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Universal Basic Income: does it fit with a robotised future economy?

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In March, engineers in China developed a robot which could administer Covid-19 tests. It also had a stethoscope to measure patients’ heart rates. The robot could even disinfect itself before moving on to the next patient! Nurses need not be afraid for their careers: nursing is at least in part about old-fashioned human caring, and this isn’t something a robot can do. But perhaps the rest of us should be afraid: a McKinsey report recently estimated that 45% of jobs could be fully automated using technology that already exists. Presumably this figure will only get higher as technology develops. For the last few years, political theorists have been discussing the various effects the process of ‘robotisation’ might have, and the various ways in which society might cope with the end of human work. I’m going to discuss one of the proposed coping mechanisms: a Universal Basic Income, or UBI. 

A UBI is a relatively simple concept. Where a UBI is in place, each and every citizen receives money from the government which covers the cost of living in that country. If jobs are lost en masse to robots, the argument goes that a UBI will ensure that everyone is able to live with dignity despite being unable to work. But proponents of a UBI point to other potential benefits of the policy, arguing that a UBI would increase citizens’ freedom in a productive way, and would streamline what is currently a complicated and flawed welfare system. 

Obviously, a UBI would give people more financial freedom. The immediate need for work to survive disappears, and this changes people’s behaviour. Opponents of the policy worry that a UBI would cause an exodus from work, which could be potentially disastrous. However, this is likely overstated: information we have access to about how people’s willingness to work changes in response to their income suggests that a UBI would cause a 3% decrease in the supply of labour. At low levels (promotions) and high levels (lottery wins), increases in income almost never make people want to work less; very few of us genuinely work to survive, so getting richer as a result of UBI likely wouldn’t affect whether we work. Secondly, there are a host of potential economic benefits associated with UBI which some believe could counteract the potential decreases in labour hours. It has been well-documented that increased incomes for families with young children results in those children being emotionally healthier and achieving higher levels of educational attainment. A UBI would boost the income of families, so might increase productivity in the long run by making our future workforce healthier and better educated. Finally, it has been argued that a UBI might make the workforce more productive by removing financial constraints on retraining, allowing people to transition into more productive jobs when they can. There are also arguments that UBI would be an improvement on our current welfare system, because it would remove a number of indignities which are caused by our benefits system being means-tested. At present, for example, disabled people have to prove that they are too disabled to work to get certain benefits. This means they have to disclose information about themselves which is potentially distressing, and which they may wish to keep private. To receive Jobseeker’s Allowance, people have to prove they are applying to a set number of potential jobs every day. This means many people have to apply to jobs they know they are unqualified for, a process which forces them to deal with unnecessary rejections. As a final example, you cannot claim Jobseeker’s Allowance if you do voluntary work, because volunteering is seen as proof that you could be in work. This means that people who are capable of selling poppies, but who are not capable of working in a corporate environment, are unfairly prevented from meaningful volunteering. Because UBI is unconditional, indignities like these would simply not be a feature of the welfare system anymore. 

Some argue that because UBI is unconditional, it would prevent people from ‘falling through the gaps’ and not getting the assistance they need. I think this is not true. At present, people can fall through gaps in two ways: one is that they may be eligible for benefits, but not be able to claim them. The other is that they may be eligible for benefits, and receive them, but find that these benefits still aren’t enough to meet their needs. UBI fixes the first issue, because everyone receives the payment, so nobody needs to claim it. But UBI doesn’t prevent the second issue; there could feasibly be people receiving UBI who are unlucky enough to need far more than what it provides. If UBI replaced the NHS, for instance, people with expensive medical conditions would find themselves unable to pay for them. 

I also think there is a fatal flaw with the suggestion that UBI should be a replacement for our current welfare system. The problem is that funding UBI would cost far more money than our existing system. So the fact that UBI would function better isn’t really that significant – our existing model would function better too if we increased its funding three times over. If we did choose to scrap the welfare state, taken broadly (meaning this includes schools, pensions, and healthcare as well as benefits), we would have £484 billion pounds to spend. Divide this up by the UK population in that year (65.65 million people), and we would each receive an annual cheque of £7372.49. So: to make UBI at all worthwhile for people currently using the NHS, or on a state pension, or in a state school, the government would have to increase its revenue significantly. In short, whilst there are many strong arguments in favour of UBI, it must be noted that even if it replaced the welfare state, the government would likely have to increase taxes significantly to pay for it. 

The debate comes down to whether you think increasing taxes in this way would be more damaging than UBI would be beneficial. Of course, the effects of tax raises are fiercely debated, and it wouldn’t be much use to rehearse those arguments here. The topic brings us back to how the debate started: on the issue of robotisation. Perhaps the important question for UBI is whether the robotised economy of the future will be able to cope with the kinds of taxation that would be required to pay for UBI.

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