Three trends that will create demand for an Unconditional Basic Income

The digitization of our economy will bring with it a new generation of radical economic ideologies, of which Bitcoin is arguably the first.  For those with assets, technological savvy, and a sense of adventure, the state is the enemy and a cryptographic currency is the solution.  But for those more focused on the decline of the middle classes, the collapse of the entry-level jobs market, and the rise of free culture, the state is an ally, and the solution might look something like an unconditional basic income. Before I explain why this concept is going to be creeping into the political debate across the developed world, let me spell out how a system like this would look:

  • Every single adult member receives a weekly payment from the state, which is enough to live comfortably on.  The only condition is citizenship and/or residency.

  • You get the basic income whether or not you’re employed, any wages you earn are additional.

  • The welfare bureaucracy is largely dismantled.  No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.

  • Employment law is liberalised, as workers no longer need to fear dismissal.

  • People work for jobs that are available in order to increase their disposable income.

  • Large swathes of the economy are replaced by volunteerism, a continuation of the current trend.

  • The system would be harder to cheat when there’s only a single category of claimant, with no extraordinary allowances.

This may sound off-the-charts radical, but here’s why you’re going to be hearing a lot more about it:

1 – The Middle Classes Are In Freefall

As Jaron Lanier points out, Kodak once provided 140,000 middle class jobs, and in the smouldering ruins of that company’s bankruptcy we have Instagram, with 13 employees.  It’s an extreme example, in most cases the economic misery is largely confined to young people, with entry-level workers trapped in a cycle of internships, ever-lengthening education, and debt.  The result is that young people are not being allowed to grow up.  In the 1960s the average first-time house buyer was 24 years old, and as late as 2002 it was 28.  The average is now 37.  The path to economic selfhood is being stretched by market forces, too many people chasing too few jobs, and a continuation of the status quo is likely to push that lifeboat out even further.

In stripping out inefficiencies and pushing digital goods to near-free prices, the Internet kills middle-class jobs.  Digitization has already largely de-monetized academia, film, music, journalism, and lots more besides.  More industries will feel the pain, including the legal professions, real estate, insurance, accounting, and the civil service, all of which are built on inefficiency, and all of which will be stripped of jobs in the years to come.  As it becomes clear to those with established positions that there are no jobs for their children, they’ll push for a more radical solution.

To put this in econometric terms, wages as a share of the economy have been in long term decline and recently hit a new low in the United States.  Meanwhile corporate profit margins have hit an all time high.  The last few years of economic turmoil has allowed industry to reduce staff numbers and reduce entry-level pay, without reducing capacity.  If that trend continues, wealth creation will increasingly be confined to those with capital, and things start to follow a Marxist logic.  The middle classes (and their elected representatives) will not let that happen.

2 – Demand For Human Labour Is In Long Term Decline

Imagine a point in the future when robots do more of our physical labour, computers do more of our mental labour, and our mechanized-digitized economy is ten times more efficient.  We don’t need to agree on a date, this could be 2050 or it could be 2500, all we need to agree on is that current trends are likely to continue in the same direction.  Between now and then two things can happen, either we do 90% less work, or we demand ten times more goods and services, or a bit of both.  The first option requires that we drastically revise downwards our expectations of how much work people do, the second requires that we drastically redistribute purchasing power to consumers.

We’ve redefined work in the past, so there’s no reason we can’t do it again.  The concept of “a job” as something that happens outside the home and for someone else is a largely Victorian creation.  Even after it was formalized into an obligation to the market economy, we always accepted that certain people do not have to work.  We do not expect infants, the elderly, or the disabled to work, and these categories are relatively fluid.  The expectation that children work inside and outside the home has been in steady decline ever since the industrial revolution, while the default retirement age has crept ever later, pushed by governments avoiding a pension crisis and senior employees hanging on to their established social roles.  While men were forced out of the home to do paid work, women were kept in the family home to do unpaid work.  During the world wars, everyone was expected to work.  During a world cup final, almost nobody is expected to work.  We regularly change our expectations of who works and how.  Forcing the unemployed onto a jobless market on the basis that “everybody has to work” is at best misguided and at worst cruel.

In 2012 the average working year in South Korea was 2,226 hours, and in the Netherlands it was 1,381 hours, 38% less.  You can have a rich, developed economy on relatively little work.  If we stop stigmatizing the non-employed, we can stop pushing people into jobs that offer little collective benefit.  From telemarketers to chuggers to sign holders to beggars, huge numbers of people are forced to eek out an existence on the fringes of the economy in roles that have almost no marginal economic output.

3 – Cultural Production Is Detaching From The Market

We already have a society of volunteers and creators, and that’s a good thing.  That Wikipedia article you just read, the parkour YouTube video you just watched, that Russian electronica you’re listening to, the code that powers your browser, all were probably given away for free.  Everyone expected an information economy, and instead we got an information culture.

