Swiss UBI Pummeled at the Polls + The Left's Piss Poor Answer to Brexit + Recession Looms

Yesterday the Swiss overwhelming rejected a proposal to create a universal basic income. Raphael Minder reports in "Guaranteed Income for All? Switzerland’s Voters Say No Thanks" that 

About 77 percent of voters rejected a plan to give a basic monthly income of 2,500 Swiss francs, or about $2,560, to each adult, and 625 francs for each child under 18, regardless of employment status, to fight poverty and social inequality and guarantee a “dignified” life to everyone.

Switzerland was the first country to vote on such a universal basic income plan, but other countries and cities either have been considering the idea or have started trial programs.

Winning less than 25% in a public vote is about as bad as it gets. The good news, as Minder goes on to note, is that other countries in Europe are considering a UBI:

Finland is set to introduce a pilot program for a random sample of about 10,000 adults who will each receive a monthly handout of 550 euros, about $625. The intent is to turn the two-year trial into a national plan if it proves successful.

In the Netherlands, Utrecht is leading a group of municipalities that are experimenting with similar pilot projects.

One pro-UBI "man on the street" in Geneva who Minder quotes gets it right, I think:

“We’re losing all our values, creating countries that no longer need workers but still need consumers, but how can we expect people to buy anything if they can’t earn a salary tomorrow?” asked Olivier Duchene, a musician and street entertainer.

While the Swiss UBI went down in flames, referendums in Europe have delivered some stunning victories recently, as Minder helpfully catalogs:

Referendums are gaining ground in other European countries that normally rely on a system of parliamentary democracy. 

Last year, Greece held a referendum on a bailout plan, and the Netherlands introduced a referendum law under which voters rejected a European Union agreement with Ukraine in April. Britain is set to vote in a referendum this month on whether to leave the European Union a year after Scotland voted to stay in the United Kingdom.

Other than the Scottish vote to stay part of the UK, all those votes were big wins. I have no sense of how the June 23 Brexit vote is going to go down. The reporting I have read in The London Review of Books has been nuanced to the point of turgidity. Case in point is Jan-Werner Muller's "Europe's Sullen Child."

The problem for the anti-Brexit left is it is arguing to stay in the European Union based on a romantic ideal that has proven fictitious:

In many ways the EU is already incoherent. For the time being, it is in a situation where failing policies are neither reversed nor properly fixed. With the Eurozone, governments created a single currency; with Schengen, they created one border. But nobody has been willing fully to accept what has to follow from these major forms of integration: namely, one fiscal policy, with at least some modest redistribution to address imbalances across the Eurozone; and a shared asylum and border policy. This would not in itself create a federal state, but it could be a step in that direction.

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. . . Brexit would make Germany even more powerful, and Germany’s continued attempts to keep Europe British without Britain would create even more conflict and resentment. A UK that remained and co-operated selectively with Berlin might just make the EU more stable, better able to project power, and less toxic. Eventually, after what is likely to go down in history as a lost decade for Europe, the EU might even become an area of hope again.

So that's what the "stay" argument boils down to after all those column inches: If the UK stays, maybe Britons will make the EU more stable and eventually "an area of hope again." That's some awfully thin soup.

Why the idea of a UBI is so timely is that it looks like the West is headed toward another recession. The May jobs report was dire (Patricia Cohen and Binyamin Appelbaum, "Sharp Fall in U.S. Hiring Saps Chance of Fed Rate Increase in June"). Even Dem cheerleader-in-chief Paul Krugman thinks so ("A Pause That Distresses"). Only 38,000 jobs were created in the month, and the jobs numbers for March and April were revised downward. As Wolf Richter notes in "What Makes This Jobs Report So Truly Ugly":

This is what was “expected”: 

The Labor Department was expected to report, according to Wall Street economists, a “moderate” gain of 158,000 jobs in May, “moderate” given that the Verizon strike kept 35,000 workers off their jobs. The “whisper number” was around 200,000 jobs. 

And this is what we got:

The BLS reported that the economy had added 38,000 jobs, the lowest since September 2010. Furthermore, the April job gains of 160,000 were chopped down by 37,000 and the March job gains of 208,000 were chopped down by 22,000. Hence, with 59,000 jobs revised away, and with only 38,000 jobs “created” in May, the net total in today’s report was a net loss of 21,000 jobs. We haven’t seen that since the Financial Crisis. 

“Shockingly weak,” and “In one word, ‘Ouch’” is how MarketWatch put it so elegantly. 

