Should the Government start giving us all free money?

Arguably, the idea of a basic provision for citizens started with the Romans, not with cash but with grain, in the era of Augustus. In the 16th century, philosopher Thomas More suggested it as a perfect way to stop thieving in his book on an ideal society, Utopia — a satire, it should be noted. Thomas Paine, author of The Rights of Man, advocated it. So, too, did Milton Friedman, the 20th-century free-market economist who styled his version as a negative income tax.

In the UK, McDonnell smells votes. "There seems to be a huge appetite amongst the general public around the idea,’ said a spokesman. A working group has been set up. Both Guy Standing, a professor at SOAS and long-standing champion of UBI, and Charlie Young, an associate at Matthew Taylor’s RSA, which seeks solutions to social problems, are doing the thinking.

There is also a conversation in the US, both in the private and public sphere. "Unlike Labour, the Democrats aren’t behind it at a federal level but you’ve seen a lot of interest at state level," says Annie Lowrey, a writer on politics and economic policy at The Atlantic magazine and author of the new book Give People Money. "Hawaii and the city of Stockton in California are looking at it."

But it is the tech giants that are pushing the conversation. Google’s chief futurist, Ray Kurzweil, believes the idea is inevitable. At this year’s TED conference in Vancouver, Canada, he predicted that "in the early 2030s, we’ll have universal basic income in the developed world, and worldwide by the end of the 2030s".

Facebook’s Mark Zuckerberg told Harvard students in 2017 that "we should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas". An entrepreneur’s allowance, in other words. A slightly different idea, also involving free money, comes from Facebook’s co-founder, Chris Hughes, who believes every US citizen who earns up to $50,000 a year should receive a monthly cheque for $500, a version called guaranteed income, with some strings attached. And Elon Musk thinks basic income will become ‘necessary’.

A cynic might say it’s a bit rich for tech billionaires to start worrying about the people who have lost decent-paying jobs through automation, only to be returned to basic levels of income. Nevertheless, they are trying it out. The most significant experiment conducted to date is by Y Combinator. A successful seed accelerator in Silicon Valley (which takes start-up tech businesses to the next level of development), it is handing out cash to participants, one group receiving $1,000 a month, the other $50, as part of a new trial across two states over five years.

This all presents a glowing picture of the UBI dream but the reality is rather different. Finland started a two-year pilot scheme last year: 2,000 unemployed people were granted €560 a month, but its centre-right government decided not to renew the trial, wanting instead to focus on work-driven benefits. (The results thus far will be available next year.) The Canadian province of Ontario launched its own three-year trial under a Liberal government, but that has now been canned by the newly elected Conservatives and described by the minister for social services, Lisa MacLeod, as ‘quite expensive’ and ‘certainly not sustainable’.

There are also economic objections. John Kay, a respected economist and writer for the Financial Times, broke down the UBI arguments in a paper last year. The elaborate social security system we have, the ‘plumbing’, as he calls it, aims to balance out individual circumstances — do you have children? Are you too old to work? — and income. "The complexity of current arrangements is not the result of bureaucratic perversity," wrote Kay last year. "It is the product of attempts to solve [a] genuinely difficult problem." Or, in bald terms: does a criminal get the same weekly sum as a mother of four who has just lost her job? Would you be happy to pay more tax, if you’re working, to fund the UBI of the person next door who makes no effort to find a job? If no, then you’re returning to a modern welfare system that looks at individual circumstances.

The other problem is how to pay for it. Welfare accounts for about 15 per cent of GDP in the UK, excluding disability, care for the elderly and so on, but including the bureaucracy. If you convert that 15 per cent into a basic income for all, it leaves us each with about £80 a week, says Kay, using Green Party figures.

Yuval Noah Harari, author of Sapiens, puts forward the philosophical point that work is not just about money; it is about purpose. If we accept automation as inevitable, that means a new ‘useless class’ of people, unemployable in a post-work world. How do you keep them content? Endless computer games? UBI-ers will argue back saying that even if supported, most people will seek out and create work. But, contends Harari, at the point at which society doesn’t need you, why keep striving?

That hasn’t stopped the dreamers, though. Professor Standing, who is working on a proposal for McDonnell, says he was approached by the shadow Chancellor about how to run a pilot. Standing is not so worried about the automation issue: ‘I can’t see a future where there will be no work.’ He is animated by its emancipatory nature; in his view it is a means of freeing yourself from the ‘rentier capitalism’ (a Marxist term, referring to those who own assets without contributing back into society). Annie Lowrey has noted a similar trend in the US where those on UBI held off getting a job longer, waiting for a better one.

But again comes the question of how to fund it. Standing’s target is the wealthy, or rather the tax breaks given to them. "You are talking about switching spending, removing tax reliefs of £400bn a year," he says. Removing tax reliefs — for example inheritance tax reliefs (ie no tax when you pass your home to your spouse or civil partner when you die) — and giving that money back to people on the street would stimulate demand for local goods and services, he says.

The other idea Standing is ‘arguing’ with McDonnell is for a commons fund. "I’m proposing a democratic sovereign wealth fund along the lines of what has been done in Alaska and Norway, not [funded from] oil but land value tax." He points me to The Economist, which led on land value tax (an annual tax on the value of the land on which your house or flat is built) as a viable idea earlier this month.

But he could just as well have pointed me back to the Enlightenment philosopher Thomas Paine, who put it thus in 1795: "Every proprietor of cultivated lands owes to the community a ground-rent for the land which he holds." That, he argued, should be put into a fund from which "there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property".

Rather than waiting for government trials, it is also possible for tech companies to take on UBI themselves. "You’ve seen this curious private provision of public infrastructure — tech companies providing utilities," says Lowrey. "Uberpool supplanting buses is the biggest example. The real intellectual headway is coming from Silicon Valley, driven by guilt and fear." Could they run their own UBI schemes, bypassing the state? "I wouldn’t be surprised."

Still, the focus on UBI has irritated those who think it is a non-starter politically, or couldn’t be funded. Kay, the economist, has written that it "is a distraction from sensible, feasible and necessary welfare reforms".

And Lowrey says that while basic income "is big, sexy, fun to talk about, futuristic and optimistic", there are other valuable policies such as earned income tax credits, paid to poor US families, that are just as good. "Arguably you want more EITC but it doesn’t sound so good on a bumper sticker."

You can see why the idealists like basic income — for its purity and its cross-party appeal. But it has been knocking around for 500 years. In that time, God has gone out of fashion and the industrial revolution has come and gone, supplanted by the digital one. If it was really so perfect an idea, why haven’t we implemented it until now? We’ll leave the last word not to an economist or a philosopher but to early 20th-century essayist and wit HL Mencken: "There is always an easy solution to every human problem — neat, plausible, and wrong."

Illustration by John Devolle