Universal Basic Income – a case


The RSA today hosted a debate about the Universal Basic Income chaired by RSA chief executive Matthew Taylor (centre).

The debate coincided with the launch of a report on the subject by the RSA and was framed by Anthony Painter RSA (left).

He argued that our current system of benefits is not fit for purpose and the new Universal Credits system designed to replace it is actually perverse.

He described the current system by means of an analogy with a catapault, a wall and a boot. Claimants are flung out of catapult by a system designed to force them into any kind of work and once there they hit the wall, which is a very steep rate of benefit reduction which equates to an effective “tax rate” of 70-80%. The boot is there to help the catapault by penalising people who don’t comply by capping or suspending benefits. “Food banks exist because of the boot.”

This, he says, is welfare at the sharp end when what is needed is a system which can support the creative potential of the citizen. “The key question is what kinds of lives do we want to support?”

What the RSA is proposing is a basic income of £3700 per person per year which would replace most forms of benefit except housing benefit and sickness benefit. Crucially there would be no conditions attached which would allow people to choose whether to work and what sort of work to do. When in work the RSA proposes that the income would taper but at a level which would equate to an effective “tax rate” in the 30%s.  It would give people back agency, supporting such life choices as caring for others, setting up a business, or practicing as an artist. As for cost, the RSA points out that the proposed level is really rather modest and would cost an extra 1% of GDP. This, argues Painter, is within the range of other spending commitments.

One of the key hurdles to overcome in moving to a Universal Basic Income is political – none of the mainstream political parties support the idea. But there is hope. Ben Southwood of the Adam Smith Institute (second from right) said there is support both on the right and the left. “It may seem strange that some of the most enthusiastic early proponents of Universal Basic Income are from right,” he said. He said, however, that he preferred to see the UBI as a “negative income tax.” This, he believes, would be more feasible politically. The key to bringing the right on side would be the need to scrap a lot of benefits. For this reason, he said, it would be better to roll housing benefit into higher basic income. This, he said, would encourage people to move to where housing is cheaper.

 

All the panellists saw paradoxical hope in the Universal Credits system being championed by Iain Duncan Smith. They all believed that the system would be an expensive and disastrous failure and that this may be the spur to look for truly radical alternatives. “Public support for the welfare state is very low,” said Tom Clark from The Guardian (right). “We really need to rebase it.”

Frances Coppola, the economic commentator (second left) summed up the argument for the Universal Basic Income. It was about “making the best use we can of human capital,” she said. “Society is better if people are doing things to the best of their ability.” The current view is any job will do, she said. “But any job won’t do.”

 

Climate change – still hope?

This is the question explorer and conservationist Tim Flannery attempted to answer, at the RSA today.

Tim Flannery and Sir David Attenborough
Tim Flannery (left) and Sir David Attenborough

 

“We are producing emissions at the highest rate we could have imagined a decade ago,” he says.  We have already reached 1degC of warming since pre-industrial times and with what we have already emitted, because of the lag effect, we are committed to another 0.5degC.

“At 1.5degC there won’t be a Great Barrier Reef,” he said.  “Are we prepared to live in a world like that? If not, we need to work on techniques to take the co2 out of the atmosphere.”

So, what would we have to do to remove co2 naturally, he asked? The answer is to plant an area of trees the size of Australia.

We can’t hide from the reality, he said:  Nobody expects we can stop at 2degC by cutting emissions alone.

One solution which had been much touted is geoengineering, and indeed there is already active research going on in the field in China. But this is an inherently risky route and there is no global treaty regulating geoengineering. “My great fear is that a nation will go it alone when things get bad.”

So, if not geoengineering then what?

I used to be pessimistic, he said, but it had become increasingly clear there was a third way involving technologies which can draw large volumes of co2 out of the atmosphere. “They are not ready yet but we need to start now. We know it takes decades from our experience with technologies like solar and wind.”

