by Kate McFarland | Jul 11, 2016 | Opinion
An article in the June 4th edition of The Economist, entitled “Basically Flawed,” argues that universal basic income is a radical policy that is just too risky to pursue. The anti-UBI argument itself is flawed, however, largely due to understating the benefit of UBI–if not ignoring its moral necessity.
According to an article in the June 4th edition of The Economist [1], universal basic income (UBI) is a policy of uncertain need but certain costs. A simple risk-benefit analysis, then, would advise us to maintain our current welfare states (perhaps with less radical adjustments) rather than gamble with a UBI.
The argument has two main components: first, establishing that there is no definite need for a UBI; second, establishing that a UBI presents unavoidable costs.
Concerning the first, the author assumes that there is one (and only one) reason why something like a UBI would become necessary: widespread unemployment due to new technologies. Here the author notes that the robot job takeover has not happened yet, and expresses skepticism that it ever will:
Worries that technological advance would mean the end of employment have, thus far, always proved misguided; as jobs on the farm were destroyed, work in the factory was created. Today’s angst over robots and artificial intelligence may well turn out to be another in a long line of such scares.
Having set aside robot-driven angst, the author turns to defend the claim that UBI has sure costs. The first and most obvious of these is financial: a UBI is certain to be expensive to any government that implements it. For example,
An economy as rich as America’s could afford to pay citizens a basic income worth about $10,000 a year if it began collecting about as much tax as a share of GDP as Germany and replaced all other welfare programmes with the basic-income payment.
Moreover, the author complains that a UBI would “destroy the conditionality on which modern welfare states are built” — leading to an “erosion” of the workforce:
During an experiment with a basic-income-like programme in Manitoba, Canada, most people continued to work. But over time, the stigma against leaving the workforce would surely erode: large segments of society could drift into an alienated idleness.
Finally, the author worries that it would be impossible to combine UBI with a reasonable immigration policy; immigrants would have to be barred or else treated as “second-class citizenries without access to state support.”
Thus, the author concludes, the risks of UBI — which are both large and near-certain — greatly outweigh its sole benefit as insurance against technologically-driven job loss (which might or might not occur).
Reply by Basic Income News editor Kate McFarland
The basic income proponent could, if she wished, directly attack any one of the author’s premises. She might be tempted to argue that a universal basic income could be afforded and that it could be reconciled with a fair immigration policy, contest the claim that it would cause people to stop working, or produce evidence that mass technological unemployment is indeed very likely.
For my own part, I am not particularly interested in quibbling over any of these points, however important they might be independently. Instead, I will concentrate on two overarching problems with the author’s argument:
1. The argument understates the potential benefits of a universal basic income, which far exceed security against a robot job apocalypse.
2. The argument assumes that risk-benefit analysis is an appropriate method by which to answer the question of whether to adopt a universal basic income. But this would not be the case if, for example, a basic income is required as a matter of individual rights or social justice.
Why do we need UBI?
In an article published last April, Rutger Bregman writes, “Forget about robots. The reasons why we need basic income are infinitely better.” This is a crucial viewpoint–and one common in basic income discourse, the media’s apparent fondness for “the robot issue” notwithstanding–which must be taken into account when addressing potential benefits of UBI.
Take, for instance, the elimination of poverty. When scholars and researchers like Pranab Bardhan, Nkateko Chauke, and the team at GiveDirectly–to name only a few–argue that developing nations should adopt a basic income, they are not worrying about robots; they are thinking about poverty and inequality.
But, of course, poverty is also a pressing and immediate concern in high-tech countries like the United States. Indeed, a recent article in the New York Times sparked a debate about whether a UBI could abolish poverty in the US. When Scott Santens and Vox’s Matthew Yglesias joined the fray to argue that it indeed could, they remained focused on the issue of present poverty–not future automation.
Perhaps the author of The Economist article believes that a UBI is unnecessary to fight poverty, because existing welfare programs could just as well be tweaked to accomplish this goal. But, if so, the author would overlook many known problems with means-testing, which a UBI might eliminate.
The abolition of poverty–along with all the hurdles, stigmatization, and poverty traps created by means-tested programs–is a potential benefit of UBI that is clearly quite profound, yet one the author fails to mention.
