Basic Income — Musk Likes It, Who Else?

February 12th, 2017 by Michael Barnard

Recently, Elon Musk was interviewed by CNBC and made an assertion that ran shivers up a few spines:

“There is a pretty good chance we end up with a universal basic income, or something like that, due to automation.”

The premise is simple at one level. Automation is replacing human labour and not all humans are suited to or are needed in the remaining smaller number of jobs. Studies suggest that from almost half to two-thirds of jobs globally are likely to be replaced by automation over the next three decades. What will those people do? How will they buy food and shelter? How will they adapt to the changes?

There is a strong set of historical precedents that new jobs will emerge and that people will end up in them. In the US Colonial Era, 90% of working people were in the agricultural industry, and now about 2% are. Prior to the Industrial Revolution, people were working piecework with manual looms and then they were working in factories. Buggy whip manufacturing workforces were supplanted by automotive workforce jobs. The world’s GDP has grown enormously and US labour participation is historically high, although declining in recent years dominantly due to retiring baby boomers.

The top-of-mind concern at present is for drivers. Two to three million people in the USA make a living or part of one as professional drivers. Autonomous vehicles are at the bleeding edge of labour displacement. Musk’s statements are definitely in the context of being a leader via Tesla in autonomous cars, with the most advanced commercial offering today and a forecast of fully autonomous vehicles by end of 2017.

Autonomous vehicles is an example of a more interesting type of job replacement than we’ve seen historically. Looking at the list of jobs expected to be displaced, they are mostly jobs which could be explained to people a hundred years ago or two hundred years ago. Before there were truck drivers, there were horse and mule cart drivers. But now those types of jobs will be disappearing.

Looking through the Oxford and Deloitte list of occupations at risk due to artificial intelligence is humbling. Their list of several hundred jobs has around 200 (including ties) which are at a 50% or greater chance of disappearing in the next two decades. The jobs at the top of the list in the graphic embedded on the right are perhaps unsurprising, but what about the following?

Tied at 95.3%: Taxation expert and Chartered and certified accountant

94.4%: Market trader

89.9%: Waiter or waitress

58.3%: IT engineers

Drivers don’t even show up on the list until under 80% likelihood.

For universal basic income advocates (also known as unconditional basic income and basic income guarantee), the answer is simple. Their preferred policy mechanism of a basic income is a panacea for social ills of all sorts, and now with automation, it’s even more of a panacea.

What is a basic income?

This is actually a harder question to answer than it should perhaps be, and the reason why will be more fully explained in the next section around competing motives for providing one. That said, it has some or all of the following characteristics:

Broadly provided to a significant percentage of the population, from anyone below a certain income to everyone

Automatically disbursed to individuals, typically on a monthly basis, typically to their bank accounts — although, at least one Libertarian advocates an annual grant

Not means tested, so it does not get downgraded if someone becomes employed

Lasts an extended period of time, from two years to life

Is sufficient to enable a person to acquire basic shelter and food, the basis of Maslow’s suggested Hierarchy of Needs, although some proposals are below the poverty line and none appear to be sufficient to support a person in a major world city

One of the key pieces of evidence that it’s all a bit ideological in nature is that a great deal of commentary related to basic income is in the form of insisting that some particular test of it isn’t really basic income, but a bastardized, corrupted, or incorrect implementation of it.

Socialists vs Libertarians on basic income

It’s worth assessing who has been supportive of a basic income for years or decades and what they value out of it, and even what they mean when they say it. When I started looking into this in earnest a couple of months ago, I rapidly found that two sets of ideologies were strongly supportive of basic incomes in one form or another: Libertarians and Socialists. Those are capitalized intentionally, because this is not the domain of people with leanings, but full-on ideologues. The resulting alliances are uneasy and I’ll expand on the Finnish example a bit later to show why.

As a pragmatic centrist living outside of the USA, my tendencies are the left of the US centre of course, so keep that in mind. Also keep in mind that some Libertarians reject the thought that they are right wingers and think that they are magically centrist pragmatists, just as many Socialist commentators from other countries exist in milieus where their perspectives are seen as obvious and basic.

What Libertarians and Socialists think of when they talk about basic income can be shown by a series of somewhat opposing statements.

Protect people from rapid change vs Enable people to participate in rapid change In addition to targeted services vs Instead of targeted services People in need vs Everybody More governmental support of citizens vs Smaller government Enable communal living vs Enable individual choice Paid for with more taxes and less military vs Paid for by cutting other social programs Nordic leisure ethic vs Protestant work ethic Redistribution of wealth vs Redistribution of labour Jobs out of choice vs Jobs due to necessity Utopian vs Utopian

Let’s look briefly at each of these in turn, but before we do, I’d like you to hold in mind the proviso that these are tendencies and generalities of the two groups, not perfect statements. The other thing to hold in mind is that there are Libertarian ideologues strongly against basic income, just as there are Socialists against it. It is not universally supported by anyone, and I’ll close with a perspective by renowned French economist Thomas Piketty, whose work Capital in the 21st Century was required reading in 2014.