There are several promising pathways Flannery outlined:

1. Biological. The trouble with biological approach is that they are limited in the face of the scale of the problem. Flannery says we would have to look to the sea where growth rates are much higher and pressure on space much lower. He pointed out that with  9% of the ocean as sea weed farms we would draw down all our current annual emissions of co2. However, he points out, that would actually result in sea weed farms covering an area five times as big as Australia. Nevertheless, there is valuable research in this area making good progress.

2. Chemical pathways. The main problem with these generally is that they need energy which doesn’t make sense until we are making enough clean energy.

That said, there are very interesting possibilities, he believes. One promising avenue is making carbon negative concrete, for example. This has already been produced experimentally and is very attractive as concrete is a major source of emissions.  But, he says, the construction industry is sceptical and is unlikely to take it up until the technology is proven. This is an area where the economic incentive of a carbon price would, he believes, drive uptake.

Another interesting area is to use silicate rock which naturally absorbs co2 when it weathers. For example, we could mine rock, grind it up and put it on beaches as sand.

Another promising research project is making plastic directly from co2. What about the havoc caused by waste plastic, asked David Attenborough? “Plastic is an appalling hazard to wildlife – we have to do something about that.” Flannery agreed.

One project Flannery was particularly enthused by was making carbon fibres directly from co2. This was exciting, he said, as it was claimed this would be cheaper than conventional methods of production which would mean carbon fibre could compete head on with steel and aluminium, both of which are major emitters. It was likely, he thought, that private money would fund this development as the rewards are potentially so great.

He then turned to carbon capture and storage (CCS). The traditional approach which was designed to make coal fired power stations “clean” was, he said, a failure. “It’s very expensive, very complicated, and doesn’t even capture all the emissions.” Will the price of renewables tumbling this would never make economic sense for coal.

However, this is not to say that CCS generally shouldn’t receive R&D effort. Where could we store co2, he asked rhetorically? Two options at least  – 3km down in the water  where the pressure makes co2 solid. Another options being explored was to bury it the antarctic – chiller boxes powered by wind would turn co2 to snow which could then be buried.

If this all sounds like science fiction, Flannery says we need to “keep the imaginative pathways open”. 2050 will be very different to 2015, he says. “Think of the difference between the world in 1915 and 1950.”

The key point is, he argues, that we have to cut emissions now and hard as well as start researching seriously on these technical solutions. If we continue as we are we will be out of budget in 13 years. And one of biggest risks of 2degC is a large release of methane which could spike temperatures. For this reason we can’t afford to wait before cutting emissions hard, but, because there is a lag between emissions and temperature increases we have a chance to develop solutions which will take co2 out of the atmosphere.

 

Making markets work for people

  
The idea that markets are perfect if left free is profoundly wrong argues Robert Shiller, Nobel Prize winning economist, who was speaking at the RSA today. 

The concept of the perfection of markets is attributed to Adam Smith, but says Shiller, even he didn’t entirely believe it. 

In fact in the modern free market economy businesses grow up around human weakness. Markets are built on phishing and we have no idea as individuals how pervasive this is. 

He gave a couple of examples: cigarettes and slot machines.  The Malboro Man  grew out of research showing that the rugged cowboy was the character which the target customer most closely identified with – everywhere in the world. So Malboro cigarettes have huge consumer preference despite the evidence from research that all cigarettes taste pretty well the same. 

Gambling, he points out, is addictive and destructive. And slot machines are among the most addictive especially when you optimise them to take advantage of the weakness. It turns out, he says, that the optimal time between button pushes is 3.5 seconds. If the flow is broken the player may walk away. So now they are designed to do nothing to break the cycle. 

Shiller argues we need regulations to combat this characteristic of markets to phish. 

“If we didn’t have regulations we would have slot machines everywhere,” he argues. 

“Government intervention should not be considered evil.”

Rise of the robots

  
Silicon Valley entrepreneur and author Martin Ford believes automation is going to have a profound effect on society, an effect we are unprepared for. Speaking at the RSA today Ford said that as a group economists are generally sceptical about the impact of automation and AI. The reason is historic – it has always proved a misplaced worry in the past. 

