Here’s Why the Answer to Increasing Automation Could Be Universal Basic Income


IN BRIEF

  • The growth and evolution of automation threatens to spread joblessness and economic uncertainty in its wake; up to 47% of jobs in the US are at risk of automation.
  • One plan to tackle the social and economic disjunction is to institute a universal basic income (UBI); pilot programs in Europe and India are already experimenting with the implementation such a system.

A NEW INDUSTRIAL REVOLUTION

The world is already on the cusp of a new industrial revolution—one that will be brought about by automation based on artificial intelligence (AI).

According to a joint study conducted by Oxford University and the Oxford Martin School, “[…] 47 percent of jobs in the US are “at risk” of being automated in the next 20 years.”

In a recent interview, President Barack Obama also talked about how AI will fundamentally change the future of employment; with downsides in terms of eliminating jobs and suppressing wages.

The world sees automation as the key to achieving more efficiency, across different aspects of our lives. But that efficiency comes at a price—the displacement of countless employees who will soon be replaced by artificially intelligent (AI) technology.

What happens then?

The answer could be universal basic income (UBI)—a policy where all citizens of a country will receive an unconditional amount of money, on top of income they generate through other means. The funds could be provided by the government, or a public institution.

And in 2017, Finland and the Netherlands will begin testing the system.

Image Credit: Joe Raedle/Newsmakers

By January of next year, the program is tentatively set to launch in Utrecht, the fourth largest city in the Netherlands. The system will provide varying benefits to current welfare recipients, following five different models to determine what works best.

In Finland, a randomly selected group of two thousand citizens, who are already receiving unemployment benefits, will receive €560 (around $600) as a monthly basic income. The program will run for two years and study whether this system can help raise the employment rate, lower poverty, as well as reduce bureaucracy and social exclusion.

THE POTENTIAL OF UBI

Considering that UBI is intended to provide an incentive that will spur productivity, and improve quality of life, a key point of consideration is the level of income that should be distributed. Should it be a minimum benefit similar to welfare state schemes? Or a higher amount that would be more appealing? To that end, with everyone receiving enough money to cover basic food, shelter, as well as goods and services, would people lose their motivation to work? Is UBI enough of a response to the pace of technological innovation and automation?

Of course, there’s that all-important question of who’s footing the bill. Since government revenue is derived from its taxing authority, the whole scheme is a little like robbing Peter to pay Paul; after all, if the population is unemployed, where will the government muster the funds to support a universal basic income? The whole system would inevitably collapse.

Still, the implementation of UBI at this scale is still in its early days, but the results from pilot programs thus far have been promising.

In India, where roughly 30 percent of the population lives below the poverty line, pilot studies of basic income grants conducted in 2011 led to more labor and work, not less, which skeptics typically predict. Results showed a shift from traditional wage labor, to self-employed farming and business initiatives. Additionally, the steady flow of income eased economic anxieties, allowing families to focus on their health and invest in the future.

In a separate study conducted in a small town in Canada, there were “fewer physician contacts related to mental health and fewer hospital admissions for ‘accident and injury.’”

UBI in the age of automation can ultimately prove to be an empowering economic move. And the results of Finland’s two-year experiment could provide more answers.

A warning from Bill Gates, Elon Musk, and Stephen Hawking


“The automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.” — Stephen Hawking.

There’s a rising chorus of concern about how quickly robots are taking away human jobs.

Here’s Elon Musk on Thursday at the the World Government Summit in Dubai:

“What to do about mass unemployment? This is going to be a massive social challenge. There will be fewer and fewer jobs that a robot cannot do better [than a human]. These are not things that I wish will happen. These are simply things that I think probably will happen.” — Elon Musk

And today Bill Gates proposed that governments start taxing robot workersthe same way we tax human workers:

“You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years [will go away].” — Bill Gates

Jobs are vanishing much faster than anyone ever imagined.

In 2013, policy makers largely ignored two Oxford economists who suggested that 45% of all US jobs could be automated away within the next 20 years. But today that sounds all but inevitable.

Transportation and warehousing employ 5 million Americans

Those self-driving cars you keep hearing about are about to replace a lot of human workers.

Currently in the US, there are:

There’s also around 1 million truck drivers in the US. And Uber just bought a self-driving truck company.

As self driving cars become legal in more states, we’ll see a rapid automation of all of these driving jobs. If a one-time $30,000 truck retrofit can replace a $40,000 per year human trucker, there will soon be a million truckers out of work.

And it’s not just the drivers being replaced. Soon entire warehouses will be fully automated.

I strongly recommend you invest 3 minutes in watching this video. It shows how a fleet of small robots can replace a huge number of human warehouse workers.

There are still some humans working in those warehouses, but it’s only a matter of time before some sort of automated system replaces them, too.

8 million Americans work as retail salespeople and cashiers.

Many of these jobs will soon be automated away.

Amazon is testing a type of store with virtually no employees. You just walk in, grab what you want, and walk out.

 A big part of sales is figuring out — or even predicting — what a customer will want. Well, Amazon grossed $136 billion last year, and its “salespeople” are its algorithm-powered recommendation engines. Imagine the impact that Amazon will have on retail when they release all of that artificial intelligence into brick-and-mortar stores.

US restaurants employ 14 million people.

Japan has been automating aspects of its restaurants for decades — taking orders, serving food, washing dishes, and even food preparation itself.

