OFFICIAL DEFINITION
Universal basic income (UBI) is the unconditional distribution or guarantee of income by a state to its every citizen.
RAZER DEFINITION
UBI is a proposal for the above. Should you read or hear that UBI is not a proposal but a policy that has been trialled, don’t believe it. No. Not in Finland. Or Alaska. Or Silicon Valley. And not in England of the late 18th century, either. These trials were not of UBI. Unless we agree that the “U” in UBI does not signify “universal” but “unusually small sample size”.
As UBI remains a proposal, it is proposed differently by different authors. This is understandable, but also very annoying. UBI can mean whatever one thinker thinks it should, which makes it impossible to argue with or assess.
WHY IT MATTERS
However flawed, absurd, immoral or unworkable it might seem, UBI has many influential fans. It has powerful advocates in business and the emerging financial centre of Silicon Valley. Influential political figures throughout the West discuss it seriously. Hillary Rodham Clinton considered a UBI policy as part of her 2016 campaign and she has since mentioned it favourably.
It matters because many of us less influential persons simply do not have the money to buy things. This crisis of capitalism demands a solution and, at the time of writing, UBI is the one thing that large numbers of policymakers can agree upon.
WHO CARES?
Save for a few wholesome monks and some unwholesome preppers, every person requires money to ensure their survival. Ergo everyone cares, even if by instinct, about UBI, or any proposal for survival in an era of widespread insecure employment.
Shareholders and the C-suite folk who serve them care very much that we, the many, have enough cash to buy what they’re selling.
RELEVANT FACTS
- UBI-ish measures have been discussed throughout the industrial age. E.g. Thomas Paine proposed a Citizen’s Dividend in the 18th century. Milton Friedman’s Negative Income Tax came to us in the 20th.
- Western economies of the present have produced wealth inequality and poverty unseen since the Great Depression.
- UBI has advocates of powerfully different persuasions. Zuckerberg, former US Secretary of Labor Robert Reich, DNC Deputy Chair Keith Ellison, Desmond Tutu and the bloke who invented the World Wide Web are all on board.
RAZER’S LAST WORD
The best that can be said for UBI is that its imposition would put an end to the costly bureaucratic indignities endured by persons who require welfare benefits.
The worst that can be said of it? “It’s loved by both Left and Right”, AKA “neither party has thought it through”. The UBI left believes that higher corporate taxes and increased social services needed to make UBI a functional reality will be accepted by the right. The UBI right believes it can pacify the masses with a few bucks.
The policy is preferable to its only current opponent the Job Guarantee (JG). JG is favoured by advocates of Modern Monetary Theory (MMT) and not too different from the Keynesian and New Deal-era policy of full (male) employment.
UBI may stabilise some economies in the short term; just as neoliberalism and Keynesianism did. It may produce its intended shift: a mass is able to buy commodities sufficient to maintain a national economy. Even so, this shift will produce its tendencies, including:
- transformation by wealthy citizens of UBI into capital;
- use of UBI by impoverished citizens to increase capital of wealthy citizens;
- greater exploitation of cheap labour; and
- greater problems for and exploitation of non-citizens, including asylum seekers, other visa holders and undocumented peoples.
FURTHER READING
For: Utopia for Realists
I entirely agree that the present victimisation of Centrelink recipients must stop and that a UBI would provide dignity. However it needs to be a proper living wage so it does not provide an excuse for all employers from Uber to BHP to underpay workers, and needs to be coupled with rent control etc. so that house and rental prices don’t inflate even more. Bill Mitchell (MMT theorist, Newcastle Uni) acknowledges these points but espouses universal jobs as an even better outcome in terms of dignity and breaking intergenerational social problems – his is a much better argument than the ‘against’ case you cite. And of course if MMT is right, the government (at least in Australia) can print money to pay for these jobs without needing to raise taxes or similar – we’ve actually won Lotto but don’t realise it – see http://bilbo.economicoutlook.net/blog/?p=35705 and http://bilbo.economicoutlook.net/blog/?p=35498 and related links
Helen, I am afraid that UBI is a superficially attractive solution to a very real problem – the very low level of income of 1.1 million Australian, most of whom have no assets and little assistance from whatever family remains for them. And while not really in the same ‘low income’ bracket there are a further 3 million Australians who depend upon government income support – though a good number of these also have substantial assets and other income. All have to deal with the bureaucracy that oversees these payments, and which is charged by the Government of the day to ensure that no dollar is improperly paid. For those required to report changes in earnings and circumstance on a fortnightly basis this is indeed a nightmare. A UBI can fix some of this, but at a quite disproportionate cost. The numbers simply do not work – if by “U” you really mean “Universal.” In Australia we would end up directing hundreds of billions of dollars to relatively well off individuals, while directing only 10 to 20 billion to increase the income of the truly disadvantaged. Even taking a very broad view of both potential budget offsets and the impact of abolishing the tax free threshold the budget impact would be enormous – something like $200 billion per annum. You could lift Newstart/Job Seeker to $1,000 a week for a tenth of that. Happy to take you through the numbers.
