There are not many policies that unite Milton Friedman, Martin Luther King, Adam Smith, and John McDonnell. Universal Basic Income is a rare exception.
The idea is backed all across the political spectrum, not ‘left’ or ‘right’ but instead ‘forward thinking’. The idea of a Basic Income, a universal payment for all citizens, is a very old concept and is an idea that could help unite the left and the right in an age of increasing polarisation.
While it’s an old idea, advocated by the likes of John Stuart Mill in the 19th century, it has gained renewed relevance recently. One of the reasons is concerns about automation and the fourth industrial revolution.
Whilst earlier revolutions helped labour and created jobs more than they have replaced, and so far automation has increased employment overall, new developments, especially in artificial intelligence, have the potential to replace jobs faster than we can create them.
For example, self-driving automobiles, for example, could replace all bus, taxi and lorry drivers within the next few decades. A PricewaterHouseCoopers (PwC) report stated that a third of British jobs could be under threat from automation by 2030. Increasing numbers of white collar jobs are also threatened to a larger extent than during previous waves of technological progress.
However, UBI could be a welcome reform to our welfare state long before robots have taken over. It has the potential to be less cruel than our current benefits system while supporting those, such as entrepreneurs and the self-employed whose work is more uncertain than the average worker.
Many who want to establish their own businesses cannot afford to take the risk of doing so. Two-thirds of Brits want to start their own business but only a few end up pursuing that path. One bad week for a sole trader could mean not putting food on the table for their family or missing their rent and the current benefits system is not supportive of entrepreneurs.
However, if the Basic Income were implemented then this worry would not hang over the heads of those in an insecure economic situation. Minimising risk and offering security for small business owners means that people who wish to start businesses are more likely to do so.
This means UBI can be a huge boost not only to the freedom of individuals but also our economy as a whole by helping unleash the spirit of entrepreneurship of more people.
The nature of UBI as a benefit also should incentivize employment. Unlike the prior systems like job seekers’ allowance, the income doesn’t stop flowing when a person finds a job. This encourages people to find work without fearing they will lose a regular and critically reliable flow of payments.
This can also be applied to the self-employed, who are an increasing share of the work-force. They often face greater uncertainty and have to operate in a welfare state that has not been developed for their situation.
A study that looked into effects of a large scale experiment of UBI in Iran concluded that one of the primary groups that benefited from it were the self-employed. In a Swiss referendum on UBI the support for the proposal was highest among the self-employed, and in India the most comprehensive experiment of the model was organised by the Self-Employed Women’s Association.
It has further advantages including the savings that can be made in government bureaucracy compared to alternatives such as our current Universal Credit. The department of work and pensions currently employs over 80,000 people to administer pensions and benefits. This could be reduced at a saving to the taxpayer if UBI was introduced.
It is a shame UBI has not been discussed in the UK to the extent it has been in other countries. Basic Income could be an inevitability in the economic and technological reality of tomorrow, and whether you agree with that or not, most agree that the idea should at least be tested. The randomised controlled trial of the policy in Finland was tested on the unemployed. A similar experiment should be conducted in the UK including a wider variety of work situations including the self-employed and entrepreneurs.
If these trials fail, those who oppose UBI have got their answer but if the trials succeed in the UK and we see genuine improvements in living standards, economic security and entrepreneurship then the policy should be rolled out even further.