The Future of Work
A Universal Basic Income to Accommodate Changing Demands for Human Labor in the Context of the Fourth Industrial Revolution
2 From Hunters & Gatherers to Doctors & Lawyers: The Development of Mechanical Muscles
3 The Fourth Industrial Revolution, or Why This Time Is Different
3.1 What’s the Fourth Industrial Revolution?
3.2 Exponential Technological Development
3.3 The Machine Learning Revolution
3.4 The Economics of Automation — Why Robots Don’t Need to Be Smart to Replace Your Job
3.5 Automation in Low-Skill Jobs
3.6 Automation in White-Collar Jobs
3.7 Automation in Professional Jobs
3.8 The Jobs That Will Be Gained: Why Creativity Won’t Save Us
3.9 The Jobs That Will Be Lost
3.10 The Case for Skepticism: Stagnating Productivity
3.11 The Ultimate Human Effects of Automation
4 The Alarming State of Developed Economies: The Omnipresent Effects of Globalization and Automation
4.1 The Transformational Effects of Globalization and Automation
4.2 Labor’s Losses: The Erosion of The Middle Class
4.3 The Trump Effect: The Political Consequences of Failure
5 The Vision of a Universal Basic Income
5.1 The Idea
5.2 A New Paradigm in the Context of the Fourth Industrial Revolution
5.3 The Liberal Case for a Basic Income
5.4 The Conservative-Libertarian Case for a Basic Income
5.5 What Would People Do With a Basic Income?
5.6 Could A Basic Income Be Financed?
5.7 The Case Against a Basic Income
Humanity may be heading towards massive upheaval, caused by the Fourth Industrial Revolution — or, simply put, the “robot revolution.” Massive advancements in computer technology over the past decades have spurred ever-increasing capability in automating previously human jobs. While we used to only be able to build “mechanical muscles,” we’re now starting to build “mechanical minds”: computers than can think and do mental labor. Some studies have estimated that this could lead to 50% of human labor in developed countries becoming redundant. And as inequality skyrockets, many argue we’re already seeing the beginning of these effects today.
If these predictions pass the test of time, that would mean a fundamental reshuffling of our society. How will we distribute wealth? What will people do all day? Contemporary social systems — even our democratic systems themselves — just aren’t equipped for such a new world.
Many experts on the Fourth Industrial Revolution propose a new political vision: a universal basic income. In this concept, each citizen receives a fixed amount of money, e.g. $1000, from the government each month — without any precondition. They argue that such a radical rethink is necessary to ensure prosperity for all in an automated age and reinvigorate the social ladders of capitalism.
Let’s take a look at the future of work. What technological innovation can we really expect? How will that affect jobs and impact our societal fabric? Can a universal basic income really accommodate changing demands for human labor?
2. From Hunters & Gatherers to Doctors & Lawyers: The Development of Mechanical Muscles
This isn’t the first time humanity has built technology that radically changed our society. Not that long ago, almost all humans were hunters and gatherers. They worked day in and day out just to collect food to eat. But humans are smart: they created tools to make their lives easier, from domesticated crops to plows to tractors. Today, less than 1% of people work in agriculture, down from nearly everybody just a couple of centuries ago.¹ But it’s not just food: we’ve built sticks and hammers, cars and excavators, power plants and the internet, all of them tools to help reduce the necessity for physical labor.
As C. G. P. Grey argues, we’ve “spent the last several thousand years” building mechanical muscles, “stronger, more reliable, and more tireless than human muscles every could be.”² That freed people to specialize, many of them switching from jobs that required physical labor to jobs requiring mental labor. Many economists argue that by raising productivity, mechanical muscles economized the use of labor, thereby increasing incomes.³ Higher incomes “generate[d] demand for new products and services,” which in turn “create[d] new jobs for displaced workers.”⁴ That’s how standards of living rose and economies grew, leaving everybody better off.⁵
The labor force has always been shaped by technology. We went from hunters and gatherers to farmers, from farmers to factory workers, and now, increasingly, to service workers.⁶ As the name implies, the Fourth Industrial Revolution is in fact only the fourth Industrial Revolution. The economist Robert Gordon defines these phases as follows:
[T]he First Industrial Revolution (1750–1830) focused on coal, steam engines, railroads and textiles; the Second Industrial Revolution (1870–1900) entailed developments in electricity, internal combustion engines, modern communications, entertainment, petroleum/hydro-carbons and chemicals; and the Third Industrial Revolution (1960 to the present) has revolved around computing and telecommunications.⁷
In each of these fundamental transitions, the fear of mass technological automation was pervasive. Yet in each of these Industrial Revolutions “the total number of jobs has always increased.”⁸
In 1930, John Maynard Keynes wrote an essay in which he warned of a “new disease”: “technological unemployment … due to our discovery of means of economi[z]ing the use of [labor] outrunning the pace at which we can find new uses for [labor].”⁹ In 1964, “a committee of scientists and social activists sent an open letter to President Lyndon B. Johnson arguing that ‘the cybernation revolution’ would create ‘a separate nation of the poor, the unskilled, the jobless,’ who would be unable either to find work or to afford life’s necessities.”¹⁰ Both of these warnings did not materialize.
Another prominent example is the uprising of the so-called “Luddites”. During the Second Industrial Revolution, a band of British brutes smashed “stocking frames” — textile-making machines — “fearing that the machines would take hand-weavers out of work.”¹¹ “Parliament responded by declaring ‘frame breaking’ a capital offense,” yet the machines kept coming.¹² Nowadays, we know that it was exactly this displacement, first of knitters, then farmers, then machinists, that produced the world as we know it today. Nevertheless, the Luddite’s protest does illuminate an oft-forgotten aspect to past industrial revolutions: even if ultimately, they created more jobs, the transition was extraordinarily difficult.
Joel Mokyr, an economic historian at Northwestern University in Illinois, notes that in the first century of the First Industrial Revolution (1750–1850) “life did not improve all that much.”¹³ Real growth (adjusted for inflation) of British wages was imperceptible from 1770 to 1830 “because productivity growth was restricted to a few industries.”¹⁴ Only in the late 19th century, when productivity gains finally spread across society, did wages catch up (see figure 1)
Moreover, each industrial revolution also required governments to pioneer new social systems in order to engender the progress we know today. A great example is the spread of access to education. Before the 1800s, education was only available to select few and mostly seen as a luxury. Projects to establish universal primary and later secondary education were decried as ridiculous, unnecessary, and too expensive¹⁵ (much like a universal basic income today). However, as the First Industrial Revolution arrived, education became necessary: the British government made it partially mandatory in 1833.¹⁶ As the Second Industrial Revolution upended society once again, secondary education became necessary: in 1902, the British government established a system of public secondary schools.¹⁷ Even though establishing universal education back then was radical in idea and implementation, it was only due to these reforms that the First and Second Industrial Revolutions were ultimately a success.
And yet, despite these massive technological changes, despite these massive societal upheavals, each industrial revolution ultimately created more jobs, grew the economy, and created the advanced world we cherish today. Skeptics describe this phenomenon as the “Luddite’s fallacy”: in every technological revolution before, many feared massive job displacement, but every time they were wrong.¹⁸
So why would it be any different this time around?
3. The Fourth Industrial Revolution, or Why This Time Is Different
3.1. What’s the Fourth Industrial Revolution?
We’re at the brink of an unprecedented technological revolution — the Fourth Industrial Revolution — that will transform the basic fabric of society. According to Klaus Schwab, the Founder and Chairman of the World Economic Forum, “in its scale, scope, and complexity, [this] transformation will be unlike anything humankind has experienced before.“¹⁹
Why? Unlike previous industrial revolutions, this one is not about building “mechanical muscles,” but building “mechanical minds.”²⁰ Robots are moving from special-purpose to general-purpose, and are becoming capable of human-like decision-making. When mechanical muscles arrived, humans generally went from physical labor to mental labor. Now, “mechanical minds” are poised to take over mental labor, threatening to massively displace jobs — by some estimates, up to 47% of jobs in the next decade.²¹
While the Fourth Industrial Revolution builds on the Third Industrial Revolution — the digital revolution — the Fourth represents more than the Third’s prolongation. Instead, it fuses technologies, “blurring the lines between the physical, digital, and biological spheres,” with so-called artificial intelligence at its center.²² Mr. Schwab elaborates that the Fourth Industrial Revolution is characterized by its velocity, scope, and systems impact:²³
- Velocity: This technological revolution is happening at an exponential rather than a linear pace (see chapter 3.2).²⁴
- Scope: The Fourth Industrial Revolution “is disrupting every industry” in the developed world.²⁵ It cuts across every section of the economy, from baristas to doctors to teachers.²⁶
- Systems impact: Ultimately, it will demand an unprecedented transformation “of entire systems of production, management, and governance.”²⁷
This chapter will examine these technological developments, their near-term and future potential, as well as their impact on our society.
3.2. Exponential Technological Development
When you take a look around you, you might see some amazing technology: smartphones, computers, the internet, cars, coffee machines. But surely that couldn’t replace half of all human labor? It’s hard to fathom such a development.
That’s because, fundamentally, our human mind thinks linearly:
When we imagine the progress of the next 30 years, we look back to the progress of the previous 30 as an indicator of how much will likely happen. When we think about the extent to which the world will change in the 21st century, we just take the 20th century progress and add it to the year 2000.²⁸
However, technology advances exponentially.
Human progress accelerates as time passes — that’s what futurist Ray Kurzweil calls the Law of Accelerating Returns.²⁹ In essence, “more advanced societies have the ability to progress at a faster rate than less advanced societies — because they’re more advanced.”³⁰ Think about it: you can much more easily design a new smartphone if you’ve already invented a computer. It’s much easier to build a computer if you’ve already invented a hammer. It’s much easier to build a hammer if you’ve already invented steel mining technologies.
