Driven by technological advancement, the economy around us is fast changing. Few people would deny that the advent of the Fourth Industrial Revolution will alter most aspects of life as we know it. But how it will impact us is debatable. Economists, scientists, governments and a multitude of other professionals and institutions are grappling with the questions that such changes to our society pose. Arguably none is more pressing than the impact of automation and artificial intelligence (AI), which threaten to put millions of individuals out of work across the world.
Industries from manufacturing, logistics and transportation are some of those that are most at risk, with low-paid, low-skilled jobs first in the firing line. Innovations, such as driverless taxis, for example, an imminent reality globally, threaten to make taxi driving a defunct role. Add to taxi drivers, receptionists, car-park attendants, customer service roles, and many more; such a reality has vast implications for unemployment on a scale never seen before. But even high-skilled roles are not immune, with some envisaging jobs from nursing through to law being replaced partially or fully by AI. According to some estimates, as many as approximately 50% of jobs are at risk in the US over the next decade or two.
These developments must be considered in the current context in which they are taking shape. Namely the most important of these is the growing and polarised income gap. Wealth, more than ever before, is increasingly concentrated in the hands of a few corporations worldwide, namely those with the technological resources on which our world is today run. Add to this scenario, millions, say hundreds of millions unemployed across the world, and the implications for political stability are grave. One need only look back over the past centuries for examples of the ill-effects of a failing economy and accompanying political ruin – from the Great Depression in the 1930s to the subsequent rise of fascism across Europe, to more recent examples such as Brexit.
One solution being advocated by some of the brightest minds in the 21st century in response to these developments is Universal Basic Income or ‘UBI’. The concept, which first emerged in the late 18th century, proposed by political activists Thomas Spence and Thomas Paine, is that each citizen receives a guaranteed monthly income from the state, regardless of income or employment status. The idea has gained support today among the likes of visionary entrepreneur Elon Musk and Facebook founder Mark Zuckerberg, and is currently undergoing trial in Finland, Netherlands and Italy. However, earlier trials go back as far as the 1970s in the US, and in Canada, in the town Dauphin, where results showed it eliminated poverty in just five years.
Unlike contributions from welfare, UBI is intended to be distributed universally, and some even argue that it could replace highly inefficient welfare programmes altogether. By providing a regular income, many, particularly those on the lower end of the employment scale, would be protected from the insecurities of the labour market – those on Zero-hour contracts, part-time workers and freelancers for example. In theory, it also allows greater flexibility for those in employment, allowing individuals the possibility of taking on reduced hours. This offers the opportunity to pursue other activities outside of the workplace, be it a parent spending more time with their children, volunteer work, or someone wishing to pursue additional educational activities. Those taking on reduced hours, in turn, provide greater availability of work for others. But it is not merely a safety net that UBI offers. For many a budding entrepreneur, such an income offers the opportunity to embark on start-ups that would otherwise be out of reach.
While pessimists will argue that UBI is essentially giving people money for nothing, the cost of unemployment, poverty and uncertainty are undoubtedly far greater risks to society. The burden of poverty and all the social ills that come at a significant cost to wider society, costs carried by institutions such as our healthcare and criminal justice systems, are increasingly untenable to manage. An income that provides for basic needs and gives people greater opportunities is essential in a world economy where countless age-old occupations are rendered obsolete, and employment opportunities are scarce enough.
UBI has supporters across the political spectrum: “Liberals” see it as a way of redistributing wealth and supporting the most defenceless in our communities; while “conservatives” see it as an alternative to arcane and inefficient state welfare systems. However, the stumbling block is on how to fund UBI. The wealth is out there in the economy, but government budgets are stretched and tax increases unpopular. More importantly, government is very inefficient at allocating resources. Indeed, social entrepreneurs, philanthropists and generous “CSR” programs are making an impact all over the world and could serve as a basis for the UBI distribution process, without the need to resort to special or additional taxes.
In conclusion, perhaps a more efficient way of funding and allocating UBI would come directly from the private sector itself. Yes, those same corporations who have been such great allocators of capital and have managed to create such vast wealth, may be the best suited to fund and distribute UBI. After all, with their sprawling global customer bases, a cynic may argue that this is a good way of making sure consumers are funded and liquid at all times, regardless of their socio-economic status.
 In 2013 Carl Frey and Michael Osborne at the Oxford Martin School predicted that 47% of jobs in the US were at risk of being automated “relatively soon, perhaps the next decade or two”. They foresaw innovations such as driverless technology replacing jobs such as driving a taxi, road haulage and dispatch driving.
February 15, 2018
CEO at Awad Capital