Business Technology

Friday 2 December 2016

Why the tech world wants to create a new basic income for all

Could a 'basic income' for every person replace current social welfare systems? Senior figures in the tech industry are lobbying for it, writes our Technology Editor

Published 09/06/2016 | 02:30

Voters cast their ballots in the recent Swiss referendum.
Voters cast their ballots in the recent Swiss referendum.
Tech guru Sam Altman.

Last week, Switzerland rejected a referendum that would have given every citizen a monthly cash deposit of Sfr2,500 (€2,277) with no questions asked. This 'basic income' would have been designed to replace other forms of social welfare and free up people to retrain or pursue lines of work they prefer without starving.

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Although the Swiss said no to the measure, a global movement considering the universal basic income as an alternative to existing subsistence systems seems to be gathering pace.

For example, Finland and Holland are about to begin trials giving a small number of citizens a basic monthly income, while the British Labour Party says it will consider proposing it as a policy at the next UK general election.

And the tech world is particularly abuzz on the topic, with several senior tech executives and venture capitalists publicly coming out in favour of the idea. The head of the world's most famous tech incubator, Y Combinator's Sam Altman, is to fund a pilot scheme of 100 people using the principle.

"In a world where technology eliminates jobs, it will mean the cost of having a great life goes down a lot," Altman recently tweeted. "But without something like a basic income, I don't think we can really have equality of opportunity."

Albert Wenger is one of the most vocal advocates of a universal basic income. As the managing partner of Union Square Ventures, Wenger is one of the world's most successful venture capitalists having overseen investments into Etsy and Twilio as well being an early personal investor in Tumblr.

But he also thinks that a basic income could change the way people think about what they want to do with their lives.

"Right now, millions of people can't afford to be entrepreneurially active because they have no time or capacity to do so," he told the Irish Independent.

"We know that to innovation needs entrepreneurship. But entrepreneurship today is something of a privilege. A basic income is a question of freedom. We should now give people money to participate."

As an investor, Wenger's own motives in favour of a basic income for all clearly involve new investor opportunities that would arise from consequent entrepreneurship.

But there's a dollop of social justice wrapped in there, too. Like many right-of-centre commentators advocating a universal basic income, Wenger sees societal trouble ahead as robots sprint into our workplaces, making swathes of us redundant.

"I think that there is a big dislocation that is happening in the world," he says. "It's unlike anything we've had before. It sometimes involves zero marginal cost."

We don't have to look too far down the line to see what Wenger is talking about. With car manufacturers set to launch self-driving vehicles in 2018, the writing is probably on the wall for millions of professional drivers in taxis, buses and delivery companies. Robots are also wiping out factory jobs at unprecedented rates, with companies like Amazon using droids and drones to phase out virtually all human involvement in warehouses and, eventually, delivery routes.

White collar jobs, previously thought of as immune from robots, are also now in the line of fire as artificial intelligence starts to live up to the predictions of scientists and futurologists.

The OECD reckons that 9pc of current jobs are at risk from robot replacement, while one Oxford study said almost half of us could be affected.

We have always worried that automation was a threat to human employment, from assembly lines to washing machines. But we have never before faced the prospect of intelligent robots that learn and make decisions as they go.

And that's where the promise of a basic income sits in the overall scheme of things: people will need far greater latitude, in a much shorter period of time, to look at new areas of work without battling subsistence issues too.

"We have the capacity to do this now," says Wenger. "We've created enough progress over several generations to now take care of everyone's basic needs. So let's give people money to participate, give them access."

The idea of a universal basic income has yet to approved by any democratic electorate. Swiss voters overwhelmingly rejected the proposal in a national referendum last weekend. Advising citizens against adopting a basic income, the Swiss government warned that it would be expensive, encourage idleness and create difficulties with immigration.

The notion has strong opponents on all sides of the political spectrum. Right-wingers say that it's a recipe for loafers while left-wingers charge it's a libertarian conspiracy designed to defenestrate hard-won social welfare rights that cater for individual needs.

Such responses are fearful and overly pessimistic, according to Wenger.

"When we look at economic issues, we have developed a fairly negative view of human motives and potential," he says. "I'm not a fan of governments building all the houses or directly providing all food as that generates bureaucracy. But this isn't the type of safety net where you get trapped. This is a floor for everyone, from which they can do amazing things. Give people freedom."

