Universal Income May Grow the Economy in the Face of Automation

With the coming work revolution wherein many low skill and repetitive jobs will be replaced by machines or software, we need to start thinking about how to address the coming crisis. Massive unemployment would spell disaster for the United States and other economies worldwide. One potential solution is known as Universal Basic Income. The concept recently became even more attractive after a new study shined a favorable light upon it.

The United States Economy Could Grow By Providing Universal Income

The idea of universal basic income is pretty simple. Every adult in the United States would be provided with a stipend regardless of employment status or socioeconomic status. In theory, it could help combat poverty and offset job losses due to technology.

However, universal basic income may also add to the economy as well. A study released by the Roosevelt Institute suggests that providing each adult in the United States with a monthly stipend of US$1000 would actually grow the economy by a whopping $2.5 trillion by the year 2025. What is even wilder is that the study suggests that the larger the basic income per individual, the larger positive impact it would have on the nation’s overall economy.

While this may sound a bit counter-intuitive at first, it makes some sense after thinking about it. If more people are further from poverty, the more goods and services they can buy. This means that tax revenue from things like sales and property tax will increase. Thus, the government receives more tax revenue, and individuals are able to increase their quality of life.

Universal basic income would likely be paid for by some sort of business or robot tax as more jobs fall victim to automation. Essentially, businesses would need to pay a premium for using automated work, but still see that premium cost less than hiring workers. That tax would help fund the basic income plan.

Always Do Your Research to Inform Your Opinions

While the Roosevelt Institute piece felt like a great big win for advocates of universal basic income, it is important to keep in mind that the Institute is left-leaning, and its findings could be subject to bias. Indeed, any studies like these should be taken with a healthy degree of skepticism. However, the research and analysis strikes me as very well done and highly empirical. It is definitely worth reading, regardless of where you stand on the universal income debate.

To me, it seems obvious that we will need to do something to address the coming technology-induced employment crisis. Indeed, we are already seeing it starting. Massive spouts of unemployment are bad news for any country, but having a proper contingency plan may mitigate their effects. I think that universal income akin to what this new study analyzed may be an eloquent answer to a very real, impending problem.

  • Low skill jobs? Doctors will lose their jobs before nurses.

  • concerndcitizen

    Universal Basic Income. Otherwise known as communism. Enjoy your new slave masters.

  • Evan Wilder

    Socialism. It’s technocratic socialism. Socialism will prevent poverty if we give everyone money, everything will go great. Pay no attention to the ghettos, the Indian reservations, and the trailer parks with the meth labs. There is no way that this can fail!

    • Johan Fajka

      and your solution is? I’m just guessing here , getting rid of black, gypsies , jews why not untill there are jut the one of you left….

      • Evan Wilder

        Love how you jumped into race. What are you implying there? That blacks, “gypsies”, Jews are disenfranchised people for your argument for your own convenience? How quaint.

        My point still stands. Universal Basic Income is technocratic socialism. The fundamentals are still there. Pay people for doing nothing BECAUSE HOW EVER WILL THESE PEOPLE SUCCEED?

        It’s not like if there civilizations that had illiterate populations had transformed into knowledge or creative populations because that was required.

        People will adapt to the economy on a peer-to-peer level, presumably with a focus on using the Internet to generate a living.

        So, unless you have a stronger counter-arguments other than, “What about niggers?”, I politely tell you to go FUCK YOURSELF.

        • Johan Fajka

          Looks like you can’t take some criticism without telling people off, that reminds me of a five year old. There are countries right now with (effective) UBI and just so happens those countries are the happiest in the world. I merely implied that your comment reeks of right wing fascism. Your solution is short sighted , “adapt to the economy on a peer to peer level”?? really ? when all jobs are taken by automated systems, and we could do that right NOW, mind you, there will be no jobs left. We have to come up with a system that in the interim takes care of the less technologically savvy unless you want to kill them all off. And even a moderately technologically savvy person will be severely outclassed by the coming quantum computers and quantum based AI.
          And to come back to your Ghetto , Indian reservation and meth labs. looks like all that capitalism has that as a result. We can be proud of what we’ve achieved in this capitalist society with people living hand to mouth and wealth being held by the smart but morally corrupt 1% (sarcasm).

          • Evan Wilder

            Nope, I just can’t just take stupid without telling you off. Also, you starting screaming at me FIRST (see previous comment of yours above).

            “UBI countries are the happiest in the world” (By what metric? Are these third-world countries that would just leap-frog its way into technological innovations or bureaucratic first-world governments that have a lot of track record for overspending funds to bankrupt programs later….)

            “Your comment reeks of right-wing fascism” (You, my enemy, need a dictionary because you have no idea what fascism is…other it being a buzzword that you don’t understand….)

            “Adapt to the economy on a peer-to-peer level” (First, the experimenters will come in, make money through automation. New economic rules will come into play with new standards that are desperately needed to address these issues. We’re going to be dealing with systems way more than simple employment because the economy is going to become much, more complicated than it is today. When you want food, people will adapt by understanding automation for people’s benefits, disregarding it and becoming the new poor, or using it for crime….there’s always a bad side to that.)

