For the last couple of years, I have been a member of a London-based thinktank called the Economic Singularity Club - or ESC. It was set up by Calum Chace - the author of several books on the impact of AI and Robotics, including "Artificial Intelligence and the Two Singularities" published in 2018.
Last week, I was invited to present my ideas on why I think that the introduction of a Unconditional Basic Income could be a vital part of our response to the risks posed by the AI revolution. We had a very stimulating evening discussing the pros and cons.
In preparation for the session, I prepared two documents. The first one was a short two-page executive summary that you can download as a pdf here. The second one is a longer nine-page version that is available here.
To facilitate discussion, I'm including the texts here on my blog. Feel free to comment if you find any of the ideas interesting.
Universal Basic Income and the Economic
Singularity
Executive Summary
Rapid progress in AI and automation means that in the coming
decades, many jobs currently performed by humans will disappear. How can we
survive this economic singularity and ensure that our children and
grandchildren live happy and rewarding lives despite the loss of paid work?
Some believe that we could be moving towards a world of “Fully Automated Luxury
Capitalism” where goods and services have virtually zero cost. This is already
the case for many internet-based services, and other essential services like
education, health, transport, energy and water could follow. But could people
really live decently with no money? Here, I propose that a Universal Basic
Income (UBI) will be a vital feature of any future solution to the economic
singularity.
Contrary to a widely held view, providing a UBI is indeed
affordable, and could be implemented by a radical redesign of the current
welfare and tax system. Instead of using complex means-tested benefits and a
tax system riddled with loopholes, governments could provide a fixed sum to
everyone with no strings attached but then tax all additional income at a fixed
rate, whatever the source. Simulations for the French economy show that a
system with a basic income of €600 per month per adult could be financed
entirely by a flat-rate 30% tax on all additional income. The 61% of the population
earning less than €2000 a month would effectively be subject to negative
taxation – an idea already proposed by none other than Milton Friedman in the
1960s. €2000 is the level of pay where the 30% tax rate cancels out the €600
basic income. Remarkably, the net tax paid by the 39% earning more than €2000
per month is enough to finance the entire system! At a stroke, the reform would
also eliminate the hundreds of tax breaks that make current systems so
complicated. In all cases, functionally equivalent direct government subsidies
for desirable behaviours (house insulation, switching to electric vehicles,
using renewable energy sources, etc.) can reproduce the positive effects of tax
breaks.
There are already groups of people who can avoid paid work entirely.
Retired people with comfortable pensions, people with inherited wealth, and a
few people who have earned enough to retire early can all choose to live a
low-impact, ecologically sound lifestyle if they so choose. And they can decide
to devote themselves to the vast range of activities that are very valuable,
yet unpaid. These include not just
charity work, but also creative activities that are highly rewarding, even
without pay. Why not give this option to everyone? Even a modest UBI would
allow people to adopt a low consumption lifestyle, perhaps by moving to rural
areas and growing their own food. The more people make this choice, the better
our chances of saving our planet, so it should be actively encouraged. And
releasing the natural creative instincts that many people have will also be
highly beneficial.
Importantly, with a UBI, people would be free to adopt the lifestyle
of their choice. Our current system obliges the vast majority of people to work
9 to 5, five days a week from the day they quit education to the day they
retire forty or so years later. Those who fail to fit the pattern and currently
depend on welfare payments are often treated as second-class citizens,
“scroungers”, or worse. And that is true even if they spend all their free time
doing valuable, yet unpaid work.
This discrimination would end with the introduction of a UBI. Some
people would no doubt continue to work very long hours because they crave an
extravagant lifestyle, with fancy cars and vacations in exotic locations. But
others might choose to only work 10 hours a week, or one week or month, or
three months a year. Or they might live perfectly happily doing no paid work at
all. They might also decide to stop doing paid work for a year or two at various
moments in their life without having to wait for some totally arbitrary
retirement age. Indeed, there would be no need for a fixed retirement age. Even
the very notion of “being unemployed” would no longer be meaningful, making the
current obsession with getting the unemployment rate as low as possible a thing
of the past. As Dave
Graeber argued, around 40% of people think that their jobs are entirely pointless
and serve no useful function. Introducing a UBI would eliminate many such
“bullshit” jobs and free people to do far more valuable unpaid work.
