95. Towards a Basic Income

I ask myself: How will my offspring face a future with little or no employment open to them? The rise of robots, automation and other technologically driven job killers is set to result in an economic surplus of labor. Software is already changing the very nature of our profit based economics. Even part-time service jobs are becoming increasingly unreliable and insecure. These rapidly changing developments ultimately demand a rethink of our entire economic system.

Re-enter the ancient idea of a Basic Income as a counter-balance to the ever widening inequality of incomes as well as the steady decline of job opportunities. Giving every citizen an unconditional grant, regardless of whether they are billionaires or destitute, would represent a significant departure from existing welfare options. The latter offer only limited and conditional support when work is no longer an option. Instead, a Basic Income would be given to all adults over the age of 18 irrespective of what they might otherwise be earning. The wealthy could channel such extra money to good causes.

Surprisingly the idea which was already entertained by Plato and had been revived in recent years by disparate political activists, feminists, and economists on the right as well as the left, has now become a serious talking point both in Silicon Valley and on Wall Street by venture capitalists. The latter proponents contend that the rise of machine “intelligence” will produce such a surplus in productive capacity that our society could collectively be able to free much of the population not only from border-line hunger and suffering, but also from both insecurity and unchallenging work.

The interest of venture capitalists to create highly profitable enterprises that employ few people is understandable. More surprising is that the ‘techies’ of Silicon Valley see an algorithm-driven economy supported by a “Basic Income” as a positive move for wider social and economic advances. Ideologically, they just don’t see driving a truck for endless hours along the motorways as a good use of the human brain.

Farhad Manjoo an economist writing for the New York Times, explained that “one of the reasons some libertarians and conservative like the Basic Income is that it is a very simple, efficient and universal form of welfare — everyone gets a monthly check, even the rich, and the government isn’t going to tell you what to spend it on.”1

Manjoo goes on to speculate, tongue in cheek, that “In Robot America, most manual laborers will have been replaced by herculean robots. Truck drivers, cabbies, delivery workers and airline pilots will have been superseded by vehicles that do it all… Doctors, lawyers, business executives and even technology columnists for the New York Times will have seen their ranks thinned by charming, attractive, all-knowing algorithms.”

Most arguments pro or against the Basic Income have focused on its promotion of personal independence, its simplicity, and its effectiveness at reaching those who fall through the cracks of the welfare state. Some of the libertarians (which even includes the ghost of the late conservative guru, Milton Freidman) have liked Basic Income because it promises a leaner state without a large bureaucracy checking people’s eligibility or policing their behavior. On the left, many see basic income as an opportunity to free people from “wage slavery.” For feminists, basic income is viewed as a successor to the old demands for paid housework.

The economic discontent from the “mismatch between expectations based on an earlier America, where plenty of blue-collar jobs offered a decent standard of living, and the more cutthroat reality they face today, can seem intractable,” writes another economist for the New York Times.2 On the other hand, Zoltan Istvan, a radical American economist and politician, views a “Universal Basic Income” as an eventual necessity because he believes robots are going to take away nearly all jobs in the next three decades. So he contends that we need a way to transition society to live happily in a time where there will be no more jobs.

Not unexpectedly in the face of such a widespread theoretical appeal, trial runs for a Basic Income are now underway in such disparate countries as Canada, Finland, India, Namibia, and Switzerland. In its 2015 Budget, the Canadian province of Ontario introduced a consultation on social assistance rate restructuring. During the discussions to reduce poverty and support people in their efforts to participate in the economy, a clear consensus emerged on the need in this Canadian province to undertake a Basic Income pilot project.

The campaign for a Basic Income in Switzerland is entering a more advanced stage. After more than 125,000 citizens signed a popular initiative in 2013, a national referendum will be held on June 5th this year. Younger voters (under the age of 35) are confident that such a Basic Income will eventually become a reality in Switzerland, but a majority (56 per cent) of the respondents in a recent poll thought a Basic Income would never happen. The poll also revealed that if there were a Basic Income, 53% of those polled said they would spend more time with their family, 54% would like to pursue further education and 67% believed such an income would help to “relieve people from existential fears.”

I believe that the future dependence of the unemployed on welfare, as a solution to the advance of robotics and automation, is untenable as a long-term proposition. I expect that about 10 percent of the work force in the developed economies will be able to provide the total labor required to produce all the housing, food, clothing and energy needed for the entire population. A decade ago in my book, Dollars or Democracy3 I proposed that the advanced economies of the world should adopt a “Universal Credit” which fundamentally involved a “basic income.” This was to be accompanied by the end of cash as we have known it. Indeed, cash is fast disappearing from our monetary system but I shall not go into all the complex details of my entire proposal here.**

The most important result of the institution of a Basic Income in the next decade may not be in its practical applications but rather in how it could change the way we think and talk about the challenges of poverty and inequality. Considerable debate is already arising about how to deal with a “post-work” age: How will people constructively spend their abundant free time? Do we really need jobs for our personal fulfillment? Presently Americans socially define themselves by the work they do. However even now there is no dismissal of those devoting their lives to learning or to creative activities. Even with the Basic Income the population would soon begin to recognize that there is ever so much more to life than money or the capitalist economics of greed, competition, efficiency, or consumption! The introduction of the Basic Income consequently represents a brave step in a new direction.

1Farhad Manjoo.“A Future Without Jobs? 2 Views of the Changing Economy,” The New York Times, March 9, 2016

2Eduardo Porter, “Reviving the Working Class,” The New York Times, March 9, 2016.

3Yorick Blumenfeld, Dollars or Democracy, (2006)

** For the curious, my ‘Credit System’ would come after an economic collapse. In the subsequent economic restructuring, Cash would no longer exist. My ‘Credits’ given as a Basic Income did not involve a currency to be traded. Its value was based on the human work (time, energy and focus) that had gone into it – not the rating or valuation of goods or raw materials. The “Credit” would be based on the establishment of the average “value” of an hour of labor. One Credit for one hour. Forty Credits per week would automatically be entered into each adult’s account as a basic minimum. Using the technology of our ever smarter plastic cards for all ‘commercial transactions,’ every adult would be credited each month (or perhaps every ten days) with a certain number of “Credits.” Each minor also would be given or credited something like a tenth of that sum from the moment of birth.

For the sake of comparison each credit might be declared to be the equivalent of the current minimum wage levels in the US or the UK. While this might seem like a drastic reduction in current middle-class earnings, this would be compensated by the fact that in a family each adult would get the same grant (a mother at home would be credited with the same amount as her husband at work) No more pensions, no more income tax etc.

The inexcusable inequalities produced by the American-driven market capitalism would be corrected by introducing an element of fairness into the entire economic process. A factor of ten is sufficient to reward real differences and provide a measure of incentive. The US military now gives the highest paid general ten times the wage of the lowest private. A similar range of differentials is to be found in the civil service. Most university professors are paid about ten times the salary of the graduate instructor. 2,500 years ago Plato was more modest in suggesting that a five to one reward ratio was about right. The aim would be to provide for the most basic survival needs of all the people and only then consider the deserved rewards of the particularly industrious, meritorious, the highly creative or those who are making exceptional contributions to the society.

I believe that initially one way to fund such a Basic Income Credit System might be to subsidize it through Quantitative Easing. This could offer each adult the equivalent in Credits of about $1,000 or £800 a month to cover the most fundamental costs of food, rent (or housing) and other necessities. But the complexity of such details are covered at length in my book.