UBI, or not UBI, that is the question.

Updated: Aug 13, 2019

Unless you have been taking an extended holiday on the dark side of the moon, you should be aware by now of the coming impact on the workplace of AI and automation. If not, here’s one I prepared earlier.

This has been happening since the industrial revolution in the 18th century, and as technology gets cleverer and more sophisticated, an increasing amount of jobs that are currently being done by the fallible, fickle fleshbags known as “people” will be lost to technology. I don’t think that there is a lot of mileage in discussing the morality of this; on one basic level, capitalism is about cold, hard profits, and companies that do not keep up with this particular flavour of progress will ultimately fail, meaning that they end up employing no-one at all.

Whether this “progress” is good or bad is all but irrelevant. It’s happening.

All we have right now are predictions. Most suggest that millions of jobs will be lost. It is entirely feasible that millions will be created too, but I can’t see this equation arriving at parity, or anything like it. And there will be more people, too.

Something’s got to give.

Perhaps something’s got to change. Is that change Universal Basic Income (UBI)?

The idea is this: everyone in a country (say, for argument’s sake, everyone over the age of 18) gets a guaranteed, tax free income, paid every month by the government. There is no means testing; everyone qualifies. It doesn’t matter if you are working or on welfare. Everyone gets it. And they can do what they please with it. Save it. Spend it. Give it away. Convert it into cash and light cigars with it. Put it in a food blender with some orange juice and drink ridiculously expensive (and presumably disgusting) smoothies.

One would hope that the recipients of UBI would be slightly more sensible than to take the two latter options there, but you take my point. The money would be ours’ to do with as we see fit.

This idea will intuitively make a lot of people uncomfortable. We live in a World where many people baulk at the idea of welfare payments, free education and universal healthcare. I suppose at its most basic level, this is redistributing income and that sounds like a form of communism. But is to draw such a conclusion to surrender to dogma?

Capitalism redistributes income all the time; it does it using different mechanisms, but it still does it. An elite athlete who is lucky enough (and dedicated enough) to be at the top of his (and it probably is “his”) game in a popular sport might “earn” in excess of $100m a year. Someone dedicated enough to be a nurse (and save lives instead of performing gymnastics with a spherical object) might earn about 0.05% of this amount. If they’re lucky.

It’s an extreme (and absurd) example, but it illustrates how our free markets can work. We usually perceive it differently (and to be fair, there are some differences), but there is enough money to go around. It doesn’t work like that though, and we all happily accept this as one of the rules of engagement.

But to give free money away to people who have not earned it (and perhaps do not deserve it, although I’m not sure who gets to decide that)…this simply does not compute with a lot of people.

However, if we are creating a World where machines are replacing people in the workplace, what are those people to do? How will they survive, financially? The gap between the super-rich and the rest of us is increasing, and it seems safe to assume that if automation increases profits and unemployment, then this gap is likely to get bigger. And as many of the jobs that are lost will be in the blue-collar sector, those who are likely to pay this price are those that can least afford to.

This is not a very new idea. Thomas More advocated something like this in Utopia in the 16th Century, and American revolutionary Thomas Paine supported a version of it back in the 18th Century.

There have been a few experiments where a scheme has been trialled with mixed and completely inconclusive results. I think that the big issue with a trial for UBI is that it isn’t universal, and so the results are fairly meaningless, and open to wild interpretations that are shaped by the political preferences of the interpreter.

It does allow us to see the impact of state sponsored income on a few individuals (and the impact on them, unsurprisingly, does seem to be positive), but this doesn’t really help us to work out what would happen if an entire country gave its inhabitants a guaranteed annual income.

And because of this, it can only ever be an idea that we cannot really understand properly; until, of course, an entire country adopts the scheme, and this does not seem like something that is going to happen in the foreseeable future.

I am lucky enough to live in the beautiful (and sometimes delightfully weird) country of Ireland, and I have looked into some basic logistics, should my adopted country be brave (or foolhardy, take your pick) enough to introduce UBI. The figures are very much of the “back of an envelope” variety – the idea is just look at how much it might cost.

There are around four million adults in Ireland, and for this example, let’s assume that each of them gets €1000 per month. That would cost €48 billion, every year. It’s difficult, when we are discussing such big figures, to give them any context, but I think I had better try. The Irish government spends around €70 billion per annum to run the country. Or in terms of an increase, that’s about 68%.

And where would this money come from?

Well, that’s (using today’s exchange rates) the $54 billion-dollar question.

And of course, my ridiculously simplistic explanation hides a much more complicated equation.

Imagine a country where all adults suddenly have €12000 more spending power. A great deal of it would indeed be spent, and much of this will be returned to the government via tax. So, some of UBI would be self-funding, although what “some” means is nigh on impossible to estimate with any accuracy.

And no matter how much it is, there would still be a multi-billion Euro gap to bridge, and the only conceivable place to find this would be with the wealthier members of society. We can talk all we like about corporations and how much money they make, but ultimately, we are talking about taking a great deal of money off individuals. Extremely powerful and influential individuals who (understandably, I think!) are not terribly keen to accede to demands for their legitimately (or otherwise) earned fortunes.

As for the short to long term effects of UBI, all we have is guesswork, and that guesswork is hugely affected by where one stands on the political spectrum. A small country like Ireland would surely have some economic benefits if the population was gifted €48 billion spending money. They would spend a lot of it domestically, wouldn’t they? This would mean that the money would help more (much more) than the individual spending it.

This would be a huge boost to the economy, at least in the short term. But in the longer term, when everyone was used to having the extra money – what would happen then? And what would happen if it was concluded that UBI was a failure, and it was withdrawn?

Would it make people lazy? A lot of people seem to think so. Or would people volunteer more? Or would they seek work that was fulfilling? Would they be more creative? Or would they just watch more TV?

There are no easy answers here.

There is – of course – a wealth of opinion and articles and studies and websites out there in Googleland, and I would encourage anyone who is as fascinated by UBI as I am to go and get educated.

Allow me one morsel of advice though. Go deep.