            “You want to kill (the less tech savvy)” (Boy, do you love these moral arguments. What? Too lazy for sources to support your claims.)

            “Even someone who is moderate tech-savvy can be outclasses by quantum computers and quantum computers?” (You know you’re not supposed to compete against computers. You are supposed to use them to compete against other tech and their makers. Speaking of which, are you tech-savvy?)

            “Captialism created ghettos, Indian reservation, and meth labs.” (Captialism didn’t create ghettos or bad neighborhood (or at least to the state where they are now: funded poverty, progressive government welfare did. In fact, there were many ethnic civilizations (from blacks to Italians) that were booming in 1800s and the 1900s – strictly because of captialism. You would know this if you did your fucking research, you fucking holier-than-thou pretentious asshole.) (smug face 🙂 )

          • Johan Fajka

            whatever

  • WorkHard&Prosper

    This article summarizes everything that is wrong with Democrats and Liberals. They literally have no common sense and no ability to foresee how their proposed actions will result in unintended consequences. Instead of a point-by-point rebuttal of this article’s proposals, I will just post a recent interview with Doug Casey which highlights some key points:

    Doug Casey on the World’s Biggest Revolution

    Justin’s note: South Korea just made history.

    Two weeks ago, it introduced a “robot tax.” It became the first country to adopt this policy.

    Now, to be fair, this isn’t a tax at all. But it will make it more expensive for South Korean companies to invest in technology. Under the current law, South Korean companies can deduct up to 7% of how much money they spend on automation equipment or robots. But soon they’ll only be able to deduct 2% of their investment.

    The government hopes this will encourage companies to hire workers instead of buying robots. Below, I talk to Doug Casey about this radical idea…

    Justin: Doug, what do you make of this robot tax? Should governments be discouraging companies from investing in innovation?

    Doug: It’s incredibly stupid. I’m especially surprised to see the South Koreans be the ones to take the first step in this direction.

    South Korea is one of the most technologically advanced countries in the world. It’s much more advanced on a per-capita basis than the United States or any place in Europe. Most of the countries in East Asia—most prominently Singapore, Hong Kong, Taiwan, Japan, South Korea, and most recently China—have been advancing at warp speed for decades. That’s partially because of their social ethos, but mainly because they’re very low-tax, low-regulation jurisdictions—like the US was during its golden age.

    So, it’s very disturbing to see the South Koreans moving in this direction.

    Justin: Why would they do this? And do you think other countries will follow suit?

    Doug: Why indeed? The reasons offered have to do with preventing unemployment, heading off social unrest, and garnering more tax revenue. The real reasons however, in my view, are fear of the unknown and ignorance of economics.

    There’s been a lot of talk about taxing robots. The meme is gaining traction with both the talking heads and the hoi polloi. Bill Gates is a big proponent, which further cements his status as being an idiot savant.

    What he wants to do is to not just withdraw the tax benefits for investing in robotic technology, but actually tax robots the way that a human worker would be taxed.

    The rationale behind this is that since robots could replace from 15 to 35% of all human jobs within the next ten years, something must be done to slow that trend. And generate tax revenue to put those newly unemployed people on welfare or whatnot.

    These people want to slow down the rise of the robots. And taxes will certainly do that by discouraging businesses from investing in them. But what’s even worse, Gates wants to use the income from the tax on robots to increase welfare benefits for the unemployed. Which is especially stupid, because you get the things that you encourage. And when you pay people for not working, or you make it possible for them to not work, that’s exactly what they’re going to do.

    So, it’s a very, very bad trend, promoted by Gates, and implemented by the South Koreans.

    Justin: Should the government do anything to prevent robots from taking people’s jobs?

    Doug: No, there’s absolutely nothing that the government should be doing about this.

    What would have happened if government had decided to do something about the rise of the cotton gin during the first Industrial Revolution? Or mechanical weaving machines, which unemployed millions of “cottage industry” spinners and weavers working with primitive foot-powered looms in their shacks? The Bessemer furnace, the steam engine, the railroad, and a thousand other technologies in the first industrial revolution?

    In those days, technophobes were known as Luddites; they wanted to destroy the new machines in order to save their unproductive jobs. If they’d succeeded, we’d all still be primitive benighted peasants.

    Any government interference withdraws capital from productive areas of the economy, and redirects it to some politically favored parts of the economy. Robots and artificial intelligence (AI) are the friend of the average man; they catapult the average standard of living much higher.

    Justin: So, you’re saying the government should just get out of the way?

    Doug: The government should withdraw itself not just from robots and artificial intelligence (AI), but from the economy in general. The State is, by its nature, a coercive institution. And coercion of any type should be kept to a minimum in any society. That means the State should be limited to protecting you from domestic coercion with police. Foreign coercion with an army. And facilitating the adjudication of disputes with a court system. In today’s world, however, it does none of those things effectively—but tries to do everything else.

    I find it most disturbing that even in today’s world, when much more is known about economics than ever, that people still look at government, which is a coercive force, as something that should involve itself in the economy. It’s very discouraging.

    Justin: So, what should people do if the government stays out of this? How can they prepare for the robotics age?

