The Machine Age and Public Policy

Debates on Labor, Basic Income, and Job Guarantees

The labor force has been shaped, and reshaped, over the centuries by technological progress. Agricultural technology gave rise to the farming industry, industrial technology moved people into factories, and the tech-led forces of globalization and automation birthed the service economy. Despite the constant flux, the total number of jobs has always increased. However, as Artificial Intelligence (AI) and Machine Learning continue to intrude into every available orifice of the economy, we may be on the eve of something altogether different: a seismic shift in the supply and demand for human labor and an end to work as we know it. The fear that machines might replace our utility has always been juxtaposed with the hope that they will bring about an idle-filled paradise.

Where is Our 15-Hour Work Week?

In a 1930 lecture titled Economic Possibilities for Our Grandchildren, John Maynard Keynes elaborated that “thus for the first time since his creation, man will be faced with his real, his permanent problem — how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well”. Keynes predicted that his grandkids would work 15-hour weeks.

A little over 30 years later, Time Magazine made computers the cover subject for its April 2, 1965 issue. Fascinated by the progress made thus far, and eager to anticipate what would come next, Time noted, “Men such as IBM Economist Joseph Froomkin feel that automation will eventually bring about a 20-hour work week, perhaps within a century, thus creating a mass leisure class. Even the most moderate estimates of automation’s progress show that millions of people will have to adjust to leisurely, “nonfunctional” lives, a switch that will entail both an economic wrench and a severe test of the deeply ingrained ethic that work is the good and necessary calling of man.”

The April 2, 1965, cover of TIME

What is real and observable thus far in the 21st Century is technological progress has not led to massive shifts in the average worker’s schedule. The drudgery of work has not been replaced by expansive leisure nor limitless personal freedom. The number of hours worked in the United States has remained steady for decades and our friends across the pond have it only marginally better. According to Keynes, compound interest and science were to be the dual forces underwriting an idle-filled future. The reality of a savings or investment compounding over time to create passive income, releasing one from the responsibility to work, has become a reality for very few. The top 10% of American households, as defined by total wealth, now own 84% of all stocks, as reported in a recent paper by NYU economist Edward N. Wolff. Science, or technological progress, on the other hand, is inflicting a new and lasting impact on the workforce. The predictions were not wrong, just premature.

The Machines Are Here, More Are Coming

In 2013, Oxford University researchers forecasted that machines might be able to perform half of all U.S. jobs in the next two decades. The projection was bold at the time and, in the intervening years, has been criticized for not going far enough. A McKinsey report from last year said 400 million to 800 million jobs worldwide could be automated by 2030. Even the optimists amongst the research, viewing through rose-tinted glasses, reveal a shift too great to ignore.

As the presence of AI, automation, and robotics looms over us, and we once again start pondering a future tech-driven utopia, we must confront the economic realities of the past. Technology has accelerated productivity for decades, yet far from freeing up lives, it has kept most working the same amount of time while earning the same amount of wages, benefiting the few at the top.

Source: Economic Policy Institute

Soon, advancements might eradicate the need for much of human labor altogether. Yuval Harari (Author of Sapiens & Homo Deus) notes, “Just as the Industrial Revolution created the working class, automation could create a global useless class. Disruptive technologies, which have helped bring enormous progress, could be disastrous if they get out of hand.” This worldview is starting to be taken seriously by researchers, economists, and legislators alike. The debate for interventionist solutions is narrowing into a binary set of options: Guarantee the people a basic income or guarantee them jobs.

Universal Basic Income (UBI)

The popularity of these three words above is soaring in the lexicon of our political discourse. The idea, a form of social security that guarantees a certain amount of money unconditionally to every citizen within a given governed population, is hardly new. Thomas More proposed the idea in Renaissance times as an antidote to thievery. Thomas Paine (of Common Sense) wrote about a basic endowment in the 1700s. MLK proposed “guaranteed annual income” as a natural progression of the civil rights movement. Pilots, studies, and debates of a UBI have been taking place in the Nordic and French economies for decades. And closer to home, Alaska began paying oil dividends to the state’s residents in 1982 — each resident received over $2,000 as recently as 2015 — and it has helped to establish Alaska as the most egalitarian among US states.

