UCL/IGP: 

Boost basic services to counter ‘rise of the robots’ – report

• Extension of NHS principle to cover housing, food, transport and IT would boost incomes of those most at risk of job automation and growing inequality
• £42bn cost represents just 2.3% of UK’s GDP – and could be paid for by changes to tax system
• System would preserve incentives to work while building a more cohesive society
• Questions? Want to collaborate with us? Email [email protected]

The UK should provide citizens with free housing, food, transport and IT to counter the threat  of worsening inequality and job insecurity posed by technological advances, a report launched by the Insitute for Global Prosperity recommends.

The proposal for ‘Universal Basic Services’ represents an affordable alternative to a so-called ‘citizens’ income’ advocated by some economists, according to the expert authors working for UCL’s Institute for Global Prosperity.

Building on the ethos that saw the establishment of the NHS and public education – that essential services should be free at the point of need – the plan would “raise the floor” of basic services all citizens can expect, providing better protection for workers in the face of rapid advances in technology and automation.

Outlining the research, Professor Henrietta Moore, Director of the UCL Institute for Global Prosperity, said: “If we are to increase cohesion, the sense that we are ‘all in it together’, we must act where we can have the greatest impact and that is on the cost of basic living.”

The recommendations include a massive expansion of social housing, free bus travel, meal provision for those most at risk of food insecurity and basic phone and internet access. The total cost of £42bn – representing just 2.3% of UK GDP – could be fully funded through changes to the Personal Allowance, making the proposal fiscally neutral.

The services themselves might be provided publicly, by private companies, or by the voluntary sector and would need to be democratically accountable locally to prevent state monopolies.

Those in the lowest income decile would benefit the most – saving the equivalent of £126 per week in costs as a “social wage” if they accessed all the Basic Services. A “social wage” is the value of a public service to an individual citizen, expressed as replacement for financial income.

Critically, the report demonstrates clearly that UBS would be a far more affordable response to the changing nature of the labour market than a ‘citizens’ income’, also known as Universal Basic Income (UBI).

A UBI paid to all UK citizens at the current modest Jobseekers Allowance level of £73.10 per week would cost just under £250bn per year – around 13% of total GDP, or 31% of all current UK public spending. By contrast, the transformative effects of UBS are accessible with relatively minor changes to the fiscal structure of the UK economy: additional UBS spending represents only 5% of existing budgets.

Most plans for basic income include keeping the existing public services in place, and distributing cash in addition to the cost of services. Focusing on more comprehensive provision of services rather than giving cash handouts also means there remains a strong incentive on citizens to work.

Professor Moore and the report’s co-authors – Professor Jonathan Portes of King’s College London, Andrew Percy of the IGP and Howard Reed, director of the economic research consultancy Landman Economics – add that an important aspect of UBS would be the opportunity it could give to rejuvenate local democracy and local involvement in the design, financing and delivery of local services. And they also suggest that UBS could be complementary to a modest basic income.

One recent report by McKinsey estimated that almost half (49%) of the activities people are paid almost $16 trillion in wages to do in the global economy have the potential to be automated by adapting currently demonstrated technology in robotics, machine learning and Artificial Intelligence.

Professor Henrietta Moore, Director of UCL’s Institute for Global Prosperity, said “Without radical new ideas that challenge the status quo, we face a future where the changing shape of our society and labour market leaves more and more people struggling simply to achieve the basics – let alone having the resources and mental energy to allow themselves and their families to flourish.

“As a society, we already accept that certain services like health and education should be provided free at the point of use to the whole population, because we understand that all of society benefits as a result. The concept of UBS is a logical extension of this principle.”

Andrew Percy, the IGP’s citizen sponsor for the research, added “The safety net of a society must be just as modern as its economy. Universally available public services have the potential to provide the flexible, need-specific, and responsive support that could replace much of our current, conditional benefits, while also preserving the value of paid work, conforming with public attitudes, and building social institutional fabric at the same time.

“It cannot be sufficient to excuse hungry school children or an uncared-for elderly population with a notion of ‘unaffordability’ in a society that is as rich as any that has ever existed.”