We’re advancing technology — and society, for that matter — at an exponentially quicker rate today than at any time in the past. You can’t compare the progress we made from 12,000 BC to 11,750 BC to the progress we’ve made from 1750 to 2000. Arguably, the progress we made from 12,000 BC to 1750 BC — domesticated agriculture, cities, the concept of living together in a civilization — is comparable to the progress made from 1750 BC to today — engines, machines, medicine, the internet, computers, nuclear weapons, and so much more. By extrapolating from historical trends, futurists like Kurzweil estimate that the progress we make in the 21st century might be 1000 times the progress of the 20th century.³¹
This concept of exponential disruption has been especially relevant since the invention of the microchip. In 1961, the co-founder of Intel, Gordon Moore, made the prediction that “every year[,] we’d double the number of transistors that could fit on a single chip of silicon so you’d get twice as much computing power for only slightly more money.”³² While he later revised that estimate to two years, and we’ve seen some difficulties recently, this prediction has essentially held true. It’s a remarkable example of exponential progress: in comparison to Intel’s first chip in 1971, “Intel’s latest chip offers 3,500 times more performance, is 90,000 times more energy efficient and about 60,000 times lower cost.”³³ That’s as if the 1971 Volkswagen Beetle would now only cost 4 cents, drive 300,000 miles per hour, and offer 2 million miles per gallon.³⁴ At this pace, we’ll be able to buy a microchip for $1000 in 2025 that has the same computing power as the human brain — even though current $1000 microchips only have one thousandth of the power of the human brain.³⁵
Compounded, these effects lead most conventional thinkers to significantly underestimate future technological progress.
3.3. The Machine Learning Revolution
Underlying the Fourth Industrial Revolution is so-called “artificial intelligence”: in essence, “mechanical minds.” In the past few years, we’ve seen a colossal paradigm shift in how we approach artificial intelligence: instead of programming computers to do a specific task, we’re now programming computers to learn how to do a specific task.³⁶ By leveraging advancements in neuroscience, computer scientists have developed so-called machine learning.³⁷
Generally, there are three types of machine learning:
- In supervised machine learning, algorithms analyze a training data set with example inputs and corresponding outputs. Then, they try to generalize a model for the output based on an arbitrary input. Analogous to this technology would be a child learning how to talk by watching other humans talk.³⁸
- In unsupervised machine learning, algorithms analyze a large data set and attempt to categorize it or infer information, without the “supervision” of example inputs and outputs. Analogous to this technology would be a child learning about calculus on the basis of his existing math skills.³⁹
- In reinforcement learning, an existing model is tested. This model is rewarded or punished based on the accuracy or success of the output of the algorithm. The algorithm then adjusts accordingly, tests again, and the cycle repeats. Analogous to this technology would be a child learning to ride a bicycle by repeatedly trying slightly different techniques until he gets it right.⁴⁰
The most prominent new invention in this machine learning revolution has been so-called deep learning, a type of supervised machine learning. Deep learning employs deep neural networks, which are inspired by and approximately simulate the human cerebral cortex.⁴¹
The foundational unit of a neural network is a neuron.⁴² The neurons receives a certain set of inputs, each with a specific weight. It combines the inputs, applies a certain function on them, and then transmits its output to other neurons.⁴³ The actual neural network emerges from the connections of individual neurons to each other.⁴⁴ In figure 2, you can see an example of how this works: each input is connected to each neuron in the first hidden layer. A deep neural network is characterized by myriad hidden layers, who can either be all connected with each other or only selectively connected (such as in a convolutional neural network).⁴⁵ The neurons of the final hidden layer are then all connected to each of the outputs.⁴⁶
The example inputs and outputs are used to “train” the neural network. In this “training process,” the optimal weights for the connections between the neurons are found.⁴⁷
The effects of these new machine learning technologies has been nothing short of revolutionary. Tasks that seem simple for human beings, such as recognizing handwriting, classifying images, or understanding speech, are near impossible to solve by primitively programming an algorithm to follow specific rules. However, by emulating the learnings functions of the human mind, computers are now starting to be able to solve tasks that were previously thought to be exclusive to human intelligence.
This machine learning revolution enables a “new kind of automation”: general purpose automation — robots that can learn on their own, thereby capable of solving a wide variety of tasks, even ones that require a flexible interaction with the world around them.⁴⁸ A great example of this is Baxter, an attempt at a general purpose manufacturing robot.⁴⁹ He costs less than the average annual salary of the human worker, and instead of needing expensive programming for every new task, he can just learn a task by watching you do it.⁵⁰
That stands in stark contrast to the kind of automation we’ve seen previously: large, expensive, custom-built, special-purpose industrial robots that require skilled operators and technicians, such as the ones initially prevalent in car factories.⁵¹ These robots are only “cost-effective in narrow situations,” as they can’t easily adapt and are ignorant to everything but their own very specific task.⁵²
This transition from special-purpose to general-purpose automation is key to understanding the disruptive potential of the Fourth Industrial Revolution. Think of computers: the real revolution came not from the highly-custom, highly-expensive early models, but when computers became cheap, general-purpose, and eventually slipped into all of our pockets.⁵³ So it will be for automation.
3.4. The Economics of Automation — Why Robots Don’t Need to Be Smart to Replace Your Job
We’ve already seen how relatively “dumb” robots can replace jobs. In new supermarkets, 20 retail salespeople have given way to one worker overseeing 20 robot cashiers — simple scanning machines with touchscreens. This example highlights the importance of “process reeingeering”: in order to replace jobs, robots don’t need be as smart as humans.⁵⁴ Each job can usually be broken down into multiple routine steps that machines are becoming capable of, and a human overseer can be in charge of the rare non-routine instances.
Moreover, even if robots are slow and clumsy, they can replace jobs: a robot a tenth the speed but a hundredth the price of its human competition is still ten times as economical. After its purchase price, a robot only costs “pennies worth of electricity”; in comparison, human labor costs minimum wage.⁵⁵ In addition, a robot never sleeps, never needs a vacation, never gets distracted, never tires, and can communicate at near light-speed. These inherent advantages often allow robots to be more accurate than humans.⁵⁶
3.5. Automation in Low-Skill Jobs
As mentioned earlier, the Fourth Industrial Revolution is unprecedented in its scope; it pervades every industry. Stanford professor Jerry Kaplan argues that automation is now “blind to the color of your collar.”⁵⁷ This paper will highlight prominent examples of automation in low-skill, white-collar, and professional jobs, as well as quantitatively evaluate job displacement.
Low-skill jobs usually involve physical and/or mental labor that doesn’t require a higher education — technicians, factory workers, construction workers, taxi drivers, retail salespeople and more. Since these jobs are often highly routine, or can be easily broken up into routine parts, they’ve been most visibly threatened by automation in the past few years.
First, take a look at manufacturing. In the recent American Presidential campaign, much was said about free trade deals, such as NAFTA, and jobs “going to Mexico” or “going to China.” It’s true that there have been massive job losses in manufacturing, such as in the steel industry, which lost “400,000 people, 75 percent of its work force, between 1962 and 2005.”⁵⁸ However, a study by Allan Collard-Wexler of Duke and Jan De Loecker of Princeton last year found that steel shipments in America hadn’t actually declined.⁵⁹ Why? It wasn’t that companies weren’t producing less steel in the United States, just that they were employing machines instead of humans.⁶⁰ Lawrence Katz, an economics professor at Harvard, explains that similar effects can be seen across the manufacturing industry.⁶¹ While globalization did account for about 13% of recent job losses, according to an analysis by Ball State University, the rest stemmed from increased productivity due to automation.⁶² As a result, just between 2000 and 2010, approximately 6 million American workers lost their jobs in manufacturing.⁶³
Automation in manufacturing, however, is still rapidly expanding. Foxconn, the Taiwanese giant responsible for most of the production of Apple’s iPhone, has just announced a three-phase plan⁶⁴ to automate the vast majority of its 1.2 million people workforce:⁶⁵
The first phase of Foxconn’s automation plans involve replacing the work that is either dangerous or involves repetitious labor humans are unwilling to do. The second phase involves improving efficiency by streamlining production lines to reduce the number of excess robots in use. The third and final phase involves automating entire factories, ‘with only a minimal number of workers assigned for production, logistics, testing, and inspection processes,’ according to [the general manager of Foxconn’s automation committee,] Jia-peng.⁶⁶
Experts observe similar trends in automobile production. For example, the upstart electric car company Tesla is planning to produce its new Model 3 almost entirely by robots — so much so that the company’s engineering effort has shifted from engineering the machine (the care) to engineering the “machine that makes the machine.” ⁶⁷
Speaking of automobiles: self-driving cars aren’t just coming, but they’re here. By installing cameras and sensors, utilizing detailed map data, and training complex machine learning models, multiple tech companies have developed nearly production-ready autonomous vehicles. Google’s car has driven millions of miles up and down the California coast without human intervention. Tesla’s cars can already drive themselves on the highway with its “Autopilot” technology, and are shipped with the necessary sensors to become fully autonomous later in 2017 via a software update.⁶⁸
Autonomous vehicles have enormous positive potential: 40,000 people die each year from car vehicles in America alone, and the vast majority of those are due to human error.⁶⁹ Even if they’re not perfect, just better, self-driving cars could prevent many of these accidents — in fact, Tesla cars are experiencing 40% fewer accidents since the introduction of the autopilot technology.⁷⁰ Moreover, as cars spend approximately 95% of the time idle, entire cityscapes could be redesigned once self-driving cars reach market saturation.⁷¹
However, the job displacement that this technology alone could cause can hardly be understated. About 3.7 million people work in driving jobs in the United States alone — bus drivers, taxi drivers, truck drivers, and more.⁷² President Obama’s White House estimated that in just a couple of years, autonomous vehicles could replace up to 3.1 million of those jobs.⁷³ That alone would account for a 50% rise in current unemployment.⁷⁴
3.6. Automation in White-Collar Jobs
Robots are also poised to replace white-collar jobs. These are jobs that usually involve sitting at desk and working at a computer or with paperwork.⁷⁵ C. G. P. Grey elucidates that because white-collar work is more expensive and more numerous, the economic incentive to automate it is even greater than low-skilled work.⁷⁶ Moreover, robots can more easily navigate the mostly-digital sphere of white-collar work than the mostly-physical sphere of low-skill work.
For example, the stock market, once a human endeavor, has been largely taken over by robots; electronic trading now accounts for 79% of the total trading volume in the U.S.⁷⁷ The New York stock exchange, once bustling with traders doing their day jobs, has now become mainly a TV set.⁷⁸ Furthermore, “with no practical limit to the amount of company and industry data that can be considered,” machine financial analysts are easily outcompeting their human counterparts.⁷⁹
Voice dictation systems, once ridiculously inaccurate e.g. in the first iterations of Apple’s Siri, are now maturing: Microsoft’s systems have even reached parity with humans at transcribing speech.⁸⁰ IBM’s Watson was able to beat the best humans at Jeopardy!, a quiz show featuring complex natural language knowledge questions, in 2011. This technology could make many secretaries, office clerks, and assistants redundant.
