robots and universal basic income (UBI)

In the fourth of his Free Lunch series on automation, Martin Sandbu defends the universal basic income (UBI) as a way to distribute benefits of increased productivity.

In the area of radical reform to achieve this, there are two rivals currently receiving a lot of attention. One is universal basic income (UBI) — an unconditional income from the state to all, regardless of job or other status and intended to replace much of the welfare state’s existing income support — which Free Lunch readers will know I have much sympathy for. The other goes by the name of a “job guarantee” and is often brought up in the same breath as scepticism of UBI.

The job guarantee is usually described loosely as a policy to provide public sector jobs to those who cannot otherwise find decent employment. Diane Coyle has one of the more thoughtful critiques of UBI as well as an appealing defence of the job guarantee. ….

[A] public jobs programme has much more going for it as a very short-term stabilisation policy than as a long-term solution to structural change that displaces jobs in whole sectors or communities. The opposite is true for UBI. In the standard version, it is not such a good stabiliser — it is constant through the cycle — but of course the existence of a UBI does create a very easily accessible lever for governments to quickly get more spending out to the economy by temporarily increasing UBI rates in a recession.

Over the long term, however, … [i]t is important to recognise that one function of UBI is to create demand for jobs that serve the UBI recipients themselves — because that’s what they will be spending their money on. ….

There is a worry that the demand sustained by UBI need not create good jobs …. Of course it is not obvious why a government … would “guarantee” public jobs that were any better. … [A] function of UBI is to give jobtakers the bargaining power to demand it themselves through the ability to say no to a bad job.

Martin Sandbu, “Money can buy you work“, Free Lunch (FT’s daily email on global economic policy), 6 April 2017 (premium FT subscription required for access).

Mr Sandbu discusses the UBI with Cardiff Garcia on Alphachat, “Newly conceivable ideas in economics“, 17 February 2017, an ungated FT podcast (registration required), accessible also through iTunes.

Here is the article by Ms Coyle that Mr Sandbu refers to:

Diane Coyle, “Universal basic services are more important than income“, Financial Times, 4 April 2017 (gated paywall).

I was also unconvinced by Ms Coyle’s argument, though I agree with Mr Sandbu that it is thoughtful and worth reading.

On the UBI, Indo-American journalist Akash Kapur’s review of Dutch historian Rutger Bregman’s book Utopia for Realists: And How We Can Get There is worth a look.

Bregman may be a particularly enthusiastic evangelist, but he is hardly the first to promote a universal income; the idea has a long, and in many ways somewhat surprising, pedigree. Thomas More, the godfather of utopia, envisioned something like a guaranteed income for the residents of his idealised world. Versions of the concept have also found favour among thinkers as varied as John Stuart Mill, Thomas Paine, Friedrich Hayek, Milton Friedman and John Kenneth Galbraith. In the late 1960s, no less a conservative stalwart than Richard Nixon presented a basic income bill, labelling it “the most significant piece of social legislation in our nation’s history”. It passed the US House of Representatives before dying in the Senate.

The idea subsequently fell out of vogue, obscured by Reaganite-Thatcherite pieties about meritocracy, hard work and individual responsibility. But it has recently returned from the fringes to the centre-stages of policymaking, once again a respectable option backed by influential figures on both the left (who like its egalitarian impulses) and the right (who find it less paternalistic than the welfare state).

Akash Kapur, “Money for nothing: the case for a basic income“, FT Books Essay, 2 March 2017 (gated paywall).

Mr Kapur (born 1974) also covers, in his review, Basic Income: A Radical Proposal for a Free Society and a Sane Economy, by Philippe Van Parijs and Yannick Vanderborght.

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