A World Without Work: Technological Unemployment and the New Economic Order
Richard Gilbert, PhD
Professor of Psychology and Director of The P.R.O.S.E. (Psychological Research on Synthetic Environments) Project
Loyola Marymount University
http://bellarmine.lmu.edu/psychology/faculty/richardgilbert/
www.proseproject.info
Chair, Board of Governors, Western United States Chapter of the Immersive Education Initiative
www.immersiveeducation.org
When you read the title of my talk, you might be confused. Isn’t this a topic that is typically examined by an economist or perhaps a sociologist of labor? Doesn’t psychology focus on individual processes such as promoting self-esteem or reducing personal problems, and specific interpersonal processes such as improving communication between parents and children or intimate partners? Yes it does, but its scope is far greater than that. Psychology is called the “Queen of the Social Sciences” because people and their mentality are at the heart of all aspects of society -- from politics, to economics, to sociology -as well as individual and interpersonal processes.
Take Developmental Psychology, which is one of the courses I regularly teach. This core area of psychology not only examines the central issues that individuals go through at each stage of the lifespan, it also investigates how these issues are impacted by the broad social context in which they occur. In infancy and toddlerhood, for example, developmental psychologists don’t only examine the formation and impact of secure attachments between children and their primary caregiver(s) in isolation. They also consider how the development of early attachments is influenced by the social and cultural context in which these relationships unfold. It’s self evident that raising a baby in a safe, secure environment is a world apart from doing so in New Orleans in the months after the levees broke, in the midst of a warzone in Syria, or under conditions of poverty and ongoing financial threat. In a similar vein, the primary focus of Community Psychology, another important subfield within Psychology, is to examine how social issues, processes, and institutions impact individual behavior and internal experience. Thus, psychologists in a variety of subfields are concerned with broad contextual influences (including economic influences) on human experience. Perhaps because psychology in the popular media is almost exclusively focused on the close examination of individual and interpersonal behavior, the prominent role of contextual analyses within the field is less widely understood. Nevertheless, the current talk on the impact of technology on the future of human labor, rather than venturing outside the disciplinary lines of Psychology, is consistent with a longstanding contextual tradition within the field.
In addition to the relevance of economic and other contextual factors to the broad discipline of Psychology, the topic of technological unemployment is closely tied to my specific area of research. In 2009 I founded a research lab called The P.R.O.S.E. (Psychological Research on Synthetic Environments) Project to investigate the personal and cultural impact of 3D or “immersive” digital environments, such as virtual reality and virtual worlds, and the lab has become an important source of information about the psychology of these new digital contexts. While the lab continues its work on 3D environments, its focus has broadened over time to consider the personal and cultural impact of a wide range of leading edge digital technologies including wearable computing, neural implants, affective computing, personal robotics, and artificial intelligence. As part of this expanded focus, one of my major goals in the past several years has been to complete a series called “The Futurist Quartet” -- a collection of 4 papers on the future of 1) The Metaverse (an interconnected system of 3D virtual worlds), 2) Identity and the Self in the Digital Age, 3) Human-Computer Interaction and Artificial Intelligence; and now, in the final installment, the current work on Digital Technology and the future of Human Labor.
In studying the later topic, it’s become increasingly clear to me that disruptive technologies such as 3D printing, artificial intelligence, and personal robotics are having a dramatic impact on the outlook for jobs and financial security, and will continue to do so to at an accelerating rate in the years to come. In the material to follow, I will begin by discussing the problem and causes of technological displacement of human labor. Subsequently, I will propose that a fundamental change in the relationship between society and work is the only long-term solution to one of the great social and philosophical challenges of the 21st century.
In our highly polarized society, there is one thing that politicians across the political spectrum agree upon: The number one issue that concerns voters is the lack of jobs. More specifically, the lack of fulltime jobs that pay enough to provide individuals and families with a sense of security and the possibility for upward mobility, both of which are at the heart of the American Dream.
Recently the government has been trumpeting a declining unemployment rate and the fact that we have created more jobs in recent years than were lost following the collapse of Lehman Brothers and the start of the Great Recession in September 2009. Unfortunately, while this makes a good talking point for political campaigns, it paints an overly optimistic picture of the economy and the labor market. The fact is, a large majority of the jobs that have been created in the past few years are either part-time or provide wages that are too low to enhance security or social mobility. For an accurate picture of the labor market, the government would need to report more than the unemployment rate. It would need to report the average number of hours worked per week, average hourly pay, the number of people who have stopped looking for a job entirely (and thus are not counted in the unemployment rate) and the percentage of the adult population that is working. When all of these statistics are examined, a more somber view of the labor market emerges, one that is more in keeping with the sense of anxiety, pessimism, and at times desperation that many American workers feel today.
While reduced access to good jobs is not a matter of dispute, there are disagreements regarding whether this problem represents a short to medium term (i.e., cyclical) downturn that needs to be managed until robust growth in the labor market returns, or whether the weak labor market signals a structural change in the economy that will ultimately require a fundamental reordering of the relationship between society and human labor.