Even seemingly creative fields aren’t immune to the Fourth Industrial Revolution. The natural language software firm Persado can create online marketing “wording that will have the necessary emotional pull, with the ability to test thousands of permutations to find the best performing versions.”⁸¹
There’s a good chance you read a news story written by robot recently. As Klint Finley explains, the “Associated Press uses software to generate news stories on corporate earnings reports[,] Fox auto-generates some sports recaps that appear on its Big Ten Network site[, and] Yahoo uses similar technology to create fantasy sports reports custom-made for each of its users.”⁸² In fact, these automated writers at the Associated Press logged fewer errors in producing earnings reports than the “human-produced equivalents from years past.”⁸³ Similar technologies are now freely available, and any company can automate writing everything from quarterly reports to company updates.⁸⁴
The artificial intelligence startup MetaMind, recently acquired by Salesforce, has combined “natural-language and image-recognition networks into a single-system,” allowing it to answer questions about images.⁸⁵ This technology could ultimately be used to automate customer-service chat bots or call-centers.⁸⁶
The possibilities here are endless: robots can sift through paperwork, read, and process knowledge magnitudes more efficiently than humans. Think only of search engines, spam filters, and credit card fraud detection, all of which tasks software robots are so much better in than humans.⁸⁷ Now that mechanical minds are becoming capable of decision-making, the applications of automation in the white-collar sector appear nearly endless.
3.7. Automation in Professional Jobs
Even though they often require high-skill, cognitive work, professional jobs are at risk of automation as well.
For example, take a look at physicians. Do you know Watson? That’s the artificial intelligence technology IBM has been feverishly working on. This mechanical mind is slowly becoming a better doctor than humans ever could be. Watson can instantly access a vast array of medical knowledge, keep up to date on the latest medical research, and learn from the experiences of millions of patients.⁸⁸
According to Dom Galeon, it’s already become better at diagnosing cancer than humans:
Human experts at the University of North Carolina School of Medicine tested Watson by having the AI analyze 1,000 cancer diagnoses. In 99 percent of the cases, Watson was able to recommend treatment plans that matched actual suggestions from oncologists. Not only that, but because it can read and digest thousands of documents in minutes, Watson found treatment options human doctors missed in 30 percent of the cases. The AI’s processing power allowed it to take into account all of the research papers or clinical trials that the human oncologists might not have read at the time of diagnosis.⁸⁹
And Watson won’t just stop there. IBM is investing billions of dollars in its medical technology, and it’s just one of many players.⁹⁰
Sure, no contemporary computer system could replace an entire doctor, but even today’s technology is making them much less in demand already: “[t]here are more monthly visits to the WebMD network, a collection of health websites, than to all the doctors in the United States.”⁹¹
Similar analysis could be applied to lawyers. Most of their work doesn’t actually revolve around trials and defending clients in court, but predicting the outcomes of legal disputes or wading through paperwork in so-called “discovery.” Computer robots can wade through documents faster, cheaper, and more reliably than humans.⁹² Predicting the outcomes of most trials is also within reach of new artificial intelligence systems.⁹³ Moreover, entire new legal paradigms can displace lawyers. For example, 60 million disagreements among eBay traders — more than “three times the number of lawsuits filed each year in the entire U.S. court system” — are resolved via “online dispute resolution” rather than “lawyers and judges.”⁹⁴
Startups, such as Smacc, are building complex systems to automate accounting for most businesses.⁹⁵ Already, the “U.S. tax authorities in 2014 received electronic tax returns from almost 50 million people who had relied on online tax-preparation software rather than human tax professionals.”⁹⁶
Evidently, doctors, lawyers, and accountants — and many more professional jobs — will face massive technological displacement. The relentless wave of automation won’t even spare them.
3.8. The Jobs That Will Be Gained: Why Creativity Won’t Save Us
Many historians and economists are skeptical of the apocalyptic job displacement scenarios most technologists outline. They point to how previous industrial revolutions have always created new jobs and allowed humans to move on to more complex work (see chapter 2). David Autor, an economist at the Massachusetts Institute of Technology, argues that automating “a particular task, so that it can be done more quickly or cheaply, increases the demand for human workers to do the other tasks around it that have not been automated.”⁹⁷ For example, some point to the slight increase of bank tellers after the introduction of ATMs, or the slight increase in the number of legal clerks after the introduction of some robots capable of legal discovery.⁹⁸ James Besen, an economist at the Boston University Law School, argues that “rather than destroying jobs, automation redefines them, and in ways that reduce[s] costs and boost[s] demand.”⁹⁹
However, this contention ignores the objective technological facts of the Fourth Industrial Revolution. Once mechanical minds reach a certain level — or rather once they are adopted across the economy — there won’t be many tasks left that only humans can do. When previous industrial revolutions and their mechanical muscles displaced physical laborers, humans moved on to mental labor. When the Fourth Industrial Revolution displaces mental labor with mechanical minds, to where will humans move on to? Sure, some automation may create new economic demand, which in turn requires new human work. But this new labor too will soon be automated — for example, an Oxford study observed that “[e]ven the work of software engineers may soon largely be computeri[z]able.”¹⁰⁰ Especially considering the exponential progress of technology, the question for most work seems to be rather when, not if, they are automated.
Others argue that we will become a society based on creativity — a society of artisans, poets, writers, and composers. Yet this theory is fundamentally flawed: artists depend on popularity. A musician can only earn money if many people attend his concerts. A poet can only earn money if many people read his works. An entertainer can only earn money if many people watch his shows. The fundamental truth about creative work is that there is limited economic value it can provide. Indeed, even creativity might be susceptible to automation: new robots can compose music that listeners can’t distinguish from human composed music.¹⁰¹
However, the “demise of the formal economy could free many would-be artists, writers, and craftspeople to dedicate their time to creative interests.”¹⁰² Already, people upload “more than 400,000 hours of YouTube videos and 350 million new Facebook photos every day.”¹⁰³ Creativity won’t create jobs; it’ll just be an occupation for the unemployable.¹⁰⁴
The simple fact is that computer technology progresses exponentially, while, according to economic historian Robert Skidelsky, job complexity grows less-than-exponentially. In addition, there is ultimately a firm limit to human skills.
The facts about today’s jobs support this conclusion:
Nine out of 10 workers today are in occupations that existed 100 years ago, and just 5 percent of the jobs generated between 1993 and 2013 came from “high tech” sectors like computing, software, and telecommunications. Our newest industries tend to be the most labor-efficient: they just don’t require many people.¹⁰⁵
Take a look at the economically valuable companies of the digital age: Instagram, a photo-sharing app, was sold to Facebook for $1 billion in 2012 — with only 13 employees.¹⁰⁶ The Economist explains that “Kodak, which once employed 145,000 people making photographic products, went into bankruptcy at around the same time.”¹⁰⁷ Google’s parent company Alphabet, America’s second valuable company with a market capitalization of approximately $550 billion,¹⁰⁸ employs about 55,000 people.¹⁰⁹ In 1964, AT&T was America’s most valuable company with a market capitalization of $267 billion in today’s dollars, yet it employed 758,611 people.¹¹⁰ That means Google needs only about 3,5% of workers that AT&T needed to produce the same economic value.
3.9. The Jobs That Will Be Lost
After qualitatively examining the technological possibilities of the Fourth Industrial Revolution, a critical question remains: how many jobs will automation replace?
In an often-cited 2013 study entitled “The Future of Employment: How Susceptible Are Jobs to Computerisation?”, Carl Benedikt Frey and Michael Osborne examine the probability of automation for 702 types of work and find that 47% of workers in the United States are at high risk of potential automation within the next two decades.¹¹¹ Especially routine jobs, they warn, such as most workers in transport and logistics (see chapter 3.5), office support (see chapter 3.6), sales and services (“such as cashiers, counter and rental clerks, telemarketers and accountants”¹¹²) face a high risk of displacement.¹¹³
The Economist cites subsequent studies that have put the “equivalent figure at 35% of the workforce for Britain (where more people work in creative fields less susceptible to automation) and 49% for Japan.”¹¹⁴
Another prominent study by McKinsey concludes:
While automation will eliminate very few occupations entirely in the next decade, it will affect portions of almost all jobs to a greater or lesser degree, depending on the type of work they entail. Automation, now going beyond routine manufacturing activities, has the potential, as least with regard to its technical feasibility, to transform sectors such as healthcare and finance, which involve a substantial share of knowledge work.¹¹⁵
Ultimately, by analyzing more than 2,000 tasks for 800 plus occupations, they demonstrate that by applying just current technologies, 45 percent “of the activities people are paid to perform” could be automated.¹¹⁶
The implications of these findings are enormous. If 50% of work can be automated just with current technology, that means that many humans would become unemployable: they would have no use to society “through no fault of their own.”¹¹⁷ If even unemployment rates of approximately 10% can cause existential economic difficulties, such as during the recession in 2008/2009, or 25% in the Great Depression in the 1930s,¹¹⁸ what will the effects of 50+ percent unemployment due to automation be?
However, McKinsey notes that technical feasibility is not the only factor to potential automation. They highlight that automation depends on five factors: “technical feasibility[;] costs to automate[;] the relative scarcity, skills, and costs of the workers who might otherwise do the activity[;] benefits (e.g. superior performance) of automation beyond labor-cost substitution[;] and regulatory and social-acceptance considerations.”¹¹⁹ As Erik Brynjolfsson and Andrew McAfee of MIT reckon, the main bottleneck on automation may be “the time it takes society to sort through the many combinations and permutations of new technologies and business models.”¹²⁰ However, the exponential pace of improvement will just keep making robots ever more economically appealing — technological breakthroughs that seem imminent, such as an “understanding of natural language on par with median human performance,”¹²¹ would greatly increase the technical feasibility and speed of market penetration of automation, according to the McKinsey study.¹¹² Just like with past industrial revolutions, it will take until the next recession (or the one after that), which employers often use to rethink their business, until we’ll feel the full effects of today’s technology.¹²³
McKinsey classifies the technical feasibility (“% of time spent on activities that can be automated by adapting currently demonstrated technology”) for automation based 7 groups of work activities:¹²⁴
This classification highlights another key challenge to the Fourth Industrial Revolution: which jobs are automated. This phenomenon can be explained utilizing a simplified version of Daron Acemoglu’s and David Autor’s automatability matrix. This matrix has two axis: manual versus cognitive and routine versus nonroutine.¹²⁵ Jobs can then be arranged into four boxes: manual-routine, manual-nonroutine, cognitive-routine, and cognitive-nonroutine. Elizabeth Kolber explains that jobs “on an assembly line fall into the manual-routine box, jobs in home health care into the manual-nonroutine box. Keeping track of inventory is in the cognitive-routine box; dreaming up an ad campaign is cognitive nonroutine.”¹²⁶ Table 2 visualizes this classification.