Professor Jonathan Portes of King’s College, London, said “The role of the state is to ensure an equitable distribution of not just money, but opportunity to participate and contribute to society. For that to be meaningful, there are likely to be certain services everyone should be able to access.

“UBS, like basic income, has the potential to improve work incentives, especially for lower paid workers. It reduces the cash income required, through the benefit system or from savings, for individuals or families to survive at an acceptable standard of living if they have little or no income from labour; and if services are provided to all regardless of work status, then there is no disincentive effect from the loss of access as people move into work or increase their earnings.”

Responding to the launch of the UBS report, Shadow Chancellor of the Exchequer John McDonnell said “Rapid technological changes are a profound challenge for our economy and society. This report offers bold new thinking on how we can overcome those challenges and create an economy that is radically fairer and offers opportunities for all. It makes an important contribution to the debate around Universal Basic Income, and will help inform Labour’s thinking on how we can build an economy that truly works for the many not the few.”

UBS in detail:

The Universal Basic Services (UBS) modelled in the report build on existing universal healthcare, education and legal services. They would enable every citizen to live a ‘larger life’ by ensuring access to safety, opportunity, and participation. Reducing the Personal Allowance to £4,300/year (leaving the current benefits system in place as is) would make UBS revenue neutral, and be highly progressive.

• Shelter: doubling the existing social housing stock by funding the building of 1.5 million new social housing units using 30-year Treasuries at current market rates. The new units would be offered on a needs basis at zero rent. All social housing would be exempted from Council Tax, and include a utilities allowance. With a seven-year building schedule the costs start at £6.1bn and finalise at £13bn from the 7th year onwards.
• Food: A food service would provide one third of the meals for the 2.2 million households deemed to experience food insecurity each year. This would add to existing programs such as free school meals and meals on wheels, providing 1.8 billion meals at a cost of £4bn per year.
• Transport: Extending the existing Freedom Pass (currently for citizens over the age of 60) to everyone for bus services, providing access to free local public transport services that enable citizens and residents access to jobs, education, healthcare and participate fully in their community – all of which are currently under threat. Assuming an increase in use of 260% the cost would be £5bn per year.
• Information: To promote digital inclusion, this covers the cost of basic phone, Internet and the BBC TV licence fee. This would enable access to work opportunities and other services, as well as participation in our democracy as informed citizens. This is the most expensive service considered, with an annual budget of £20bn, however it also delivers universal value across all income groups and keeps all citizens connected in our increasingly digital world.

Key facts – Why UBS?

• According to the Joseph Rowntree Foundation, in 2015/16, 14 million people were in relative low income after housing costs (22%), up 500,000 from the year before. Relative low income is based on those living below 60% of median income.
• According to End Child Poverty, 4 million children in poverty in the UK, and this figure is projected to rise to 5 million by 2020 as further social security cuts come into force.
• In 2016/17, the Trussell Trust gave nearly 1.2m three-day emergency food supplies to people in crisis.
• Research by Shelter has found that typical new homes built today are out of reach for over eight in ten (83%) working families living in private rented accommodation across the country – even if they use the Government’s Help to Buy scheme.
• Data from the ONS shows that between 1980 and 2014, the real cost of motoring, including the purchase of a vehicle, declined by 14%, while bus fares increased by 58% and rail fares increased by 63% in real terms (i.e. accounting for inflation).
• According to Ofcom, 9% of UK adults have difficulty paying for a communications service (phone or internet), rising to 14% of younger people (aged 18-34).

A copy of the full research paper on Universal Basic Services can be downloaded here.

UCL Institute for Global Prosperity

UCL’s Institute for Global Prosperity was set up in 2014 under the leadership of the renowned sociologist Professor Henrietta Moore. Its remit is to rethink social and economic models to tackle the major challenges facing the world in the 21st century as it grapples with climate change, resource depletion and a rapidly growing human population.

Questions? Collaboration? Please email us at [email protected]

Press Contact: James Tout, Journalista, [email protected]

Photo by Daniel Frese from Pexels https://www.pexels.com/photo/berlin-building-business-city-574177/

The post Universal basic services could work better than basic income to combat ‘rise of the robots’ appeared first on P2P Foundation.

