The digitization of our economy will bring with it a new generation of radical economic ideologies, of which Bitcoin is arguably the first. For those with assets, technological savvy, and a sense of adventure, the state is the enemy and a cryptographic currency is the solution. But for those more focused on the decline of the middle classes, the collapse of the entry-level jobs market, and the rise of free culture, the state is an ally, and the solution might look something like an unconditional basic income. Before I explain why this concept is going to be creeping into the political debate across the developed world, let me spell out how a system like this would look:
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Every single adult member receives a weekly payment from the state, which is enough to live comfortably on. The only condition is citizenship and/or residency.
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You get the basic income whether or not you’re employed, any wages you earn are additional.
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The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.
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Employment law is liberalised, as workers no longer need to fear dismissal.
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People work for jobs that are available in order to increase their disposable income.
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Large swathes of the economy are replaced by volunteerism, a continuation of the current trend.
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The system would be harder to cheat when there’s only a single category of claimant, with no extraordinary allowances.
This may sound off-the-charts radical, but here’s why you’re going to be hearing a lot more about it:
1 – The Middle Classes Are In Freefall
As Jaron Lanier points out, Kodak once provided 140,000 middle class jobs, and in the smouldering ruins of that company’s bankruptcy we have Instagram, with 13 employees. It’s an extreme example, in most cases the economic misery is largely confined to young people, with entry-level workers trapped in a cycle of internships, ever-lengthening education, and debt. The result is that young people are not being allowed to grow up. In the 1960s the average first-time house buyer was 24 years old, and as late as 2002 it was 28. The average is now 37. The path to economic selfhood is being stretched by market forces, too many people chasing too few jobs, and a continuation of the status quo is likely to push that lifeboat out even further.
In stripping out inefficiencies and pushing digital goods to near-free prices, the Internet kills middle-class jobs. Digitization has already largely de-monetized academia, film, music, journalism, and lots more besides. More industries will feel the pain, including the legal professions, real estate, insurance, accounting, and the civil service, all of which are built on inefficiency, and all of which will be stripped of jobs in the years to come. As it becomes clear to those with established positions that there are no jobs for their children, they’ll push for a more radical solution.
To put this in econometric terms, wages as a share of the economy have been in long term decline and recently hit a new low in the United States. Meanwhile corporate profit margins have hit an all time high. The last few years of economic turmoil has allowed industry to reduce staff numbers and reduce entry-level pay, without reducing capacity. If that trend continues, wealth creation will increasingly be confined to those with capital, and things start to follow a Marxist logic. The middle classes (and their elected representatives) will not let that happen.
2 – Demand For Human Labour Is In Long Term Decline
Imagine a point in the future when robots do more of our physical labour, computers do more of our mental labour, and our mechanized-digitized economy is ten times more efficient. We don’t need to agree on a date, this could be 2050 or it could be 2500, all we need to agree on is that current trends are likely to continue in the same direction. Between now and then two things can happen, either we do 90% less work, or we demand ten times more goods and services, or a bit of both. The first option requires that we drastically revise downwards our expectations of how much work people do, the second requires that we drastically redistribute purchasing power to consumers.
We’ve redefined work in the past, so there’s no reason we can’t do it again. The concept of “a job” as something that happens outside the home and for someone else is a largely Victorian creation. Even after it was formalized into an obligation to the market economy, we always accepted that certain people do not have to work. We do not expect infants, the elderly, or the disabled to work, and these categories are relatively fluid. The expectation that children work inside and outside the home has been in steady decline ever since the industrial revolution, while the default retirement age has crept ever later, pushed by governments avoiding a pension crisis and senior employees hanging on to their established social roles. While men were forced out of the home to do paid work, women were kept in the family home to do unpaid work. During the world wars, everyone was expected to work. During a world cup final, almost nobody is expected to work. We regularly change our expectations of who works and how. Forcing the unemployed onto a jobless market on the basis that “everybody has to work” is at best misguided and at worst cruel.
In 2012 the average working year in South Korea was 2,226 hours, and in the Netherlands it was 1,381 hours, 38% less. You can have a rich, developed economy on relatively little work. If we stop stigmatizing the non-employed, we can stop pushing people into jobs that offer little collective benefit. From telemarketers to chuggers to sign holders to beggars, huge numbers of people are forced to eek out an existence on the fringes of the economy in roles that have almost no marginal economic output.