Currently, both major political parties approach the labor downturn as a cyclical crisis and advance competing approaches to stimulate the economy and (presumably) create job growth. Similarly, reports emanating from the mass media or leading business organizations generally view the current problems in the labor market in cyclical terms, implying that the difficulty is due to the aftermath of the housing bubble, the foreclosure crisis, the need for deleveraging, uncertainty about tax and spending priorities by business owners, etc. that will sort themselves out over time if the right policies are followed. Reflecting this emphasis on cyclical explanations, one rarely hears hat the persistent inability to revitalize the labor market is due to enduring (i.e., structural) changes in the domestic and global economy. The absence of serious public discussion by politicians, mainstream media, and business leaders about possible structural problems in the labor market is likely due to concerns that public disclosure of deep structural challenges will undermine consumer and investor confidence, turn off media viewers, and be
unappealing to American voters who prefer optimistic politicians who offer a quick return to national greatness and prosperity.
The essence of the structural perspective is that forces in the modern world have fundamentally altered the balance between the supply and demand for human labor, simultaneously increasing the supply and reducing the demand for workers. The consequences of this structural change are:
1. Rising unemployment or underemployment. (Average weekly hours have declined since 1950.)
2. Stagnant or depressed wages due to increased competition for a limited number of jobs. (Expressed in 1982 dollars, wages in 2014 are slightly lower, while prices have risen 120%.)
3. Declining security and social mobility. (The United States, long known as the “land of opportunity,” now has less social mobility than class-conscious Europe.)
4. Growing income inequality as capital shifts from vulnerable, redundant workers to corporate owners, executives, and major shareholders. (The richest 1% in the United States now own more wealth than the bottom 90%; 93% of additional income created in the past decade has gone to the richest 1%; the US now has a GINI coefficient -- a standard measure of inequality -- approaching that of poor and dysfunctional economies in Latin America. On a global scale, Oxfam estimates that the richest 85 people own half of the wealth in the world.)
Moreover, because the forces underlying this change are intensifying and accelerating (see Section D), the imbalance between the supply and demand for labor, and the resulting lack of secure, life-enhancing jobs, will be a permanent feature of post-industrial culture. Over time, as more people realize that they are trapped in something far greater than a cyclical downturn, pessimism and despair will turn to rage against the government, corporations, and large capital owners and the possibility for widespread social rebellion will greatly increase. The 2011 Occupy movement and 2014-2015 rallies to demand an increase in the minimum wage have foreshadowed this possibility. While the Occupy movement was discredited due to its poor organization and lack of focus, and the minimum wage rallies were coopted by corporate acquiescence to small, gradual increases in base wages, more sustained and virulent protests akin to those against the Vietnam War could occur and require fundamental changes in the economic system to control. As with the Vietnam-era protests, the call for structural economic changes will be difficult for the elites to ignore because the rebellion will be led, not by the poor and its narrow band of supporters, but by the parents and children of the educated classes who see no hope for the future this nation has promised them.
D. What forces underlie the structural change in the supply and demand for labor?
The increase in the supply of labor is due to two major factors. First, there has been extraordinary growth in world population in recent history. When one looks at the timeline of the human race, it took almost the entirety of its 200,000 year history, until 1804 to be precise, for the total population of the world to reach one billion people and another 123 years, until 1927, to reach a second billion. Now world population has eclipsed 7 billion and, if the current rate of expansion continues, it will reach 11 billion by the end of the 21st century. So, in slightly more than 2 centuries world population has increased 700% and, if current projections are accurate, this expansion will increase to 1100% by the end of the century.
A second factor increasing the supply of labor is globalization, which enables labor to migrate from any physical location in search of jobs, and for jobs to migrate to cheap sources of labor via physical and digital outsourcing. In effect, globalization greatly multiplies the supply of potential workers who can vie for specific jobs, rather than having these jobs subject only to competitive forces in the local economy.
At the same time that population growth and globalization have produced a massive expansion in the supply of labor, productivity gains due to advancing technology have reduced the demand for human labor. From ATMs, to self-service gas pumps, to self-checkout stands at supermarkets and pharmacies, to online applications, to robotic manufacturing and 3D printing, the list of jobs once performed by human beings that are now largely or completely automated grows by the day. Facebook, for example, has a market cap of 193B, making it one of the more valuable companies in the world, and it does so with slightly more than 6000 full-time employees. Similarly, Google has a market cap of over 400B with less than 50,000 full-time employees. In contrast, General Motors, the largest corporation in the world during the industrial era, had a peak labor force of over half a million full-time workers.
The ability to maintain and expand productivity with fewer human workers is a great benefit to any business, large or small, as it eliminates the cost of recruiting, hiring, and training employees and paying their salaries and benefits, including healthcare, workman’s comp, social security, and any pension obligations. It also reduces costs related to lost time for sickness, costs for risk mitigation, costs for lawsuits, and costs for stolen company secrets or other retaliatory actions by dismissed employees. In addition, technology can work non-stop 24/7, 365 days of the year, without violating labor laws. The bottom line is that is financially foolish for any business NOT to try and minimize the number of people it employs and shift the locus of productivity to software, robotics, and non-human agents. While this process has already eliminated or reduced millions of jobs, the alarming reality is that the age of information that began with personal computing in the 1980’s and the rise of the World Wide Web as an instrument of mass communication in the 1990’s is only 20 to 30 years old. Over time, there is no question that the displacement of human labor will continue to expand. Moreover, with accelerating advances in artificial intelligence and personal robotics, jobs that require a higher level of cognitive processing -- jobs that have supported people who have spent years and hundreds of thousands of dollars on education and training -- will no longer be immune to machine displacement. When that happens, fundamental change in the relationship between labor and society will be required to prevent social rebellion.