At its Winnipeg 2016 Biennial Convention, the Canadian Liberal Party passed a resolution in support of “Basic Income.” The resolution, called “Poverty Reduction: Minimum Income,” contains the following rationale: “The ever growing gap between the wealthy and the poor in Canada will lead to social unrest, increased crime rates and violence… Savings in health, justice, education and social welfare as well as the building of self-reliant, taxpaying citizens more than offset the investment.”

The reason many people on the left are excited about proposals such as universal basic income is that they acknowledges economic inequality and its social consequences. However, a closer look at how UBI is expected to work reveals that it is intended to provide political cover for the elimination of social programs and the privatization of social services. The Liberal Party’s resolution is no exception. Calling for “Savings in health, justice, education and social welfare as well as the building of self-reliant, taxpaying citizen,” clearly means social cuts and privatization.

UBI has been endorsed by neoliberal economists for a long time. One of its early champions was the patron saint of neoliberalism, Milton Friedman. In his book Capitalism and Freedom, Friedman argues for a “negative income tax” as a means to deliver a basic income. After arguing that private charity is the best way to alleviate poverty, and praising the “private … organizations and institutions” that delivered charity for the poor in the capitalist heyday of the nineteenth century, Friedman blames social programs for the disappearance of private charities: “One of the major costs of the extension of governmental welfare activities has been the corresponding decline in private charitable activities.”

To Friedman and his many powerful followers, the cause of poverty is not enough capitalism. Thus, their solution is to provide a “basic income” as a means to eliminate social programs and replace them with private organizations. Friedman specifically argues that “if enacted as a substitute for the present rag bag of measures directed at the same end, the total administrative burden would surely be reduced.”

Friedman goes on to list some the “rag bag” of measures he would hope to eliminate: direct welfare payments and programs of all kinds, old age assistance, social security, aid to dependent children, public housing, veterans’ benefits, minimum-wage laws, and public health programs, hospitals and mental institutions.

Friedman also spends a few paragraphs worrying whether people who depend on “Basic Income” should have the right to vote, since politically enfranchised dependents could vote for more money and services at the expense of those who do not depend on these. Using the example of pension recipients in the United Kingdom, he concludes that they “have not destroyed, at least as yet, Britain’s liberties or its predominantly capitalistic system.”

Charles Murray, another prominent libertarian promoter of UBI, shares Friedman’s views. In an interview with PBS, he said: “America’s always been very good at providing help to people in need. It hasn’t been perfect, but they’ve been very good at it. Those relationships have been undercut in recent years by a welfare state that has, in my view, denuded the civic culture.” Like Friedman, Murray blames the welfare state for the loss of apparently effective private charity.

Murray adds: “The first rule is that the basic guaranteed income has to replace everything else — it’s not an add-on. So there’s no more food stamps; there’s no more Medicaid; you just go down the whole list. None of that’s left. The government gives money; other human needs are dealt with by other human beings in the neighborhood, in the community, in the organizations. I think that’s great.”

To the Cato Institute, the elimination of social programs is a part of the meaning of Universal Income. In an article about the Finish pilot project, the Institute defines UBI as “scrapping the existing welfare system and distributing the same cash benefit to every adult citizen without additional strings or eligibility criteria”. And in fact, the options being considered by Finland are constrained to limiting the amount of the basic income to the savings from the programs it would replace.

Photo courtesy of Julien Gregorio: https://flic.kr/p/H95TrQ

“Basic Income” Won’t Alleviate Poverty

From a social welfare point of view, the substitution of social programs with market-based and charitable provision of everything from health to housing, from child support to old-age assistance, clearly creates a multi-tier system in which the poorest may be able to afford some housing and health care, but clearly much less than the rich — most importantly, with no guarantee that the income will be sufficient for their actual need for health care, child care, education, housing, and other needs, which would be available only by way of for-profit markets and private charities.

