T WAS just too good to be true. The level-headed Swiss aren’t persuaded that a citizen’s income for every adult makes sense, and they voted massively against the idea in their referendum at the weekend.
I have to say, I probably would have been in the No camp. However, a citizen’s income, or universal basic income (UBI) as it is usually called, is an idea that won’t go away. And it’s not just the far left and the Greens that are keen on it.
Ontario is about to test a basic income system, as is Finland. The Scottish National Party voted in favour of a UBI at its conference this year. And the respected think-tank RSA has called for a UBI of £71 a week to end welfare dependency and address the job-killing impact of automation.
However, the Swiss feared creating a generation of young people without any motivation to work. Voters also worried that a citizens income might suck in large numbers of immigrants eager to live off the state. Mind you, welfare benefits in countries such as Switzerland and Britain are already higher than average incomes in many of the countries migrants are fleeing from. And as nearly everyone now accepts, the vast majority of immigrants come to Britain here to work. The problem is that good jobs are becoming scarce.
In the two centuries following the industrial revolution, capitalism created as many jobs as the population could support. Productivity increased year on year and as it did it created a virtuous circle of job creation. As goods such as TVs, fridges, and cars became cheaper, the workers were able to afford them with the wages they made in the factories that produced them. Henry Ford began it all in the 1920s when he paid his workers twice the going rate so that they could afford to buy his cheap Model T cars.
Occupations proliferated as the economy matured and as recently as the 1970s, work was so abundant that only the genuinely workshy were without a job. But around the turn of the 21st century, this virtuous circle began to reverse. As computers took over the management of industry, automation began to make human workers redundant. The robots that make modern cars don’t go out and buy them.
Middle class occupations are disappearing as rapidly as manufacturing ones. Routine secretarial and clerical tasks were the first to go, followed by semi-skilled occupations like bank tellers, account keepers and shop assistants. Analysts say that some legal occupations, estate agents and accountants could be the next to be hit by the automation hurricane.
Some of the jobs that are left tend to be low pay, low skill service occupations that aren’t easily automated – hair dressing, security and dog walking. Not only are these not very skilled, they don’t pay enough to give people the income to pay for all the cars, computers and smart phones that are being produced by super-efficient automated factories.
This is a problem that no one foresaw, not even Karl Marx. A world without work is not science fiction; it is already happening, though the benefits are not being shared. The end of mindless toil should leave us free to do more creative things, like painting, making music or just thinking. But only if we have the money to put our leisure to good use.
It seems to me that a guaranteed income isn’t the answer. The RSA’s suggested income of £71 a week would liberate people from work only to imprison them again in poverty. Moreover, it wouldn’t solve the problem of demand: of ensuring that there is wealth to buy the goods digital capitalism can produce. A negotiated three, or even a two-day week, without loss of pay, would be a better solution. This doesn’t involve the moral hazard of a basic income, which might incentivise indolence.
It’s also in line with history. Our forefathers worked 12-hour shifts six days a week until union bargaining brought in the 8-hour day. Now machines can put in nearly all the hours. Perhaps in future work will be seen not as a chore to be avoided, but something people genuinely value.
What we must avoid is a digital depression in which millions of people are thrown into idleness and destitution simply because the economy has become more productive. We must ensure that the gift of automation is used for the benefit of the many, and not just the few who possess the algorithms of production.