Will UBI Follow The Pandemic?

From everything I have read, the looming recession, which some experts are calling a possible recession within a recession, is likely to permanently eliminate millions of jobs. Some economists see visions of 2008 and a long recovery to get lower-income workers back on their feet. If we are lucky, and a well-designed stimulus package emerges, perhaps the impact on workers will be buffered. Even if this optimistic case becomes reality, the long term outlook may turn out to be much worse. 

The impact of robots and AI varies greatly in different countries around the world. Unfortunately, in the United States, we will have a large number of people who lose their jobs. Some will be redeployed to similar positions. Some will be able to be retrained to qualify in new occupations. However, new AI technologies such as Robotic Process Automation (RPA) are going to have a huge impact. For example, RPA will enable many old-fashioned paper-based or redundant processes to be eliminated. Forrester Research estimates RPA will cause the loss of 230 million or more workers worldwide, or approximately 9 percent of the global workforce.

I cannot think of an industry which is immune. Some pessimists believe nearly all radiologists will be replaced by an AI. Autonomous vehicles will impact millions of taxi, bus, and truck drivers. Robots are immune to viruses, and will flip burgers and deliver packages. I believe the pandemic will accelerate the pace of adopting robots. AI and robotics will create millions of new jobs, but I believe many more millions of people will end up with no job because there are no jobs available or they will end up with dead end low paying jobs. Those jobs won’t provide adequate income to sustain their home and family obligations. The hodgepodge of state, local, and federal government subsistence programs may help, but not sufficiently.

Some of the top dogs in the tech world are thinking about the impacts of robots and AI. They have ideas. Chris Hughes, the 36-year-old cofounder of Facebook, whose net worth is estimated at $500 million, believes the amount of money he received as a cofounder of Facebook is way out of proportion compared to his contribution to the company. He believes automation and elimination of jobs is going to increase income inequality. He believes the time has come to consider new and bold ways to make the economy work better for all Americans. He is co-chair of the Economic Security Project, which is a network of people committed to advancing the debate on unconditional cash and basic income in the United States.

The Economic Security Project believes, in a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety. Hughes believes a universal basic income (UBI) can help solve the inequality problem. He says his proposal could provide stability to every lower-middle income taxpayer by providing a monthly $500 supplement. He proposes to implement the supplement through the Earned Income Tax Credit (EITC). You can find the details of how the EITC could pick up the tab in Robot Attitude: How Robots and Artificial Intelligence Will Make Our Lives Better. Hughes says his UBI proposal would cut American poverty in half. 

Although many politicians are not willing to take on the issue, pilot UBI programs are under way and may reveal whether the concept can be as beneficial as Hughes espouses. Stockton, CA is giving 130 residents $500 a month for 18 months through a program called the Stockton Economic Empowerment Demonstration (SEED). Stockton has experienced significant financial disarray, and one in four residents live below the poverty line. The 130 residents will receive a debit card which will get $500 applied to it each month with no restrictions on the expenditures.

The experiment will enable researchers to evaluate the following: how people spend the money, whether they spend more time with family, change jobs, quit jobs, get new jobs, whether health and healthcare are affected, and whether people perceive an improved quality of life. There will be many debates about what constitutes success for a UBI pilot program.

UBI has its opponents. Some say it is too expensive and doesn’t really solve the many problems of an evolving economy. Others say, instead of giving cash handouts, the government and companies should work together to create innovative training and redeployment solutions for those who lose their jobs due to automation.

Some tech billionaires have expressed support for UBI or expressed a view it is inevitable because there is no good alternative. I believe Richard Branson, the billionaire serial entrepreneur and founder of the Virgin Group, summed up the issue very well when he said,

With the acceleration of artificial intelligence and other new technology, the world is changing fast. A lot of exciting new innovations are going to be created, which will generate a lot of opportunities and a lot of wealth, but there is a real danger it could also reduce the amount of jobs. This will make experimenting with ideas like basic income even more important in the years to come.

At a Nordic Business Forum, Branson told Business Insider Nordic in Helsinki,

Basic income is going to be all the more important. If a lot more wealth is created by AI, the least the country should be able to do is that a lot of that wealth that is created by AI goes back into making sure that everybody has a safety net.

Sam Altman is the President of Y Combinator, a top Silicon Valley tech incubator. Altman is a self-made multimillionaire, and he has been vocal about why UBI is a good idea.

Eliminating poverty is such a moral imperative and something that I believe in so strongly. There’s so much research about how bad poverty is. There’s so much research about the emotional and physical toll that it takes on people. I think about the amount of human potential that is being wasted by people that are not doing what they want to do. I think about how great it would be to undo that. And that’s really powerful to me.

Y Combinator is leading an experiment to better understand UBI by giving residents of Oakland, CA cash supplements to see how the money affects behavior. 

Andrew Yang, 45, was a 2020 Democratic Presidential candidate. Mr. Yang was a tech startup entrepreneur for ten years but is a political neophyte. In 2012 Yang was called a “Champion of Change” and in 2015 he was named a “Presidential Ambassador for Global Entrepreneurship”. He has a devoted following on Twitter at #yanggang. Yang believes one way to help soften the impact of automation is through use of a UBI, and this was a central part of his Presidential campaign. Mr. Yang’s proposal is for the Federal government to give each American adult a monthly check for $1,000, regardless of employment status or income. He has branded the proposed program the “Freedom Dividend.” The proposal would be funded by a Value Added Tax of 10 percent. The proposal would need Congressional support. The Wall Street Journal said it was a near certainty most politicians would balk.

Elon Musk, tech billionaire behind Tesla and SpaceX, said,

There is a pretty good chance we end up with a universal basic income, or something like that, due to automation. Yeah, I am not sure what else one would do. I think that is what would happen.

In May 2017, Mark Zuckerberg Chairman and Chief Executive Officer of Facebook, addressed the graduating class of Harvard. He talked about the future and the idea of UBI, which he described as a standard base “salary” for each member of society. He said the idea of helping to meet basic needs regardless of the work someone does is worth exploring. He said,

We should have a society that measures progress not just by economic metrics like GDP, but by how many of us have a role we find meaningful. We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.

There are many diverse points of view about the effects of robots and AI. A robot attitude suggests we should embrace the coming technologies because they will have the potential to make our lives better as I wrote in Robot Attitude. I believe this will be true in the short term. In the longer term, the technologies will likely cause disruption in most industries and heavily in some countries and a number of U.S. counties. 

Government intervention of some kind will be needed to protect the financial integrity of individuals and to keep families from being devastated financially by automation. Government and technology leaders need to anticipate these changes and work together to ensure the longer-term effects of automation are as positive as those in the short term. Calling UBI names is not sufficient. If not UBI, well-designed alternatives need to emerge sooner rather than later. 

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