A UBI also allows the sorts of flexible working practises that drive
the shift towards the so-called “gig” economy and zero-hours contracts, so
appreciated by business. But this would occur naturally, without the risks of
exploitation inherent in the current system. Likewise, pay rates for gruelling
but vital jobs (such as frontline work by nurses and carers) would naturally
increase. UBI also provides a form of subsidy for local production, just as
universal health care would avoid the massive costs of health care that
currently cripple businesses in the USA.
While a UBI could be introduced at a regional or national level by
radically reforming the welfare and tax system, an even more exciting
possibility would implement a UBI for the entire population of the planet.
Providing a UBI at 50% of the median wage in every country in the world would
cost around $10.6 trillion a year. While this may seem like a huge number, it
is tiny compared to the €14.9 quadrillion figure for financial transactions
reported by the Bank for International Settlements in 2018. A modest 0.1% on
all such transactions would generate more than enough revenue to finance the
entire scheme.
Another potential source for a global UBI could be a tax on all
assets – financial, real estate, or other forms of wealth, whether held by
individuals, trusts or corporations. Imagine imposing a 1% annual tax on all
such assets, irrespective of where they are held (including places that are
currently tax havens). This could easily provide the money needed to give
everyone the possibility to live a modest, low consumption, lifestyle wherever
they live on the planet.
Advances in AI and robotics could potentially be immensely
beneficial to humanity. But with the current system, there is a genuine danger
that such technologies could have devastating consequences. But with a UBI in
place, advances in AI and robotics can proceed at full speed without the risk
of the massive social unrest. People would simply adopt a less
consumption-driven lifestyle in an entirely progressive way, with no need for
imposing any particular solution in a top-down manner. At the same time, we
would be doing our bit to save the planet. It seems that, with UBI, we really
can have our cake and eat it.
Introduction
The members of the Economic Singularity Club (ESC) share the belief
that advances in AI and automation will have profound effects on humanity in
the coming decades. In particular, it seems likely that machines could replace
humans in a wide range of situations, making a substantial proportion of the
population unemployable. For anyone with doubts about the potential impact of
state-of-the-art technologies such as GPT-3 (Generative Pre-trained
Transformer 3), the recent article in the Guardian entitled “A
robot wrote this entire article. Are you scared yet, human?” gives a
flavour of what is already possible. GPT-3’s potential for replacing entire
teams of journalists (and other highly skilled and well-paid professions) makes
it clear that technology is not just a threat for people earning their livings
from repetitive, manual tasks.
Our book “Stories
from 2045 – Artificial Intelligence and the Future of Work” published in
January 2019, included a wide range of scenarios, ranging from the positively
dystopian, to quite optimistic. One of the aims of ESC must be to propose
strategies that help ensure that our future is more “White Mirror” than the “Black Mirror” scenarios
of Charlie Brooker’s popular television series.
In this presentation, I would like to argue that providing a
Universal Basic Income (UBI) is the single most potent antidote to the societal
threats associated with the AI revolution and that we should be pushing to
implement such proposals as rapidly as possible.
It is perhaps useful to note that providing a UBI is in no way
incompatible with other ideas that have emerged from the ESC group. In
particular, Calum Chase has argued that we could move towards a world of what
he calls “Fully Automated Luxury Capitalism”, made possible when the cost of
providing goods and services drops so low that people could live decently
without spending money. This sort of revolution has already occurred in some
areas. Here is a list of some of the areas where goods and services can be
provided to people with low incomes – even if they do lose their ability to
find paid employment.
