A Tesla Motors Inc. Model S electric automobile, operated Uber Technologies Inc., drives through traffic, in Madrid, Spain, on Friday, Jan. 13, 2017. Ride-hailing service Uber Technologies has launched its first electric car taxi service in Madrid, operating a fleet of Tesla Model S electric vehicles. Photographer: Angel Navarrete/Bloomberg
© Bloomberg

Every problem, the saying goes, has a well-known solution: neat, plausible and wrong. The resurgence of interest in the “universal basic income” (UBI) puts this dictum to the test. 

Making unconditional cash payments to all citizens is trumpeted as a visionary solution to inequality, poverty and job insecurity. But away from countries with weak social safety nets and low poverty thresholds, the numbers do not add up. Either the basic income has to be unrealistically low or the tax rate to finance it is unacceptably high. Suppose the US provided its 327m inhabitants with $10,000 a year. That would be less than the 2018 official poverty threshold of $13,064. But it would cost 96 per cent of this year’s federal tax take.

No amount of Gradgrindian analysis is dulling the enthusiasm for UBI. Britain’s Labour party wants to trial it. Some notable business leaders are also keen. Richemont boss Johann Rupert is interested. So are Silicon Valley tycoons Mark Zuckerberg and Elon Musk. Facebook co-founder Chris Hughes is helping fund a pilot in Stockton, two hours drive from San Francisco. 

Their enthusiasm is rooted in anxiety over the replacement of jobs by machines. New jobs are likely to emerge as others are destroyed. This century, the number of secretaries employed in Britain has halved, while the number of fitness instructors has doubled. Even so, they are right to worry. Some places and people are being left behind by change. Gig work is no substitute for a full-time career. 

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A social conscience is not the only reason why businesses might like governments to compensate losers from job-destroying automation. It might lessen the chance of a backlash, which would be a brake on technological change. Uber, which spent $457m on autonomous fleet development in 2018, warned about a potentially tricky transition to self-driving cars in its listing prospectus. Reducing the need for drivers is likely to add to their dissatisfaction. Driver protests are bad for business. 

The transport industry tops the tables of sectors ripe for automation. Some $80bn was invested in self-driving cars from 2014 to 2017, according to Brookings Institution. But driving is one of the world’s biggest sources of employment, largely because it has been immune from automation and globalisation. Faced with unrest, governments might prefer to keep it that way. 

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