3 – Cultural Production Is Detaching From The Market
We already have a society of volunteers and creators, and that’s a good thing. That Wikipedia article you just read, the parkour YouTube video you just watched, that Russian electronica you’re listening to, the code that powers your browser, all were probably given away for free. Everyone expected an information economy, and instead we got an information culture.
When people are locked out of the jobs market, some may sit at home all day on the couch, but many will go out into the world and produce cultural goods that they then give them away for free. I don’t buy into the myth that unemployed people are lazy. I’ve lived in a country that had a period of “full employment” and now has 14% unemployment, and I don’t see how anyone can be so misanthropic to claim that those 14% of people just got lazier. Employment doesn’t just give people an income, it also gives them an identity, status, confidence, a sense of mission, and a network of peers. Anyone given access to those rewards will work for them. As the fantastic talk by Dan Pink puts it, we are motivated by autonomy, mastery, and purpose, but not money. As machines take over more of our work, we are going to have to find other ways of letting people fulfil these human needs. Forcing them to send 500 CVs out every week is not a good start.
Don’t dismiss this as socialism, it involves a complete rejection of the Stakhanovite work ethic and a full-throttle embrace of consumer culture.
How would we pay for it?
We could start by getting corporations to pay their taxes. As I mentioned above, corporate profit margins have hit an all time high, and that money will circulate far faster if it’s placed in the hands of consumers. For salaried workers a basic income would likely be a repackaging of tax free allowances, although they would likely need a net gain to buy into it. The scheme would also yield savings elsewhere in the public sector, from a reduction in the size of the bureaucracy, to an increasing role for volunteers and charities. The scheme would also stimulate economic activity, as shown by the PPI scandal in Britain which forced the transfer of £10 billion from banks to customers, and led to a GDP growth boost of 0.1% because consumers were so much quicker to spend it.
Frankly, in an era when communities can create their own currencies, capital can sneak across digital borders despite being legally frozen, and economic production is increasingly decentralized, finding ways of fairly collecting revenue for the public good is going to be one of the big questions of the century, regardless of whether or not we have an unconditional basic income. Under the current set of rules, most developed world governments are bankrupt, but as the bank bailouts proved, the rules can be rewritten when needs be. Money is a device we use to help us allocate resources, it is a symbol and an understanding, seemingly solid in the short term, but flexible and evolutionary in the long term. If you burn all the notes in your wallet right now, you haven’t made the world any poorer, you’ve simply reduced your personal claim to available resources. There is always more money.
As has become increasingly clear, austerity is not working, and should never have been expected to work. An unconditional basic income would be the Keynesian response that should have been launched as soon as it became clear the financial sector had a rotten core. In other words, it would be a bailout for consumers.
Fabulous post, thanks. I see this particular topic getting fleshed out and its subtleties being articulated beyond refutation very soon.
“Ad hominem is the refuge of the scoundrel, without any decent arguments.”
How is requiring volunteer hours for welfare ‘bullying’ someone to do something ‘for free?’ If the person receives assistance, they are not doing anything for free. This kind of entitlement rhetoric is dangerous. How will you get corporations to pay? With your free state-sponsored legal council? BitCoin is one step closer to a cashless society and embedded RFID. The middle class is slipping, and it is the one thing in the way of total oligarchic dominance. Instead of a robot paradise (I’ve heard this referred to as ‘life after work’) many people will simply not survive. That is the plan, and it’s working. Those demanding assistance from the government, and those with worthless degrees, will be a part of the ‘sustainable’ crews bringing about ‘smart’ development, population reduction, et al. They will do this believing they are a part of the solution… and they are.
Don’t dismiss this as _______, instead look to the death of Socrates and the sophists. I fear a great number of well meaning people fail to grasp the impact of sophistry and hence fall victim to supposedly ‘democratic’ movements.
“We are the riders of the Pale Horse: Death.” – Barbara Marx Hubbard
if they’re working for the ‘assistance’ it’s a job. the employer is either paying at least the minimum wage and employment (social security, medicare) taxes, or is stealing.
Right, so if a person works, they receive due compensation and potentially other benefits. If they can (yet don’t) work and receive compensation, they are stealing.
Perhaps what needs to happen is a reevaluation of what it means to ‘work.’
