From Job Loss to Guaranteed Basic Income

AUTOMATION AND THE POST-SCARCITY ECONOMY

by Dusty Sklar

From the Summer 2017 issue of Jewish Currents

THE IDEA of providing a universal basic income (UBI) to all families has begun to take root in the U.S. among both conservatives and liberals. For the former, it’s a way actually to shrink the welfare state by folding poverty-relief programs into a single, universal, basic income program. For the latter, it’s a path to more economic equity and an end to dire poverty. For both, it’s a way of responding to a growing reality of job obsolescence attributed primarily to automation -- as well as to the internationalization of manufacturing and to the less-acknowledged refusal of the federal government to invest significantly in infrastructure, green industries, environmental repair, and many other job-creating, socially valuable programs.

Experiments with providing a UBI have been unfolding around the world. Canada’s Ontario province is launching a pilot project this summer to test its impact on some 4,000 low-income residents in Hamilton, Thunder Bay, and Lindsay. One group will receive up to $12,570 annually for three years, while the control group will receive no funding.

Similar test programs are underway in Finland, Italy, the Netherlands and Kenya. Finland is launching a two-year experiment with some 2,000 citizens who will receive a monthly payment of about $590 and a negative income tax to replace the nation’s ever-expanding tangle of welfare programs. Kenya began a pilot program last October with GiveDirectly, a New York-based nonprofit, in a rural Kenyan village. This is an experimental, basic-income program in which residents of forty villages, more than 6,000 people, receive the equivalent of $22 every month for the next twelve years. In another eighty villages, the same monthly amount is distributed for two years only. In a third group of eighty villages, recipients are given a lump-sum payment equal to the two-year total. A control group of a hundred villages will receive no cash payments. Preliminary results reported by GiveDirectly are promising: Recipients indicate that the money has been used to purchase basic necessities (food, clean water, medical bills, etc.) and is encouraging investment in small businesses. Participants also relate lower stress levels.

Alaska is often cited as an American UBI role model for programs that benefit all citizens, regardless of their economic standing. Since 1982, the Alaskan government has paid an annual dividend on oil revenues, under the Alaska Permanent Fund, to all full-time residents of the state (with exceptions pertaining to incarceration). The payments average only $1,100, however, and fluctuate with the price of oil. Nevertheless, in a country that generally loathes income redistribution schemes, Alaska’s share-the-wealth policy is groundbreaking.

IT IS ALSO, in fact, anything but “un- American.” The American revolutionary Thomas Paine wrote in his last pamphlet, “Agrarian Justice,” that since the Earth was the common property of the human race, “it is the value of the improvement” of the cultivated lands “that is in individual property. Every proprietor, therefore, of cultivated lands owes to the community a ground-rent,” which Paine proposed “shall be paid to every citizen, when arrived at the age of 21 years, the sum of fifteen pounds sterling as a compensation in part for the loss of his or her natural inheritance.” He also proposed “the sum of ten pounds per annum, during life,” be paid “to every person now living, of the age of 50 years.” Paine insisted that payment be made “to every person, rich or poor.”

Economist Friedrich Hayek, a darling of the libertarian movement, supported the idea that the state should ensure “a certain minimum income for everyone . . . a sort of floor below which nobody need fall even when he is unable to provide for himself.” During the 1940s, Milton Friedman, another libertarian icon, proposed with George Stigler a plan for a government subsidy to a household with income below a specified amount, in the form of a negative income tax.

In August 1969, eight months into his presidency, Richard Nixon talked about a “Family Assistance Plan” for “every American family with dependent children that cannot care for itself.” The plan, though incorporating a work or job training requirement, has been seen as a forerunner of today’s UBI concept.

In 1972, the Democratic presidential nominee George McGovern proposed an annual payment from the federal government to “every man, woman and child,” which would be the same regardless of the recipient’s wealth. As opposed to Nixon, McGovern’s proposal included unmarried individuals and childless couples.