There are those who acknowledge that technology is causing widespread displacement of human labor but still maintain a more sanguine view of the future. In another variant of the cyclical perspective, they correctly point out that there was also massive displacement of labor in the 19th century when society made the transition from an agrarian-based to an industrial economy. Over time, however, the Industrial Revolution created millions of high-paying manufacturing and service jobs that more than offset the loss of jobs in farming and agriculture and ultimately enhanced the security, mobility and quality of life of American labor. Guided by this historical template, they maintain that we are now going through a similar, painful transition from an Industrial to a Post-Industrial economy but, over time, new markets like computer programming, cyber-security, electrical engineering, biotechnology, and many others as yet unknown, will emerge to reemploy displaced labor and ultimately support and enrich their lives once again.
Unfortunately, this historical analysis doesn’t account for a fundamental difference between the displacement of labor due to industrialization and the current displacement due to information technology and robotics. During the Industrial Revolution, machines displaced human and animal labor in areas of work that relied on physical strength, speed, and endurance. For example, neither humans nor horses could run as fast, as far, or as long as an automobile or a train; neither humans nor oxen could equal a tractor’s ability to plow a field. This was essentially the death knell for animal labor because, stripped of their physical advantage by the superior power and performance of machines, they had no other job skills to fall back on. Today, no new markets have emerged for oxen and, after more than a century of industrialized agriculture, the unemployment rate for their dwindling population is approximately 100%. Similarly, with the exception of a small percentage of horses that are used for sporting activities, equine therapy, nostalgic cowboys, or the pleasure of rich women and pre-pubescent girls, almost all horses are unemployed. As one reflection of their declining function in modern culture, the U.S equine population dropped during the Industrial Age from 19.8 million in 1910 to 1.6 million in 1974.
Unlike animals, human beings still retained competitive advantages over Industrial Era machines in areas of work that required intellectual, creative, or social skills. These remaining advantages enabled humans to transition into new forms of work while they ceded the domain of physical labor to machines. However, with the development of artificial intelligence and advanced robotics, the domains of work where human beings retain a distinct advantage over machines is shrinking rapidly. There is no rational basis to believe that a sufficient number of new markets and industries will be created where human beings have a cost-effective advantage over increasingly intelligent and capable machines to offset the accelerating erosion of secure, well-paying, jobs that has accompanied the rise of the Post-Industrialism.
Before focusing on proposals for structural economic change, let’s revisit approaches to improve the labor market advocated by those who view the employment crisis as a short to moderate term problem that can be managed by working within the current economic framework. While there are many specific ideas and policy proposals that fit within this cyclical perspective, they all fall into one of 3 camps.
First there is the “Increase Demand” camp, which is rooted in Keynesian economics. The essential idea is that in a time of recession, slow growth, or, as in the current case, a “jobless recovery,” the government should use all the tools at its disposal to aggressively stimulate the economy and put money into the hands of people who are struggling financially. These tools include: Directly putting people to work through infrastructure projects, extending unemployment benefits, cutting payroll taxes, lowering interest rates, expanding the earned-income tax benefit, and pushing to increase the minimum wage. The expectation is that individuals will spend the extra money they receive, increase the demand for goods and services, and ultimately lead to more hiring as businesses ramp up production to meet this heightened demand. Eventually, as the economy begins to grow on its own and jobs are added, the stimulus can be gradually tapered. All of this sounds eminently reasonable and has worked to good effect in past recessions. This approach has also helped the nation weather the potentially cataclysmic impact of the global financial crisis that began in 2009 and restore a sense of order and stability to the economic system. However, it has not resulted in creating jobs at a rate greater than the rise in population or, as we’ve indicated, jobs with hours and wages that can support a middle-class lifestyle. This is because, for the first time in history, businesses are able to increase productivity, and thus meet the rise in demand, via enhanced technology, without the need to hire a large number of employees.
Simply put, the Keynesian solution is valuable but ultimately falls apart if increased demand for goods and services does not have to be addressed by adding human labor. How many more employees does Home Depot or Amazon need to add if a thousand extra people buy a new sink -- a sink that is manufactured by a 3D printer, ordered online, removed from stock and loaded into self-driving trucks by AI-equipped robots, or delivered straight from the factory to the home by commercial drones, and barely touched by human hands?
