Sunday, May 20, 2018

Time For A Basic Income


It's time to implement Guaranteed Basic Income Programs. However, Gwynne Dyer writes, there  is surprising resistance to the idea. Conservatives argue that giving people free money is fraught with moral hazard. But the projections suggest that, in the future, large numbers of people will be unemployed:

The famous 2013 study by Carl Frey and Michael Osborne identified 47 per cent of U.S. jobs as liable to be automated in the next 20 years; a 2016 working paper from the Organization for Economic Co-operation and Development suggested that 33 per cent of Canadian jobs are highly susceptible to automation; Nicholas Eberstadt’s 2016 book Men Without Work showed that 17.5 per cent of American men of prime working age are already not working.

Unemployed workers helped put Donald Trump in the White House:

Mr. Trump blamed it on free trade and the resultant “off-shoring” of many good American manufacturing jobs to Mexico, China and other low-wage countries: Nationalism always pays good political dividends. But the real job-killer was automation, and the Rust Belt suffered first and worst because it specialized in assembly-line jobs that could easily be automated even with the dumb computers and simple robotic arms of 20 years ago.
One-third of all surviving American manufacturing jobs were eliminated in the first decade of the 21st century, and less than 15 per cent of them went overseas. Automation killed the rest. If Mr. Trump understood that fact, he never mentioned it, but he did know how neglected the victims felt and how angry they were.
He also knew that the official unemployment figures lied, because they only counted people who were actively looking for jobs, not the much larger number who have just given up. “Don’t believe those phony numbers when you hear 4.9-per-cent and 5-per-cent unemployment,” Mr. Trump said in his victory speech after the New Hampshire primary in February, 2016. “The number’s probably 28, 29, as high as 35. In fact, I even heard recently 42 per cent.”
He was exaggerating as usual, but the real number is 17.5 per cent, which is two-thirds of the way to the peak U.S. unemployment rate in the Great Depression of the 1930s. If the current level of unemployment elected Donald Trump, what would twice that level produce?

If mass unemployment elected Trump, what will happen to liberal democracies when mass unemployment becomes standard operating procedure?

That's why it's time for a Guaranteed Basic Income.

Image: Vanier College

18 comments:

Gyor said...

Agreed.

Owen Gray said...

Dyer has a pretty good grasp on the future, Gyor.

Anonymous said...

Of course Trump is now singing a different tune; touting the new LOW unemployment numbers “below 4% now for the first time”, creating thousands of jobs in manufacturing, factories rushing back to US, etc, etc. Forget the ‘real’ numbers now that HE is in charge. So....no need for anything like a guaranteed annual income in US of A’s future. Maybe in Canada though, given our lacklustre.federal gov’t. Mac

Owen Gray said...

Trump navigates the world with his gut, Mac. That's why he's a serial bankrupt. But anyone who looks at the numbers -- and who can think critically -- can grasp Dyer's argument.

Trailblazer said...

http://www.businessinsider.com/finland-to-end-basic-income-experiment-2018-4

Not sure it would work.
Perhaps work sharing would be better?

TB

Owen Gray said...

A basic income would make lots of employment options possible, TB -- part time, temporary etc. Testing those possibilities are what the Ontario model is all about.

bill said...

Guaranteed income is only a short term fix. Using Alberta as an example, direct taxes i.e. royalties, clean up fund and sales taxes on the oilfield currently would pay for less than 10% of the low official government estimates of clean up costs. An article I read last week stated that the remaining oil companies expect to automate over 50% of all oil related jobs in the near future which reduces government income tax returns by over a quarter from the Provence. Store clerks at west Edmonton mall pay very little income tax.

While there is no political will today to tackle the two biggest problems, What is the role and responsibility of government and how do we create a fair tax system to fund it. The time to deal with it is shrinking at warp speed. If we ignore those questions then the resulting chaos and world wide civil war become inevitable.

Owen Gray said...

Those are the two fundamental questions, bill. Automation will put an end to a lot of jobs. Unless and until we figure out a response to the change, we'll be looking a massive and violent unrest.

The Mound of Sound said...


It's telling that America's latest "full employment" has been achieved without the usual effects. Full employment greatly shrinks the labour pool, compelling employers to compete for new workers with higher wages and improved benefits. Labour is supposed to benefit from full employment, not capital. Not so much this time around.

James Galbraith argues that guaranteed basic income is not a one size fits all solution to wealth distribution. His preference is to shift to a 3-day work week without any significant pay cut. Others would be hired to perform the remaining work. That, coupled with heavy estate taxes, would permit a more viable means of wealth redistribution in Galbraith's view.

One curiosity from Galbraith's "The End of Normal" is that, before his death, the Dark Prince of American neoliberalism, Milt Friedman, championed the idea of a guaranteed basic income.

Owen Gray said...

The three day work week is an interesting suggestion, Mound. Essentially, we would all be job sharing. The obstacle would be the neo-liberal bias against sharing wealth. However we do it, we must share the wealth if democracy is to survive.

Toby said...

A guaranteed income not only helps the needy but society as well. Those without a substantial income can't afford to save thus their monies circulate creating other jobs.

All money spent at the bottom trickles up contrary to Reagan's dictum. The rich don't like that; they want the money directly and to hell with the poor.

