The basic income movement

FLORENCE BOYLE

The celebration of labour on May Day is reflected in the calendar of saints which begins the month with the feast of St Joseph the Worker.  Here an IT specialist considers the impact of technology on traditional patterns of employment and the rise of the basic income movement.

February was the warmest month on the planet on record prompting one wit to wonder –what will get us first, climate change or the robots.  Equally scary?  Both inevitable?   Climate change is the political issue of this generation but who’s worrying, or even talking about the robots?

The progress of technology is visible, fast and sometimes overwhelming.  Most of us have yet to consider, let alone understand what the consequences are for work, family life and society in a world where fewer and fewer people are required in the process of productive economic effort and wealth.

Mundane household tasks like the weekly shopping have been transformed in the last quarter of a century from a visit to the friendly grocer on the high street to trolley pushing around a hangar like 24/7 supermarket.  But now, even supermarkets are becoming less and less a place of human interaction as you pick your own items and weigh your own fruit and veg before scanning your items through an unmanned checkout and packing your own bags.  No human beings required.

Yet for all that, automation has until now been seen as a force for good, eliminating mundane tasks, improving production and quality, reducing the cost of goods for us all.  However, one person’s mundane task is another’s job, one person’s increased leisure time is another’s unemployment.  Now the negative consequences of automation are becoming more apparent, economists and politicians are increasingly turning their attention to what policy responses there are to a world with fewer jobs.

In previous times where jobs have been replaced by a new technology, another new, well paid job sector has appeared, but in recent times as automation has penetrated across so much of the economy the previously normal cycle has been disrupted.   Machines now not only ‘do’ they also ‘think’.  Where in the past humans were still needed to do the thinking and the problem solving, that too can now be done by machines.

In the past the investment required to achieve any savings from technology focused on skilled high cost labour.  Witness the changes in car production and other high end manufacturing.  However, as technology has improved and the cost of investment in technology has become cheaper, those jobs previously done by low cost labour are now becoming increasingly vulnerable to replacement by technology.

In 2013 researchers at the Oxford Martin School at the University of Oxford, which conducts research into global challenges, predicted that in the next two decades 47% of US jobs would be in danger of being lost to automation.   In Australia the estimate is that around 40% of jobs could disappear and in the UK the Bank of England’s chief economist estimates that around 15 million jobs could disappear with those in the administrative, clerical and production sectors most at risk.  A third of jobs in the UK retail sector are forecast to disappear by 2025.

The role of automation helps explain to many why wage growth has been so sluggish in the recent past. Wage growth is one of the key factors in determining living standards, the level of demand in the economy and inflation.  Since the market crash in 2008 wage growth has fallen behind inflation and there has been an annual average drop in pay of nearly 3%.

The disappearance of skilled and semi-skilled well paid labour is starkly demonstrated in the following comparison:  In 1955 the largest employer in the United States, General Motors paid their workers an average of $37 in today’s money.  Sixty years later, in 2015 the largest employer in the United States was Walmart who pay their workers an average of $8.80.  Some of the shortfall, certainly not all of it, has been picked up by taxpayer funded social welfare programmes like Child Tax Credits.  Now questions are being asked here and in the United States about de facto taxpayer subsidisation of employers who fail to pay their workers a living wage.

To some thinkers and economists the answer is straightforward pay everyone, regardless of need, an income.  Finland is trialling the idea with a pilot of around 10,000 people proposed for later this year.  The introduction of a basic income is aimed at replacing part of Finland’s socially security programme.  The intention is to create an incentive for the unemployed to take short term or part time employment without the fear of losing benefits.  For those in work and already earning a wage the state funded basic income would be paid back through increased taxation.

The idea has its supporters across the political spectrum.  For those on the right it is a mechanism to reduce the size of the State, cutting the costs in administering a hugely complex and administratively expensive social welfare schemes.  For those on the left it is a mechanism to reduce inequality.  The Green Party in the UK has included the idea in their platform and experiments similar to the one in Finland are being talked about in the Netherlands, Switzerland, France and Ontario.

Basic Income has its supporters in Scotland.  During the referendum debate Scottish economist, the late Professor Ailsa McKay made the case for Citizen’s Basic Income (CBI) arguing that an independent Scotland presented a unique opportunity to do things differently and shape a distinctively Scottish welfare scenario.  Ailsa McKay saw the introduction of a CBI as an important tool in addressing gender, as well as income inequality.  Since much of the social security system is insurance based it only pays out where there are sufficient contributions.  Women who take time off to have children, or who work part time to accommodate caring responsibilities inevitably receive less from those schemes.

A plethora of claims are made in support of the case for a universal basic income.  Apart from the reduction in inequality supporters also make claims of a reduction in health (particularly drug costs), as people are freed from the worry of where the next penny is coming from.  Women in abusive relationships gain the economic freedom to walk away.  Young people faced with a choice between low paid, insecure work or education, choose education.  Evidence is sketchy, the experiments so far have been small scale but the debate has started.

Last word to Stephen Hawking who, when asked if we should be scared of a robot takeover, responded  ‘Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution.  So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality’.  One of the smartest men in the world confirms – people are scarier than robots.

Florence Boyle is a specialist in IT who works in the healthcare industry and is treasurer of Open House.

Now the negative consequences of automation are becoming more apparent, economists and politicians are increasingly turning their attention to what policy responses there are to a world with fewer jobs.

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