What becomes clear in this matrix is that jobs that are routine, or that can be broken into routine parts, are most at risk from automation — not one specific skill-level or collar-color. However, the routine jobs are the ones that have traditionally constituted the middle class, from routine jobs on the factory floor (manual-routine) to accounting departments (cognitive-routine).¹²⁷
Meanwhile, the highest paid jobs are cognitive-nonroutine, such as “managing a hedge fund, litigating a bankruptcy, and predicting a TV show.”¹²⁸ The lowest paid jobs are usually manual-nonroutine work such as “emptying bedpans, cleaning hotel rooms[,] … and folding towels.”¹²⁹ These jobs are the ones least at risk from automation.
This implications of this bifurcation are enormous. Not only will the Fourth Industrial Revolution threaten many jobs — almost half with current technology, according to the aforementioned studies — but also the bedrock of most developed economies: the middle class. If all the jobs left to do are either especially high income or especially low income, that could lead to a deleterious societal divide.
3.10. The Case for Skepticism: Stagnating Productivity
Despite the aforementioned evidence, some still doubt the potential of automation. For example, in his piece provocatively titled “The Automation Myth,” journalist Matthew Yglesias points to slowing productivity growth in the past few years — less than 1 percent since 2010, in comparison to a high of 3 percent from 1994–2005 — as evidence that the Fourth Industrial Revolution isn’t actually happening.¹³⁰ However, many technologists argue that this phenomenon is just a part of the innovation S-curve.¹³¹ High productivity growth at the turn of the millennium was due to an explosion of innovation due to the internet, which has plateaued in the past few years. Especially since there hasn’t been a recession since 2008, artificial intelligence and similar very recent developments haven’t yet registered in productivity metrics.¹³²
Yglesias does concede that a Fourth Industrial Revolution could happen, especially when looking at exponential technological progress.¹³³ However, he argues that such a revolution wouldn’t be a challenge, but a blessing.¹³⁴ For example, Americans could take more vacation days, work less hours, work part time, or get a better education.¹³⁵ Yet most families couldn’t live on part-time work, and most students couldn’t finance an extra long education. That gets to core of the Fourth Industrial Revolution: the potential is enormous, but a new social compact is necessary for society to reap its benefits.
3.11. The Ultimate Human Effects of Automation
For a long time, horses were a centerpiece of U.S. economic activity, and previous technological developments, such as plows, only made their labor more valuable.¹³⁶ Yet along came the car, at first unreliable, dirty, pricey, requiring a home mechanic, and causing fatal accidents.¹³⁷ Nevertheless, automobiles and other motorized vehicles replaced horse labor almost completely: the population of horses peaked in 1915,¹³⁸ and fell nearly 90 percent by the 1950s.¹³⁹
As mechanical muscles replaced the horses’ physical labor, so could mechanical minds replace much of humans’ mental labor.
Sure, robots won’t replace all jobs, but even the approximately 50% technological unemployment estimated in most studies would be enough to completely upheave our economic and societal system as we know it. And the exponential pace of improvement suggest that 50% is only the beginning.
That is not to say that you should join the Luddites in destroying machines; ultimately, even if you tried, you probably wouldn’t be able to contain the inexorable progress of technology. Our human curiosity is too great and the economic incentive too large. Moreover, the Fourth Industrial Revolution has the potential to be the most positive development in human history. The promise of automation is nothing less than abundance: producing very much for very little effort. Poverty, starvation, and stress could be things of the past.¹⁴⁰ Most Americans are unhappy with their jobs¹⁴¹— in an automated world, they would be free to spend time with their families and pursue the activities they enjoy. Everybody could have access to comfortable wealth.
Such a scenario is not that far away technologically. But society will first have to overcome substantial challenges. We’ll need to consider various ethics and security concerns. Most importantly, however, we’ll need to transform the basic units of our economy: jobs. Jobs generally have two roles today: keeping humans occupied and distributing wealth.¹⁴² Both will need to be radically rethought in order to make the Fourth Industrial Revolution a success.¹⁴³
Ideas regarding the first problem, keeping humans occupied, are plentiful. Who wouldn’t like more time to spend with family and friends? Society could begin to focus on social and emotional good.¹⁴⁴ Post-workists envision ideas such as communities of productive artisans.¹⁴⁵ Modern technology, such as virtual reality, could provide fulfilling entertainment.¹⁴⁶
However, all of these proposed occupations have limited traditional economical value. How will people get paid if they don’t have a job, or at least barely work? How we will distribute wealth is the central question our society will have to face.
Already in the 1930s, in the midst of the Great Depression, Keynes “forecast that technological progress might allow a 15-hour workweek, and abundant leisure, by 2030.”¹⁴⁷ Yet he also worried about a “temporary phase of maladjustment” as society adapts to ever greater automation.¹⁴⁸ We should take heed of his prediction — reality may well prove so.
“Society may find itself sorely tested if, as seems possible,” exponential innovation displaces traditional middle class jobs.¹⁴⁹ Thomas Picketty, an economist at the Paris School of Economics Capital, contends that the “squeezing out of that class could generate a more antagonistic, unstable and potentially dangerous politics.” Capital could replace labor, as Larry Summers, a former American treasury secretary, argues¹⁵⁰, creating a “hyper-unequal economical model in which a top 1% of capital-owners and ‘supermanagers’ grab a growing share of national income and accumulate an increasing concentration of national wealth.”¹⁵¹ Meanwhile, the majority of the population — unemployable thanks to robots — would suffer greatly.¹⁵²
In his book, Rise of the Robots: Technology and the Threat of a Jobless Future, Martin Ford suggests that we are “headed toward an era of ‘techno-feudalism.’ … Under the old feudalism, the peasants were exploited; under the new arrangement, they’ll merely be superfluous.”¹⁵³
In many ways, the Fourth Industrial won’t actually be that different to previous industrial revolutions: it has the potential to make us all better off, but only if we manage a difficult transition with innovative government policies.
4. The Alarming State of Developed Economies: The Omnipresent Effects of Globalization and Automation
4.1. The Transformational Effects of Globalization and Automation
In America today, the unemployment rate is just below 5%.¹⁵⁴ Many economists believe we’re almost at full employment.¹⁵⁵ The economy appears durable and strong.¹⁵⁶ Why would there be any cause to worry?
Yet below these rosy surface-level numbers, the past few decades have presented worrying economic trends. To understand what’s happening, it’s helpful to take a look at global real income gains since the 1980s.
Fundamentally, the time period since the mid-1980s has been the “period of the greatest reshuffling of personal incomes since the Industrial Revolution.”¹⁵⁷ The incomes of the middle of “the relatively poor Asian classes” grew significantly.¹⁵⁸ Likewise, the upper class, mostly capital owners — the top 5% globally — profited greatly.¹⁵⁹ Yet global real income gains show a remarkable trough around the 80th to 90th percentile globally: the Western middle class has essentially stagnated since the 1980s.¹⁶⁰
What happened? Globalization and free trade have led to offshoring and foreign outsourcing of work previously done in the developed world. While that led to a boom for much of the world’s disadvantaged population, the developed world’s middle class suffered.¹⁶¹ Meanwhile, a majority of recent economic gains in the developed world “have gone to … the richest portion of our population.”¹⁶²
These trends will only accelerate. The dominance of capital owners is set to further grow dramatically, as automation increasingly becomes more economical than offshoring: more and more companies will replace middle class workers with robots instead of foreign labor. That means that what were once the gains of the developing world are now becoming the even greater gains of the capital owners. In that sense, the transformation due to globalization is only an antecedent to the upheaval of the Fourth Industrial Revolution.
However, the effects of the Fourth Industrial Revolution have already substantially taken root today. Recent research suggests that automation is capturing “ever more of the world’s income since the 1980s” for owners of capital, while “the share going to [labor] has fallen.”¹⁶³ One of the most compelling signs of a new wave of technological displacement is the “diminishment of human labor as a driver of economic growth.”¹⁶⁴ Except for a slight recovery in the 1990s, the share of U.S. economic output paid out in wages has fallen steadily since the 1980s, “accelerating during the Great Recession. It now stands at its lowest level since the government started keeping track in the mid-20th century.“¹⁶⁵ While productivity rose nearly 75% from 1973 to 2013, hourly compensation rose only 9.2%.¹⁶⁶
Sure, technological innovation hasn’t yet given way to traditional unemployment. Nevertheless, many former workers have just withdrawn from the labor market — giving up even seeking a new job — as they are becoming unemployable. According to the White House Council of Economic Advisors, 98% of American prime-age men (between 25 and 54 years old) participated in the labor force in 1954.¹⁶⁷ Conventional wisdom has long held that “men in this age group [ — ] at the peak of their abilities and less likely than women to be primary caregivers for children [ — ] should almost all be working.”¹⁶⁸ However, this rate has precipitously declined, reaching just 88% today.¹⁶⁹ Former treasury secretary Larry Summers traces this development to technical change substituting capital for labor.¹⁷⁰ The economist Tyler Cowen calls this “the key statistic” for understanding “the spreading rot in the American workforce.”¹⁷¹
Furthermore, an increasing number of workers are resorting to the “gig economy,” meaning that they move from low-paying gig to gig in professions like “journalism, arts and entertainment, private transportation, and higher education, trying to scrape together enough cash to survive.”¹⁷² Economists Lawrence Katz and Alan Krueger estimate that approximately 16% of Americans work in this capacity, up from 10% in 2005.¹⁷³ These workers are cut off from any benefits, have little bargaining power, usually receive low wages, and have only diminutive job security.¹⁷⁴ Even though they’re not counted as unemployed, these workers often can’t sustain themselves.¹⁷⁵ As the Fourth Industrial Revolution further accelerates, these jobs might soon give way to “frank unemployment” as well.¹⁷⁶
4.2. Labor’s Losses: The Erosion of The Middle Class
These trends of globalization and automation have culminated in a remarkable erosion of the middle class — just as predicted by technological theories of the Fourth Industrial Revolution. As The Economist explains, the “wages of a typical worker, adjusted for the cost of living, are stagnant” in rich countries.¹⁷⁷ The real wage in America has barely changed in the past four decades.”¹⁷⁸ Ben Casselman explains that for “the first time since at least the 1960s, the majority of Americans aren’t in the middle class” anymore.¹⁷⁹ The drop in the share of income going to middle-class households has been stark, “from 62 percent in 1971 to 43 percent last year.”¹⁸⁰ Meanwhile, fully 49% of American income went to upper-income households in 2014, up from 29% in 1970.¹⁸¹ The classical American dream that “each generation will do better than the one before” is dying: the earnings of the generation born in 1970 have fallen behind those of their parents at the same stage in their lives.¹⁸²
Most of the recent economic growth, especially after the recession in 2008, has come at the extreme high and extreme low of the income spectrum.¹⁸³ For example, 44% of new jobs since the recession have been in the low-income sector.¹⁸⁴
Especially young people, without an existing job to cling to, are struggling on the job market. More people graduate college, but the real wage of recent college graduates has “fallen by 7.7 percent since 2000.”¹⁸⁵ The share of recent college graduates in low-skill jobs that traditionally haven’t required a degree is significantly higher than in 2000. Derek Thompson summarizes that “in the biggest picture, the job market appears to be requiring more and more preparation for a lower and lower starting wage.”¹⁸⁶ In some European countries, such as Greece, these trends are more overt with an almost 50% youth unemployment rate.¹⁸⁷
Furthermore, vast swaths of our population still live in inhumane poverty. For example, despite immense overall economic growth, poverty levels in America have risen to about 15% since the 1970s.¹⁸⁸ In Berlin, the capital of the economically thriving Germany, a third of all children live on measly welfare.¹⁸⁹ In our incredibly rich civilization, it seems absurd that so many people still live in poverty.
