Money for nothing?
Aaron Bastani
Last week Jeremy Corbyn said that Labour might consider adopting a universal basic income as party policy. Emphasising the responsibility of government to 'protect citizens' from uncertainty, rather than exacerbate it, he isolated a UBI as a potential solution to the risks of globalisation – but only after proper research and testing. That's probably a good idea, since nobody is really sure what happens when you start to give money to everyone for doing ‘nothing’. There was an experiment in Manitoba in the 1970s, and trials are imminent in Finland and Oakland, California, but they won’t give much sense of how it would work in a country with 65 million people and the world’s sixth biggest economy.
Given the lack of precedents or data, why is the left so seduced by the idea of a guaranteed income for all? (The Greens included it in their last general election manifesto.) Corbyn used the language of unemployment insurance in his speech, but a UBI’s real popularity derives from concerns about ‘technological unemployment’. As robots and algorithms perform more tasks previously undertaken by humans, the argument goes, more and more people will find themselves either unemployed or in highly precarious work. As machines are capable of producing more things more efficiently than ever before, an ever growing number of people will prove incapable of buying them. In a healthy economy under 20th-century capitalism, growth was a result of high employment and rising wages, which meant workers could buy the goods and services they produced. For a growing number of thinkers, by no means limited to the left, that model has definitively gone. Its successor? Secular stagnation.
Proponents of a UBI think they have the answer to that conundrum. As human labour is increasingly disconnected from production, so too, they argue, should wages be. If machines no longer need people to make things, the only way to maintain a market economy, and allow an ever larger surplus population to live, is to make humans no longer need paid work. If capitalism was, in part, defined by workers being compelled to sell their labour on a market in order to live, then undermining that mechanism could be seen as revolutionary.
And yet a UBI has found adherents who champion an entirely different politics, including the two great intellectuals of neoliberalism, Milton Friedman and F.A. Hayek. Friedman backed a universal income because it would cut bureaucratic costs, as left advocates do, but he also viewed it as a way of inserting markets into the provision of services currently administered by the state. Rather than an antidote to the excesses of late capitalism – low wages, weak unions and the maximal expansion of market rationality – Friedman saw a universal income as a means of extending it.
A UBI makes sense as a progressive policy only if it’s accompanied by major reforms to housing, education and healthcare, which would need to be completely withdrawn from commodity circulation and free at the point of consumption (as much of the NHS presently is). If your rent is more than half your wages, or university sets you back £9000 a year plus living expenses, a UBI won’t be much help: rather, it spells further erosion of any social democratic settlement. A universal income could set us free, tipping the balance of power back to labour, paying carers a wage, allowing experimental business models to flourish and entrepreneurs to take risks, but only if it’s part of a broader moment – one in which the human right to free time isn’t seen as more important than a home, education or good health.
Comments
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23 September 2016
at
11:02pm
David Timoney
says:
The key issue with a UBI is not the pragmatic question of housing benefit and other discretionary costs but the mechanism by which it is determined and (crucially) uprated. This where the difference between left and right versions can be seen.
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24 September 2016
at
3:19am
Chris Couch
says:
@
David Timoney
A very good point and a very good article; I imagine I will not be the only lefty who considered a universal basic income as the panacea to all the world's ills.
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24 September 2016
at
10:07am
Graucho
says:
Getting £200 for passing GO makes excellent sense, the inventor of Monopoly knew more about how to achieve economic growth than all the neo-cons laid end to end. Eliminate the single person's tax allowance, adjust the the rates/bands and the whole thing can be revenue neutral. No more job seekers allowance, no more bureaucracy, means testing, form filling. As for Housing Benefit, it's more fuel thrown onto the blazing inferno of British housing inflation. The cost is nudging £25 billion. Government can borrow at 2% these days, if not less as baby boomers seek safe havens for their savings. £25 billion will service a debt of £1,250 billion. You can build a lot of accomodation for that sort of money. Actually solving the problem is the order of the day, not being enslaved by the orthodoxies of an economic priesthood.
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24 September 2016
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7:09pm
Simon Wood
says:
They're only looking at it. They're only looking at a lot of things. They're only looking at what to do about leaving the EU.
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25 September 2016
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9:11am
Delaide
says:
Work should provide much more than a basic income. A sense of purpose, identity and community come immediately to mind. As robots reduce the amount of work people need to perform why not redistribute the remaining work, rather than just money, from those fortunate enough to retain jobs? A four day working week sounds fine to me.