Near the end of his life, Martin Luther King’s economic dream was that the government guarantee every American a middle-class income. In his 1967 book, Where Do We Go From Here? Chaos or Community, he argued that it was time for the government to make sure that every American had a reasonable income, “pegged to the median of society,” which should rise automatically with the American standard of living.

Robert Reich, former Secretary of Labor in the Clinton Administration, says we have no choice but to “raise the floor and provide a universal basic income. Technology will replace so many good jobs that Americans won’t have enough purchasing power to keep the economy going without an economic floor to stand on.”

THE UNIVERSAL basic income idea also has support from many powerful people in Silicon Valley, whose technological innovations have hugely disrupted jobs and income. Driverless cars, for instance, will probably soon have us saying goodbye to employment for drivers of taxis, trucks, ambulances, and other vehicles -- roughly five million people, according to the Los Angeles Times, most of them “belong[ing] to the same demographic cohort as many factory workers -- men without college degrees -- who’ve already been hit hard by the loss of five million manufacturing jobs since 2000.” What are they supposed to do when their livelihood is obliterated?

It’s predicted, in fact, that in the next twenty years, half of all American jobs will be replaced by machines. An Oxford University study anticipates a loss of 47 percent of American jobs by 2033. What’s to be done so that financially vulnerable people are not crushed? There are many government interventions, of course, that could help promote employment at a living wage while also bringing social benefits to the whole country -- the New Deal of the 1930s exemplified how government jobs programs can blunt the painful vicissitudes of the capitalist marketplace. In the current anti-statist political climate, however, a universal basic annual income seems to many to be the most plausible solution.

One advantage of UBI over the multiplicity of “social safety-net” programs is its universality. Today, on average, about one in four U.S. families living below the poverty line receives Temporary Assistance for Needy Families -- but there are states such as Oklahoma and Wyoming in which far fewer poor families are helped. The present welfare system is also believed by many critics to be racially biased and designed to sustain rather than eliminate poverty. According to Joe Soss, Richard C. Fording and Sanford F. Schram, authors of Disciplining the Poor: Neoliberal Paternalism and the Persistent Power of Race, welfare is a close cousin to prison. “In the 1970s,” they write, “welfare and penal operations shifted in tandem as two elements of a single apparatus for managing the poor.” The tremendous growth of the welfare state in the 1960s, moreover, gave rise to furious resentment among working-class whites towards black women living on Aid to Families with Dependent Children and their “dangerous men.”

Many conservatives, such as Charles Murray, the author of In Our Hands, believe the welfare state is financially insupportable. “No serious student of entitlements,” Murray says, “thinks that we can let federal spending on Social Security, Medicare, and Medicaid rise . . . to the 28 percent of GDP that it will consume in 2050 if past growth rates continue.” Of course, reprioritization of the federal budget away from military expenditures and tax-cutting for the wealthy might quickly whisk away such doubts. But the establishment of a universal basic income looks far likelier than any such reprioritization, barring the collapse of the entire economy into a state of emergency.

There are even some proposals already on the table from conservative welfare reformers. Florida’s Senator Marco Rubio, for example, wants to move out of existing welfare funding into a single “flex-fund” to be dispersed to the states. Wisconsin Representative Paul Ryan would allow states to combine food stamps, housing assistance, etc., into a single funding stream. Neither of these proposals, however, guarantee anything but reduced government spending on poverty relief. Charles Murray, while proposing eliminating Social Security and Medicare, at least substitutes an annual $10,000 cash grant to everyone 21 and older.

“The response I almost always get,” Murray says, “goes something like this: ‘But people will use it to live off the rest of us! People will waste their lives!’” To the contrary, it is generally believed that if people knew they had a basic income to rely on, they could negotiate better wages and working conditions, or go back to school, or quit a low-paying job to care for a child or aging relative. With an unconditional basic income, workers also wouldn’t have to worry about how making more money might lead to a loss of crucial benefits. With welfare, which is withdrawn as income is earned, people are punished for working; with UBI, income is never withdrawn. People are rewarded for working, but they also have the power to refuse to work. It gives them bargaining power and much more freedom of choice in their lives.

