The first revolution, the Cognitive Revolution from around 500,000 years ago, led humans to further cooperate, build tools, and in a relatively short amount of time, turn into the dominant species. It is our unique ability to cooperate, above all else, that has helped human beings progress in the way that we have. If cooperation simply means humans working jointly towards the same ends, the growing acceleration of income inequality marks a divergence; we are experiencing an economic apartheid, with humans breaking into two distinct groups — the elite and the rest. The recent political unrest is only a small glimpse of its consequences.

At its core, entrepreneurship is about the ability to identify problems, connect the dots, and consider what viable solutions may look like. The Economic Security Project provides a platform to test whether the Universal Basic Income (UBI) could provide a solution to the rising inequality and joblessness problem.

Rising harsh economic conditions will have costly consequences

Most would agree that economic conditions are central to human actions, and when the conditions become too harsh, chaos often ensues. On the one hand, trade and commerce can play a role in creating social cohesion and reducing racism, or on the other, justify slavery (e.g. slave plantations) and wars. In the first book on democracy, Aristotle described how the majority (the poor) will vote to appropriate the wealth of the rich, which will lead to chaos, unless there are measures to reduce inequality. The Founding Fathers also recognized this. The 1935 New Deal delivered both security (welfare state) and promoted equal opportunity (such as access to education). The post war period of widespread progress and growth that followed is in large part attributed to the existence of security and equal opportunity as key conditions.

However, since the early 1980s, there has been a continuous decline in both economic security and opportunity. The average cost of a degree for example has increased by 1,120%, while average wages have been flat or falling during the period. It is no wonder that 58% of Americans are pessimistic about the future. It is clear that the majority are looking for alternatives, however radical that may be, with a sharp decline (from 75% in 1930s to 25%) in those stating that it is essential for them to live in a democracy, and worse among younger voters. The more severe the situation, the more resentment will build up, the more radical the alternatives sought — to the point where an alternative which is viewed as a human cocktail Molotov being thrown at the ruling elite, despite any and all other dangerous consequences, will seem like the only hope — a la Trump!

Joblessness is real and getting worse

There are now 3 applicants for every 1 job; improvements in automation and manufacturing efficiency has meant that we need a quarter as many humans as we did in 1980 to produce the same amount (graph below). This is expected to get worse, with an estimated half of today’s jobs being in danger of becoming automated in the next 20 years. Unlike previous revolutions, the sheer scale of automation and advances in artificial intelligence (AI) means that the permanently unemployed are here to stay. There is little scope for any meaningful “retraining”, since unlike previous revolutions, automation due to AI improves exponentially. I experienced the assertion that The greatest shortcoming of the human race is our inability to understand the exponential function first hand as the co-founder of a startup that uses machine learning. On average, we process 50x identity document checks compared to human processes and this is expected to reach 500x by the end of 2017. Today, there are 102 million working age Americans who do not have a job. The sooner we recognize the scale of the problem, the sooner we’ll be able to devise effective solutions.

[Source: Azeem Azhar — The Exponential View]

The current solutions won’t work long-term

Misunderstanding the scale of the problem, or ignoring it, won’t make the problem go away, but will leave space for ineffective and often more damaging alternatives. There have already been short-term solutions suggested for this joblessness (or rise of BS jobs) crisis — first, the age-old one of blaming migrants for taking our jobs. However, despite US manufacturing output having doubled since the 1980’s, it has been jobless growth, with 85% of the job losses due to automation. Second, the creation of “more wealth” — deregulating and cutting taxes — to create more wealth and make the economy appear to be growing. The problem is that 90% of the new income generated has gone to the 1% (graph below). Third, limiting democracy — if “one person, one vote” is the problem, why not make it “one dollar, one vote” — indeed, the Supreme Court’s Citizens United decision in January 2010 gave corporations more rights to influence politics than ordinary individuals. This won’t make the problem go away, however — it temporarily stifles it like placing a plaster on a dam that will soon burst. Fourth, pumping money into the economy, as with the $8tn bank bailout in 2009. However, banks no longer simply connect borrowers to savers and invest in communities to fund profitable return projects, mega-banks mostly operate on speculation, further exacerbating the problem in the long-term. Fifth, investing in productive and socially useful activities, such as Roosevelt’s New Deal or Obama’s Green jobs, following John Maynard Keynes’s economic prescriptions where full employment and the relief of poverty are key goals. Although productive investments to directly boost jobs could be part of the solution, it does reach a limit when demand for jobs far outweighs supply, hence the importance of understanding the scale of the problem.