Amounts to be paid out under a universal basic income vary by proposal and pilot scheme. While the Swiss model would have paid over €27,000 per year in cash to every adult, pilots in Holland and Finland range from €7,000 to €12,500 per year.

Most systems proposed would allow someone to keep the universal basic income on top of any other work they do or any additional income they have.

In the US, the right-wing author Charles Murray has written a book on the topic, proposing an annual $13,000 (€11,454) cash payment to everyone over 21, decreasing to $6,500 (€5,727) for those earning over $60,000 per year. However, he argues that $3,000 (€2,643) of the stipend must be used for health insurance, leaving less than $200 (€176) per week to cover everything from housing to food.

Murray is coming at the provision of a basic income from a starkly anti-welfare viewpoint.

"The UBI is to be financed by getting rid of social security, Medicare, Medicaid, food stamps, supplemental security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare," he wrote in a recent 'Wall Street Journal' column. "As of 2014, the annual cost of a UBI would have been about $200bn [€176.2bn] cheaper than the current system. By 2020, it would be nearly a trillion dollars (€881.1bn) cheaper."

In countries like Ireland, where over half the population receives some form of welfare payment, there is probably little appetite for anything approximating this kind of approach to a universal basic income.

Instead, advocates here pitch the idea as something that could end up being a supplement on top of other welfare payments.

"We would need an independent commission to determine amounts, supplements, change-over ages for increases and similar issues," say the organisers of Basic Income Ireland, a lobby group affiliated to the worldwide Basic Income Earth Network.

"Setting the amount would become a central political issue. The commission would have to be composed of members from all social groups."

The group has touted €188 per week, or €9,776 a year, as a suitable basic income.

But while interpretations of a universal basic income differ, interest in it appears to be strong across Europe. In April, an EU-wide survey by Dalia Research showed that over two-thirds of Europeans would consider voting for a universal basic income.

It is not clear whether this represents fatigue of current welfare systems, a desire for more welfare or a fear of robots taking our jobs.

"I think that a UBI is our only hope to deal with a coming labour market unlike any in human history," wrote Charles Murray. "We are approaching a market in which entire trades and professions will be mere shadows of what they once were. Yes, some people will idle away their lives under UBI. But that is already a problem. A UBI would present the most disadvantaged among us with an open road to the middle class if they put their minds to it. It would say to people who have never had reason to believe it before: 'Your future is in your hands'."

In Ireland, the Basic Income Ireland lobby group (which is affiliated to the worldwide Basic Income Earth Network) has touted an annual cash payment of €9,776 (equivalent to €188 per week). This is considerably less than the €27,000 per year that would have been paid had the Swiss people passed last Monday's referendum on the issue.

Pilots in Holland and Finland range from €7,000 to €12,500 per year. Economists will argue over the peripheral costs incurred or foregone if you change the current system in favour of one basic income. But Basic Income Ireland says that a basic income system would cost the same as the current social welfare system.

PROS

1 It could give people financial space to retrain or consider other areas they're interested in, including the resolve to start their own business.

2 It would be an instant boost to many unpaid carers or home makers, whose role is often financially under-recognised.

3 It would cut down on expensive bureaucracy.

CONS

1 Many people would get it who do not need it. For over half the population, it could be an unjustifiable windfall.

2 If strictly observed in replacing current welfare systems, it could lead to hardship where individual needs or circumstances are ignored.

3 It could end up being very expensive for taxpayers if it became a supplemental payment rather than a replacement one.

5 jobs expected to be replaced by robots in the next decade

1 Taxi drivers and professional chauffeurs

Driverless cars will be introduced on a mass scale some time in the next decade. Car companies say people will be able to simply tap or text for a car, which will then ferry them wherever they want to go at whatever time they want.

2 Bus and rail drivers

Given the plight of taxi drivers, it takes even less imagination to realise that the writing is on the wall for this group.

3 Service agents and online sales reps

Companies such as Microsoft are slowly releasing online bots designed to replace human service agents. Armed with increasing levels of artificial intelligence, such bots can 'have conversations' with customers and learn from the experience.

4 Delivery service personnel

Companies such as DHL, FedEx and others say they're committed to using drones for small deliveries in future. Amazon announced last month that it is no more than six months away using drones within its warehouses.

5 Accountants

While creative accountancy will always attract premium customers, basic filing, expenses and tax returns are expected to become completely automated in the next ten years according to a recent Oxford study.

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