How to save ourselves from the technology apocolypse
· Universal Basic Income (UBI) is a concept that has gained a lot of traction in recent times — with it seeing endorsement from people such as Mark Zuckerberg, Elon Musk, and those all across the political spectrum.
· It has been touted as an innovative way of solving problems like generational poverty, complex welfare programmes, and the coming technological assault on low-skilled jobs.
· However, it is not without its problems, with critics making a strong case for why it would not work in reality.
· On the whole, UBI, in theory, is a dynamic and innovative way of tackling the economic problems of developed countries — although it may have its questions and critics, I expect it to be a hugely influential idea (and policy instrument) for a long time to come.
In recent times, the notion of a Universal Basic Income seems to be everywhere — with its advocates becoming ever more influential and more bipartisan. Mark Zuckerberg — social media magnate and all-round rich person — recently visited Alaska and said there were ‘lessons’ to be learnt from Alaska’s welfare programmes (especially their particular form of UBI). Similarly, Elon Musk — Tesla owner and technological maestro — has put his weight firmly behind UBI, saying that it will be a ‘necessary’ policy in the future. The notion of UBI also has cross-spectrum support, being popular with Leftists and Conservatives alike.
So, what is Universal Basic Income, and why is it so popular?
In essence, Universal Basic Income is a form of welfare that is universal and not contingent on individual economic output — simply put, it is a hand-out from Government that is not linked to your income or employment status. For instance, in Finland, they have been experimenting with UBI by putting 2,000 of their citizens on a scheme whereby they all receive £473 a month for two years. The 2,000 receive this income regardless of changes to their income, their employment status, family status, and so on. It is universal and not subject to change.
If we blow this up to a national level, the principle would be that every citizen (over a certain age) would be entitled to a fixed amount every year. There are slight variants to the UBI idea (Alaskans receive income from an equal division of shares from oil profits, whilst the Finnish experiment is more State-led and redistributive) but the notion of an income not coming from work is essentially the core concept. Furthermore, the idea of UBI is meant to replace all other forms of welfare, not supplement them. Universal Basic Income would become the sole instrument of direct economic redistribution in the State — an important point to note.
The reason why this concept has become so popular in recent times is because it speaks directly to solving some of the most pressing economic problems we currently face.
Firstly, those in support say that it has the ability to disrupt cycles of poverty that exist in developed societies. The poverty cycle is perpetuated fundamentally by recurrent or generational poverty limiting the opportunities for those who are part of that environment. Whilst wealthier families can invest in their children by transferring skills, knowledge, and an economic ‘safety-net’ that can be used to help their children take risks as they grow, this is not the same for many already in poverty. The result is that those in poverty have a higher chance of staying there, whereas the same holds for those born into wealth. Statistically, in the UK, if you are born into poverty you are very likely to die in poverty (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/569410/Social_Mobility_Commission_2016_REPORT_WEB__1__.pdf) — with the same holding for the US (https://www.ft.com/content/7de9165e-c3d2-11e6-9bca-2b93a6856354?mhq5j=e1).
Those who support UBI say that giving every person a substantial amount of economic resources will extend some of the benefits of having an ‘economic cushion’ to the poorest in society. In theory, those who are in generational poverty will not have the opportunity to invest in themselves through learning new skills or taking low-paid internships to gain experience. In the long-run, it is claimed, social mobility will increase, and we will move more toward a more meritocratic society.
Secondly, there is support (mainly from Conservatives) for a Universal Basic Income due to its simplicity. A major problem with current welfare programmes in the UK is that they are notoriously inefficient and complex. Due to the various intricacies of our current welfare system, there is a large premium on taxpayers to pay also for the sprawling bureaucratic machinery necessary to implement these schemes. In short, the level of State that is needed to uphold our current system is vast — which makes the State bigger, increasing the inefficiencies (and costs) of welfare (http://www.civitas.org.uk/pdf/cs00.pdf).
