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Considering Universal Basic Income

Updated: Jan 14, 2021

Victor Luca, 19-Sep-20.


As New Zealanders we are accustomed to the idea of the welfare safety net afforded to us by our left-leaning democratic governments. The idea of our social safety net, formerly known as social welfare system, and now social development system, is that if you can’t make it on your own, either through a bad start in life (bad luck), or through bad management, or because the system is rigged, or the playing field isn’t level, that the state comes to the rescue with a subsistence package.

New Zealand superannuation, job seeker support (aka the dole), transition to work grant, accommodation supplement, disability allowance, childcare subsidy, emergency benefit, funeral grant, home help and so forth are just some of the slew of benefits that government makes available to people who can demonstrate need. These grants and subsidies are not designed to allow people to live the high life but rather to be able to just get by, to eke out a living. They purport to provide a springboard to allow people to better themselves, although I doubt they achieve this. Even in America there is some system for ensuring that people have the bare minimum (e.g. food stamps). However, in that country the offerings are very meager indeed and dropping dead on the street is a real possibility. Crime, homelessness, mental illness and despair are just some of the characteristics of this the wealthiest country on the planet with among the highest wealth disparity in the OECD.

Social welfare support packages are designed to ensure you don’t die but they also generally guarantee that you can’t prosper or thrive either. In my opinion once you land on the safety net, it is not easy to get back on your feet, especially in a world in which socialism is for the rich and capitalism for the poor. The form of capitalism that exists in the United States, where education and medicine are for those that can afford it, is rather brutal and makes upward mobility very difficult.

The idea that everyone deserves some sort of minimum, no-strings attached income, is not new. It dates back to the Speenhamland system at the end of the 18th century. In more recent times Martin Luther King Junior proposed a universal basic income (UBI) in 1967. Surprisingly, somewhat later, US republican president Richard Nixon came very close to initiating a UBI experiment in 1969. Just prior to its enactment, Nixon’s ultra-conservative advisor Martin Anderson talked him out of it based on the supposed failure of the Speenhamland system. However, this system was far from a failure. What was a failure was the way it was presented to Nixon.

Aside from Nixon’s near introduction of a UBI, there have been several subsequent attempts to experiment with the UBI idea, notable in Canada and Finland. The Canadian ‘Mincome’ experiment, as it was known, was run in the 1970s and involved giving 2,128 people in the town of Dauphin in Manitoba a guaranteed income of $16,000 (Canadian Dollars) per year over four years.

At the time it was the most ambitious social science experiment ever to take place in Canada. The results of the experiment included an 8.5% fall in the rates of hospitalizations, improvements in mental health, and a rise in the number of children completing high school. Most important of all, no reduction was observed in the willingness of people to work which is a common criticism of UBI by conservative and other groups.

A similar experiment has been conducted more recently in Finland and involved giving 2,000 people a guaranteed income of 565 Euros per month from 2017 to 2019. It was found that this helped many of those involved to find work and this provided greater economic security. The full results of the experiment are still being determined.

As the nature of work changes through automation and artificial intelligence the jobs of an increasing number of people are coming under threat and may ultimately be pulled from under their feet. Think of the disruption that will be caused when fleets of self-driving trucks make human drivers expensive and irrelevant. When the personal computer moved into the office, typewriters marched out and armies of filing clerks followed them.

In the car plants of today human workers are almost conspicuous by their absence. Robotic technology improves efficiency and reduces costs significantly and up and coming 3D printing technologies are set to cause further disruption.

Ford assembly line of old compared with modern automated production line.

Seeing the inevitable consequences of automation, in February of 2017, Elon Musk said “We will have to have some kind of UBI, I don’t think we have a choice”.

At about the same time, Bill Gates made the statement that “Over time countries will be rich enough to do this” and Mark Zuckerberg in May of 2017 added that “We should explore ideas of universal basic income to make sure everyone has a cushion to try new ideas“. These tech visionaries are probably quite right in surmising that the scientific and technological advances that have led to their success are about to undermine the very nature of work.

Dr. Zachary Smith and Robot in the original 1960s version of Lost in Space. Dr Zachary Smith is actor Jonathan Harris. UBTECH’s Walker robot is able to interact with people and even has the ability to walk smoothly and quickly and to grasp and manipulate objects.

When I was a kid in the 60s, the serial, Lost in Space, depicted the talking & thinking Robot that was even capable of witty repartee and was the creation of Dr Zachary Smith. Today, it seems that Dr Smith’s Robot is not so far from becoming reality.

So, automation is likely to change the nature of work and when robots are able to 'think' and make more robots there will probably be little left for us mere mortals to do. Certainly fruit picking will be within the capabilities of robots of the future. It seems inevitable therefore that there are going to be fewer ‘good’ jobs out there per head of population. This is undoubtedly what leads tech gurus like Gates and Musk to make their assertions of the inevitability of a UBI.

Aside from the reduced availability of jobs due to automation, we should consider philosophical questions such as, do we all have the ‘right to live’? This has been discussed in more academic circles for centuries.

But let’s get practical and consider what might happen if the mighty state and the banks they are supposed to regulate, and who create money from nothing, were simply to give the money they created from ‘thin air’ away to everyone with no strings attached.

COVID-19 has certainly shown how government can find money when it needs to. Of course it can, since it is ultimately responsible for creating the stuff in the first place!

How different would a UBI be compared to what we are already doing? Would it be a bad thing? How would it change society? Would providing folk a basic living stop them from going out to work which in any case would be scarcer than it currently is? Or would it prompt them to go out and be enterprising, free them up to be creative, give them a vision for the future, help them look after their kids better, be happier and healthier? The UBI experiments that have been conducted to date seem to suggest that this might be the case.

One of the main functions of a monetary system is to facilitate the exchange of goods and services in an economy. To do this money needs to circulate in an economy. In that regard, it is well known that when people on the bottom rungs of the socio-economic ladder are given money, they spend it all and it circulates exactly as it is supposed to do.

On the other hand when rich people have excess dollars they tend to invest them and/or hide them in trusts and OS tax havens. The well documented practice of multinationals who receive government bail outs and then turn around and buy back their own shares is common and is particularly despicable. These corporations need to ask themselves if they are fulfilling their social contract?

Given the way house prices are putting the poor further onto the back foot, the way the playing field has been un-levelled, and the way that the nature of work itself is changing, it is perhaps time for a serious discussion of UBI. In a way, the UBI would simply be like reducing the age limit of the NZ superannuation system?

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