Home > Economic policy > Universal Basic Income: What to aim for and how to get there

Universal Basic Income: What to aim for and how to get there

August 22nd, 2017

That’s the title of a presentation I gave to a workshop on UBI run by the Academy of the Social Sciences in Australia. I wasn’t able to attend in person so I called in for my session. The result is that I can’t give a summary of the event, but Tim Hollo has one here. My presentation is here. Also, there’s a Facebook group and a couple of useful links.

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  1. Newtownian
    August 22nd, 2017 at 14:22 | #1

    An interesting and timely problem given the inexorably rise in automation, subject to limits to growth consideration. Not sure about the UBI solution but its at least an option that is worth airing and considering..

    Having just seen a new university productivity tracking system called “Boris” (‘B’ stands for ? but I’m inclined to [email protected]#$%it) I wonder how this would work. Would the UBI be managed in a similar way? Would you just give everyone a yearly bucket of money no questions asked? Or would you get everyone to self assess against some fatuous KPIs as jobs disappear. Would people with a ‘real job’ be exempt from filling in the monthly UBI returns? Would the paperwork nightmare for the others be used as incentive for people to get a real job? Would we have robot to fill the form in (now there is a market)? Would you invent more non-jobs like the latest (priority other than alcohol) drug testing of dole recipients ‘to help them’ not find a job?

    A related concern is what to do about private property. As robots advance to new heights, the owners of capital, the means of production and of course politics/the reigns of government will keep accumulating wealth (i.e. decision power and control really). How are we to stop them doing whatever they like with all those surplus people? Especially when the automations are more cost effective than people.
    What are people stuck on the unversal dole to do? Earn an income by watching adds on Facebook?

    One last thing. I noticed all but one of the great leading UBI lights accessed via the ‘useful’ link were male with a strong bias toward the academy or equivalent. Surely an issue as important as this needs input from the rest of the community especially those who would be the biggest UBI beneficiaries who didnt look much in evidence in the list.

  2. Newtownian
    August 22nd, 2017 at 14:25 | #2

    ps apologies for appearing facetious but my idiotic questions are also serious as they will arise if they havent already…….like this mad drug testing scheme of the Federal government.

  3. Greg McKenzie
    August 23rd, 2017 at 09:10 | #3

    Milton Friedman suggested that a negative income tax should be used to guarantee a base income. The annual nature of this makes it largely impractical, but not more so than drug testing welfare recepuents just so you can put them onto restricted acces debit cards. Ah Canberra, you can hear the poppy fields growing from here. Heaven forbid that these beautiful flowers should be misused by any of our great welfare planners. Still some times I do wonder where all these ideas come from, in this country town pretending to be a capital city. I am with Newtowniar on this one!

  4. Simon Fowler
    August 23rd, 2017 at 10:44 | #4

    I’m really quite confused by what a UBI is attempting to solve. A lot of people seem to be presenting it as a solution to the “problem” of automation destroying jobs; others present it as a solution to inequality (how? it seems more likely to entrench inequality, particularly inequality of opportunity); most of the other ideas I’ve seen boil down to one or other of those, with various wrinkles added.

    So what’s the point of a UBI? What’s the underlying problem it tackles, and by what mechanism does it tackle that problem? And how on earth is it better than simply committing to full employment via a mechanism like a job guarantee?

  5. Dan
    August 23rd, 2017 at 12:17 | #5

    @Simon Fowler

    Is a job guarantee not, functionally, a UBI with the condition attached that you need to be chained to a desk (or work site) for a certain number of hours a week to access the money?

  6. Dan
    August 23rd, 2017 at 12:21 | #6

    @Simon Fowler

    (Or, in other words, if the work is bullshit, why not just give people the money without them needing to show up?)

  7. derrida derider
    August 23rd, 2017 at 14:04 | #7

    @Simon Fowler
    The link to the “robots will take all the jobs” meme is the claim that the robots will not cause mass unemployment (for the well known reason that, at least in the long run, the “lump of labour” fallacy is indeed a fallacy) but will indeed cause more and more jobs to be bullshit jobs, with bullshit pay and (especially) conditions. Dan has put the point of the exercise well.

    I’m sceptical we’ll ever see a true BI, not because its not a good idea (it is) but because it requires an implausible degree of enlightened self-interest by the ruling class and altruism by the middle class. I think the political economy, not the economic or social policy, is all wrong.

