Insight

Universal Basic Income: will the automation of work make it happen?

11 Apr , 2019  

As more of the jobs traditionally done by people are taken over by robots and other automated processes, what happens to the people? If armies of workers are destined by social change to go from low-wage to no-wage, how will they live? Will it at some point be necessary to guarantee a basic income to everyone regardless of employment status?

Technology pioneers Mark Zuckerberg and Elon Musk, among others, think so; or at least that the possibility needs exploring.

Unemployment caused by automation has the potential to hit hard. The global average of jobs at risk is thought to be around 57%. In sectors such as construction, logistics and farm work the percentage is much higher. Many industry experts are concerned that the impending disruption of the labour market will require some form of economic redress.

Basic Income or Universal Basic Income (UBI)

The idea of Universal Basic Income (UBI) is that every citizen of a country receives a regular payment from the government unconditionally, whether or not they work. It is a guarantee of revenue sufficient to meet a person’s basic needs without any demand that it be at all ‘qualified for’. In this respect, it contrasts strongly with systems of welfare that are means-tested.

That all citizens should have access to a minimum amount of money is a long-established principle in European political thought. That this income should be distributed by the state to everybody (rather than just those in obvious need) was a concept that emerged in the nineteenth century; it grew out of Enlightenment ideals of human dignity and freedom.

basic income idea

Twentieth-century explorations of the idea evolved in pace with modern welfare structures. Negative Income Tax was developed as a theoretical way of getting near a Universal Basic Income by using the tax system as a basis on which to allot supplementary grants to those on the lowest incomes.

Basic Income trials

How UBI (Universal Basic Income) might work in practice has been partially tested by a number of social experiments all over the world. Among the best known are the Alaska Permanent Fund Dividend, established in the early 1980s; and the Basic Income trial begun in Finland in 2017 and ending at the close of last year.

The first of these draws on a government-owned fund to distribute about $2000 per annum (it varies according to the fund’s value) to each full-time, law-abiding resident of the state. The second awards about €560 per month to 2000 unemployed citizens selected at random.

job automation and universal basic income

Other trials currently in progress include the Ontario Basic Income Pilot and a well-publicised Californian project masterminded by Sam Altman of Y Combinator, the venture capital company.

These experiments do not necessarily predict how a self-supporting, open-ended UBI system in a large economy might work. But they do start to answer one or two pressing questions that the issue raises.

UBI: benefits or burden?

For example: how do people behave when they are given money without having to do anything for it? The findings in Alaska are that recipients of the Dividend do not necessarily work less. Full-time employment levels have not changed, while part-time employment has gone up in some sectors and down in others. In some sectors, extra spending has created a demand for more workers.

When a basic income scheme was trialed in the poor settlement of Omitara in Namibia in 2008, the increase in household buying power was associated with the starting up of small businesses and a surge in school attendance.

Although the results of the Finnish experiment are yet to be published, there is in the meantime anecdotal evidence among the participants of high levels of creativity, whether it is business-orientated or not.

There have been no findings of a rise in antisocial behaviour or increased spending on, for example, drugs and alcohol. A 2014 World Bank Report found across 30 studies ‘either no significant impact or a significant negative impact of [cash] transfers on temptation goods’.

Automation of jobs and basic income

The observation that those in receipt of an unconditional basic income willingly remain active is a key point for tech pioneers with an eye on the future of work. Just as various jobs become automated, so others – software engineers, system managers, information analysts – will come into existence. Rather than lapse into indolence, an outgoing workforce must reinvent itself.

universal basic income

By protecting those temporarily without work from the disabling effects of economic uncertainty, UBI may have a vital role to play in developing a society of the future.

Such is the theory. In practice, the obstacles to realising this kind of economy are formidable. How is it to be paid for? The ideas range from a simple calculation of the necessary rate in income tax (anywhere between 39 and 45% has been put forward as the figure), through levies on everything from capital to carbon, to the creation of a state-owned Sovereign Wealth Fund.

Basic income = a world without stress?

UBI enthusiasts emphasise the potential savings to be made in such areas of government expenditure as health care: as the incidence of poverty- and stress-related diseases fall away, so too will the need for their costly pharmaceutical and therapeutic remedies.

Skeptics see too much untested optimism here, and too much ambition too soon. Bill Gates, while conceding distant possibilities for UBI, thinks it too expensive for government remit right now. He does say, however, that the technology companies dictating the changing nature of work are naturally liable to contribute through tax payments towards a workforce’s necessary retraining.

There has in fact always been an element of Utopianism in much UBI advocacy. In its very unpicking of the age-old knot that ties socially useful activity to pro-rata gain, it is a paradigm shift of rarely-seen significance. In its philosophical implications, it represents far more than just one possible method of preparing for – and living with – the age of machines.

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