The ‘basic income’ trial is more real than many think

Critics see the universal basic income as just a bit of policy fluff.

Critics see the universal basic income as just a bit of policy fluff. Photo: Getty

A month before the ‘Trump revolution’, The New Daily ran the story ‘Hell yes, of course you’re entitled to a job’, which explored the employment-related forces driving Donald Trump’s popularity.

Well, now Finland has gone one better, telling 2000 unemployed Finns that ‘hell yes, you’re entitled to an income’.

The Finnish government is trialling a version of what policy wonks call the ‘universal basic income’ (UBI).

Finland flag

The Finns have taken the global lead in trialling the universal basic income. Photo: Getty

The idea is to give the sample of 2000 citizens a guaranteed income each month – €560 or $A805 – with no conditions attached whatsoever.

Yep, even if you find work, you keep your UBI.

The program, which could be widened to all Finns if it turns out to improve employment outcomes, is designed to remove the disincentive to find work that faces traditional welfare recipients.

It’s a pretty radical plan, but not unfeasible. The tax system would be altered to collect more revenue, but as most versions of the UBI would hand the same allowance to the wealthy, those two numbers are supposed to cancel each other out.

Or they would, if the scheme didn’t convince many people just to give up paid employment altogether. We shall see.

Is it all fluff?

The UBI isn’t new – it’s been around since the early 20th century – but discussing it is always a bit like hoisting a toy unicorn up a flagpole.

First, it’s shot to pieces from left and right. Then critics point out that unicorns don’t exist and can’t exist. And finally, they’ll tell you to stop toying with a ‘pet’ idea when there are serious issues to debate.

So why bother? Well, unlike unicorns, there are contemporary ills that are harder to wish away:

  • growing youth unemployment
  • structural unemployment due to robotics and automation
  • job losses flowing from lop-sided trade deals or currency manipulation
  • cyclical unemployment caused by the excesses of financial markets
  • and swings in employment caused by monetary policy mistakes.

As argued previously, there’s nothing many individuals – even very flexible individuals – can do to protect themselves from these forces.

However, when they strike, two pernicious myths tend to spread by ideologues on the far-right.

youth jobs

Youth unemployment is a growing problem. Photo: Getty

Firstly, that people can’t find jobs because they “go home, eat Cheezels, get on the Xbox”, as one Liberal MP put it in 2014.

While every welfare-net nation on Earth has some work-shy layabouts draining the coffers, it is simply false to suggest that most of the 15 per cent of young Australians who are out of work fit that stereotype. At present, the jobs just aren’t there.

The second myth is that all the unemployed need do is start their own business. Or similarly, if wages and conditions were lowered enough in existing businesses, everyone would have a job.

Well, much as some would like shoe shines on every corner buffing shoes for $3 an hour, or an army of dog walkers to tip 50c for taking Fido out, most Australians want ‘high-skill, high-wage’ jobs for their kids – some of the very jobs falling to the forces listed above.

Could a UBI work here?

In Australia, just as elsewhere, the nature of work is changing – more part-time work, more temporary work, more frequent shifting between jobs and more frequent periods of unemployment.

So should we be trialling the UBI here? Well, perhaps. But the cost would be pretty hard to sell to voters.

Economist Saul Eslake tells me that his back-of-the-envelope calculation suggests such a scheme would require a 10 percentage point increase in tax revenue.

That’s a lot of money – roughly $40 billion, or the equivalent of the government’s entire pension bill for one year.

Former Bank of America Merrill Lynch chief economist Saul Eslake. Photo: AAP

Saul Eslake has done a rough calculation of the revenue required to fund a ‘universal basic income’. Photo: AAP

However, as noted above, the extra tax paid by wage earners should, in theory, be returned by their own UBI, as well as savings in existing welfare bills.

But the real hurdle to creating a UBI is not economic, but political. The stereotype of the indolent dole-bludger won’t die off easily.

And while the world of work has already changed a lot, it’s unlikely many voters could, at this stage, make the connection between the growing problems listed above and this radical solution.

For my money, even the Finnish trial is unlikely to be adopted across the economy.

Nonetheless, it’s an important trial and an important debate – one being eyed by the US, Scotland, Canada and India.

At the very least, debating such a radical plan may help loosen the minds of rigid ideologues enough to get less radical schemes up and running.

And it should help voters everywhere start to see workers thrown on the scrap heap as humans beings, deserving of a dignified life.

To read more columns by Rob Burgess click here.

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