The notion of a universal basic income (UBI)—provided to
every eligible person whether in need or not—has come a long way in recent
years. Several books have been published
supporting the idea, there is a Democratic candidate for president, Andrew
Yang, who makes such a scheme the centerpiece of his candidacy, and recently we
had a credible observer of the political and economic scenes, John Lanchester, publish
a compelling article in support. Let us
consider Lanchester’s reasoning which appeared as Good New Idea in the London
Review of Books.
Lanchester begins by pointing out that the left has not
been doing well in the policy arena. And
it is recognized as having been complicit in all the damage that unrestrained
capitalism has done to society in terms of economic inequality within our
societies. He also points out that
current trends indicate that problems are only going to get worse. The left needs a big new game-changing idea to
make amends for past failures and to prepare society for the future to come.
“You don’t have to believe in an
imminent artificial intelligence job apocalypse to see that work will continue
to change in the direction of machines doing more and humans doing less, and
often less interesting, work.”
“The question is what to do about
it. In response to the right’s bad old ideas – more nationalism, more borders,
blame the immigrants, culture wars, trade wars and war wars – the left needs
some good new ideas. And that is where Universal Basic Income comes in, because
UBI has the potential to be the frame-changing, game-changing solution to a
whole set of economic and political problems.”
The UBI is simple in concept.
“A guaranteed regular cash
payment for every citizen, unconditionally and for life. The money would be
enough to provide psychological and practical security, and enough to prevent
destitution, but not enough to be a disincentive to work; if you wanted to live
on it, you would be safe but not comfortable. (I’m paraphrasing, and there is,
as we will see, no consensus about the exact amount of money we’re talking
about.)”
Let’s begin by discussing the problems that Lanchester
believes would be addressed by the existence of UBI. Perhaps the most egregious example of economic
unfairness is the manner in which society’s most critical tasks end up
receiving low or no pay. The economic
engine requires children to be raised, educated, and delivered into its maw in
order for progress to continue. For this
difficult and time-consuming labor mothers receive no compensation at all. Teachers, who are an important part of this
process, are compensated at a rate totally inconsistent with their importance. Care giving for the disabled and invalids is
often performed for free by relatives and friends, saving society a large expense. When care giving is provided by the state it
is usually compensated only at a minimum wage rate. All of these services are primarily provided
by women who bear the brunt of economic unfairness. A UBI would provide some recognition that
these efforts are of value.
“The amount of unpaid work done
by women was dramatically highlighted in Iceland by the Women’s Day Off on 24
October 1975, an experience which seems to have raised the consciousness of the
whole country. President Vigdís Finnbogadóttir, the first single mother to have
become a head of state, credits the radicalising effect of the Day Off, which
inspired her to go into politics: ‘It completely paralysed the country and
opened the eyes of many men’.”
A worker in our current economic system has
essentially no power but to accept whatever wage is offered. This means that only a mandated minimum wage
can put a floor on what workers are paid.
New trends in employment are aimed at making workers contingent, and
left bidding against others to perform tasks most
cheaply. Work is being redefined so that
many people are needed to perform ever simpler tasks for even less pay. A UBI would restore some dignity to workers
by allowing them to resist this trend and decline to perform tasks that humans
shouldn’t have to do.
“Recent decades have seen
a catastrophic loss of worker power…a systematic attack on organised labour,
and a corresponding reduction in pay, security and working conditions. UBI
would, quite simply, make it easier for workers to say no.”
The notion that people who are not performing paid labor
are of no value to society and of no value to themselves pervades our society. This becomes a rather insidious concept as
the forms of work available become more and more demeaning. UBI would provide options for workers who
wish to have more control over their existence.
“…UBI would have the effect…of
‘desacralising paid work’: of making it clear that there are other forms of
work than paid work, and that work is not the only basis of worth, and that it
is not true that any job is always better than no job. It would allow people to
refuse work that they felt was demeaning, and to take creative chances with
their lives; it would make possible deliberate career breaks and ease the
strain of externally imposed periods in between jobs. Both of these, along with
mid-career retraining, are widely seen as an inevitable feature of the future
world of work, and UBI would be a big step towards making them much more
endurable.”
As meaningful work becomes rarer, we must recognize that
no paid work at all can become a useful form of participation in society.
“It is possible that some
people would take the ‘desacralising’ even further, and choose not to work at
all. To some thinkers of a utopian or anarchic bent, such as Graeber in Bullshit
Jobs or Srnicek and Williams in Inventing
the Future, that is one of the most positive features of UBI, which
represents a profound break with our culture’s deeply imbued ideas about the
innate and redemptive virtue of paid work. It’s not as if most people find
their jobs satisfying. A survey from Gallup showed that only a third of workers
in the US are ‘engaged’ with their work, which isn’t great, but is a lot better
than the findings in the UK: only 11 per cent of British workers feel
‘engaged’.”
Finally, a UBI contributes to our liberty. In the United States, the term liberty generally
refers to license to do something. The
liberty referred to here is the freedom to be, or attempt to be, whoever one
might want to be. A UBI would support a
person who wished to try a career as an artist, or as an author, or even as an
entrepreneur. It might also encourage
some to participate in otherwise low-paying public service fields.
