Discover how a Universal Basic Income will change your life

There’s been much talk of a Universal Basic Income (UBI) over the past few years. This is a fixed salary that government pays every single citizen, no matter what their situation is. A few countries are experimenting with it, but there’s been little discussion about it in Malta.

I

The concept of a UBI is simple – every citizen gets a fixed monthly salary from the government. There will be no need for unemployment benefit, sickness benefit, or any benefits. The UBI covers everything.

This UBI acts as a safety net. If I wish to take a risk and open up a business, I can rely on the UBI to give me a basic salary while I get up and running. Or it could give support to single parents wishing to work part-time while they spend more time with their children.

The idea is simple, but it could be flawed. If people get a basic salary from the state will they still search for work? If they don’t, it would impact a nation’s productivity. That, in turn, affects the nation’s taxes. And how would a nation scrape all that money together anyway?

There are many intelligent people asking these questions. There are a few who put money where their mouth is and are trying to figure out the answers.

Let’s take Sam Altman, the Chief Executive Officer of Y-Combinator and a billionaire investor. He’s interested in this because he knows the future will be more and more robot-centric. This means one of two things:

  • 80% of the world starves to death while the robot owners make money.
  • 80% of the world somehow receives free money.

Mr Altman is interested in the second option. In a company blog post in 2016, he announced funding for research into the issue. He stated, “in a world where technology replaces existing jobs and basic income becomes necessary, technological improvements should generate an abundance of resources.”

Think about that for a second. Technological advances should increase a nation’s productivity thereby increasing the available resources. It’s obvious that if I do some manual task and improve it with technology, I can be more productive. If technology continues to evolve to the point where it can do the job without me, I will be out of a job. But the nation’s productivity continues to increase.

But how realistic is it to say that ‘basic income becomes necessary’ because ‘technology [is] replac[ing] existing jobs’?

 II

Economists are predicting many middle-class jobs will become redundant. The Business Insider reports on current estimates showing 50% of current jobs will no longer exist by 2030. There’s evidence to suggest technology could replace 45% of our jobs right now. (I think this is close to about 20%. In my daily life I see many processes which we can automate. In these cases I wonder why we hire people to do these things.)

What I find worrying is which jobs will be redundant – and it’s the middle class white-collar jobs. Let’s take a simple example from the legal world. Last November, The Times of London reported on Clerksroom’s Billy Bot. This is a software robot junior clerk for legal chambers in the UK. Stephen Ward from Clerksroom states, “Our human clerks tended to take between eight and ten minutes to book a barrister. Now that process is fully automated with [Billy Bot], which means we are saving about 200 hours a month.”

That’s a hell of a boost for their productivity.

Mr Ward continues, “all new instructions were processed through Billy after six months of programming whereas a 16-year-old clerk takes two years to train.”

Again, impressive numbers.

Doctors’ jobs are also being threatened by automation

But this also means that 16-year old kids looking for good jobs are no longer going to be able to find clerking jobs in legal offices anymore. This is a white-collar job. It requires the sort of intelligence to check for conflicts of interest, assign cases to barristers and organise their calendars. And it’s going to be unavailable for the next generation of people hitting the job market.

And it’s not just youths whose jobs are threatened. The Sunday Times of London reports from the front-line of medical diagnosis. “Several start-ups are experimenting with AI to detect cancer and other ailments at stages where they are simply not visible by human beings.” This means that doctors are also feeling the heat when it comes to technological change.

If I knew a robot could detect cancer earlier than a human, I’d be in front of Metal Mickey’s door. I’d use a human doctor to, perhaps, verify the findings. These doctors would be no better than knowledgeable nurses.

The examples continue. I worry that we’ve just spent three decades telling our children that the best thing they can do is get a University degree. The truth is robots and AI will take over most of the jobs they can do. Until universities start teaching practical skills, I’d be wary of such advice. Let’s not forget that the rate of technological change is increasing.

Everyone needs a salary of sorts

People will no longer be able to make money based on their usefulness to society anymore. There has to be another way to distribute income.

Can a UBI help?

III

These examples show that today’s (and tomorrow’s) workforce needs to know how to re-train itself. This comes at an incredible cost. I’ve (kind of) been through this myself in the past. After training as a software developer in the ’90s, there was a lack of job opportunities at one point. I retrained as a Network Administrator. I was lucky because there’s some overlap between the two and because the broad industry remained the same. But if an employer didn’t take a chance on me and let me train while getting the job done, I would still be unemployed.

I didn’t have the safety net I needed to study and retrain myself without a job. I needed a salary.

Who doesn’t?