Owen Gray said...

The health of an economy has great deal to do with the velocity of money, Toby. If it changes hands frequently to purchase goods and services, it creates a virtuous cycle. If it gets sucked to the top of the social pyramid and lies there inertly, the economy falters. So, yes, the money that a gauranteed basic income would inject into the economy would benefit everyone.

BJ Bjornson said...

This is a huge topic to tackle. Diagnosing the issue is easy enough, but while I like the idea of a basic income, I have a really hard time seeing how we actually get there. Too much of our culture is based upon people finding value in doing work, finding their identity and feeling of self-worth in “making a living” for themselves and not just mooching away on welfare. Sure, maybe that will change if you make the program universal and it’s more clear that there simply aren’t enough jobs for everyone to work for a living anymore, but how?

And that’s before you get to the problem of paying for such a program, and keeping it funded properly, when there is an entire political party (or several of them) dedicated to keeping the tax burden on the wealthiest of us as low as possible and doing so in part by targeting any programs or services the poorest of us depend on. Hell, my conservative relatives squeal whenever the idea of raising the minimum wage is brought up. How much more resistance can you expect for a program that pays people well to do nothing? A basic income that fails to cover the basics doesn’t solve anything really.

The other possibilities such as job guarantees and reduced hours for full-time employment are also hard to get to, but probably easier in the short-term, and can maybe make the basic income thing an easier pill to swallow (after all, you’re not being paid to do nothing, you’re being paid a reasonable stand-by fee until the job you’ve been guaranteed turns up, even if it’s only for 12 hours a week full-time).

No idea if it will actually work, but it would appear to be heading towards either that, or the rich locking themselves up in some kind of super-gated communities with drone sentries and robot servants and manufactories while the rest of us subsist and fight over whatever crumbs might be left outside (or possibly more like the poor get locked up in overcrowded slums like the Palestinians in Gaza and the West Bank while the rich luxuriate in the open spaces denied the rest of us).

Owen Gray said...

There are moral hazards associated with a basic income, B.J. But the Digital Revolution has changed everything. Printed newspapers are struggling. So is the music industry. And national elections can be monkeyed with by other countries.

Nonetheless, poor and idle people can become very dangerous. They can eventually breach the walls of gated communities. Those French aristocrats who believed the poor and idle should eat cake lost their heads.

We don't have to re-invent the wheel. The baby bonus cheques were a radical idea. But they supported baby boomers, went to mothers instead of fathers, injected money into the economy and acted as economic stabilizers. Such a program can work.

BJ Bjornson said...

“They can eventually breach the walls of gated communities.”

Correction: They could. The French revolutionaries had to deal with muzzle-loading muskets firing two to three rounds a minute in trained hands, where swords and spears still counted as credible military weapons. With such technology, numbers tell. (Plus of course the soldiers mostly came from the same poor and idle population.) But since then, technology has progressed to the point where it is far easier for smaller and smaller groups to maintain control over the masses without the same access to such technology.

Hell, the whole reason we’re talking about this is that we believe the advancement of AI will be different than other technological revolutions, where the destruction of certain jobs were offset by new types of employment and (ultimately) greater productivity and wealth for everyone. If we’re willing to believe it will do that for work, why not other areas? We’re not there yet, mind you, but that does seem to be the direction we’re heading.

And the baby bonus isn’t really a good example. It’s a targeted program that goes to only certain people in certain situations. Effectively, it is part of what the universal income is supposed to replace the need for. OAS would be a better example. Paid to everyone out of general revenue regardless of work history or situation and only clawed back if you make a considerable income otherwise. Of course, not really enough to live off of by itself, and the last Conservative government raised the eligibility age by two years as a means to save money to pay for the deficits their tax cuts caused. So the real question is can we find a way to make OAS pay more, and instead of raising the age people get it at, reduce it all the way down to 18 or so?

Owen Gray said...

I agree OAS is a better example, BJ. And the delivery system is already there. Plus, making one payment would make administration more effcient. I also agree that modern technology has made oppression of the masses easier.

But those in power tend to underestimate the consequences of white, hot anger. Years ago, I was part of a group of white students who met with black kids from the ghetto. One of my colleagues reminded an angry young black girl that white folks were in the majority and that "they had the guns." Her response was unamibiguous. "I'd rather die standing up," she said, "than on my knees."

BJ Bjornson said...

I appreciate the sentiment behind that black girl’s words, but I also remember who the U.S. just elected as President and what kind of rhetoric he used to get there. Fear of losing one’s privileged status can cause a great deal of anger as well, and such anger is all too easy to direct towards convenient scapegoats. There is a reason they have a lynching museum, and why it took so long to open said museum while monuments to treason in defence of slavery are both widespread and loudly and proudly defended.

Not that anger doesn’t help to inspire movements that can create real change, but there are limits. I’m sure the Palestinians in Gaza are also quite angry, and the Israelis seem entirely willing to see them die whether they stand or kneel.

Owen Gray said...

I acknowledge that the powerful have the upper hand, BJ. The incident goes back to a time when American ghettoes were burning -- an act, it seemed then, that was self defeating. But desperation can be the match that lights a conflagration.