·
Internet. Billions of people can now access a wide range of services
including radio, TV and internet at virtually zero cost. Wikipedia, Facebook,
Google, Spotify and Banking services are all available to anyone with an
internet connection and a mobile phone or computer. And there are now numerous
schemes for providing free smartphones to people who do not have the means to
buy one themselves, see for example a
recent example in Lagos, Nigeria.
·
Energy and Water. Every citizen could have a basic allowance of electricity and water
for free, and companies only allowed to charge for consumption exceeding the
basic quotas.
·
Education. In virtually all countries, education is provided
free of charge at least until the end of high-school, but there are many
countries where even university education is either free or at a minimal cost.
They include Norway, Finland, Sweden, Germany, France and Denmark.
·
Health. Although there are some glaring exceptions (such as the USA), the
majority of countries now provide free universal health care.
·
Transport. There are now well over
100 cities where transportation is free, and the movement is growing. Tallinn
became the first EU capital to provide free transport in 2013, and in 2020,
Luxembourg became the first country with entirely free transport. But things
could become even better when self-driving electric vehicles become a reality.
Governments could decide to provide a Uber-like service so that anyone with a
smartphone could simply request transport to go anywhere. The reduction in
congestion and the number of vehicles required could easily justify the
expense.
So, it seems clear that people could have many of the requirements
for a modest lifestyle without changing the system completely. And while this
is not Fully Automated Luxury Capitalism, this tendency is likely to
accelerate. Other vital components needed to live a decent life may be somewhat
harder to provide at zero cost because requirements vary so much between
individuals. Food, clothing and housing can all be expensive items, even though
you can reduce costs a lot by choosing to live a more frugal lifestyle. People
could opt to eat less meat and dairy produce, recycle clothes and ignore the
need to have the latest fashions and choose to live away from expensive and overcrowded
cities.
But could people really live decently when advances in AI and
robotics have restricted their ability to earn money? Before discussing the
potential role for UBI, let us examine how the current systems would cope with a
rise in technological unemployment. In many countries, the state would step in
to help people with little or no resources using a whole range of means-tested
schemes that often oblige people to prove that they are actively looking for
paid work. But such schemes have many serious problems. Many people who are
eligible for aid fail to take advantage of the schemes either because they are
often overly complicated or because of the shame of living on welfare. And in
many cases, the assistance is removed as soon as the person starts to earn any
additional income, meaning that the effective marginal tax rate can be very
high – 80% or more. The resulting poverty traps can mean that people get stuck
in poverty, even if they would like to work.
Poverty traps can be avoided if, instead of providing support in the
form of means-tested benefits, the state simply provides support to everyone,
using regular monthly payments with no strings attached – the very definition
of a Universal Basic Income (UBI). In this article, I will look at the
fundamental issue of how such a mechanism could be implemented and how it could
change the nature of society. In particular, I will argue that a Universal
Basic Income (UBI) will be a vital feature of any future solution to the
economic singularity.
The main problem – financing a UBI
One of the objections to a Universal Basic
Income is the claim that is would simply cost too much. If you simply multiply
the amount of the UBI payments by the number of people, you certainly get huge numbers.
But, as we will see, a radical change in the entire tax and welfare system can
easily cover the costs.
Suppose that every adult receives a standard
sum of money every month, with no strings attached, but then paid tax at a
fixed rate on any additional income, whatever the source. Interestingly, it
turns out that the resulting scheme could be very close to the current system,
but without the administrative overhead. Consider the situation in France where
less than half the working-age population pays income tax. You could provide €600
a month to every adult, and tax all earnings at a flat rate of 30%. 61% of
the French population earns less than €2000 a month, which is the point where their
tax payments (30% of €2000, or €600) cancel out the basic income. All such
people would effectively get a form of negative income tax,
an idea already proposed by Milton Friedman in the 1960s. Remarkably, the
amount of income tax revenue paid by the 39% who earn more than €2000 a month
is enough to finance the entire system. In such a case, the UBI coupled with a
flat rate 30% tax on all earnings would be a purely redistributive system –
taking money from the high earners and using it to pay those earning less than €2000.
