Basic income versus the robots

An economic all-stars match-up.

Two weeks ago, I wrote about the idea of a citizen's income: the state replacing the vast majority of the benefit system with one cash payment made to everyone, regardless of employment or income.

The advantages of such a change are legion. At a stroke, the thorny issues of incentives are done away with, since work always pays; the deadweight loss associated with means testing disappears (albeit replaced with the deadweight loss of giving money to people who don't need it); those most likely to fall through the cracks of a regimented welfare state find the barrier to re-entry done away with; and it allows for a recognition of the value of certain types of non-market labour, like caring or raising children.

The New York Times' Paul Krugman and the Financial Times' Izabella Kaminska now wade into the fray, proposing another advantage of the policy: its redistributive effect.

Now, redistribution is already, prima facie, one of the absolute best things a government can do. Simply put, rich people don't need money, and poor people do. All else being equal, taking some money from rich people and giving it to poor people is therefore the absolute best way to improve worldwide welfare we know of.

The problem is that all else is not equal: the act of taking and giving money changes people's actions in material ways. Giving or taking money from people changes their incentives, and may lead to sub-optimal decisions. So even if, on first assessment, redistribution is great, it may not be quite as effective as it ought to be.

But Krugman and Kaminska argue that there's a strong chance that redistribution will get significantly more important in the near future. That's because, they fear, all our jobs will be taken by robots.

(Well, alright, not robots exactly. Think of "robots" as a short-hand for a huge amount of automation, from factories running with fewer staff, through genuine robots doing work like caring for the elderly, all the way to the replacement of white-collar jobs in journalism or law with algorithms which can write financial stories or legal documents automatically).

For the most part, all our jobs being taken by robots isn't that bad a thing. What that would mean in practice is that we would have the same standard of living that we have now, and wouldn't need to work for it. That's actually pretty great.

The problem comes when the benefits from increased automation accrue, not to society at large, but to one small subset of society: the robot owners. (In other words, the problem comes when automation meets capitalism. But let's not go there)

Krugman writes:

I’ve noted before that the nature of rising inequality in America changed around 2000. Until then, it was all about worker versus worker; the distribution of income between labor and capital — between wages and profits, if you like — had been stable for decades. Since then, however, labor’s share of the pie has fallen sharply. As it turns out, this is not a uniquely American phenomenon. A new report from the International Labor Organization points out that the same thing has been happening in many other countries, which is what you’d expect to see if global technological trends were turning against workers.

And Kaminska adds:

The new inequality we are seeing has little to do with how well educated you are. It’s hard to penetrate beyond the barrier on education alone. The new inequality is about capital owners and non-capital owners.

And increasingly, it’s about technology capital owners. Those who own the robots and the tech are becoming the new landlord rentier types.

If automation does squeeze the labour market – even if it's just temporarily – then a basic income may be a good way to respond to it. That's especially the case if its implemented somewhat pre-emptively, avoiding the massive social upheaval caused during the last time technology disrupted the labour market this way: the industrial revolution. That only shook out fully once half the ruling class had been massacred in the First World War, and the Labour Party nationalised many of the companies owned by the other half.

More than being just an evergreen idea, a basic income is a policy whose time has definitely come.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

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