The Case for Universal Basic Services

How do we solve the coming decimation of jobs through automation? The solution of a Universal Basic Income has united both Silicon Valley libertarians and social democrats, offering a guaranteed income to every citizen. But the practical and political issues with the UBI mean it will only serve as a temporary salve for the underlying problems. Instead, progressives must argue for Universal Basic Services, drawing on the history of publicly provided health and education services to build a state fit for the 21st century.

 

Automation will put between three and five million jobs at risk in Australia by 2030. Some new jobs will be created, but the rise in baseline unemployment since the Second World War will continue, putting millions out of work. This structural change will require adjustment to welfare systems, or risk severing the social contract and plunging the reserve army of labour into wretched poverty.

 

The idea of a Universal Basic Income (UBI) has been around for some time, championed by Hayek and Friedman on the right, as well as Martin Luther King on the left. The idea is that every citizen would receive a basic stipend paid by the government. This would be paid for through the elimination of existing targeted welfare systems and tax increases on the rich to counteract their portion of the UBI. But because this idea has come separately from the left and right, there are two competing views of how the program should be implemented.

 

The social democratic version of a UBI would provide each citizen with enough money to fulfill their basic needs. Each person could then spend this income on the market, and this consumption would circulate through the economy, providing customers for businesses and allowing each person to allocate their money to maximise their own utility. Systems like the NDIS would remain in place to ensure that those with exceptional needs have those met. The social democratic UBI would keep everyone from absolute poverty and desperation. By ensuring that people’s basic needs are met, it would also allow more risk taking by entrepreneurs and artists.

 

But the social democratic vision of a UBI is not the only version of this policy.  The conservative vision of a UBI is as a trojan horse to dismantle the welfare state. Milton Friedman didn’t advocate what he called a negative income tax in order to eliminate poverty, but to serve his ideology of small government. Under a conservative vision, the basic income level could not be sufficient to live on, but would be kept as low as possible (like the dole) in order to ensure recipients are desperate for work. All other welfare programs would be abolished, meaning that the desperation for work would extend to the retired and injured. The UBI would also serve as a cudgel for cutting other government programs – for instance replacing universal healthcare with an increase in the UBI to allow for citizens to buy their own health insurance.

 

In a two party democracy like ours, these competing visions of a UBI would clash, providing conservative governments with justification for slashing public welfare and services whenever they are in power. For all the good intentions of a social democratic UBI, it cannot fail but be corrupted by the libertarian right. In a policy contest between social democrats who want to maintain welfare at a low but livable level and conservatives who want to push it as low as possible, the social democrats cannot win. The collapse in the level of unemployment and student benefits in Australia demonstrates this well.

 

Even discounting the political problems, there are practical issues with a UBI as well. The amount of funding necessary is substantial – if the current welfare spend was diverted entirely to UBI, it would provide each person with a little more than $6000 per annum, thus requiring spending to be quadrupled in order to reach the poverty line. Core to the idea of the social democratic UBI is to fund it with tax increases on the rich, but a $500B per year tax increase would be tough for even the most radical in the Labour Party to support.  It is more likely that the UBI is set to a much lower level, ensuring that it does not meet people’s living needs and functions like a conservative UBI in practice.

 

By relying on the market as a mediator, the UBI also introduces a slew of other problems. Much like first home buyers grants only serve to pump up the prices of homes, there is a real risk that a UBI will just end up in the pockets of landlords who can set higher rents at the bottom end of the market. The profit seeking motives of market intermediaries like this mean that a cash grant has to be higher than what would be required for the government to fund the services directly.

 

So why not provide Universal Basic Services instead? The state could provide basic housing, food, transport and communications in addition to existing healthcare and education services. The public sector already has recent experience in providing services in all these areas, from social housing to public transport and pre-privatisation telecommunications networks. The healthcare example demonstrates the cost savings which are possible through public services rather than those run for-profit – the UK’s NHS costs less than half that of the private US system. This would allow the services to be set at a genuine living standard while keeping tax increases to palatable levels. All the benefits of a social democratic UBI, but at a much more affordable cost.

 

Providing a non-market alternative in these basic areas would also have other benefits. The poor would no longer be anxious about whether they could afford the necessities, as these would be guaranteed. The public provision of these services would have unexpected benefits, like eliminating food deserts and homelessness. It would also help to combat alienation, allowing creatives to meet their basic needs without pandering to the whims of a fickle market. It may prompt a rethinking of the central role which markets play in our society.