Furthermore, a benefit unique to UBI is that, if high enough, it would enable workers to refuse employment. This too promises many positive results in the here and now, without waiting for robots to arrive at the door.
A UBI could be an enormous boon to workers who need or desire to leave full-time employment, if only temporarily, in order to raise a child, care for an ailing family member, return to school, start a small business, participate in voluntary community services, contribute to the arts, or pursue any other unpaid project. UBI is often said to recognize the value of unpaid labor in all of its forms; current systems of social welfare do not.
Moreover, it is often argued that this ability to refuse work benefits even those workers who do wish to retain full-time employment, insofar as it increases their bargaining power: if a worker cannot be replaced by someone desperate to take any job just to survive, it is easier for that worker to demand higher wages, better working conditions, or shorter or more flexible hours. It is UBI, not existing welfare systems, that would generate this type of bargaining power.
None of these advantages of UBI are mentioned in the risk-benefit analysis in The Economist, despite the fact that they are arguably as near-to-certain as any of the alleged risks–robots or no robots–and would be positive impacts of very high magnitude. A UBI might well be expensive, but one should to consider its full range of benefits in order to properly assess whether it is worth its high price tag. The author does not.
Of course, this is all to grant that the use of risk/benefit analysis is a fitting approach to the decision of whether to pursue UBI–but I believe that even this assumption can, and should, be questioned.
Is UBI “just just”?
As evidenced by the various articles linked above, it is popular to argue in favor of basic income on the basis of its predicted effects: pro-UBI authors of cite empirical evidence of effectiveness cash-transfer to establish the claim that a UBI “will work”. That is, many authors argue that UBI will achieve certain desired outcomes (or not cause certain outcomes generally deemed undesirable, such as decreased workforce participation, laziness, or higher spending on alcohol or other temptation goods).
But what if a basic income is not merely an effective means to attain socially desirable ends? What if universal and unconditional basic income is mandated as a matter of social justice?
This is, in fact, far from an uncommon view within the basic income movement.
For example, Guy Standing and Yanis Varoufakis have recently described UBI as a form of social inheritance (cf. their linked lectures). The idea here is this: the money distributed in a UBI is money that rightfully belongs to all of us, equally, as inheritors of the wealth generated through the collective activities of our forebears.
Alternatively, one might argue for a right to a livable basic income in other commonly recognized individual rights–such as, perhaps most straightforwardly, a right to a certain minimal standard of living, just for being alive. Furthermore, a well-entrenched view in philosophical work on basic income–canonically presented by Philippe van Parijs and later developed in a somewhat different form by Karl Widerquist [2]–holds that the protection of freedom mandates an unconditional basic income.
If a universal basic income is a universal human right, then there is no question of whether the benefits are worth the risks; thus, arguments of the form given in The Economist don’t get off the ground. There is simply no question as to whether a UBI should be adopted: it should. The only question is how to manage whatever risks the policy would create, or perhaps how to tweak and fine-tune the policy to minimize risk.
If a basic income is a right–if it’s necessary as a matter of social justice–then we must find a way to fund it, even if it requires hefty tax increases on the rich (or even German levels of government spending!). And we must be willing to assume risks, including the possibility that some individuals will leave the workforce (some of them, perhaps, to simply smoke weed and watch Netflix).
This is not to suggest that we should ignore the potential risky outcomes. On the contrary, it is crucial to understand what the risks are, so that we might build safeguards against them. But, under the present supposition that basic income is simply a right, they should be viewed as potential problems that can–and must–be surmounted for the sake of what is owed to individuals and society.
[1] “Basically flawed,” The Economist, June 4, 2016.
[2] Such arguments are made in the books mentioned in the embedded links. N.B. All chapters from Widerquist’s work are available for free download from his website.
Thanks to Genevieve Shanahan and André Coelho for reviewing a draft of this article, and thanks to my supporters on Patreon.
“MET II Robot Lab” photo CC Georgina Rose.
by Guest Contributor | Jun 20, 2016 | Opinion
The level of Basic Income (BI) is a matter of heated debate in discussions of BI for national implementation, investigating the level at which BI would be ‘high enough’. There is also growing dispute regarding ‘partial’ vs. ’full’ BI. This was the central topic of investigation at this year’s BI conference in Maastricht in January. The following calculations, using a common formula and comparing BI levels for 24 European/OECD countries, aim to assist in the resolution of this debate.