It was ugly all around. A number of sectors, including manufacturing, shed jobs, and the labor participation rate dropped for the second month in a row, to 62.6%. Just about the only good number was the magic headline unemployment rate, which fell sharply, from 5% in April to 4.7%, the lowest since the Great Recession began, leaving some folks scratching their heads and searching for answers.

Richter sees the drop in temp hiring as the canary in the coal mine:

But here’s where the report really spread gloom:

The number of temporary jobs plunged by another 21,000. Temporary employment is a harbinger for future employment trends, on the way up and on the way down.

The temporary-help sector was a major – and much lamented – driver of jobs growth after the Financial Crisis. The sector began adding jobs in September 2009. It was an early sign that companies were starting to hire again but didn’t want to commit to more permanent jobs, even as the economy overall continued shedding jobs until February 2010.

From the low point in August 2009 at 1.75 million temporary jobs, the sector added 1.2 million jobs by December 2015, when it peaked at 2.94 million. But then it started shedding jobs. With May’s loss of 21,000 jobs, the sector is down 63,800 from December.

This also happened in 2007, when the temporary help sector started shedding jobs even as the overall economy was still adding jobs until right up to the official beginning of the Great Recession. And it happened in 2000, before the 2001 recession kicked it.

Staffing agencies are cutting back because companies no longer need that many workers. Total business sales in the US have been declining since mid-2014. Productivity has been crummy and getting worse. Earnings are down for the fourth quarter in a row. Companies see that demand for their products is faltering, so the expense-cutting has started. The first to go are the hapless temporary workers.

Some the reporting of the G-7 meeting in Japan a couple weeks back mentioned Abe's rebuffed call for a unified commitment to stimulus spending. Nothing much more was said about it. But I figured that something ominous must be in the formative stages. Can you imagine the impact of another recession when we have yet to dig our way out of the post-Lehman Long Recession?

UBI Referendum in Switzerland + Hollywood Looking Shaky

Switzerland will vote Sunday, June 5 in a referendum on a modest -- $2,500 a month for adults, $625 for minors -- universal basic income (UBI). The UBI is gaining a toehold in public debate now that it is becoming apparent that remunerative, meaningful work for the masses is a thing of the past.

A pro-UBI statement by Daniel Raventos and Julie Wark can can be found in "Basic Income Gathers Steam Across Europe"; a con-UBI pronouncement is available this morning by The Times' Eduardo Porter in "Why a Universal Basic Income Will Not Solve Poverty."

Porter, believe it or not, makes some cogent points, foremost is one borrowed from Marxist ontology, that work is how we communicate our being. People need work in order to live meaningful lives. Warehousing people in favelas with access to high-speed Internet sounds more like The Matrix than a post-scarcity Utopia.

Then there is Porter's assessment of the cost:

Its first hurdle is arithmetic. As Robert Greenstein of the left-leaning Center on Budget and Policy Priorities put it , a check of $10,000 to each of 300 million Americans would cost more than $3 trillion a year.

Where would that money come from? It amounts to nearly all the tax revenue collected by the federal government. Nothing in the history of this country suggests Americans are ready to add that kind of burden to their current taxes. Cut it by half to $5,000? That wouldn’t even clear the poverty line. And it would still cost as much as the entire federal budget except for Social Security, Medicare, defense and interest payments.

Thinkers on the right solve the how-to-pay-for-it problem simply by defunding everything else the government provides from food stamps to Social Security. That, Mr. Greenstein observes, would actually increase poverty. It would redistribute wealth upward, taking money targeted to the poor and sharing it with everybody, including you and me.

As Lawrence H. Summers, the former Treasury secretary and one-time top economic adviser to President Obama, told me, paying a $5,000 universal basic income to the 250 million nonpoor Americans would cost about $1.3 trillion a year. “It would be hard to finance that in a way that wouldn’t burden the programs that help the poor,” he said.

Raventos and Wark come to the UBI from a completely different direction. They see it not as a replacement for work but as a guaranteed income, a buffer and bargaining aid for the increasingly pauperized average worker. It also helps solve the problem of demand in an economy that is increasingly one of automation.

If the Swiss pass their modest UBI on Sunday that will be a wonderful first step. I am skeptical it will pass. I think citizens of the West are just beginning to get a glimpse of the dystopia barreling their way and are not yet willing to put their shoulders to the paradigm shift wheel.

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Though sales are up so far this year, the dream machine is beginning to sputter. Brooks Barnes reports in "‘X-Men’ and ‘Looking Glass’ Disappoint at Weekend Box Office" that:

Bombing was “Alice Through the Looking Glass,” which cost Walt Disney Studios $170 million to make. It took in $28.1 million, according to comScore, which compiles box office data. “We’re obviously frustrated and disappointed,” said Dave Hollis, Disney’s executive vice president for distribution. “Alice in Wonderland” arrived to $127 million in domestic ticket sales in 2010, after adjusting for inflation. 

