Ian Goldin is Professor of Globalisation and Development at the University of Oxford. He recently wrote an article in the Financial Times in which he gives a brief description of how technology is replacing human labour, making it harder for people to earn a living from paid employment. He then goes on to list five reasons why universal basic income isn’t a solution to this growing problem of technological unemployment.
You might hope that the combination of an Oxford professor and the FT would provide compelling arguments that are worthy of serious debate. Sadly no.
Professor Goldin’s reasons for rejecting UBI are so unreasonable that you suspect he has decided in advance that he doesn’t like the idea and then grabbed at whatever arguments popped into his head to support his prejudice.
His first objection is that UBI is financially irresponsible, unaffordable, requiring higher taxes or reallocation of resources from things like healthcare and education.
This is astonishing. Here we have an Oxford professor who appears to be ignorant of how money actually works, and ignorant of the distinction between money and resources: the difference between finance and physics.
The resources that are required to run a healthcare or education system are physical. The primary resource is people. Without the brain and muscle power of builders, technicians, teachers, nurses, cleaners, doctors, administrators, etc. there are no hospitals, no schools, no healthcare, no education.
Money is merely the tool that we use to activate these people, to allow them to put their brains and muscles to good use. And there is no limit to the amount of money that we can create and distribute in order to make these things happen.
So the first of Professor Goldin’s reasons against UBI is wholly unreasonable. We can fund a full UBI without raising taxes or inflating the deficit or diverting resources away from healthcare and education. Yes, we will need to modify our financial and fiscal systems to make UBI work, but they’re already in desperate need of reform and there are many ways to incorporate UBI into a reformed system.
His second objection to UBI is that it will lead to higher inequality and poverty.
It pains me to use the word “ignorant” again, but there’s no avoiding it.
Let’s take poverty first. A UBI set around the level of the Joseph Rowntree Foundation’s Minimum Income Standard will give everyone significantly more spending money than current subsistence welfare payments and state pensions. More money. If you are poor you know the value of more money. Even an Oxford professor telling you that the extra cash in your pocket has made you poorer isn’t going to change your mind.
As for higher inequality, this ignores two of the most liberating features of a full UBI, features that are glaringly obvious to anyone who has given any serious thought to the concept.
The first is emancipation from wage slavery. With UBI everyone has the freedom to pick and choose what work to do and what payment to accept for that work. This levels the playing field between employers and employees. It gives everyone the same advantage as someone who is wealthy, who has enough money in the bank to wait until they find a job that they want to do rather than have to take the first one that comes along. More equality, not less.
The second liberating feature of UBI is that it buys us time to do things other than earn money. With UBI we can study, spend time with our children and our old folk, learn new skills, and we can start businesses without the burden of paying ourselves a wage while we get the enterprise up and running. All of the things that are listed in the preceding sentence are taken for granted by people who are wealthy but are out of reach of people who are not. UBI absolutely reduces inequality of opportunity by virtue of buying time for all of us.
The third objection that Professor Goldin has to UBI is that it will undermine social cohesion. According to his logic “rewarding people for staying at home is what lies behind social decay.”
Well, if this is true we’d better round up the home-makers and the carers, the stay-at-home mums and dads, the artists and craftspeople, the musicians and the authors, the gardeners and the thinkers, everyone with a private income who prefers to sit on the sofa and read a book, and all of those wealthy ladies and gents whose only excursion out of doors is to go for lunch. We’d better round up the lot of them and march them down to the job centre before they all get hooked on smack and destroy the fabric of our society.
There’s more. He goes on to say that “crime, drugs, broken families and other socially destructive outcomes are more likely in places with high unemployment”. This infers that it’s being stuck at home that’s the problem with unemployment. You don’t think, Professor Goldin, that the demoralisation of the long-term unemployed in communities where unemployment is rife might have something to do with poverty, with lack of money to participate, with lack of investment in the community? You don’t think that conditional welfare payments might have something to do with it? Enforced pauperism? That being chivvied and bullied to do whatever underpaid drudgery is on offer by unscrupulous employers might be part of the problem? No? You’re certain that people choosing to sit at home is the cause of social decay?
