Universal Basic Income? Fear of AI Fuels Bad EconomicsIf new technology led to mass permanent unemployment, history would be an endless saga of expanding joblessness
With Alexandria Ocasio-Cortez and other Democratic candidates for president floating wilder trial balloons than a psychedelic circus, I’m surprised they have not (yet) picked up on the universal basic income (UBI). The UBI (guaranteed income for employable people who choose not to work) is far and away the favorite “solution” among those strong AI enthusiasts who expect machines to replace human work. They expect vast swaths of the country to be out of work for good.
So far, the only candidate plugging UBI is entrepreneur Andrew Yang. Yang is more idea-oriented than his Democratic opponents and he has made UBI central to his presidential campaign in the key state of Iowa. His plan would offer $1,000 a month per person. I suspect it’s only a matter of time before other Democratic candidates pick up on this platform plank, on the assumption that their likely voters will imagine it as free money.
A UBI might seem ill-timed, given that we are enjoying historically low unemployment. But the worry that machines spell mass joblessness is about the near future, not the present. As Yang’s campaign puts it,
In the next 12 years, 1 out of 3 American workers is at risk of losing their jobs to new technologies—and unlike with previous waves of automation, this time new jobs will not appear quickly enough in large enough numbers to make up for it. To avoid an unprecedented crisis, we’re going to have to find a new solution, unlike anything we’ve done before. It all begins with Universal Basic Income for all American adults, no strings attached – a foundation on which a stable, prosperous, and just society can be built.
This fear isn’t limited to a few fringe thinkers. “The future of work run by robots,” warns one mainstream news story about a recent IMF report on the topic, “appears to be a dystopian march to rising inequality, falling wages and higher unemployment.” Scads of books, like Martin Ford’s, warn of The Rise of the Robots. The authors of these books—like Rep. Ocasio-Cortez, only cleverer—announce the death of capitalism and then propose a government policy to battle the job famine: a government-provided basic income (UBI) for everyone!
You may be wondering how we’d pay for such a scheme. No doubt New York City mayor Bill De Blasio thinks he knows. The money is already in the coffers of the rich! We just need to get our hands on it.
Sounds simple. But even a modest UBI would add trillions of dollars every year to the federal budget (and budget deficit). In theory, a dictator could steal from all the billionaires for the first year or two. But how would the dictator fund a UBI after those golden geese have no more eggs to lay or have flown the coop?
Yang’s carefully-thought-out proposal is not that crazy but it would add massive new taxes. And the numbers still don’t add up. The details of UBI differ among its champions and some plans cost less than others. But the cost is not the only problem.
UBI Creates Perverse Incentives
Indeed, exorbitant cost is not even the worst problem with a universal basic income. Unless it replaced all other entitlements and means-tested welfare programs, its most likely effect would be to spread the perverse incentives of the welfare state from a poor underclass to a greater proportion of the population. The very last thing the government should do, even if it could afford to, is pay people not to work. That’s not a solution to unemployment. It’s a sure-fire way to have more of it.
Technology Has Never Created Permanent Unemployment
Why believe the dire warnings about new technologies? If technology led to permanent unemployment for the masses, history would be one long, dismal story of expanding joblessness. Obviously, it’s not. Paradoxically, without the technological progress that led to fears of job loss, the global economy could not sustain the billions of jobs and human beings it now does.
That’s not really a paradox if you think about it. Economic progress is mostly about finding ways to do more with less, to get more output from less input. The purpose of production isn’t to create jobs; it’s to create value in the form of goods or services for customers. Tractors replace oxen, ATMs replace bank tellers, forklifts replace a dozen burly men, trucks replace horses, and backhoes and excavators replace shovels and spades. Why? Because they provide more output with less input.
And, contrary to the false predictions of Karl Marx, Friedrich Engels, and their supporters, workers use new tools to earn a higher wage, due to greater output. Greater output lowers the cost of goods, which boosts the purchasing power of everyone, including the poor. And as purchasing power and standards of living rise, new kinds of jobs emerge in response to the rising demand for new goods and services. No surprise, the new jobs are often based on the new technologies.
Now, none of these benefits erases the human cost of living through a disruption. As I argue in The Human Advantage: The Future of American Work in an Age of Smart Machines, a disruption is coming. The shift could be more abrupt than the Industrial Revolution when one form of life replaced another for almost all Americans. At the time of the founding of the United States, about 95% of the population farmed for a living, as most people had done for thousands of years. Today, the American population is ten times larger and roughly one percent now work on farms. The rest are not poor and jobless. Most of the jobs that employ the other 99 percent didn’t even exist in 1776 and workers enjoy a much higher standard of living.
That said, the coming shift will be abrupt; it will happen over the course of years rather than centuries. Half of today’s jobs may disappear in the next few decades. Still, given what we know of history and economics, we should expect the future to offer far more prospects than we can now imagine.
Is man simply a machine?
A universal basic income is a bad idea because it would pay people not to work. If we’re going to push federal programs, why not craft policies that encourage new businesses? Why not look for ways to support training and work rather than non-work? Why, instead, do we get mostly dispiriting forecasts and bad policy advice? I suspect it’s not really about helping American workers. It’s just the latest in a long line of bad but useful arguments to expand government control over our lives and the economy. Only this time, it’s fueled by a science-fiction view of what artificial intelligence can do.
If man is more than a machine, then we may—indeed, will—devise ever more sophisticated machines that can mimic some aspects of our manual and mental labor. We’ll also find new things for our machines to do. This will lead to disruption but will also allow us to focus all the more on future work (much of it not yet imagined) that only we can do. We will be able to focus, as economists would put it, on our comparative advantage over machines. And all of this will be the fruit of human ingenuity.
If one assumes, however, that man is merely a machine with only the skills and capacities within the reach of a blind Darwinian mechanism, then perhaps the fear of machines makes sense. If we’re merely the product of blind evolution, full stop, might we just be an inflection point where technological evolution takes over from biological evolution?
In short, what looks like an economic debate over a policy—the universal basic income—is largely cover for a philosophical debate. And it’s a debate that the champions of strong AI think they’ve already won. Fortunately, they’re making concrete predictions, and it won’t be long before the public begins to realize they’re blowing smoke. In the meantime, we need to ensure they don’t help destroy the economy via policies supported mainly by scary predictions.
Note: You can meet and talk with both Jay Richards and professor of computer science Robert J. Marks over coffee at The Human Advantage – An Eastside Symposium: Will Artificial Intelligence Supersede Human Intelligence? in Austin, TX this evening, March 11, 2019, 6:30–9:00 pm
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Will AI lead to mass joblessness and future unrest?