As the Pew Research Center explains, we’re witnessing the “hollowing of the middle class.”¹⁹⁰ The impacts of this worrying development are multitudinous. For example, Angus Deaton, the 2015 Nobel laureate in economics, and Anne Case note in a recent paper that white Americans, especially uneducated white Americans in midlife, are dying at a ever-younger age, reversing decades of progress in life expectancy.¹⁹¹ The cause wasn’t diabetes or heart disease, but suicide, drug abuse, and alcohol abuse.¹⁹² The researchers suggest that these additional deaths are “despair deaths,” stemming from increased financial strains.¹⁹³ Overall, the authors count approximately half a million “despair deaths,” 40 times the victims of the recent Ebola epidemic.¹⁹⁴
Similar trends can be observed across the developed world. Real wages in places like Germany and Britain have “been flat for at least a decade.”¹⁹⁵ Even in “relatively egalitarian nations in Scandinavia,” inequality is skyrocketing.¹⁹⁶ Oliver Nachtwey characterizes the German economy as increasingly based on “prekäre Arbeit [(precarious employment)]”: low-wage and insecure jobs.¹⁹⁷ He sees his country devolving into a sort of dichotomous feudalism: an upper class that lives in its own world and a despairing lower class that has no opportunities to climb the social ladder.¹⁹⁸
4.3. The Trump Effect: The Political Consequences of Failure
This erosion of the middle class is posing the greatest challenge to liberal democracy since the establishment of the post-World War II global order. Across European and American society, reactionary populist movements have appealed to those left behind. As the middle class, the bedrock of our Western society, declines, so are values of openness, freedom, and even democracy itself.
A pertinent example of this effect is Donald Trump’s surprising ascent to the United States presidency. A nationalistic demagogue became leader of the free world, and his early actions in office suggest that he intends to follow through on his far-right campaign promises. Most experts agree that Trump won by riding “an enormous wave of support among white working-class voters.”¹⁹⁹ Yet opinions on cause of this surge in support diverged: many left-wing politicians blamed his victory on cultural issues — xenophobia, sexism, racism, and nationalism.²⁰⁰ While that certainly plays a role, a closer look at the data reveals that Trump won thanks to those already left behind by globalization and automation.²⁰¹
Trump gained immense support in the former bastions of industry where large swaths of working-class voters had suffered.²⁰² For example, Obama had won Youngstown, Ohio, by more than 20 percentage points in 2012, while Trump virtually tied Clinton in 2016.²⁰³ These gains extended across former industrial states like Michigan, Iowa, and Maine.²⁰⁴ Moreover, analysis of exit polls reveals that the more jobs in a county are routine, so at risk of outsourcing and automation, the more the county supported Trump.²⁰⁵ Crude unemployment, meanwhile, didn’t have a clear correlation with Trump support.²⁰⁶ That suggests that Trump won specifically because of those at risk or experiencing job displacement due to the Fourth Industrial Revolution.²⁰⁷
These statistics should be incredibly worrying: they are confirming many of the fears regarding the Fourth Industrial Revolution, and warn of serious societal upheaval. As technology continues to press unremittingly forward, job displacement, the erosion of the middle class, and possibly an economic world closer and closer to the envisaged “techno-feudalism” could lead to further support for far-right candidates, fascism, and ultimately the dismantlement of our liberal world order.
Some historians argue that the 1930s presented a similar challenge: after a period of large-scale economic change, the Great Depression hit.²⁰⁸ America and Europe alike sunk into economic despair. In many European nations, a democratic government was unable to deal with crisis, and their economies tanked — and with it democracy.²⁰⁹ Fascists like Hitler and Mussolini came into power thanks to the support of those left behind.²¹⁰
The United States could have similarly devolved into fascism; many voters were already starting to support extreme political candidates.²¹¹ Only thanks to Franklin Delano Roosevelt’s audacious and radical rethinking of government did the American economy slowly begin to recover.²¹² To put his “New Deal” into perspective: American federal government spending was $4.6 billion in 1933, but grew to an astounding $92 billion by the end of 1945.²¹³ This bold reform helped return most voters to democratic politics. Some historians argue that FDR and his “New Deal” saved capitalism and ultimately liberal democracy itself.²¹⁴
If the Fourth Industrial Revolution continues as many predict, we may need a similar radical rethinking of the role of government. Even President Obama, in his farewell address on “the state of democracy,” warned of the “relentless pace of automation” and argued for a new “social compact.”²¹⁵ As we approach a turning point in our history, a new social compact could become critical to avoiding “techno-feudalism” and preserving liberal democracy. But how would such a new social compact look like?
5. The Vision of a Universal Basic Income
5.1. The Idea
In 1797, one of America’s founding fathers, Thomas Paine, argued “that every person is entitled to share in the returns on the common property of humanity: the earth’s land and natural resources (today, you might include radio spectrum or the profits of central banks).”²¹⁶ In lieu of “their share of the planet,” Paine proposed “paying citizens the equivalent of around $2,000 in today’s money [ — ] which was then over half the annual income of a [laborer — ] on their 21st birthday.”²¹⁷ Importantly, the “benefit would be granted to all, to avoid creating ‘invidious distinctions’ between rich and poor.”²¹⁸
Paine suggested a basic income, an unconditional check from the government for every citizen — an income provided as a right, just like education or voting. This idea didn’t quite catch on in his time, although it gained steam again in the 20th century. Socialists and labor activists took up the cause, “arguing basic income could empower workers and transform economies.”²¹⁹ In the 1960s, the legendary civil rights leader Martin Luther King Jr. powerfully advocated for a basic income, writing: “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income [(another name for a basic income)].”²²⁰ Even the renowned libertarian economist Milton Friedman advocated for a negative income tax, another form of a basic income.²²¹ Republican President Richard Nixon proposed a partial basic income, which overwhelmingly passed the U.S. House of Representatives, before stalling in the Senate.²²² Had it not been for some political infighting, a basic income could have become reality in the 1970s.²²³ Instead, enthusiasm petered out again, and figures like Ronald Reagan and Margaret Thatcher rode “a wave of conservative backlash to expansive government programs.”²²⁴ The idea of a basic income receded from the political sphere.
Yet as the Fourth Industrial Revolution massively transforms our society, the time of a unique paradigm shift of our economic system, the time of a universal basic income, may have finally come. While there are multiple similar proposals, each with a different name — minimum income, guaranteed income, unconditional basic income, negative income tax, social dividend, universal basic income — they mostly share a fundamental idea: every citizen regularly gets a fixed amount of money from the government. This income is universal, basic, and unconditional:
- Universal means that everyone, “rich or poor, employed or out of work would get the same amount of money.”²²⁵ However, rich people would generally pay more than they receive in a basic income scheme because of higher taxes.
- Unconditional means that this income has no strings attached — no conditions, no questions.²²⁶
- Basic means that this income is sufficient to live on and can cover the principal needs of the recipients.²²⁷
This idea is as simple as it is radical. Instead of “managing myriad social welfare and unemployment insurance programs,”²²⁸ every citizen would get a regular check from the government. These funds could “guarantee food and shelter,” while people could pursue their own “betterment [and contribute] to society.”²²⁹ Andrew Flowers explains that a basic income could “provide a path toward a new way of living: If people no longer had to worry about making ends meet, they could pursue the lives they want to live.”²³⁰
Especially as globalization and automation march onward, a universal basic income could ease the burden of the Fourth Industrial Revolution. Ultimately, it could provide for people’s subsistence, while they transition to unpaid work, e.g. caring for family, social good, creative fulfillment, or even innovating for the challenges of the future.
A basic income is the most audacious “social policy [experiment] in modern history.”²³¹ It challenges our notions “of the social safety net, the relationship between work and income, and how to adapt to technological change.”²³² Nevertheless, a basic income has the potential to fundamentally transform our society for the better, and could even save capitalism from itself in the Fourth Industrial Revolution.
5.2. A New Paradigm in the Context of the Fourth Industrial Revolution
Most experts on the impending Fourth Industrial Revolution share the view that a basic income will be necessary to accommodate the changing demands for human labor.²³³ In the words of Andy Stern, former labor organizer and author of the book Raising the Floor, a basic income is a way “to ease the transition” and provide a floor — “not necessarily a substitute for work, but a supplement to work that allows them to have a sense of economic security [and] consumer buying power.”²³⁴ A basic income would allow people “to be entrepreneurs, to take risks and raise kids and do other things without” society morphing into a sort of “techno-feudalism.”²³⁵
As Peter Goodman explains:
For generations, policy makers have sought the magic formula for so-called full employment, with nearly everyone who wants a job able to find one. Traditional unemployment insurance schemes were devised in an age when the cyclical nature of factory life was dominant. Workers who were idled in lean times could pay their bills using unemployment benefits while awaiting the inevitable return of flush ones.
