GET IN WITH THE HYPE. WHAT IS IT ALL ABOUT?
Universal basic income (UBI), also known as basic income, is a radical idea.
It's radical because it could potentially get 6 out of 10 people out of extreme poverty, it can re-define the ‘rat race’ for those who take on jobs they don’t like, it can even allow artists to create the next masterpieces of our century and re-define the evolution of the music industry!
Yes. There are high expectations for this newly proposed policy and the ones I’ve mentioned above are not even cutting it.
Let’s see if you will also be feeling hopeful after reading this article.
Let’s start by what it is.
Universal basic income is free money! You heard me right.
It is unconditional, monthly cash transfers to every citizen, irrespective of their employment status. No strings attached. Everyone gets a salary for free, with no expectations as to how it will be spent.
Currently, this notion of free money is gaining popularity.
As we are experiencing a gradual move towards mass automation in the workforce, a massive unemployment wave is forecasted.
Self-driven trucks are soon to replace truck drivers. Robots are replacing factory workers. Artificial Intelligence is learning to do white collar jobs, like coding.
Automation is gradually replacing both blue-collar and white-collar jobs, it promises to offer better quality products and services and to be much cheaper.
That leaves millions of people living in insecurity about whether they will be keeping their jobs in the near future.
This is the huge push behind the current buzz around basic income.
This is why all 3 sectors - government, civil society and private - are all flirting with the idea of a universal basic income currently. They are all being innovative or proactive, if you like, to an expected wave of mass unemployment, due to technological advances.
PROACTIVE, STEP BY STEP.
Universal basic income is still a big and uncertain step for many, but a few governments are already doing the right thing; they are testing it, first.
Finland started a pilot program in 2016.
In this 2-year experiment, 2000 people receive €560 every month.
Even though basic income normally comes with no conditions, the Finnish government has only given eligibility to those who are unemployed at the moment of signing up.
If any of the participants find a job after the sign up, they still receive a monthly payment.
Even though official results of the experiment will not be available before 2018, there are already positive reports coming out.
Apparently, participators have lower stress levels and have a greater incentive to work.
That comes as a direct contradiction to some sceptics’ concern that free money might be enabling people to become couch potatoes.
Canada is also launching its own experiment, involving 4,000 basic income recipients, in Ontario.
The Ontario program aims at people that live on a very low income, and is done in the spirit of ‘leaving-no-one-behind’.
A few US states, India and now Barcelona, Utrecht, Glasgow, Fife and Helsinki are also considering their own trials. Switzerland has already held a referendum on adopting a universal basic income, after 100,000 signatures were collected, which means that the petition had to be put to the vote.
Photo: Fabrice Coffrini/AFP/Getty
The Swiss voted no to UBI and not a singular political party was in favor of it. Nevertheless, almost a quarter of the country voted yes.
That could mean that with time, and by addressing current popular concerns, those in favor might increase eventually.
After all, it’s common for new policy and cultural change to take time to set in.
TURNING AID ON ITS HEAD!
Another sector is also running its own trials with success, namely the Civil Society sector.
GiveDirectly is a US-based non-profit organization, powered by Silicon Valley companies, like Google and GiveWell.
It runs highly efficient, yet unconventional aid programs.
What makes GiveDirectly different is that it actually turns ‘aid’, as a sector, on its head!
Instead of injecting massive amounts of money to the recipient country’s government with the hope that the money will trickle down to the individuals that need it the most, it does exactly the opposite.
It gives cash installments, directly to those who live in extreme poverty.
The organization is expanding its operations to thousands more Kenyans and also to Ugandans that live under the poverty line.
Basic income could theoretically eradicate extreme poverty in 66 countries, according to John McArthur, a senior fellow at the Brookings Institution in Washington.
The Kenyan example is aiming to prove the following points: first, that bottom-up aid in the form of cash installments is cheap and effective; and second, that basic income, as aid, bypasses red tape, corruption and the funding of expensive top-down programs, which many a times trickle down the leftovers of an initially huge budget.
It is also aiming to raise people above the poverty line, by providing a small, yet reliable, salary that will take care of their basic needs.
Free cash can open new opportunities for these people, like educating their children or finding better jobs, or even allowing them to save a bit of money to start their own small business.
Tesla CEO Elon Musk says that mass automation in the work force is only a matter of time.
Human labor is expensive, automation performs better and is much cheaper.
A massive unemployment wave is coming. Universal basic income might be a necessity, rather than a choice.
There’s also hope that universal basic income will increase entrepreneurship and innovation.
Facebook CEO Mark Zuckerberg expressed support for UBI, at his commencement address at Harvard in March.
He said, ‘’we should explore ideas like universal basic income to give everyone a cushion to try new things.’’
Another way to look at the ‘cushion’ Zuckerberg is talking about is as a trust-based investment on individuals, that could not otherwise afford the huge risk of quitting their job and starting their own business.
Similarly, that same ‘cushion’ could be an investment to creative professionals, like artists, performing artists, musicians, composers and more, who could get a chance to create the next masterpieces of our time.
And this brings me to my next section.
BASIC INCOME; A BOOST TO THE CREATIVES OUT THERE.
Basic income could potentially touch the lives of most of performing artists.
Even though the live entertainment industry is booming and is growing every year, the story behind the recording industry is very different.
Post-Napster, album sales have been in a continuous decline.
New technologies are adopting to this trend, therefore we now have streaming platforms to access music, like Spotify, Pandora, iTunes and more.
Spotify, is still not profitable even though it is a company with more than 50 million subscribers.
Even though a big chunk of Spotify's revenue goes to royalty payments, the lion's share of that money goes to the record labels, rather than the performing artists.
