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What could possibly be wrong with a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement?
Universal basic income (UBI) is not a new idea. Thomas More made an argument for it in his 1516 work Utopia.
Eighteenth century radical Thomas Paine was an early advocate who argued that every person should receive £15 on their 21st birthday and £10 a year thereafter to be paid out of ground rent.
Supporters of the 19th-century political economist, journalist and philosopher Henry George — known as Georgists — have long been advocates, with particular emphasis on funding from land value.
But, as the Financial Times reported recently, UBI is now “seeping into the mainstream.” Both the Green Party and the Scottish National Party see it replacing personal tax-free allowances and most social security benefits.
The Liberal Democrats have been toying with the policy for years. Labour shadow chancellor John McDonnell has just announced the establishment of “a ‘working group’ to investigate the radical idea of a basic income.”
Such economic luminaries as Joseph Stiglitz, Thomas Piketty and Yanis Varoufakis are advocates. Former US labour secretary Robert Reich believes that “UBI is inevitable.”
Recent interest on the left stems primarily from the effects of the decline in well-paid employment, as illustrated by Guy Standing in his book The Precariat: The New Dangerous Class.
This has coincided with some hysteria over the prospect of a decreasing demand for labour because of technological advances — the so-called “march of the robots.”
The other related concern of UBI proponents is how to address growing financial poverty, even among those in work, and the perceived failure of the welfare state to cope with this in an efficient and humane way.
The enthusiasm of the left for this snake-oil remedy is worrying. After all, when revolutionary Paine was writing there was no welfare state.
UBI is seen by the right as a neat way to get government off their back. Libertarian Georgists, who believe in a single tax — land value tax (LVT) — envisage nearly all revenue from LVT being distributed as a “citizen’s dividend,” with a minimum assigned to funding public goods and services.
The Alaska Permanent Fund is often cited as an effective example of sharing resource rents.
It was set up in 1976 to distribute some of the proceeds of the state’s oil wealth to all its residents.
Every Alaskan still receives a yearly dividend of about $2,000 — while, according to their Institute of Social and Economic Research, they spend half their incomes on healthcare.
So what is the evidence for a progressive decline in the demand for human labour?
According to TUC research in 2015, the number of people working excessive hours has risen by 15 per cent since 2010. The average working week in the UK is 43.6 hours.
And all this while the workforce has increased substantially.
In 2013, an Oxford University study concluded that 47 per cent of US employment was susceptible to computerisation.
However, more recent research by the Organisation for Economic Co-operation and Development (OECD) covering 21 OECD countries, disputed the research methods used and concluded that the Oxford predictions were exaggerated.
The OECD estimates that, on average, only 9 per cent of current jobs are likely to be automatable.
It is probably true that most manufacturing production will progressively involve less human intervention, but there appears to be scant consideration given to the kind of work which is never likely to be mechanised.
Bespoke and hand-produced goods have always been priced at a premium despite mass production techniques. Is it seriously suggested that robots will take over all personal services — hairdressing, physiotherapy, child care, care of the elderly, care of the disabled and infirm?
Will we come to prefer computer generated art, music, comedy, dance, drama, novels?
Even if UBI enabled the flourishing of the creative arts and all outputs were gifted to the nation by those whose work produced them (copyright having been abolished), would we be content to watch robots perform for our entertainment and never experience a live performance or sports event with human participation?
If not, do we suppose that performers and athletes too will work for free because the UBI will support their basic needs?
We should wipe from our minds the dystopian vision of future “proles” living in a virtual reality world, fed on happy pills — while the human robot owners enjoy the real thing.
Instead we should welcome the potential benefits which automation of boring and unpleasant jobs offers.
It should be recognised that the service sector is a far bigger contributor to growth than manufacturing and that services can be provided without much consumption of non-renewable resources.
There are better policies than UBI which could address a potential reduction in employment.
Even if half of current jobs vanished, this should be seen as an opportunity to reduce working hours.
