Is Universal Basic Income the Answer to Automation?

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Written by Bailey Piazza

Whether epidemic or enhancement, a clear trend has swept the globe: robots seem to be replacing the jobs formerly held by hardworking humans. According to one report, U.S. factories on average employ about two robots for every one hundred employees. Meanwhile, in Korea approximately five robots join the ranks of every one hundred workers. As these numbers continue to escalate worldwide, the market expands and the cost to implement machines plummets. While this speaks volumes to the increased global development and innovation in technology, the rapid computerization of jobs has resulted in about 57 percent of the world’s jobs to be at risk of extinction. This means people with narrow/focused skillsets and little education will be forced out of employment with slim opportunities to find careers elsewhere in the same field. While increased automation points to the manufacturing industry as the most significant victim, the problem extends into the elimination of jobs in other sectors. Ninety-seven percent of farm laborers and fast food cooks will have their jobs at risk of extinction. Seventy-nine percent of truck driver jobs are at risk, as well as 80 percent of construction laborer jobs.

A society without work (and thus an earned income) will continue to drive down the median income, as it has for the past 16 years by approximately three percent. This causes the socioeconomic gap to increase and inequality and polarization in the world’s societies to skyrocket.

Among the flurry of solutions gaining traction recently are proposals for some form of a universal basic income (UBI). Those proposals can take a variety of forms, including universal grants, a negative income tax (NIT), or a type of wage supplement. The case for replacing the current welfare system with a guaranteed national income is intriguing. It promises an anti-poverty effort that is simple and transparent, that treats recipients like adults by eliminating the current complex paternalistic system, and that has a better set of incentives when it comes to work, marriage, and savings. In theory such an income could be set high enough that no citizen would live in poverty.

But what sounds good in theory tends to break down when one scrutinizes the implementation. There appears to be serious trade-offs among cost, simplicity, and incentive structure. According to the Economist, a country the size of the United States would need to raise collected taxes that go into GDP by nearly 10% to pay every child and adult about $10,000 per year. While noble in theory, the universal basic income could be exceptionally costly, costing just the U.S., for example, an approximate $4.4 trillion.

Costs aside, another downside of implementing such a policy is its potential impact on productivity, the labor force, and human purpose. Making it possible to live without working for a wage will discourage citizens from obtaining long-term security in the job market. Work is also one of the few defining aspects of most societies and to make it obsolete would have both productive and social repercussions. In many cultures across the globe, one’s career defines oneself. A profession breeds sharper skill and a sense of purpose in the universe. Without the need to learn and adapt to new skills, what will humanity do to fill the void? Some argue a technological renaissance will emerge, granting humans the opportunity to shed their financial stresses and enjoy the limitless capabilities of the automation age. However, a guaranteed income could mean the collapse of social mobility with no means of promotion, locking people in a social class with no means to escape— The American Nightmare.

While the UBI is a plausible solution for a future crisis, versions of a UBI are already being implemented. The Netherlands, Kenya, and Namibia have made the trial list. In 2016, The Netherlands launched a program that would give it’s citizens $980. Also in 2016, a $30 million program funded by GiveDirectly gave an unconditional monthly benefit to 6,000 people in Kenya. In 2008, Otjivero-Omitara, a Namibian village riddled with high crime and poverty rates, launched a pilot program that provided every resident of the village with a basic monthly stipend. The money was collected from church groups, NGOs, and labor unions. Since implementation childhood malnourishment dropped 32 percent, the poverty rate dropped by 18 percent, and the crime rate plummeted by 36 percent. In addition, the average income earned outside of the stipend increased 29 percent.

While the trials show positive results, there is still much to be determined before a universal basic income can be applied to America and the rest of the international community. The future of an automated labor force and machine-driven economy poses many woes and wonders for the world. Now is the time to prepare for, discuss, experiment, and carefully co-create our future world.

Image by Scott Santens.