But it is different this time for three reasons:

  • The exponential nature of technological change
  • The increasing cognitive capability of technology 
  • And the fact that general purpose technology is increasingly ubiquitous. “There are no safe havens any more”.

One argument is that we will create new jobs as old ones are replaced. However, he argues the new industries are not labour intensive – say, 5% of the work force for the same revenues. “90% workers are still in jobs which existed 100 years ago,” he says. “The entire economy will be more like Google and less like GM in the future.” 

Productivity and compensation decoupled in the 70s and now the benefits have accrued to the capital owners not the workers, he argues. This is because before the 70s automation helped workers become more efficient – since then it is competing with them. 

Technology is no longer just coming after the low skilled (education is the traditional solution); now technology is climbing the skill ladder. 

“Machines do not consume – businesses must be able to sell what they produce,” he says. This means a shift from labour to capital, from workers to owners. “When you take purchasing power from average people and give them to the rich you take demand out if the market – Bill Gates isn’t going to buy 1000 restaurant meals.”

We have a choice between a utopian future or dystopia. In the long run he believes one fundamental answer is a universal basic income. Politically, he says, this is almost unthinkable right now. But if we are going to avoid dystopia we will need to seriously consider options like this. And to pay for it? “Logically we are going to have to shift taxation from labour to capital.”

Beyond Ideas

  

It was doubly ironic that Robert Rowland Smith, a writer and philosopher (an ideas based profession if ever there was one) chose   the RSA (an organisation whose central mission is ideas) to urge us all to move beyond ideas at a talk today.

He says we live in a culture which believes in making things happen rather than letting things happen: “We wait for ideas to rescue us.”

He argues that this focus on ideas keeps us removed from reality. Ideas and reality aren’t connected, he says. They are the “cousins of the lie”.

He says there are many ways of seeing the world. 

The first is what he calls the Google Glasses approach. This is our common approach. Like Google Glass we look at the world through a filter. This is a mediated view designed to help us interpret rather than experience the world directly, what philosophy would call a hermeneutic way of seeing. 

In contrast his second way of seeing is data driven – a phenomenological way of seeing the world. 

Using this way of viewing we simply describe the world without trying to interpret. “The effort of seeing is very hard” though, he warns.   

The third way is what he calls Hazing  – losing focus on the particular in front of you and therefore seeing more of the context. “Understanding increases when you lose focus and you see more of the whole.”

The final way is what he describes as a Meta way of seeing. This involves moving above yourself and seeing yourself as one of the actors in the scene. This allows us to appreciate our place in the whole as we are spared of the need of interpreting the world.

Smith says he is often called on to help artists of all types who are experiencing a creative block. He says they mostly think what they need are fresh ideas. But he says this is wrong. 

Creativity is solitary and non-ideas based he argues. He has invented a term – “Soulus”  – to describe what is solitary and unique about each individual. 

True creativity comes, not from an idea which is rooted in someone else but from within. It’s in the images from our subconscious which come to us in our dreams, for example.

The final idea Smith spoke about was perdition – being lost. 

“When we are looking for an idea we are looking for navigation,” he says. Getting lost is where we find our most innovative thoughts, he says,  when we are being open to what is not formed. 

“Unless you are truly lost you are not empty enough to come up with unique creative ideas.” There’s that word again!

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How Big Data affects our lives

Big Data is as much of a threat to civil liberties as the misuse of genetic information and should be subject to exactly the same kind of ethical debate.

Professor Frank Pasquale, speaking at the RSA today, gave chilling examples of firms insisting employees use tracking (phones, FitBits etc) to track their lifestyles and then correlate the data with work performance. This, he says, is a big threat.

His argument focusses on three problems:

Collection. Technologies are adopted because they are slightly better than existing techniques, Pasquale argues, but they are still poor. That leads to frequent errors and If that happens  correcting it at source is difficulty. And even if it is corrected at source that doesn’t mean it will be corrected everywhere. This needs to changed, he argues, so there is a robust method for correcting errors everywhere they have been used. That is difficult, he acknowledged, but critical.


