AI and UBI: Forging a New Social Contract for the Fourth Industrial Revolution

As AI threatens millions of UK jobs, could universal basic income be the solution to economic upheaval and widening inequality? Explore the potential of UBI in the age of artificial intelligence.

As artificial intelligence threatens to disrupt labour markets, could universal basic income be the solution to economic inequality and job losses? This article explores the potential of UBI in the UK amidst the AI revolution.

The AI Revolution and the Case for Universal Basic Income

In the shadow of an impending technological revolution, the UK stands at a crossroads. As artificial intelligence (AI) and automation loom large on the horizon, threatening to displace millions of workers across various sectors, we find ourselves grappling with a pressing question: How do we ensure economic security and social stability in an era of unprecedented change?

Enter universal basic income (UBI), a radical yet increasingly relevant proposal that could reshape our social contract. As we teeter on the brink of what many are calling the Fourth Industrial Revolution, the concept of providing every citizen with a regular, unconditional payment is gaining traction as a potential solution to the challenges posed by AI-driven job displacement.

The AI Threat to Employment

The spectre of technological unemployment is not new. Throughout history, innovations have disrupted labour markets, often leading to short-term job losses before new opportunities emerge. However, the pace and scale of AI advancements suggest that this time might be different.

Recent studies paint a stark picture of the potential impact of AI on the UK job market. A report by PwC estimates that up to 30% of jobs in the UK could be at high risk of automation by the mid-2030s. This isn’t limited to low-skilled work; AI is increasingly capable of performing tasks in fields such as law, medicine, and finance, traditionally considered safe from automation.

The ramifications of such widespread job displacement could be severe. Beyond the immediate economic impact on individuals and families, mass unemployment could lead to increased social unrest, mental health issues, and a widening of the already gaping wealth inequality in the UK.

Universal Basic Income: A Safety Net for the AI Age?

In this context, UBI emerges as a potential safeguard against the economic upheaval brought about by AI. At its core, UBI is a simple concept: every citizen, regardless of their employment status or income level, receives a regular, unconditional payment from the government.

Proponents argue that UBI could provide a crucial safety net, ensuring that no one falls into abject poverty as the job market undergoes radical transformation. Furthermore, by providing a basic level of financial security, UBI could empower individuals to retrain, pursue education, or start businesses, fostering innovation and entrepreneurship in the face of changing economic realities.

The Economic Case for UBI

While critics often dismiss UBI as economically unfeasible, a closer examination reveals potential benefits that could outweigh the costs. Firstly, by providing a universal payment, UBI could streamline the current complex web of welfare programmes, potentially reducing administrative costs and bureaucracy.

Furthermore, UBI could act as an economic stimulus. By putting money directly into the hands of consumers, it could boost demand and drive economic growth. This is particularly crucial in an AI-dominated economy where wealth might otherwise concentrate in the hands of a few tech giants.

A study by the Roosevelt Institute suggests that a UBI of $1,000 (£764 as of 10-Sep-2024) per month for all adults could potentially grow the US economy by 12.56% after eight years. While the UK context differs, this highlights the potential macroeconomic benefits of such a policy.

Addressing Inequality in the AI Era

One of the most compelling arguments for UBI in the face of AI advancement is its potential to address growing inequality. As AI and automation increase productivity and corporate profits, there’s a risk that the benefits will accrue primarily to business owners and shareholders, exacerbating existing wealth disparities.

UBI could serve as a mechanism for redistributing the gains of technological progress more equitably. By ensuring that every citizen benefits from increased productivity, it could help maintain social cohesion and prevent the emergence of a stark divide between those who own the AI and those displaced by it.

Learning from Pilot Programmes

While no country has fully implemented UBI, several pilot programmes offer insights into its potential impact. In Finland, a two-year UBI trial found that recipients reported improved mental wellbeing, confidence, and attitudes toward work. Contrary to critics’ fears, the basic income didn’t significantly reduce participants’ motivation to work.