But the misgivings in Hollywood extend beyond one disappointing weekend, even one as important as Memorial Day. A troubling box office trend started last summer and has only become more pronounced: The riches are not flowing evenly — four of the six major movie factories are struggling — and only expensive event films seem to be drawing crowds, with many general purpose, middle-tier movies being virtually ignored despite aggressive marketing. 

What seems to be succeeding are familiar and liked brands (Marvel’s “Captain America: Civil War”), bold interpretations (“Deadpool,” “The Jungle Book”) or movies that are events for a particular audience (“Miracles From Heaven,” “The Angry Birds Movie”). Increasingly lost in the mix are films aimed at older audiences or designed as alternatives to effects-driven spectacles: “The Nice Guys,” “Whiskey Tango Foxtrot,” “Money Monster,” “Mother’s Day,” “The Finest Hours,” “The Boss,” “How to Be Single,” “Hail, Caesar!”

Studios have long fought through hits and misses. The worry is that audiences — unhappy with rising ticket and concession prices and increasingly bivouacked in their living rooms — seem to be saying that an entire section of studio output is no longer viable in theaters: Unless it’s a must-see movie, we’ll catch it on Netflix.

The superhero blockbuster is all we are now willing to gather together to celebrate. We have a great longing for justice and transcendence. But for the most part we prefer the solitude of our personal big screens.

Universal Basic Income and the Heroin Epidemic

Two stories caught my eye recently. One appeared last week in the business page, Farhad Manjoo's "A Plan in Case Robots Take the Jobs: Give Everyone a Paycheck"; the other, Katherine Seelye's "Heroin Epidemic Increasingly Seeps Into Public View," on yesterday's front page.

There is a prescription painkiller and heroin epidemic in the United States and people are regularly overdosing in public. At the same time, according to Manjoo, we are in the midst of a robot revolution in this country:

[W]ithin in two to three decades we’ll have morphed into the Robotic States of America. 

In Robot America, most manual laborers will have been replaced by herculean bots. Truck drivers, cabbies, delivery workers and airline pilots will have been superseded by vehicles that do it all. Doctors, lawyers, business executives and even technology columnists for The New York Times will have seen their ranks thinned by charming, attractive, all-knowing algorithms.

How will society function after humanity has been made redundant? Technologists and economists have been grappling with this fear for decades, but in the last few years, one idea has gained widespread interest — including from some of the very technologists who are now building the bot-ruled future.

Their plan is known as “universal basic income,” or U.B.I., and it goes like this: As the jobs dry up because of the spread of artificial intelligence, why not just give everyone a paycheck? 

Imagine the government sending each adult about $1,000 a month, about enough to cover housing, food, health care and other basic needs for many Americans. U.B.I. would be aimed at easing the dislocation caused by technological progress, but it would also be bigger than that. 

While U.B.I. has been associated with left-leaning academics, feminists and other progressive activists, it has lately been adopted by a wider range of thinkers, including some libertarians and conservatives. It has also gained support among a cadre of venture capitalists in New York and Silicon Valley, the people most familiar with the potential for technology to alter modern work.

Rather than a job-killing catastrophe, tech supporters of U.B.I. consider machine intelligence to be something like a natural bounty for society: The country has struck oil, and now it can hand out checks to each of its citizens.

These supporters argue machine intelligence will produce so much economic surplus that we could collectively afford to liberate much of humanity from both labor and suffering.

In theory this is true. But in actuality technology has concentrated wealth in the 1%. The current vogue of the UBI is a version of the "workerless factory" of the first half of the 20th century. The idea was that the working class would have to toil less as technology was integrated into the job site. The reality has been the exact opposite. People have to struggle harder, work longer at less stable employment, to earn less than what they made before. Look at a chart of the productivity gains since the early 1970s, a fraction of which has gone to the working class.

Hillary beat reporter Amy Chozick had a line in a story, "Clinton Offers Economic Plan Focused on Jobs," the other day that summed it up: "This is the latest revision to the corporate tax code Mrs. Clinton has proposed in an effort to create jobs and lift wages, which have been virtually stagnant for 15 years even as the costs of college, child care, housing and health care have soared."

We live a precarious, stressful. "no future" life these days. The rich would sooner see the vast majority slaughtered than guarantee a basic income. This hopelessness, a rudderless moral destitution, is part of what is fueling the heroin binge.