Interestingly, a 30% flat-rate tax rate has
already been imposed by the French government on all income from financial
sources (dividends, rents, etc.). The reform would thus be a simple extension
of this same flat-rate tax to all forms of income, including salaries, pensions
etc. It is also worth noting that it is easy to scale the amount of the Basic
Income even in this self-financing system. Essentially, increasing the
flat-rate tax by an additional 10% adds an extra €200 to the UBI. You can
therefore choose between €600 a month with a 30% flat-rate tax, €800 with a 40%
tax or even €1000 a month at 50%.
Further evidence that a UBI can indeed be
affordable comes from a
website, developed by a team based in Bordeaux, where you can simulate
different ways to finance a UBI. I found that it was possible to provide a UBI
of €920 per month for all adults, coupled with half that amount for those under
18 (€460). Total cost would be €645 billion, but the simulator shows that
this could be fully financed. There would even be a surplus of €9 million. Much
could be achieved by fusing many of the existing benefit schemes into the Basic
Income payments. They include the equivalent of the job seekers allowance
(€15.4 bn), housing aid (€17.4 bn), tax exemptions for low salaries (€38.7 bn),
family benefits (€36 bn), state pensions (€219 bn) and unemployment benefits
(38.1 MD€). But it also requires the elimination of tax niches (€34 bn) and the
effects of tax individualisation (€37 bn). I also set the rate for Income Tax
at 0% but replaced it by something called the CSG (General Solidarity
Contribution) which is a flat-rate tax with no loopholes that applies to all
forms of income. I increased it from the current rate of 7.9% to 30%. I even
managed to abolish VAT altogether, but increased the existing tax on wealth
from 1.18% to 2% and set a carbon tax at €100 per ton. I chose the option of
taxing financial transactions which would raise a further €50 billion based on
a rate of just 0.012%, but this could be easily increased. In conclusion, this
official government simulator, using official figures, demonstrates that
financing a UBI is perfectly doable – if there is the political will.
Later on, we will look at two additional ways
of financing a UBI at a global level. But these can be combined with the
proposals mentioned here. So, if we can agree that implementing a UBI is
possible, what would be the advantages?
Advantages 1 - Simplification
Implementing a UBI provides a vast simplification
of existing schemes for people on low incomes, or who risk losing their
livelihoods because of advances in AI and robotics. Some argue that it is
better to target such support to avoid making payments to people who don’t need
the money – why pay a basic income to millionaires? But fundamentally,
providing a basic income of €600 (or whatever) to someone earning €100,000 a
month is functionally the same thing as giving them a tax break of €2000 a
month.
Another thing comes for free with such a system.
Switching to a Basic Income & flat-rate
tax system would allow the suppression of hundreds of tax breaks and loopholes that
make many tax systems impossible to navigate without professional help. In the
US, the complexity of the tax system forces even people with relatively modest
positions (such as university professors) to pay professionals to fill in their
tax returns. While the claim that the tax code in the US now runs to around
70,000 pages is apparently not
valid, the system is very complex. It could be that the
UK wins the title for the most complex system, with 17,000 pages of tax
code. Much of this complexity results from lobbying by pressure groups who
argue that their sector merits specific reductions in taxation. Trying to
eliminate all those loopholes one by one could be extremely arduous, so
entirely scrapping income tax would be a simple way to clear the system. But bear
in mind that a direct subsidy can replace any tax break – they are functionally
equivalent. Of course, it is relatively easy to defend a tax break (since
no-one likes paying taxes and lobbying for tax breaks is considered a fair game).
In contrast, it is much harder to justify receiving taxpayers’ money.
