Richard McLachlan: Faces of wage inequality around the world

Activists cheer during a rally after the New York Wage Board endorsed a proposal to set a $US15 minimum wage for workers at fast-food venues with 30 or more New York locations. AP photo/Mary Altaffer

Opinion

British economist Guy Standing's description of a new social class he calls the "precariat" provides a useful context for the debate over a Universal Basic Income (UBI) - an old idea gaining fresh currency.

Finland is about to carry out studies to see how it might work. Perhaps we should be watching closely, even if it is viewed only as a policy thought experiment.

As the many consequences of growing inequality make themselves felt around the world, where predictable employment and a secure income is becoming the exception rather than the rule for increasing numbers of people, the time has come to look at our options.

Impetus is growing in some countries to consider providing everyone with a fixed sum of money that would help address basic needs such as food and housing, and in doing so address the constant anxiety and insecurity associated with never having quite enough to survive with dignity.

An unconditional UBI would be provided as of right to all. It is a highly contested proposal, accompanied by dissenting arguments from both sides of the political divide. Some are valid, some are plain wrong, and there will certainly be unintended consequences.

A Universal Basic Income has had and does have support among people across the political spectrum. Martin Luther King, Milton Friedman, John Kenneth Galbraith, Friedrich Hayek and the UK's Tony Atkinson have all supported versions of the idea. US President Richard Nixon proposed it in 1969. It passed through the House of Representatives easily but stalled in the Senate.

Forty-six per cent of Canadians support the idea. A proposal for UBI was resoundingly voted down in Switzerland in September, but public support for the idea is driving a referendum next year. Evaluated trials in India with 6000 men, women, and children have delivered positive results - "the simple fact is that people with basic security work harder and more productively, not less".

This approach has historical precedent stretching back to the days before neo-liberal economics colonised collective thinking. But "by 1980, the political tide shifted to the right and politicians moved their talking points to unfettered markets and individual gain from sharing the wealth and evening the playing field". Then in 2013 the subject was reintroduced in the New York Times and in The Atlantic. It is a live debate.

The 2008 Global Financial Crisis eliminated 8.4 million jobs in the US and many economists believe a lot of these jobs will not return. According to Standing's 2011 book The Precariat, people losing jobs as a result of recession often move into less secure positions with lower pay and a lack of union protection, and their situation becomes more precarious.

Outsourcing production and services, imposed casual employment arrangements, and lack of appropriate work for large numbers of graduates is helping create Standing's precariat, a significant and financially very insecure class. It is a group thta has diverse interests and political affiliations, but has in common casual, short-term employment arrangements and financial insecurity.

Of course, there has been a precariat since well before 2008. You only have to go to East New York or parts of Northland or South Auckland to realise that. But especially since 2008 it has been emerging in the US and Europe, as economic insecurity spreads among the middle classes.

Standing lays the recent expansion of this new anxious and unstable class at the feet of the questionable emphasis on growth - driven by market competitiveness, and supported by a "flexible" labour force and widespread privatisation. This unsophisticated and profoundly divisive approach to social relations is still avidly espoused in Australia, New Zealand, Canada, the UK, the US and much of Europe.

As distinct from the traditional proletariat, the precariat's "essential character is being a supplicant, a beggar, pushed to rely on discretionary and conditional hand-outs from the state and by privatised agencies and charities operating on its behalf". This has become clear with the large numbers of employed Americans relying on some form of subsidy or state support such as food stamps and Medicaid to be able to support their families.

Forty-two per cent of US workers earn less than US$15 ($22.35) an hour for fulltime work (US$31,200 before tax), and many are paid half that. Women, African Americans, and Latinos are overrepresented. More than 46 per cent of this group is 35 or older, suggesting a career trajectory is not among their expectations.

In New Zealand, Gareth Morgan has written more than one succinct summary of the UBI as an idea whose time, he feels, has come. The growing precariat, whether or not you use that term, is a reality - and a powerful stimulus for debate. French economist Thomas Piketty points to inequality that is structural. He and his mentor Tony Atkinson are questioning commonly held assumptions, and are advocating redistribution of the wealth that is concentrating among so few.

Is it possible we've been paying reluctant fealty to an idea, to an economic system that no longer serves a growing mass of people? We created it after all, and are only constrained from imagining a better future by timorous notions of what is possible.

Richard McLachlan is a New Zealander living in New York.