Why Universal Basic Income Is Not Inevitable

In today’s news, Finland will carry out an experiment with universal basic income. The idea that the state should provide a small income for all citizens is popular in tech ideology. Robots will put us all out of work, so the state will have to step in, goes the logic. The Finnish case talks less about robots and more about making the welfare system more efficient, but the basic idea is the same: free money, no questions asked. What could possibly go wrong?

In the Silicon Valley-flavour, it is the idea that the system of innovation and ever improving computers will inevitably bring a situation where human work is increasingly superfluous. Some love that idea, some see it as the end of civilization, some talk about a new kind of capitalism. But the system is not impossible to change. I see three levels: business, government and technology. Looking at the business, of course all try to maximise profits (or stock value) and it is fair to say they are locked in. But the ad-funded freenomics are not the only alternative, look at how Microsoft, Sony, Samsung or even Apple to some extent go about creating online market places where everybody can make money. Google Play not so much. But Google may not be able to grow infinitely on ads, at least that’s what its chief economist professor Hal Varian told me last year. So there are more than one way for business to operate within the system.

Next government, author Andrew Keen makes these points brilliantly in The Internet Is Not the Answer (Atlantic, 2015) how the government created the internet. I would add that the safe harbour/net neutrality-regime has been fundamental to how the digital economy has come to be about selling ads rather than content. With a different policy, there would have been a different outcome. Imagine if Google were required to patrol the re-upload of infringing videos on Youtube, the situation for music and audiovisual industries would be much different.

Lastly, technology. The way the IP/HTTP-protocols work, means every attempt to charge for content will have to be added on as an after-thought rather than integral to the system. I dream of an internet were packets would also have authors and pricetags but that is the stuff of hypothetical arguments and non-starters like Xanadu. Except, with blockchain technology there may be a new opportunity (one speaker said “blockchain enables transfer not copy”).

I would add that it is also a matter of ideology. Google is a result of what was discussed and taught at Stanford in the 80s and 90s. And remember Peter Thiel’s four laws from the Stanford review: no tax, no government, no competition and no copyright (brilliantly analysed by Jonathan Taplin https://vimeo.com/122361826).

So I think we do not need to rely on a new kind of capitalism, I think the solutions may already be in the kind we have.

Robots and AI-revolution: I’m not convinced it will take away all those jobs. Short term, it may be more a question of taxation: automation means replacing work with capital, we tax work much more than capital. With a different tax system, the incentives would change. Perhaps easier to make happen than minimum income? Or perhaps it’s not one or the other?

Finally, coming to minimum income, I find it difficult to see how it would play out. Take my home country Sweden, arguably one of the places with the most advanced publicly funded social systems. If every Sweden over the age of 18 would get €1000 per month, that would amount to €86 Billion per year. That is three times what the Swedish government spends on the social system today. Where is all the money going to come from? Minimum income would likely mean less tax revenue for the state, not more. Also, many of those who receive various kinds of support need and get much more than €1000 per month. I just can’t make the math work. Perhaps the Finnish experiment will produce better data?