The second camp, which is complementary rather than mutually exclusive with the demand model, is the “Increase Competitiveness” approach. In this method, efforts are directed toward equipping workers to compete more effectively for higher paying jobs that are available now or in the near future. The centerpiece of the increased competitiveness approach is more, better, and targeted education. This involves earlier education so children don’t fall behind; more rigorous and effective primary school education; more school choice to optimize the fit between learners and educators; more education in math and science to compete for high paying jobs in the information, biotech, and engineering fields; more vocational education; more business-academic partnerships to match students with corporate jobs; more college education and graduate education. As with the Keynesian strategy of increasing demand, the approach of making workers more qualified and competitive in their job searches is completely reasonable and effective in some cases. However, in the big picture, this strategy does little to address the fundamental problem of a declining need for human labor. As AI software and intelligent robots are able to preform increasingly sophisticated forms of labor (e.g., translation, tax and legal form preparation, interpretation of basic MRI and CT scans, executing stock and commodity trades, writing news summaries, filling prescriptions, and thousands of other tasks previously performed by educated workers) the supply of college graduates will far outstrip the number of jobs that rely on cognitive skills that are unique to human labor. In turn, this imbalance in supply and demand for cognitive workers will begin to depress wages and increase underemployment for the educated classes, no less than what happened to workers who once relied on physical skills to support themselves and their families. In fact, this process has already begun. As a consequence, the current generation of Americans will be the first in the nation’s history to be downwardly mobile and to fail as a group to meet or surpass the living standards of their parents, a measure of progress that is fundamental to the American psyche. Nevertheless, because the encroachment of intelligent machines has not quite reached a threshold of criticality, the educated classes still perceive a sufficient competitive advantage accruing to higher education and students and parents are willing to spend many years and hundreds of thousands of dollars to gain more and more formal education. However, as more young people find themselves stuck in jobs that offer neither security nor social mobility, living with a parent or parents or in some other form of unsatisfying housing, and facing years or decades of crushing debt, a sense of despair and eventually rage will grow. It is the educated class of children and their sacrificing parents who will eventually feel betrayed by the system and form the vanguard of social change, just as they did in the 1960’s when their lives (instead of those of the poor) were on the line for a foolish war, and just as they have for all of history. “Students and workers unite and fight!” is more than a simple rallying cry; it represents the coalition that has often been at the center of social rebellion. Ironically, while advanced education may not help many young people secure the life-enhancing jobs they thought was their birthright, it will make them much more effective at demanding social change.
The final camp is the “Increase Money for Business Development” approach, which is largely based on the theory of supply-side economics initially put forth by Robert Mundell and Arthur Laffer. According to this macroeconomic model, the best way to maximize economic growth is to lower barriers for people to produce goods and services and invest in businesses. Essentially this involves reducing government regulations and lowering marginal tax rates and taxes on capital gains. If this is done, consumers are
presumed to benefit from a greater supply of goods and services at lower prices, a consequent increase in demand for these goods and services, and eventually increased hiring for employees to meet this demand. In essence, the theory goes, providing financial benefits to business owners and investors will eventually “trickle-down” to workers in the form of lower prices and more jobs. Unfortunately, this is rarely what happens in practice, and certainly not in a context where more workers are unnecessary to meet any rise in demand. What actually happens is that the money trickles down from the government and the general public to the pockets of the capital class, inflating inequality, creating vast corporate cash reserves, increasing stock values for major shareholders, encouraging mergers and acquisitions (thus further consolidating the labor market) and ultimately leaving the typical worker further behind rather than in a better position. The logic of supply-side economics (i.e., “the best way to help the poor and working classes is to increase the money available to the rich”) is so suspect on its face that the model was once scornfully dismissed as ‘voodoo economics” by no less a radical leftist than George Bush Sr. Nevertheless, as a psychologist, the ability of the financial elites to convince millions of struggling Americans to support economic policies that run counter to their financial interests as some patriotic embrace of freedom over tyranny is one of the most impressive examples of public persuasion the world has ever seen.
According to Structuralists, many of the macroeconomic policies offered by cyclical theorists have been valuable in managing times of economic crisis such as the Great Recession. However, these policies are viewed as inadequate to address the accelerating imbalance in the supply and demand for human labor brought about by Post-Industrialism.
As Table 1 shows, there have been 4 types of societies in human history, each with a different mode of production or primary way of employing labor. For most of this 200,000-year history, human beings were organized into nomadic tribes that hunted animals and gathered nuts and berries to survive. Given this extremely localized and labor intensive mode of production, there was never an excess supply of labor and all able-bodied members of society had a readily available job. Similarly, non-mechanized agricultural production, which began around 8000B.C., is a labor-intensive mode of production that primarily relies on a localized labor force. The demand for labor in agricultural production is so high that even the use of animal labor for power and endurance-based jobs such as plowing and hauling didn’t meaningfully impact the demand for human labor relative to its supply. It wasn’t until the Industrial mode of production began in the early19th century that machines began to perform more and more of the productive activities of society. As previously mentioned, the introduction of industrialized production permanently diminished or eliminated forms of labor that relied on physical strength, speed, and endurance, including almost all of animal labor. Moreover, industrial advances in food production, housing, medical care, transportation, and communication unleashed a population explosion and forces of globalization that dramatically increased the supply of human labor. With this revolutionary transition, human labor suffered painful dislocations for a number of decades. Eventually, however, it found a new productive role in society by capitalizing on its remaining competitive advantages over machines: Its intellectual, creative, and social abilities. Unfortunately, with the coming of the computer age and the rise of a post-industrial mode of production (i.e. production that rests on the transfer of information rather than on hunting, gathering, growing, or manufacturing), disruptive technologies such as 3D printing, artificial intelligence, and personal robotics have begun to encroach on these last remaining areas where human beings have an advantage in the labor market. By the mid to late 21st century, as developments in these technologies advance at an exponential (i.e. non-liner) rate, highly intelligent and interactive machines will take over the large majority of the productive labor that was
once the exclusive domain of human intelligence, and do so in a manner that is faster, less expensive, and more efficient. In the face of this massive transfer of responsibility, no macroeconomic prescriptions -- no amount of financial stimulus, formal education, or supply-side incentives for business development -- will be able to counter the diminished role of human labor in the productive output of society. The only viable, long-term option will be for human beings to grasp the historical trajectory before them and creatively restructure the relationship between society and work, which is the essential prescription that flows from a structural perspective.