With a UBI, a basic income is something that people can rely on. It may not be much, and it might be the bare minimum. It means that in lean periods there is a safety net to keep you going while you take the next step in your life.

With a UBI, will people become lazy and avoid working completely?

Does this make sense though? Or is it Utopian pie-in-the-sky?

IV

Several countries are experimenting with this. They are interested in the answer to obvious questions like ‘Will people become lazy?’

The Netherlands worries about the sort of conditions to associate with a UBI. Behavioural economics researchers from the University of Utrecht are interested in whether there should be any strings attached to a UBI. At the moment, you can only get benefits from the government if you do certain things, like fill in a number of job applications. The researchers think these criteria are counterproductive. The Dutch tests will find out if this is true or not.

Finland is more interested in the question, ‘If we give people free money, will they become lazy?’ They ran running an experiment in 2018 where they gave give a group of people EUR 560 tax-free every month. Some unemployed people don’t seek work because work means they’d lose benefits. Removing this side-effect should reverse the problem, the Finns think thought. In fact the problem was not reversed and people on a UBI were not more likely to seek work than any others. The UBI did bring health and a peace of mind though, which is a substantial change to ‘being on benefits’ even if these results are all self-reported.

How will we pay for a UBI?

There are other countries getting in on the act from Italy to Kenya, which is going to give us plenty of facts to work with in a year or two.

Update (October 2018): Virginia Tech (USA), ERF (Egypt) and Bloomsburg University (USA) published a report in August 2018 about cash transfers and the labour supply. They analysed Iran’s example. In 2010 Iran removed generous energy subsidies and gave uniform cash transfers to 70 million people. The money they gave was 28% of the median per capita income. People feared that recipients would get lazy, especially poorer people. This report analyses the data and finds no evidence that cash transfers reduced labour supply. It looked at both the number of hours worked and people’s participation in the work force. The report concludes there was a positive effect on the labour supply of women, and of self-employed men.

The one question you should be asking yourself at this point is: How will we pay for all this?

V

You’re not the only one asking this.

Swiss voters rejected a similar scheme in 2016. Their estimates show it would cost the state about EUR 21 000 000 000 (21 billion). The Guardian points out this would take welfare spending from 19.4% to roughly a third of Swiss GDP.

I can’t help think the Swiss were too quick to reject this. After all, we need these kind of experiments to see which ideas work best. We can’t just replicate these ideas in a lab. The experiments I quote above are all instances where we can figure out whether a UBI is a good idea or not. And society is so intertwined today that we have to experiment on a large-scale, but we don’t need to affect an entire nation either.

What I find curious is that the Maltese government is not thinking about this. We have a growing population, a large segment of which works in the kind of jobs that technology will take in a few years’ time. It feels like today’s children are going to hit the job market just in time to be unemployed.

Shouldn’t we expect more intelligent government?

Is this what you want for your children?

Shouldn’t we expect more intelligent government?

What are your views on a UBI? Join the discussion below.

References

  1. Moving Forward on Basic Income; Altman, Sam; Y-Combinator Blog; 2016-05-31
  2. Giving people free money could be the only solution when robots finally take our jobs; Chris Weller; Business Insider; 2016-08-04
  3. Billy Bot threatens to replace barristers’ clerks; Jonathan Ames, Frances Gibb; The Times; 2017-11-15
  4. Meet the geek behind the rise of the robots?; Danny Fortson; The Sunday Times; 2017-12-10
  5. THE NETHERLANDS: Social Assistance Experiments Under Review; Kate McFarland; Basic Income Earth Network; 2017-05-09
  6. Finland is starting a national experiment to try to prove a basic income doesn’t make people lazy; Eshe Nelson; Quartz.com; 2017-01-04
  7. Finns can only get glummer as Helsinki scraps free basic income; Andrew Byrne; The Sunday Times of London; 2018-04-29
  8. Universal income creates happier, healthier slackers; Adam Sage; The Times of London; 2019-02-11
  9. Preliminary results of the basic income experiment; Kela.fi; 2019-02-08
  10. 8 basic income experiments to watch out for in 2017; Chris Weller; Business Insider; 2017-01-24
  11. Cash transfers and labor supply: Evidence from a large-scale program in Iran; Djavad Salehi-Isfahaniab, Mohammad H.Mostafavi-Dehzooeic; Journal of Development Economics; Volume 135; 2018-11
  12. Swiss voters reject proposal to give basic income to every adult and child; Agence-France Presse; 2016-06-05
  13. Finland trials basic income for unemployed; Jon Henley; The Guardian; 2017-01-03

All references were valid and correct when this article was published. Changes to referenced websites or web pages may render some references invalid. If this is the case, please leave a comment below.


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