Wealth Inequality and the Calls for a Universal Basic Income

By Paul Gregoire and Ugur Nedim

The world’s eight richest people have accumulated more wealth than the poorest four billion, an Oxfam report released 12 months ago revealed. And since 2015, the richest 1 percent has owned more than the rest of the globe’s 99 percent.

This ever-increasing wealth disparity is becoming an escalating concern, especially as automation and technological change threaten to leave growing numbers of workers without employment in the not-too-distant future.

And with the likelihood that more people will be facing decreasing prospects of securing gainful employment, the idea of a universal basic income (UBI) to uplift social welfare is becoming an increasingly popular solution.

Indeed, some analysts are predicting that 2018 will be the year that the UBI enters mainstream politics.

For one and all

In its purest form, the UBI is a regular flat-rate payment that all citizens receive unconditionally from the government. This is despite their occupation, financial history, housing or any other qualifier. And an individual is not required to work for the UBI.

Of late, a number of high-profile entrepreneurs and intellectuals are backing the proposal as a viable option. Virgin boss Richard Branson, Facebook founder Mark Zuckerberg, and Slack chief executive Stewart Butterfield have all thrown their support behind the idea.

It’s nothing new

Although, the concept of the UBI has come to the fore over recent years, the idea of a basic income stretches back to the 16th century, when Spanish humanist Juan Luis Vives proposed that government should provide a minimum subsistence wage to all.

And this idea was carried on through the theories of many political thinkers, such as American political activist Thomas Paine and British philosopher John Stuart Mill. In 1967, Dr Martin Luther King Jr spruiked the idea during a Civil Rights Movement lecture.

While in 1969, then US president Richard Nixon announced a proposal for a Family Assistance Program, which would have provided ongoing additional payments to families with kids. But, while the legislation made it through the US House of Representatives, it faltered in the Senate.

An early success

Between 1974 and 1979, the Mincome Program was carried out in the city of Winnipeg in Canada. It involved local residents receiving an additional monthly payment, which was based on their income levels.

However, it wasn’t until the late 1990s, that the success of the program was realised. Research revealed that during the time of the experiment, hospitalisation in the local area decreased by 8.5 percent, high school completion rates went up, and new mothers could afford to work less.

The Australian history

In 1920s Australia, a British proposal for an unconditional weekly payment known as the Milner’s State Bonus was discussed in the press and raised in federal parliament by a Labor MP. While in 1942, WA radio commentator Lloyd Thomas published a pamphlet calling for a UBI.

The newly-elected Whitlam government announced in 1973 that it was planning to scrap the existing social security system, in favour a guaranteed income scheme that would provide people earning less a certain amount with a supplementary payment.

However, the government never came up with a suitable model for the scheme.

Robots will take your job

Currently, there’s a Senate Select Committee on the future of work and workers inquiry underway to investigate the impact that technology and other changes are likely to have on the future of Australian workplaces and workforces.

Online employment agency Seek outlined in its submission to the inquiry that it’s “been estimated that around half of existing labour is automatable with current technology.” And while low-skill and high-skill jobs are in demand, “middle skill roles are in decline.”

Queensland University professor John Quiggin wrote in his submission that “changes in the structure of labour markets and in labour market law since the 1970s have predominantly had the effect of weakening unions and reducing protections available to workers.”

“Technological disruption” has led to “shifts towards arrangements more favourable to employers,” the professor outlined. And he suggests that the benefits of technological progress should lead to a situation where paid work becomes a choice rather than a necessity.

Professor Quiggin called for a form of UBI that could initially be paid to the unemployed. At first, this income would involve participation in society through voluntary work, but it wouldn’t require an individual to take part in “imposed activities such as ‘work for the dole.’”

Basic income trials

Currently trial versions of a UBI are being carried out around the world. As of January 1 last year, 2,000 unemployed Finnish citizens began receiving a monthly income, as part of an experiment that is set to run until the end of this year.

A key goal of the Finnish scheme is to encourage those receiving the payment back to work by providing them with the financial assistance even once they’ve returned to paid employment.

While in 2016, a program was launched in Kenya that’s providing around six thousand local people, who usually survive on less than a $1 a day, with an unconditional income on a regular basis for the next 10 to 15 years.

People living in the cities of Glasgow and Edinburgh may soon start receiving unconditional monthly payments as part of a series of universal basic income pilots that are currently being explored by the Scottish federal government.

And chief economic advisor to the Indian government Arvind Subramanian has predicted that at least two Indian states will implement a UBI within the next two years. In July last year, India politicians met in Delhi to discuss the feasibility of setting up such schemes.

New technologies covering the shortfall

To many, the idea of a UBI seems rather far-fetched, but the concept is beginning to catch on in many parts of the world. A Gallup and Northeastern University Poll undertaken in the US this year, found that 48 percent of Americans agreed that a UBI was a positive solution.

And as advances in artificial intelligence (AI) begin to lead to jobs loses, many believe that these changes could actually fund a basic income system.

Both Bill Gates and Richard Branson have stated that AI industries should be required to pay taxes in line with what the workers that have been replaced by these technologies would have paid. And these funds could then be funnelled into something like a UBI scheme.

While others are arguing that as businesses increasing rely on access to data, these companies should be required to pay a tax on this socially generated wealth.

Indeed, this would work in much the same way mining companies are required to pay royalties on what is recognised as the commonly-owned resources they extract from the ground.

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