Earlier this year, Jaron Lanier, a computer scientist and a pioneer in the field of virtual reality, published an e-book entitled “Who Owns the Future?” in which he proposed that a fundamental restructuring of the information economy is necessary to cope with the erosion of productive jobs caused by the Internet and mass digitization.
According to Lanier, Internet companies tend to form global monopolies or near-monopolies (think Google for search; Facebook for social networking; Ebay for auctioneering, etc.) that crush competition in their sector and inhibit overall economic growth. Because they are highly automated, they are able to achieve their massive scale with relatively few employees (recall that Facebook has a market cap of 193B with about 6000 full time employees.)
The business model underpinning the growth of these platforms is simple and consistent: The company provides a digital platform that allows users to carry out a useful service or activity for free and the users provide content for the platform, also for free. The site then makes money by selling advertising space or information about its users to third parties. In this model, a big part of the value of these companies comes from their user’s content and information, but the users themselves derive little or no financial benefit from the content they provide. The vast majority of the wealth created goes to the owners and major shareholders of the company, thus contributing to economic inequality.
Ultimately, as more and more functions and services are digitized, Lanier believes that the only significant generators of wealth will be the Internet platforms themselves and the only way to avoid a complete breakdown of the economic system will be to compensate people for the content they contribute to the information economy by developing a system for monetizing informational transactions. Simply put: Users of information on the Internet would be charged and providers of content would be paid for each transaction. Lanier is cognizant of the great difficulty involved in implementing his structural proposal due to the technical complexity of this reorganization, the expectation by the public that Internet use will be free, and the resistance of powerful and politically active platform owners who derive the majority of the economic benefit from the existing order.
The On-Demand, App-based Economy (To be added ---Explain how “sharing”, “bartering,” “Gig Apps” etc. involve an alternative way to earn a living in the face of threats to the traditional employeremployee model.)
Another structural change approach, one which I and many others believe is the most promising and realistic way to address long-term imbalances in the supply and demand for human labor, is the Basic Income Guarantee. In the material to follow, I’ll define the model and its specific elements, address some key issues and controversies related to its adoption, and discuss the short and long term prospects for achieving a political consensus to implement a program of this nature.
A Basic Income Guarantee is an income paid by a political community to all of its sanctioned members on an individual basis, without means testing or work requirement.
The specific elements contained in this general statement can be further defined:
1. The political community that determines the amount of the income guarantee is usually a nationstate, but it can be part of a nation (e.g., a state, county, city, etc.) or a supra-national organization such as the Eurozone. Whatever amount is set is paid in cash, not “in kind” (e.g., with food or land use) or via special currency with restricted use (food stamps, housing vouchers or grants, etc.)
2. Payment is made to sanctioned individuals, not households, in order to foster communal life, decrease isolation, and reduce administrative costs related to checking household arrangements or combating false domiciles. The definition of “sanctioned” individuals is determined by the political community, but often involves non-incarcerated, non-institutionalized adult citizens who have filed a tax return in the preceding year and have a current account in an approved national bank to receive the funds.
4. The basic income is transferred electronically at regular intervals (usually monthly) through an existing agency of the political community, such as the Social Security Administration, so no additional bureaucracy is needed. It is paid without restriction in the nature or timing of the consumption or investment of the transferred funds; individuals can spend or invest their benefit when and how they see fit.
5. The basic income is not “means tested” or subject to taxation. To incentivize work, basic income can be supplemented without penalty by money earned via employment, savings, investments, or public or private pensions. All income above the basic income is subject to taxation at current marginal rates for the political community. The benefits of eliminating means testing of the basic income include:
• Eliminating the “unemployment trap” and culture of dependency characteristic of existing antipoverty programs by not proportionately reducing benefits if a recipient earns money.
• Eliminating the administrative costs of monitoring and combating fraud, household testing, checking willingness and efforts to work, etc.
• Reducing the stigma of taking the benefit on the poor, as it is applied equally to all sanctioned adult members.
• Endowing the poor and the weakest in society with bargaining power, as they don’t have to take any job or be exploited. They can hold out for respectful wages and doing something that has
some meaning or value. Most believe a basic income guarantee will reduce crime and prostitution linked to financial desperation.
1. Affordability.
The affordability of the program is conditioned on 1) the number of sanctioned individuals in the political community, 2) the amount of the income guarantee set by the political community, 3) the number and cost of other social benefits it replaces, and 4) the tax base of the political community.