France provides a good illustration. The
government is currently offering €6000 in aid to anyone buying an electric
vehicle, and a further €6000 for switching from oil-fired heating to Solar
panels and a heat pump. The government could have implemented such aid via tax
breaks, but this would only affect people who pay tax - less than half the
population. Direct subsidies are thus a much fairer way to distribute state aid
because everyone can benefit. And, since they are available to all citizens,
they resemble an Unconditional Basic Income. The only real difference is that the
help comes as one-off payments – not regular monthly payments.
Advantage 2 – Choice of lifestyle
A second significant advantage of having a UBI is that it enables
people to choose their lifestyle without the need to spend a large proportion
of their time earning money. Our current system obliges many people to work 9
to 5, five days a week from the day they quit education to the day they retire
forty or so years later. Those who fail to fit the pattern and currently depend
on welfare payments are often treated as second-class citizens, “scroungers”,
or worse. And that is true even if they spend all their free time doing
valuable, yet unpaid work.
There are already groups of people who can avoid paid work entirely,
without being labelled scroungers for living on benefits. Retired people with
comfortable pensions, people with inherited wealth, and a few people who have
earned enough to retire early can all live without working for money. Another
very significant group, especially historically, are “housewives” or
“stay-at-home moms”. At the start of the 20th Century, close to 90%
of women were housewives or homemakers. Even as recently as 2011, roughly
20% of French women described themselves as housewives. These days, the
status of housewife is only possible for people whose partners are earning enough
money to give them that option. Most women are now obliged to out to work to
pay the bills.
So there are already several groups within society that already have
the liberty to devote their time to a vast range of activities that can be very
valuable, even though unpaid. These include working in the home and caring for
children but also charity work and other worthy causes. They can also indulge
in a wide range of creative activities that are highly rewarding, even without
pay.
You might argue that people need to be paid money to motivate them
to do things that are vitally important for society. But some of humanity’s
most impressive achievements have been done without monetary rewards. The
entire Wikipedia project involves only about 280
paid staff, with the rest of the work done by unpaid volunteers. Currently,
around
70,000 people make five or more edits to the English language Wikipedia per
month – all for free. It is worth
noting that Wikipedia has practically demolished the market for commercially
produced encyclopaedias like the venerable Encyclopaedia
Britannica that was probably published in print form for the last time in
2010, after 244 years. Likewise, open-source software projects like Linux
produced by armies of unpaid enthusiasts have demonstrated that they can rival
products from Microsoft and Apple, despite their phenomenal resources. Indeed,
since 2017, Linux is now the only
system used on the TOP500 supercomputers.
So, there are clearly several groups in society that can choose what
they do with their time. Why not give this option to everyone? Imagine the
change if everyone could get involved in unpaid work – including those
currently obliged to go out and earn a living 40 hours a week, all year round.
Should such people be obliged to give up their valuable weekends and vacation
time to do useful things that they would be delighted to do if they only had
the choice?
Interestingly, in his 2018 book “Bullshit Jobs: A Theory”,
anthropologist David Graeber found that around 40% of people in paid work believe
their jobs are entirely pointless and serve no useful function whatsoever. It
follows that if a UBI allowed all those people to stop wasting their time, and
do something useful, we would all benefit. Tragically, David
Graeber died on the 2nd September 2020.
Advantage 3 – Ecology
Yet another advantage of UBI would be its ecological impact. Even a
modest UBI would allow some people to adopt a low consumption lifestyle,
perhaps by moving to rural areas and growing their own food. Around 1000m2
of land can feed a family of four, but this currently requires about 6 hours of
labour per day. However, low-cost intelligent robots could significantly reduce
the amount of work needed by picking fruit or removing weeds. Apart from
anything else, this would dramatically reduce the need for herbicides and help
protect the environment. The more people make this choice, the better our
chances of saving our planet, so it should be actively encouraged.
