to work hard in order to make a living. I hope that people see that this proposition is nonsensical.

Ordinary people should not be shareholders of a nation or region. They don’t deserve it!

From a purely utilitarian perspective it is irrelevant whether they deserve it or not. If a SUPI provides superior results, then it should be adopted. Historically, capitalism was introduced and philosophically justified based on utilitarian reasoning [xxviii]. If you think capitalism is legitimate due to its efficiency, it should be legitimate for people to be shareholders of a nation if that’s a more efficient system than the status quo.

It would be better for the economy to lower taxes and keep the UBI at a level that is merely sufficient!

That is a highly questionable hypothesis. As explained above, massive automation will require a proportional strengthening of the consumer demand side. Either you hope for this strengthening to somehow happen on its own, or you do the economically rational thing and use a SUPI to do that in an intelligent and systematic way.

Of course, optimizing the economy is difficult, so some actual experimentation will be required to figure out the optimal approach. It might be conceivable that there are better solutions than SUPI, but the idea of trickle-down economics has failed empirically [xxix],[xxx],[xxxi], so we definitely need to try something else.

Summary

I have predicted that a UBI, if it is implemented correctly, will have the following effects:

  • The economy is boosted and will grow faster.
  • Inequality, poverty and criminality will be significantly diminished.
  • People will feel better, more motivated, more creative, and more innovative.

For best results, the introduction of a UBI is done in several steps:

  • Pilot cities should introduce a fully sufficient UBI as soon as possible. The resulting effects should be scientifically analyzed.
  • Whole regions should introduce a UBI one by one until the whole nation has a fully sufficient UBI.
  • As soon as the UBI is introduced on a national level, it should be transformed as soon as possible into a SUPI (Sustainable Universal Prosperity Income).

It is not premature to present, discuss, and promote the SUPI idea, because it enables an uplifting and bold positive vision of the future.

References

[i] Piketty, T. (2014) “Capital in the twenty-first century” The Belknap Press of Harvard University Press. Cambridge, Massachusetts; London, England

[ii] Dolan, E. (2014) “A Universal Basic Income and Work Incentives, Part 1: Theory” EconoMonitor, August 18, 2014 http://www.economonitor.com/dolanecon/2014/08/18/a-universal-basic-income-and-work-incentives-part-1-theory/ accessed February 20, 2015

[iii] Kaufmann J. (2010) “BIG Hopes, BIG Questions: Namibia’s Basic Income Grant”. The Journal of Civil Society and Social Transformation, Volume 1, January 2010, 38-47 http://max-cmshost-01.syr.edu/uploadedFiles/moynihan/tngo/BIG%20Hopes,%20BIG%20Questions%20Namibia%E2%80%99s%20Basic%20Income%20Grant.pdf

[iv] Standing G. (2013) ”Unconditional Basic Income: Two pilots in Madhya Pradesh”. http://www.guystanding.com/files/documents/Basic_Income_Pilots_in_India_note_for_inaugural.pdf accessed February 20, 2015

[v] “Land Value Tax” Wikipedia http://en.wikipedia.org/wiki/Land_value_tax accessed March 16, 2015

[vi] Braus, A. (2014) “Don’t Tax Humans – Tax the Robots” https://medium.com/@ajbraus/dont-tax-humans-tax-the-robots-be8da8351bb9 accessed March 9, 2015

[vii] Winfield, A. (2015) “Maybe we need an automation tax” http://robohub.org/maybe-we-need-an-automation-tax/ accessed March 9, 2015

[viii] Van Hollen C. (2015) “Democrat proposes carbon cash: $1000 for every American” SFGate article by Carolyn Lochhead, February 25, 2015 http://m.sfgate.com/science/article/Key-House-Dem-proposes-carbon-cash-1-000-for-6101720.php

[ix] Dinan T. (2012) “Offsetting a Carbon Tax’s Costs on Low-Income Households” Working Paper Series, Congressional Budget Office, Washington D.C. November 2012, Working Paper 2012-16 http://www.cbo.gov/sites/default/files/11-13LowIncomeOptions.pdf