But automation is fundamentally changing the labor market so that full employment becomes a fantasy. A permanent, universal, and unconditional basic income would be “built for an age in which demand for labor may be perpetually slack.”²³⁶ Each individual could count on sustenance, while engaging in the new flexible economy: they could become a part-time Uber driver or work creative gigs or care for their families or help a program for social and emotional good. Derek Thompson illustrates that some people would simply devote their freedom to leisure; “some will seek to build productive communities outside the workplace; and others will” piece together jobs in informal economies.²³⁷
Albert Wenger, a partner at the venture capital firm Union Square Ventures, and author of the book World After Capital, argues that a basic income could help attack the last remaining scarcity: attention.²³⁸ He thinks a basic income could allow citizens to spend less time on tasks that can be automated — much of traditional paid work — and more on “issues he thinks are insufficiently addressed: fighting climate change, exploring space, preventing the next global pandemic.”²³⁹ He argues that not only would a basic income cushion technological displacement, but “allow innovation to flourish.”²⁴⁰ People’s newfound flexibility and freedom could increase the value of creative and social work, thereby nourishing human progress.²⁴¹
Ultimately, with everyone’s needs met, society could “embrace robots” and liberate itself from “drudge work.”²⁴² A basic income presents a radical path forward that could counter the possibly devastating effects of automation while liberating human potential in the 21st century.²⁴³ Its appeal spans the ideological spectrum, from left-wing socialists to fierce conservative-libertarian defendants of capitalism. Let’s take a look at some of their arguments for a basic income.
5.3. The Liberal Case for a Basic Income
For decades, liberals — used here in the contemporary form as term for those on the left wing of the political spectrum — have worked to help the poor, those who are disadvantaged or left behind. From the 1960s to today, liberals have tried to combat poverty and help everybody live a life in dignity. Yet despite our advances as a society and ballooning welfare states, poverty rates in America have stagnated at about 16%.²⁴⁴
A universal basic income could eliminate poverty completely — depending, of course, on the sum of the basic income and the poverty definition. Nevertheless, researchers have concluded that giving people money is the most effective way to combat poverty.²⁴⁵ A basic income would fundamentally guarantee every citizen subsistence and a life in dignity.²⁴⁶ Instead of means-tested welfare programs full of holes that all too often entangle people in permanent poverty, a basic income would provide a floor “without holes”²⁴⁷ on people’s living standards and a “platform on which they could stand before reaching out for something better.”²⁴⁸
The power of a basic income extends beyond poverty, however. Our free market system is based on the idea that because we freely choose to make an exchange, the exchange would be mutually beneficial.²⁴⁹ According to theories of capitalism, if individuals cooperate on the basis of free choice and equality, their exchanges would lead to common prosperity.²⁵⁰ That’s why, for example, theft, fraud, and slavery are banned.²⁵¹ Yet as Karl Marx correctly diagnosed, the most fundamental exchange of our economy is not free: work.²⁵² Most workers have no choice but to work in order to survive — in fact, more than half of Americans live from paycheck to paycheck, without a safety cushion.²⁵³ Although modern welfare systems have slightly reduced that coercion, even these welfare systems are designed to force people to work. For example, the German Hartz IV system cuts benefits if a recipient does not do enough to find a job or doesn’t take a job offer.²⁵⁴
Because a basic income would be universal and unconditional, it would emancipate citizens from the compulsion to work. That doesn’t mean people would necessarily stop working, but that people could choose what and when and how and where they work.²⁵⁵ People could forgo today’s all-too-common stress, burnout, and unfulfilling drudge.²⁵⁶ Workers could “eschew poverty-level wages,” thereby increasing their bargaining power²⁵⁷ and incentivizing companies to invest in attractive workplaces.²⁵⁸ Moreover, that in turn would lead to better outcomes and higher productivity for the businesses employing workers.²⁵⁹
Yet in the context of the Fourth Industrial Revolution, less people working is welcome too. At its most basic level, a basic income could separate our occupation from our subsistence. For example, a basic income could “support those who already contribute priceless value to society, mainly women in the caring sector — or, indeed, artists producing great public works for next to no money.”²⁶⁰ Young people could “experiment with different careers,”²⁶¹ and those who lose their job to technology would be free to “go back to school [or] care for a child or aging relative.”²⁶²
5.4. The Conservative-Libertarian Case for a Basic Income
Due to the plethora of shortcomings of today’s welfare systems, many conservatives and libertarians propose replacing it with a basic income.
First of all, contemporary welfare systems are means-tested: people only receive benefits if they fulfill certain criteria, such as not earning too much or too little, working or trying to find work, not spending your money on certain products, not receiving support from relatives, and more.²⁶³ In the United States, for example, the benefits systems consists of an “indecipherable alphabet soup of programs: SNAP, TANF, CHIP, Section 8, EITC, WIC, SSDI,” costing nearly “$1 trillion across dozens of separate programs at the state and federal level,”²⁶⁴ all of them governed by an assortment of arcane rules and regulations.²⁶⁵ These programs require “enormous administrative oversight on the part of the government,” simply put, bureaucracy. A streamlined universal basic income — a simple check to every citizen each month — could eliminate much of that, dramatically reducing costs.²⁶⁶ Although means-testing is meant to more efficiently distribute money to only those who need it, in practice, contemporary welfare systems often prioritize those who are best politically connected.²⁶⁷
Yet the problems of these schemes “go beyond [their] complicated structure.”²⁶⁸ If those who receive benefits get a job and earn more, the government withdraws benefits, discouraging work and trapping many in poverty²⁶⁹ — “often labeled the ‘welfare trap” or ‘poverty trap.’”²⁷⁰ Andrew Flowers explains that, for example, a “family of four can’t qualify for food stamps [(a program helping the poor buy food in the U.S.)] if it earns more than $31,536. These benefit phase-outs, or ‘cliffs,’ essentially create steep marginal tax rates on the poor.”²⁷¹ Wessita McKinley, founder of a Sistas United, a nonprofit working with individuals in poverty, describes it this way: “If you’re a dollar over, you can’t get assistance.”²⁷² Ultimately, it’s as if the government keeps you on leash: “you can only go so far.”²⁷³ Renowned libertarian economist Milton Friedman explains that this “government leash” is “one of the ways in which we’ve been producing poor people.”²⁷⁴
Especially in European countries with an extensive safety net, this disincentive to work has been especially deleterious in the dynamic environment of the Fourth Industrial Revolution. A recent New York Times report by Peter Goodman on the social safety net in Finland found:
While entrepreneurs are eager to put [people laid off from Nokia] to work, the rules of Finland’s generous social safety net effectively discourage this. Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance. For laid-off workers from Nokia, simply collecting a guaranteed unemployment check often presents a better financial proposition than taking a leap with a start-up in Finland, where a shaky technology industry is trying to find its footing again.²⁷⁵
In many countries, welfare systems “are so laden with rules that jobless people tend to acquire just one skill: They gain savvy in navigating the bureaucracy.”²⁷⁶ In fact, many “people miss out on benefits for which they qualify simply because they don’t know that the program exists, or what they need to do to draw from it.”²⁷⁷ A basic income would reduce the significant cost “in terms of time, effort, and skill at bureaucratic navigation”²⁷⁸ of means-tested welfare systems and allow the jobless to spend their time more productively, such as learning modern trades.²⁷⁹
Furthermore, a basic income would enable companies to embrace the agile economy of the Fourth Industrial Revolution. Karl Widerquist, a philosopher at Georgetown University, argues that they would have the freedom to take a risk on hiring or firing people more aggressively, knowing that each individual could subsist without employment.²⁸⁰ A basic income could make rapid und large-scale “restructuring palatable.”²⁸¹
Although opponents like to decry a basic income as a hidden form of socialism, it could be a tool to invigorate capitalism and finally fulfill the promise of free markets.
While skeptics of a basic income argue that as people would not be required to work, they would abdicate personal responsibility, many libertarian proponents argue that a basic income would return responsibility to individuals. Current welfare systems place constraints on people, such as requiring them to buy certain food, as in the food stamp program, or spend a certain share on housing, as in the German Hartz IV, in ways that libertarians argue are invasive and paternalistic.²⁸² With a basic income, as Charles Murray explains, in “place of little bundles of benefits to be used as a bureaucracy specifies,” citizens would get a monthly check “to use as they wish.”²⁸³ Heikki Hiilamo, a professor of social policy at Helsinki University, elucidates that a basic income grants people the autonomy to do “things which are beneficial to [them], and also for [their] community.”²⁸⁴ Fundamentally, it places a person’s future in his own hands.²⁸⁵ Sure, that would result in some recipients spending their benefits on vices such as alcohol or a new flat-screen TV, but research has shown that people generally know best themselves how to spend money in order to improve their situation.²⁸⁶
Overall, conservatives and libertarians argue that the government has shown to be an ineffective and inefficient regulator of markets, with recent attempts at reform mostly serving special interests and creating an ever-more complex web of transfers, taxes, incentives, and bureaucracy.²⁸⁷ Ultimately, the vision of a universal basic income would emphasize the freedom of the individual, while still advancing societal solidarity.²⁸⁸ Society would trust the individual to contribute his part to prosperity for all, and more equally distribute wealth in the framework of a free market.²⁸⁹
5.5. What Would People Do With a Basic Income?
Many critics of a basic income argue that recipients would just stop working. If everyone received enough money to subsist, why would they get a job? Who would do the “dirty work”? Wouldn’t people just be lazy and do nothing with their life?
Although the research on this question isn’t conclusive yet, there have been numerous attempts to study this question over the last 50 years.