In France, for example, there are around 28 million hectares of
agricultural land. If 1% of that land were requisitioned, and distributed to
people in the form of allotments that could be used for growing food, it would
allow a substantial proportion of the French population (around 11 million
people) to become self-sufficient in food.
With the average cost of agricultural land in France at around €6000 per
hectare, the land needed to feed a family of 4 would only cost about €600 – a
very modest investment. At such prices, rural communes in France could simply
give land to all residents, enabling them to attract city dwellers to move to
the country and revitalise rural communities.
Advantage 4 – Flexibility
UBI would end the current inflexible system where the length of the
working day and the times when people have to work are imposed from above. With
a UBI, people could freely decide how much time they spend doing paid work.
Some might choose to work 100 hours in a week some of the time (it would be
their choice). But others might do only 10 hours of paid work per week or even give
up paid work entirely. Likewise, there would be no obligation to work all year
round. People could easily decide to work just one week every month, or three
months every year. With this degree of flexibility, the entire concept of being
“unemployed” would cease to exist.
A UBI would also impact the many vital jobs that are currently
poorly paid. The recent covid-19 pandemic has highlighted the importance of frontline
health staff, including nurses and auxiliary personnel. If such workers were
not obliged to work long hours, they might prefer to work part-time – maybe just
one or two days a week, or for relatively short periods. To entice them to
work, employers could be obliged to increase the level of pay to convince them
to continue working long hours. The net effect would be that vital but gruelling
jobs that are currently poorly paid would end up being among the best-paid jobs
in the economy.
The desire for flexibility has been a factor in the development of
the so-called Gig economy and zero-hour contracts,
especially in the UK. For a business, this can be a significant advantage –
especially when there is a need for seasonal workers in areas like tourism and
agriculture. While current zero-hour contracts lead to worker exploitation, in
a system with a UBI, such criticisms lose their pertinence.
UBI has other advantages for business by effectively subsidising
local production. Imagine that you are in the business of manufacturing cars,
trying to decide where to implant a new factory. A country with a UBI would
have a natural advantage because some proportion of employees’ living expenses
are already covered, reducing overall manufacturing costs. A similar argument already
applies to health provision. In most developed countries, universal health care
provision reduces costs for industry. The glaring exception is the USA, where employers
have to cover the full costs of health care for workers and their families. Businesses
in the USA are thus seriously disadvantaged relative to practically every other
country on the planet. It is odd, even incomprehensible, that the business
leaders who currently back Trump’s plan to eliminate “Obamacare” have failed to
register this point.
Towards a Global UBI?
So far in the essay, I have talked about implementing a UBI at a
local level – national or regional. Replacing the current complex benefits and
taxation system by a UBI coupled with a flat-rate tax on all revenues could indeed
work locally. But the challenge imposed by advances in AI and automation are
ones that will affect just about everyone on the planet. Can we imagine a
scenario to introduce a UBI at a global level?
Suppose that we decided to provide a UBI at 50% of the Median Per
Capita Income. How much would it cost? Using data from the
World Population Review produces a total of just under $10.6 trillion. That
may seem a huge number. But choosing to provide a UBI at 50% of the median per
capita income is quite generous. For example, in the UK it would correspond to
nearly £400 a month for every man, women and child – up to £1600 for a family
of four. The figures for France would be similar – around €440 a month. The costs would be much higher in Scandinavian countries where the cost of living is much higher, and where
median incomes are about 50% higher. But the cost of the equivalent deal in
African countries where median income is typically well below $35 a month would
be almost trivial.