We don’t want to make the system worse than it is. It’s logical, then, that the minimal level of BI should reach, at least, the level of current Social Assistance (SA): we could call this ‘partial’ BI. All BI proposals included in this analysis satisfy this condition.
It follows that implementation of a BI close to the level offered by the current social security system (e.g., the SA level) implies budget neutrality in countries with a more universal system.[1] This follows the argument “If we can afford our current welfare system, we can afford basic income” that Max Ghenis has well elaborated. These proposals might be socially more acceptable, given that the change would be ‘minimal’.
So, if the level of SA in a country indicates 1) the socially acceptable level of social aid and 2) the first estimation of the social welfare budget, BI at the same level would likely be the most financially and socially affordable solution, offering the shortest implementation time frame. Proposals for Slovenia[2], Hungary[3] and Finland[4] belong to this category.
On the other hand, the level of BI should be high enough to ensure a material existence and participation in society. We assume this when we argue that BI should be at least at the level of the current Poverty Threshold (PT): we could call this ’full’ BI. BI at such a level would probably fulfill the role of an emancipatory welfare system.[5] Proposals for Switzerland[6] and the Netherlands[7] fit into this second category.
The question is, how costly are lowered aspirations regarding a ‘partial’ BI level (e.g., in Slovenia, Finland and Hungary) in service of affordability and/or social acceptance in the foreseeable future? Will we achieve anything? As the microsimulation in Slovenia demonstrated, however, even a partial BI proposal (budget neutral, well below PT and above SA) proved to be: 1) better for the majority, 2) the same or better for the more vulnerable and 3) better for the lowest deciles. The Hungarian BI proposal seems to draw similar conclusions.
To serve discussion regarding the level of BI in different countries, a common formula (similar to that used for the Slovenian proposal) was used to calculate the levels of BI proposed in various countries.
Formula: BI = an average of three components:
- Social Assistance for a single person with no children: Indicates the currently acceptable minimal level of social aid (and the ‘budget’ of the current social security system).
- 1/2 of the Poverty Threshold at the point of 60% of the median income: Takes into account income distribution and the risk of poverty.
- 1/3 of average net wages: Takes into account the ‘value of work.’
A table with Basic Income calculations for 24 European and OECD countries allows us to draw comparisons across and within countries regarding: the social protection system (e.g., SA), the average wage (AW), the poverty threshold (PT), BI calculations using the same formula (both in national currencies and euro) and different BI proposals. It’s very important to note, however, that in countries where the level of SA is already higher than the BI calculation, the existing SA should be taken as a starting point. BI proposals for Finland and the Netherlands belong to this group.
Such BI calculations (that are above SA & ‘budget neutral’ & below PT) could serve BI discourse as the first benchmark:
- at which we could expect results that would be: a) better for the majority, b) the same or better for the more vulnerable and c) better for the lowest deciles;
- of the BI level calculation for countries that, as yet, have made no BI calculations;
- to evaluate competing national proposals;
- to evaluate proposals across countries;
- to evaluate existing social security systems, investigating by how much they diverge from this preferable solution;
- of common European social welfare solutions made by the people (of 99%) for the people and not from the EU elites.
Valerija Korošec: PhD in Postmodern Sociology, MSc in European Social Policy Analysis. Author of (eng) UBI Proposal in Slovenia (2012) sl. Predlog UTD v Sloveniji: Zakaj in kako?(2010). Co-editor UBI in Slovenia (2011). Member of Sekcija za promocijo UTD. Member of UBIE. Slovenian representative in BIEN. Fields of expertise: poverty, inequality, sastifaction with life, social policy anlaysis, gender equality, ‘beyond GDP’, paradigm shift, postmodernism, UTD, basic income. Slovenian. Born 1966 and raised in Maribor. Lives in Ljubljana. Employed at the Institue of Macroeconomic Analysis and Development (Government Office of Republic Slovenia). Views under my name are my own. @valerijaSlo
Footnotes:
[1] All included countries have a universal SA system, except: 1) Finland, Germany, Belgium, Estonia and Denmark, which have different levels of assistance based on employment status according to OECD statistic – in these cases it was the data for the ‘Employed’ SA level that were included; and 2) the United Kingdom, Greece and Italy, which have no scheme comparable to SA.