  8. Ratee
    August 23rd, 2017 at 16:28 | #8

    @Simon Fowler
    I agree, UBI is not the issue – ‘THE’ issue is the problem its an attempt to solve. THE BIG problem of human society since the invention of agriculture allowed the accumulation of surpluses.
    – How to you keep a massive populous quiet/acquiescent to being ruled – while the elites concentrate more and more of the societies surpluses?
    Religions and isms and fear of invasion have shown they can only work in the short term – but hey the long run is only a series of short runs.
    – Or maybe you get a UBI on condition you are sterilised – is that it?

  9. Simon Fowler
    August 23rd, 2017 at 19:43 | #9

    @Dan
    Why do you assume that the only option is bullshit work?

  10. sunshine
    August 24th, 2017 at 08:40 | #10

    I would like to think a UBI would free up human ingenuity, time and power so that an explosion of new possibilities would happen .Removing the stigma and raising the status of activity not well captured by GDP would be good. A lot of potential is currently nullified by a combination of physical and mental bondage. Community could grow again .

  11. Nicholas
    August 24th, 2017 at 17:48 | #11

    I want the federal government to target full employment with price stability and sustainable resource use. There are two million Australians who are either officially unemployed, or hidden unemployed, or under-employed. There are millions more who are in jobs that are not fulfilling and meaningful for them, that lack a clear link to advancing societal wellbeing, that pay a wage that has fallen far behind per capita personal income growth and national productivity growth, that are poorly managed and supervised, and that involve low morale and toxic workplace culture. The solution to these problems is to make paid work better, not to give up on the concept of paid work. A Basic Income Guarantee is a deeply flawed response to the problems of unemployment, under-employment, and low quality jobs. We need a federal government Job Guarantee that guarantees living wage jobs to everyone who wants them, that improves the quality of employment across the economy, and that widens our society’s concept of what a paid job can be. I cannot endorse the Greens’ Adequate Income policy – it would reduce people to mere consumption units, and it ignores the immense psycho-social benefits that people get from having structured, paid opportunities to contribute to society. It is far better to receive a living wage for doing something useful than to receive a pittance for doing nothing. We should retain the Disability Support Pension and the Age Pension (and increase both significantly, because they have fallen behind per capita personal income and national productivity growth). But a universal payment that is untied to production or contribution would be inflationary, and it would fail to respond to what unemployed and under-employed people are saying they want: meaningful paid work.

    Automation creates opportunities for us to widen our imagination of what a paid job can be. Automation liberates people to do jobs that are more interesting and less dangerous. The practical impact of automation is determined by the federal government’s policy response. If the government responds by maintaining full employment, the allocation of tasks between people and machines changes, but the total amount of socially useful work that people can do need not decline. There is an immense amount of socially useful work that the federal government could pay people a living wage to do in the fields of social and community services, environmental services, artistic and cultural services, and entrepreneurship. Many socially useful tasks that our culture currently defines as hobbies, or as leisure, or as unpaid service, or as personal risk (such as developing and launching a small business) can and should be converted into living wage public sector jobs on demand. There is no need for anyone who wants paid work that is relevant and meaningful for them to go without it. The decision to stop targeting full employment is the biggest national policy blunder of the past forty years.

    The claim that automation reduces the total amount of useful work that people can do is based on a static understanding of what work is. The nature of work can, should, and does change over time, in response to productivity increases, technological improvements, and cultural norms. Culturally, paid work fulfills a deep sociological need for reciprocity – for people to be seen to be contributing in proportion to their capacities. A Basic Income would violate people’s expectation of reciprocity because many people would be seen to be consuming without contributing. We already have a stigmatized cohort (the involuntarily jobless). A Basic Income would merely transfer this stigma to a different cohort. The scheme would be highly susceptible to political attack, and would inevitably be chipped away over time. In any event, the amount would either be too small to live on, or too high for the nation’s productive capacity, which would inflate much of the payment away, defeating its purpose. In the absence of full employment, a Basic Income would probably end up being pocketed by employers as a wage subsidy, and workers’ bargaining power would decline even more than it already has.

    I want the federal government to assess what real resources – labour, materials, energy, and technology – are for sale in the Australian dollar, and then use Overt Monetary Financing to mobilize unused real resources for socially useful and ecologically sustainable ends. I do not accept the widespread belief that the federal government is financially constrained when it spends its own currency. The constraints on federal government spending are real resource constraints, not a budget or financial limit. At present we allow an obscene waste of real resources because of a false narrative that the federal government would need to borrow its own currency or increase its overall tax take before it could increase its spending. Since 1983, when Australia adopted a floating currency with no commitment to convert, on demand, Australian dollars into another currency or commodity at a fixed exchange rate, the federal government has had immense fiscal policy space. For ideological reasons those fiscal powers have not been used to their full potential. The government places voluntary financial constraints on itself, causing needless suffering. The macro-economists to whom we should be listening include Bill Mitchell, Randall Wray, Stephanie Kelton, and Pavlina Tcherneva. Mainstream macro-economists have failed us terribly, and our policy options are unduly narrow as a consequence.