The fourth objection is that UBI undermines incentives to participate. This one is an absolute steamer.
It appears to be based on the assumption that as soon as we are given enough money to meet our basic needs there is no incentive to earn any more. If this is true then every employer who is paying anyone more than the value of a full UBI (e.g. £1,000/month) is wasting their money, which is clearly nonsense. If you disagree, professor, I’m sure Oxford university will be delighted when you return the portion of your salary that you so clearly believe is superfluous.
If we follow the logic of this argument we should outlaw all unearned income. If getting money for nothing stops us from participating in society, in the economy, then we’d better make dividends and interest illegal. We’d better ban pensions and increase capital gains tax and inheritance tax to 100%.
Or maybe his objection is based on the assumption that we’re all born lazy and will only get off our backsides and do something useful if we’re threatened with starvation. Again, this is a ludicrous idea. Our communities are thick with people who spend big chunks of their lives doing things for others without being paid a penny for their efforts. And I have yet to meet anyone who is good at their job who is doing it only for the money. I know a lot of people of outstanding intellect and talent who have spent their lives doing work that is very poorly paid because they enjoy it, instead of pursuing a lucrative career doing something less fulfilling. UBI will help more people to follow this route.
The fifth reason is another gem: “UBI offers a panacea to corporate and political leaders, postponing a discussion about the future of jobs.”
Eh? The assumption here appears to be that the world is directed by corporate and political leaders and the rest of us should just sit quietly and wait for them to tell us what’s going to happen next, how they are going to manage the challenges of technological unemployment, inequality, and all the rest of it.
Sorry to disappoint you, professor, but we’re already of the opinion that the great and the good aren’t really up to the job. And this gets to the nub of the problem that UBI can help us to solve.
Our collective ability to participate meaningfully in the productive economy – to do useful stuff for the common good – is limited by the concentration of economic power in the hands of a tiny corporate and political elite.
It is very hard to initiate any productive activity in our economy unless you have access to time and money. Time is the key thing. Trying to innovate, inspire, activate something new whilst going to work to earn a living is extremely difficult.
This means that most of our talent is permanently unavailable, locked into service as employees, never allowed to initiate, develop, direct, and flourish.
Instead we rely on a small pool of people who have access to the wealth and influence that’s required to make things happen. Our ability to progress is limited by the imaginations and proclivities of this tiny sub-set of humanity.
UBI can change this. It can release the creative power of millions of minds. It can make innovation affordable by removing a huge chunk of the wage bill for any new venture. Instead of waiting for direction from an elite that rarely rises above mediocre in it’s handling of our affairs UBI gives all of us the freedom to participate in the business of finding better ways of doing things.
This, and the elimination of absolute poverty, and emancipation from wage slavery, and an excuse to reform our ridiculous financial system.
Are you blind to all this Professor Goldin? Or do you see yourself as one of the elite and don’t like the idea of losing all that lovely status and power?
Views From The Boatshed 
Estimates reveal that nearly half a million Japanese youth have become social recluses. In Japan, hikikomori (Japanese: ひきこもり or 引き籠り, lit. “pulling inward, being confined”, i.e., “acute social withdrawal”) are reclusive adolescents or adults who withdraw from social life, often seeking extreme degrees of isolation and confinement. Hikikomori refers to both the phenomenon in general and the recluses themselves. Hikikomori have been described as loners or “modern-day hermits”.
My concern is that without any real financial incentive to go our and work in repetitive, hard, relatively unsocial jobs like fruit picking, production line work, or shop work, millions of young people will just refuse to take the first steps on the ladder of what can become exciting and interesting careers in these industries.
Think back to your first few jobs: would you have done them if you didn’t need the money?
