Diving into the first semester of my Master in Sustainable Business and Innovation, professor Joan Miguel Pique in our Geopolitics class prompted us with an article on the future of work in the face of rapid AI development and increasing automation. This led our class to have an engaging discussion on the applicability of Universal Basic Income (UBI) – the idea that everyone would receive an unconditional payment regularly, which revealed a myriad of views across all our home countries.
Though most importantly, we seem to arrive at the conclusion that UBI can be a powerful tool to work towards sustainable economic growth and eradicating extreme poverty.
The main argument for UBI is to use it to lift communities out of extreme poverty in the face of rapid automation and growth of artificial intelligence. However, I believe it is merely a band-aid solution to the larger systemic issues at play depending on the country.
In the case of Hong Kong, cash handouts have proven to be ineffective in tackling extreme poverty. Without policy intervention, Hong Kong’s poverty rate sits at 23.6%. The Hong Kong Government has tried various cash handout programs such as the “Scheme $6000” in 2011, “Caring and Sharing Scheme” in 2018, and “Cash Payout Scheme” in 2020. None of which have decreased Hong Kong’s poverty rate consistently.
In Alaska, however, unconditional cash transfers have been around since 1982 from the Alaska Permanent Fund. This has increased the fertility rate of the state by 13%. Moreover, a 2016 study by Matthew Berman and Random Reamey also estimated that without the cash transfers, 25% of the population would be under the poverty threshold. There have also been other success stories on a smaller scale in other developed countries such as Germany, Finland and Spain.
While UBI might have worked on a small scale, and improved quality of life for some communities, it is not a feasible solution on a larger scale for sustainable economic growth nor a solution to eradicating extreme poverty. What’s more is that in a recent conference with professor Mario Negre Rossnoli, we found that poverty is relative and will continue to evolve in tandem with economic growth of respective countries.
So is UBI a good solution for tackling poverty and increasing automation? My view is, not in the long run and not on a large scale. Echoing Professor Joan Miguel Pique’s view, there are other tools to be used to balance out inequality. To ensure the basic needs of future generations are met, we need to address the systemic issues at play on a case-by-case basis. This requires more cooperation between the public, private and non-profit sectors to address the needs of respective communities, and doing so in a way that doesn’t foster paternalism towards a specific entity.
Dr. Federica Massa Saluzzo, the programme director of the Master in Sustainable Business & Innovation, raised that uneven progress on a global scale and job shortages due to technological innovations have triggered a renewed interest in Universal Basic Income (UBI). Research on the topic has been flourishing and results show that UBI programs can alleviate poverty and improve health and education outcomes without negatively affecting labor market participation.
However, the debate on UBI is very much open and rigorous research on the topic, in the form of longer-term experimental designs is very much needed to address questions like:
In what contexts would UBI be more effective?
How does the UBI program relate with other poverty alleviation programs and how can we design systemic solutions where multiple programs are supporting each other?
And what is your opinion about the UBI?
Participant of Master in Sustainable Business & Innovation, class of 2023
Nicole is an outspoken, analytical and driven ESG professional pursuing a Master in Sustainable Business and Innovation. She graduated with a Bachelor's in Environment and Sustainability at UBC in 2019. She is passionate and engaged in developments regarding sustainable economic growth, environmentalism in policy making, the race to Net Zero and mobilizing systemic change. Outside of her professional pursuits, Nicole is a recently 500-hour certified yoga teacher. In her free time, she enjoys roller skating, hiking and attending small music events.