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25 September 2016
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1:00pm
JWA
says:
UBI - will potentially be a change as significant as the foundation of the NHS. It's also something the left has to resist compromising over - if it is to be brought in, given that it will fundamentally disintegrate union power everywhere, it must be done alongside the progressive reforms outlined above. Any effort to triangulate with the city et al will slide inevitably towards Friedman's vision - effectively bringing to a close any hope of bridging growing economic inequality.
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25 September 2016
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1:29pm
suetonius
says:
It's been clear for many decades that the need to work would disappear. The question is how that happens. Is it to everyone's benefit, or just a few? If it's a few, things will get bad. It's one thing when you have most people working hard and getting much less than a few people, but getting by and even sometimes having some rewards. It's another thing when you have most people doing nothing, and having nothing. I could see the bourgeoisie being smart enough to realize they have to give something back (they've done it before), but everyone else has to realize that's just the start. Benefits need to be distributed equally. How does one justify enormous wealth based on "merit" when no one really has to do anything? We're heading for Star Trek, without the space ships.
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25 September 2016
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10:29pm
richard atkinson
says:
Usual unchecked factoids - "Friedman and Hayek supported UBI" (they didn't) - while completely missing the main argument for UBI which is about relations of power and privilege. All present, and past, welfare systems have been used as means of social control and segregation - the undeserving working age poor as against infinitely deserving pensioners, recently. This is a process that will shortly transmute into a frank dictatorship over every aspects of poor people's lives with Universal Credit. Taking away that power over claimants is a progressive reform even if it has no other redistributive effect. That's why the 'U' in UBI stands for 'unconditional' by they way, not 'universal' which adds nothing.
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25 September 2016
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11:15pm
Graucho
says:
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richard atkinson
Quite
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26 September 2016
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1:16pm
martyn94
says:
i suspect that I'm possibly the only person here who has actually tried to do the sums for UBI in anything approaching the real world. The late Ralph Howell MP (yes, there were Tories like that in those days) was a tireless enthusiast, and M Thatcher was surprisingly indulgent towards him, and it was me that had to cast my slide rule over his latest proposal.
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28 December 2016
at
8:06pm
Josie
says:
Here’s my idea for a halfway house between a benefits system and a citizen’s wage. You are entitled to a small stipend, as long as you sign a form saying that you have been unable to earn a wage that month, for whatever reason. It is made quite clear that no attempt whatsoever will be made to check the veracity of this statement, it will be taken on trust.
Read moreThe fundamental argument is how we allocate the fruits of growth. The left would argue for 100% of growth to be remitted as a social dividend. The right would argue for 0%, on the grounds that growth is the product of individual contribution not society at large. One reason for the UBI's current salience is low growth, which makes it less contentious.
The danger of UBI is that it becomes a parsimonious dole that justifies the evisceration of the welfare state. The opportunty is that breaks the paradigm of time = money,
It is certainly conceivable that all housing could become universal income PLUS half your paycheck, education could be divided into higher and lower quality tiers, with the latter affordable to the basic income recipients, and the former only available to the highly-skilled, highly-paid class.
Nevertheless, I would maintain such a system is a definite start: already we have people having to work for free in order to get on the job ladder, surely it would remove some of the barriers for entry if those at the very bottom were able to rely on an income not provided by their parents. Likewise, the catastrophic consequences of labour insecurity might be eased somewhat if some money would always go into a person's account each month. If you are on a zero-hours contract and can only get ten hours one month rather than thirty, you would at least be able to make ends-meet with your basic income.
The result was always the same: with the tax base we have, or realistically could have, the tax rates needed to finance UBI at even the most meagre level were absolutely eye-watering, and still needed the whole structure of means/needs based support to cover the tens of millions of people with "non-basic" needs, (housing, disability, lots of kids....) and so needed tax rates which were much more eye-watering again. It made Denmark look a very low-tax economy.
And it wasn't something you could make up just by taxing a few hedge-fund managers, but it would need you to bulldoze the whole middle-class welfare state that most readers here benefit from to a greater or less degree. Usually greater, I suspect. Many of us may intermittently feel guilty about enjoying large untaxed gains from our housing equity (let alone enjoying the imputed rents tax-free), but I doubt that many would be volunteering to have it "withdrawn from commodity circulation".
Its only my guess, but I would imagine while some would sign it falsely, the majority of people would not, simply out of the shame of abusing trust (particularly if there is propaganda put out on how shameful it is to sign falsely). And there would be a huge saving on administration costs vs our current system. I would also guess that this would improve the overall culture of society. People will feel like bigger people because they would know that they were being trusted.
Plus it’d just be a really interesting experiment, and if it didn’t work out as above you could just scrap it, having learned something useful in the process.