ANDY STERN, former president for fourteen years of the most influential and fastest growing union, the Service Employees International Union (SEIU, with some two million members in health care, food services, janitorial work, and the public sector), is now a senior fellow at Columbia University’s Center for Business Law and Public Policy. He has recently published, with author Lee Kravitz, a timely book, Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream (Public Affairs, 2016, 272 pages). In researching his book over the course of five years, Stern has spoken in depth with important business people, activists, CEOs, futurists, economists, workers, entrepreneurs, intellectuals, and investment bankers. His reports on these conversations are cause for optimism about our society’s capacity to deal with the fast-paced economic changes we are facing.

Stern argues, however, that merely tinkering with current programs won’t solve workers’ problems. Automation has overtaken the economy, and a major shift in the working lives of all people is well underway. The solution he proposes to widespread unemployment and economic displacement is to institute an annual UBI of $12,000 for every adult citizen, whether or not they work. He suggests eliminating many current government programs while adding several new ones.

Why give this income to people who already have enough, or to people with real wealth? As with Social Security and Medicare, having everyone in the same program would reduce the stigma associated with receiving benefits from the government, Stern says. It would promote equality, efficiency, an equal sharing in the benefits of technological progress, a common ownership of the Earth, and a society-wide investigation of how to maximize happiness in a post-scarcity, technologically sophisticated, economically secure society.

Stern reports that a growing list of technology executives are in favor of such a plan, among them Tesla’s Elon Musk, Y Combinator president Sam Altman, and eBay founder Pierre Omidyar. Yet some of Stern’s discussants foresee problems with scrapping existing welfare programs and worry that a guaranteed annual income would waste money on those who don’t need it -- and may do away with Social Security and Medicare. They fear that those who are worst off would have their benefits reduced, while the middle classes and the rich would profit. The argument made to Stern by Jason Furman, former chairman of the Council of Economic Advisers under Obama, is that it would take America in the wrong direction and worsen economic conditions.

Jared Bernstein, former economic advisor to Joe Biden, also opposes the idea of replacing the welfare system outright and warns that people could find themselves without any protections. He feels that claims that the welfare state doesn’t work are false, because current government programs “lift more than 40 percent of Americans out of poverty,” he says, “and instituting a universal income in our country would undermine that progress.”

One can presume that, as with all programs of social progress, the impact of UBI would be influenced significantly by the attitudes with which it is implemented. If it is simply an excuse for reducing government interventions to a bare minimum -- to hell with addicts, mentally ill, PTSD veterans, rape victims, etc., you’ve got your money, you’re now on your own -- it may yield cruel results. If it is motivated by a sense of moral urgency and a recognition that citizenship means more than the right to be left alone, it could be a stepping stone to a transformed culture of well-being.

A GUARANTEED INCOME would cost more than $3 trillion annually, just to distribute $10,000 per year to all citizens, according to a report recently released by the science and technology website Futurism. Both Andy Stern and Charles Murray suggest that cutting spending on defense and curbing tax credits could pay that cost -- which Furman and Bernstein call “bad math.”

Stern ends his book by echoing the “inevitability” feelings of Robert Reich: “There’s no turning back,” Stern writes.

We live in an era of fundamental economic change. Technology is transforming work and the workplace. This can be thrilling and empowering but also alienating and scary. At times it feels that we have no say in our future. But we do. If you believe, as I do, that our economy’s problems are structural, and that technology is very likely going to make decent-paying jobs harder to find, if you believe that our children and grandchildren deserve a more secure livelihood and an opportunity to achieve their dreams, then I invite you to join in a national conversation to raise the floor and shape the future of jobs, work, and the American Dream, with UBI as our guiding star.

Dusty Sklar is a contributing writer to our magazine and website. She is the author of Gods and Beasts: The Nazis and the Occult, as well as numerous stories and articles.