There was a social experiment in Dauphin, MB, Canada that was called “mincome”. It was a ridiculous success!
https://www.pirateparty.ca/2013/05/15/lets-talk-about-mincome/
http://www.winnipegfreepress.com/opinion/analysis/its-time-to-give-mincome-another-look-166728506.html
http://en.wikipedia.org/wiki/Monarchy_of_Canada
I’m not exactly a fan of the man, or of the Austrian school of economics, but I really think Milton Friedman was onto something with the Negative Income Tax. It’d probably be the most efficient way to implement something like this.
Actually, the NIT was proposed by Juliet Rhys-Williams, and Friedman just picked it up to suggest a “lesser evil” for the income tax, but both taxes MF perceived as contrary to the neo-libreral state model his teachings have brought upon us.
I wasn’t aware of that, and thanks for the name. Friedman made a very public attempt to get NIT implemented, so it’s easy to lose track of where it came from.
I do think that attaching his name to it is a great way to get everyone on board with the idea of a basic income considering he’s such a conservative icon. It’s Milton Friedman approved!
Here’s a video of Milton Friedman discussing his Negative Income Tax.
Do you even know what the Austrian school of economics is? You’re clearly clueless if you think Friedman was an Austrian.
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Basically, this line of thought opens one up to be the unwitting accomplice, the ‘useful idiot’ of the ultra-rich elitists. Dig a little deeper, Lui.
Geolibertarianism was mentioned in the comments previously. I think this is key to understand basic income, and how to fund it, in terms of captialism and liberal/libertarian views.
What it boils down to is the ethics surrounding individuals rights to resources and the what is expected in return. Is it right to have “free” money, so to speak?
I suggest that there is no reason to think basic income as free. It can very well be implemented with a clear expectations of the recieving party, while at the same time provide a sound economic implementation. Heck, it could probably be restated as a “basic contract” rather than “basic income” to further afford this view.
From a practical stand point it has been argued before that there should be no taxes on income or capital, but instead only a tax on land value (Henry George, 1879), not least for reasons of efficiency. A tax on land value would not disincentivize economic transactions in the same way as other taxes do.
The jump from land value taxasion to basic income goes through a slight ethical reconsideration of the meaning of private property. First of all it should be argued that a land value taxasion is more ethical tax than other forms of taxes if property is described as a natural right stemming from the right to ones body, and its labour. Most taxes can be seen as being in direct conflict with ones right to ones labour. Land value taxation can be seen as a tax on the input to that labour, and thus no conflict there.
Instead we need to ask, by what right can we tax land, and by what right can one appropriate land to mix ones labor with it? Locke started from the notion that all land was given by god as common property, others view it as completley unowned until first possession.
I suggest a third view: land is uncontended, until two or more people see utility in it. That is, regardless of wether we see it as common property, or unowned, we use private property as a means to solve contention.
The ethical reconsideration I propose is that we completly reject the first possession theory of property, and for whatever reasons, religious or pragmatic, view land as essentially common property before it is allocated as private property. Meaning for some land to become private property it has to first be removed from the commons.
How do we, non-violently, remove something from the commons? A contract of course!
“We, the commoners, herby grant you, the private owner, exclusive rights over this piece of land. We promise not claim posession over the land until, and as long as…”
And this is where basic income enters the picture. As a commoner I expect to be compensated in full for the value of the land I am now waivering my rights to. I expect the best contract for both parties to be if the full rent of the land is paid by the proprietor to the commons in compensation for the exclusive riths to it.
So the basic income would then be nothing else than the full compensasion for retaining exclusive rights to something which, without a contract, would belong to the commons.
Agreed. I have written extensively on this topic, take a look at http://wealthoflabour.wordpress.com
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Robert HEINLEIN extensively explores this concept in his very first novel “For Us The Living”
Actually, Heinlein explores this idea in multiple books; Beyond This Horizon is another.
Lessee now. A century of voting for the party that promises the most Free Shit from the Gubmint has brought the West to its knees. I’ve a real hot idea for fixing it: what we really need is more, guaranteed, FSftG.
Yeah, that ought to work.
And, wow, here’s a really original thought. Let’s screw more out of the richbastards to pay for it. I mean, shit, everybody knows that they keep their money in a money-bunker like Scrooge McDuck. They’re fuckin’ capitalists, right? So they’re never going to invest their money, so they can employ people and produce stuff and make profits so they can actually pay some fuckin’ taxes, right?
Jeez.
You have issues, obviously.
I love it when people either don’t read the ENTIRE ARTICLE or do read it and FAIL to comprehend it.
No wait, I don’t.
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| We do not expect infants, the elderly, or the disabled to work, and these categories are relatively fluid.
