Thanks to the recent efforts of such figures as Democratic presidential candidate Andrew Yang and British Shadow Chancellor John McDonnell, the issue of Universal Basic Income (UBI) has been back at the forefront of the public discussion on economic issues, along with the various arguments and justifications for introducing such a policy. While many of these justifications have become quite familiar over the years of waxing and waning interest in UBI, it is interesting to note the recent surge of interest in one particular argument, which sounds more like something from a science fiction novel than an economics textbook.

A Familiar Narrative—with a Twist

This argument runs roughly as follows: In the not too distant future, rapidly advancing technology will allow robots and artificial intelligence (AI) to perform many of the jobs now being done by humans and to do so more cheaply and efficiently than humans ever could. This will result in robots/AI replacing humans in almost all jobs, making the vast majority of people permanently unemployed, and without Universal Basic Income, how will they (the people) be able to keep food on their tables?

Of course, the idea that advances in labor-saving technology will lead to catastrophic unemployment and declining living standards is hardly new, arguably dating back to ancient Greece or earlier, and economists (not to mention the facts of history) have been refuting the idea for nearly as long as economics has existed as a self-conscious science.

What marks the AI argument as new is its assumptions about the breadth of different jobs the technology would be capable of usurping.

However, as familiar as the generally Luddite tone of this new argument for UBI may seem on its surface, it nevertheless does have one key difference from the more traditional arguments against labor-saving technology. This difference not only sets the new AI scaremongering argument apart as meaningfully different than the arguments that have gone before, but it also highlights a fundamental misunderstanding its proponents suffer from concerning the very nature of what a market economy is and what drives it.

What marks the AI scaremongering argument as new and meaningfully different is its altered assumptions about the breadth of different jobs the new technology would be capable of usurping from human workers. In previous eras, even the most hysterical denouncers of labor-saving technology shared an unspoken understanding of the limited capabilities of the technologies they opposed.

When the spinning jenny was introduced in the 1760s, they may have argued that it would cause unemployment in the textiles industry, but none of them would have claimed that the same machine would cause mass unemployment among butchers, lawyers, or pub landlords. When automobiles became widely available, they may have argued that buggy whip manufacturers were at risk of permanent impoverishment, but few would have argued that the existence of cars posed an equal threat to the jobs of teachers, waitresses, or doctors.

However, given the near-total lack of public understanding of what AI actually is and what it’s capable of, not to mention the irresistible temptation to sensationalize modest scientific advances into eye-grabbing and alarmist headlines, the new AI scaremongers have allowed their imaginations to run wild when speculating as to which jobs are under threat from this mysterious new technology. The result is that they, and much of the public, seem to believe AI is (or soon will be) capable of almost anything they can imagine, in the same way that so many charmingly naive '80s movies portrayed home computers as essentially "omnipotent science magic."

But would that really still be the case if the new technology is capable of making human labor obsolete in all types of jobs?

It is this assumption that AI and robots will soon be able to accomplish almost all jobs more cheaply and efficiently than humans that marks the new AI scaremongering argument as fundamentally different from the previous arguments against labor-saving technology. Economists had previously been able to argue that labor-saving technology frees up resources and lowers prices in a way that results in net quality of life improvements for society as a whole, creating new jobs and opening up new types of industry, even if it results in short-term unemployment for a small minority. But would that really still be the case if the new technology is capable of making human labor obsolete in all types of jobs?

There are several objections one could make against this argument, not least of which being its dubious assumptions about the capabilities of AI technology. However, the sign of a truly weak argument is not only a reliance on unrealistic assumptions but a failure to stand up to scrutiny even when its assumptions are taken as given.

A Fundamental Misunderstanding of Economics

Even if it were true that robots and AI could perform absolutely all jobs currently being done by humans and could do so more cheaply and efficiently than humans, the AI scaremongers would still be incorrect to conclude that robots and AI will replace humans in all, or even most, jobs. The source of their incorrect conclusion is a fundamental misunderstanding of what drives business activity in a market economy.

Entrepreneurs are not driven by an arbitrary desire to pursue the most technologically advanced, the most efficient, or even the cheapest production process purely for the sake of it, as seems to be the assumption of the AI scaremongers and many other anti-capitalists. Rather, the fundamental driving force in a market economy is to direct and organize production in the way that best satisfies consumers’ preferences.

For evidence that this true driving force of the economy does not necessarily lead to increasing reliance on technology, even if that technology would be more cheap or efficient in some objective sense, one need look no further than the sectors in which human workers already are being replaced by "robots" of a sort. Readers who have visited a fast food chain such as McDonald's in the past few years may have noticed an increasing number of self-service touch screens, reducing the need for human staff to take orders. But if this technology exists and is already in profitable use at these fast food chains, why hasn’t it been adopted by all other restaurants?

It's easy to imagine many services consumers might prefer to have provided to them by human staff.

If the AI scaremongers believe robots and AI will necessarily replace all human workers when the former can perform the same job more cheaply and efficiently, how do they account for the fact that human waiters haven’t already been replaced by self-service touch screens at the Savoy Grill or The Ritz? The absurdity of the question illuminates the fact that a desire to satisfy consumer preferences, not bare efficiency and cost-cutting, is the key motivator of entrepreneurial decision-making in a market economy.

With a little thought, it is easy to imagine many services consumers might prefer to have provided to them by human staff even if a machine were technically capable of providing the same service more cheaply: nurses and care providers, entertainers, chefs, and teachers would likely fall into this category, as would many other jobs.

Given the persistent popularity of UBI across the political spectrum, its advocates are unlikely to abandon any of their increasingly familiar arguments any time soon. However, it seems unlikely that their new argument about AI-induced mass unemployment will turn out to be the silver bullet they were hoping for.

This article was reprinted from the Mises Institute.