We believe the impact of Universal Basic Income (UBI) in many forms can provide a foundational layer of support for the most vulnerable individuals within any population. Regardless of the approaches taken (Dotare’s included), it would be foolish to not address the criticisms that keep much of the innovation stuck in theory instead of through real world experimentation and iteration. 

Disincentivizes Work

Let’s tackle the “lazy” argument first as it is both the most common and seemingly intuitive conclusion, which is, if you give people money for no effort, they will have no motivation to get themselves out of their economic situation or at the least positively contribute back to society.

We could evaluate Maslow’s theory that suggests human motivation stems from a hierarchy of five fundamental needs: physiological > safety > love and belonging > esteem > self-actualization and how far up the pyramid should UBI be responsible for, but let’s not. It is far more straightforward. For every country there is a median annual income and on the whole, the higher or lower the annual median incomes, the cost of living (however you define it) tends to correlate as a %. Therefore the lower the UBI assistance is as a percent of median income the higher likelihood of it providing a safety net and not a hammock. Ideally, every country would then have their own UBI which would align with their own economics in both ability to fund as well as distribute based median income/cost of living.

With the goal of making the largest impact to the largest number of people, Dotare ranked the lowest annual incomes by country. From there we are targeting 25% of annual income. The expectation is that as Dotare’s global endowment grows and global incomes grow both the benefactor distribution base will grow and so will the amount of the distributions, effectively raising global income over time.

Increase Labor Shortages For Low-Wage Sectors

First let’s be clear, low-wage work is rarely desirable work, let alone safe or done for short durations, so there is already a desensitization for these jobs. That being said, UBI actually provides the opportunity for these low-wage jobs paired with UBI to become living wage jobs and a better chance to move on from them if desired. At the very least it may free up extra hours for self care (medical general life logistics) or the care of others.

AI + Robotics are already coming for these jobs. The lower the skill level required for the job, the faster a machine will be able to “learn” to replicate it. The current line in “AI is, you will not lose your job to AI, you will lose your job to someone who uses AI.” and this in the context of traditionally high skilled labor. Pairing this with robotics is what will accelerate the demise of lower skilled roles.

Let’s be real. While we all “benefit” from low-wage labor domestically and abroad, it is only aggregators of the economic arbitrage (company owners and share holders) that push back to preserve profits, and even then, once an AI enabled machine can undercut the cost of the human alternative, the human element will be eliminated. In short, low-wage jobs are just humans being treated as machines waiting to be replaced by cheaper machines.

We believe this is now just a matter of when, not if, and will only be accelerated by global population declines which in turn increase demand for AI automation of roles of all wage levels.

Increased incomes drive up inflation, negating the benefits

Let’s bring this again into perspective of what goods and services have the chance of being affected here: Food, Water, Shelter, Transportation, Healthcare & Social Services, Education, Communications. For the economically stronger countries, these services are already being subsidized or purchased on the behalf of those they deem in need, by their own governments, NGOs and non-profits and then redistributed back, but with addition of management and subcontracting overhead.

As demand for basic services by “paying” customers goes up, more businesses move in to solve for the increased demand, and over time with processes and technology can reduce inflationary pressures. These businesses also tend to be local, which means more local jobs, and local economic growth.

UBI is not “new” money in the system, it is just an approach to distribute it more efficiently, and more importantly it is spent more efficiently as each individual is optimizing it for their needs which change over time.

Oversimplified Poverty Solution

UBI seems too simple to address ALL the complex problems of poverty, and that is because it does not. However, to say that its inherent simplicity makes it ineffective is objectively false. The reality is, it creates a more vibrant and sustainable marketplaces for basic needs. Innovations in efficient communications, housing, food production, education, social services etc, only enhance what is possible with UBI.

The tireless work at government agencies, NGOs, and charities will always be needed to address acute (e.g. disaster relief, disease eradication) and structural challenges (policies, tax structures, human rights) and should be celebrated and supported.

Potential for Government Overreach

There is a concern that if the government becomes the primary provider of income, it could increase dependence on the state, potentially giving policymakers more leverage over citizens through surveillance and control of their money through Central Bank Digital Currencies (CBDCs). The bad news is there is already a level of control of a country’s citizens through monetary policies and controls. Whether directly through taxation, asset forfeiture, and every government assistance program. One could argue that it is actually the non monetary benefits that have the most control, there is no option to “save” or “exchange” unused services, let alone the physical, and administrative hoops that need to be jumped through to “prove” eligibility.

