Basic income — the only real solution to ‘unemployment’

The myth of the benefits culture is pushed by governments on both sides of the Atlantic because politicians and our over-paid economists are incapable of seeing the real problem.

Nine out of 10 sickness benefit claimants are judged fit to work ran a recent headline in the London Daily Telegraph.

On the other side of the Atlantic, concerns have recently been voiced about rising homelessness amongst homosexual youth.

The proliferation of “tent cities” in the Promised Land is not a new concern.

How are these three issues connected?

In Britain, previous governments massaged the so-called unemployment figures by moving many people including long term unemployed and those who are virtually unemployable from unemployment benefit – or whatever it was then called – onto other benefits such as incapacity benefit.

Regarding homelessness amongst homosexual youth, is this a reality, or is it that many young people of both sexes who find themselves on the street resort to prostitution? Anyone who thinks this doesn’t happen in even the wealthiest of nations should check out the 1984 documentary Streetwise, which follows the misfortunes of a group of such unfortunates in Seattle, the home of Micro$oft.

As to tent cities, the big question must be why do they exist at all? How can the United States afford to maintain armies in Iraq and Afghanistan and a military presence in many other countries if it can’t house its own citizens? Try this on for size:

“For whoever has, to him more will be given, and he will have abundance; but whoever does not have, even what he has will be taken away from him.”

It is unlikely the men who wrote the Gospels had in mind compound interest or investment income when they came up with this line, but it is a reality that society then as now was divided broadly into the haves and the have-nots. In the 21st Century, most of us don’t grow our own food; society, indeed entire economies have become so highly specialised that at the top end, marketable skills are needed to produce the goods and services that we all demand. To take an extreme example, how many of us have the ability to program a computer, much less to manufacture one from scratch?

The end result of specialisation and exponential advances in technology is that fewer and fewer people can and do produce more and more consumer goods; the same applies to food, both at the ground level – farming – and at the processing level. In highly developed nations such as the United States, Canada, Britain and Europe, Japan, South Korea and increasingly China, people without readily marketable skills are left increasingly without the means to earn their livelihoods. As technology destroys tiresome, laborious and totally undesirable jobs, even many graduates are finding themselves unemployable. It must be stressed this is a good thing, but only if we find meaningful solutions for the problems it appears to cause. There is absolutely no evidence that any of our politicians, certainly any of our MPs, even understands what these problems are, much less the solutions. What is their analysis?

Briefly, that there is a shortage of something called employment, and that in order to fill this shortage, ie to create jobs, the government must make work, any work, for idle hands. Unfortunately, this analysis has also been accepted not only by a large percentage of the workforce but more significantly by the trades unions, especially their leaders. It may even be that organised labour devised the original “solution” to the “problems” of unemployment. Shortly after the turn of the 19th Century, the Luddites appeared in Nottingham. Although their original aim was to increase the wages paid to garment industry workers, they have rightly given their name to the struggle against technology and innovation. The Luddites actually set about breaking knitting frames, an action that was taken so seriously that it was made capital; some Luddites were hanged, others were transported to Australia.

While change does not invariably equal progress, and some technology is definitely bad – the atomic bomb springs to mind – who in his right mind would argue that we should close down the Internet to keep the libraries open, or that CDs should have been banned because they led to the death of cassettes and vinyl? While it is true that video killed the radio star – as the man from SongFacts told us – it is also true that new technology leads to greater efficiency and therefore to greater production, to greater comfort, and to yet more innovation which benefits everyone.

The consequences of failing to embrace new technology for investors and for society as a whole are described poetically in a short speech by Danny de Vito as “Larry the Liquidator” in the film Other People’s Money, but in the real world consider this, there are now around 7 billion people on the face of this planet, without modern technology, from farming methods to transport to refrigeration to medicine and a lot more, many of them would not be alive this time next year.

Mention labour camps, and most people will think of the former Soviet Union and such, but there were actually labour camps in Britain during the 1930s. According to the 1989 book LABOUR CAMPS: THE BRITISH EXPERIENCE, from 1929-39, nearly 120,000 long term unemployed men went through them, but “...full employment was once again made possible by the Second World War.”