If we set the parameters for sanctioned members as non-incarcerated, non-institutionalized adults citizens who have reached the age of 26 (the identical age used for full adult status in the Affordable Health Care Act and the age at which neuroscientists have determined that brain development is complete), there would be approximately 200 million beneficiaries in the United States. If the political community set the basic income guarantee at $11, 671 (one dollar above the 2014 federal poverty line for individuals as depicted on Table 2), the annual cost would be 2.33 trillion dollars. A variety of accounting models have demonstrated that this level of revenue is attainable. As one example, sufficient funding for this benefit could be derived by 1) replacing most social welfare and income-transfer programs to individuals (other than health-care and disability payments) with the direct income benefit, 2) eliminating most income-transfers to corporations including agricultural subsidies, 3) maintaining some form of progressive taxation on all income above the basic guarantee such as: a redistributive income tax (most common), property tax, value-added tax, Tobin tax on capital movements, and/or “bit taxes” on transfers of information, and 4) instituting a set of tax reforms such as eliminating the standard deduction and personal exemption, changing all tax rates to single, expanding the payroll tax to all earnings, taxing capital gains as regular income, charging a small stock transaction tax, etc. Again, this is only one of many accounting models that have been offered. The key point is that, while achieving a consensus on the specifics of financing an income guarantee would certainly be a challenge and pit powerful interests against each other, it is possible to fund a basic income guarantee at a level that would eradicate poverty and affordability is not a prohibitive barrier to its adoption.
It is important to restate that the income guarantee is provided to individual adults. As such, any household comprised of two adults would receive double the “poverty line plus one dollar” benefit. This would currently amount to $23,342, which, as shown in Table 2, is less than $500 below the federal poverty line for a family of 4 and would serve to lift any children of these adults out of poverty as well. Similarly, a multi-generational household composed of, for example, two adults and an elderly family member or friend, would receive 3 subsistence guarantees amounting to, at today’s level, slightly more than $35,000. While this amount is still more than $16,000 below the 2013 median national income of $51,107, it illustrates the deep incentives for family preservation and communal living arrangements that operate in a basic income guarantee program. These powerful incentives could lessen trends toward isolation and social fragmentation that operate at all levels of culture, but which have been particularly damaging within impoverished communities.
As a final note regarding affordability, some have pointed out that adding a financial eligibility requirement, whereby individuals who earn more than a certain amount of income would not receive the benefit, could significantly enhance the economics of the program. However, this provision runs counter to the notion that a basic income guarantee is not subject to means testing and is provided equally to all sanctioned members of the community. In addition, instituting this requirement could lead to a complex,
tiered system of eligibility and a costly bureaucracy of fact checking and oversight. A simple compromise would be to retain the provision that every sanctioned member of the political community would be entitled to receive their full income guarantee regardless of their means, but all members would be required to indicate on their annual tax return the percentage of the guarantee that they would like to claim for the upcoming year. It is likely that high profile philanthropists like Warren Buffet and Bill Gates who have expressed concern about income inequality and financial fairness would opt to decline the entirety of their benefit and probably others who are less in the public eye would follow suit. Still others who are affluent but not extremely wealthy might elect to decline a portion of the benefit. As tax returns are a matter of public record, decisions to decline all or part of the basic income guarantee could be published on a government website as a way of recognizing wealthy individuals who decline part or all of their subsistence benefit for their pro-social sacrifice and as a way to apply public pressure for other affluent individuals to consider doing the same. The sum of benefits that are declined either partially or in their entirety would impact the affordability equation by an amount that could be conservatively estimated in advance and eventually precisely determined.
While issues of affordability are important to address, the greatest impediments to providing a basic income guarantee are psychological rather than financial. When presented with the idea of an income guarantee, many people question 1) whether basic subsistence is a universal right or a matter of individual responsibility, 2) whether, even if it is deemed to be a fundamental right, any conditions should be attached to receiving the benefit or if it should be provided unconditionally, and 3) whether a guaranteed subsistence benefit would undermine the motivation to work for people who might otherwise have been productive contributors to society. The implementation of a basic income guarantee will rise or fall on the ability of proponents to satisfactorily address these deeply held concerns, each of which will now be considered in turn.
Individuals who oppose a basic income guarantee tend to believe in a right to life, liberty, and the pursuit of happiness as enshrined in the Declaration of Independence. However they view basic subsistence as a matter of individual responsibility that is guaranteed to no one. The countervailing position that basic subsistence is (or should be) a universal human right is expressed by Allan Sheahen in the following passage from his book, “Basic Income Guarantee: Your Right to Economic Security.”
“Each of us has a moral right to the minimal physical conditions of life -- air, water, food, and shelter -- simply because we’re here…This is perfectly consistent with our heritage. We acknowledge the inalienable right to life, as well as liberty and the pursuit of happiness. In fact, none of these rights means a thing without the provision for life itself.”
It is important to note that proponents of an income guarantee maintain that anything above basic subsistence is not an economic right and must be earned. Thus, the system should not be confused with socialist or communist models where there is massive income distribution designed to minimize income and class differences. All sanctioned members of the political community -- rich or poor, educated or not, talented or not -- receive the same benefit to simply ensure that they start the cultural race at the level of subsistence rather than at nothing. The goal of the system is to guarantee basic survival and to eliminate the worst of human fear and exploitation; it is not to promote equality of achievement or
wealth. All incentives to earn additional income and generate wealth found in market-oriented capitalist economies are preserved beyond the guarantee of subsistence.
Should the Subsistence Benefit be Conditional or Unconditional?
Most proponents of an income guarantee would prefer the benefit to be provided without condition in order to reinforce the notion that basic subsistence is an unqualified human right. As a matter of principle, they maintain that the right to basic survival accrues from the simple existence of a human life and should no more be attached to conditions than the right to breath or drink water. At the same time, others are uncomfortable with the idea of dispensing a social benefit without any individual responsibility and point out that many fundamental rights have corresponding obligations. We have the right to assembly, but an obligation not to gather on private property. We have the right to free speech, but an obligation not to slander or threaten someone with physical harm. We have the right to pursue happiness, but an obligation not to do so in a manner that doesn’t infringe on the rights and freedoms of others.
