Abu Dhabi, UAEFriday 22 November 2019

The idea of universal basic income isn't new – but can it ever be more than a buffer against the tide of life?

Finland is experimenting with the concept of a basic income, prompted by artificial intelligence, but governments have been toying with the idea for years, writes Damien McElroy

Can universal basic income ever provide more than a buffer? Illustration by Álvaro Sanmartí / The National
Can universal basic income ever provide more than a buffer? Illustration by Álvaro Sanmartí / The National

A country where the staple lunch in summer is a rich salmon soup is by definition a highly developed state.

Finland is wealthy, well-educated and sophisticated in its tastes.

It comes as no surprise that Finland is one of a select group experimenting with universal basic income.

The basic income concept is spurred by innovative technologies such as artificial intelligence that automate and perfect human function.

The theory is that receipt of a relatively low wage covering household needs means people can adapt to the structural change in the economy.

The Finnish experiment appears, however, to be scarred by long-held flaws. Detractors have clear pitfalls to wage against the entire enterprise. The concept has virtues but it also has limitations. The biggest of these is that it runs up a white flag on the path of progress.

First of all it is necessary to explain why Finland is a model for the project. Its forested landscape has provided commodity wealth for decades. The population of just under six million is well educated. A welter of technology companies, such as Nokia, are globally successful. Highly taxed, it has a culture of redistribution of wealth that enjoys strong popular support.

The pilot scheme saw 2,000 people nationwide selected to receive €560 ($657) a month for two years.

The organisers are jealously guarding a formal assessment of the scheme but it appears many of the recipients used the money to enhance their lifestyle.

One stay-at-home father, whose furniture business had gone bust, has happily taken advantage. He spent the money to launch himself as a photographer and travelled to Africa on unpaid assignments.

In the summer, Finland is a spectacular country with daylight that never quite extinguishes. In the winter, it is punishingly cold and dark. According to accounts emerging from the basic income scheme, the steady payment is at best a buffer against the seasonality of life.

The rewards are too insipid to justify the enormous financial commitment to roll it out nationwide.

Helsinki has announced that the payments system won’t be prolonged after the two-year pilot has expired early next year. Yet the programme architects have vowed to press on with the study to capture the high and low points of the experience.

Elsewhere in the world more such experiments are planned. Silicon Valley has taken up the idea. Y Combinator, a tech incubator, has plans for a $60 million dollar project to provide basic income for 3,000 Americans.

The idea has surfaced often in recent US political history. A panel set up by Lyndon Johnson recommended it in 1968. Richard Nixon stole the idea and ran with it for a time in 1969 before settling on an alternative moral hazard theory that giving people income made them workshy.

Milton Friedman, the doyen of free market economists, took up the idea in the 1980s but by then the “welfare queens” moniker adopted by Ronald Reagan to propose reform of the welfare system made the idea impossible.

The overall goal is probably impossible anyway. Paying every adult American just $1,000 a month would annually cost almost $4 trillion, or one-fifth of GDP.

If robots really can boot workers out of jobs, where would the taxes come from to fund UBI?

In the end, basic income amounts to subsidising victims. The wish to help the dispossessed becomes dangerously close to father-to-the-problem.

Rising to the challenge of the tech revolution should surely mean a different approach. School systems now place great emphasis on maths and tech skills. Yet these are the very strengths of automated intelligence.

The training of people needs to re-engineered to ensure workers can float alongside the machines, sometimes working, sometimes not, but always offering something different.

Abandoning learned behaviour in exchange for creativity, flexibility and collaborative thinking is the real challenge that artificial intelligence throws forward.

Universal payment initiatives have occurred throughout history and lies in the lure of virtue appealing to sections of the powerful. The idea of seeing the condition of the people as hopeless in the face of progress has been around for centuries.

It is an idea that lends itself to “good people” and by default, the detractors are "bad".

The television melodrama Poldark on the tribulations of the piratical Cornish coast has its main protagonist fighting for just such a solution.

The villains of the series are of course against it. We are yet to see what happens but fictional England 250 years ago did have a series of basic income experiments.

It suggests an alternative history for the generations following on from the fictional Regency era population that suffered the poverty and starvation.

The answer, I suspect, is that the area would today be even more deprived and backward.

Updated: July 21, 2018 02:35 PM