Perhaps the Nat-bots will behappy knowing that Labours discussion
about UBI is following in the p[aths of Milton Freidman, Richard Nixon
and Sarah Palin! (as well as many eminent thinkers on the left . . .)


http://www.ft.com/cms/s/0/a9758f1a-e9c0-11e5-888e-2eadd5fbc4a4.html#ixzz433YBwPd0

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Columnists

March 14, 2016 4:14 pm

A universal basic income is an old idea with modern appeal

John Thornhill


Developed countries have to reform their welfare states to adapt to technological upheavals


When Andy Stern wanted someone to transcribe an interview he had
recorded for a book, he posted the job details on upwork.com. He was
pleased to receive almost instant replies from US freelancers as well
as those from as far away as the Philippines and Sri Lanka. But
whereas US freelancers pitched between $12.50 to $25 an hour, those
elsewhere offered $3 to $7.50.

For the former president of the Service Employees International Union,
it was a bittersweet revelation. How could 53m freelance workers in
the US ever hope to maintain their living standards when technology
had created such a transparent global marketplace?

That experience only hardened Mr Stern in his conviction that
developed countries have radically to reform their welfare states to
adapt to the technological upheavals of the 21st century.

³We built a whole social infrastructure based on the concept of a job,
and that concept does not work any more,² he writes in his book
Raising The Floor , to be published this year.

Instead, Mr Stern argues powerfully for the US government to provide a universal basic income (UBI) of $1,000 a month to every citizen. Such
a guaranteed income, he says, could prove a smarter way of tackling
poverty than the $1tn spent each year by 126 federal, state, and local anti-poverty programmes. It would also boost demand in the economy,
give people more flexibility to retrain, look after children or
elderly parents, start businesses and revive the promise of the
American dream.

Such a proposal will strike many readers as mad. But in a world in
which investors are paying some governments for the privilege of
lending them money, it is no longer clear where the boundaries of
economic sanity lie.

Besides, the concept of rich societies giving poor citizens enough
money so they are no longer poor does not strike everyone as insane.

Supporters of basic income have a long ‹ and frustrated ‹ history,
dating back to the 18th century radical Thomas Paine. The movement
burst into life in the US in the 1960s, when liberals, such as John
Kenneth Galbraith and Martin Luther King, emerged as vocal champions.
Some conservative thinkers too saw it as a means of providing greater
choice. Milton Friedman backed a variant of UBI: a negative income tax
in which top-up cash payments would be made to those below the poverty
line.

In 1969 President Richard Nixon drew up a Family Assistance Plan,
offering families with no earned income a conditional income
supplement of about $1,600 a year ($10,320 in 2014 money). The
proposal passed the House of Representatives but died in the Senate.

However, the workability ‹ and popularity ‹ of basic income has been
shown in Alaska. Since 1982 the state has paid a basic income to every
Alaskan, funded by oil revenues. Alaska has one of the lowest poverty
and inequality rates in the US.

The UBI movement is gathering momentum elsewhere. Switzerland is
holding a referendum on basic income this year. The Canadian and
Finnish governments are experimenting too. The Dutch city of Utrecht
has launched a pilot project to test its viability.

In the UK, the RSA recently published a report modelling the costs of
a basic income of £3,692 for all citizens aged between 25 and 65, with additional payments for children and pensioners. By cutting
overlapping welfare payments and ensuring distributional fairness, the
RSA calculated it would cost an additional 1 per cent of gross
domestic product but would bring many benefits.

Anthony Painter, one of the authors, argues that linking income to
voter registration would reinforce social solidarity. ³It is a very
powerful tool of citizenship,² he says.

Enthusiasm for UBI has spread among Silicon Valley entrepreneurs, who
say we now have the computational skills to model such social
programmes. Although UBI is simple in theory, there are complex
trade-offs between its impact and affordability, as the Cato Institute
has highlighted. Sam Altman, president of Y Combinator, a start-up
incubator, is funding a research project.

Mr Stern believes the US economy is reaching a ³Vietnam moment². It
was only when middle class children were drafted that public opinion
swung decisively against the Vietnam war.

Globalisation has destroyed many blue-collar jobs but technological
change is now threatening the professions. ³The middle class is no
longer immune,² he says.

That makes it an opportune moment for a full debate about the
practicalities and costs of basic income. It is an old idea whose time
may finally have come.

Copyright The Financial Times Limited 2016.

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