Closer to home, Scotland is set to trial a Minimum Income Guarantee, a concept similar to UBI. This presents an opportunity for the UK to closely observe and learn from the outcomes of a UBI-like policy within its borders.

Challenges and Criticisms

Despite its potential benefits, UBI faces significant challenges and criticisms. The most obvious is the question of affordability. Implementing a meaningful UBI would require substantial government expenditure, potentially necessitating tax increases or reallocation of existing budgets.

Critics also argue that UBI could reduce the incentive to work, leading to decreased productivity. However, evidence from pilot programmes suggests that this fear may be overstated. In fact, by providing a safety net, UBI could encourage risk-taking and entrepreneurship, potentially boosting overall economic dynamism.

There are also concerns about the inflationary effects of UBI. If everyone receives a basic income, wouldn’t prices simply rise to absorb this additional purchasing power? While this is a valid concern, careful monetary policy and competition in the market could help mitigate inflationary pressures.

Implementing UBI in the UK: A Gradual Approach

Given the magnitude of the change UBI represents, a gradual implementation approach might be most feasible for the UK. This could start with targeted basic income programmes for specific groups most at risk from AI-driven job displacement, such as workers in industries highly susceptible to automation.

Another approach could be to begin with a modest UBI amount and gradually increase it over time as the economic impacts of AI become clearer. This would allow for careful monitoring of the policy’s effects and adjustments as needed.

The Role of Government and Business

Implementing UBI would require significant political will and cooperation across various sectors. The government would need to lead in designing and implementing the policy, potentially through cross-party collaboration given the long-term nature of the initiative.

Businesses, particularly those at the forefront of AI development, should also play a role. This could involve contributing to the funding of UBI through targeted taxation of AI-driven profits or by actively participating in retraining programmes for displaced workers.

Beyond UBI: Complementary Policies

While UBI could form a cornerstone of the UK’s response to AI-driven job displacement, it shouldn’t be seen as a silver bullet. Complementary policies will be crucial to ensure a smooth transition to an AI-dominated economy.

Education and retraining programmes will be vital to help workers adapt to the changing job market. The government should invest heavily in lifelong learning initiatives and collaborate with businesses to ensure that training aligns with future skill needs.

Additionally, policies to encourage the equitable distribution of AI benefits, such as employee ownership schemes or profit-sharing arrangements, could complement UBI in addressing inequality.

The Ethical Imperative

Beyond economic considerations, there’s an ethical dimension to the UBI debate in the context of AI advancement. As we create technologies that can perform an increasing range of human tasks, we must grapple with fundamental questions about the nature of work and its role in society.

If AI can meet many of our material needs more efficiently than human labour, should we continue to tie basic survival to employment? UBI offers a way to decouple basic economic security from traditional notions of work, potentially allowing for a reimagining of human purpose and fulfilment beyond mere economic productivity.

Conclusion: Preparing for an Uncertain Future

As AI continues to advance at a breakneck pace, the UK must proactively address the potential socioeconomic disruptions it may cause. Universal Basic Income, while not without challenges, offers a promising approach to ensuring economic security and social stability in an era of rapid technological change.

By providing a safety net for those displaced by AI, fostering innovation and entrepreneurship, and helping to distribute the benefits of technological progress more equitably, UBI could play a crucial role in shaping a future where technological advancement benefits all members of society.

The implementation of UBI would undoubtedly be a monumental undertaking, requiring careful planning, gradual implementation, and ongoing evaluation. However, as we stand on the brink of an AI revolution that could fundamentally reshape our economy and society, bold solutions are needed.

The time has come for serious consideration and public debate on Universal Basic Income in the UK. As AI reshapes our world, UBI could be the key to ensuring that this technological revolution leads not to widespread hardship, but to a more prosperous and equitable society for all.

Bob Lynn / 10-Sep-2024