In weighing these competing positions, some advocates of a basic income guarantee have proposed a compromise between viewing the benefit as an absolute, unrestricted right and attaching conditions to its provision. The first to do so was Anthony Atkinson who proposed adding a condition of “social contribution” that must be met to continue to receive the benefit. Recipients of the benefit would be required to document their participation in some activity that contributed to the well being of others during the preceding year to retain their eligibility. This pro-social activity is broadly defined and encompasses “paid employment or efforts to obtain employment, participation in educational or training activities, dependent care, or any pro-social volunteer activity.” Similarly, Steven Shafarman proposed adding a monthly quota of “citizen service” to retain eligibility for the benefit. According to Shafarman, this requirement could be met through a variety of activities ranging from “volunteering in a child or grandchild’s school, serving on a PTA or community board, training with police or firefighters to assist in emergencies, planting trees or helping to maintain neighborhood park or garden, working with a church group or nonprofit agency,” and many other activities that provide a benefit to society in exchange for the personal income benefit.
Adding a civic participation or social contribution requirement to a basic income program is not only valuable as a compromise between those who prefer a conditional versus an unconditional benefit. It also involves a fundamental shift in our cultural definition of work from a narrow “labor that produces income” perspective to a much broader “labor that produces social benefit” view. This conceptual shift will become increasingly important as intelligent machines take over more and more of the instrumental functions of society and the litmus test for personal responsibility can no longer be limited to traditional paid employment. Eventually, society will recognize that wealth created by machines is still wealth and encourage human beings to exercise their remaining evolutionary advantages of compassion, commitment, and creativity as their primary contribution to the operation of culture.
Despite the political and conceptual benefits of adding a mandatory participation component to receive a subsistence guarantee, the inclusion of this condition has still been subject to criticism for potentially adding complexity and cost to the program. Critics of the social contribution compromise maintain that it would require a additional layer of bureaucracy to oversee the activities of 200 million people in order to identify a (presumably) small minority of people who obtain the benefit without making any social contribution, as broadly and flexibly as that term is defined. Nevertheless, in my view, the political and conceptual advantages of incorporating a social contribution requirement are so significant that every
effort should be made to retain this condition while seeking to constrain additional costs and bureaucratic complexities that compromise the efficiency and viability of the program.
Opponents of a basic income guarantee have objected to the benefit on the grounds that it would undermine people’s motivation to work, nurture an idle underclass, and divide society into workers and non-workers. While this concern is sincerely expressed, there are pragmatic and psychological reasons why it wouldn’t apply to the vast number of people who receive the benefit.
On a pragmatic level, it’s important to keep in mind that the income guarantee is set at the level of subsistence. All it provides, in combination with available health care, is an assurance that everyone has a roof over their head, enough food to keep them alive, and access to basic medical care. Anything beyond that remains a matter of individual initiative and subject to the same system of competition and incentives that have operated in capitalist societies for centuries and produced the greatest expansion of wealth in human history. Metaphorically, all the rungs of the socio-economic ladder are preserved in a basic income program; everyone simply starts at rung one rather than on the floor. And this leads to the key question: What percentage of the population would be content to remain at this level and forgo any effort to earn additional money? Certainly, a small number of individuals would choose not to seek additional income and remain at a basic subsistence level, and this would be entirely up to them. However, if a mandatory participation requirement were incorporated into the system as previously suggested, even these individuals would need to document a social contribution to receive the survival benefit. They would remain part of an economic underclass, but not an idle underclass without social obligation.
Beyond the pragmatic benefits of earning money, work is linked to a powerful set of psychological needs. For most people, work provides a social identity, conveys competence and social status, and contributes to a sense of meaning and purpose. We have many naturally occurring experiments where people have won, earned, or been given more than sufficient income to live on -- lottery or contest winners; highly successful people; retirees who are financially secure: and family members who inherit money, assets or benefit from large trusts. While there are isolated examples of individuals in these groups who elect to live an idle and hedonistic life on a permanent basis, the large majority eventually pursues activities that offer a sense of identity, meaning, and purpose. There is simply no empirical evidence to support concerns that the provision of a subsistence income will destroy the incentive and human need for meaningful and life-enhancing work. The only work that will be jeopardized is work that is demeaning or exploitive, as workers whose survival is ensured will have the capacity to say no. Some have suggested that the capacity to say no, and for this word to have meaning, is the ultimate measure of liberty.
The call for a universal right to subsistence, derivative from the right to life itself, is not new. It can be found in the writings of Thomas Paine, Bertrand Russell, and Eric Fromm: in the reports of Presidential Commissions; in the speeches of left-leaning Senators such as Robert Taft and Daniel Patrick Moynihan and a presidential candidate, George McGovern; in the works of right-leaning Libertarians like Robert Theobald and Charles Murray; and in many academic papers. There have also been two basic income programs that have actually been implemented. In the 1970’s, a beautifully designed, multi-site, pilot study funded by the government found that a cash assistance program did not cause a massive withdrawal of workers from the labor force as many had predicted or feared. Across multiple rural and
urban communities located in different areas of the county, the average decline in the number of hours worked by male heads of housework that received the income guarantee was 6%. In addition, since 1982, the state of Alaska has distributed a small portion of its oil royalties to every state resident (adult or child) under the terms of the Alaska Permanent Fund Dividend. Since the Permanent Fund was established, Alaska has maintained one of the lowest rates of poverty and one of the highest rates of income equality in the country and, in 1999, over 84 percent of residents voted against repealing or curtailing the program.