Analysis.  We are rapidly becoming an administered society, Pasquale believes, and phenomena such as Red/Yellow/Green pre-classifications are commonplace but opaque.  There are numerous examples of abuse, he says, such as people’s credit scores being penalised because they tried to dispute their credit score. “This is a Black Box problem,”he says.  The problem is that these systems are serving those who are scoring consumers not the consumers themselves. “It has become almost a quasi-judicial role,” he says. “A kind of Big Data Star Chamber.”

Uses of data. Credit card companies analysed their data and found something very interesting- people paying for marriage counselling on a card are more likely to subsequently default. This finding can then be used to raise rates or lower credit limits. This he says is very troubling as effectively we are penalising people who seek marriage guidance – a perverse outcome. The answer is to eliminate certain types of sensitive data such as health and sensitive behavioural data.

Pasquale pointed out that with the genetic revolution society decided that the issues were so important that we decided we needed serious ethical debate. Big Data, he says, is of a similar magnitude as an issue and needs a similar ethical debate.

One of the problems in this space is that national jurisdictions vary so much in how they handle the privacy issue. Pasquale says governments use this lack of standardisation sometimes to get around their own country’s rules. The answer, he believes, is more harmonisation of standards globally.

There are some very powerful uses that Big Data could be put to which would benefit humankind – improving response to illness, for example, by analysis of large anonymised data sets of medical data. And he points to another positive example in the treatment of returning veterans of the US Army. Veterans traditionally have a much higher suicide rate than the general population. The Durkheim Project aims to monitor the social networks of returning veterans and perform sentiment analysis to compare with patterns detected in the social networks of those who have previously committed suicide. This is done with full consent and is, he says, an excellent example of the positive use of Big Data Analytics.

Frank Pasquale is Professor of Law at the University of Maryland and an Affiliate Fellow at Yale Law School’s Information Society Project.

Can altruism be more effective?

  Moral philosopher Peter Singer gave a compelling argument today at the RSA for the utilitarian approach to charity. He believes that not only should we give more of our incomes away but we should make sure it is as effective as possible. 

You get much better value for your money investing in developing countries than in developed. It costs much more money to make an equivalent difference in Britain than in a developing country. 

He is a supporter of the Effective Altruism movement which he says originated in Oxford and has been growing in influence for the past decade. He cited organisations such as Giving What We Can which encourage  people to give 10% of salary but also promote an analytical approach to its allocation. 

The idea which initially sounds very appealing isn’t without its problems, however. Singer himself raised several questions: How do you decide what the best thing to do? How do you compare cataract removal with maleria net? How to treat non-human animals compared to humans?  How do you measure the value of giving to organisations which try to change government policy rather than directly intervene? 

Despite these challenges he believes trying to allocate resources based on effectiveness could transform philanthropy. 

“Most people don’t research and even those who do mostly do very little,” he said. Any improvement would be a good thing. Similarly he resists giving out a target for the percentage of income which should be given. Much better to start somewhere and then review. 

His ideas create discomfort though. Do they mean we shouldn’t invest in charities serving developed countries? Isn’t the logical conclusion a reductionist one where the single most effective organisation gets all the money? How do you value volunteering rather than cash? 

His answer is again pragmatic – applying an evidence-based approach to giving (time or money) will make the world better, even if it is far from perfectly implemented. 

The future of jobs

Two of the speakers at this year’s Thinking Digital conference, Tony Hey a former vice president of Microsoft Research and Luciano Floridi Professor of Philosophy and Ethics of Information at the University of Oxford, both argued that fears over AI are overblown.

But interestingly they both believe increasing automation will result in a very significant and permanent rise in unemployment as more and more jobs are rendered obsolete by technology. They both argue that society will need to deal with this through some kind of basic income mechanism as well as a big pick up in educational attainment.

