Free money for everyone

Yesterday I wrote about the worst development I have seen in tech for some time.

Zayd Enam, CEO of Cresta AI, hailed his new automation software a success because it allowed a worker to keep taking customer queries while suffering from a nose bleed.

As I said, it highlights a growing problem anthropologist David Graeber wrote about in 2013. The phenomenon of bullshit jobs.

But it actually does more than this. Because, whether people are working in “bullshit jobs” or not. The chances are their jobs will be automated away faster than many people realise.

McKinsey calculates that up to one fifth of the global workforce will lose their jobs to automation by 2030. That’s only 12 years away.

And in richer countries, those figures are even higher. It says one third of workers in Germany and the US will need to retrain.

However, if we follow the trend we’ve seen in the last century, those jobs won’t disappear. They will simply transform into pointless administrative and bureaucratic roles.

As the Guardian wrote this week:

According to the World Economic Forum (WEF), about 133m jobs globally could be created with the help of rapid technological advances in the workplace over the next decade, compared with 75m that could be displaced.

The findings will go some way towards assuaging fears that the rise of the robot economy could cost millions of workers their jobs, with widespread ramifications for pay, living standards and inequality across developed nations.

It does make you question the argument for automation, when it will create more work than it completes. Where’s the logic in that?

As John Maynard Keynes is often quoted as saying, by 2030 there should be no need to work more than 15 hours per week.

“I draw the conclusion that, assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years,” he said in his famous 1930 essay.

Keynes based his three-day work week assumption on us being around eight times better off today than we were in 1930, which we are.

However, as Graeber argued:

Rather than allowing a massive reduction of working hours to free the world’s population to pursue their own projects, pleasures, visions, and ideas, we have seen the ballooning of not even so much of the ‘service’ sector as of the administrative sector, up to and including the creation of whole new industries like financial services or telemarketing, or the unprecedented expansion of sectors like corporate law, academic and health administration, human resources, and public relations.

While corporations may engage in ruthless downsizing, the layoffs and speed-ups invariably fall on that class of people who are actually making, moving, fixing and maintaining things; through some strange alchemy no one can quite explain, the number of salaried paper-pushers ultimately seems to expand, and more and more employees find themselves, not unlike Soviet workers actually, working 40 or even 50 hour weeks on paper, but effectively working 15 hours just as Keynes predicted, since the rest of their time is spent organizing or attending motivational seminars, updating their facebook profiles or downloading TV box-sets.

Is this a sustainable situation, and which argument is more accurate?

Will automation double decimate jobs, or will it simply double them?

And if it does double them, and lead to even more pointless paper-pushing roles, will that not eventually void people of any meaning in their careers?

Either way, it’s not looking too great. Which is why, in any article or essay on this topic, you’ll inevitably find a segment on Universal Basic Income (UBI)

Some hail it as the saviour of our future society, and some dismiss it as a pipe dream. But what exactly is it?

Universal basic income explained

From Wikipedia:

A universal basic income is a type of program in which citizens (or permanent residents) of a country may receive a regular sum of money from a source such as the government.

A pure or unconditional basic income has no means test, but unlike Social Security in the United States it is distributed automatically to all citizens without a requirement to notify changes in the citizen’s financial status.

An unconditional income that is sufficient to meet a person’s basic needs (at or above the poverty line), is called full basic income, while if it is less than that amount, it is called partial.

How would it all get paid for?

Here’s what Robert Jamerson, who wrote The Case for a Basic Income,

Mainly, it would come from existing welfare schemes, because many of them will be replaced by Basic Income.

Secondly, it would come from the fact that Basic Income would be replacing most Personal Tax Allowances. Personal Tax Allowances allow workers to earn a basic amount of income without paying income tax. Basic Income, however, would be providing a basic, tax-free income to everyone – so these tax allowances would no longer be needed. This leads to very significantly increased tax revenues, without any need to raise actual tax rates.

Thirdly, it would come from significant savings in government bureaucracy – because we would no longer need armies of government bureaucrats to means-test people to see if they qualify for welfare payments.

And how much would that payment be?

We can get a good idea from entrepreneur and 2020 US presidential hopeful, Andrew Yang.

He believes (in the US at least) $1,000 per month is the right amount. Here’s what he said about it in March:

It is impossible to overstate the positive impact of $1k a month on households around the country. It would take people from a constant mindset of scarcity to a mindset of assured survival and possibility. It would transform our society in myriad positive ways by taking the boot off of people’s throats

I’ve worked with hundreds of entrepreneurs and most have an incredible mindset of abundance and possibility. A UBI would be the greatest catalyst for arts, entrepreneurship and creativity that we have ever seen.

Digging a little deeper into Yang’s $1,000 per month idea, CNBC writes:

First, $1,000 a month was recommended by former Service Employees International Union president Andy Stern in his book, “Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream.” And $12,000 a year brings an individual close to the U.S. poverty line, says Yang, which is $12,752 per person per year for those under the age of 65, according to the United States Census Bureau. Plus, a $1,000-a-month UBI has been studied and modeled by The Roosevelt Institute, says Yang.

So the idea is: everyone gets enough money to live.

If they want more money to buy expensive things and go on holiday, they can, and hopefully will still, work.

But whether their job pays them £5,000 a year or £500,000, they will still get the UBI payments.

Graeber and others argue this would massively cut down on pointless, meaningless jobs and leave people free to pursue their passions. Or to spend time inventing or creating art or simply enjoying more free time with their families.

Plus, if 20% of jobs are to be automated away in the next 12 years alone, we may not have much of a choice.

The detractors of UBI – of which there are many – argue that it could lead to hyperinflation. That it is too costly to implement and that maybe people should have to work mundane jobs.

People with too much time on their hands inevitably cause trouble. Not everyone would set up a bespoke furniture workshop, or take up painting or sculpture or entrepreneurship.

Many people would simply spend the money on booze, drugs and anti-social behaviour.

At least, that’s the argument.

But where does the truth lie?

In the last few years a large number of UBI trials have sprung up around the world. Their intention is to answer this exact question.

Because it’s all well and good theorising about it. But until we have real evidence, it’s all just that – a theory.

Tomorrow, I’ll be looking at how these experiments have gone and what we can learn from them.

Until then,

Harry Hamburg
Editor, Exponential Investor

PS let me know what you think of UBI and everything else I’ve been writing about this week on harry@southbankresearch.com.

Category: Technology

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