Citizen’s income and globalisation’s crisis of confidence

22 Jul 2016 Ryan Miller    Last updated: 25 Jul 2016

Illustration by Patrick Sanders
Illustration by Patrick Sanders

The global village was meant to bring harmony and prosperity to the human race, is progressing roughly as predicted – and is in a state of peril. One mooted solution is free cash for everyone.

The idea is that, in the long term, free markets – the fluidity of goods, services, labour and capital, including across borders – will bring peace and prosperity, everywhere.

Increased economic and cultural ties will lift poorer countries out of poverty while mature countries would also have room to grow. The latter will be boosted in part by the increased strength of possible trading partners, while the attendant increases in competition between both nations and countries ensuring good deals for consumers, amongst other positives.

Many of these benefits have come to pass and should be welcomed on their own terms.

One aspect of globalisation, however, was that the relatively low paid in relatively rich countries would be last in the queue for the benefits of this interconnected world.

That has happened too, as predicted, and is causing huge problems for the global village itself.

Much of the popular blame falls on immigrants, with accusations that they both will accept lower wages and also saturate the jobs market, although free movement of capital, goods and services means that the work can move to the labour just as well as labour moves to the work.

In this context, there is now a search for some way to obviate against this significant drawback to globalisation. One economic idea that is gaining increased traction – including across traditional political lines – is that of a universal basic income, or citizen’s income, whereby every adult, regardless of circumstances, gets a fixed amount of money per period time. No conditions, no exceptions (but perhaps some variations, such as with age).

Free money?

A citizen’s income has actually been Green Party policy for a very long time but now others, including free market ideologists, are coming to the table, albeit probably for different reasons.

The Liberal Democrats – remember them? – spent several years in the 1990s with this as party policy (before shooting it down in flames) but some of those involved with the party have begun the discussion again (see here and here, for example).

However, is this idea an easy sell? The tone of the criticisms aimed at these benefits without conditions – on the one hand, there is no requirement to pursue work, and on the other even the wealthiest people in society would get handouts – are straightforward to predict.

The fears will be this increases laziness, ruins productivity and, at worst, ultimately eats itself - dumb utopian drivel. The hopes will be that it liberates those looking for work, balancing choice in the jobs market between employers and employees, rather than having it skewed towards the former. This could drive up wages in the least appealing jobs and also be a way of shortening the working week for everyone.

Even amongst supporters of the principle in general, there is opposition to a blanket basic income.

This article contains figures about the wage growth of people across the world, between 1988 and 2008, broken down by their wealth. It paints a grim picture for working classes in rich countries, including in the UK.

The EU is and has been an imperfect agent of globalisation. Globalisation has succeeded in more areas than it has failed, but its failures are real and ongoing, and Brexit will not cause them to abate. And never mind UK policy on Europe, our own domestic plans are currently exacerbating inequality, and specifically the economic prospects for those at the bottom.

Calling the vote for Brexit a rejection of globalisation is a simplification, millions of people voted for Brexit and there will be subtle differences in all of their positions, but when the above figures are taken together with polling data from Lord Ashcroft concerning the relationship between Brexit and NRS social class, a relationship appears.

Prospects

People are worried about their futures – and they should be.

Give or take, we live in the most prosperous period in human history, but many people in wealthy countries are feeling squeezed, with both the opportunities of work and also the remuneration involved tightening year on year.

This represents a significant fault in the development of our economy. Should we not all expect to do a little better, work a little less, or preferably both in these high times?

It is a long way from happening, but perhaps universal basic incomes (or something like it) can provide a bolt-on solution that allows us, as a species, to enjoy the benefits of globalisation but also to mitigate against its weakness.

And when it comes to economic prospects, globalisation and increased labour market competition does not just negatively affect employees in rich countries, and the problems are not just to do with other workers overseas.

Technological advances are having a real impact on the need for labour, and this squeeze on jobs is set to intensify greatly. It is not just menial work on production lines that is at risk – although clearly that is the case – but steps forwards in computerisation, as well as robotics, mean every industry is at risk from an electronic rationalisation.

Here the citizen’s income can claim to come into its own; rather than see automated productivity as a problem, treat it as a good thing. The wealth continues to spread while the need for work – or, rather, the need to work – diminishes.

It’s a wild idea, far away from fruition, but expect to see it mentioned more and more.

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