[2] https://basicincome.org/bien/pdf/munich2012/Korosec.pdf
[3] https://let.azurewebsites.net/upload/tanulmany.pdf (English version unavailable).
[4] https://basicincome.org/news/2015/12/finland-basic-income-experiment-what-we-know/
[5] https://basicincome-europe.org/ubie/charter-ubie/
[6] https://www.reuters.com/article/us-swiss-pay-idUSBRE9930O620131004
[7] Alexander de Roo, by mail.
by Philippe van Parijs | Jun 6, 2016 | Opinion
Despite being factually defeated in the ballots, the Swiss initiative for basic income should be regarded as a giant step in the now unstoppable march towards basic income, says BIEN Founder Philippe Van Parijs.
Philippe Van Parijs is Professor at UCLouvain, Hoover Chair of Economic and Social Ethics. Chair of BIEN’s International Board
June 5th, 2016 will be remembered as an important landmark in the worldwide march towards the implementation of unconditional basic income schemes. On that day, all Swiss citizens were asked to express their approval of or opposition to the following proposal:
- The Confederation introduces an unconditional basic income.
2. The basic income must enable the whole population to live a dignified life and to participate in public life.
3. The law will determine the funding and level of the basic income.
The proposal was rejected, with 76.9% of the voters against, 23.1% in favor. Why was this rejection predictable? And why is it such an important step forward?[1]
From 0 to 23%
To answer these questions, a brief historical overview is in order. In 2008, the German film maker Enno Schmidt and the Swiss entrepreneur Daniel Häni, both based in Basel, produced Grundeinkommen: ein Kulturimpuls, a “film essay” that gave a simple and attractive picture of basic income. The dissemination of this film through the internet helped prepare the ground for a popular initiative in favor of the proposal quoted above, which was launched in April 2012. Another popular initiative, which proposed an unconditional basic income funded specifically by a tax on non-renewable energy, had been launched in May 2010, but it failed to gather the required number of signatures. The initiators of the 2012 initiative first thought of specifying that the basic income should be funded by the Value Added Tax, as was suggested in the film, but they dropped the idea for fear of reducing support for the proposal. They also chose not to stipulate a precise amount of the basic income in the text itself. But their website did mention a monthly amount of 2500 Swiss Francs per adult and 625 Swiss Francs per child as the best interpretation of what was required, in Switzerland, “to live a dignified life and to participate in public life”. If an initiative gathers over 100.000 validated signatures in 18 months, the Federal Council, Switzerland’s national government, has the obligation to organize a country-wide referendum within three years either on the exact text of the initiative or on a counter-proposal to be negotiated with the initiators.
On the 4th of October 2013, the initiators handed in spectacularly 126.406 valid signatures to the federal chancellery. On the 27th of August 2014, after validation of the signatures and examination of the arguments, the Federal Council rejected the initiative without making a counter-proposal. In its view, “an unconditional basic income would have negative consequences on the economy, the social security system and the cohesion of Swiss society. In particular, the funding of such an income would imply a considerable increase of the fiscal burden”. The proposal was subsequently submitted to both Chambers of the Swiss Parliament. On the 29th of May 2015, the Commission of Social Affairs of the National Council (Switzerland’s federal house of representatives) recommended by 19 votes against 1, with 5 abstentions, that the proposal for an unconditional basic income should be rejected. After a thorough discussion at a plenary session on the 23rd of September 2015, the National Council proceeded to a preliminary vote and endorsed this negative recommendation by 146 votes against 14 and 12 abstentions.
On the 18th of December 2015, the Council of States (the Swiss Senate, made up of representatives of the cantons) considered the initiative in turn and rejected it by 40 votes against, 1 in favor and 3 abstentions. On the same day, the proposal was the object of a second and final vote in the National Council: 157 voted against, 19 in favor and 16 abstained. In all cases, all the representatives from the far right, center right and center parties voted against the proposal. All pro votes and abstentions came from the socialist party and the green party, both of which were sharply divided. At the final vote in the National Council, 15 socialists voted in favor, 13 against and 13 abstained, while 4 greens voted in favor, 5 against and 3 abstained. The degree of support thus oscillated between 0% in the Federal Council, 2% in the Council of States and 4, 8 and 10% in the National Council (commission, preliminary and final vote).