When people are locked out of the jobs market, some may sit at home all day on the couch, but many will go out into the world and produce cultural goods that they then give them away for free.  I don’t buy into the myth that unemployed people are lazy.  I’ve lived in a country that had a period of “full employment” and now has 14% unemployment, and I don’t see how anyone can be so misanthropic to claim that those 14% of people just got lazier.  Employment doesn’t just give people an income, it also gives them an identity, status, confidence, a sense of mission, and a network of peers.  Anyone given access to those rewards will work for them.  As the fantastic talk by Dan Pink puts it, we are motivated by autonomy, mastery, and purpose, but not money.  As machines take over more of our work, we are going to have to find other ways of letting people fulfil these human needs.  Forcing them to send 500 CVs out every week is not a good start.

stakhanovite

Don’t dismiss this as socialism, it involves a complete rejection of the Stakhanovite work ethic and a full-throttle embrace of consumer culture.

How would we pay for it?

We could start by getting corporations to pay their taxes.  As I mentioned above, corporate profit margins have hit an all time high, and that money will circulate far faster if it’s placed in the hands of consumers.  For salaried workers a basic income would likely be a repackaging of tax free allowances, although they would likely need a net gain to buy into it.  The scheme would also yield savings elsewhere in the public sector, from a reduction in the size of the bureaucracy, to an increasing role for volunteers and charities.  The scheme would also stimulate economic activity, as shown by the PPI scandal in Britain which forced the transfer of £10 billion from banks to customers, and led to a GDP growth boost of 0.1% because consumers were so much quicker to spend it.

Frankly, in an era when communities can create their own currencies, capital can sneak across digital borders despite being legally frozen, and economic production is increasingly decentralized, finding ways of fairly collecting revenue for the public good is going to be one of the big questions of the century, regardless of whether or not we have an unconditional basic income.  Under the current set of rules, most developed world governments are bankrupt, but as the bank bailouts proved, the rules can be rewritten when needs be.  Money is a device we use to help us allocate resources, it is a symbol and an understanding, seemingly solid in the short term, but flexible and evolutionary in the long term.  If you burn all the notes in your wallet right now, you haven’t made the world any poorer, you’ve simply reduced your personal claim to available resources.  There is always more money.

As has become increasingly clear, austerity is not working, and should never have been expected to work.  An unconditional basic income would be the Keynesian response that should have been launched as soon as it became clear the financial sector had a rotten core.  In other words, it would be a bailout for consumers.

This piece has been translated into French.

198 responses to “Three trends that will create demand for an Unconditional Basic Income

  1. Pingback: An Unconditional Basic Income Is The Solution But The Important Word Here Is Basic | Forbes | Wealthonomics: Rags To Riches·

  2. Why not link unemployment levels to a tax, where the tax gets turned out as a basic income? If we actually ARE slowly crawling up to higher unemployment levels this will HAVE to translate to a basic income So why not formally link unemployment to basic income? My suggestion would be about half. In other words – if we get 50% unemployment levels, levvy a 25% additional tax to generate a basic income from the people who have it. Probably we will have to do so everywhere, in every country.

    • There are at least two reasons why your suggestion is a monumentally bad idea:

      Firstly, it would reduce incentives to work in a (yet hypothetical) situation where they must be increased. While there are many other factors than incentives involved, they remain one of the more important. In your scenario those who chose to work (when having the option) are punished, those who chose not to are rewarded.

      Secondly, the tax burden on those who do work would soon reach crippling proportions and ultimately not suffice to cover the cost of basic income (assuming that it is kept at a even semi-reasonable level).

      • Nope, I am sorry but you are wrong.

        If I’d be forced to work two jobs at a McDonalds where I’d make about 40% of what I’d reasonably need to survive, then I might have the physical abiltiy to do so for a while, but you’d find a large percentage of the population would eventually buckle. We live in a race to the bottom when it comes to employment – mass employment is over. So what else do we have?

        Oddly enough for several decades we did have considerable economic increases in efficiency, over-all. That means someone out there is making more money even though most people don’t get enough reward out of a full time job (by objective measure) to survive in a dignified manner. There comes a point where this system stops working, and you’ll find angry protesters on the street who find they can’t feed their kids, no matter WHAT they try.

        Basic income would solve that. We tax big banks and corporate investors and financial traders and other people with more than enough money than these people could ever reasonably spend. There’s nothing wrong with that – by going back to a tax rate as was common in the 1950s, the US can easily generate enough income to afford a decent basic income.

        There are LOTS of sound arguments for this idea of a basic income.

        http://www.scoop.it/t/arguments-for-basic-income

        I invite you to open your mind and step out of the thinking in the context of a defunct economic order. It isn’t the old days any more. We need a new way to keep society together and ‘work’ and “wages” as it once existed, it’s simply an outdated idea.