Moreover, automation is also reaching the music industry.
For example, software such as the New York based Amper, an artificial intelligence composer, performer, and producer, or S. Korean HumOn, a music creation app, can give us a taste of what is to come.
Currently, performing artists consume tonnes of personal resources to compose, record and promote their art.
Being heard through the noise is a massive and expensive challenge.
“We’re losing all our values, creating countries that no longer need workers but still need consumers, but how can we expect people to buy anything if they can’t earn a salary tomorrow?” asked Olivier Duchene, a musician and street entertainer.
UBI could be the ‘cushion’ that Zuckerberg was talking about for artists to produce more and better music to perform live.
In contrast to the industry of recorded music, the live entertainment industry is not suffering from free album downloads. In fact, it is booming. Fans stand in lines to get tickets to listen to their favorite bands.
The new trends reinforce a healthy live music industry; 55% of millennials are saying that they rather spend their money on experiences rather than things and festivals in Europe have increased by 73% since 2003.
There’s demand and there’s definitely supply, but a basic income could potentially also increase the value of the artist.
An actual example is the web platform Patreon, a crowdfunding platform for artists, where people become ‘patrons’ of their favorite artists via a subscription.
Patreon empowers many solo artists and performing groups to sustain themselves by doing what they do best, because they get a steady income from fans on a monthly basis.
FEET ON THE GROUND
Let’s not get ahead of ourselves.
It’s easy to get carried away with Utopian thoughts; basic income allows people to do what they like, it allows them to spend time with their loved ones and engage with their communities. Markets flourish with more spending money and standards of living are raised for everybody.
Long-term results are not out yet, but as more and more experiments roll out, anticipation to make sense of the results across different nations is growing.
Like all new policies, universal basic income does not come unchallenged. Some skeptics consider it another version of a welfare state.
But even the most neoliberal minds would agree that basic income is a much simpler solution to over-complicated welfare systems that take huge government resources to run or are too complicated to be understood.
In the UK, £35 billion of welfare is not claimed every year.
This is mostly because citizens are not aware of their rights or they don’t understand the system.
UBI is not welfare, it is unconditional income.
That gives the freedom to every person to utilize that money as they choose, within a free market.
Whether it's investing it, saving it or spending it, that’s entirely up to them.
And that’s the basic difference between UBI and welfare… UBI gives people the freedom of choice, welfare is more conditional.
Now, what if a certain percentage of the population spends their basic income in a way that the government does not approve of?
Well, what difference does it make?
The informal economy is the sector that is not registered and doesn’t pay taxes and every country has one.
It’s doubtful that basic income will change that in any significant way.
The people that are already involved in the informal sector could continue as they are, without economies, and GDPs for that matter, getting impacted.
A third concern, as in the case of Switzerland, is that of border control.
People will want to migrate to countries where a universal basic income is offered. Isn’t that an issue already? Aren’t there countries that offer better living conditions or better work opportunities than others?
(This is a talk for a whole other article.)
So that leaves us with…
HOW ON EARTH DO WE FUND BASIC INCOME?
Taxes are too easy to speak of, but very hard to apply.
There are several proposals as to how UBI can get funded.
First, there could be dividends collected as a percentage of the revenues from national natural resources.
In this way, citizens become shareholders of their country’s assets.
Second, there could be dividends collected as a percentage by technology patents.
Technology patents are quintessentially monopolies allowed by the government for a certain period of time.
The government is able to do that with taxpayers money.
Since many of these very profitable technologies are the very ones that are replacing humans in the workforce, it could mean that a cut from the profits of these technologies could go to fund UBI.
Again, that makes every UBI recipient a shareholder to these technologies.
And third, there’s talk of dividends collected by big data companies, like, for example, Facebook and Snapchat, whose immense market value lies in the micro-work all the users do, filling the platforms with content.
Collecting a percentage from big data companies into a national fund that would pay out basic income, it would be an indirect way of all the billions of people that quintessentially create the value for this companies, to get dividends as well.
SO, HOW DO YOU FEEL ABOUT BASIC INCOME?
I know I definitely feel optimistic.
Striking a balance between a fair way to fund universal basic income and giving people a basic salary, that could possibly make them happier, more involved citizens, who create innovative new products or the next artistic piece that people are going to talk about for centuries, is key.
I know that I’ll be thankful and appreciative next time I hear something awesome through my headphones!
Podcast. This New Economy. 2017. Can Basic Income Save Us? [Part2]. Rocketship.fm
Charlotte Hassan. 2016. Streaming Music Only Generates 1/5th the Revenue of Live Concerts… Digital Music News. Retrieved October 21, 2016 from http://www.digitalmusicnews.com/2016/06/08/streaming-growing-faster-concerts/
Eventbrite. 2014. Millennials: Fueling the Experience Economy. Retrieved October 21, 2016 from http://eventbrites3.s3.amazonaws.com/marketing/Millennials_Research/Gen_PR_Final.pdf
Jonathan Berr. 2016. After Napster, the music industry winds up humming. CBS News MoneyWatch. Retrieved October 21, 2016 from http://www.cbsnews.com/news/after-napster-the-music-industry-winds-up-humming/
PwC. 2016. Global Entertainment and Media Outlook 2016-2020. Ovum. Retrieved October 21, 2016 from https://www.pwc.com.tr/tr/industry/entertainment-media/outlook-global-entertainment-and-media-outlook-2016-2020.pdf
Natalia is the co-founder of Bandster, a tech company that is revolutionising the entertainment industry one product at a time. She's an entrepreneur and an avid tango dancer.