[Source: Azeem Azhar — The Exponential View]

The Market won’t fix this one folks

Whereas the first industrial revolution automated and replaced routine manual tasks (replacing the human arm), the Second Machine Age partly uses machine learning to replace routine cognitive tasks (replacing the human intellect). Moreover, the industrial revolution created jobs for humans who earned wages and spent — hence demand rose with supply; whereas in the Machine Age, only entrepreneurs are expected to do well, often in winner-takes-all markets. The majority will increasingly have less to spend, further reducing demand. The share of income going to labor (rather than capital) has also declined by 15% during the past 60–70 years (graph below). Fewer jobs, lower share of income — and this is only the start. This isn’t the market failing; it’s the market working.

[Source: Azeem Azhar — The Exponential View]

Survival of the fittest now has a new meaning

There is the laissez-faire view that joblessness is the problem of the jobless and we’ve been taught to champion the individualistic view that our “progress” is a consequence of the survival of the fittest — the strong do what they can, the weak suffer what they must. This was a more palatable deal as long as there were jobs. There are even records of some slaves forgoing freedom in return for job security on plantations. The fear of hunger, it is argued, would incentivise harder work. That assumes that there are jobs, however, and fails to take into account what happens when there aren’t any. This is when a growing number may pursue a living outside of the law. Like the challenge of truly grasping the notion of the exponential function, poverty and hunger are experience goods — with it being difficult to fully understand the realities of joblessness, such those experienced by one in six Americans struggling to put food on the table. If a growing number are poor and expected to suffer, following the logic of tunnel theory, they will grow impatient, have hopes shattered as one detached failed government administration replaces another, and the widespread resentment will eventually turn into a profound sense of betrayal.

It’s the Government’s problem then!

Others argue that the consequences of joblessness are the government’s problem — correct! it is the government’s problem, and should the government fail, it will then become everyone’s problem. Venture capitalist Nick Hanauer predicts, pitchforks will come for us plutocrats. When left with no viable alternatives and hope, we shouldn’t be surprised when more and more citizens prefer to just flip the table whenever given the chance to vent. In the aftermath of the industrial revolution, there was much bloodshed and suffering before the creation of the welfare state, unions and labor movements. Now with the Machine Age, we need a new set of solutions.

What kind of society do we want

Once the problem has been fully acknowledged, seeking the appropriate type of solution boils down to the question of what kind of society we want to live in. As a student of Economics, I don’t think that we should look exclusively to economics for an answer (although very tempting). Despite the many economic reasons for the Universal Basic Income, economic theory is ultimately the study of distribution of resources based on efficiency using scientifically quantifiable tools, not human values such as life, liberty, happiness, justice, peace, and fairness. It will ultimately be our collective values and subsequent influence on political decisions that will tip the balance for its adoption. As for our collective values as a society, Gandhi defined civilization as less about efficiency and survival of the fittest and more about how we treat the most vulnerable in society: the poor, old and sick. There are, of course, alternative viewpoints, such as Spartans and fascist parties, who view the vulnerable as weak, an embarrassment, something to ignore at best or eliminate at worst. In contrast, striking the right balance between free enterprise and security combined with equal opportunity has fueled the success of the United States — all can work hard and progress. The New Deal got this balance right, and if we intend to end the economic apartheid and continue thriving sustainably, we need to adopt the Universal Basic Income as the 21st century’s equivalent.