    Doug: There’s no question that robots and AI are going to hugely expand. Their power is increasing at the rate of Moore’s Law. In other words, the power of computing is doubling roughly every 18 to 24 months, while the cost halves. This is also true in the areas of biotech, nanotech, and genetic engineering. These technologies are going to fundamentally transform the very nature of life itself.

    In a decade or two, robots will be more intelligent, more innovative, and perhaps even more thoughtful than humans. They’re not just going to be the odd-looking mechanical beast that can perform a few parlor tricks like today. Soon, there will be not just mechanical robots, but biological robots. Who knows what will come after that.

    We’re really on the cusp of the biggest revolution in world history. I look forward to it. It will cure disease and old age. The avalanche of new wealth that will be created will effectively eliminate poverty. Mankind’s wildest dreams and ambitions can be realized. People who are trying to slow this process down are worse than stupid—they’re criminal.

    So, what should you do about it?

    The first thing you have to remember is that there’s no need for unemployment in the world. Everybody—myself, you, and all the other seven billion people in the world—have an unlimited desire for goods and services.

    So, theoretically, anybody could be able to work 24 hours a day, seven days a week, providing goods and services that other people want. The presence of robots will just make that easier, more efficient and more profitable.

    And there are always going to be things that people can do better than robots. Point number one. So, there’s no need to be unemployed.

    Justin: What’s the other reason?

    Doug: Point number two is that the intelligence of computers and robots is increasing exponentially.

    This will liberate people to do things—most of which we haven’t even thought of yet—that they’ll still be able to do better than machines. Years ago, IBM came up with the slogan “Machines should work, people should think.” The world is moving towards that ideal at the speed of Moore’s Law—as long as government, and busybodies like Gates, don’t slow down progress.

    Not so long ago you were working 12 hours a day, loading 16 tons of coal in an underground coal mine, just to keep body and soul together; by the time you got home, you were just too tired and didn’t have time to do any creative, productive work. Unless the trend indicated by Bill Gates and the South Koreans continues, in a generation we’ll think of today’s world as being almost as oppressive and backward. Much of the work we do today is “dog work.” Good riddance to it.

    I believe the trend to robotics and AI is a very favorable thing from both a humanist and a spiritual point of view. It’s immensely favorable from an economic point of view as well.

    The problem—if there is one—is that government will try to use these robots to control the populace. And the military will be the biggest user of these things everywhere.

    So, it’s very dangerous. The movie The Terminator will be much more predictive than previously imagined.

    Justin: That’s certainly a threat to consider. But what about the opportunity here? Have you personally invested in any robotics or AI companies?

    Doug: No, I haven’t, because although most of the reading that I do is about either science or history, and I’ve got a reasonable theoretical grip on these things, I don’t feel like I have enough personal tactical competence in these areas to decide which company’s going to be a winner. It’s something I might look into more, exactly which companies are actively involved in these areas. Because it might be an excellent place to place some bets. Everybody wants to find the next Apple, Google, or Microsoft.

    Justin: Absolutely. A lot of money is going to be made in that space. So, let us know if you find any investments. Thanks for taking the time to speak with me today, Doug.

    Doug: My pleasure.

  • loganspappy

    The faster economics replaces biology with machines, the better. UBI just means more people will die more suddenly when it all comes falling apart.

  • dave

    Then we will have to have a robot tax. Where does that end? It would have to be a bean counter to evaluate your level of automation. As an example. Since you have a word processor and a printer how many typists have you put out of work? ( there are so many examples on this by the way ) Now we will have to meter your use of these things and apply a tax to make up for the lost taxes on the typist….

    Next will be an AI tax. If you are using an AI then it is displacing a human by how good it is to a percentage and now you will pay an extra tax on that.

  • Chris Webb

    Please stick to writing about cryptocurrencies because you are dangerously ignorant on economics. UBI’s are pure socialism and if you think there’s any positive aspects of socialism, you’re a fool, literally.

  • Michael Dekle

    I’ve been thinking about this issue now for quite some time. The idea of UBI comes as no surprise to me as the issue of technological unemployment was something that people like Thorstien Veblen and Karl Marx were speaking of quite a long time ago. Undoubtedly, these concepts come from a left leaning bias, but as far as thinkers go I place my bets with them. The often short, and underthought bias from elsewhere comes from a serious lack of thought.
    The one thing that never seems to be mentioned in these discussions is “inflation”. It’s as if people don’t seem to think it exists. I mean does it? Economists still have trouble with it. But it’s to my understanding that when the money supply increases it reduces the value of that currency. And therefore the purchasing power of the holder of that currency. Wouldn’t that be a problem with having a UBI?
    Personally, and this is just some out there thinking; I think that if we are to see any real improvements we should think about how to make goods and services more available or abundant, irrespective of currency. Like the air we breath every moment of every day, no one is paying to breath it, why because it’s massively abundant. In the Star Trek universe the one thing that made poverty obsolete is replicating technology. If we could create that then maybe this future without poverty could be realizable. Check out the sticky fingers debate regarding replicating tech. And the name Drexler. We should put our resources into making resources more abundant, then less money would mean more access, and maybe eventually no money.