Yes, yes, they do expect the disabled to work. My rent’s going up 6%, $85 next month, and the government isn’t giving me $85 more dollars nor is my wife going to earn $85 more dollars in her service industry job nor is my dad going to give me $85 more dollars of the $1000 he already gives me to pay rent because I don’t contribute enough to the household for us to support ourselves. No he expects me to work, the government does too, so does the apartment managers, owners, etc. My wife does too.
A reblogué ceci sur PROF NUTON and commented:
En anglais… Je conseille néanmoins sa lecture à ceux que la langue de Shakespeare ne rebute pas. Le revenu universel d’existence, c’est pour bientôt ?
Basic Income is Communism ! Communism is absolute evil as we all know !
The Bible says, “Who does not work, shall not eat”. It is a duty to work, so no communist free money for anyone !
please take your ignorance and travel back 2000years where you belong.
Oh, huh, interesting. The Bible also says to sell all your possessions and give the money to the poor.
Related: https://www.pirateparty.ca/2013/05/15/lets-talk-about-mincome/
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Capitalism is made up of wealthy investors and cheap labor. A middle class is not an inherent feature of capitalism. In fact a middle class only exists out of collective bargaining and unionization, which are inherently socialist. Its no surprise that as the wealthy fight for continued deregulation of capitalism, these sorts of problems will always pop up in some shape or form.
Capitalism never worked, and its silly to hold onto an economic system that is only designed to enable the wealthy to get wealthier. Entitling control of the economy to the people with the most wealth spells disaster for any civilization that is trying to look out for each and every person. Especially because that wealth is acquired by stealing the fruits of the working class’s labor. Prior to the civil war, the collective worth of slaves was something like 3.5 billion, more than every other asset in America combined! In a purely capitalist world, a wealthy individual/corporation CAN OWN PEOPLE. Or water. Or the food supply.
Capitalism always has and always will require a greater class of people to work long hours for tiny wages. The more we embrace capitalism, the more we will go back to the days of the late 1800s where people worked 10+ hours a day, every day, for tiny pay and compromised health. In fact, this happens overseas because its ILLEGAL in America, but corporations still figure out how to effectively pay their cheapest employees less than minimum wage in America. Actually, the more we embrace capitalism, the closer we will get to the conditions that allowed capitalism to thrive in the first place – slavery.
Awesome mini piece, clear as day, thanks!
A paleo-conservative think tanker, Charles Murray, wrote about a basic income guarantee with his “In Our Hands” several years ago. He looked at the numbers and said 10k/yr was the price point if kept transfer payments static. I suspect “comfortable living” is out of reach for the time being, and unfortunately, innovation is slowing (per Peter Thiel), so I’m not sure when it might become feasible, but I’d like to think it’s something to shoot for a generation or two down the road.
I have been tryiong to push a Basic, or citizens’ Income for 40 years. Is it really about to happen? but unlike all other advocates, I also say it is one of the measures needed to keep the planet fit for future generations. The Christian who quotes the bible needs a better answer than to tell him he is antediluvian (even though he is). the point he and people like him ( there are a lot about) need to grasp is that means testing is the real evil.
Please read my blog, or better still my book (link on the blog)
http://www.clivelord.wordpress.com
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Excellent article. Most of the population think that the idea of robots performing all of our physical labor (and eventually, service jobs) is just sci-fi but the fact is it is already happening and has been for some time. This gradual trend is speeding up quickly and it is inevitable that it will continue. Foxcon, the company that makes the iphone and ipads, recently purchase 10,000 robots and is planning to purchase 20,000 more which will replace a huge number of human workers. This is just one example of what we can expect to continue in the future.
Reblogged this on STORY 2 SUCCESS BLOG.
Congratulations, if you combine your proposal with a simplified tax structure you basically get what opponents have called a flat tax. The idea is simple, that every person gets a fixed checked for a given amount simply by membership in a society (for example $20,000.) Then a single tax rate is applied to everyone’s income (say 20%) regardless of source (capital gains, payroll, Then you get a truly progressive tax rate that is both fair and provides for basic needs.
The effect, using the numbers above, is that people making less than $100,000 would actually net money from the government and people making over that amount would pay higher and higher tax rate approaching 20%. Of course those are example number, they whatever we decide is fair (maybe $25,000 and a rate of 40%.) Regardless the results are the same, there is NO income disincentive (economically logical situations were people don’t want to work because of existing social benefit loss ), simplification of the tax code (which some estimates say causes the government to loose as much at 30% of its expected revenue due to evasion and administrative costs), and what is more the system would less adversely effect the supply-demand pressures in just giving people a direct payment (if you increase everyone’s income by 25,000 there will actually be no net increase in people’s income because of the inflationary nature of money.)