For the popular vote on the 5th of June 2016, the national leaderships of nearly all parties, including the socialist party, recommended a “no” vote. The only exceptions were the green party and the (politically insignificant) pirate party, which recommended the “yes”, joined by a number of cantonal sections of the socialist party from all three linguistic areas. Against this background, it was entirely predictable that the no vote would win. The actual results of nearly one vote out of four for “yes” — with peaks at 35% in the canton of Geneva, 36% in the canton of Basel-Stadt, 40% in the city of Bern and 54% in the central districts of Zürich — is far above what the voting record in the Swiss parliament would have led one to expect. We must, moreover, bear in mind that Switzerland is perhaps the country in Europe in which support for an unconditional income should be considered least likely, not only because of the deeper penetration, in Calvin’s homeland, of a Calvinist work ethic, but above all because of the comparatively low levels of unemployment and poverty it currently experiences.
In Switzerland and beyond: broader and more mature
Everyone now realizes, however, that even if the initiative had not managed to gather the votes of more than the 2.5% of the Swiss citizens who had given their signatures at the initial stage, it would have been, thanks to the initiators’ stamina and their impressive communication skills, a stunning success. There is now no population in the world or in history that has given more thought to the advantages and disadvantages of the proposal than the Swiss have done over the last four years. And the effect was by no means confined to Switzerland. Just in the few days preceding the popular vote, the Economist, the Wall Street Journal, the Financial Times, the New York Times, the Guardian, and countless other newspapers around the world felt forced to publish substantive articles in order to explain at length — sometimes quite well, sometimes not so well — what a basic income is and what it is about. There is certainly no week in the history of the world in which the media have allocated so much time and space to a discussion of basic income.
Apart from giving a big boost to the spreading of the idea, the Swiss initiative has also greatly contributed to the maturing of the debate about it. For one lesson to be drawn from the experience is that a proposal that stipulates a high amount for a basic income, but no precise way of funding it, can easily gather the required number of signatures for a vote – while still being a long way from convincing a majority among the voters who bother to turn up on voting day (about 46% of the electorate in this case). A shining star that indicates the direction is enough for the former, but visible signposts on the ground marking a safe path in its direction are essential to achieve the latter. Whenever I was invited to join the Swiss debate, I argued that introducing in one go an individual basic income of CHF 2500 (38% of Switzerland’s GDP per capita) would be politically irresponsible. True, no one can prove that such a level of unconditional basic income is not economically sustainable. But nor can anyone prove that it is. Nor will any local experiment performed or planned in Switzerland or elsewhere prove that it is. Moreover, it is not unreasonable to suppose that the economic sustainability of an unconditional basic income at that level will require a number of preconditions currently unmet, including the introduction of new forms of taxation — for example the micro-tax on electronic payments that played an interesting role in the Swiss debate — and effective international cooperation against tax evasion — not exactly Switzerland’s strongest point.
In the immediate future, however, it should now be clear that more modest but significant steps forward can and must be worked out and debated. They must involve an individual unconditional basic income at a lower level (say, 15 or 20% of GDP per capita) that would still need to be topped up by means-tested social assistance benefits or housing grants, certainly for urban single-adult households. It is not because in many cases the unconditional basic income would not suffice, on its own, to “enable the whole population to live a dignified life”, that it would not make a big difference to the security, bargaining power ad freedom of choice of many of the most vulnerable among us. Even in the short run, introducing such an unconditional basic income is definitely sustainable economically. It is up to us to make it politically achievable.
The totally unprecedented Swiss initiative has not only made many people, in Switzerland and far beyond, far more aware of the nature and size of the challenges we face in the twenty first century and of how a basic income might help us address them; by triggering countless objections, some naive and some spot on, it has also helped the advocates of basic income to sharpen their arguments and to better see the need for realistic next steps. For both of these reasons, the Swiss citizens who devoted a tremendous amount of time, energy and imagination to the “yes” campaign deserve the warm gratitude not only of the basic income movement worldwide, but of all those fighting for a free society and a sane economy.
[1] Many thanks to Nenad Stojanovic (Zurich and Princeton) for reliable information and insightful comments.
by Guest Contributor | May 10, 2016 | Opinion
To tackle spiraling deflationary trends, governments and central banks will soon have no other choice but to resort to printing money and giving it directly to the people.