Source: Google Trends

One interesting public figure is not just igniting a conversation around UBI, but leveraging the idea as the fulcrum for a 2020 presidential campaign.

When Andrew Yang recognized that new technology like AI threatened to eliminate one-third of all American jobs, he sought to do something. In his book The War on Normal People (2018), he explains the mounting crisis and makes the case for implementing a UBI tacitly named The Freedom Dividend: $1,000 a month for every American adult, no strings attached. It is possible Yang might never see the debate stage or make it past the primaries, but what is significant is that he is sparking a conversation, one that is resonating with a populace increasingly disaffected by technological progress. Yang suggests, “There are so many good things about it for businesses and CEOs. Everyone who runs a business knows that capitalism and markets function much, much better when consumers have money to spend. If we were to give everyone $1,000 a month, the consumer economy would be much more robust and vital, and businesses would have significantly more customers to serve. The Roosevelt Institute found that giving everyone $1,000 a month would increase buying power by more than $2 trillion per year and grow the economy by 12 percent while creating 2.5 million new jobs.”

Historical experience with basic income experiments has yielded some favorable, albeit nascent, signs of working quite well: increases in mental and physical health, education, entrepreneurship, nonprofit work, familial balance and caring, bargaining power for workers, and job encouragement. The impulsive, fear-assisted response that cash recipients would waste their money on drugs, alcohol, or worse, drop out of the job market and have more kids than one can afford have been disproven by The World Bank. Many of these behaviors were shown to be reduced. To be scientifically fair, the studies must admit to being only a partial window as sample populations have been small, each with their own distinct circumstances.

What Could Go Wrong?

Despite the positive results from studies, skepticism and cynicism abound. Not as to whether the idea can function, but towards what end, and rightfully so. Given that UBI champions exist on both ends of the political spectrum, left in the wrong hands, the idea could go from a leftist dream-state to assisting in capitalist intensification. It could be a remedy to combat the plight of low-wage workers or a long-awaited justification to abolish the welfare state. When hardened capitalists and conservative thinkers promote the idea of UBI as a solution for their woes, it might be time for progressive thinkers to take a second inquisitive look at what could go wrong.

Milton Friedman, in his book Capitalism and Freedom, argued that UBI is an efficient way to eliminate and privatize public sector programs including welfare, social security, minimum wage, public health, housing, hospitals, pensions, and aged-care. He said, “If enacted as a substitute for the present rag-bag of measures directed at the same end, the total administrative burden would surely be reduced.” Charles Murray, UBI advocate and fellow at the American Enterprise Institute, a conservative think tank in Washington, D.C., insists on “getting rid of Social Security, Medicare, Medicaid, food stamps, supplemental security income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare.”

It is doubtful a weakened or disappeared welfare state, combined with a greater reliance on market dynamics, is the utopian future most have in mind when they fantasize about a UBI-subsidized lifestyle. Sociologist Daniel Zamora argues that “UBI isn’t an alternative to neoliberalism, but an ideological capitulation to it.” A payment too little to live on combined with drastic cuts to welfare will only perpetuate the condition that makes “market exchange the nearly exclusive means to acquire the goods necessary for our own reproduction.” Putting aside the fear of a conservative hijacking, there are those who denounce the idea as being fundamentally misaligned with the will and spirit derived by human nature. What might happen if work goes away?

A Guaranteed Job

Lining up against the post-work vision of UBI are those who celebrate work, viewing it as providing meaning by being the literal and figurative backbone of modern society, not to be quickly transcended or dispensed with. There is a dignity to working and to being useful. We should strive for better work, not less, not to mention the blurry lines where work intersects and interweaves with our fragile social order.