Bob,
I wish we could get the middle left and the middle right together on this. Although a flat tax is associated with the right, I agree with you that it, as you have laid it out, answers some of the most pressing concerns of the left as well. i think it would have to be more then $20,000 unless some other support were provided like government subsidized basic housing and education, (20K a year is less then the year’s rent for a minimal apartment in some parts of the country right now), but these are just details I believe honest and concerned people could hash out.
Norway provides healthcare, housing, education and living support to its citizens. And has one of the highest per capita entrepreneur levels in the world.
The “carrot and stick” notion that people have to be threatened to make them work was disproved a long time ago by psychologists.
(See this TED talk: http://www.ted.com/talks/dan_pink_on_motivation.html)
You are 100% right about the solution to an economy that is shedding need for workers at an alarming rate. Unfortunately, those that control our economy and our politics would rather keep all the benefits of our increased societal efficiency to themselves. And much of the rest of America can easily be bought off with the proverbial “plate of porridge” in the form of platitudes about the “evils of socialism.” And the divide and conquer strategy of getting the poor to blame other poor for their lack of employment prospects.
Jeff is correct that people do not need to be forced in order for them to work, but it is clear from observation that some people will work less than others (perhaps not even enough to support themselves) and some will work hard but to little effect. Besides this, there are many hard-working people who will happily work on their own projects without regard to what other people want. This can produce results that are wonderful but also results that are useless. Some of the socialist nations in Europe purportedly had (perhaps still have) warehouses full of state-subsidized art that no one wants.
It’s all very nice if society can afford to let everyone follow their own heart, but even in a technological future we will need people to actually supply the needs of others – and that is where the capitalist system fits in. That is what free markets do: they reward people for providing goods and services that other people want.
This may not always be fair. Many innovators never benefit from their labors. In my own life, during a period of unemployment in the 1990s I contributed quite a bit of labor to Project Gutenberg. One of the books I put online had not been published since the original printing in 1914 and had been pretty much forgotten, but since I put it online it has been republished several times and has even been used in college courses. At the time it was difficult even to give copies away, but now several people have made money through my labor even though I have not – because at that time what I was “selling” had no buyers. But then the original Johannes Gutenberg never got rich off his invention either, even though it is the most important invention in human history. I can hardly complain – I have benefited greatly from the work of unpaid innovators. That’s just the way things go sometimes. In the meantime, we need food to eat and roofs over our heads – and to get people to do work like that – work that we all need done but which isn’t always fun – we need markets.
The great thing about the basic income idea is that it preserves the functioning of markets while ensuring everyone has their basic needs met. By ridding ourselves of unnecessary administrative and compliance costs, we could even increase productivity by releasing many workers to find new and more fulfilling outlets for their creativity while removing barriers from entrepreneurs and avoiding the indignities and corruption inherent in means testing. For those concerned that $10,000 per year is too low, keep in mind that this would be *per person*. A family of four would get $40,000 plus whatever they could earn on the side.
I am sick of the Norway example being thrown around. You don’t look at why Norway is actually successful. Sure if everyone in the world had the same basic attitudes about life as Norwegians then the system would work. But guess what, it isn’t like that in real life and Norway’s system won’t work in the U.S. http://www.americanthinker.com/2012/07/the_norwegian_miracle.html
A quote from your article…
“Let me summarize its [Norway's] real keys to prosperity.
* A tiny, non-diverse, predominantly white and Christian population.”
Wow, convincing… and not at all racist.
“* Drilling in its ocean for oil to become one of the biggest oil exporters on the planet, and the biggest by far on a per capita basis, all during a time when oil prices quintupled.”
Presumably the point of this is to show that Norway has natural resources, but America has comparatively little. But that ignores America’s biggest natural asset, which is currently almost completely in private hands – the value of its land. The value of land is produced by the entire community surrounding that land. The owners of the land, as owners, contribute nothing to its value, yet they are the principal beneficiary. This causes massive distortions in the economy and robs people of their common right to the value of nature. A far better system would be to use the value of land to fund an unconditional basic income.