This may or may not become a problem with UBI. We cannot tell until we try it. If we think it might become a problem then there are things that we can do to counteract it that will benefit young people and the economy (e.g. getting pupils out of the classroom and learning that there is satisfaction to be had from doing useful physical work).
Is the possibility of a hikikomori epidemic a good enough reason to forego all of the other benefits of UBI? Certainly not.
Yes, I probably would have done most of the jobs of my youth even with UBI. I was keen to learn stuff, enjoyed the workplace camaraderie, and a bit more money is always attractive.
”repetitive, hard, relatively unsocial jobs like fruit picking, production line work, or shop work,” aren’t these all jobs machine can do? Or did i miss something along your thoughts?
Does Japan have UBI? If not, I don’t see the relevance of Bayrok’s comment.
Hikikomori is a result of social pressures. Basic income would take those pressures away. When young people stop feeling guilty about their contribution, they thrive intellectually and the need to contribute returns
First off – I believe we have the same goal – finding policies that enable humans to live peacefully, freely and productively.
Financially, a UBI is completely conceivable – I completely agree.
Given the massive disruption, economies are faced with because of technological change and globalisation – some form of welfare state needs to ease the societal issues that arise from frictional unemployment.
Now, given the increased likelihood of significantly more structural unemployment due to changing labour market dynamics through the fourth industrial revolution – innovative considerations on how to deal with this situation are warranted and likely necessary.
My reservations regarding the UBI are the following (Please try to explain if I am wrong – I am open to being swayed – I have no allegiance to my current set of ideas – I am only interested in truth and what works):
1)
Many European countries have welfare legislation that approximates a UBI for certain parts of the population. In Germany for example, you can almost always fall back on a security net of welfare benefits should you use your job etc. Now, these benefits are not enough to ensure a meaningful and dignified existence (which they probably are not intended to). So the pro-UBI argument would then presumably be that the level of welfare is too low and that people would fare better if they received a minimum income without having to jump through the hoops of the welfare system and had time to concentrate on more productive endeavours. While this is likely to be true for some people – I wonder whether a UBI would have similar issues as a minimum wage should have in theory (if it is too low it is ineffectual in what it is intending to do – if it is set too high, it distorts the labour market and keeps people from getting employed)
2)
A UBI should distort incentives to do certain jobs that are generally considered undesirable (distortion effect I mentioned in 1). Since we assume that most physically demanding jobs will be done by robots, these should not be the ones that we ought to worry about.
But what about the painful, repetitive, simple jobs that a journalist has to do when he starts his career at a newspaper? He will likely be opening letters, answering emails, filling out databases for YEARS until he gets to do the interesting work that he intended to get into when he chose his career path. Will he have the drive to do that?
Now, I am aware that the UBI is not socialism – hence, beyond the assured minimum income there remains a profit motive and people will be able to gain significantly from hard work if they are willing to invest it. I am just very unsure whether people will have the drive to get out of the lower-income group they are automatically born in as soon as a UBI is put in place.
This is quite a blurry argument and I realise that it is hard to say anything definite here, but I would be interested to hear your thoughts about this potential issue.
“It appears to be based on the assumption that as soon as we are given enough money to meet our basic needs there is no incentive to earn any more.”
Well, that is not the argument though. It is that if you know that you can always just stay at your current level of income you might not develop the drive to aspire to more.
3)
Relative poverty cannot be eradicated. Sure, a UBI would keep anyone receiving it from absolute poverty, but most western economies feature barely any absolute poverty anyway (certainly not the kind of global standards)
What exactly is the goal of the UBI regarding poverty then? 20 years after enacting a UBI, people who only receive the minimum income would consider themselves to live in abject poverty.
4)
The UBI has weird implications of state dependency and it is very unclear to me what kind of politics such a welfare regime would foster. Would it increase political apathy and create a class of people that are even more sidelined from society? Is the UBI as a policy an elaborate form of vote buying?