Despite the range of voices that have called for a subsistence guarantee, and the encouraging results of two small-scale programs, adoption of a basic income benefit has never been seriously considered on a national scale. As previously mentioned, some of this opposition comes from inaccurate, but deeply entrenched, beliefs that a national program is financially out of reach, constitutes a handout to freeloaders (versus a benefit to everyone), and would destroy the motivation to work. In addition, as some of the commonly proposed mechanisms for funding the benefit (such as eliminating most incometransfer programs to corporations, increasing taxes on capital gains, adding a small tax on stock transactions, etc.) would disproportionately affect more affluent members of society, it is not in their interest, or the interests of the politicians whose candidacies they fund, to correct these flawed assumptions. To a large extent, the current system works fine for the financial elites.
Of course, it doesn’t work fine for the poor. But what do the people and organizations that speak for the poor have to offer, other than continuing to pour more and more money into 1960’s-style anti-poverty programs that by any honest assessment have been a failure? Of course there are well meaning people working in traditional anti-poverty programs who sincerely believe that these programs can still make a meaningful difference, and others who may acknowledge their limited effectiveness but don’t see any viable alternatives. But there are others who are no less self-serving than many of the financial elites and are simply protecting their turf and livelihoods by opposing anyone who would question their approach or propose a new way of combating poverty that they don’t control.
Thus, there is little chance that the financial elites or leaders of the current anti-poverty system will be agents of meaningful reform. That leaves the working class, students, and their parents as the most likely candidates to press for change. The anger and frustration of American workers are simmering beneath the surface: Workers are facing stagnant or depressed wages; reduced work hours; disempowered or absent unions; greater responsibility for funding their health care and pension benefits; rising costs for housing, food, energy, and education; executives who often receive salaries and benefits hundreds of times greater than they do; sometimes needing to work multiple jobs to make ends meet; and all the while fearing being displaced by automation, consolidation, the whims of a difficult supervisor, or other workers willing to accept lower wages to do their job. And now joining them in this state of anxiety and frustration are many members of the educated classes -- the students and their parents who have spent spend years and large sums of money on education and training based on the expectation that this effort would help them realize the American Dream. Now they are beginning to wonder if, after following the script that was written for them, their prospects for getting a good job, getting out of debt, owning their own home, having the means to raise a family and meeting (let alone exceeding) the living standard of their parent’s generation is really a dream. In an NBC/Wall Street Journal poll completed on August 3, 2014, 76% of parents indicated that they are not confident that their children’s generation will have a better life than they do -- an all-time high. And this expression of economic pessimism comes before the time when artificial intelligence and robotics are more fully developed and claim more and more of the cognitive and intellectual jobs that the educated classes sacrificed to obtain. Right now these forces are building, but there is still some hope, some remaining belief among workers and the educated classes
that the challenges in the labor market are cyclical rather than structural and that, with time and patience and the correct macroeconomic policies, broad based economic growth and a robust labor market will return, just as they have after every historical downturn. If, however, the working and educated classes begin to lose faith in the cyclical model and sense that the difficulties they are encountering in the labor market are structural and enduring, the simmering volcano of working America will erupt in frustration, betrayal, and rage.
In the face of ongoing social rebellion, the elites may decide that a basic income guarantee is a relatively simple and affordable way to restore stability to the social and financial system. In this case, it could be a surprisingly simple matter to enlist the support of both political parties despite the extreme level of polarization that currently exists. This is because a basic income guarantee is perfectly suited for a grand bargain between the left and the right. By supporting a basic income guarantee, the left would be able to assert that it had eliminated poverty in America, while the right would be able to state that it had dismantled the welfare state and dramatically reduced the size and complexity of government. Thus, both major parties could claim victory and the realization of long-cherished objectives by supporting the same legislation. We may need to go through troubled times, but the possibility for reaching a consensus in support of a subsistence guarantee, and thus becoming the first nation in history to achieve basic security for all while maintaining incentives for growth, may well present itself in the years to come.
Type of Society Dominant Mode of Production
Hunter-Gatherer
(200,000 BC8000 BC) Hunt Game Gather Nuts & Berries
Agrarian (8000 BC -- 1800 AD) Grow crops Raise livestock
Industrial (1800 --1980)
Post-Industrial (Early)
Displacement of Labor by Machines
None
Remaining Human Competitive Advantage
All forms
Minimal -Animals used for some jobs (e.g., plowing; hauling)
Manufacturing Animal Labor
Human Physical Labor
(Late 20th Cen.— Present Transfer of Information Moderate Intellectual Work & Some Interactive Work
Post-Industrial (Mature)
Mid-21st Century and beyond Transfer of Information Most intellectual and Interactive work
Almost all (Minimal erosion of jobs involving power or endurance-based unskilled physical labor.)
Cognitive, Creative, Interactive Work
Some Cognitive, Creative, and Interactive Work
Creative and some Social-Emotional Work