 And America is now getting some automated restaurants as well.
 There’s even a company that makes delivery trucks that drive around and start baking pizzas in real time as orders come in.
 Automation is inevitable. But we still have time to take action and help displaced workers.

Automation is accelerating. The software powering these robots becomes more powerful every day. We can’t stop it. But we can adapt to it.

Bill Gates recommends we tax robotic workers so that we can recapture some of the money displaced workers would have paid as income tax.

Elon Musk recommends we adopt universal basic income and give everyone a certain amount of money each year so we can keep the economy going even as millions of workers are displaced by automation.

And I recommend we take some of the taxpayer money we’re using to subsidize industries that are now mostly automated, and instead invest it in training workers for emerging engineering jobs.

The answer to the automation challenge may involve some combination of these three approaches. But we need to take action now, before we face the worst unemployment disaster since the Great Depression.

I strongly encourage you to do 3 things:

  1. Educate yourself on the automation and its economics effects. This is the best book on the subject.
  2. Talk with your friends and family about automation. We can’t ignore it just because it’s scary and unpredictable. We need a public discourse on this so we can decide as a country what to do about it — before the corporations and their bottom lines decide for us.
  3. Contact your representatives and ask them what they’re doing about automation and unemployment. Tell them we need a robot tax, universal basic income, or more money invested into technology education — whichever of these best aligns with your political views.

If we act now, we can still rise to the automation challenge and save millions of Americans from hardship.

Elon Musk doubles down on universal basic income: ‘It’s going to be necessary’


In an interview with CNBC in November 2016, Tesla CEO Elon Musk joined a growing list of tech executives who support universal basic income as a possible solution to the widespread unemployment automation will likely cause.

Universal basic income (UBI) is a system in which all citizens receive a standard amount of money each month to cover basic expenses like food, rent, and clothes.

On February 13, Musk doubled down on his initial support for the concept.

elon musk

“I think we’ll end up doing universal basic income,” Musk said to a packed crowd at the World Government Summit in Dubai, according to Fast Company . “It’s going to be necessary.”

The economic forecasts for the next several decades don’t bode well for the American worker. In March of last year, President Obama warned Congress about the looming threat of job loss, based on several reports that found as many as 50% of jobs could get replaced by robots by the year 2030.

The downside of that reality is that millions of people will wind up out of a job, a possibility Musk discussed at the Summit.

” There will be fewer and fewer jobs that a robot cannot do better,” he said. ” I want to be clear. These are not things I wish will happen; these are things I think probably will happen.”

UBI-friendly executives like Musk – a group that also includes Y Combinator President Sam Altman and Facebook cofounder Chris Hughes – also believe that automation will dramatically increase a society’s wealth.

“With automation there will come abundance,” Musk said. “Almost everything will get very cheap.”

That money could theoretically be redistributed to give people financial security even if they don’t work. UBI advocates often point to those reduced costs as part of the reason the system could be cheaper to implement than most assume.

“Because a very small amount of people have an almost unimaginable amount of money at the very top,” UBI advocate Scott Santens wrote for Huffington Post, “a basic income could actually decrease almost everyone else’s income tax burdens except for theirs.”

Musk retains some skepticism about the effects of UBI – he has voiced concerns what will happen to people’s sense of purpose if they have less of a need (or no need at all) to work.

“If there’s no need for your labor, what’s your meaning?” he said. “Do you feel useless? That’s a much harder problem to deal with.”

A $10 Million Investment Is Set to Determine If Universal Basic Income Would Work in the U.S.


IN BRIEF
  • A group of activists, investors, and visionaries have pledge to invest $10 million over the next two years to study whether a universal basic income system would work in the United States.
  • The system is already being tested in places like Canada and Finland, and if successful, it could offset the widespread unemployment expected by increased automation.

THROWING MONEY AT THE PROBLEM OF NO MONEY

The concept of Universal Basic Income (UBI) has been popping up left and right all around the world lately. Discussions and tests are and will be carried out by countries like Finland, Canada, and Uganda to find out if granting periodic and unconditional cash transfers to every individual in a community could solve that area’s economic problems. These studies, however, remain inconclusive, with some reporting that UBI has a positive effect on a population while others report a negative one.

The latest in a long line of groups trying to uncover a definitive answer to this question is the Economic Security Project (ESP), an eclectic group of people with signatories that include activists, investors, and visionaries. This group has pledged to spend $10 million in the next two years in order to find out if UBI can work in the United States.

This wide-ranging project would involve the ESP funding a diverse group of organizations, each with a distinctive question they would like answered regarding the benefits, or lack thereof, of UBI. The Roosevelt Institute, for example, will contribute macroeconomic modeling, behavioral studies, and public opinion research on UBI. Another group, the Chesapeake Climate Action Network, aims to find out the feasibility of carbon pricing and dividends to fund UBI.

Credit: Associated Press/Paul Sakuma

WE NEED ANSWERS

Poverty is not currently as big of a problem in the U.S. as it is in places like Kenya and Uganda, but a major concern for the U.S. is the encroachment of automation on American workforce. How will those unfortunate enough to have the same skill-set as the robots that could replace them survive once they no longer have jobs?

It’s a concern that worries government officials, financial experts, and scientists, and the UN has even predicted that 75 percent of jobs in developed nations could be lost to automation. As a solution to this potential job loss in the coming years, some have been pushing for UBI, but first the ramifications of such a system must still be studied. If this $10 million investment generates solid evidence one way or the other with regards to UBI, it could give officials a better action plan for humanity as it enters the age of automation.