During the Three-Day Week in 1974 (due to restricted power generation) industry retained almost all production. Perhaps this is the answer to Britain’s persistent low rate of productivity.
The reason why some are so enthusiastic about UBI and the prospect of not having to work is that so many people experience unbearable stress at work.
There is no reason why the practices which cause such stress should be accepted as necessary for efficient production in any sector.
UBI is intended to enable the purchase of basic needs, but one of the most essential, housing, can never be accommodated by UBI because housing costs are so diverse.
The rent for a bedsit in Croydon is £800 a month; a three-bedroom home in Stanley, County Durham, can be bought for £50,000.
The Green Party’s policy on UBI, recognising this difficulty, retains housing benefit. Some are paying more than half their income on housing, including rent or mortgage, council tax and water rates.
Not all are in receipt of housing benefit.
The housing crisis can only be solved by the provision of sufficient council houses and the replacement of the regressive council tax by LVT.
Private landlords receive over £9 billion a year from housing benefit. LVT would put a stop to that because it is paid by owners, not tenants.
There is no reason to shield the owners of income-generating property from the full force of LVT and this will kill the enthusiasm for the landlords’ game.
Rented properties would flood onto the market and thus reduce the market price, enabling purchase by those who want to live in their own home and the local authority for letting to those who cannot or do not want to buy.
The price of land for development would also fall, allowing councils to purchase for new build while land-banking developers would have to get on and build to offset the LVT or sell to those who will.
Further, unless LVT, which captures community created land value for public benefit, is levied on all land, UBI will feed, like all public expenditure, into land values and hence housing costs.
LVT is supported by both the Green Party and John McDonnell.
Some basic human needs are provided here by the state for free: most healthcare and primary and secondary education.
One might also add publicly owned transport infrastructure. These are funded from general taxation.
There is a crisis in the care of the elderly which is affecting NHS hospitals and the best solution would be for such care to be fully funded by the state. This would cost more than £15bn a year. And, of course, the NHS itself needs far more money if it is to survive as a service free at the point of delivery.
There are many good things which the state could finance in addition, such as childcare for working parents and the free dental and eye care and tertiary education we used to enjoy. Is it imagined that the extra burden of a meaningful UBI on taxes would make any of this possible?
Proponents of UBI claim that it would put an end to the indignity of the means test.
But it would be more humane and efficient to pay all benefits as they are needed and add them to taxable earned income, as with the state pension. This is preferable to a one-size-fits-all benefit system which characterises all forms of UBI.
There are better ways to address poverty than UBI. Plenty of wealth is produced in Britain, but the share going to the owners of land and capital has increased at the expense of the workers who produce that wealth. Real wages have been declining since the 1970s as the result of neoliberal economic policies. The best and simplest way to distribute the wealth which is created by labour is through paid employment.
The fact that working people require tax credits to survive indicates a rotten economic system which cannot be fixed by extra payments from the state in whatever form.
In order to share in the wealth created, everyone who is able to should be prepared to contribute to its production.
Adherents of Modern Monetary Theory (MMT) propose a job guarantee for anyone willing and able to work, paying a living wage.
The primary purpose of this programme, says the US economist and proponent of MMT Warren Mosler, is “to provide a transition from unemployment to private-sector employment.”
This should be combined with a much shorter statutory working week and statutory living wage levels controlled by revived and expanded wage councils.
We need this plus a taxation system which claws back the unearned incomes from land and capital to pay for generous benefits for those who cannot work or have special needs and to fund necessary public goods and services for all — in effect a social wage. We do not need UBI.
It will be interesting to see the outcome of planned trials for introducing some form of basic income in Brazil, Canada, Finland, the Netherlands and India. In the meantime we can observe that those wise Swiss voted against UBI in a referendum last year: “We are critical of UBI — we have a social system in Switzerland that works.”
During the UBI referendum debate one of the supporters declared: “UBI is about shifting power back to the citizen.” Surely socialists wish to shift power back to the workers.
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