First, researchers have found that giving cash to poor people doesn’t discourage work.²⁹⁰ For example, a recent study by MIT and Harvard economists analyzed 7 cash transfer programs in Latin America, and none of the programs showed a statistically significant change “in either employment levels or hours worked per week.“²⁹¹ Cash grants may even increase motivation and incentive to work: another recent paper by Christopher Blattman, Nathan Fiala, and Sebastian Martinez analyzed an Ugandan program that gave “cash grants ($382 per person, on average) to groups of [unemployed young people].”²⁹² Ultimately, the recipients’ hours of work rose by 17 percent and earnings by 38 percent.²⁹³ Another program in Nigeria that gave about $150 and some basic business skills training to women in northern Uganda increased work hours by 61 percent, according to a study by Blattman, Eric Green, Julian Jamison, and Jeannie Annan.²⁹⁴
Give Directly, a charity piloting a basic income in Kenya, has shown in randomized-control peer-reviewed studies that cash transfers work wonders.^ 295Across the board, they found positive (health) effects, especially for children, such as “height-for-age and weight-for-height in South Africa, large reductions in HIV infection rates and psychological distress in Malawi, and large reductions in the incidence of low birth weight in Uruguay[, as well as] increase[d] schooling and decrease[d] child labor.”²⁹⁶ Adults earned more income in the long term by using the cash to invest, while they didn’t systematically abuse cash funds on “temptation goods,” such as alcohol, and didn’t decrease work.²⁹⁷
Developed economies have also run trials of programs similar to a basic income, albeit in a limited fashion. Richard Nixon’s advocacy for a guaranteed income resulted in four major experiments testing a negative income tax, which is similar to a basic income but phases out for higher earners.²⁹⁸ In these experiments located in “New Jersey and Pennsylvania; Iowa and North Carolina; Gary, Indiana; and, the largest, in Seattle and Denver … families were assigned into treatment and control groups, given cash and tracked over several years.”²⁹⁹ Karl Widerquist, a Georgetown University-Qatar professor found in his 2005 paper summarizing the results that “[some] of the experimenters said that they were unable to find even a single instance of labor-market withdrawal,” although earners did cut back their hours by around 5 to 7 percent.³⁰⁰ However, this reduction was mostly attributable to parents spending more time caring for their children as well as young people going to school. Moreover, when researchers corrected discrepancies in self-report income figures by comparing them to official government records, they discovered that “the number of hours worked had scarcely decreased at all.”³⁰¹ Even those declines “were undoubtedly compensated in part by other useful activities, such as search for better jobs or work in the home,” the Seattle experiment’s report concluded. As the chief data analyst of the Denver experiment explains, “[t]he ‘laziness’ contention is just not supported by our findings. … There is not anywhere near the mass defection the prophets of doom predicted.”³⁰²
The experiment closest to the modern conception of a universal basic income was MINCOME, a guaranteed income offered from 1974–1979 “to every eligible family in Dauphin, a prairie town of about 10,000, and smaller numbers of residents in Winnipeg and some rural communities throughout” the province of Manitoba in Canada.³⁰³ Yet when Canada’s governing party changed midway through the experiment, “funding dried up and the researchers were told to archive their data for later analysis. No database was created, and the results of MINCOME were not examined.”³⁰⁴ Evelyn Forget, an economist at the University of Manitoba, unearthed “800 dusty cardboard boxes — with information on each family receiving MINCOME — at Canada’s National Archives” decades later.³⁰⁵ Her analysis resulted in a groundbreaking 2011 research paper called “The Town With No Poverty.”³⁰⁶ She found that not only did the guaranteed income bring most recipients above the poverty line, but the effects on employment were modest, with virtually no decline in work.³⁰⁷ In addition, the program eased families’ economic anxiety, “allowing them to invest in their health and plan over a longer horizon.”³⁰⁸ By matching the MINCOME records to the database of Canada’s universal health insurance, Forget discovered dramatic health benefits accruing to the families with the guaranteed income. They had “fewer hospitalizations, accidents[,] and injuries,” and mental health hospitalizations precipitously declined.” High school graduation increased as well, especially for 16-to-18-year-old boys³⁰⁹— validated by the New Jersey experiment, where high school graduations rose thirty percent thanks to the negative income tax.³¹⁰ These findings suggest that a basic income wouldn’t just affect citizens’ economic situation, but significantly improve their education, health, and overall life outcomes — which in turn, could save the government and society vast swaths of other social expenses.
These studies paint a positive picture: they suggest that a basic income wouldn’t decrease motivation to work, but instead provide a platform for human self-fulfillment and greater productivity.
Nevertheless, they can’t yet provide conclusive evidence. A full trial would need to be randomized, long term, and fulfill the framework of a universal basic income (basic, universal, unconditional). No previous experiment has met all of the conditions.³¹¹ That’s why governments are starting to run basic income experiments. The Finnish government has just launched a trial, and the Dutch are preparing to, while the French Senate and Canadian Government are considering it.³¹² Meanwhile, even private companies — especially those in Silicon Valley who see the potential of the Fourth Industrial Revolution — are launching experiments, such as the crowdfunding “My basic income,” the infamous startup incubator Y-Combinator’s upcoming trial, or Give Directly’s experiment in Kenya.³¹³ Their results will be invaluable in evaluating and implementing the universal basic income as a concrete policy.
5.6. Could A Basic Income Be Financed?
Critics also assert that a basic income is not financially viable. They do quick back-of-the-envelope math and conclude that a basic income would require “tax rates approaching 85%.”³¹⁴ Yet a more in-depth economic analysis reveals that a basic income may well be realistic.
First, a basic income isn’t always a basic income — in fact, there exist various models of how to implement them. A universal basic income usually constitutes a universal and unconditional payment of a fixed amount to every citizen. In the proposal of a negative income tax or a guaranteed income, the basic income would evenly taper out (without “cliffs”) as the recipient starts earning more money.³¹⁵ Ultimately, these models end up producing similar results, as even in the universal basic income proposal higher taxes would mean rich people end up paying more than they receive.³¹⁶ Nevertheless, a universal basic income has the benefit of reduced bureaucracy and a clear floor for everybody.
Second, a basic income could replace vast amounts of the current welfare state. Unemployment insurance, disability insurance, childcare assistance, and many other forms of the social safety net — and their bureaucracy with it — would become redundant.³¹⁷ Conservative and libertarian proponents even argue that a basic income could replace social security (pensions) as well, although liberals object to this notion.³¹⁸ However, supporters vigorously disagree about which exact welfare programs a basic income should replace.³¹⁹
Third, how high should the basic income be? Most proponents suggest an income “high enough to ensure a material existence and participation in society,” as Valerija Korosec, a sociologist at the Institute of Macroeconomic Analysis and Development in Slovenia, explains.³²⁰ There are various ways to calculate that level, such as basket of goods or a certain percentage of median income. However, most analysis that take food, clothing, housing, and other living costs as well as a baseline of cultural, social, and political participation into account arrive at a figure of around $1000 per month, so $12,000 per year.³²¹ Of course, these figures would need to be adjusted for inflation. Coincidentally, the poverty line in America is currently $11,880 per year, so a universal basic income of $1000 per month could completely eradicate poverty.³²² In order to eliminate poverty across all household sizes, children would need to receive a minimum of $4,000 per year.³²³
In order to fund such a basic income, it’s helpful to look at current government spending. Excluding health care, the U.S. government already spends approximately $6,300 per person per year on social services — which would equate to a $6,300 basic income.³²⁴ Raising that basic income to $12,000 per person per year would require increasing taxation about 10 percent of GDP³²⁵ — or if you kept social security (pensions) 13 percent of GDP.³²⁶ While that’s large, it’s not outrageous — in fact, it would just increase the size of government to that of approximately Germany, from 26% of GDP to 36% of GDP.³²⁷ Some Scandinavian countries, like Denmark or Sweden, already bring in enough tax revenue to fund a basic income of about $10,000 per year.³²⁸
In addition, some proposals that ease out benefits for higher earners, such as a negative income tax — equivalent to a basic income with higher taxes for the rich — could even cost less than the current welfare state.³²⁹ For example, libertarian economist Charles Murray proposes a guaranteed income of $10,000 per year — although $3,000 of that would go to health insurance — for every adult 21 and over, replacing all other welfare programs.³³⁰ According to his study, this basic income model would cost less than the current system, while possibly saving up to a trillion dollars per year by 2028.³³¹ He argues that this basic income model wouldn’t just do a better job than the welfare system at preventing poverty and helping the working poor, but also ensuring sufficient retirement income.³³² While the cuts Murray proposes, for example to social security (pensions) are probably too extreme to be politically viable or even desirable, they do illustrate the financial feasibility of a basic income.
There are various proposals to finance the additional government revenue. One is simply to raise traditional income taxes. Another growing group of reformers is advocating for a so-called “flat tax,” a flat income tax that isn’t adjusted for income levels. This structure would again simplify bureaucracy and thereby effectively counter the exploding problem of tax evasion.³³³ In combination with a basic income, government taxes would still be effectively progressive, however: poor people would receive money from the government, and the more money they earn, the less money they receive. At some point, people would “break-even,” and high earners would have to pay net sums to the government.³³⁴ Ultimately, such a “flat tax” combined with a basic income would put a floor under gross wages while reducing the slope of the income curve.
Another proposal, advanced e.g. by billionaire Werner Götz, is the idea of a consumption tax, or VAT, similar to a sales tax.³³⁵ Proponents argue that taxing work disincentives productivity, entrepreneurship, innovation, and job creation.³³⁶ Instead, they propose to impose a levy on consumption, similar to the widespread sales taxes in Europe.³³⁷ Without a basic income, these proposals are largely regressive, as the burden of taxation falls disproportionately on the poor.³³⁸ However, with a basic income, the poor would be compensated for additional expenses. Moreover, as the Fourth Industrial Revolution displaces more and more workers, there will be less and less income left to tax; to accommodate automation with a basic income, it would make sense to finance it with a consumption tax. Many environmentalists also favor consumption taxes, arguing that it discourages excessive depletion of resources.³³⁹ Implementing a basic income of around $10,000 dollars per year per adult in the U.S., while keeping social security (pensions),³⁴⁰ would require a VAT of approximately 20 percent,³⁴¹ which is standard for many European countries.
Some left-wing economists also propose financing a basic income through returns on assets, harking back to Thomas Paine’s proposal of distributing the “returns on the common property of humanity.”³⁴² Alaska already has some versions of this, paying its residents an annual dividend — basic income, some might call it — of $1,900 (in 2014) from the returns on its oil fund.³⁴³ The Economist contends that an “asset-financed basic income would remove welfare distortions without introducing new ones through higher taxes.”³⁴⁴ Former Greek Finance Minister Yanis Varoufakis argues that the capital that accrues to a few was largely produced collectively — from government grants funding research to privatized property to society pooling ideas.³⁴⁵ He proposes paying a basic income in the form of dividends from capital stock as a form of reciprocity.³⁴⁶ Matt Bruenig asserts that such a form of “basic income” already exists for the top 1%, which on average receives “7.5 times the national income” in the form of capital income “without having to work for it.”³⁴⁷ This passive income hasn’t deterred them from being productive; in fact, it has helped spur their innovation and contribution to society.³⁴⁸
In every model, however, it’s difficult to estimate the macroeconomic effects of a universal basic income. The economy could grow thanks to consumers with more money and new innovation, or it could fall because of decreased labor force participation.³⁴⁹ Improving health and education outcomes with a basic income could also reduce governmental costs, although these are difficult to estimate. In addition, workers’ increased bargaining power via a basic income would allow governments to abolish regulations such as minimum wage law, thereby spurring economic growth.³⁵⁰ It’s clear that concrete policy proposals for a basic income will need more detailed economic modeling.
Governments will also have to consider who exactly receives the basic income — only citizens, or selected immigrants as well — to protect their immigration system from exploitation. They could also choose to vary the sum of the basic income regionally, adjusted for living costs, although economists contend that scaling the basic income by location could exacerbate high costs of living.³⁵¹
Ultimately, each government considering a basic income would have to find their own unique combination of welfare cuts, universal basic income, and tax reform that best fits their needs. Nevertheless, a basic income is financially feasible, although it would require significant reform. Especially some European countries with already high revenue appear well-positioned to implement a basic income.