Article by John Aziz, originally published on azionomics.com under the title “Universal Basic Income Is Inevitable, Unavoidable, and Incoming.”
The last time I saw universal basic income discussed on television, it was laughed away by a Conservative MP as an absurd idea. The government giving away wads of cash responsibility-free to the entire population sounds entirely fantastical in this austerity-bound age, where “we just don’t have the money” is repeated endlessly as a mantra. Money, they say, does not grow on trees. (Only as figures on the screen of a computer).
In this world, universal basic income seems like a rather distant prospect. Yes, there are some proposals, like Finland which is set to start local experiments in 2017 and Switzerland which is holding a referendum on universal basic income next month. I don’t expect the vote to pass. The current political climate is just too patriarchal. We live in a world where free choice is unfashionable. The mass media demonizes the poor as feckless and too lazy and ignorant to make good choices about how to spend their income. Better that the government spend huge chunks of GDP employing bureaucrats to administer tests, to moralize on the virtues of work, and sanction the profligate.
But this world is fast changing, and the more I study the basic facts of economic life in the early 21st century, the more inevitable universal basic income begins to seem.
And no, it’s not because of the robots that are coming to take our jobs, as Erik Brynjolfsson suggests in his excellent The Second Machine Age. While automation is a major economic disruptor that will transform our economy, assuming that robots will dissolve jobs entirely is just buying into the same Lump of Labour fallacy that the Luddites fell for. Automation frees humans from drudgery and opens up the economy to new opportunities. Where once vast swathes of the population toiled in the fields as subsistence farmers, mechanization allowed these people to become industrial workers, and their descendants to become information and creative workers.
As today’s industries are decimated, and as the market price of media falls closer and closer toward zero, new avenues will be opened up. To that end, Canada has seen a surge in startups in recent times. Towns that were once oblivious to people in the country have become a melting pot for fresh Fintech startup ideas. Case in point is this FinFund Media app that aims to simplify getting loans in The Pas for individuals by leveraging the power of local rural communities to send and receive money. Similarly, new industries will be born in a never-ending cycle of creative destruction to keep the economy churning. Yes, perhaps universal basic income will help ease the current transition that we are going through, but the transition is not the reason why universal basic income is inevitable.
Welcome to the world of hyperdeflation
So why is it inevitable? Take a look at Japan, and now the eurozone: economies where consumer price deflation has become an ongoing and entrenched reality. This occurrence has been married to economic stagnation and continued dips into recession. In Japan – which has been in the trap for over two decades – debt levels in the economy have remained high. The debt isn’t being inflated away as it would under a more “normal” rate of growth and inflation. And even in the countries that have avoided outright deflationary spirals, like the UK and the United States, inflation has been very low.
The most major reason, I am coming to believe, is rising efficiency and the growing superabundance of stuff. Cars are becoming more fuel efficient. Homes are becoming more fuel efficient. Vast quantities of solar energy and fracked oil are coming online. China’s growing economy continues to pump out vast quantities of consumer goods. And it’s not just this: people are better educated than ever before, and equipped with incredibly powerful productivity resources like laptops, iPads and smartphones. Information and media has fallen to an essentially free price. If price inflation is a function of the growth of the money supply against growth in the total amount of goods and services produced, then it is very clear why deflation and lowflation have become a problem in the developed world, even with central banks struggling to push out money to reinflate the credit bubble that burst in 2008.
Much, much more is coming down the pipeline. At the core of this As the cost of superabundant and super-accessible solar continues to fall, and as battery efficiencies continue to increase the price of energy for heating, lighting, cooking and transportation (e.g. self-driving electric cars, delivery trucks, and ultimately planes) is being slowly but powerfully pushed toward zero. Heck, if the cost of renewables continue to fall, and advances in AI and automation continue, in thirty or forty years most housework and yardwork will be renewables-powered, and done by robot. Water crises can be alleviated by solar-powered desalination, and resource pressures by solar-powered robot miners.
