King decrees universal basic income

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King decrees universal basic income Image by Jason Train, Flickr https://flic.kr/p/f1BBQu

The question for the week is, what, apart from introducing a universal basic income, would you do if you were King, President or Prime Minister for a day? The term ‘King for a Day,’ which has inspired more than a dozen pop songs and an obscure opera by Verdi, implies that for 24 hours you get to be loved by the masses. You can loll about in a high-backed chair, gold orb and sceptre in hand, and be fawned over – mint juleps and the like.

In the Silly Season, media outlets tend to ask people questions like this, for a news slot or an inconveniently empty news hole next to a couple of ads. The ABC North Queensland asked a bunch of 11-year-old kids and some senior citizens what they’d do if they were Prime Minister for the day. Some of the answers were predictable enough. Sophie, 11 said, “Give everyone a day off so adults can take their kids out (and make theme parks free).” James (10) said he’d employ more scientists so Australia can get its research skills up (reserve that kid a cabinet post, circa 2030). Keira (11) wanted more national parks; Charlotte (11) wanted a program for kids to do work experience and be taught something they want to do.

If I could be King for a Day, I’d single out the dysfunctional tax and welfare systems and propose the following reforms:

Introduction of a universal basic income for all adults: $25k a year, indexed, no strings attached. Adults are free to earn money over and above the $25k, but it will be taxed on a sliding scale to the maximum rate for anyone earning more than, say, $150k.

Hypothetically, a previously unemployed or under-employed couple could, with a tax-free household income of $50,000, find jobs, start a business, renovate the spare bedroom, and join Airbnb and ramp up their annual income in a myriad of ways. Their only duty would be to the Tax Office.

Treasury boffins would be responsible for reforming the tax system to ensure the universal basic income could be funded and that as few people as possible are disadvantaged. Treasury could find ways to encourage business to work with this new system, for example offering generous tax rebates for research and development.

In my Kingdom, all forms of social welfare would be replaced by a new regime, overseen by the Office of Financial and Social Opportunity and Incentivisation (NOOFASOI). The office would oversee payment of the UBI and iron out the inevitable wrinkles in a new and untested system.

This is not just a FOMM flight of fancy

Countries as diverse as Finland, France, Ireland, Norway, the US, Canada, New Zealand, Holland, Iceland, India and Brazil are either talking about universal basic income or trialling it in one form or another. Switzerland had a referendum, and while the people said no, it shows how front of mind this issue has become. Indeed, Australia has a university-sponsored programme to research income security.

And the Parliament of Australia published this comprehensive yet concise policy paper by Don Henry, for those who want to find out more.

The media went on a feeding frenzy recently after the end of the first year of Finland’s two-year trial to dole out a subsistence amount (no strings attached) to 2,000 unemployed Finns. The Finnish government (wisely) is letting the experiment run and will only look at it the results when the trial ends.

I would not pretend to understand the complexities of financing a universal basic income and the social engineering required to make it work.

An OECD report in 2017 said that despite well-publicised campaigns for a Basic Income, no country has put a BI in place as a pillar of income support for the working age population.

“The recent upsurge in attention to BI proposals in OECD countries, including those with long-standing traditions of providing comprehensive social protection, is therefore remarkable,” the report says.

It’s not so remarkable when one looks into the growing inequality that is being spawned by job losses as a result of automation and digital disruption. As Oxfam said last week, 42 people hold as much wealth as the 3.7 billion people in the poorest half of the world’s population.

This is clearly not sustainable. 

From where I sit, the domination of the contract or ‘gig economy’ and a part-time, casual workforce has left the welfare system behind. Moreover, the welfare bureaucracy is unrealistically punitive, in that it forces the unemployed to prove they are pursuing fast-disappearing jobs to qualify for support.

Mainstream conservative publications including The Economist and the Financial Times have canvassed the UBI debate. As the FT said, it “strengthens a sense that the traditional welfare state is no longer fit for purpose”.

The advances in artificial intelligence (AI) are threatening many jobs around the world, the FT said, adding that most workers have come to accept that the job for life has gone for good.

But if the intent of a UBI is to lift people out of poverty and ensure wealthier people pay their fair share of tax, it’s not that simple.

The OECD report concludes that introducing a UBI in countries with strong social support systems would not solve poverty and would lead to higher taxes. Others warn against dismantling welfare systems, which, however flawed, are at least a safety net for the poor and disadvantaged.

George Zarkadakis, an AI engineer and writer, outlined some of the flaws in an article for Huffington Post. Zarkadakis dismissed talk of taxing the cash reserves of fully automated companies, saying this would affect their ability to invest and innovate; they would lose their competitive position to low-tax or zero tax regimes. Likewise, he was sceptical about the hi-tech and energy companies that are lobbying for (and prepared to help fund) a UBI, arguing that this would give them undue political influence.

The ancient ideal of a UBI (Thomas More’s social satire, Utopia, published in 1516), frees creative people and artisans around the fringes of the commercial world to develop their skills without financial pressure. The ‘shall we tell Centrelink?’ poser goes into the dustbin of history, along with the often inaccurate stereotype of the ‘goddamn, long-haired hippy dole bludger’. People on disability pensions would no longer have to get stressed about the fluctuating cycles of their illnesses. For example, a person receiving the blind pension (which is not means tested), can lose it if they recover some sight. There is also the travesty where workers made redundant find out that 30 years of paying tax counts for nothing. Unless their payout is locked up in super, they’ll have to spend every cent of it before dipping into the public purse.

Even a theoretical discussion about a UBI should alert us to many of the anomalies in our welfare system, which arise from outdated legislation and an institutionalised idea that people are out to rort the system.

As for my Kingly privileges for a day (you can tell how far along we are with ‘The Crown’), I was so busy hunting grouse, inspecting broodmares, dallying with ladies-in-waiting and whatnot, I never got around to doing anything. Terribly sorry.

More reading: Hardship in Australia

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