 

Those who wish to seek their riches and luxuries on the market would still be able to, but those with other priorities would be freed from the drudgery required to make rent. Without this Sword of Damocles hanging over the worker’s head, they will be able to push harder for wage rises, whose stagnancy has been decried by even the Reserve Bank. In a society where basic needs are guaranteed one can forsee some in the  creative class eschewing the market entirely, enriching the lives of all. Entrepreneurs would not need to set aside funds for their own survival, helping startup businesses become established and providing a boost to innovation.

 

Universal Basic Services may reduce the incentives for people to undertake menial labour. Some would see this as a negative. But in a world of increasing automation, the demand for low skilled workers will contine to fall. UBS would make it easier for workers to retrain and build their skills in the new fields demanded by the market, helping fit them to the skilled work available. Critics will decry the program as enabling bludgers to watch TV all day, but is this any less valuable to society than them working as telemarketers instead? In an automated world with less demand for low skilled labour, we need to reconsider the nature of unemployment. I believe that the vast majority of people want to do socially useful work, and if this is community volunteering or their own creative projects rather than the alienating wage labour they are forced into at present then all the better for them and us.

 

Politically, there is no right wing case for the state to provide these services. So there would be no squabbling and compromise between the left and right over the level of service provided. History shows that once implemented, universal public services are very hard for any conservative government to repeal. By their universal nature, voters experience these services and understand their value – the whole population cannot be decried as ‘welfare queens’. Consider how the Labor Party was able to fight the last election solely on saving Medicare from privatisation, even though the Liberal Party had no such policy.

 

There is strong support for increased public spending funded by taxation on those who can afford to pay. Without action in advance of the job losses caused by automation, we risk severing the social contract and leaving swathes of the population in abject poverty. Universal Basic Services are a radical idea, but one whose time has come.

Alienation and Me

Mankind’s capacity for creative work is what distinguishes us from the animals. People through history have created great works of art, literature and technological achievements as a means of self-actualisation. But what is labour without self-expression?

 

While we may aspire to create art or technology as expressions of ourselves, most of us are stuck earning a wage in the market. This places us in not just a contractual relationship with an employer, but also in one of power. Our work cannot be our own self-expression, but is instead dictated by the demands of our bosses and those of the market society in which we live. An artist may aspire to create abstract paintings, but be forced by the demands of the market and his employer to create Minions memes. This power relationship causes all of us workers to be alienated from the products of our labour.

 

What we produce is not an affirming expression of ourselves, but instead is some cruel twisted bastard, dictated to us by outside forces. By extension, the very process of working to create these bastard products is itself alienating. We cannot decide where, when and how we wish to work, as our bosses and the market society dictate terms. The products of our work are alien from us, as they are not ours to enjoy, but instead sold to the highest bidder. In the case of the worker building luxury cars or palatial houses, we may not even be able to experience what we produce.

 

The true, creative form of labour is everywhere run down and derided as amateur, a mere hobby. Indeed, the worker is forced by both the extraction of rents and the enforcement of societal norms to spend the bulk of his waking hours in alienated work, and so cannot devote much time or effort to their hobby. Those owners of private property use their power to sideline the amateur who works merely for the joy of creative labour, disclaiming their credentials or experience. If this fails they attempt to commodify the amateur’s work to turn self-expression into mere artisanal craft.

 

Everybody who works for a wage or salary, or who sells their products on the market is alienated in some respect from the products of their labour. While some vocations allow for more self-expression than others (a writer compared with a factory worker for instance), we are all trapped together under this yoke. Bullshit jobs shuffling paperwork are but a post-modern expression of a classic form, labour power thrown to the wind instead of serving a useful purpose.

 

In this alienation from our essence as creators, we dull our own capabilities. We are restricted to the particular forms which the market and our employers demand. We produce copies of the same product for mass consumption rather than expressing ourselves in each one. The alienation beats us down as we struggle to inject a forbidden touch of personality.

 

It is true that labor produces for the rich wonderful things – but for the worker it produces privation. It produces palaces – but for the worker, hovels. It produces beauty – but for the worker, deformity. It replaces labor by machines, but it throws one section of the workers back into barbarous types of labor and it turns the other section into a machine. It produces intelligence – but for the worker, stupidity, cretinism.