5)
“With UBI everyone has the freedom to pick and choose what work to do and what payment to accept for that work. ”
That is only true insofar as you can always fall back on your UBI. But beyond it, the same rules of the labour market as before will apply. How does the UBI change the situation relative to a society with generous unemployment benefits in this regard?
I think ideas such as the UBI are great examples of new ways in which we can societally encourage people to live a more productive and flourishing, as well as fulfilling life. I am not convinced at this stage, that the policy is at a stage of intellectual development in which it could be implemented.
What exactly is the evidence from real-life experiments around the UBI?
Best
1) It is a mistake to conflate UBI and welfare. UBI displaces welfare but does not replace it. UBI is more than welfare. UBI is an agreement between all of us that each of us is born with an equal share of the right to prosper, and UBI is an emancipator of human energy/ingenuity/productivity. The idea that giving people money reduces their appetite for work is absurd. It might reduce their appetite for doing unpleasant work for subsistence wages, but that is a different economic argument and doesn’t justify with-holding UBI.
2) The economy doesn’t just happen. It needs people to do the things that we need for our collective security and comfort. We all have to learn how to be useful. This is a fact that has to be woven into the fabric of our culture, especially through our education system, regardless of UBI. If I think I want to learn journalism I will happily do the donkey work. I might be happy to do it for free (if I have UBI), or I might want a bit of a wage to top up my UBI. After I’ve been in post for a year I might see that I’m being productive and ask for a bit more wage. I (and many in my community) have spent my whole working life in the lower income group being productive, being useful. Why do I have to aspire to more income? Why would UBI stop me from being productive?
3) I define prosperity as a lack of fear: not having to worry about where the money comes from to pay for tomorrow’s food, shelter, fuel, and the means to participate in your community. That’s what UBI helps to provide: universal prosperity, which is the antithesis of absolute poverty. Relative poverty is something that future generations can argue about at their leisure. Our job is to attain universal sustainable prosperity.
4) Again, UBI is not welfare, is not a substitute or extension of welfare. UBI should be a component of a reformed financial system that’s designed to promote the productive capacity of the economy. UBI should not be the gift of government. The financial system should not be a tool of government, it should be a separate institution owned in common by the population and operated for the benefit of the population. In my book I propose a sovereign currency operated by a citizens’ bank under a charter that can only be amended by a mechanism that transcends the normal practice of government (e.g. judicial consent plus a super-majority vote). Government should be a client of the financial system (including UBI), not its master.
5) No, the same rules of the labour market do not apply. UBI eliminates wage slavery, and has the potential to reduce the wage bill by some fraction of the aggregate value of the workforce’s UBI. For example, if I currently earn £3k/month doing a job that I enjoy I might happily do the work for £2k/month plus £1k/month UBI. This is very different to the current welfare model.
All of the evidence that I’ve read from BI trials suggests that it increases both well-being and productivity. If you find contrary evidence I’d be keen to have a look at it.
This is a great article. I’d only critique two things.
1) The first point is not very convincing. It should be made clear that gov. could easily print money to fund a UBI without causing inflation, because inflation only occurs when consumption outpaces production and our economy has been massively constrained by a LACK of consumption for decades and we’ve actually been injecting cash into the economy regularly to prevent DEflation. We’re only at 73% of productive capacity, as of 2019. This means there is plenty of room for production to grow with increased consumption, maintaining the balance and resulting in no inflation/deflation. A UBI would be a much better way to prevent deflation than creating debt bubbles, as we are now. Furthermore, even if tax-funded, UBI’s “cost” is still not an issue, as the GDP growth and poverty-related cost-savings it causes means you get more out than you put in. If you pay $2 more in taxes to get $3 back, anyone would recognize that as a good deal. And, of course, the taxes can be progressive.
2) It should be mentioned that trials of UBI across the globe and over decades have consistently shown no significant effect on employment so the entire stay at home being lazy argument is bunk from the get-go.