Introduction
Over the last year, I have documented in several articles that labor saving automation (LSA) has infiltrated all goods producing and service industries. The process continues and its implications are worrying. For the first time in history, it is worth asking whether the world needs all its potential workers and if not, what is to be done. Here, we are not talking about science fiction. The question is deadly serious and is being addressed in field trials, articles and books. Their work focuses on the costs and benefits of a universal basic income (UBI).
Robert Reich, in a New York Times book review has cited a number of these works:
- Labor leader Andy Stern,
- Facebook co-founder Chris Hughes,
- Belgian academics Philippe Van Parijs and Yannick Vanderborght.
Reich’s piece reviews two books on the subject:
- Annie Lowrey, a contributing editor for The Atlantic, wrote Give People Money and
- Entrepreneur Andrew Yang The War on Normal People.”
I start by quoting Reich:
If climate change, nuclear standoffs, Russian trolls, terrorist threats and Donald Trump in the White House don’t cause you feelings of impending doom, you might think about artificial intelligence. I’m not just referring to big-brained robots taking over civilization from us smaller-brained humans, but the more imminent possibility they’ll take over our jobs.
UBI: Background
How did we get to this? Several of those cited by Reich note that Martin Luther King Jr., Richard Nixon and Milton Friedman supported an UBI to be set at $1,000 a month for every American. Today, poverty is currently defined as an income for a single adult of less than $12,000 a year. Reich notes that a UBI at that level “…would, by definition, eliminate poverty for the 43 million Americans now living below the poverty line.” He notes further that “…it would also improve the bargaining power of millions of low-wage workers — forcing employers to increase wages add benefits and improve conditions in order to retain them.”
Of course, when a guaranteed income of any amount is proposed, its critics say that huge numbers of people would stop working. Reich notes that both Yang and Lowrey cite considerable research to rebut these claims. Reich adds:
I’m not sure they need it. After all, $12,000 a year doesn’t deliver a comfortable life even in the lowest-cost precincts of America, so there would still be plenty of incentive to work. Most of today’s jobs provide very little by way of fulfillment or creativity anyway.
How Would a UBI Be Paid for?
A $1,000-a-month grant to every American would cost about $3.9 trillion yearly, or about 21% of the US GDP. But it does not have to be paid to all. It should go to only to those near or below the poverty level. Since there are 43.1 million Americans living in poverty, that would cost $517 billion. This is a manageable number, especially when seen against Trump’s tax reform that cost $2.3 trillion in lost revenues. It could be introduced as a negative income tax for those whose taxable income is negative.
Relevant Research
There are several research areas that are worth considering here. The first comes from Africa where studies show that cash grants rather than payments in kind are more efficient at increasing well-being. However, very little of the foreign assistance is delivered as grants. Donors fear grants will be misspent and consequently deliver most aid in kind.
Research by Michael Faye and Paul Niehaus in Africa concluded that cash was more valuable to its recipients than the in-kind gifts commonly distributed by aid groups, …like food or bed nets or sports equipment. If you’re hungry, you cannot eat a bed net. If your village is suffering from endemic diarrhea, soccer balls won’t be worth much to you. It’s so deeply uncomfortable to ask someone if they want cash or something else. They look at you like it’s a trick question.
Give Directly et al
Faye, Niehaus and others went on to form GiveDirectly, a nonprofit organization operating in East Africa that helps families living in extreme poverty by making unconditional cash transfers to them via mobile phone. GiveDirectly has attracted $24 million in donations for its basic-income effort, including money from founders of Facebook, Instagram, eBay and a number of other Silicon Valley companies.
Inspired by Give Directly’s work, the research wing of Sam Altman’s start-up incubator, Y Combinator, is planning to pass out money to 1,000 families in California and another yet-to-be-determined state.
So there is all sorts of work going on to determine how best to manage a UBI.
Income Differentials Are Worsening: Is It Trump or A Conspiracy?
Some ascribe widening US income differentials as something developed by Republicans and supported by Trump. There is no conspiracy. This is the way capitalism works. Capitalists look for good ideas, raise money and invest. Now, they see a higher return on labor-saving automation. The result is they are replacing laborers with robots, etc. It is not their responsibly to worry about workers they do not need. And this concern is in large part the reason so many in Silicon Valley are looking at alternative income mechanisms.
Conclusions
New technologies and growing awareness on how to use them will continue to eliminate jobs at a disturbing pace. We can afford UBIs but that will hardly remedy the situation. Compensation for work has been the way the world has operated since the beginning of mankind. How will humans adopt to the new reality that their work is no longer needed? I do not know.
I conclude with a quote from the Reich article:
“A world inhabited only by robots, their billionaire owners and a large and increasingly restive population is the plotline for countless dystopian fantasies, but it’s a reality that appears to be drawing closer. If we continue on the path we’re on, we will need to make fundamental choices about how to support human livelihoods and ensure equal participation in our economy and society. Most basically, we will have to confront the realities of vastly unequal economic and political power. Even if we manage to enact a U.B.I., it will not be nearly enough.”