In addition, CBDCs are already in 10 countries (including China, Russia, India, Brazil) and 12 piloting them (including the European Union, United Kingdom, United States, Canada, Japan) without the guarantee of UBI.

This is why Dotare was designed and built on an independent blockchain (Cardano) with its own constitution and governance, which is designed to outlast the disruptive but inevitable election cycles, political parties, and even entire governments.

Cultural and Social Impacts

Work is often tied to identity, purpose, and social structure. The concern is a UBI system that reduces workforce participation could lead to a decline in personal fulfillment, ambition, and social cohesion. There’s a risk of fostering a culture of dependency where individuals lose motivation to contribute productively to society. Let’s be clear, this is already here but it’s called heroin.

Painting UBI as the gateway drug to a dystopian world of millionaires is pretty tough to preach to someone struggling with food insecurity. Even the most generous forms of UBI assistance, merely help those that receive it to exist. Next time you see a news report on child labor, sex trafficking or the elderly person just barely getting through their day bagging your groceries, ask yourself, “gee I’d hate for UBI to destroy their sense of purpose”.

Despite this being a laughable argument in both the chance it could happen, and if it did, those previously in poverty would be the ones complaining, it is worth being clear that Dotare is designed to be open to all, but the distribution amounts are a fraction of the avg global incomes, thereby being only valuable to those most in need. As the underlying endowment fund grows, the distribution amount per beneficiary is assessed on an annual basis. This allows beneficiaries to plan ahead accordingly.

Immigration and Population Pressures

If one country implements UBI while others do not, the concern is that it could attract large numbers of migrants seeking financial stability. This could create strain on the system, requiring strict residency requirements, which might introduce ethical dilemmas around inclusion and exclusion. 

We can see this already with countries becoming more isolationist and projective of their resources which include their social services and we don’t see this changing any time soon. This can also happen at a micro level if a state, city, province, etc offers UBI or any other benefits for their residents.

The one factor that is not addressed here though is that UBI deployed in the least developed economies will likely not be enough to seduce migration. It is really the only factor if top tier economies were to deploy UBI and see above, there would likely be strict residency review and approval processes. 

With this in mind, Dotare has chosen to be global by default. This removes the temptation of location arbitrage to access it and more importantly, because it is a set amount for everyone it is most impactful for the least economically advantaged individuals in the least economically advantageous countries thereby reducing migration pressure on the countries most protective of the social benefits of their own citizens.

Political Sustainability

UBI would require long-term political commitment, but changing administrations could alter or defund it. If future governments reduce or remove UBI, it could leave recipients in financial instability, especially if they had structured their lives around it.

This is both true and no different than any other social service provided by existing governments. The same goes for NGOs and non profits that rely on constant fundraising to be sustainable.

It is for these reasons, Dotare has developed its UBI structure on the Cardano blockchain which itself has its own governing mechanism. Dotare is open to partner with governments and other NGOs to build funds to support target demographics of their choosing as additional layers of UBI and direct payments, but their impact can only be additive and can never disrupt the core global UBI funding. 

Funding Uncertainty

Many UBI proposals rely on higher taxes, redistribution of existing welfare budgets, or wealth taxes, all of which come with political and economic risks. High taxation on businesses and individuals might stifle innovation, drive capital flight, or reduce incentives for investment.

Dotare is structured to be charitable, but not a charity case. The genesis investment by the founders is the seed from which the endowment fund will grow. Only a percent of the annual yield of the endowment will be available for distribution. This ensures the fund continues to grow every year from its invested assets. If the fund has a negative year there is a limit to what can be pulled from the fund to be distributed to beneficiaries. If there are 3 negative years in a row, the fund pauses distributions until it returns to growth. In addition, since Dotare runs its investments publicly and calculates distributions for the following year on an annual basis, those impacted have visibility into the state of affairs and can do their best to plan accordingly. To minimize disruption further, all distributions are determined in order of signup and account validation, meaning the earliest users who have been most reliant are the least likely to be disrupted.

While this may mean less funds to less beneficiaries in some years, it breaks the cycle of not obeying laws physics and economics that are all too common with even the best intentioned initiatives to reduce poverty.

Too Complex

Universal Basic Income is complex. Controversial. Maybe even wrong. But we’re building it anyway — because the status quo isn’t working. If something better emerges along the way, we’ll be the first to pivot our resources. Either way, the world wins.