In my contribution to ESC’s book on “Stories from 2045”, I made the
radical suggestion that a very modest 0.1% tax on all financial transactions
could entirely fund the $10.6 trillion needed for a universal UBI. Data compiled
from the Bank for International Settlements (BIS) shows that in 2018, these
transactions totalled at least $14.9 quadrillion – over one thousand times
more than the sum needed to provide a universal UBI. And that sum is almost
certainly massively underestimated because the BIS figures fail to include
major players like the Chicago-based Options Clearing Corporation (OCC) that
describes itself as “the world’s
largest equity derivatives clearing organisation”, clearing 5 billion contracts a year. Likewise,
according to BIS, foreign exchange transactions total $6.6 trillion a day so that with 250 trading days a
year, this totals around $1.6 quadrillion. Daily volumes of interest rate swaps
are also around the same value, so the $14.9 quadrillion figure is entirely
plausible. Of course, some in the financial sector may claim that even a 0.1%
financial transaction tax would have catastrophic consequences. But the fact is
that the 0.1% rate is similar to the transaction charges imposed by the
industry itself, so this argument is bogus. If 0.1% of the value of
transactions was indeed funneled into the general world economy by simply
giving it to the worlds’ citizens, the boost to the entire system could be
extremely beneficial.
There is another relatively simple, yet currently, unexplored way to
move towards a genuinely universal UBI. I have recently proposed the idea of
a universal 1% annual tax on all assets – payable wherever they are held.
In jurisdictions where no asset tax was present (as is the case in tax havens
like the Cayman Islands), the tax would need to be paid to a global organisation
such as the United Nations. If international agreement for such a scheme was
possible (admittedly a tall order), it could eliminate tax havens at a stroke
because it would no longer be possible to avoid the tax by relocating assets.
How much revenue would such a tax generate? The companies in the
Forbes Global 2000 list have combined assets of over $200 trillion.
Clearly, the total would be a lot higher if we included assets for all the
roughly 43,000 publicly traded companies in the
world, rather than just the top 2000. We should also include the many
privately-owned companies that are also required to declare their assets every
year. While those numbers are harder to find, the
annual revenue for just the top 50 exceeds $2.5 trillion, suggesting that the
accumulated assets of privately-owned companies could also be enormous. We can
also add in the global value of real-estate that Savill’s estimates at around $280
trillion and currently increasing at over 6% a year. We should also
be able to include the value of other assets such as yachts, aircraft, jewellery
and works of art. A simple way to determine the value of such assets for the
asset tax would involve using the
insured value of the goods. Adding together the values of all these assets,
whether owned by individuals, trusts or corporations could easily reach the
eye-watering figure of $1 quadrillion. With a 1% annual asset tax, this would
be yet another way to finance a universal UBI set at 50% of median income for
the entire population of the planet.
We have thus seen that there are various options for financing a
UBI. Locally, governments could reform their tax and benefits system to provide
a basic income. But with international cooperation, a universal financial
transaction tax of around 0.1%, or a universal asset tax of 1% per annum, would
be enough to provide a UBI for everyone. By using both taxes, it would be
possible to use even lower rates. It is therefore hopefully abundantly clear
that providing a UBI is perfectly doable – if there is the political will.
The suggestion that a global organisation such as the United Nations
could organise the distribution of a basic income to everyone on the planet is
undoubtedly very bold – and perhaps not very realistic. But the advantages
could be enormous. Nearly every nation on earth has signed up for the United
Nations list of 17 Sustainable Development Goals. While everyone agrees on
these objectives, there is little agreement about how to finance them. But it
is worth noting that a global UBI could help many of them. The obvious ones are
Goals 1 (No Poverty), 2 (Zero Hunger) and 3 (Good Health and Well-being) that
would be directly affected, but a global UBI would help just about every one of
them. Furthermore, allowing the United Nations to implement the scheme would
give it enormous negotiating power, because the provision of the basic income
payments could be made conditional on the governments in particularly countries
respecting basic civil rights including freedom of speech.
Final comments on UBI and ESC
My final point returns to the fundamental question of how we could
cope with the consequences of the AI revolution and increasing automation on
the amount of paid work in the economy. I would like to argue that by introducing
a modest UBI now, or in the near future, governments could easily cope with any
future changes in the job market.
