Britain remains in the grip of referendum fever with each side producing more and more frightening images of the Armageddon that awaits us on the other side of 23rd June if we make the wrong choice.
Meanwhile, the Swiss (who are more used to this kind of thing) had a series of referenda last weekend, including one on the introduction of a guaranteed basic income for every Swiss citizen. A guaranteed basic income is a payment made regularly to all citizens solely on the basis of their citizenship and paid to them irrespective of their working status, their income or indeed any other non-citizenship characteristic. The idea (amongst it supporters) is not to provide a ‚minimum‘ payment (a floor beneath which no-one should be allowed to fall) but rather to support the maximum sustainable payment (consistent with other economic imperatives). The sum provisionally suggested for payment in Switzerland was CHF2,500 (about £1,765) per month.
The outcome was a decisive ’no‘ vote. 72% of Swiss voters (in line with their government and all the mainstream parties) came out against the proposal. That means that around 28% of voters chose to support it.
This looks like a decisive rejection. Indeed, it was a decisive rejection. But supporters of a basic income (and there are plenty of them dotted around the planet) were not discouraged. For them it represented a giant step forward, placing the issue on the public agenda in a big way and garnering the support of nearly three-in-ten voters in one of Europe’s most affluent and capital-friendly countries.
This is not an isolated episode, though it is the one that has attracted the most attention. There is a tide of experiments and initiatives around the world. Governments in Finland and Canada are planning local trials. Parties, trades unions and even legislative assemblies around the world are undertaking feasibility studies. And there are some real-world examples to go by as well.
And it’s an idea that’s not entirely new. It has a history which goes back at least to Tom Paine whose Agrarian Justice included proposals for a one-off coming-of-age capital grant to all citizens (as well as social insurance to cover the risks of old age). A number of distinguished economists, of both right and left, have long backed it. In Europe the Basic Income European Network (BIEN) has been an active advocate for some thirty years. And it has a lot of support in the relevant academic community, most notably in the work of the Belgian political scientist, Phillippe van Parijs.
The objections are not very difficult to find. On the one hand, it is said that giving people ‚free money‘ will lead them to quit their jobs in droves (especially unattractive and poorly-rewarded jobs). On the other, the taxation costs of the few people left in work would become unsustainably (and exploitingly) high leading them to quit their jobs, thus cranking up a vicious cycle.
Supporters of B.I. have some well-developed responses to these claims. One is that it would be an incentive to improve the quality of people’s working lives, both in terms of their pay but also in terms of the qualitative experience of their work. And all sorts of useful work which is not rewarded in the conventional labour market could now be done – and we would all be better off for that. On the funding issue, we could explore new ways of raising public revenues which would avoid piling all of the burden on income-tax payers, perhaps by penalising environmental ‚bad’s or discouraging unproductive financial hyper-activity.
However good these arguments are (or are not), they are certainly not new. So why this recent growth of interest in B.I.?
Let me suggest two possible reasons (amongst many others). One is to do with the process of automation. Those whose vision of the future stretches a long way suppose that in 20-30 years time perhaps as much as 30% of the work now done by humans will be done by intelligent machines. And yet we are trying to fix our current economic problems by driving more and more people into work, work which is often poorly paid, not intrinsically interesting and which is ripe for automation. At the same time, we live (at least in the affluent West) in societies of rapidly increasing income inequality. When all the mud has fallen off Thomas Piketty, his central insight, that we are living in societies characterised by growing wealth inequality, remains more or less intact. At the same time, the institutions of redistribution and social protection, a combination of public transfers and public services, through which the distributional outcomes of capitalism in the second half of the twentieth century were effectively moderated, are coming apart at the seams.
It is about as clear as it can be that our old solutions no longer work. We are peddling a one-size-fits-all solution, welfare-to-work, in societies which are increasingly ill-equipped to deliver well-paid, satisfying jobs for all. Most of the solutions we are offered mean more (or rather less) of the same. This isn’t going to work. Basic Income may not prove to be the solution (though it is surely worth a try). But it is asking the right questions. And until we ask the right questions, we have no chance of coming up with the right solutions.