In 1944, Franklin D. Roosevelt brought forward the Economic Bill of Rights (which was not passed), the first tenet of which states, “right to a useful and remunerative job in the industries or shops or farms or mines of the nation.” The idea that the government should guarantee every individual a job is again not a new one, but is gaining a lot of traction as of late.

Democratic leaders — clearly feeling the sting of losing ground in the populist war for the worker’s soul — are starting to line up behind the idea. Senators Cory Booker, Bernie Sanders, and Kirsten Gillibrand have all come out in favor of a guaranteed jobs program. Congresswoman Alexandria Ocasio-Cortez is advocating for a Green New Deal, which would include a job guarantee at a “livable wage.” Details are sparse on how it would be paid for, and more consequently, how it would stimulate, as opposed to stymie, economic growth. Still, the premise is radically simple — if you are a citizen, and you cannot find work in the private sector, you have it waiting for you in the public sector, regardless of cognitive or physical ability. Senator Booker claims, “It’s going to create a more competitive labor market where people are going to start getting living wages, not just minimum wage. Giving people the dignity of work, of being able to stand on their own two feet, there’s such a strengthening element of that.”

Conservatives and naysayers warn of runaway inflation and centralizing too much power away from private industry. There are also those on the left that worry this type of program would create a permanent underclass by not addressing the real problem: wage stagnation. The aforementioned UBI advocate Andrew Yang brings down the proverbial hammer on the idea in a single tweet: “A jobs guarantee is a well-intended but terrible idea. Leads to armies of dystopian laborers forced to do makework to survive amid a growing mass of bureaucrats. Studies have shown an inability to transition into private employment afterwards.”

Furthermore, there is a larger complication that this idea has failed to adequately wrestle with. Guaranteed jobs reverse the normal logic of the labor market and, more philosophically, of human advancement. The starting point should be what society demands and desires. Only then does the direction of labor reveal itself. A jobs guarantee imposes a massive constraint on the system — the current capabilities of millions of undereducated and undertrained (and increasingly resentful) individuals — which have to be put to work to earn an already guaranteed wage.

The Way Forward

Any measure promised as a single-shot solution to collective woes will inevitably be a failure. Incremental, measured progress should be the goal. Government intervention is at its best when it frees up individuals and allows for them to bring their skills and experiences to the market. Better yet when intervention allows for individuals to acquire new skills and experiences. Interventionist policies should be seriously considered not because they are magic pills, nor moral antidotes, but because if administered correctly, they have proven to stimulate many of the frustrating laggards that we have yet to find solutions for.

Philippe Van Parijs’ and Yannick Vanderborght’s recent Basic Income: A Radical Proposal for a Free Society and a Sane Economy brings forward a persuasive calculus on UBI’s positive impact on all things economic, philosophical, and pragmatic. It reminds us that it is not a magic trick that instantaneously solves the contradictions in our capitalist model. For fear of it being co-opted by the extreme Left or Right, it would have to be brought to life as a consensus proposal, a common-sense reaction to changing labor dynamics bolstered with other measures that aim to maximize human well-being.

There is hope and optimism that the AI revolution will be similar to past ones — bringing about new opportunities and markets to replace the ones that came before. Nonetheless, the stubborn reality persists: the vast majority of people who are set up to lose their jobs will not possess the proper skills to take on the new ones. Retraining and retooling a large swath of the labor force will take time and investment. Most workers at risk for displacement are middle-aged or older. Many have health and family problems. Retraining will be difficult, expensive, and might be abandoned altogether if adoption rates are low.

Future uncertainty, or optimism, is not a valid excuse for inaction. The probability of intervention in the labor shift is growing. Solutions are being debated and lines are being drawn. Will it be the promise of a job or an unconditional cash payment? Our civic attention is now required. How should our government respond?