An idea whose time is coming?

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

Milton Friedman

This quote by economist Milton Friedman is used by John Lanchester in his recent article in London Review of Books on Universal Basic Income. As one of the most influential economists of the 20th century, Friedman probably has a point.

Lanchester takes us through many experiments in Universal Basic Income from across the world. The evidence is that it works, that it reduces stress among poor people, reduces drug and alcohol use, reduces crime, etc etc. Depending on the level set it can also remove the need for much other public spending on benefits for the poorer sections of society.

The direction we are moving, in terms of increasing disruption due to climate change and robotic technology, suggests that some such solution is going to be inevitable unless we are willing to revert to Victorian approaches of almost washing our hands of the problem of the ‘undeserving poor’, and leaving it to charity.

What is not clear is what would be the optimum level for such a basic income, how fraud and coercion could be avoided, etc. Which is why it is suggested that it be introduced at a low level and gradually increased.

Of course, the question is how to pay for it. The inertia in the current taxation system suggests that it is unlikely to come through ‘steady as she goes’ political change. But Lanchester suggests that with the coming crises the situation will be ripe for just such a change.

The article does not mention the possibility of more fundamental change to the underlying money system to ‘pay’ for such a system. What if money were created as basic income for people, rather than as debt to fund the banking system? Or some hybrid of the two. I.e. we change the nature of banking and money itself to be more in the interests of the people. Now there’s a thought. See Positive Money.