Karl Marx, Economic and Philosophic Manuscripts of 1844

 

We tell ourselves stories about the purposefulness of our work, just as we strive to better contort our essences to the roles inflicted upon us. But the soul resists. The bastard is not our creation.

 

I’ve come to realise that these bonds chafe particularly tightly on me. The signs can be seen back to my university days, where I couldn’t wait to get out and do real concrete work after years of scribbling on paper under the direction of professors. In the dissatisfaction I felt with profit-centric management in the building services industry. As a captive to the whims of the market in software development. And now the alienation is blatant as a consultant whose only labour product is digital drawings and specifications in a field that I care nothing for.

 

What is to be done about it? I’ll keep scribbling and shooting here, as a proud amateur. But beyond that, there is no simple cure.

Beneath the Corporate Mask

Companies deploy elegant public relations masks in order to appear a positive influence on our society and lives. BP claims to deliver services that “help drive the transition to a low carbon future“. Northrop Grumman are “committed to maintaining the highest of ethical standards, embracing diversity and inclusion, protecting the environment, and striving to be an ideal corporate citizen in the community and in the world.” But beneath the hollow sheen of advertisements and corporate branding is an ugly demonstration of what is really important to the corporations who run our lives.

 

The infamous vampire squid – Goldman Sachs – released a report to investors on gene therapy developments a few days ago. In it, their analysts raised concerns with the profit potential of such companies, asking “is curing patients a sustainable business model?” Treatments like gene therapy do not offer the recurring revenues of the pharmaceuticals currently used, and “could represent a challenge for genome medicine developers looking for sustained cash flow.”

 

Those investors who can afford the fees of Goldman Sachs don’t want platitudes about corporate responsibility. The lives of those who might be saved with new innovations have no importance when there are profits to be made. These ghouls can extract more money from a patient who needs to take a pill every day for the rest of their lives than from one who can be fixed with a single treatment. The patient’s entire future earnings are available to pilfer, rather than just the savings they may have accrued to date.

 

This rigid focus on money and profits regardless of the consequences is not merely confined to corporate investors but has spread throughout our society. While public relations departments might paint a different picture, those who wield corporate power continue this rigid focus on economics. Petrochemical giant BP’s submission to drill for oil in the Great Australian Bight was recently unearthed, in which their real vision of the world was laid bare.

 

BP claimed that in the event of an oil spill, “in most instances, the increased activity associated with cleanup operations will be a welcome boost to local economies” with no social impacts. This displays the very same worldview as the Goldman Sachs report – that the only consideration is monetary. The massive environmental degradation which would result from any oil spill is of no importance, except that the locals might be benefit from temporary jobs cleaning the slick from their once pristine beaches.

 

Within the ideology embedded in our society, life is simply a game where each player’s score is measured in dollars. Profit isn’t just the most important thing. It is the only thing.

Private Space

Last week, Elon Musk’s SpaceX successfully launched their new Falcon Heavy, a more powerful rocket than anything flown since the Apollo era Saturn V. Media has been abuzz with excitement at the renewal of our spacefaring ambitions. But rather than the typical scientific experiments and satellites aiming to further our understanding of the world, SpaceX hauled up a car from their sister company Tesla and memetic references to popular sci-fi. Is there a place for science in the new private vision of space?

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Are Markets Democratic?

The pricing mechanism inherent in markets allows each consumer’s choices to influence the success of a product or company. Conservatives and liberals both assert that product boycotts and consumer activism are effective ways to have our voices heard. Liberals boycott companies associated with Trump’s business empire, while conservatives employ the same tactics in support of their own aims. Nobel prize winning economist Milton Friedman asserts that markets, unlike political channels, permit wide diversity through a system of proportional representation – “each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color the majority wants and then, if he is in the minority, submit.”

 

But just how democratic are markets?

 

As an example of a democratic system we can consider the Dutch House of Representatives, which has 150 members chosen through proportional representation. Each citizen is eligible to vote and each gets only one vote. Every citizen’s vote has the same value. After the votes are tallied, the seats are allocated to parties in proportion to the number of votes they received using a quota method. This gives a diverse representation of people’s views, from the People’s Party for Freedom and Democracy, supported by 21.3% of people in 2017 for 33 seats (or 22% of the total) right down to the Forum for Democracy, with 1.8% of the vote and 2 seats. The way in which each vote is counted varies between systems (for instance in Australia, where our votes go towards the winner of each geographical seat), but the central principle remains. We are all equal. We all get just one vote, regardless of status.