It is notable that author Dave Colledge appears to accept the premise that the full employment that was brought by the Second World War was a good thing, though it is less certain if he or anyone who actually lived through it considered the war itself to be. Would anyone in his right mind argue that war is an acceptable price to pay for so-called full employment?

While we have seen the proliferation of wars in even the 21st Century, it has not yet been considered acceptable in the West to send the unemployed to the gulags, but workfare (in the United States), and a short lived con trick called employment training have been tried in Britain. The latest such try-on is unpaid internships. Although internships are nothing new, they have quietly become a source of cheap (read free) labour for many companies.

Unsurprisingly, workfare has always been unpopular with the trades unions who see it as a form of cheap labour undercutting their members. The minimum wage is something else that has been tried, but any free market economist will explain in simple English why this is a non-starter, and for once, this is something most economists get right.

For those who register unemployed for their state pittance, there are many hurdles to be jumped. The system is means tested, which has led to a proliferation of rules and regulations, bureaucracy, advisers, adjudicators and spies. It is probably not too much of an exaggeration to say that at times the people who run this system spend more money denying people benefits than it would cost simply to pay them. The levels of benefit vary from country to country, but they are nowhere great. When the new Coalition Government came to power, one of their first priorities was to attempt to sort out the benefit system, to simplify it, and to ensure that work always pays by eliminating the so-called poverty trap.

Admirable though these goals are, they fail to address the real problems, namely that a) there is not enough paid work to go round, b) that even if there were, many people at the bottom end would be incapable of earning a living wage and c) that some people are literally unemployable in a job market where a laser printed CV is not an optional extra. An extreme case is that of Michael who featured in a BBC documentary series earlier this year.

This man is a serial albeit small time offender; he has problems with substance abuse, he is probably not in the best of health, and purely for reasons of hygiene he is probably not someone you would want to sit next to on the bus. A man like this would probably have ended up in the workhouse in an earlier era, but there is absolutely no way he could earn a living wage certainly in any industrialised nation. If he had been born in rural Africa he would probably have been long dead. The simple solution, indeed the only solution, is to recognise the self-evident fact that he and people like him, including the great mass of the so-called workshy, are unemployable. They – and everybody else – should be paid a non-means tested income, a Basic Income, and after that left to work as they may.

One other thing that should be mentioned here is what is known in the US as affirmative action, and in Britain as positive discrimination. The theory is that minorities, especially blacks, are either so backward or so stupid that they need special assistance in the workplace. The practise is that the blacks who benefit from affirmative action don’t need it, although it has over the years produced a large number of distinctly inferior intellects. It has also created a massive bureaucracy and jobs galore for lawyers, which one suspects is the real point. While the black underclass is indeed proportionately larger than the white underclass, whites are rapidly catching up, and as automation increases, those professionals and high wage earners (of all races) who remain, will be crippled by taxation.

The theory of Basic Income, or to give it its original name, Social Credit, was developed by Major C.H. Douglas way back in the 1920s. Douglas was not an economist but an engineer who applied engineering principles to the economy. Although the mechanism be proposed was unnecessarily complicated, his Social Credit and Basic Income ideas have been developed by many others including Professor Albus and in recent years by a large number of groups who are lobbying for its institution. When one considers all the money that would be saved by its instigation, including the dismantling of both the taxation and social security systems, reduced homelessness and much reduced rates of petty crime, the question is not can we afford to instigate a Basic Income for all citizens but can we afford not to?

On top of that we have seen and are continuing to see massive subsidies of supposedly private enterprise in Britain, America and worldwide, most especially of the banks, but even of private transport companies such as Britain’s rail network, about 50% of whose income comes from the taxpayer. It remains to be seen why such subsidies are paid to these large, wealthy and at times parasitic corporations instead of being channelled into a Basic Income for all citizens.

[The above op-ed was first published August 6, 2011.]

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