The Automated Economy And The Case For Universal Basic Income
The future is now. The labour market is poised to make radical shifts due to automation and artificial intelligence technologies. It’s not a part of the distant future; it’s happening now. Self driving vehicles are being tested by a multitude of companies, and automated food delivery systems are already capable of driving pizzas to your front door. AI is being integrated into customer service jobs such as call centers at an increasing rate. These innovations offer exciting new frontiers for human development but come at the potential cost of displacing a significant population of labourers.
A study analyzing data from the United States Bureau of Labour Statistics estimates that some of the most popular jobs in southern states, such as retail and food service, are among the most vulnerable to automation with a predicted replacement rate above 90%. The trucking industry, which employs roughly 1.7 million individuals in the United States alone is the most popular jobs in at least 27 states, is particularly threatened by automation. The incentive for adopting these technologies is high, especially in industries like trucking or food service that often take a physical toll on workers. Limited by our biology, human beings simply cannot compete.
As the technology rolls full steam ahead, a radical concept has been proposed to address these issues, that of Universal Basic Income (UBI). Generally, UBI schemes suggest implementing a recurring regular payment to every citizen, regardless of income or employment status. Advocates argue that radical ideas are necessary to address an economic shift that is already well underway; an estimated 5.6 million manufacturing jobs were lost in the U.S. between 2000 and 2010 alone, and experts agree this trend is set to continue. Outside of manufacturing, many careers vulnerable to displacement by automation like food service are among the lowest paid, and in the case of U.S. where 4 in 10 adults cannot afford a $400 emergency, a guaranteed monthly income would be a huge boon to those in need. Aside from alleviating economic burdens, evidence is mounting that suggests a myriad of potential benefits that a guaranteed income could provide, such as improvements to mental health and increased quality of life in the retired elderly.
Despite some promising results in a variety of experiments, trial programs face many challenges and oftentimes are either too small in scale or too short term to reliably apply to large scale national economies. Some recent ventures have resulted in less than enthusiastic reactions from government officials. For example, the pilot program in Ontario Canada covering 4,000 low income participants was cut short by the current conservative government, who cited concerns over the price tag. Similarly, Finland recently axed a national program because, while general well-being of participants measurably improved, the primary goal of increasing employment rate was not met. Despite misgivings and challenges many programs are currently ongoing in North America, such as in the city of Stockton California, or the long term program in the state of Alaska where residents have been receiving regular payments since 1982.
UBI continues to gain serious consideration in a wider audience. Andrew Yang, a 2020 hopeful for the U.S. presidency is running on the platform of providing a guaranteed income for all american citizens over the age of 18. In an interview with Rolling Stone, Yang lays out his plan, which he presents as a means to mitigate some of the most severe aspects of job automation. Central to his message is that metrics like GDP are outdated, and advocates replacing them with measures that more accurately reflect social health and wellbeing. Part of his increasing appeal among even conservative voters is in the conceptual framing of the plan, which he dubs the ‘freedom dividend.’
Guaranteed income remains a hard pill to swallow for many, the primary sticking point being the hefty price tag. Take for instance Yang’s proposition of $1000 USD per month for every adult citizen, which would be an enormous yearly expenditure. Yang proposes implementing a Value Added Tax, which is common in Europe, to offset the cost and add billions to the US economy, even if implemented at a fraction of what many European countries require. Furthermore, it is assumed that financially vulnerable citizens will immediately reinvest that money into the economy by purchasing things they were putting off, such as repayment of loans, seeking health care, fixing vehicles and so on. Despite the initial costs, a study by the Roosevelt Institute claimed that $1k per citizen would in fact grow the U.S. economy by as much as 12.56%.
Many remain unconvinced. The significant costs, along with arguments that it disincentivizes looking for work and shifts the conversation away from the problem of automation of jobs by focusing purely on income make this a hard sell. A study by the University of Bath centered on the United Kingdom claims that a UBI that successfully addressed poverty would come at too great a price tag. Furthermore, not all projections for automation are gloom and doom; the project lead for self driving vehicles at Uber believes that automation in the trucking industry will in fact provide more jobs for people, jobs that are in fact of higher quality.
Our technology continues to free us from the need for labour, but this achievement presents us with new challenges that will require creative solutions. Advocates like Andrew Yang acknowledge how controversial UBI is. But as he describes it, his fellow candidates are reluctant to even broach the subject of what he sees as a coming seismic economic shift, and this is his answer.For better or for worse, experts agree that the labour market is poised to change significantly in the coming decades due to automation technology and we must be prepared. Most supporters readily admit that UBI is not a silver bullet, but evidence continues to mount suggesting that a guaranteed income could provide a myriad of potential economic and social benefits to citizens. Time will tell if UBI is viable, let alone politically feasible, but whether we act or not the future is here.