Saturday, 8 August 2020

Is UBI an unambitious solution to the forthcoming changes in work and society?

I've been thinking of writing a post about universal basic income (UBI) since I returned to blogging. It is no small topic. I don't pretend that this article will cover every aspect. I have also drawn in some short explainer videos to help with the background.

Let's kick off with one from a time before Covid-19:

However, it is Covid-19 which has really sharpened focus on the idea of UBI, and so a more updated overview is helpful:

UBI tends to be promoted these days by the political left, although something similar was once advocated by Friedrich Hayek and it does strike me as one of those issues which is not well served by the old fashioned political spectrum.

Covid-19 may have drawn more people to the cause and hurried the pace, but the more established principles behind UBI relate to changing work and societal patterns. The digital revolution transformed the work place but as that morphs into vast automation and especially the use of artificial intelligence (AI) work / life balance will change for millions.

It will be possible to have increased output productivity, increased profitability for the manufacturer and increased tax revenues for the state while for many people they will have an increase in leisure time but potentially a relative decrease in their earned income. In such a circumstances it is understandable why there is an attraction to the re-distributive nature of UBI.

As the videos above reference there are varied scales of UBI from a safety net payment to replace and simplify the benefits system with a significant efficiency in eliminating bureaucracy, through to UBI being used as light cover for a very high tax society with an enormous shift in reliance on the state. Spoiler: very high tax policies tend not to last very long because they exist to punish the rich, who are best able to work the tax loopholes anyway, rather than grow the economy for all. I think the former UBI proposal is by far the more likely model, so that is what I have in mind as I write this. 

However, even in this scenario if one presumes that UBI will provide the equivalent of full time employment at the national living wage rate, then it does raise the question over provision of money for nothing. Many people will seek to top up their income through paid employment but that will be down to their own motivation rather than encouraged by the system.

Some will simply oppose UBI because it creates a system in which more people are reliant on state largess. Instinctively, this argument resonates with me, but I think it is fast going to become out-dated with the widespread roll out of AI in the economy. The state will grow as the economy changes and it is ideas of how that is managed in a way which does not make us slavish to it and allows us to retain our innovative instinct for which we need to develop policy.

Covid-19 has re-emphasised the idea of the key worker. Many of them providing a vital service to society while on relatively low pay and with poor working conditions. Many of these roles will not lend themselves easily to AI solutions. The human-interaction element is crucial. There is already a strong case for increasing the salary and improving the conditions of this work. However, no matter what happens in the interim, that could become a very sustainable long-term goal as AI expands. If the state is to grow it makes sense to do so via an expansion of state-provided services, not just through the redistribution of cash without commitment. This could create more, better paid roles within our key service sector which could share the workload better than at present.

Here are the key steps I would suggest:
  • Incentivise AI development in the UK including with close partnership with European neighbours and friendly democratic nations;
  • Legislate to mitigate dominance of Chinese and US AI dominance
  • Separate the short-term idea of UBI to bounce-back from the damage done to our economy by the pandemic from the long-term need to respond to changing work patterns;
  • Robustly assess what constitutes a key worker role to avoid an over-dominant state (the risk of creep to encompass favourite industries picked by politicians and influential figures is real), but having done so gradually bring these roles back into the public sector as existing outsourcing contracts expire to allow greater scope for decision-making to prepare for the AI economy;
  • Root policy making in sound economics and avoid the headline ideology of the small-state right or the high-tax left.
The last six months have re-emphaised the role of key workers and redefined our perspectives on what constitutes society. It has also seen a huge increase in the role of the state in our lives. The immediate decision is to respond to the damage wrought by Covid-19 but decision-makers should also consider how best to navigate the forthcoming rapid changes to work and society which until the pandemic was the focus of much of the UBI debate.