Looking specifically at the question of whether Friedman’s proposal would actually improve the conditions of the poor, Hyman A. Minsky, himself a renowned and highly regarded economist, wrote the “The Macroeconomics of a Negative Income Tax.” Minsky looks at the outcome of a “social dividend,” which “transfers to every person alive, rich or poor, working or unemployed, young or old, a designated money income by right.” Minsky conclusively shows that such a program would “be inflationary even if budgets are balanced” and that the “rise in prices will erode the real value of benefits to the poor … and may impose unintended real costs upon families with modest incomes.” This means that any improved spending power afforded to citizens through an instrument such as UBI will be completely absorbed by higher prices for necessities.

Rather than alleviating poverty, UBI will most likely exacerbate it. The core reasoning is quite simple: the prices that people pay for housing and other necessities are derived from how much they can afford to pay in the first place. If you imagine they way housing is distributed in a modern capitalist society, the poorest get the worst housing, and the richest get the best. Giving everyone in the community, rich and poor alike, more money, would not allow the poorest to get better housing, it would just raise the price of housing.

If UBI came at the expense of other social programs, such as health care or child care, as Friedman intended, then the rising cost of housing would draw money away from other previously socially provisioned services, forcing families with modest incomes to improve their substandard housing by accepting worse or less childcare or healthcare, or vice versa. A disabled person whose mobility needs requires additional expenditure on accessible housing may not have enough of the basic income left for any additional health care they also require. Yet replacing means testing and special programs that address specific needs is the big idea of UBI.

The notion that we can solve inequality within capitalism by indiscriminately giving people money and leaving the provisioning of all social needs to corporations is extremely dubious. While this view is to be expected among those, like Murray and Friedman, who promote capitalism, it is not compatible with anticapitalism. UBI will end up in the hands of capitalists. We will be dependent on these same capitalists for everything we need. But to truly alleviate poverty, productive capacity must be directed toward creating real value for society and not toward “maximizing shareholder value” of profit-seeking investors.

Photo courtesy of Julien Gregorio:https://flic.kr/p/H95TrQ

There Is No Possibility of Another Kind of “Basic Income”

Many people don’t dispute the fact that establishment promoters of UBI are only doing it in order to eliminate social programs, but they imagine that another kind of basic income is possible. They call for a basic income that disregards the “deal” that Charles Murray advocates, but want UBI in addition to other social program, including means-tested benefits, protections for housing, guarantees of education and child care, and so on.This view ignores the political dimension of the question. Proposing UBI in addition to existing program mistakes, a general consensus for replacing social programs with a guaranteed income for a broad base of support for increasing social programs. But, no such broad base exists.

Writing in 1943, with the wartime policies of “full employment” enjoying wide support, Michal Kalecki wrote a remarkable essay entitled “The Political Aspects of Full Employment.” Kalecki opens by writing, “a solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending programme.” Though he is talking about full employment, which means an “adequate plan to employ all existing labour power,” the same is true of UBI. The majority of economists would agree that a plan to guarantee an income for all is possible.

However, Kelecki ultimately argues that full employment policies will be abandoned: “The maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, ‘the sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.”

The conflict between the worker and the capitalist, or between the rich and the poor, can not be sidestepped simply by giving people money, if capitalists are allowed to continue to monopolize the supply of goods. Such a notion ignores the political struggle between the workers to maintain (or extend) the “basic income” and the capitalists to lower or eliminate it in order to strengthen their social position over the worker and to protect the power of “the sack.”

Business leaders fight tooth and nail against any increase of social benefits for workers. Under their dominion, only one kind of UBI is possible: the one supported by Friedman and Murray, the Canadian Liberal Party, and all others who want to subject workers to bosses. The UBI will be under constant attack, and unlike established social programs with planned outcomes that are socially entrenched and difficult to eliminate, UBI is just a number, one that can be reduced, eliminated, or simply allowed to fall behind inflation.

UBI does not alleviate poverty and turns social necessities into products for profit. To truly address inequality we need adequate social provisioning. If we want to reduce means testing and dependency on capitalist employment, we can do so with capacity planning. Our political demands should mandate sufficient housing, healthcare, education, childcare and all basic human necessities for all. Rather than a basic income, we need to demand and fight for a basic outcome — for the right to life and justice, not just the right to spend.

• Cross-posted from Furtherfield
• Lead image courtesy of Michael von der Lohe: https://flic.kr/p/GhRAk3

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