Universal Basic Income - An Inevitable Future?
Pubished 6th April 2017
In the past I’ve written about the wave of automation looming just over the horizon, promising to hit the world in a way that fundamentally changes the way we work forever. Automation is characterised as one of the pillars of the fourth industrial revolution, the next step in industry “happening ten times faster and at 300 times the scale, or roughly 3,000 times the impact” of the Industrial Revolution, according to McKinsey. Although it promises exciting development in industry, automation also brings with it a substantial concern - mass unemployment. However, what about if we didn’t actually need to work? Let's talk about Universal Basic Income.
Did you miss? Why it's important to work somewhere that supports mental health
In simple terms, UBI is a fixed amount paid to by the government to its citizens regardless of employment status or wealth. Although the real world examples and trials of basic income are few and far between, the suggested model for its distribution is similar to the benefits system currently in operation in the UK - regular instalments of money, be it weekly, monthly or annually. There is no hard and fast rule for how much money should be distributed, but the general consensus appears simply to be ‘as much as it takes’ to sustain yourself.
UBI has been a topic of discussion amongst scholars (Friedman, Murray, Sowell to name a few) for quite some time, but since automation has become a more prominent issue it has found its way into more mainstream conversation. This is due to some simple, yet unsettling predictions from a report in 2013 by Carl Benedikt Frey and Michael Osborne. 47% of workers in America had jobs at high risk of potential automation. They concluded that “recent developments in machine learning will put a substantial share of employment, across a wide range of occupations, at risk in the near future.” Subsequent studies put the equivalent figure at 35% of the workforce for Britain (where more people work in creative fields less susceptible to automation) and 49% for Japan.
As in the case of the USA, when half your workforce finds itself out of the job, you face a situation wherein an entire economy comes tumbling down - who spends the money when nobody has any to spend? Such a question even attracted the interest of Tesla and Space X’s Elon Musk when speaking to CNBC in November last year; “I think that there’s a pretty good chance we end up with a universal basic income, or something like that, due to automation,” Musk said. “I’m not sure what else one would do.”
Aside from its recent association with automation, UBI has merits and negatives in its own right. Proponents argue that it would provide financial security for all, eliminate the number of households living below the poverty line and also lead to an explosion in creativity, research and entrepreneurship. However, critics believe that the cost of implementation for governments will be too high and that UBI itself disincentivizes, potentially leading us down a path towards economic stagnation.
The debate on UBI has made its way into the mainstream, expect to hear much more about it in the coming years as the effects of widespread automation begin to materialise. Whether or not a universal basic income is the best way to tackle the challenges that arise remains to be seen and in truth this conversation is in its infancy. What are your thoughts - do you see automation as a real threat to employment? Is UBI the way to go?
Richard Draper
Managing Director at Rees Draper Wright