And just as computers and the internet have made huge quantities of media (such as this blog) free for users, 3-D printers and disassemblers will push the production of stuff much closer to free. People will simply be able to download blueprints from the internet, put their trash into a disassembler and print out new items. Obviously, this won’t work anytime soon for complex objects like smartphones, but every technology company in the world is hustling and grinding for more efficiency in their manufacturing processes. Not to mention that as more and more stuff is manufactured, and as we become more environmentally conscious and efficient at recycling, this huge global stockpile of stuff acts as another deflationary pressure.
These deflationary pressures will gradually seep into services as more and more processes become automated and powered by efficiency increasing machines, drones and robots. This will gradually come to encompass the old inflationary bugbears of medical care, educational costs and construction and maintenance costs. Of course, I don’t expect this dislocation to result in permanent incurable unemployment. People will find stuff to do, and new fields will open up, many of which we are yet to imagine. But the price trend is clear to me: lots and lots of lowflation and deflation. This, ultimately, is at the heart of capitalism. The race for efficiency. The race to do more with less (including less productivity). The race for the lowest costs.
I’ve written about this before. I jokingly called it “hyperdeflation.”
Global Japanization
And the obvious outcome, at the very least, is global Japan. This, of course, is not a complete disaster. Japan remains a relatively rich and stable country, even after twenty years of deflation. But Japan’s high level of debt – and particularly government debt – does pose a major concern. Yes, as a sovereign currency issuer borrowing in its own currency the Japanese government runs no risk of actual default. But slow growth and deflation are stagnationary. And without growth and inflation, the government will have to raise taxes to cover the deficit, spiking the punchbowl and continuing the cycle of debt deflation. And of course, all of the Bank of Japan’s attempts at reigniting inflation and inflating away that debt through complicated monetary operations in financial markets have up until now proven pretty ineffectual.
This is where some form of universal basic income comes in: ultimately, the most direct stimulus for lifting inflation and triggering productive economic activity is putting cash in the people’s hands. What I am suggesting is nothing less than printing money and giving it away to people – as opposed to trying to push it out through the complicated and convoluted transmission mechanism of financial sector lending. This will ultimately become governments’ major backstop against debt deflation, as well as the temporary joblessness and economic inequality created by technological acceleration. Everything else, thus far, has been pushing on a string. And the deflationary pressure is only going to become stronger as efficiency rises and rises.
Throw enough newly-created money into the economy, inject inflation, and nominal tax revenues can rise to cover the debt load. Similarly, if inflation gets too high, cut back on the money-creation or take money out of circulation and bring inflation into check, just as central banks have done for the last century.
The biggest obstacle to this, in my view, is the interests of those with lots of money, who like deflation because it increases their purchasing power. But in the end, rich people aren’t just sitting on hoards of cash. Most of them do have businesses that would benefit from their clients having higher incomes so as to increase spending, and thus their incomes. Indeed, in a debt-deflationary spiral with default cascades, many of these rentiers would face the same ruin as their clients, as their clients default on their obligations.
And yes, I know that there are legal obstacles to fully-blown ‘helicopter money‘, chiefly the notion of central bank independence. But I am an advocate of central bank independence, for a variety of reasons. Indeed, I don’t think that universal basic income should be a function of fiscal spending at all, not least because I think that dispassionate and economically literate central bankers tend to be better managers of monetary expansion and contraction than politically motivated – and generally less economically literate – politicians. So everything I am describing can and should be envisioned as a function of monetary policy. Indeed, what I am advocating for is a new set of core monetary policy tools for the 21st century.
by Kate McFarland | Apr 19, 2016 | News
Rutger Bregman in June 2015
Source: Victor van Werkhooven (Wikimedia Commons)
Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek, the latest book by the award-winning Dutch journalist Rutger Bregman, will be published in English on Tuesday, April 19. The book was originally published in Dutch, and met immense success in the Netherlands — where it not only became a national bestseller but also helped to spearhead the movement for municipality-level basic income experiments.
Early in the book, Bregman transports the reader back to a long-gone time of utopian fantasy — to visions of “Cockaigne,” a land where “rivers ran with wine, roast geese flew overhead, pancakes grew on trees, and hot pies and pastries rained from the skies,” and all people danced, drank, and lounged together as equals. A new vision of utopia, he argues, is sorely needed in modern societies.