I agree.
Nureus, what most commenters on this subject (in this country at least) seem to miss is that very soon it won’t just be a philosophical discussion. The tsunami of job losses that’s approaching will put the industrial revolution upheavals in the shade and will need to be dealt with on a whole new level. UBI is being experimented with because some nations are perfectly aware of what’s on the horizon. We are going to have many millions of Australians out of work and we’re going to have to deal with it.
We are still decades – if not generations – away from robots being to do everything.
In the interim, there is much work that needs doing but is not because it’s not profitable enough. To say nothing of transitional phases like maintaining employment by reducing the hours in a working week.
The politics need to change first. A UBI in today’s barely democratic, neoliberal world is worse than a waste of time, it’s just another tool to entrench the status quo.
With respect, drsmithy, we’re already feeling the effects of AI. Robot heavy machinery in mining and agriculture already can and are running 24/7. Whole herds can already be moved around using satellites and an iPad in fenceless paddocks.
Modern aircraft can virtually fly themselves these days, I’m not suggesting we’ll have pilotless aircraft, the point is the AI technology is already that advanced. Legal offices already need far less research staff than 20 years ago, in a few years they’ll will be almost non existent.
AI will replace staff in virtually every business imaginable. Countries all over the world are experimenting (and investing) in autonomous vehicles. I predict we’ll see driverless cars, taxis, busses and trucks within the next 10-15 years, maybe sooner. These technologies will snowball into the future, literally putting millions out of work. UBI or something like it will have to be introduced, that’s why countries are experimenting with it.
Aircraft have been able to virtually fly themselves for decades.
Fully autonomous vehicles are still decades away in any volume, simply on a numbers game. There isn’t a single one on the market today, and it’ll take 10-odd years after they’re mainstream (ie: your average $30-40k new car has it, and you’re prepared to trust it to drive you from Brisbane to, say, Thredbo or Alice Springs while you sleep) for them to become commonplace (average vehicle age in Australia is ten years).
Now, considering that a (fully) pilotless aircraft is a far easier – probably orders of magnitude easier – proposition than a driverless car, yet we still don’t have them flitting around the skies, I think the encroachment of the driverless car tends to get a bit overstated.
AI is certainly impacting jobs, but the result of this should be people freed up to do more useful work that AI cannot (of which there is no shortage as of yet). It’s not, and that’s not even considering all the jobs that need doing today, but aren’t, because they’re not considered profitable enough. How many roads near you need repairing ? How much rubbish is lying around on the ground that needs collecting (let alone waterways) ? How often do you go to the doctor and not have to wait ? What’s the teacher:student ratio at your local schools ? Etc, etc.
Don’t get me wrong, I think it’ll get there eventually. But it’s generations away at best and between now and then we really, really, REALLY, need to fix the political/governance situation, or humanity will revert back to the long-term norm of some sort of authoritarian feudalism with a handful of the population living in unimpaginable wealth and most of us living in abject poverty. AI and robotics – currently – make this outcome more likely, not less. Similarly, a UBI today would be disastrous. The *best* it does is paper across symptoms without addressing any real causes, and it is the causes that are the problem.
Well, no-one is suggesting a UBI is imminent, just that it’s inevitable. I think it will happen sooner than people generally think. For example: small mass produced electric cars will be far cheaper than current petrol guzzlers and I think that the two most likely mass producers of these will be China and India. They’re both oil importers and their populations are demanding greater mobility. Tata already produces a four person car for just a couple of thousand dollars, electric motors will cut that price even more. Autonomous cars are the next logical step in making their roads safer.
* Alaska is pretty damn close. The only exclusions are convicted felons, IIRC.
* A UBI does not necessarily – and I would argue definitely should not – replace welfare (though the right-wing/libertarian versions pretty much always do).
* Why on Earth would you think a UBI – basically a crutch for free market failure, even in most “lefty” variants – be preferable to a jobs guarantee ?!
She explicitly states that JG is not preferable to UBI though?
Yes ? That was my point ?
Oh, my apologies, perhaps I read it wrong because I can’t actually imagine the sort of person that wants the Jobs Guarantee, basically a crutch for market failure, over literally anything including just dropping a colony on us, Gundam style.
Someone who wants to address high unemployment and a bunch of work needing to be done but isn’t ?
How is a JG worse than a UBI ? What problems does a UBI fix ?
JG is compulsory labour. I have an issue with prison.
No it’s not.
Or, if it is, you’re looking at a model most JG advocates would not endorse. It is not intended to be a (busy-)work for the dole scheme.
A JG, as commonly defined, is supposed to provide a job for anyone who wants one (ie: it’s voluntary), at a minimum wage, doing useful work.
Personally, I would run a JG as an expansion of the public service with full-time, full-pay jobs. But that’s a bridge too far for some.
