Universal Basic Income: Why it is Not Crazy and Not Going Away
The Dutch city of Utrecht is developing a pilot project for a universal basic income that will launch in January 2017. The Finnish government is designing a trial to see whether giving low-income people a guaranteed basic income destroys their motivation to do any work at all, as critics allege. The idea is not going away because most “real” jobs are on the way out.
The old argument in defence of technological change – that it creates more new jobs than it destroys – no longer holds water. In the 1980s, 8 percent of new jobs created in the developed economies were in entirely new occupations, from call-centres to computer programmers. In the 1990s, only 4.4% of the new jobs involved newly invented occupations. In the 2000s, only half a percent did.
So full-time jobs with benefits have declined – only one-quarter of working-age Americans now have one – and the so-called “gigging economy” has not filled the gap. You may be able to stay afloat financially by doing a variety of “gigs” – low-paid, short-term, often part-time jobs – but you will never make ends meet, let alone get a mortgage..
Industrial jobs were the first to be destroyed by automation, but it soon moved on to the less demanding clerical jobs as well. As somebody said: “Every ATM contains the ghosts of three bank tellers.” And now it’s moving on to the kinds of jobs that it once seemed impossible to automate. Driving, for example.
The driverless vehicles that are now to be found meticulously observing the speed limit (and causing angry traffic jams behind them) on the roads of various major cities will soon be out of the experimental stage. At that point, the jobs of many millions of truck-drivers, bus-drivers and van-drivers will be in jeopardy.
Another huge chunk of the economy will start shedding jobs rapidly as online health monitoring and diagnosis take over the routine work of non-specialised health professionals. A similar fate awaits most mid-level jobs in the financial services sector, the retail sector and “management” in general.
The standard political response to this trend is to try desperately to create other jobs, even if they are poorly paid, almost pointless jobs, in order to keep people “in work” and off welfare. Unemployment is sees as a failure by both the government and the victim.
Yet this “problem” is actually a success story. Why would you see an economy that delivers excellent goods and services without requiring people to devote half their waking hours to work as a problem? The real problem is figuring out how to distribute the benefits of automation when people’s work is no longer needed.
And so to this relatively new idea: universal basic income. The core principle is that everybody gets a guaranteed income that is enough to live on, whether they are poor or rich, employed or not. They can earn as much more as they want, if they can find the work, but their basic needs are covered.
The actual amounts did not get mentioned in the Swiss referendum, but the people who proposed it were thinking in terms of a monthly income of $2,500 for every adult, and an additional sum of $625 a month for every child. It would replace the usual humiliating jumble of welfare payments with a single fixed sum for everybody, so it has appeal for the right wing as well as the left.
In the Swiss model (and in many others) the cost of a universal basic income is about 50% higher than current expenditure on welfare payments, so taxes would be higher. But so would incomes, including those of high earners, since even they are getting the same flat annual payment of $30,000 per adult.
As for the inevitable rise of the “gigging economy”, that then becomes just the way people top up their incomes in order to afford luxuries. If there is work available, then people would still want to do it – but if there is not, they would still have decent lives.
About half the remaining traditional full-time jobs in advanced economies will be eliminated by automation in the next 10-20 years, so this is an idea whose time has come. Then why did the Swiss reject it by a 4-to-1 majority? Mainly because their deal with the European Union means that they have relatively open borders.
Luzi Stamm, a member of parliament for the right-wing Swiss People's Party, liked the idea in principal but opposed it in practice: “Theoretically, if Switzerland were an island, the answer is yes,” he told the BBC. “But with open borders, it's a total impossibility...If you offered every individual [living here] a Swiss amount of money, you would have billions of people who would try to move into Switzerland.”
Well, tens of millions anyway. But the solution to that is to control the borders, not to abandon the whole idea. And it will be back.