Basic income is a terrible, inequitable solution to technological disruption


Comment: Handing out a universal wage will only deepen the divide between the remaining few with jobs and those without. We should redistribute work not wealth, says Emran Mian

21st July 2016

One of the decent arguments in favour of a basic income goes something like this. We are entering a period of remarkable disruption, owing to advances in automation and machine learning; many jobs will be destroyed. We might never recover some of these jobs. Or, at least, we will require time and freedom to invent new and productive things to do. Hence a basic income – replacing our complex system of welfare benefits with a single equal payment for everyone – can serve as a safety net, either for those who won't have work, or those who are trying to make new work.

This argument has obvious rhetorical merits. While the rest of us are stuck in the mould of the mundane everyday, the proponent is facing the future. While the rest of us wish to keep humanity in shackles, the proponent lifts our eyes to the stars. On the face of it the argument also seems to fit some facts about the changing labour market and the onrush of technological change.

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Ordinarily I contest that fit. I'm not convinced that this period of job destruction is unprecedented; specifically, I believe that it will be – like other periods of job destruction before it – accompanied by huge amounts of job creation too. But, even if we pretend that the premise of the argument is correct, does it actually support the case for a basic income?

If this is a period of unprecedented job destruction, does it actually support the case for a basic income?

Let's say that lots of jobs are vanishing. We want to help the people who are no longer in work to have a decent standard of living, perhaps indefinitely. This means increasing what we spend on welfare. Yet the premise of the argument is that there are fewer people in work. This means taxes on the people in work have to go up, by a lot, because we're not only increasing welfare spending from present levels but doing so by using tax revenues from the smaller proportion of people who are in work.

This diminishes the incentive for any specific person to be in work rather than on the basic income, so that's more people who stop working and then that's taxes going up a bit more and then that's more people who stop working. Perhaps the extra taxes needed to pay for a basic income are small at first – advocates say they are – but if a basic income is only necessary because of the coming job losses then there is bound to be this ratchet effect.

There is a way out of this: it may be that the people who are in work are going to earn substantially more than those who are not. Technological change may mean that a big gap in productivity emerges between those in work and those not; and the middle band disappears. This means that there are few people on the margin where work is just a little more rewarding than the basic income. You're either in work and earning a lot, so you'll stay in work; or out of work and relying on the basic income. If you're in the former group then you'll pay the extra tax to live in a society where your economic activity is licensed and you aren't a pariah among those in the latter group.

Let's try to envisage that this divide exists. But here’s the trouble: it's revolting. We shouldn't allow it. And I'm surprised that advocates of a basic income believe that it is in any way just to stand for it.

If technology destroys lots of jobs then buying off those without work with the offer of a basic income is morally unacceptable compared to foregoing some of the productivity benefits of technological change in order to limit social and economic inequality.

Instead of deciding that high unemployment and mass dependency is the consequence of progress, we should decide to adapt the progress we make.

If technology destroys lots of jobs then buying off those without work with the offer of a basic income is morally unacceptable

I don't say that because I have some cruel fixation on making people work for a living; instead it's because making one group of people dependent on the kindness of others denies them freedom. The way to improve the position of those needing a basic income is to redistribute work, even if that might reduce economic efficiency, rather than hand out money.

The moral problem with accepting that some people won’t work becomes clear. We should expect that the people without jobs in the future economy envisaged by proponents of a basic income are more likely to be those, for example, with low human or social capital. Those with high capital will have passed to the other side of the divide either through applying their skills and abilities; or by the grace of their networks. The group that is left behind will therefore be likely to include a disproportionate number of people from poor families – those with low cognitive skills and developmental difficulties; as well as recent immigrants and asylum seekers. In other words, we might want to pretend that the right to a basic income is for anyone who needs it; but the incidence of who needs the right will be unequal.

If that's the case then a basic income is an alternative to reform that distributes opportunities differently. Partly for that reason I don’t think the economic and social conditions that proponents of a basic income describe will ever arise. We'll spot them and change them. But, if they did arise, then there would be no moral gain from having a basic income in those circumstances. Instead it would be the cover for a massive moral failure.


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