Consequently, people in favour of ‘shrinking the state’ are also proponents of Universal Basic Income. As UBI would replace all other forms of state welfare, the scheme would drastically cut the level of public employment needed to hold the welfare state together. Overall, this would lead to a more streamlined public sector, lower bureaucratic overheads for taxpayers, and an easy to understand system for citizens.
Thirdly, proponents have claimed that UBI will be necessary to defend low-skilled citizens from the oncoming technological assault on the labour market. It is no secret that the robots are coming for our jobs, with PwC estimating that 10 million workers are at high risk of having their jobs replaced by robots in the next 15 years (https://www.theguardian.com/technology/2017/mar/24/millions-uk-workers-risk-replaced-robots-study-warns). These numbers are not trivial, and are certainly not to be ignored. There are around 40m people currently in the labour force, therefore, robots are coming to take around a quarter of our jobs by 2032. This trend is not expected to reverse either, with tech-magnates such as Elon Musk expecting there will be ‘less and less’ jobs available for the low-skilled as time goes on.
Universal Basic Income has been touted as a possible solution to this issue. As low-skilled jobs become consumed by more efficient machines, the introduction of a UBI can help in two important ways. Firstly, it creates a means of distributing wealth that does not rely on labour — which means that it will give those who fall through the ‘skills crack’ a good standard of living, and also allow them to consume the products that machines are helping produce (which is good for the economy). Secondly, giving people who lose their jobs an injection of capital can help close the skills gap itself — they can utilise this injection to help put themselves through University, re-train in another profession, or try and start their own business. Therefore, the victims of the technological apocalypse can be given fresh opportunity to rebuild in light of their redundancy — something they would not receive with the smaller sums given via traditional welfare.
Due to the fact that an introduction of a UBI potentially solves these three pressing issues, it is already being seriously considered around the globe. Switzerland recently had a referendum on adopting a UBI (which it rejected). Alaska have a form of UBI already, giving all Alaskans income based on the profits received by the oil industry. Finland are currently conducting an experiment around UBI, which may ultimately lead to its introduction, with political debates in major countries (such as the UK and the US) beginning to take UBI seriously. It is only a matter of time, I feel, before states start widely adopting UBI proper — and I think that Scandinavian nations will be the first.
However, there are some looming issues that hang over UBI.
Firstly, the problem of eligibility is a huge political issue. Who should receive it? Should it be based on citizenship, age, nationality? Should you have to contribute a certain amount in taxation before you are eligible? Do you have to have two parents of the nationality in question? Where do immigrants fit in the picture? The debates around eligibility are endless, and, like all debates surrounding eligibility over public goods (NHS, state schools), they are likely to polarise either end of the political spectrum.
Secondly, the issue of setting the level of UBI is extremely problematic, especially if the level is set through a democratic political system. As Universal Basic Income would replace other forms of welfare, it would almost certainly create a very visceral political environment whereby people would strongly disagree about the right level. The general pressure of the level would move upwards, as those who stand for office would attempt to ‘outbarter’ each other in an attempt to secure more votes — which would in turn put more pressure on taxation, which would create backlash to the increase. Overall, the price level would become hugely contentious, especially along class lines.
Finally, if people are getting paid not to work, would there be enough of an incentive to work in the first place? Also, what would happen to those who squandered their share? Well, in theory, whilst it would give people flexibility and more choices in the labour market than they otherwise would have had, it is true that UBI effectively subsidies unemployment — which means that it could have an adverse effect on the unemployment rate overall. Also, due to the UBI replacing other forms of welfare, once it has been squandered, the State would have no obligation to help you — which is a more hardline approach than we now currently have. So, the practicalities of what people would actually spend the money on are strongly debated. As well as the morality of giving people a lump sum and letting them get on with it.
So, the UBI is not without its problems. In fact, it has many. However, looking toward the future, I feel that the pressures brought to low-skilled labour markets from technological advancement will come to a head, leading to drastic welfare reforms in an attempt to maintain economic stability. I would also expect the current trend in Finland to widen, with more nations beginning to experiment with UBI in the short term.
So, even if the robots do take our jobs, its okay. We’ll all be getting paid.