To make this point clear, suppose we start from the “ideal”
situation of full employment with 100% of the working age population working
full time – five days a week. Imagine that over some period, the amount of paid
work drops by 50%. There are clearly a range of strategies. One would be to
lay-off 50% of the population, and keep those that still have jobs working full
time. Another would be to reduce the working week from 5 days to 2.5 days. But
who is to say that everyone would want that solution?
With a UBI in place, and set at a level where it was possible to get
by with just the UBI (if someone was happy to live a low consumption lifestyle,
growing their own food), you might have a situation where equal numbers of
people decide to work full time (5 days a week), part time (4 days a week, 3
days week, 2 days a week and 1 day a week), or to do no paid work at all. With one-sixth
of the population in each group, you would also have enough people to do all
the paid work that was available. But critically, no one would have to impose
this in a top-down way. And market forces would naturally adapt to ensure that
all the essential paid work was done by increasing pay levels when necessary.
Suppose that, a few years later, the amount of paid work had dropped
to just 20% of the original value. There would again be a wide range of
possibilities without having to decree that everyone has to work a one-day
week. The obvious option would have 20% of the population working full time,
and 80% doing no paid work at all. But you could just as easily have two-thirds
of the population opting to do no paid work, and the remaining third being
divided equally between 1-, 2-, 3-, 4- and 5-day working weeks – with one in 15
still opting to continue working full time.
Of course, the two-thirds of the population doing no paid work would
not necessarily be sat watching endless television series or playing video
games (even though they would certainly have that option). They could also
indulge in all the enjoyable activities currently reserved for the retired, for
those who have inherited wealth, those lucky enough to have earned enough to
retire early, or married to someone wealthy. They could also devote themselves
to the myriad options for rewarding and valuable unpaid work that would improve
our world.
The beauty of having a modest UBI as a baseline is that everyone
would be able to choose precisely how they divide their time between paid work,
recreational activities, and valuable but unpaid work.
It is also important to realise that in such a scenario, market
forces will still be able to play their role. If the level of the UBI is set a
level sufficient to live modestly without paid work, but not enough to provide
a lavish lifestyle, money will still be effective at motivating people whose hard
work is considered particularly valuable, such as chefs in Michelin-starred
restaurants, skilled musicians, actors, sports stars and entrepreneurs. You
could even decide the level of the optimal amount for the UBI by fixing it such
that a given number of people (say 10%) choose to opt out of paid work.
A final point to make is that this future world where everyone
chooses freely how they divide their time may be as close as we can get to a
real utopia. It would ensure what Jeremy Bentham called “the
greatest good for the greatest number”. The simple fact is that people differ
and there is no point in seeking a “one-size fits all” solution where everyone has
to do what some bureaucrat has decided is the optimal amount of paid work. Not
only will people be free to choose their particular mix, but that mix can also
change continuously from day to day, from week to week, from month to month and
from year to year. There would be no such thing as being “unemployed” since not
doing paid work would be a question of choice, and there would be no shame in
choosing such a lifestyle. Indeed, if we are serious about saving the planet,
we should be actively encouraging such behaviour. Likewise, the very notion of defining an age
when you are allowed to retire would be seen to be nonsensical. Effectively,
some people might “retire” as soon as they left school – as the children of
millionaires can already. Does that mean that they would never do anything of
value?
For me, the main reason why we have ended up in the current system
stems from the fact that the vast majority of people appear to believe that
their “value” can be measured by the amount they earn. Hopefully, most people will
be able to see that this is an illusion. The elimination of this misconception
could be the most positive impact of advances in AI and automation.
But the final point is that, with a UBI in place, and the
development of a situation where everyone chooses their life mix freely, there
will be little need to fear the rise of AI and automation. These new
technologies can potentially be enormously beneficial for humanity and for all
life on our planet. UBI is the mechanism that we need to be able to see that
technology progress without threatening our societies.
