Inequality in the Digital Age: The Case for UBI
In today's digital age, the rise of the gig economy, sharing economy, and the "ghost" economy (also known as the informal or underground economy) have led to unprecedented levels of inequality. As more and more people are left out of traditional employment structures, the need for a universal basic income (UBI) becomes increasingly evident. In this article, we will explore how the gig, sharing, and ghost economies are exacerbating economic divides, and how a universal basic income could be the solution to these issues.
The economy often appears to be a dark mistress one is either intimate with or is doomed to never understand. So, let’s banish the fog and get the basics out of the way:
An economy is the state of a country or region in terms of the production and consumption of goods and services and the supply of money.
Simple enough, right?
Yet, despite this apparent simplicity, it will come as no surprise that it’s tough out there for many people depending on free market economies to survive (it should be noted that it’s potentially a lot harder for those under other systems by this is neither here nor there). We in the West are slowly realizing that we live in a post-economic world: nominally rich but plagued by things like medical bankruptcies and income inequalities, something that hadn’t necessarily been theorised by the scholars of yesteryear.
One of the many reasons for this is that our economy isn’t as socially productive as it’s traditionally been, in part because we never learnt how to nurture a middle class that can thrive in a highly automated and digital society, within which “free” data is King (Queen?).
Which leads us to…
The Digital Economy
I’d argue that the digital economy, wherein the bigger computing power and best software brings in the bigger bucks, is partly to blame for current inequalities : large companies now live and strive on data analysed by A.Is. They’re fed data. Your data. My data. Free data. Data which leads to higher revenues with less workers. All quantifiable facts are constantly blended for sale, with the aggregate of every single interaction becoming a mechanism for ever-more-finely tuning the business of attracting and retaining users. Most of the current top-tier tech companies have gotten to where they are because people aren’t paid for the information that is used to dole out regular dividends.
And because information is held to be free (one of the 21st century’s biggest lie), more and more people will give more and more data for free, which will be used to put more vulnerable workers out of jobs they might not be able to afford to lose.
The digital economy is steadily digesting the physical economy and the jobs it provides, leaving a gap between those that give the information and those who wield it.
Data is not like steel. It does not need to be produced. It simply is. Hence, we’ve moved from issues of productions to issues of fair distributions.
How do we address this? For a start, we can keep track of where information came from. Pay people when information that exists because of their mere existence turns out to be valuable, no matter what kind of information is involved or whether a person intended to provide it or not. What the heck, let the price be determined by markets (if you received 0.1 cents every time you gave your email address to a company, how quickly would you make a dollar?). Every Facebook user is worth $20 per year to the company. Do you feel you’re getting $20’s worth of product from the fake news machine?
We’ve moved from an era of scarcity to an era of abundance, and the rise of inequality isn’t only caused by people not being needed. More precisely, it’s because of an illusion that they aren’t even there.
Which leads us to…
The Ghost Economy
When I rave about inequalities, who do I talk about? I speak of the invisible workforce: people who clean offices, sort recycling, fulfill online orders, oh God so many online orders… people you rarely see, and even more rarely think about. Usually a ragtag crew of screw-ups, felons, floozies, single moms, the differently abled, students, immigrants, the homeless and hungry, the overqualified (fun fact, McDonalds rejected me 3 times) and under-qualified (fun fact, McKinsey rejected me 3 times), all of them ghosted by the traditional marketplace. For them, Smith’s “invisible hand” takes on a whole new meaning.
When you are so poor that you have to withstand the shame of a horrid uniform, the shame of handing out flyers in the street, the shame of welcoming suits to a conference all day, you become invisible. But in boardrooms, far removed from this suffering and indignity, things are better than ever. Shareholders, CEOs and venture capitalists are enjoying record profits.
And so began…
The Gig Economy
Many jobs have become gigs, and the gigs are unsteady.
Part-time. No health benefits. No pension, no unemployment insurance, no maternity leave, no way to plan a life, sign a lease, pay off debt. No stability. No other options. The model goes by many names (the gig economy; the on-demand, peer, or platform economy) but the companies partaking in it share certain premises. They typically have ratings-based platforms, in-app payment systems and give workers the chance to earn money on their own schedules, rather than through the corporate ladder. This means that the distance between the main employer and the worker who fulfills these gigs widens, allowing for the same type of casual cruelty that is exchanged between people who meet on Tinder.
What often unites the gig economy’s stakeholders is a belief in meritocracy, the free market, and the potential for social mobility: the presumption that they’re playing a fair game. Yet, it’s never been easier to be a billionaire and never been harder to be a millionaire: in this game, there are winners and losers and no in-betweens. That’s the genius of companies like Uber. It took the traditional corporation, with its C-suit responsible for controlling workers and machines, and cut it in two, creating a management structure that needs not deal with the political demands of workers, while heralding the virtues of autonomy, flexibility and the “go-getter spirit”.
And thus was born…
The Sharing Economy
Uber and AirBnB’s business is characterized not by sharing, but by showcasing spare capacity for rent, with the platform taking a cut. Managers hang onto the “sharing” story because it props up the claim that market mechanisms could re-engineer the very community ties that the markets themselves have eroded.
This not only separates managers from the grunts: it also shifts the costs of working to the “self-employed”, as well as the risks this entails.
This is a venture capitalist’s wet dream.
Give a startup minimal capital to hire developers and run media campaigns, and then watch as network effects ripple over the infrastructure of the internet. Tadaaa, you’re suddenly in control of a corporation built with cheap digital tools extracting value from expensive real-world, physical assets like cars and buildings. The entity holds itself together not via employment contracts, but rather by self-employed workers’ dependence on it to access the market they rely on for their survival.
“But”, I hear you say “surely every efficiency has a winner and a loser, and society is benefiting in the long term”. First, don’t call me Shirley, and second, a service like Uber benefits the customer, who’s saving on the taxi fare otherwise paid, but makes drivers’ earnings less stable. Airbnb has made travel more affordable for people who can’t (but more often simply don’t want to) afford a hotel, yet it also means that a significant revenue stream doesn’t make its way directly to the hotel employees such as housekeepers, receptionists and cooks, but instead goes to people who can afford a second home to rent to people who can afford to travel. The sharing model has helped divert traditional service-worker earnings into the top 10%’s ever-expending pockets, drawing wealth slowly upward.
And so we arrive to the logical conclusion of…
The Post-Work Economy
Even when work quality is potentially miserable, we still associate it with the idea of self-reliance and self-realization. But what if it wasn’t so? To answer this question, many (myself not necessarily included) are calling for a universal basic income: a plan to give every citizen a modest flat annuity from the government, as a replacement for all current welfare and unemployment programs. This would safeguard people for whom work doesn’t lead to increased financial security and would arguably allow everyone to benefit from automation, not just the lucky few.
Put down the pitchforks.
Before dismissing this idea too quickly, it’s important to consider the idea not in the context of our current economy, but of what the economy could become in a future dominated by robots and A.Is. A government implementing a basic income philosophy would acknowledge that there are too few work hours to be worked by all available workers, and respond by injecting liquidity into the mechanism that allocates them. Workers would need to be able to exchange hours of work at full pay, for hours of free time paid for by the state. This is, in essence, how Deliveroo and Uber currently work already!
Profit-seeking and benefits-giving are not at odds: shareholders are best served when all stakeholders are well served.