The point was to show that Norway has more of the most valuable natural resource per capita than anyone else and that funds their welfare state. The fact that they also have basically no diversity in their population is used to illustrate their work ethic, which is obviously higher than most countries. It may not be politically correct, but Christian work ethic can be real.
You have a good point if you want to say that resource-poor countries cannot use their natural resources to provide a basic income.
You have a very poor point if you want to suggest that the USA does not have natural resources sufficient to provide a basic income. The USA may not have per capita resources equal to Norway, but the USA is an extraordinarily resource-rich nation nevertheless.
Currently, resource-rich and resource-poor nations alike frequently use their resources to keep an elite in power — often, a foreign elite. You can’t get blood from a turnip but that does not mean you can’t share the turnip juice.
To paraphrase Adam Smith: wealth = labor + natural resources. You can multiply each component by finding more efficient ways to employ them. The problem is that each human consumes some portion of this wealth, in the form of goods / services / food / etc (actually, most humans consume quite a bit more than the bare minimum). While you can skim quite a bit off the top to sustain non-producers, especially in the near-post-industrial age, there’s a limit to how many non-producers a society can sustain. [For the purposes of this discussion "producer" means "someone who contributes to the lowest 2 tiers of Maslow's Hierarchy, particularly the bottom tier".]
Throughout history, the ratio of non-producers / producers has been quite small, generally enough to support a Praetorian class (soldiers, police – i.e., providers of physical security). It’s the old Hobbes/Locke notion of the Social Contract: give up a portion of your property to pay for the protection of the rest.
As society’s overall wealth increased, the ranks of non-producers eventually encompassed a growing Political class (originally kings and clergy; now politicians, bureaucrats, lobbyists, media, and anyone who has a significant influence upon and benefit from law-making), and also artists, entertainers, teachers, etc. However, most of these people (and to some extent, even the politicians, paparazzi and bureaucrats) provided a service which people were willing to pay for.
However, once you throw open the floodgates and make entry in to the ranks of non-producers available to everyone, you run into trouble.
Once large numbers of people consume without contributing, you start to run out of enough surplus wealth to go around. Leaders are forced to confiscate more and more wealth from those who are still producing, which drives marginal producers to make the (perfectly logical) decision that it isn’t worth the effort of working for the paltry gains that are left after taxes. They go onto the dole, further increasing the consumers and decreasing producers, which drives more wealth-confiscation, which drives more people out of the workforce. It’s a vicious cycle.
This would be feasible if the basic needs of life were essentially free. Science Fiction has produced at least one such utopia that makes economic sense: Earth in the StarTrek universe. However, in that world, manufacturing and even food production are completely automated and instantaneous, and energy is too-cheap-to-meter. StarTrek technology drives the basic amount wealth needed to live down to essentially zero.
S/F author David Weber provides a more realistic view of the eventual effects of a UBI in a world where labor & energy consumption aren’t free. Scroll down to the section on the Republic of Haven.
http://www.library.beau.org/lib/ebooks/baen/01/More%20Than%20Honor/More_Than_Honor.htm
…or just trust Heinlein when he said “TANSTAAFL”.
Right, it isn’t giving away free lunches, it’s investing in the market and reaping indirect benefits via wealth velocity. People are going to deposit that cheque back into the market whence it came, but the effect will be an increase in overall prosperity which actually significantly benefits efficiency for producers among other intangibles.
The basic reality is that there are _lots_ of valuable things that nobody living has to pay for. This includes not just natural resources, but the capital and knowledge that has been accumulated by the human species over the last 1,000,000 years.
(Railroads, refined steel, instruments of measure, high-precision tools, chemical plants, and so on, would not exist were it not for our inheritance. Given _only_ the labor of now-living humans, and _no_ inheritance from thousands of previous generations of humans, the lifestyle of the human species would _not_ differ from the lifestyle of the wild Chimpanzee.)
Every year, the proportion of wealth inherited by humanity over the portion of wealth created by currently-living humans _increases_, because the previously-created currently-inherited knowledge-wealth continues to increase in value. (In economics this is named the Solow residual.)
(Maxwell’s equations represent a higher proportion of economic production _today_ than they did at the time Maxwell formulated them; and, similarly, the value of the labor of nameless stone-age innovators, who invented the iron age, can validly claim to have provided a foundation for the later bronze age, and so on, up to Maxwell. The “debt” which living-humanity “owes” to these stone-age innovators continues to increase, ever-faster, owing to the rapid cumulative nature of “compound interest.”)