        • You merely demonstrate a lack of insight into the way humans and the economy works with your comment. (Even assuming that we let “There’s nothing wrong with that ” stand as an ethical judgement, which is by no means obvious.)

          There may very well be situations where a basic income is doable and/or the only choice. Your scenario, as a “solution” to a 50 % forced employment, is not one of them. There your suggestion would lead to complete disaster.

          On the contrary, the most realistic scenario would be when the overall wealth of society and advancement of technology grows to a degree that basic income can be handed out as a boon because work is no longer needed (in most capacities)—not as a last ditch measure to counter a raising unemployment. (And, no, we are not currently there.)

          As for your claims that I should open my mind, I caution you that I am one of the most open-minded and unconventional people you will ever interact with. I do, however, not just swallow ideas blindly—I actually think them through.

        • More can be found at usbig.net and basicincome.org

          I really like Richard Cook’s proposal for basic income within his monetary reform treatise. It can be found on Youtube – “Credit as a Public Utility.”

      • Well then, how about we increase incentives by say….. 1. rounding up all the women and food 2. paying the hardest working most contributing men in women and food. If you don’t work hard enough, you don’t get to breed and you don’t get fed. The men are super-incentivized to work hard, if only because they want to eat and have children! That’s kinda what it was like in the old days; would you like to go back to that? It’s true, we’re lazier now and this might make us even lazier, but we are also fabulously wealthy as a society and we might as well spend it on something.

        • If a pinch of salt improves your soup, would you dump a whole pound in it?

          If running five kilometers a day improves your health, would you run for fifty kilometers a day?

          If a cup of coffee makes you more alert, would you drink a gallon?

          Of course not: Not only are there diminishing returns, but even the best of things turns negative when exaggerated. As a consequence, your example has no practical bearing on the risks involved with reducing incentives.

          Furthermore, your example involves women only as a reward, effectively cutting the potential work-force in half.

          Whether we are sufficiently “fabulously wealthy” is far from clear—and it is even less clear that we would remain so, should the incentives to work or accomplish be reduced.

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  5. Reblogged this on Vibrant Bliss and commented:
    A most superlatively excellent post about the welfare/economic policy concept of ‘Unconditional Basic Income’ (UBI) (popularised in Anglophone philosophy by the non-Anglophone-sounding Philip Van Parijs), click through to the site to view properly.

    Just this evening I contributed to a friend’s discussion on Facebook over whether universal benefits were preferable to means tested ones because the latter lead to claimants being disrespected with stigma and suspicion. I wrote an essay on this for my degree which I plan to adapt for this blog some time, and my view tonight is the same as it was there: that the positives of means testing outweigh the negatives of the disrespect, since claimants are going to have to deal with that from other sources anyway, and they should just learn to put up with it as one of the less serious disadvantages of being poor. This position, however, is depended upon there being a welfare state similar to the one we have now, whereas my top preference is for a radically different establishment in which we have UBI instead.

    Funnily enough, I also mentioned this in the aforementioned university essay and the reason I haven’t posted it is that I want to split up the topics of progressive approaches to social justice from means testing’s disrespect. But I didn’t make the link that the author of the Simulacrum article I’m blogging does, that UBI solves the respect dilemma by apparently making means testing redundant. In congruence with my post on Working Less, he says: “If we stop stigmatizing the non-employed, we can stop pushing people into jobs that offer little collective benefit.”

    This is also apt because I am about to welcome a second guest blogger in the form of Joey Jones (like Toby Coe and myself a University of Reading graduate) to share his philosophical ruminations on work, and The Partially Examined Life are about to podcast on work too.

  6. Pingback: Swiss to vote on 2,500 franc basic income | Poor Richard's Almanack 2.0·

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  9. Seems like a revival of socialism – now on steroids. What do you think will become of inflation if the scarcity factor is taken out of the economic equation? Where are your calculations proving that companies alone will be able to feed the insatiable state bureaucracy? How many companies will just decide its no longer feasible to continue production / providing services if nearly all profits go to the state? What will become of the financial services sector if people have no need to borrow or save? If all banks / insurers etc disappear, they will also no longer be able to pay taxes and yet more people will become unemployed. Interest rates will also no longer be an effective tool to control inflation. I see lots of holes in the economic rationale for such a system.

    • Basic Income!!

      Seems like a revival of radical libertarianism – now on steroids. What do you think will become of inflation if the scarcity factor is taken out of the economic equation? Where are your calculations proving that companies alone will be able to feed the insatiable corporate power? How many smaller companies will just decide its no longer feasible to continue production / providing services if nearly all profits go to monopolist corporate power blocks ? What will become of the financial services sector if people have no need to borrow or save? If all banks / insurers etc disappear, they will also no longer be able to pay taxes and yet more people will become unemployed. Interest rates will also no longer be an effective tool to control inflation. I see lots of holes in the economic rationale for such a system.

  10. Pingback: Three trends that will create demand for an Unconditional Basic Income | NYC Startup News·

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