Universal Basic Income

Universal Basic Income

The concept of a universal basic income (UBI) paid to citizens regardless if they are employed or not, is becoming popular in the West as well as some parts of the world. Finland recently began a pilot scheme, where it pays 2000 Fins approx. US$ 600 per month, with no strings attached. It is also being tested in other countries, some dating back to the seventies.

This is not a new concept. It was popularized by Thomas Paine, one of the thinkers in the American War of Independence, at the end of the eighteenth century. The basis of this idea is that the ownership of all resources in a country belong to its people and, hence they are entitled to a share of the profits generated (Citizens Dividend). It may seem communist in nature, but it is different, especially as it does not ban private ownership and business. Instead, it demands that the businessmen pay a tax to citizens in lieu of making personal fortunes by using the country and its resources and facilities.

The above was the philosophical and innocent explanation of the historical development of the UBI concept. As for an explanation of why it is now making a comeback, and the rush to implement it in many countries, including such places as India and Africa, even in the form of pilot/test projects, that may be ominous of what is soon to come.

A New Production Revolution

Most of us know that the Industrial Revolution began in the countries of the West in the mid eighteenth century. As a result, those countries grew rapidly, became powerful and began to dominate the world through one form or other of colonization. Then came the Information Revolution (Computers and IT), which changed the way of working and doing business, and allowed the powerful Western countries to move their expensive manufacturing functions to poorer countries with cheap labor and less stringent manufacturing and operating regulations. It began with Japan in the 1960’s, Singapore and Taiwan in the 1970’s, South Korea and China in the 1980’s and India is soon expected to follow. This way, the rich Western countries were able to import almost all their needs cheaply from those poorer nations, which in return improved their economies and the livelihood of their citizens. Now, the time has arrived to pull away the rug from underneath those poorer countries.

Since decades, there has been a concentrated western effort to develop automation and robotic manufacturing equipment and facilities, which has now been enhanced by the development of Artificial Intelligence (AI). AI has advanced in the past ten years at a compound annual rate of 50% per year, making it smarter than most of us – and more efficient. But what does all this mean?

AI Robots to Replace Human Workers

It is now expected that AI tools and equipment will eventually replace, not only most industrial workers, but also most office and desk workers in all fields including the medical and legal professions. Already, reports and studies are listing the jobs and professions that are at risk of extinction in the next 10 – 20 years. So how will people earn a living, if there are no jobs for them?

One of President Trump’s new Ministers, who is a millionaire owner of a restaurant chain, declared his love for automation and praised its ability to work perfectly 24/7, without sick leave, striking, complaints, legal claims, discrimination law suits and, above all, for free. In other words, businesses prefer machines to humans. And this, is the method that will be employed by the West to return its outsourced industries back home, thus syphoning away the poorer countries livelihood. In the process, these rich countries will dramatically increase their profits compared with what they earn presently.

But such a mass automation move entails the dumping of most workers of the world into a unemployment bin, including a big chunk of the Western countries’ own labor force. This is a sure recipe for a mass revolution by the disfranchised poor against the few rich and their companies, and such a revolution would be too massive for the rich to contain it.

The rich have a few options, the least evil is to grant the unemployed salaries. But as the majority of labor will be unemployed, it was discovered that, by paying just a little more, they can pay everybody a basic salary, thus shutting them up – at least for a while.

The Advantages of the UBI

Despite this grim view of the AI/automation disaster rapidly approaching us, there are advantages to UBI. The most prominent is that it returns personal freedom to the people, especially their ability to choose which jobs to take and which to reject. Also, workers will once again be free to think and speak their minds publicly without fear of reprisal by their bosses. Finally, it allows people to develop their talents and interests, or do voluntary work, without worrying where their next meal is coming from.

On the economics side, we can think of one important advantage to countries that have suffered massive rural migration to the cities, causing urban congestion, unemployment and their related maladies. With UBI, migrants from the countryside, such as Egypt for example, can return to their villages and live a comfortable life and reduce the pressure on the cities.

UBI in Kuwait

Kuwait (and to an extent the rest of the Gulf) was not only a vanguard of UBI, but also granted its citizens a lot more than what UBI calls for. It provided them with lucrative jobs, cash grants, allowances for rent, children, university students, widows, divorcees, housewives, and the psychological and physically impaired. It also provides Social affairs financial assistance, free housing, all levels of education, scholarships abroad, medical care, as well as subsidies for food, fuel, electricity and many other free services.

All this was possible through oil revenue, the abundance of which allowed the Government to implement over a period exceeding half a century, a wealth redistribution policy among its citizens. But as oil revenues have now shrunk and the budget gone into deficit, will this generous policy continue?

We think is difficult, nay impossible, to abruptly stop all these benefits, without arranging for an alternative source of income that can maintain the standard of living that Kuwaitis have become accustomed to. The most that the Government can do is to end the growth of these expenses. It may be able to cut back on some unnecessary expenditures as well as those that are fraudulent of unjustified, but no more.

The ball is now squarely in the Government’s court, and it will have to reconsider its Financial Economic Reform plan in a more profound manner, and show us how good it is at financial planning and management, and thereafter, how good it is at economic management.


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