Inevitably, it is the problem of humanity to decide on a mechanism for distributing the massive inherited knowledge- and resource-wealth which is _not_ produced by currently-living humans.
Currently, humanity has chosen a polite social fiction as the basis of its economic ideology. We pretend that we, the living, produce all that there is. We apply the following heuristic to decide who is producing all of the things that, in fact, humanity inherits: whoever owns the inheritance pretends to have produced it.
The article we have here raises the issue that the distribution of the Solow residual becomes an _increasingly_ pressing problem for the humans species, because our collective inheritance is approaching 100% of our useful consumable product. If the ever-increasing inherited portion of human wealth reaches 100% of economic production — and we should expect this to happen eventually — we _must_ abolish the polite social fiction that whoever owns a resource has produced it.
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THREE TRENDS THAT WILL CREATE DEMAND FOR AN UNCONDITIONAL BASIC INCOME
The digitization of our economy will bring with it a new generation of radical economic ideologies, of which Bitcoin is arguably the first. For those with assets, technological savvy, and a sense of adventure, the state is the enemy and a cryptographic currency is the solution. But for those more focused on the decline of the middle classes, the collapse of the entry-level jobs market, and the rise of free culture, the state is an ally, and the solution might look something like an unconditional basic income. Before I explain why this concept is going to be creeping into the political debate across the developed world, let me spell out how a system like this would look:
- Every single adult member receives a weekly payment from the state, which is enough to live comfortably on. The only condition is citizenship and/or residency.
- You get the basic income whether or not you’re employed, any wages you earn are additional.
- The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.
- Employment law is liberalised, as workers no longer need to fear dismissal.
- People work for jobs that are available in order to increase their disposable income.
- Large swathes of the economy are replaced by volunteerism, a continuation of the current trend.
- The system would be harder to cheat when there’s only a single category of claimant, with no extraordinary allowances.
This may sound off-the-charts radical, but here’s why you’re going to be hearing a lot more about it:
1 – The Middle Classes Are In Freefall
2 – Demand For Human Labour Is In Long Term Decline
3 – Cultural Production Is Detaching From The Market
How would we pay for it?
We could start by getting corporations to pay their taxes.
In an era when communities can create their own currencies, capital can sneak across digital borders despite being legally frozen, and economic production is increasingly decentralized, finding ways of fairly collecting revenue for the public good is going to be one of the big questions of the century, regardless of whether or not we have an unconditional basic income. Under the current set of rules, most developed world governments are bankrupt, but as the bank bailouts proved, the rules can be rewritten when needs be. Money is a device we use to help us allocate resources, it is a symbol and an understanding, seemingly solid in the short term, but flexible and evolutionary in the long term. If you burn all the notes in your wallet right now, you haven’t made the world any poorer, you’ve simply reduced your personal claim to available resources. There is always more money.
As has become increasingly clear, austerity is not working, and should never have been expected to work. An unconditional basic income would be the Keynesian response that should have been launched as soon as it became clear the financial sector had a rotten core. In other words, it would be a bailout for consumers.
$100US a month ought to do it.
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A problem with any such scheme is that it does not adress sufficiently the underlying problem of a diminishing need for employees of relatively lower competence (together with the modest success of increasing competence through e.g. more education). Cf. an earlier text of mine: http://www.aswedeingermany.de/60Misc/50Automatization.html
As an aside: I recently read Ayn Rand “Atlas shrugged” and while there is a lot of exaggeration in it (presumably for rhetorical purposes) it does make a very compelling case against too much government intervention and too small a correlation between accomplishment and reward. (It can be added that this book appears to have often been misrepresented in public discourse.)
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Some of the ideas mentioned here are quite sound, and will indeed come to pass (very specifically point 2, regarding human labor). I assert that we’re already at a level of productive efficiency in all essential things.. ie, keeping people fed and sheltered, that unemployment numbers could actually be much, much higher than they are now with little actual impact. The ever increasing levels of global manufacturing, automation, etc, will simply continue magnifying this particular scenario.
Greed is, of course, the giant limiter of progress in this direction however, and it will be interesting to see what eventually happens when the realities of efficiency end up directly challenging long held social beliefs such as the 40 hour work week, everyone earning their keep, land ownership, etc.
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Interesting thoughts, and well put, but I wonder: what will happen to the prices of consumer goods, rents, and energy? Will corporations raise them because they know that the money is out there and they know people can afford it? To work, a basic income needs to cover the basics of living. If it doesn’t because prices go above that level, we have the same situation as now only with more state involvement.
