The old idea of a universal basic income is getting another roll out. And it’s entirely true that the provision of such a thing would solve many of our economic problems. It’s not quite the miracle panacea but it is still pretty good all the same.
As Jaron Lanier points out, Kodak once provided 140,000 middle class jobs, and in the smouldering ruins of that company’s bankruptcy we have Instagram, with 13 employees. It’s an extreme example, in most cases the economic misery is largely confined to young people, with entry-level workers trapped in a cycle of internships, ever-lengthening education, and debt.
This part of the reasoning is simply an irrelevance. Digitisation no more means that we should have a universal income than the decline of agricultural employment did. If you’ll recall we moved something like 30 percent (for the UK) and 50% (for the US) of the population out of agriculture and into something else (either manufactures or services, obviously) in the 20th century. That we now take photos with 13 people instead of 140,000 no more implies a basic income than the mechanisation of agriculture did.
Imagine a point in the future when robots do more of our physical labour, computers do more of our mental labour, and our mechanized-digitized economy is ten times more efficient. We don’t need to agree on a date, this could be 2050 or it could be 2500, all we need to agree on is that current trends are likely to continue in the same direction. Between now and then two things can happen, either we do 90% less work, or we demand ten times more goods and services, or a bit of both. The first option requires that we drastically revise downwards our expectations of how much work people do, the second requires that we drastically redistribute purchasing power to consumers.
No, that last isn’t really true either. For the effect of mechanising the production of absolutely everything is going to be to make absolutely everything as cheap as spit. Real wages will thus undoubtedly rise as a result: and it really is only real wages that we should be concerned about.
Neverthless, a basic income is a very good idea indeed: the clincher for me is that it would eradicate those huge marginal tax rates that people at the bottom of the labour pile face. As benefits are withdrawn and taxes start to bite there are millions in my native UK who face 60% marginal tax rates. There are even some tens of thousands of unfortunate souls who face rates over 100%: earning more money leaves them with less disposable income. And yes, the Laffer Curve does bite at the bottom as well tas the top: 100% tax rates really are a disincentive to work.
However, the most important part of a universal basic income is the word “basic”:
Every single adult member receives a weekly payment from the state, which is enough to live comfortably on.
No, it’s a universal basic income, not a universal comfortable income. Chris Dillow has done rough sums for the UK and comes up with £130 a week (around $200). Charles Murray had a look at it for the US and went for $10,000 a year, a remarkably similar sum. These are the sorts of amounts that could be paid within our current societies. Comfortable is something very different indeed. If we take the Joseph Rontree Foundation’s work on what is required to be not living in poverty in the UK then the numbers are very much higher. Two to three times higher in fact, getting to the stage that we would be swallowing near all of the economy in providing just this comfortable living for all.
The sad and basic point being that we’re not rich enough as a society to provide a “comfortable” living to all as of right even though we’re entirely able to provide a universal basic income.