Lanchester realizes that there are plenty of reasons why
such a scheme might not work; but concludes that there is sufficient existing
evidence to indicate that a UBI is worth a try.
“By about
this point, most people hearing about UBI for the first time are saying ‘but
but but …’ The questions and objections have two main strands, the first of
which concerns whether it would work, or be destroyed by unintended
consequences. Here are some of them: that people would take the opportunity to
drop out of work, and society would end up with a permanently entrenched
underclass; that people would spend the money irresponsibly, squander it, so
none of the benefits of increased security would be realised; that people would
piss the money away on ‘private bads’ (wonderful term, the opposite of public
goods, and meaning essentially drugs and drink); that it is inherently
invidious to treat the non-working and working poor alike; that too much money
would go to people who don’t need it. (Note that plenty of money already goes
to people who don’t need it: during quantitative easing, the UK spent £435
billion on buying assets, all of it going to rich institutions and people, to
uncertain effect. That would have been equivalent to £50 a week paid to
everybody in the UK for two years. I think you would have trouble finding a
sane economist who doesn’t think the stimulus effect of that would have been
much greater.)”
“Fortunately, there is a large
body of empirical evidence about the effects of UBI, thanks to a range of
pilots and experimental schemes, from an extraordinary range of places:
Manitoba, Iran, Finland, Stockton, Kenya, the Cherokee nation, Alaska, Brazil,
Mexico, Liberia, Honduras, Indonesia, even the City of London.”
There will obviously be people who will abuse the
benefit, but if on average, the lives of the recipients are significantly improved,
then the trial UBI can be considered a success.
“As always seems to happen
with these unconditional cash transfers, people spend it mainly on things they
really need…the most common thing people say, when asked what they do with the
money, is: ‘It helps me make ends meet’.”
Lanchester reports on several of these UBI trials. We will consider a few. The first examples come from Brazil and
Mexico, the last has been ongoing in Alaska for many years.
“The largest sort of UBI
programme in the world is Brazil’s bolsa familia. (I say ‘sort of’ because it
is paid only to families and is conditional on the children being vaccinated
and attending school. That makes it technically not a UBI but a CCT or
Conditional Cash Transfer. Acronyms are fun!) It cut extreme poverty by 50 per
cent, reduced inequality by 20 per cent, increased school attendance and cut
the suicide rate, inter alia. A similar programme in Mexico increased women’s
earnings by 65 per cent, increased the amount of time children spent in the
school system by a year and three months, cut childhood rates of illness by 23
per cent, and reduced stunted growth in girls by 39 per cent.”
“Alaska has had a version of UBI
since 1976, thanks to a policy brought in by the Republican governor Jay
Hammond. It is called the Alaska Permanent Fund and takes a quarter of the
annual royalties from fossil fuel extraction and puts them into a government-run
fund…The fund hands out 2.5 per cent of itself in cash annually in the form of
a cheque given to every resident of Alaska except prisoners and convicted
felons. The amount usually comes to between $1000 and $2000; the typical payout
has been about $1400, which for a family of four is more than $6000 a year, not
a lavish sum but not a trivial one either…Alaska has one of the lowest rates of
inequality of all fifty states. Studies have concluded that the fund dividend
has no negative effect on Alaskan employment rates – a big part of the argument
against UBI schemes is that they reduce the incentive to work.”
Lanchester also concludes that the various forms of a UBI
are more affordable than one might think.
The money must come from somewhere and there are many ways in which it
can be accomplished. Choosing the best
approach could be difficult, but clearly tax increases and spending cuts will
be part of the package. This illustrates
one generous form of UBI.
“Andy Stern suggests a form of
UBI giving every American adult $1000 a month, at a cost of $2.7 trillion, to
be paid for by getting rid of existing programmes, cutting tax breaks (which
cost $1.2 trillion), reducing defence spending and instituting a sales tax.”
For perspective, the current size of the economy is about
$21 trillion, and annual federal expenditures are currently about $4 trillion.
There is a bit of a warning that comes with these
considerations. The small-scale
experiments that seem reasonable in terms of results might have unintended
consequences when applied to an entire economy.
“Pilot schemes can give you all
sorts of evidence about the effect of UBI on individuals, but to run an
economy-wide UBI you would be running an economy-wide experiment, and by
definition, we don’t know how that would work out. This is a good reason for starting
UBI low and seeing what happens.”
Lanchester provides a final word of advice to ambitious
progressives. And he turns to none other
than the conservative economist Milton Friedman.
“The left will need a new
toolkit. It will need to have done its intellectual prep. That, more than
anything, is what this new wave of work on UBI represents. Milton Friedman
wasn’t right about everything, but he knew more than anyone in modern political
economics what it takes to change an intellectual climate. He worked out how to
make a new idea take shape first as something thinkable, and then as a specific
policy. He said that the crucial step was to be ready…”
Then this quote attributed to Friedman:
“Only a crisis – actual or
perceived – produces real change. When that crisis occurs, the actions that are
taken depend on the ideas that are lying around. That, I believe, is our basic
function: to develop alternatives to existing policies, to keep them alive and
available until the politically impossible becomes the politically inevitable.”
Lanchester’s final word:
“The list of progressive
alternatives which currently fit that description is one item long: universal
basic income.”
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