For open minds

A Universal Basic Income: the Next Big Thing in policy

Giant Guinness Book record placard on basic income vote
Let's try to answer that. Source: DPA

Policy boffins all over the world are feeling a bit let down by Finland. It has been doing an experiment with a prototype of a so-called Universal Basic Income (UBI), but is now phasing out this trial ahead of schedule.

The UBI is an old idea gaining new currency amid fears about the job-destroying potential of Artificial Intelligence (AI). That anxiety is overblown. Yes, machines and algorithms will do many jobs better than humans can, from taxi driving to X-ray analysis. But like all previous technologies, AI also creates jobs. It will change work, not eliminate it.

Still, there is the justified fear that the acceleration of change will leave many people behind, creating a “digital proletariat”. So why not pay everybody enough to live a dignified life? Every man, woman and child. Rich or poor. Employed or not. No strings attached.

Here is how you can tell that the idea is big: Some social scientists on the left hate it; so do some on the right. Others on the left love it; as do some on the right. This can mean only one thing: We have no clue what we are even talking about.

Those lefties who instinctively hate the UBI fear that it decouples a fair wage from work. Righties worry that the carrot of a UBI without the stick of looming penury would kill the incentive to work and lead into sloth. Germans, with their Lutheran tradition, can barely even imagine a world in which work is optional.

Other lefties and righties love the UBI because it promises to eradicate poverty, or to stabilize democracy. That is huge. Classical liberals like me also like the idea because – this point is often misunderstood – a UBI would not complement, but completely replace, the existing welfare state. All social-security bureaucracies and other Leviathans would go. The UBI thus promises a radical simplification, and limitation, of the state.

So what are the problems? A big one is the transition from the old welfare state to a UBI, which would be fiendishly complex. Another is determining how high a UBI should be, and how high taxes need to go to fund it. But the biggest question is this:

How will human nature respond to guaranteed income? If people were to stop working, societies would collapse. But that is not a given. It appears more likely that most people would use a UBI to bridge periods without work. They would acquire new skills after a job loss, for example, or take time out to care for a toddler or an aging parent, before resuming their careers. This is exactly what the new world of work demands: A way to let people keep learning and adapting throughout life.

The only way to get answers is to run experiments. Too bad Finland is out. But Scotland, Canada, and – most promising – Kenya are still in. Germany should run its own trial. The only prerequisite is an open mind.

To contact the author: kluth@handelsblatt.com

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