Assessing Andrew Yang's Universal Basic Income Proposal in the Age of AI
Andrew Yang has revived his proposal for a 'Freedom Dividend' that would provide every American adult with $1,000 per month as a safeguard against job losses driven by artificial intelligence (AI).
While this universal basic income (UBI) aims to cushion individuals from automation's impact, it has been criticized as insufficient to address the core challenges of an AI-driven economy, particularly the substitution of human labor by machines and the growing concentration of wealth among owners of robotic technology.
Funding a UBI at the proposed level of $53,000 annually per adult would exceed $14 trillion a year, roughly 45% of the US gross domestic product (GDP), rendering it fiscally impractical. Historically, US public social spending has not surpassed 25% of GDP since 1980, and total tax revenue has remained below 30% of GDP, underscoring the limitations on redistribution through taxation.
As AI reduces labor income, the traditional tax bases reliant on labor shrink, necessitating a shift in funding towards non-labor sources such as carbon, land, or taxation of robot owners. Ownership of automation technology by a small group of tech oligarchs could allow these individuals to capture most of the economic rewards, potentially creating a significant power imbalance. Erik Brynjolfsson warns that society could risk being dominated by the owners of technology.
The value of UBI lies in removing the requirement to work for income; however, it does not address entrenched inequalities. There may be a need to complement UBI with redistribution mechanisms focused on capital ownership in robots to achieve equitable outcomes.
Wage subsidies, such as an expanded Earned Income Tax Credit (EITC), may provide a more effective response to current labor market needs than UBI.
Observations from other high-income countries like Australia, Denmark, Finland, Spain, France, and Italy reveal lower working hours and robust social safety nets existing without UBI.
The discussion employs Leontief's horses-and-tractors analogy to illustrate the diminishing role of human labor in production as automation increases.