Markets, for all their failings, do at least prevent this. Only monopolies can increase prices just because consumers have more to spend.
This idea does not take into account the limits to growth. The reality in the ground and on the wind is that our resource quality is generally diminishing, and our accumulated wastes are uh accumulating.
Even if theoretically it were to work for a generation, our mammalian tendencies would have us overpopulate and bring the onset of decline in short order, imo.
This is not the garden of Eden. It is a long hard slog regardless of the method of distribution of wealth.
How do you explain the correlation between quality and life and birth rate then? Populations tend to explode only in places where economic survival is uncertain.
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thank you for writing about this – we’ve all been thinking it, but it’s good to see it finally discussed properly.
please join us in irc channel http://webchat.freenode.net/?channels=emergence where we work on what i think you are talking about in your digital movement post: the movement driven by concerns around learning, growth, empowerment, futurebuilding, love, networks, p2p, openness, growing and nurturing communities, collaborative production, coordinating our activities, emerging institutions, ending exploitation, creating safe and open spaces, social technologies for collaboration, cultures of participation, and bringing everyone along
This is an extremely interesting idea, but your article is let down by the “how will we pay for it” section.
Corporation tax makes up a small proportion of tax takings altogether, and I see many people make too much of corporation tax’s ability to raise substantive funds. This is not because most of corporation tax is evaded (though quite a lot is), it is because corporate profits are not very large when compared to the size of GDP altogether.
For an idea like unconditional basic income to have enough intellectual merit to gain mainstream traction, it is crucial to demonstrate its practicality. Anything proposal short of that is just a pipe dream.
So, some numbers on paying for this:
Lets say we want to pay everyone a very basic, but live-able wage. I’ll set this according to a current 37 hour a week “living wage”, as defined by the the UK living wage organisation http://www.livingwage.org.uk/, would be around £13,000.
UK population is around 63 million. Assuming benefits would only be paid to adults, the 20+ population in the UK was 48 million in 2011 (ONS). Paying 48 million people £13,000 a year would cost £624 billion.
To be fair, not all of the £624 billion would be new spending. It would replace all pensions and benefit spending. This already amounts for £260 billion. So we would need to find an additional £364 billion to pay for the basic livable wage. This is not a small number. £364 billion would pay for all public sector services: health, education, defence, transport, police – all of it!
It is interesting however, that £364 billion is not as far out as many might initially assume it is. If we were to raise the existing welfare budget by 20%, and then by 2% every year (so below the long term rate of GDP growth), you would hit £624 billion within 40 years.
(Population would have risen by then however, so maybe you’d need to use a per capita GDP number. I don’t have time to work that out…)
With an ethical foundation in the source of the income maybe the actual size of it isn’t important.
As outlined in my previous comment I think land value rent in the form of a contract with fellow commoners is such a foundation. With a contract in place actual land value would dictate the size of the basic income instead of some arbitrary estimation of basic entitlement.
In practice I think we’ll be surprised of how much that is though. My guess in the area of 90% of the economy as a whole.
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“Money is a device we use to help us allocate resources, it is a symbol and an understanding, seemingly solid in the short term, but flexible and evolutionary in the long term. If you burn all the notes in your wallet right now, you haven’t made the world any poorer, you’ve simply reduced your personal claim to available resources. There is always more money.”
Awesome piece! if a little optimistic.
You mention using corporate tax to pay for, it which makes perfect sense in the long term, and if you think about it, makes the whole corporatarian process kind of communist if implemented.
Awesome movements on the global from are a good sign in that direction as well:
“OECD tax proposals offer G20 ‘once in a century’ chance to fix creaking system”
http://www.guardian.co.uk/business/2013/jul/19/oecd-g20-tax-reform-proposals
The critique I would add is that it ignores the entrenched elite (& their media control), resource scarcity and potential intellectual property rights as a push back.
For that, one of my favorite articles on this topic, the Four futures outlined by Peter Frase from Jacobin covers it really well. Not sure if i mentioned this before. He outlines 4 potential outcomes of increasingly technological society, vis a vis political power and resource availability:
Egalitarianism and abundance: communism
Hierarchy and abundance: rentism
Egalitarianism and scarcity: socialism
Hierarchy and scarcity: exterminism
Highly recommended.
http://jacobinmag.com/2011/12/four-futures/
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