‘Free money’ might solve ‘Automation Apocalypse’

Image courtesy of Serge Bertasius Photography at FreeDigitalPhotos.net

 

Yorkshire can be an economic powerhouse providing a decent standard of living for all, but it also faces an “Automation Apocalypse” that could rob the county of 500,000 jobs, that is the view of the Yorkshire Party’s Wayne Chadburn, who has made a special study of one controversial solution.

Penistone Town Councillor Wayne, a maths teacher at a Sheffield school, is passionate about education, employment and the inequality between Yorkshire and the South.

He highlighted the warning by the Centre for Cities think-tank about the rise of robots and the effect on jobs and prosperity.  It said that by 2030 about a quarter of all jobs in Yorkshire could be lost because of a future ‘Automation Apocalypse’ and globalisation.  Sheffield and Leeds could lose up to 100,000 jobs each with up to 30% of the jobs in Wakefield at risk.

“If nigh on 500,000 people lose their jobs in the next 10 years or so, imagine the exponential growth in the inequality gap and the impact on living standards in households across our region,” said Wayne.

However, one socio-economic system could hold the answer: Universal Basic Income.

 

Councillor Wayne Chadburn: an advocate for Universal Basic Income

 

This is Wayne’s detailed analysis:

“I believe that Universal Basic Income has the potential to give our citizens a safety net, time to retrain and refocus our economy, and prevent significant social problems while we adjust to the certain rise in automation across our region, as well as providing a standard of living and level of dignity for all our citizens that morally we must strive for.

“What would you say if the Government offered to give you some free money?  Actually, not just you but everyone … Utopian fantasy?  Maybe, but this is the basis of a UBI, or ‘free money’ as some call it.

“This was part of the Green Party manifesto in 2015 and Labour has now said it will look into its feasibility.   As we approach ‘Automation Apocalypse’, where robots take over many jobs, vastly improving productivity but, of course, potentially putting millions of people out of work, UBI could give those displaced by automation time to retrain or find other work.

“It is not a new idea.  It was outlined in Thomas More’s book Utopia in 1516.  It also has had some very curious proponents through time – from the liberal left such as Martin Luther King and Bertrand Russell to those on the right such as Milton Friedman and President Richard Nixon (who almost got a version of UBI through Congress in the early 1970s).  It has been tried in limited forms in various countries such as Canada, the USA, Finland, and Namibia.

“What is UBI?  There are many forms but in a basic sense it is an amount of money given to all citizens with a legal right to reside in a country.  It would be tax free and given to people unconditionally with no restrictions on how they could spend it.

“UBI would be an amount that would be sufficient for a person to cover their basic needs of food, clothing and shelter.  UBI would replace many of the benefits currently paid to people.

“The idea has many benefits.  It would simplify the welfare system and drastically cut bureaucracy.  This is its big appeal to those on the right who want smaller government and less complexity.  It would lower inequality and poverty and should lead to lower infant mortality, better health and educational achievement and potentially great degrees of both entrepreneurship and volunteering.

“Consider the current welfare system, designed by well-meaning people but which often traps people in poverty, subsidises employers paying decent wages and promotes passive behaviour.  If someone is unemployed they gain certain benefits.

“However, there are conditions.  Someone in receipt of these benefits needs to show they are actively seeking work by applying for x number of jobs per month, they may have to attend numerous courses or training sessions, which are often a waste of time and money and are ways of getting unemployed people to jump through hoops to demonstrate they are looking for work.  They may be forced into accepting any job offered despite how good a fit it is or what it pays.

 “If someone receives let us say £500 a month in benefits and gets a job paying say £550, they of course lose their benefits and with taxes and travel the probability is that they would have less money at the end of the month than they did when on benefits.  For many people the welfare system simply doesn’t make work pay.

“UBI could not be touched – any money earned on top of it would not reduce the level of UBI.  Work really would pay.  Think about all those people on poorly-paid, possibly zero-hours contracts where working conditions are poor.  UBI could give people the leverage needed to demand better wages and better conditions if they were to do these jobs.

“Those who are being controlled by the welfare system are also restricted from volunteering opportunities because they have to show they are available for paid employment.  Imagine if volunteering could be enhanced because doing it would not have a detrimental effect on the money you had.  Volunteering can be an essential way into paid work, lifting self-esteem and self-confidence and the benefits to the local community are many and obvious.

 

“There are three major arguments used against UBI.

 

1 – UBI would be exorbitantly expensive.

Yes, it would not be cheap.  However, it is estimated that at least half the cost would be achieved from savings in the current welfare system and the reduction in bureaucracy.  Other sources could be taxation on automation, financial transactions, cutting tax incentives and loopholes for those on the largest incomes and on companies with the largest turnovers – a real attempt to cut the inequality gap between the richest and the poorest in society (there isn’t a direct correlation between how hard a person works and the money they earn, believe me!).

Look at it from another angle.  In the USA a study found that for every $1 extra given to a normal wage earner added $1.21 to the national economy; however, if $1 were given to a high-income earner only 39 cents was added to the national economy.  There is no evidence to suggest things would not be different in the UK.  Paying UBI would actually GROW the economy through people spending more and producing greater demand.

 

2 – UBI promotes laziness.

The small-scale studies so far show this to be untrue.  The schemes run in Canada showed that only 1% of recipients actually stopped working and the vast majority of these were those staying at home to look after children or those going back into education.  Evidence suggests that on average UBI would reduce working hours by less than 10% (fewer than four hours a week) and that this extra time is usually used to go back to education and/or looking for better jobs.

Not only would it promote volunteering opportunities but it would allow people to start their own businesses, promoting entrepreneurship.

 

3 – People would spend their UBI foolishly.

The obvious (and libertarian) answer to this is that we should trust people to spend money in their own way.  Not persuaded?  A 2013 World Bank study found that poor people did not waste their benefits money on alcohol, cigarettes and drugs.  The concept of the lazy, drunk poor person is a stereotype rather than a reality.  In a small UBI-themed study a few homeless men in London were given money each week with no conditions.  At the end of the study it was found that this money wasn’t spent on alcohol or drugs but that well over half the men had homes and were making strides to improve their health and wellbeing.

The Economist magazine said: “The most efficient way to spend money on the homeless may be to just give it to them.”

 

“Of course, there are many aspects to a potential UBI becoming a reality.  Extra support would still be needed for those who were disabled, there might need to be different levels for areas with a higher cost of living and at different ages. However, if UBI could be rolled out correctly it really could be the 21st century answer to our broken welfare system, improving physical and mental health, promoting work, entrepreneurship and volunteering, turning the tables on the rogue employers that paid peanuts or used zero-hours contracts, and improving working conditions.

“It is possibly the most ambitious social policy of our time: some would say a Utopian ideal. But eliminating slavery, creating equal rights for men and women and establishing democracy were once said to be Utopian dreams.  Sometimes these dreams come true.

“Oscar Wilde once said that ‘stronger than a thousand armies is an idea whose time has come’.  I would suggest that UBI could be an idea whose time has come.”

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