Protect people from rapid change vs Enable people to participate in rapid change

Socialist commentaries on basic income’s part to play in the rapidity of change tends to be from the perspective of conserving human dignity and the basics of life in the face of rapid shifts of capital to new ventures. On the other side, Libertarians look at basic income as an intelligent security mechanism to support people as they take entrepreneurial chances in emerging markets and technologies, insufficient to fund those new ventures but making sure that they won’t starve as they do it.

These are both admirable impulses but do represent the more paternalistic perspective of Socialism vs the individualist and entrepreneurial perspective of Libertarians. And to be clear, they represent reasonable perspectives on what a group of people would actually do in the event of disruptive change. Some will naturally be entrepreneurially attracted to the change, some will resist it far past the point where it’s reasonable and be left behind, and the rest will be at various points along the continuum.

In addition to targeted services vs Instead of targeted services

This is a matter of degree, not an either–or position. Some Libertarian proposals I’ve reviewed clearly want to do away with every social program that isn’t basic income, effectively eliminating innumerable federal, state and municipal government jobs with a single transfer from the federal level. (This is similar to Libertarian support for a carbon price which comes with the proviso of removal of all or most regulation.) More sensible ones focus solely on fiscal transfer programs such as unemployment and food stamps. Most Socialist responses are much more sympathetic and aware of the diversity of need of the disadvantaged, and typically have a much smaller shopping list of existing services that they would displace.

People in need vs Everybody

In general, Socialist approaches to basic income focus on the unconditional basic income or basic income guarantee variants, in which people in need or transition receive the money from the state for a guaranteed period or for life. The intent is a redistribution of wealth from the rich to the poor, not causing potentially inflationary pressure by giving the already well off more money. Libertarians tend to favour universal basic income in which everyone gets it and it’s partially clawed back from the rich in taxes (which they want to cut to the bone regardless).

There’s a two-speed perspective to this. Both Socialists and Libertarians have advocates of a scarcity perspective and have advocates for a world-of-plenty perspective. Socialists strongly believe that it’s possible for individuals to have too much and that it’s wrong for individuals to have too little. Libertarians strongly believe that everyone should get whatever they can.

This leads to a variance in proposed implementations between the ideologies and a strong tendency to sweep complexity of implementation under the rug on both sides.

More governmental support of citizens vs Smaller government

This is a fairly obvious split in the position. Libertarians want to make government much, much smaller and achieve fewer of the goals that government takes upon itself. Socialists want governments to be more pervasive. As the design of basic income programs and policies progress, this dichotomy is one of the hardest to overcome as it’s one of the most pronounced splits.

Enable communal living vs Enable individual choice

Pooling of resources among basic income earners gets a fair amount of play on both sides. In the case of Socialists, the ideal of the commune gets a fair amount of air time, while in Libertarian circles, alternative lifestyle communities including survivalists tend to be the flavour. However, in general, Socialists spend more time talking about family units, extended family units, and group living, while Libertarians talk a lot more about the freedom of the individual. This plays into questions of how big the basic income needs to be, of course.

Paid for with more taxes and less military vs Paid for by cutting other social programs

While Libertarians frequently espouse a reduction in the military and an isolationist policy, in practice they are much more interested in cutting social programs than they are in cutting military budgets. Socialist commentators are interested in expanding social budgets by including basic income among the tools for wealth redistribution and cutting military budgets. This is especially clear in foreign observers of the USA who see the outrageously large military budgets in that country.

Nordic leisure ethic vs Protestant work ethic

This is a fascinating cultural variant between Socialist and Libertarian schools of thought regarding basic income. Much of this is country-based, with Sweden, Norway, Finland, and France theorists promoting quality of life and leisure vs countries which were once under Calvinist influence such as Germany and the USA. One Socialist criticism of the current Finnish experiment thought another Socialist had gone too far, and offered his more moderate perspective:

“The result is a predictable beast built upon the sorrowful soil of a Protestant work ethic that fetishises work incentives and bemoans the metaphysical sinfulness of laziness.”

As moderate statements go, this still reads as a fairly extreme perspective.

In reality, of course, some people love work, some people love leisure, and the Nordic perspective is better expressed as work hard and efficiently during working hours so that you can apply yourself diligently to leisure as rapidly as possible. But the perspective of the diligent Calvinist emerges much more among Libertarians than among Socialists.

Redistribution of wealth vs Redistribution of labour

This one is purely ideological in nature, of course. Socialism is founded upon ensuring that the worker is well rewarded for their labour and protected from capital flight. This is done under basic income by taking money from the rich and corporations and giving it to the working class and poor. Libertarians, however, view labour mobility as a basic premise and see basic income as a means of enabling labour to retrain and move itself to where the work is.

This frequently leads to the two groups talking past one another as they try to find compromises that will enable their shared interest in seeing a basic income come to fruition.

Jobs out of choice vs Jobs due to necessity

This overlaps with the leisure vs work ethic cultural divide, but is separate I think.