 

In the analogy of markets to democracies, each dollar is a vote. A consumer boycott campaign reduces a company’s profits in proportion to the number of dollars which aren’t spent. The simple number of people boycotting the company makes no difference. A support campaign acts similarly, increasing the company’s profits only in proportion to the additional dollar spend of the supporters. We can only continuously spend the money we earn, so both our ability to reward and punish companies in the market is tied directly to our income. A person’s disposable income determine’s the value of their vote and thus their voting power within the market.

 

In a perfectly equal society then, markets would then be democratic with each consumer having equal voting power. Unfortunately, our society doesn’t come close to this ideal. As a simple example, women in Australia earn 87% of what men do. So when voting in the market, on average a woman’s vote is worth only 0.87 male votes, as they have proportionally less dollars to spend. Consider a company which might take a sexist stance in their advertising. They could gain 1000 male customers and lose 1100 female customers, yet the market vote would deliver them more profits through the higher average incomes of men, even though more people disagree with the stance than support it.

 

The gender pay gap, though real, is small compared with the discrepancies which exist across other strata of society. Consider the income distribution in the USA: The top 10% of people have 47% of the income, while the bottom 50% of people have only 13%. This means that the average person in the top 10% has 18x the market voting power of their counterpart in the bottom 50%. A boycott by half the population could be cancelled out by the top 10% each increasing their spend by just under a third. Markets don’t care who the dollars come from, just that they keep flowing in. To correct Mr Friedman’s analogy, each man can indeed vote for the colour of tie he wants, but only the wealthy man gets it; the poor man with little market power can only hope that some rich men share his views.

 

Investments provide an even starker image, as a consumer’s voting power there is determined not by their income but by their wealth. The wealth distribution everywhere is more unequal than income, and again the US data is illustrative. The top 1% have 39% of the wealth, the next 9% (from 90-99% in the distribution) have 34%, while the bottom 50% of people have a combined net worth of zero. So the direction of investment is almost entirely determined by the top 10%, with the poorest 50% able to provide no input whatsoever. Is it any wonder that venture capital continues to demonstrate itself entirely out of touch with real people? Why tech entrepreneurs continue to ignore women, people of colour and the poor? In a society built around markets, those with no money have no say.

 

We do have a word for this kind of system, where a small elite has all the power. But that word isn’t democracy. It is an oligarchy.

Pokies

The prospect of gambling brings to mind the glittering lights of Las Vegas, but its real home is a dingy RSL club in Western Sydney. Here, countless desperate folks see their only chance at escape within the tawdry reels of what is euphemistically called ‘gaming’. These dens of inequity ensnare the poor, the uneducated and pensioners with little to live for but the promise of riches through feedback specifically designed to trick players into taking just one more spin. Loyalty programs turn saps into VIPs and give them a free spin every visit to re-engage those gambling faculties and maintain the addiction cycle. Australia leads the world in gambling spend per person, thanks to these obiquitous poker machines. We spend $1,273 per adult each year on gambling in this country. More than half of this expenditure is taken up by the particularly loathsome category of poker machines.

 

Australia has the second highest number of poker machines in the world, 195,631 at last count which places us second only to the USA (but with a much higher number per capita). This makes one poker machine for every 95 adults. Of those machines, nearly half are in New South Wales, which records an abominable machine per 65 people. Consequently, the average New South Welsh adult loses $1,580 per year gambling(roughly 2/3 of that on the pokies), or about $30 every week. We lose $23.7B each year on a turnover of $204B to the gambling industry. To put these numbers in perspective, the agriculture industry earned profits before tax, depreciation, etc of $21.1B last year, while the construction industry earned $43.2B.

 

What these statistics conceal however is that not all of us gamble. The HILDA survey found that 8.1% of Australians play poker machines once or more a month. So neglecting the (likely only small) losses of irregular players, each poker machine player loses $8,023 a year on the pokies alone. Eight thousand bucks per person per year, so more than the average household spends on electricity, gas, clothing, footwear and telecommunications combined! Losses per player are likely higher within NSW alone, but HILDA doesn’t break down participation to state levels. Even worse, the HILDA survey asked gamblers how much they thought they spent on a monthly basis. Pokie players underreported their losses by a factor of six compared with the industry data, demonstrating how the tricks of the machines cause addicts to lose track of their spending.

