Can a Basic Income Grant compensate for machines replacing labour?
Not only is it our moral duty to look after those with less opportunity, but a society with a growing population of marginalised people will collapse.
The idea for a universal basic income (UBI) — the policy of handing out a set income to everyone, regardless of their skills, age or income — goes back to Thomas More in the fifteenth century. Now, the increasing loss of human jobs to machines is giving new life to what has always been a controversial proposal for welfare.
The Swiss recently turned down the offer of such a policy, voting 23 percent for and 67 percent against in a national referendum. In South Africa, a proposal for UBI — locally referred to as the basic income grant (BIG) — is periodically put on the table, discussed in the media and behind closed doors and then, finding no conclusion, it falls from the spotlight to simmer in the background.
In Switzerland it was turned down because they don’t need it (unemployment is 3.6 percent); in South Africa it is turned down because nobody has developed an implementable strategy of how South Africa can afford it. This may change as machines take over our jobs.
Technological progress should make our lives easier — machines that can do work for us can take the mundane tasks off our hands and allow us to engage in creative activities, such as entrepreneurship, arts, research or teaching.
But the problem is that technology is not owned by the workers and the benefits of efficiency accrue to a few owners of capital, while those employed are made redundant. Total production increases but for the vast majority, life becomes harder rather than easier.
A universal income is one way to counter for the distortion of benefits that are earned through technological progress. Instead of machines earning more than people, UBI allows the income of machines to be redistributed to the displaced workers so that they have the freedom to apply their time and skills to other activities.
Success is typically measured by how much we earn or contribute to the economy, but there is great value in contributing progress or assistance that cannot be quantified in financial terms. Let machines generate wealth and fund people to build society.
The problem with UBI is that it is horrendously expensive. In Switzerland it was estimated that it would triple government spending. But if we focus only on the element of UBI that is introduced to compensate for unemployment created through technology, then financing should not be a problem if the correct mechanisms for redistribution are used.
If machines are so much better at creating wealth than humans, then the excess wealth they create should exceed the cost of compensating society for the loss of jobs. And by that, if the wealth created by machines is sufficiently taxed, then it will generate enough revenue to fund the UBI and still allow a surplus to be enjoyed by the capital owners and investors in innovation.
But as with all large policies, it’s not as simple as the cost-benefit calculation. Switzerland’s proposal exceeded the compensation for job loss and suggested that all citizens receive 30 000 Swiss francs (about R461 114) per year — an amount suitable to sustain a life of decent quality.
Immediately, questions were raised on how this would affect people already receiving welfare support. Is a UBI designed to replace existing welfare grants and, if so, what will happen to the most vulnerable citizens who already receive more than the proposed UBI?
The other problem is how UBI will affect the incentives of citizens. With a free remuneration for leisure time, will people use the time to follow their passions, push society forward and care for the needy, or will they stay in their house and watch programmes on how nice it is to be outside their house?
My personal opinion is that UBI in its current form is an inappropriate policy to fix the problems of redistribution and counter for redundancy created through technology. But if we are to stave off the dispensibility of unskilled labour, escalating unemployment and rising inequality, we need to change the mechanism that distributes the wealth created by capital.
And we desperately need to do this. Not only is it our moral duty to look after those with less opportunity, but a society with a growing population of marginalised people will collapse.
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