Once, it was our birthright to live off the land.

Since the invention of property rights, money, and a system of paid work, ‘living off the land’ is no longer possible for most people in the developed world.

As a result, as Scott Santens has identified, humans have become the only species that requires money to survive.

Welfare has been designed to meet this requirement by providing money for people who are ‘out of work’.  Unfortunately, it comes with a ‘poverty trap’.

The higher the benefit, the more rational it is for people to take it instead of low-paid work that may be available.  Given this fact, it is also rational for governments to keep benefits ‘below the poverty line’, to incentivise people who can work to take the available jobs - so long as they view voluntary unemployment as a social ill. 

This has the iniquitous side effect of forcing many people into poverty: those who cannot work, who also lack savings and family support.  

Welfare could be increased - if we could easily identify who can and who cannot do paid work, and only pay it to those who cannot.  In practice, this becomes onerous, subjecting people to intrusive questioning of their bona fides, with frontline staff forced to make imperfect judgements as personal circumstances continually change. As a result, many people fall through the safety net, usually our most vulnerable who find it difficult to navigate the bureaucracy. This is a system problem.

No nation has solved it, though some do a better job than others.

A Job Guarantee is another method of tackling the problem. It aims to ensure that everyone who wants a job has one, by ramping up ‘public service’ jobs when the private labour market is weak. Releasing the labour when the market picks up.

It avoids the need for people to prove entitlement and is aimed at providing both money and meaning for people who can work: around 50% of the population at any time, plus their dependents. However, it comes with several drawbacks:

1. Most significantly, it can do nothing for the 12-14% of the population who are forced into poverty because they cannot work.In Australia, this is over 3.2 million people, mostly single women with kids, the old and incapacitated and their unpaid carers, and some who are ‘between jobs’. All of whom lack savings and family support. It includes 17% of all children.This is an indictment of the system, given we have the resources to supply the basic needs of everyone one of our 26 million citizens and permanent residents.
2. While work can be meaningful, it can also be soul destroying.  Having to perform menial work under a Job Guarantee simply to have enough to survive is hardly uplifting.
3. A Job Guarantee requires a permanent organizational structure to manage the scheme in each local area. This can be costly and inefficient if the principal aim is to act as a foil for the job market.  When employment is at capacity, the Job Guarantee organization would sit idle.
4. More importantly, if the work being done under a Job Guarantee is both meaningful and necessary (say to provide aged or disability care), imagine how distraught it would leave people reliant on the services of the Job Guarantee worker, if the worker is pulled away when the private market needs them.
5. Providing ‘jobs’ could easily become a ‘cash cow’ for contract companies whose sole purpose is to maximise profits rather than deliver quality goods and services through the deployment of Job Guarantee workers on socially useful tasks.  (Just as employment organizations are now set up to ‘tick and flick’ job seekers to maximise income).

If the work is socially valuable, it should be publicly funded and simply form part of the job market, with pay rates set to attract the required workers.

A Universal Basic Income (UBI) can both eliminate systemic poverty and balance the labour market - without the need for a massive bureaucracy to manage it.

A UBI is an unconditional payment to every permanent resident at or above the poverty line (currently around $500/week).

The approach developed by Basic Income Australia offers a way to implement a UBI without altering the current welfare or tax system, or increasing taxes or debt, or taking money from other programs, or causing excessive inflation.  It can be implemented with very little risk by starting at just $10/week and increasing slowly (say, over five years) to the poverty line - giving the supply chain time to adapt to the new patterns of demand. How this can be achieved is the subject of the next blog.

This solves the fundamental system problem by ensuring everyone has sufficient money to survive.  Effectively restoring our birthright.

By paying the money to everyone, unconditionally, it also allows everyone who can work to earn extra, without losing their UBI.  It provides a floor to stand on, not a ceiling to achievement –eliminating the ‘welfare poverty trap’.

Pilots from around the world have demonstrated that when people have enough money to survive, most are highly motivated to better themselves and their family.  This includes providing better family care and undertaking more education, as well as taking on paid work when they can.

Once the UBI reaches the poverty line, it can also be used to keep the labour market in dynamic balance.  This can be achieved because each person has a different propensity to take on paid work, depending on their age, commitments, and needs.

As automation and virtualization result in a fall in demand for workers, the UBI can be increased.

As it is raised, individuals will make their own choice to stop looking for work, or to drop out of paid work to live on the UBI, and any other passive income they may have. Once the rate at which jobs are being filled begins to push out beyond ‘standard’ recruitment times, this would signal the need to hold the UBI rate until the market is rebalanced.

It would never be perfect, but it should facilitate the transition to a ‘new normal’ over time.

Unlike Welfare and a Job Guarantee, a UBI can eliminate systemic poverty and keep the labour market in dynamic balance with very little bureaucracy.