 

HILDA does break down demographics, so we can see who these players are. Poker machine gamblers are disproportionately poorer, less educated, more likely to be indigenous, of lower socio-economic status, older and more likely to be on government assistance than the general population. So those who are compelled to throw their money away are also those who can least afford it. Pokies steal from the poor addicts and give to the rich owners of these suburban casinos, who are commonly professional sporting teams. This isn’t just a moral issue, but also one of social justice.

 

How have we got to the point where pokie addicts each sacrifice eight thousand dollars every year to these one armed bandits? Governments are well aware of the clear and present harm which they are doing to the community, with multiple studies undertaken and maverick NXT leader Nick Xenophon starting his career as a ‘No Pokies Independent‘. One major problem is that state governments have themselves become addicted to the taxes pokies bring in. Government revenue from gambling comes to $6B across the country, making up around 8% of taxation taken in by the governments of New South Wales, Victoria, Queensland, South Australia and Tasmania and 12% in the NT. Both major parties have also been given hefty donations from hotels and clubs, with $6.6M donated to Labor and $4.4M to the Liberal and National parties since 1998. This includes $3M just from Clubs NSW (split $1.2M to Labor and $1.8M to the LNP), the statewide representative group for the clubs which hold most of these machines. So there is quite an incentive to maintain the status quo.

 

Is it any wonder that the government’s committment to problem gamblers focuses entirely on overseas online sports betting, which accounts for only a small sliver of the gambling pie? Or that the most recent Productivity Commission report into gambling found that “people’s willingness to pay for gambling over alternative products reveals their underlying preferences” rather than addiction and so “gambling provides significant enjoyment for many Australians”, in a classic case of the economist’s ignorance of reality? Both governments and the parties who run them have been entirely captured by this callous industry which sells an illusion of glamour coating an exploitative core.

What is Knowledge Good For?

I seek to read and learn widely, building an understanding across a wide range of areas in order to understand the world I live in. If you’re willing to trawl the internet widely enough to find this blog, then that probably applies to you as well. But what good does all this knowledge do us? Does understanding the dynamics of society improve our lives if we lack the power to change them? Is the ignorant worker-drone who spends his leisure time with mindless entertainment more at peace and happier than one who understands his problems yet cannot solve them?

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The Unexamined Lives

We are all free to choose our own purpose, our own values and to make our lives our own projects. In a world without godly codes, everything is permitted and it is up to us both as individuals and as members of the greater mankind to decide what is good and just. Our own choices and actions demonstrate what we see as good, and our society’s conception of ‘good’ is the sum of our individual choices. So far, so Jean-Paul Sartre. But most of the folks who make up our society don’t ever actually consider their values or examine their lives the way a bourgeois philosopher might. How many amongst us have ever really considered the meaning of their lives beyond simple surface level goals?

 

For most of us, our values aren’t defined by a heady contemplation of ethics – we muddle along and try to make the best of the limited information which is readily available. At best, our ethics are informed by looking at parents and role models, at worst by simple osmosis from the society in which we are immersed and only in the case of rare individuals through active contemplation. So if, as Sartre asserts, “everything happens to every man as if the entire human race was staring at him and measuring itself by what he does”, what happens when the bulk of people are not actively choosing, but merely being swept along in their unexamined lives?

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Marriage Equality Predictors

The ABS released the results of Australia’s survey into the legalisation of gay marriage today. The headline result was a win for the ‘Yes’ vote, with 61.6% of the vote which should translate into legislation in the near future. Thanks to the release of data per electorate, we can also use this to take a look at what sorts of communities were more supportive of the change. As a pure issue of social liberalism versus conservatism, this gives us the opportunity to consider positions of groups of people solely on an axis of social issues, rather than conflating them with economic issues as is the case in general elections. As the data is only detailed down to a per electorate basis however, we do need to consider that across an electrorate there may be substantial variation as well as a cacophony of variables acting in multiple ways, so these are certainly guides rather than anything genuinely scientific.

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The Ideology of Self-Help

The self-help book is ubiquitous, filling the shelves of bookstores and offering to solve the problems of your life. From happiness to loneliness to overeating, everything can be solved with a ten step plan. In the digital age, a cottage industry of self-help websites have sprung up, with similar promises and even less scientific backing. Self-help books are the world’s best selling genre. They demonstrate both our dissatisfaction with our lives and the all pervasive nature of the ideology which underpins them.

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