Reimbursement for Care

Recent events have laid bare the bankruptcy the extreme capitalist model practised in the western world. Reimbursement for Care (RFC) is my idea for a key component for a successful modification of the model.

A fundamental flaw in our current model lies in the goals we use. While affairs are managed by nation states, some competitive financial metric will remain necessary. But the internal goals are all flawed, and create consequences leading to failure.

I believe there are three key metrics in use. The first is GDP. This has always been an ugly metric, including things like arms sales and financial transfers and excluding much of the informal economy and beneficial activity such as volunteering. GDP is essentially a corporate rather than a human metric. There is no obvious human replacement, but some sort of dashboard of welfare, happiness and development could work.

The second metric is also corporate. It is not a goal but more of an axiom. It is assumed return on capital, and it has converged globally on something like 6% real for no risk assets. This assumption has driven the turbo-charging of capitalism and caused the squeeze on labour. International agreement for series of radical changes could reset 6% at a sounder level such as 3%.

The third metric is the only human one and that is full employment. Less than full employment creates waste and welfare and discontent. Of the metrics, this is the one most dear to the left. Yet I find it the most damaging one.

The underlying assumption behind a full employment goal is that humans should undertake paid work as much as possible, or at least for a defined segment of their week. Humans do need activities to support self-esteem, but why should that be dominated by paid work? What if machines could do all the work and we could just sit back and have fun?

The emphasis on full employment leads to crazy distortions. We are trained to be upset when a factory automates so that robots can replace humans doing grinding, unsafe and mind-numbing activity. How on earth is toiling to an early death in a coalmine a good thing? Surely humanity should maximise automation and embrace technology, and find a better metric to replace full employment and compensating mechanisms to rebalance incomes?

The traditional model is increasingly out of date even for those who can find work. People with families cannot easily balance rearing kids with work, perpetuating gender inequality. The gig economy is growing and sits uncomfortably next to the classic model.

Keynes mooted the concept of the post-work society, and I believe its time has come. It is supported by a number of factors, not just the speed of development in technology and communication. It is not just technology that is squeezing traditional jobs. The most labour-intensive sectors are most stressed, such as retail. During the pandemic and post-pandemic, we can add hospitality and tourism. Worse, the squeezed segments most affect the least well paid, and can kill whole communities.

Next, the pandemic has awakened both the need for and the value of community service. Too many of our old and disabled people live in unfit conditions. Housing in vulnerable communities is detrimental to health. Many of our young lack the critical advantage of pre-school. Local facilities are crumbling. And those who have volunteered have realised that community work makes them feel good as well as the beneficiaries. The right often promote national service: why not national service for all, focused on communities?

Inequality, deprivation and temporary economic pause have moved Universal Basic Income (UBI) from the fringes to the mainstream. UBI is a sticking plaster, but does little to address the more fundamental issues listed above. RFC is a fairer and more sustainable alternative.

RFC envisages payment by local government for a whole slew of beneficial activities that people can enjoy, activities that currently are unpaid or underpaid or not done or done poorly. In an RFC society, people will rebalance towards these activities, with the balance varying depending on phase of life. A young single adult may choose only a few hours of RFC (or even none). Parents of young kids will complete more RFC hours, and older adults will place a higher priority on supporting society than career development or income maximisation. Someone living with a dependent relative will devote many hours per week to RFC (as they do already, but unpaid).

RFC activities should be widely defined. They include childcare, elderly and disabled care, sick and deprived person care, community maintenance and development activities and projects, and even arts and culture. Citizens can self-declare a number of hours per week depending on the make-up of the household, and add additional hours via certified and loosely regulated organisations. Because of the explosion of potential funding, there would be a step-change increase in the number and quality of nursing homes and childcare facilities.

I envisage hourly payments based on defined levels of qualification, with training provided to progress through levels for different types of RFC. The lowest level requires no training, and should be reimbursed at a local minimum wage, set depending on a basic cost of living including housing rental, utilities and food. It should be possible to live a simple life only with RFC income for say forty hours per week at level two or three, but most people will choose more like ten hours of RFC and continue regular employment. Over time, I suggest that all employment follows a gig model, one where the employee defines their availability and the employer cannot discriminate based on the hours per week offered, only on total experience.

I believe this model to be more affordable than might be envisaged. In the US, 200m people might claim an average of 10 hours and a rate of $10, giving an annual budget for RFC of a trillion dollars. But RFC obviates the needs for many existing budgets, including some social security (healthy pensioners undertake RFC), food stamps, welfare and so on. In addition, many public sector jobs could be eliminated, which we should not see as a bad thing in a post-employment world, so long as sufficient RFC is made available (and I propose it can be bottomless).

I see the biggest implementation challenge not in affordability but in equitable distribution. I can see a lot of wealthy white suburban folk embracing RFC with all sorts of fancy playgroups for their own kids and beautification of their own neighbourhoods. Rich faith communities will tend to restrict their efforts to their own kind. That is all well and good, but I believe that incentives will be required to direct a higher share of the effort (and supply) to more deprived populations. Perhaps a share of total RFC hours should be mandated towards higher priority areas and projects. It should be possible, so long as budgets are equalised. Funds should be disbursed locally, but from a national pot.

In an RFC world, corporations may have to lower their expectation for return on capital, partly because taxation will need to fund RFC and partly because labour supply would be reduced. So long as a sufficient number of developed nations choose to implement RFC in some form, this should be seen a benefit rather than a problem.

I find it sad that so few imaginative ideas have come to light in this rare moment of global opportunity. We should cheer UBI and the various support packages implemented by governments, but many seem to be ignoring the signs and planning for a return to normal business after the pandemic. Stock markets seem to agree. In my opinion any return to normal that supports corporations to the level now assumed by the markets would involve catastrophic hardship among communities and whole segments of the population. The time has come for something more radical. It is time for RFC.