    The Greens accept the myth of a budget or revenue or financial constraint on the federal government. State and local governments, households, and firms are indeed financially constrained. The federal government, however, is in a very different position. It is a currency-issuer, not a currency user. It does not need to borrow its own currency. It can and should stop issuing Commonwealth Government Securities. Its decisions should be guided by the availability of real resources that are for sale in Australian dollars. Its decisions should not be hemmed in by false beliefs about financial limits.

  12. Keith Burtons
    August 25th, 2017 at 10:04 | #12

    @Dan
    No, a job guarantee is, by definition, counter-cyclical, and would help in the event of economic downturns, with a shrinking/growing pool of JG employees depending on the willingness of the private sector to employ them at the time. I assume a UBI would be paid at a constant rate, and therefore wouldn’t have this buffer effect.

    Also, if a UBI is truly universal, then isn’t it likely that it would just push prices up for everyone, leaving the least-well-off back where they were in the first place?

  13. dedalus
    August 25th, 2017 at 10:52 | #13

    @nicholas
    I agree with you. Many would argue that a vast increase in the issuance of $aus by the Federal Govt would lead to inflationary side effects. To that argument I would respond by pointing out (at least) two things. First, as Nicholas has said, the spending of “created money” would be for completely productive purposes. That, really, is all that needs be said on that point. The second thing is to remind ourselves of the relativity of money. When $aus was recently above parity with $us, the citizenry could do “x” things with “Y” $aus. Now that the currency has two-thirded, the citizenry can still do “x’ things with “y” $aus. Can anyone really point to a one-third diminution of our purchasing power? I would reply no. Similarly with the official inflation rate, which has shown no meaningful.connection with the exchange rate.

    The Govt should use its discretionary fiscal powers to finance much-needed infrastructure and social services. This would need a huge workforce. Problem solved.

  14. Paul Norton
    August 25th, 2017 at 11:44 | #14

    The paper by Ben Spies-Butcher and Troy Henderson has been posted to one website with the title ASSA Spies Butcher Henderson Paper on UBI. The missing hyphen meant that when I first saw the title I thought that I was about to read an aggrieved critique of ASSA’s peer review process.

  15. Smith
    August 25th, 2017 at 11:48 | #15

    @Paul Norton

    An inattentive reader might have mistakenly thought they’d read ASIO Spies Butcher Henderson Paper on UBI.

  16. John Brookes
    August 25th, 2017 at 16:53 | #16

    I’d like to see a trial involving two remote indigenous communities. One gets the cashless welfare card. The other gets a “no strings attached” basic income equivalent to whatever benefits they currently get. “No strings attached” means no filling in forms, no reduction when you earn income, no requirement to advise where you are living (even if you move from the remote community) or with whom, no activity test, no drug test, you are just left alone. There is one possible caveat, and that is that you aren’t allowed to give any non-government body authority to your bank account. If they want your money, they have to ask for it.

    Before the trial starts, the well being of the two populations is tested. And then again, after 3 years.

  17. August 26th, 2017 at 02:12 | #17

    @John Brookes
    Didn’t a German charity run something very like your experiment in Namibia?

  18. Dan
    August 27th, 2017 at 10:03 | #18

    @Keith Burtons

    Yes, I accept that. However I don’t know many advocates of a UBI who think that it represents the abolition and replacement of countercyclic measures (though I’m sure they exist; certainly I can see a Friedmanite line of argument here).

  19. may
    August 28th, 2017 at 19:00 | #19

    if a person as a shareholder in a business entity receives money as a dividend that person is a respectable pillar of society?

    if a citizen as a shareholder of a sovereign state receives money to eat, that person is a dole bludger?

    being not-to-bright, i would think that even the dole bludger has effect as an upholder of the commercial wellbeing of those who sell them the food?

    i’m confused—–an incident has precipitated this.

    that is the flat statement from somebody i generally think of as clear thinking.

    they said “a minimum basic income would make the rich richer”

    how?

  20. Dan
    August 30th, 2017 at 11:44 | #20

    @may

    I think you should have asked them!

    But yes, I agree, the idea that being a consumer is dignified in a way that being a party to the common weal is not is a narrow, narrow definition of citizenship and society indeed.

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