“It is important to remember Albert Camus’ rejection of the phrase ‘work ethic’ on the grounds that ethics are about choices, and for most people, work is not a choice. It is a necessity.”

One of the criticisms from Socialists about proposed or actual implementations of basic income is that they would force people into bad or unfulfilling jobs instead of enabling them to self-actualize. And on the other side of the equation, a feature of Libertarian discussions is that nothing has value unless there is a market willing to pay for it, and so there is no inherent value in most poetry and art for example.

This is a serious split between adherents of the ideology that leads to potentially ugly compromises.

Utopian vs Utopian

Both ideologies have perspectives on basic income which are fundamentally utopian, and both deny it. The Socialists believe that this will make humans fundamentally better people and the Libertarians assert it will eliminate inner city crime. Neither is true, of course.

It’s a tool in the toolkit that will address some of the challenges in means-tested social support which inhibits some people from getting jobs. It reduces poverty among people at least capable of getting bank accounts and so reduces the impetus to crime somewhat. It would enable a subset of people to explore new ideas and allow some people to sit at home and play video games and drink cheap beer.

Humanity is far too diverse for anything to have a common outcome.

The Finnish experiment

Right now, Finland is conducting one of the larger experiments with basic income, but it has very interesting roots and variances which start to explain why they are doing what they are doing and with whom.

To start with, Finland isn’t picking a random subset of their population, they are picking 2,000 unemployed people who live in the now moribund technical centre which used to be anchored by Nokia. The specific hope is to unlock technical innovation and entrepreneurship among people currently inhibited by potential loss of other state benefits. This puts the initiative more on the Libertarian side of the scale, which is reasonable given the governing coalition in Finland right now, reasonably well expressed in this Socialist commentary, The UBI Bait and Switch:

“Centre won the 2015 election, securing 21 percent of the vote. Closely behind Centre were the conservative National Coalition Party (NCP) and the ethno-nationalist Finns Party, both of whom won about 18 percent. Shortly after the election, Centre — which has entered both left-leaning and right-leaning coalition governments in the past — announced that it had formed a bourgeois government, with Sipilä as prime minister and NCP and the Finns as junior partners.”

The article complains that the initiative was about increasing employment not giving workers the ability to not work or about reducing inequality and poverty. And yet that’s what the centre-right (by European standards) party ran on and the citizens voted for.

To bring this back to Musk, a lot of people in Silicon Valley are Libertarians by default or by specific intent and focus. There’s a myth of the Silicon Valley inventor toiling in his garage, but there’s the reality that a lack of security significantly inhibits technical innovation and entrepreneurialism. There’s a running joke that being a tech entrepreneur is a millionaires’ hobby.

Musk is influenced by people he speaks to there, and while he’s very interested and deep in automation (and solar and rockets), he’s got a lot more received casual knowledge on other topics. He’s more aware of this than most billionaires of course, but he’s also comparing himself to and influenced by Peter Thiel, who is a very hard Libertarian ideologue.

Thomas Piketty on basic income

The most reasonable perspective on basic income comes from one of the world’s leading economists on the challenges of inequality. Piketty holds a handful of prestigious academic positions in France and the UK and was author of the most read economics book of 2014.

He’s been making waves in the world of basic income recently with a short series of blog posts. He rightly points out that basic income is insufficient by itself. It can’t be funded without very significant new forms of revenue, and his solution includes increased taxation on the rich at the levels that used to exist in the USA prior to Reagan.

He’s clearly positioned on the Socialist end of the scale of discussion, but he’s got a broader perspective than most basic income proponents:

“If we wish to live in a fair and just society we have to formulate more ambitious objectives which cover the distribution of income and wealth in its entirety and, consequently, the distribution of access to power and opportunities. Our ambition must be that of a society based on a fair return to labour, in other words, a fair wage and not simply a basic income.”

He points out that educational opportunity inequality needs to be addressed, that trade unions need to be supported and strengthened, and that intergenerational wealth transfers need to be taxed at a high level. In other words, he recognizes that basic income is a tool in a toolkit, whether you agree with the other tools in his kit or not.

Will a basic income be necessary?

It might be. Society is transforming more rapidly than ever before, leaving less time for individuals, families, and communities to adapt. The change means that business needs different skills than it did a few short years ago, and needs people with those skills. In general, work is getting more complex, not simpler, and we need to prepare as a global society and as countries for that rapidity of change and increase in complexity.

But there will be no purity in any basic income implementation. The relatively opposing perspective of primary theorists will ensure that every attempt outside of the most narrow will be laden with multiple and often contradictory value propositions. The attempts will have to deal with the innumerable variances in local implementations of safety nets of various types. The attempts will have to deal with existing systems offered at the federal, sub-federal, and municipal levels. This sort of complexity will take a long time to work through and will result in different implementations everywhere.

There are nine experiments or potentially emerging experiments in basic income going on globally right now. It will be very interesting to see how different groups claim success or failure for them.

Additional reading:











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