A century ago, influential thinkers like John Maynard Keynes predicted that automation and improved efficiency would render work all but gone in the not-so-distant future. Instead, here in the early decades of the 21st century, we citizens of developed nations find ourselves working longer hours than ever — all too often in jobs that we ourselves find meaningless. (On the last point, see Bregman’s lucid discussion of “bullshit jobs” in hist chapter entitled “Why it Doesn’t Pay to be a Banker.”) Technology has brought great improvements in living conditions — at least for a few — but dreams of a paradise of leisure seem lost to the wind.
Detail from Pieter Bruegel the Elder’s “Luilekkerland” (“The Land of Cockaigne”), 1567
How, then, can we reclaim our visions of utopia? How can we turn our modern “Land of Plenty,” as Bregman often calls it, into a land of plenty for all — and plentiful leisure and life-fulfillment as well?
No doubt, many skeptics and naysayers will find Bregman’s solutions — his visions of a universal basic income and a 15-hour workweek — to be fanciful as the mythical land of Cockaigne. Bregman himself concedes that, to many, his proposals will sound like “crazy dreams.” But it can’t be over-stressed that this “crazy dream” is, indeed, a “utopia for realists.” Far from being a woolly-headed dreamer, Bregman proposes and describes specific steps en route to utopia — from disincentivizing overtime to taxing banking transactions to developing alternative measure of progress to the GDP — and thoroughly backs his claims with diverse historical and experimental evidence.
For example, in his first chapter on basic income (“Why Everyone Should Get Free Money”), Bregman presents the findings of multiple studies of the effects of “free money.” He discusses the results of “Mincome” experiment in Dauphin, Manitoba, and similar concurrent studies conducted in the United States, in some detail — in addition to summarizing the outcomes observed by charitable organizations like GiveDirectly, which deals in no-strings-attached cash donations, and formal studies of cash transfers to the poor. He effectively combines statistics, anecdotes, and theoretical considerations in making the case that a basic income is the most effective means to combat poverty — a realistic approach to utopia-building if any is.
Of course, as Bregman knows, basic income, on its own, is not sufficient to create a utopian future. I will leave it to the reader to discover the other facets and nuances of his “crazy dream” — but, as an educator, I do want to call special attention to Bregman’s critique of our present discourse about education, which he (accurately) notes “invariably revolved around the question: Which knowledge and skills do today’s students need to get hired in tomorrow’s job market?” According to Bregman, this is “precisely the wrong question.” Instead, educators must ask what knowledge and skills we want students to have — to prepare them “not only for the job market but, more fundamentally, for life.” I couldn’t agree more. (Of course, as a philosophy instructor, I also couldn’t agree more when Bregman specifically recommends training students in “philosophy and morals,” but I digress…)
Utopia for Realists is a highly recommended read — but, in the words of Reading Rainbow’s LeVar Burton, you don’t have to take my word for it. Bregman’s book has received widespread praise from noted scholars and thinkers in the basic income movement and beyond.
Nick Srnicek, the co-author of another influential utopian-leaning book (Inventing the Future: Postcapitalism and a World Without Work), calls Utopia for Realists “a bold call for utopian thinking and a world without work – something needed more than ever in an era of defeatism and lack of ambition,” while noted social theorist Zygmunt Bauman describes it as “brilliant, comprehensive, truly enlightening, and eminently readable” and “obligatory reading for everyone worried about the wrongs of present-day society and wishing to contribute to their cure.”
BIEN co-founder Philippe van Parijs also commends the book, saying, “Learning from history and from up-to-date social science can shatter crippling illusions. It can turn allegedly utopian proposals into plain common sense. It can enable us to face the future with unprecedented enthusiasm. To see how, read this superbly written, upbeat, insightful book.”
To learn more about Rutger Bregman and Utopia for Realists, visit the website of its publisher The Correspondent, a crowdfunded online journal for which Bregman has written extensively.
Bregman was recently interviewed by Gawker about basic income, in conjunction with the English version release of his book. The interview covers much ground, including the feasibility of a basic income in the United States (Bregman sees a “natural fit” for a basic income in the US, calling it the “ultimate marriage of conservative and progressive politics”), and responses to a battery of potential objections, such as the free-rider problem, the threat of inflation, and the worry that an economy in which people work fewer hours could not generate sufficient revenue to finance a basic income.
For a short and accessible video introduction to Bregman’s ideas about a basic income, watch his TEDx talk on YouTube.
