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How Universal Basic Income Can Advance the United States’ China Strategy

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How Universal Basic Income Can Advance the United States’ China Strategy

The infrastructure bill is a good start, but the U.S. must go much further in “domestic renewal” to truly compete with China.

How Universal Basic Income Can Advance the United States’ China Strategy
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Earlier this summer, U.S. Secretary of State Antony Blinken outlined his foreign policy strategy of “domestic renewal,” aimed directly at arming the United States to compete with China. The strategy, articulated in an August 9 speech at the University of Maryland, focused predominantly on increasing infrastructure investment at home, reflecting the potential foreign policy benefits of the bipartisan infrastructure bill Congress passed last week.

In the weeks following the “domestic renewal” speech, we patiently awaited further elaboration of Blinken and President Joe Biden’s domestic policy-oriented China policy, some next steps to integrate the oft-segregated domestic and foreign policy worlds.

But no further elaboration came.

Perhaps the principle of domestic renewal served little more than a rhetorical function for the Democratic party leadership in the State Department, designed to push the infrastructure bill through Congress. But make no mistake: For the United States to compete with China – and address domestic concerns like economic inequality – it must embrace a broader policy that explores the synergies between local, domestic, and international policy. That means taking domestic renewal seriously, and expanding it beyond the realm of physical capital and into the realm of human capital.

Democratic constraint, the idea that countries have a limited policy arsenal due to pressure from public opinion and other electoral constraints, has profoundly influenced American foreign policy for decades, such as during the end of the wars in Vietnam and Iraq. Experimental evidence conducted on Israeli parliamentarians showed they were more willing to use force when public opinion concurred. The key takeaway of this research is that in order to optimize its foreign policy, the U.S. must align its domestic policy so that its citizens – and voters – support “strategically optimal” foreign policy objectives.

Consider the area of artificial intelligence (AI), a crucial point of contestation between the United States in China. As Graham Allison and Eric Schmidt at the Belfer Center have argued, the AI arms race is much more competitive than most Americans realize. Despite the importance of encouraging AI development, most Americans are techno-pessimists. Much of this apprehension toward technology stems from concerns that automation will fuel job loss, with a 2017 Pew Research Center study showing 72 percent of Americans are concerned about a future where computers can do many human jobs. The United States’ ability to develop a foreign policy to compete with China in AI is thus directly hindered by domestic policy constraints: The American public is afraid of the economic consequences of automation.

How can the United States overcome the democratic constraint problem that is inhibiting progress in developing an optimal foreign policy response toward China? The answer lies partly in modifying domestic incentives such that the American public supports strategically optimal foreign policies. If U.S. domestic policy can harness technological advancement to improve the lives of average Americans, it can unlock advantageous foreign policy approaches from their domestic constraints. The only way to turn Luddites into technophiles is to recalibrate the system so that the economic gains of advanced technology start flowing to them. Relevant human infrastructure investment could manifest in a range of forms, but here we consider one of the most prominent ideas from the 2020 U.S. presidential elections: Universal Basic Income (UBI).

At its core, UBI is a direct investment in American human capital, distributing the immense economic gains of technology advancements throughout the populace. The policy, popularized by Andrew Yang as a “Freedom Dividend,” would guarantee direct cash payments every month. Cash is highly flexible and fungible, meaning it can be used to overcome the recipient’s most pressing financial pain points.

The domestic benefits of UBI are well-documented. Although UBI wouldn’t bring the mining and manufacturing jobs back, experts estimate it would lead to 13-percent GDP growth and help revive pandemic-ravaged industries like retail and hospitality, providing them the funds to pay employees reasonable wages. Simultaneously, it would offer workers bargaining power and psychological security. While gross cost calculations for the program run into the trillions, the net cost, or “real cost” is calculated to be just a sixth of the oft-mentioned price tag, landing at about $540 billion. With the potential to eradicate absolute poverty, it is a compelling investment at a lower net price than the defense budget.

However, UBI would operate as more than an inward-facing policy. Rather, it would strengthen American competitiveness on the world stage by unlocking support for technological progress and AI development. As such, it would help the United States maintain its hegemonic advantage over China. UBI reframes the story of automation. Instead of replacing us, robots would now be working for us, and their progress would deliver us financial freedom. As their productivity grows in the coming decades, so could monthly checks – aka the dividends we are paid for being stakeholders in the United States. In this context, rapid technological progress that allows America to stay nationally competitive is not only digestible, but beneficial.

Fortunately, the implementation of Universal Basic Income would improve foreign policy outcomes in other ways as well.

For one, UBI can inspire Americans to work in the national interest, as it shows citizens that their leaders believe in their abilities and that their nation is willing to fight for them. There is strong empirical evidence that direct cash payments from the government increase social trust in both lawmakers and peers. When Finland conducted its landmark basic income experiment, providing direct cash transfers to 2,000 of its citizens, trust in legislators and fellow citizens both markedly improved.

Robert Cialdini’s psychological research surrounding reciprocity is highly relevant here: People feel naturally obliged to return favors done for them. This new wave of UBI-inspired patriotism would be instrumental in helping the United States accomplish its foreign policy objectives.

Additionally, UBI provides Americans the material resources to innovate by uplifting them financially. It offers citizens the seed funding they need to innovate without the risk of financial ruin, helping them turn their product ideas into realities. It provides the financial resources to take a chance.

All three of these outcomes – acceptance of technological progress, patriotic fervor, and rising innovation and entrepreneurship – would go a long way in improving our national competitiveness. They would serve as a strong foundation for America’s post-pandemic domestic renewal.

Factionalization in Washington has brought extensive infighting, leading to segregated domestic policy and foreign policy discourses. The United States would be well-served by a policy approach that can make progress on alleviating domestic suffering while furthering foreign policy priorities, and can be pitched as a multifront strategic initiative. Human infrastructure investments, through UBI or policies like it, have the potential to tackle these domestic and foreign challenges simultaneously.