Nonetheless, even if governments don’t implement a sweeping basic income, smaller cash transfer programs could do enormous good as well. Matt Bruenig and Elizabeth Stoker argue that government could “halve poverty by cutting a $3,000 check to Americans of all ages.”³⁵² Such a program could also lay the groundwork for a more ambitious universal basic income program.
5.7. The Case Against a Basic Income
Next to worries about everybody stopping work and financial unfeasibility, many are still wary of a universal basic income.
Mike Konczal argues that the critiques of the current welfare system are overrated, and that a basic income is a utopian dream that distracts from the real issues facing poor people.³⁵³ Like many progressives who have spent decades defending the welfare state, he’s cautious of replacing it with a basic income. “There are some benefits that could be made universal … but there are some benefits that are targeted to people in need,” said Deborah Weinstein, the executive director of anti-poverty alliance. She opines that people with disabilities, for example, “have requirements that not everyone has.”³⁵⁴ Spreading out funds to everybody with a basic income would result in those in need most worse off, so they claim.³⁵⁵ Yet their case ignores the failure of the welfare state to not only effectively combat poverty, but also provide citizens with a ladder to opportunity.³⁵⁶ Their alternative proposals don’t even consider the upcoming challenges of the Fourth Industrial Revolution. However, the special needs of some should be considered in devising an exact basic income model.
Skeptics also enumerate various studies showing that people are less happy when they are unemployed, and that jobs are imperative to give people structure. They argue that society should accommodate the Fourth Industrial Revolution with policies that promote employment, e.g. the government as an employer of last resort or reducing working hours.³⁵⁷ Yet their analysis focus on the downsides of unemployment in a society built on the concept of employment. In fact, next to their disastrous economic situation, contemporary culture often treats the unemployed as outcasts.³⁵⁸ Instead of forcing people to work in jobs that they don’t like — as the vast majority of workers do — a basic income would enable a society to restructure and embrace the potential of automation.³⁵⁹ Historians point to the hunter and gatherer civilization, in which humans only worked for a couple of hours each day — without bosses and paychecks and alarm clocks.³⁶⁰ Up until the schedules of the industrial revolution, humans mixed work and play in their daily lives, sometimes with hundreds of days of holidays.³⁶¹ Automation and a basic income could work in tandem to engender a society built on the basis of self-determination, not employment.³⁶²
All of the evidence suggests that the Fourth Industrial Revolution will at best present some thorny challenges, and at worst upheave society, threatening “techno-feudalism.”
But the Fourth Industrial Revolution also presents humanity’s greatest opportunity. We could leave the toils of strenuous employment and scarcity behind us and create a world of abundance. Yet making this possibility into a reality will require innovative government policy, just like in previous industrial revolutions.
Evidently, a universal basic income, while by no means perfect, could cushion the effects of technological displacement. Fundamentally, it proposes divorcing how we earn money and spend our time, thereby enabling an agile economy in the context of the Fourth Industrial Revolution and fulfilling the promise of freedom. By replacing a failing welfare state, a basic income could also eradicate poverty and create new ladders of opportunity.
While financing a basic income would require significant reform, it is far from impossible. The evidence of previous experiments suggests that recipients wouldn’t become lazy and could benefit from positive secondary effects. However, these findings are far from conclusive.
As the attacks on liberal democracy amplify, politicians around the world will need to recognize the need for a new political vision. The perils of globalization and automation are too great. Thanks to exponential progress, these effects will intensify quickly. Simply saying “it won’t happen here,” like German Chancellor Angela Merkel did recently,³⁶³ is naive. Governments should at least experiment with a basic income in order to be prepared for the possible upheaval of the Fourth Industrial Revolution.
Yes, a universal basic income seems utopian — but so did universal education, and so did universal voting rights. A basic income is the utopia in which we can embrace automation, close social divides, elevate individual freedom, create a platform for creativity, and engender new prosperity. A basic income doesn’t just enable the future of work, but the future of society.
As Franklin Delano Roosevelt said in his first inaugural address, “the only thing we have to fear is fear itself.”³⁶⁴
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170. “The Onrushing Wave.”
171. Thompson, “A World Without Work.”
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176. “The Onrushing Wave.”
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216. “Basically Unaffordable,” The Economist, May 2015, http://www.economist.com/news/finance-and-economics/21651897-replacing-welfare-payments-basic-income-all-alluring.
219. Andrew Flowers, “What Would Happen If We Just Gave People Money?” FiveThirtyEight, April 2016, http://fivethirtyeight.com/features/universal-basic-income/.
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224. Flowers, “What Would Happen If We Just Gave People Money?”
229. Peter S. Goodman, “Free Cash in Finland. Must Be Jobless.” The New York Times, December 2016, https://www.nytimes.com/2016/12/17/business/economy/universal-basic-income-finland.html.
230. Flowers, “What Would Happen If We Just Gave People Money?”
233. Kolbert, “Our Automated Future.”
234. Sean Illing, “Why We Need to Plan for a Future Without Jobs,” Vox, October 2016, http://www.vox.com/conversations/2016/10/17/13245808/andy-stern-work-universal-basic-income-technology-artificial-intelligence-unions.
236. Goodman, “Free Cash in Finland. Must Be Jobless.”
237. Thompson, “A World Without Work.”
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241. Markkwessi, “Warum Das Bedingungslose Grundeinkommen Eine Liberale Vision Ist,” Markkwesi, August 2016, https://markkwesi.com/2016/08/21/warum-bedingungsloses-grundeinkommen-liberale-vision/.
242. Goodman, “Free Cash in Finland. Must Be Jobless.”
243. Markkwessi, “Warum Das Bedingungslose Grundeinkommen Eine Liberale Vision Ist.”
244. Matt Zwolinski, “The Pragmatic Libertarian Case for a Basic Income Guarantee,” Cato Unbound, August 2014, https://www.cato-unbound.org/2014/08/04/matt-zwolinski/pragmatic-libertarian-case-basic- income-guarantee.
245. Charles Kenny, “Give Poor People Cash,” The Atlantic, September 2015, https://www.theatlantic.com/international/archive/2015/09/welfare-reform-direct-cash-poor/407236/.
247- Scott Santens, “The Progressive Case for Replacing the Welfare State with Basic Income,” TechCrunch, September 2016, http://social.techcrunch.com/2016/09/09/the-progressive-case-for-replacing-the-welfare-state-with-basic-income/.
248. Yanis Varoufakis, “The Universal Right to Capital Income,” Project Syndicate, October 2016, https://www.project-syndicate.org/commentary/basic-income-funded-by-capital-income-by-yanis-varoufakis-2016–10.
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256. Markkwessi, “Warum Das Bedingungslose Grundeinkommen Eine Liberale Vision Ist.”
257. Goodman, “Free Cash in Finland. Must Be Jobless.”
258. Verena Kainrath, “Grundeinkommen Stellt Gesellschaft Vom Kopf Auf Die Füße: Interview Mit Götz Werner,” derStandard.at, January 2017, http://derstandard.at/2000051252761/Goetz-Werner-Alte-s-stellt-eine-ganze-Gesellschaft-vom-Kopf.
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260. Varoufakis, “The Universal Right to Capital Income.”
262. Noah Gordon, “The Conservative Case for a Guaranteed Basic Income,” The Atlantic, August 2014, http://www.theatlantic.com/politics/archive/2014/08/why-arent-reformicons-pushing-a-guaranteed-basic-income/375600/.
263. Flowers, “What Would Happen If We Just Gave People Money?”
265. Zwolinski, “The Pragmatic Libertarian Case for a Basic Income Guarantee.”
268. Flowers, “What Would Happen If We Just Gave People Money?”
269. “Basically Unaffordable.”
270. Flowers, “What Would Happen If We Just Gave People Money?”
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275. Goodman, “Free Cash in Finland. Must Be Jobless.”
277. Zwolinski, “The Pragmatic Libertarian Case for a Basic Income Guarantee.”
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284. Goodman, “Free Cash in Finland. Must Be Jobless.”
285. Murray, “A Guaranteed Income for Every American.”
286. Gordon, “The Conservative Case for a Guaranteed Basic Income.”
287. Markkwessi, “Warum Das Bedingungslose Grundeinkommen Eine Liberale Vision Ist.”
290. Dylan Matthews, “Economists Tested 7 Welfare Programs to See If They Made People Lazy. They Didn’t.” Vox, November 2015, http://www.vox.com/policy-and-politics/2015/11/20/9764324/welfare-cash-transfer-work.
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303. Flowers, “What Would Happen If We Just Gave People Money?”
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310. Bregman, “Nixon’s Basic Income Plan Jacobin.”
311. Flowers, “What Would Happen If We Just Gave People Money?”
312. Peter Diamandis, “Universal Basic Income,” Abundance Insights, December 2016, https://medium.com/abundance-insights/universal-basic-income-ec5c319139aa.
313. Goodman, “Free Cash in Finland. Must Be Jobless.”
314. “Basically Unaffordable.”
315. Scott Santens, “Scott Santens — Negative Income Tax (NIT) and Unconditional Basic Income (UBI),” December 2014, http://www.scottsantens.com/negative-income-tax-nit-and-unconditional-basic-income-ubi-what-makes-them-the-same-and-what-makes-them-different.
317. Flowers, “What Would Happen If We Just Gave People Money?”
319. Joel Dodge, “The Progressive Case Against a Universal Basic Income,” Quartz, September 2016, https://qz.com/789889/a-universal-basic-income-could-wind-up-hurting-the-poor-and-helping-the-rich/.
320. Flowers, “What Would Happen If We Just Gave People Money?”
321. Ronald Blaschke, “Grundeinkommen: Modelle,” Netzwerk Grundeinkommen, June 2012, https://www.grundeinkommen.de/die-idee/finanzierungsmodelle.
322. Scott Santens, “What If You Got $1,000 a Month, Just for Being Alive? I Decided to Find Out.” Vox, November 2016, http://www.vox.com/first-person/2016/11/14/13513066/universal-basic-income-crowdfund.
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342. “Basically Unaffordable.”
345. Varoufakis, “The Universal Right to Capital Income.” 346 Ibid.
347. Matt Bruenig, “The UBI Already Exists for the 1%,” Matt Bruenig, January 2017, https://medium.com/@MattBruenig/the-ubi-already-exists-for-the-1-d3a49fad0580#.fjajky2o6.
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355. Santens, “The Progressive Case for Replacing the Welfare State with Basic Income.”
357. Strauss, “Would a Work-Free World Be so Bad?”
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