JG vs UBI arguments aside. (I won’t start with how MMT will only work in G20 nations, and crush the rest.) UBI is the idea with the greatest number of advocates. Which makes its consideration more urgent.
This must be real-world consideration (and should probably include the fact that the Alaska money is not equally distributed, let this one got back to the keeper).
We can’t say “the left-wing version is the good one” if the left-wing version depends on increasing social services and taxing corporations and the investor class.
If anyone can tell me how these things will suddenly become possible again a decade after the biggest crash in 80 years led to a neoliberal doubling down and no new prescriptions, I’d be fascinated.
UBI is not Ali Baba’s magical phrase that opens the wallets of the rich.
Sorry, Helen, I’m having a bit of trouble understanding what you mean here.
The main point I want to make is that UBI models vary considerably (usually depending on the intent and leanings of the proposer), and this is important because it will have a significant impact on the likely outcomes. The most obvious example is whether or not a UBI replaces or co-exists with, welfare.
Just saying ‘UBI has wide support’ is a bit like saying ‘full employment has wide support’. How a Libertarian would go about achieving (or even defining) full employment is very different to how a Social Democrat would.
Reminds me a bit of Vonnegut’s Player Piano of a world of fully automated production – except stories like that always ignore that most jobs are services although many can be automated too. However there seems to be no end of services that can be dreamt up to the extent that many people now talk of having bullshit jobs. Who’d have thought personal trainers or diversity officers could be a thing ?
UBI might end up working but needs lots more work. It seems more like cracking a nut not with a sledgehammer but an iPhone app. We need a resurgence of traditional left activism – like unions. Remember them?
Congratulations on your new gig, Helen, and thank you for giving an interesting topic a well-focused, practical grounding.
My only quibble is the way you unilaterally dismissed experiments to date.
How much testing should be adequate? Why that level and not something else? What do you believe existing experiments can show us? What should stop UBI advocates from constantly upping the ante as do zealots of Marxism, neoliberalism and other economic religions, and demanding more commitment before they’ll accept a negative finding? Alternatively, what should stop UBI opponents from doing as climate change cynics do and constantly lifting the bar for evidence to invalid and hypocritical levels?
I’m asking because while I love data, I find there’s a general lack of independent validation in the way people collect it when promoting social policy. In fact, I think most social commentators aren’t clear on what ‘independent validation and verification’ actually means.
First, R, the point of this communication is to keep it short!
Second, one simply cannot test macroeconomic solutions on a small group.
Economists can model UBI. Political economists can tell them the real-world stuff they left out of their closed system modelling.
No “experiment” is worth a thing. We may as well “test” public debt out on a private household, which is a thing our own politicians recommend, and of which Angela Merkel has been very fond.
My own income and my own expenses have NOTHING in common with government revenues and government spending. If I spend too much, I can rein it in. If a government spends too little, the austerity tendency is to increase the government debt. Also, I can’t print more money without going to prison. Also, I don’t have a big strong pal like the USA to protect me from the people at Visa.
Really, there is no comparison and no need to compare what happens in a small group with what happens in a thing as complex as an economy.
This looks like an excluded middle argument, Helen.
You seem to be arguing that EITHER we must do detailed financial modelling taking pages to discuss OR we’re free to argue however we like using only intuition, philosophy and cherry-picked examples.
I don’t agree with that at all. For example, do you believe we can learn nothing from (say) changes to spending patterns, health outcomes, education outcomes or social participation under whatever basic income arrangements we’ve already trialed? If you had that evidence would you really suppress it from your discussion because ‘it’s not worth a thing’?
One of the reasons I love your analyses is that you’re not afraid to let evidence lead you to disagreeable and surprising outcomes. My perverse enjoyment of your tone aside, I think you’re a good ‘facts over feelings’ commentator in a world where there are very few commentators who are.
I think there’s more to be explored and discussed here, Helen, at exactly the level you’re pitching. If (for example) Basic Income experiments are producing widespread social welfare outcomes that (for example) subsidised Health and Education benefits aren’t, that’d be a huge result. Or if it’s failing dismally on a per-dollar comparison to publicly-funded Health and Education, that’d be great to know too. It’d shift the conversation from ‘can we afford it’ to the critical question: ‘is it likely to work in any form at all?’
It’s not something I’ve looked into deeply because like you I feel the whole debate has been engaged naively and disingenuously. Yet the question is worth asking and I hope you’ll consider digging into it in such a way in a future article.
I’d certainly read the hell out of it if you did.
The critical question is “what problem are we trying to solve”.
DrSmithy wrote: The critical question is “what problem are we trying to solve”.
Exactly …followed by, ‘What’s the simplest experiment an independent observer would accept that it doesn’t help solve that problem cost-effectively’, and ‘What’s the simplest experiment an independent observer would accept that it can?’
And by ‘independent observer’, we mean someone who’s not a Marxist zealot, free-market evangelist, credit-card marketeer or politician seeking re-election. In other words, someone agnostic about whether it should work, who’d nevertheless be able to tell if it did.