[x] “Alaska Permanent Fund” Wikipedia http://en.wikipedia.org/wiki/Alaska_Permanent_Fund accessed March 16, 2015

[xi] CIA World Factbook: Public debt of different countries https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html accessed March 17, 2015

[xii] “Ghetto tax” Wikipedia http://en.wikipedia.org/wiki/Ghetto_tax accessed February 23, 2015

[xiii] Krugman P. (2014) “Inequality Is a Drag”. The New York Times, August 8, 2014 http://www.nytimes.com/2014/08/08/opinion/paul-krugman-inequality-is-a-drag.html

[xiv] http://www.selfdeterminationtheory.org/theory/

[xv] Pink D. (2010) “Drive”. Canongate Books, 2010. 14 High Street, Edinburgh EH1 1TE

[xvi] Hanauer N. (2014) “The Pitchforks Are Coming… For Us Plutocrats”. Politico Magazine, July/August 2014 http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html

[xvii] Dolan E. (2014) “A Universal Basic Income and Work Incentives. Part 2: Evidence”. EconoMonitor, August 25, 2014 http://www.economonitor.com/dolanecon/2014/08/25/a-universal-basic-income-and-work-incentives-part-2-evidence/  accessed February 20, 2015

[xviii] Santens S. (2014) “Wouldn’t Unconditional Basic Income Just Cause Massive Inflation?”. Medium, November 22, 2014 https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7 accessed March 17, 2015

[xix] Morrison R. (2013) “Ecological Growth”. EugeneWeekly.com, November 14, 2013 http://www.eugeneweekly.com/20131114/guest-viewpoint/ecological-growth accessed February 28, 2015

[xx] “Sustainable agriculture” Wikipedia http://en.wikipedia.org/wiki/Sustainable_agriculture accessed February 24, 2015

[xxi] “Circular economy” Wikipedia http://en.wikipedia.org/wiki/Circular_economy accessed February 24, 2015

[xxii] “Sustainable national income” Wikipedia http://en.wikipedia.org/wiki/Sustainable_national_income accessed February 24, 2015

[xxiii] Harris J., Roach B. (2013) “Environmental and Natural Resource Economics: A Contemporary Approach”. M.E. Sharpe Inc., 80 Business Park Drive, Armonk, New York 10504. 3rd edition 2013. Chapter 8 http://www.ase.tufts.edu/gdae/Pubs/te/ENRE/3/Ch8_Income_Accounting.pdf

[xxiv] Doctorow C. (2003) “Down and Out in the Magic Kingdom”. Tor Books, January 2003 – available for free download at http://craphound.com/down/download/

[xxv] Hrenka M. (2012) “Quantified Prestige”. Radivis.com, October 2, 2012. http://radivis.com/quantified-prestige/

[xxvi] “Synereo” http://www.synereo.com/ accessed February 28, 2015

[xxvii] Rifkin J. (2014) “The Zero Marginal Cost Society”. Palgrave Macmillan; St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010

[xxviii] Rifkin J. (2014) “The Zero Marginal Cost Society”. Palgrave Macmillan; St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010

[xxix] Piketty, T. (2014) “Capital in the twenty-first century” The Belknap Press of Harvard University Press. Cambridge, Massachusetts; London, England

[xxx] Chu B. (2015) “The wealth that failed to trickle down: The rich do get richer while poor stay poor, report suggests”. The Independent, January 19, 2015. http://www.independent.co.uk/news/business/analysis-and-features/the-wealth-that-failed-to-trickle-down-report-suggests-rich-do-get-richer-while-poor-stay-poor-9989183.html accessed Feburary 28, 2015

[xxxi] Aleem Z. (2014) “7 Chars Show What Free Market Economics Have Really Brought on America”. Policy.Mic, November 20, 2014 http://mic.com/articles/104612/7-charts-show-why-trickle-down-economics-has-been-an-enormous-failure accessed February 28, 2015

Footnote

The article above features as Chapter 3 of the Transpolitica book “Anticipating tomorrow’s politics”. Transpolitica welcomes feedback. Your comments will help to shape the evolution of Transpolitica communications.

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