Even if universal basic income was set at a modest level the cost would be crippling. Picture / Getty Images
Even if universal basic income was set at a modest level the cost would be crippling. Picture / Getty Images
Opinion
"Some ideas are so absurd only intellectuals believe them." Some say George Orwell uttered these words in the Forties. Others say the phrase came a decade later from Bertrand Russell, the philosopher.
Whatever its origin, this aphorism deserves attention; for there are some ideas that, promoted as coherent and well-intentioned, are so unworkable as to be dangerous.
Throughout history, bad ideas - promoted by the highly educated, politically connected but ultimately out of touch - have launched institutions and systems prone to abuse, extremes and collapse. Intellectuals, unchecked by reality and common sense, can inflict genuine human damage.
Take Soviet communism - launched a century ago, off the back of Marxist doctrine. Having sparked revolutions in Russia and beyond, communism brought oppression, kleptocracy and decades of economic stagnation, yet it was still admired by generations of intellectuals, including in the UK.
An absurd idea from the present, again with many intellectual supporters, is European monetary union. So what if practical folk - from currency dealers to trade unionists - warned against shackling a large group of very different democracies to a single exchange rate? And who cares that the likes of France, Spain and Greece, locked in a high-currency straitjacket, have youth unemployment rates of 25 per cent, 30 per cent and 40 per cent respectively?
"Monetary union works," screamed UK economists in the late-Nineties. "Before monetary union, Europe was the tinderbox for two world wars - of course we need the single currency! You don't think so? Anti-European! Xenophobe!"
I paraphrase, but not a lot. Those of us who resisted UK euro membership - not least when voicing our concerns within the groves of academe - were subject to abuse.
While it sounds good at first, UBI falls to bits under closer examination.
The latest intellectual fancy, with academic backing, is the "universal basic income". To support UBI is to parade one's progressive credentials - while displaying, once again, a lack of practical understanding of how human beings really work.
As the scale of the artificial intelligence and robotics revolution becomes clear, there is understandable angst at the scale of potential job losses. Growing numbers of academics, liberal politicians and tech titans are seeking solace in the idea of paying a UBI to everyone, regardless of their means, whether or not they're looking for work.
Such payments would cover essential living costs, while replacing all other welfare payments, leaving individuals free to decide if they wanted to earn more. The idea has found favour with Bernie Sanders, the US Democrat senator, and John McDonnell, UK Labour's shadow chancellor. From Silicon Valley, Elon Musk and Mark Zuckerberg have voiced support.
The idea of universal basic income has found favour with US Democrat senator Bernie Sanders. Picture / AP
While it sounds good at first, UBI falls to bits under closer examination. If you replace welfare payments targeted at the needy with a generalised transfer to everyone, millions would receive state money unnecessarily, while sums paid to the most vulnerable would be lower.
On top of that, because everyone gets it, even if UBI was set at a modest level the cost would be crippling.
To cover basic living costs in the UK, it should be £323 ($629) per week - the "real living wage" as defined by the Living Wage Foundation. Paying that to every British adult would cost £850 billion a year.
Even if you subtract the state pension and existing welfare, which UBI is meant to replace, there would still be a bill of around £560b - a 70 per cent-plus increase in public spending.
Apart from the ridiculous cost, UBI would damage social cohesion. People work not only for income, but also meaning, self-respect, networks and friendship. Paying the entire workforce to stay at home if they choose would spark widespread sloth, ill health and rancour. Crime, drug use and other socially destructive outcomes would spiral.
A wealthy nation like the UK should obviously have a decent social safety net. Our welfare state, while comprehensive, is often patchy, but welfare, while alleviating poverty, should also encourage participation in society - helping people to find work, retraining if needs be - not paying them to opt-out.
Smart welfare offers a hand-up, not a lifetime of dependence.
Facebook CEO Mark Zuckerberg has voiced support for universal basic income. Picture / AP
Another objection is that it is merely an easy way out. AI and robotics clearly present challenges. There is a need to support more part-time "gig" work, while better preparing school-leavers and graduates to cope in a hi-tech world.
The answer is to meet those challenges, not pay people to stay idle. UBI advocates from Silicon Valley could help by paying more of their fair share of general taxation.
There are macroeconomic drawbacks, too. Putting an extra £323 a week in the pockets of every UK adult would cause inflation to rocket. Inevitably, the tax revenues to pay for it would be lacking, so borrowing would soar and governments on the UBI bandwagon would end up printing money.
If anyone wants to understand why UK wealth inequality has polarised in recent years, look to the Bank of England.
"Quantitative easing" has boosted the price of everything from houses to oil paintings. The asset-rich have got richer while ordinary young adults, struggling to get on the property ladder, have lost out.
In February, the OECD think tank said a universal credit system that replaced multiple benefits with a single monthly sum, like that being introduced in Britain, would work better than a basic income.
Last week, the Finnish government confirmed that its basic income pilot scheme, which began last January amid much international fanfare, would not receive additional funding.