It seems like the basic income is an idea whose time is fast approaching.

Why information grows

A short history of information from the Big Bang to the modern complex economy. That was basically the entertaining talk Cesar Hidalgo, who leads the Macro Connections group at MIT Media Lab gave at the RSA last  Thursday.

He started with the universe made up of matter, energy and information. Information is expressed by how physical things are arranged and you need to spend energy to create information. Take a deck of cards – shuffle the deck and you have the same matter, but arranged differently. That is information. DNA is also information. For information to exist it needs to be embedded in matter.

However, for information to grow – which is the subject of his investigation – it has to develop the capacity to compute. Computation is much more widespread that we usual think. For example trees are able to compute, he says – they know which way to grow their roots and their branches, when to shed and when to grow their leaves and how to fight off diseases.

 

So living organisms can grow information but they are limited by their own internal physical properties as defined by their genetic codes.  Humans are the only species to break through that limit. By using computation to make our imaginations real we grow the total amount of information. “Products are embodiments of imagination and information.” In other words we “crystallise imagination”.

So why do we do this? In order to transmit the skill of others who you may never have met in the form of products. He provides a good example of how much value imagination provides. Take a supercar such as the Lamborghini Veneno which costs $3.9m. If you rearrange the matter in the car by crashing it into a tree at speed you still have exactly the same amount of matter, but after the crash the idea of the car is totally different and so is the value.

So, humans found a way to crystallise information but we have a finite capacity to accumulate knowledge. So we need to organise the work in a network so that different people provide different parts of the puzzle. But embodying information in a network of people is hard and there are limits on the size of the effective network, trust being the key ingredient.  “Trust reduces the cost of transactions,” as he puts it.

Societies differ in their intrinsic levels of trust. Familial economies are low trust societies where only family members can be trusted. These societies therefore have small networks and basic industries and they tend to want the state to step in to solve all problems.

High trust societies on the other hand have networks of people organised in firms and have larger and more complex industries (aircraft manufacture, for instance) . They tend to self-invent institutions to help them where they need it.

Therefore the differences in income are differences in computational abilities, Hidalgo argues.

As societies get more complex the next step up from networks of people in the growth of information is networks of firms.

 

There is what Hidalgo calls a re-embodiment of computation  in ever more complex structures. And economies highly nested and activities cluster together.

It is therefore possible to predict quite accurately which categories of exports countries will move into by studying what they are exporting now.

Thus he believes the information theory of economics is much more useful as an indicator of economic strength than GDP.

 

 

The Road to Character

  

 The columnist David Brooks says there are two types of virtues, resume virtues and eulogy virtues – the things that are said about you after you are dead. We spend our lives chasing the first but in the end it’s the second that we most desire, deep down. 

Speaking today at the RSA he talked about the concept of Adam 1 and Adam 2  – the idea coined by Joseph B. Soloveitchik to describe the external and internal lives of people. 

Brooks says these two live by different logic. And the danger comes when the two are out of balance. If there is too much Adam 1 a core piece of the personality (Adam 1) becomes less impressive each day. He believes this is what is happening today and he says there are several reasons for that including lack of time, the increasing prevalence of social media and the fact that our culture is now focussed on self worth. “We’ve told a couple of generations how great they are and they believed us.”

The result is an increased desire for fame and the loss of the capacity to have sophisticated moral conversations.  

He says if you use Google Ngrams to analyse the popularity of certain words it is clear economic words are up, moral words are down. 

So what are activities that Brooks believes lead to moral depth? 

First, humility – not self-deprecation but the ability to truly  see yourself from a distance. “The essential drama is in overcoming your own weaknesses.”

Second, suffering. “We wouldn’t call someone deep unless they had suffered.” Sometimes people shrivel when they suffer, he says, but it can develop self knowledge, empathy and even transcendence. 

Third, a capacity for great love. 

The word “character” has migrated from an Adam 2 world to an Adam 1 world, he says, and it is now something which helps you get on. It needs to be reclaimed.