Is UBI the “Let them eat cake” of our time?

The idea of a Universal Basic Income or “UBI” for all Americans has been a particularly popular policy proposal among Silicon Valley’s elite. The concept, as most fervently articulated by presidential candidate Andrew Yang and briefly discussed in last night’s presidential debate, is to give every adult in America a fixed amount per month, typically $1,000, regardless of economic situation and without any conditions.

Like few other political proposals, UBI seems to be garnering the biggest support from nearly opposite ends of the political spectrum — with liberals embracing it as a way to further buoy impoverished communities, and libertarians espousing it as an alternative to existing bureaucratic government assistance programs. Indeed, Yang, a Democrat, has received support from several right-wing fringe groups for his UBI stance.

The fact that multi-billionaires, including Mark Zuckerberg, Elon Musk and Sir Richard Branson, are proponents of UBI is telling. On the surface, their advocacy seems altruistic, but I can’t help but interpret it as a “Let them eat cake” declaration of our time — an impractical and out-of-touch proposal by the extremely wealthy that ignores the real problem.

UBI’s popularity among tech elites epitomizes the unique political philosophy of Silicon Valley, which somewhat awkwardly combines progressive social ideals with unbridled capitalism and a deep-rooted sense of entitlement. The mindset is, “I feel guilty about all these poor people, but keep your fucking hands off my money!”

The pitch of UBI appeals to the tech community’s mindset. It’s “simple." It’s “fair” because everyone would get the same amount. It “disrupts” the legacy bureaucracy. It’s a “hack” that elegantly solves seemingly intractable problems. And, perhaps most important, it assuages our guilt: “See what a good guy I am? I support UBI for everyone!"

Regardless of what you call it (Yang’s recent re-branding is the “Freedom Dividend”), it’s not at all clear that UBI is a good idea, nor that the motivations of its proponents are any more sincere than Marie-Antoinette was about solving the real problem.

First, there’s the unavoidable topic of cost. There are approximately 254 million people in the U.S. over age 18. Giving them each $1,000 per month would cost over $3 TRILLION per year! To put that mind-boggling number into perspective, the entire U.S. GDP is just over $20 trillion. The entire U.S. federal government spent $4.1 trillion last year. Total spending on Social Security, Medicare and Medicaid combined was just over $2 trillion.

Does anyone in their right mind really believe that we could enact a program that is 50% more than the major federal social programs combined, 75% of the entire federal budget, and 15% of our entire national GDP!?!? It makes a slice of cake for every French revolutionary seem downright practical.

To help pay for his proposal, Yang has specified that those who already receive federal benefits could opt to receive the $1,000 UBI check instead. But he’s less specific about cutting off the entitlement above some level of income, as several mayors who have actually experimented with UBI have been. So, essentially, in its currently proposed form, UBI would be punitively regressive — taking away other federal assistance from poor people, but effectively serving as yet another tax credit for wealthy people.

The second practical concern of UBI is that it has been very difficult to demonstrate tangible success. A UBI trial in Finland was cut short when it showed few positive results. A much-lauded trial proposed by Sam Altman at Y Combinator has been delayed and still seems to be stalled. Programs in Ontario, Canada showed limited results. A trial in Oakland was scrapped. Perhaps the most established UBI test has been in Stockton, California, funded in part by Facebook co-founder, Chris Hughes. But at only $500/month for 125 people for 18 months, the scope is limited.

Despite these and other efforts at proving the efficacy of UBI, the best that could be said so far is the results are inconclusive. Proponents argue that the problem with these trials is they are too limited in scope or time horizon. That to truly show the power of UBI, the program must be comprehensive and permanent.

As unlikely as it is to enact a $3 trillion program of unknown benefit, the very debate about whether UBI will “work” or not underscores its preposterousness. Do you know what will work? Paying for medical bills. Paying for education. Paying for food, housing, childcare. Yet, expanding such programs meets extreme resistance because they are considered “welfare” (heaven forbid!).

The Department of Education’s statistics show that it would cost only $79 billion to eliminate tuition at all public colleges and universities. Why don’t we do that? It would cost about 2.5% of the Freedom Dividend, and do a hell of a lot more to ensure American workers are trained for the future workforce without crippling debt.

But the strongest argument against UBI is that it fails to address the root problem of growing wealth inequality. UBI is a way to keep poor people at bay by throwing them a bone. For tech tycoons, it addresses the "collective angst over the social consequences of technology.”

As Nathan Heller describes in his excellent New Yorker critique of UBI, it "alleviates moral debt: because there is a floor for everyone, the wealthy can feel less guilt as they gain more wealth." Notably, few UBI proponents advocate increasing taxes on the wealthy to pay for the program — instead pointing to ambiguous “value added” taxes on companies using “AI” or “automation” that lead to job loss.

An equally plausible scenario if UBI were ever implemented at scale is that it would quickly be absorbed at the low-end of the income curve. Rents would increase now that people had an extra $1,000/month in their pocket. Wages, particularly for gig economy workers, would further decline, since people had a safety net of subsidized income. Pay day loan predators would lend against the federal stipend. In other words, people who can barely hang on economically could find themselves more vulnerable to exploitation under UBI than they already are.

An even more cynical take is that UBI would prop up the businesses and their billionaire benefactors by enabling under-employed workers to still buy their products. As Douglas Rushkoff put it in a Los Angeles Times op-ed, Silicon Valley tech companies "understand the basic math undermining their long-term business plans: If they automate all the jobs, who will be left to buy their services?”

I don’t mean to suggest that all supporters of UBI have nefarious intentions. Many are sincere in their belief that it will help. But, as a society, we need to address the core problem that the vast majority of economic opportunity in our country resides with too few people. The wealthiest among us must be willing to pay more, not for blunt force wealth redistribution, but to afford everyone the opportunity to improve their lives.

Technology and automation have been alleviating jobs for centuries. Millions of farm jobs and manufacturing jobs have been lost, and yet we’re at historically low unemployment with higher-than-ever productivity and GDP per capita. UBI is a pessimistic, even apocalyptic, view of the future that assumes the end of productive human endeavor.

We have serious economic challenges in this country, but now is not the time to throw up our hands and offer only impractical, reductive solutions of the "Let them eat cake” crowd. We can’t just declare that our social problems are just too complicated, so let’s just give everyone $1,000 per month to make them go away.

Now is the time for pragmatic and tangible social assistance that helps people where it matters — education, healthcare, housing, wages. A UBI of $1,000 per month won’t make anyone feel more financially secure if they are saddled with student loan debt, spiraling healthcare costs, rental and real estate that is out of reach and stagnant wages — the very economic dynamics that have enriched the wealthy.

Bottom line: it’s time to address the economic inequality in our country. Or the “Let them eat cake” sentiment of UBI may not be the only parallel to the French Revolution.