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30 March 2020

Ending insecurity: from UBI to a Marshall Plan for the planet

Filed under: London Futurists, UBI — Tags: , — David Wood @ 7:53 am

On Thursday last week, 60 members and friends of London Futurists took part in an online Zoom webinar addressing the following questions:

  • Are regular payments to every citizen in the country an appropriate solution to the fragility that the coronavirus pandemic is exposing in our economy and social safety net?
  • When we consider potential additional crises that may boil over in the years ahead, does the case for UBI (universal basic income) strengthen or weaken?
  • What are the alternatives to UBI?

A video recording of the discussion (lightly edited) is now available:

As you can see, the event was not without glitches, but it went more smoothly than the previous online London Futurists event. We continue to live and learn!

Please find below various takeaways from the conversation that deserve wider attention. I am providing these to help enable the continuation of key lines of discussion.

(My apologies in advance in case my summaries unintentionally misrepresent what any participant said.)

From Phil Teer:

  • A basic “no strings attached” income would allow people to follow government advice to “stay at home”, confident that they won’t fall into poverty as a result
  • If basic income had already been in place, it would have allowed the country to go into lockdown quicker, without waiting for a specific financial support scheme to be devised first
  • At the moment, far too many people feel obliged to work, even when they are unwell – that’s a bad system, even in times when no pandemic is taking place
  • Many aspects of the current benefits system are designed to incentivise people to return to work as soon as possible. That’s not a purpose we need the system to do at this moment
  • Basic income provides individual agency and choice: individuals being able to choose whether to protect themselves and their families by staying at home
  • Until now, technology for working remotely has been stuck on the wrong side of the adoption curve chasm, waiting for its big push into the mainstream; that push is now here
  • The crisis can accelerate adoption of automation – such as online supermarkets, and (already happening in China) unmanned supermarkets and drone deliveries
  • We can anticipate and welcome a shift in production from people to machines, bots, and algorithms
  • Companies big and small will question the need for their physical offices and premises
  • We should welcome these changes – they lay the basis for an “age of imagination” in which people will be valued more for their creativity than for their productivity

From Calum Chace:

  • The true challenge from technological unemployment is not meaning but income
  • Once the income problem is solved, a world of greater technological unemployment could bring in a second Renaissance
  • The forecasters who insist that people will always have paid work to do are pessimists
  • However, a “basic income” scheme that leaves recipients indefinitely poor (as implied by the word “basic”) will be a failure, and won’t survive
  • The economist John Kay: If UBI is high enough to be useful, it’s unaffordable. If it’s affordable, it’s not useful
  • That’s why every government so far, in responding to Covid-19, is implementing targeted policies rather than a regularly paid UBI
  • A better solution than UBI is “the economy of abundance” in which the goods and services needed for a very good standard of living are almost free
  • What will reduce the costs of these goods and services isn’t “Fully Automated Luxury Communism” but “Fully Automated Luxury Capitalism”
  • Taking inspiration from the abundant music delivery of Spotify, we need to develop what might be called Constructify and Clothify
  • This can happen by enlisting more and more advanced AI, driving down energy costs, and removing expensive humans from as many production processes as possible

From Barb Jacobson:

  • If a basic income scheme were already in place, we wouldn’t have seen such a fear and panic as has taken place over the last few weeks
  • Around 500,000 people in the UK have recently applied for Universal Credit (unemployment benefit), but these claim processes are unlikely to be completed until June
  • A package just announced by the government for self-employed people will also not kick in until June
  • In contrast, basic income would be the fastest and easiest way to get money to everybody who needs it
  • There’s a scheme in one province in South Korea that has already issued what they call an “emergency income”, via a card based on people’s national insurance number
  • Instead of “universal basis income” we can think of these payments as being a “dividend” – a share in the economy
  • What we’re learning in this crisis is that many people who are necessary to the operation of society (including carers) are unpaid or low paid or have insecure income
  • In contrast, many people who are paid the most aren’t noticed when they’re no longer working
  • Therefore the crisis can allow a rejigging of how the world is viewed and how we collectively function in it
  • In the meantime, there are prospects in central London of riots and mass looting in the next few weeks: shopkeepers are already taking precautions

From Carin Ism:

  • Milton Friedman: “Only a crisis, actual or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around”
  • “That is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable”
  • Our present social systems for producing and distributing surplus are by no means “the end of history”
  • We can’t know for sure what the full effects of basic income will be – although initial experiments are promising – so that’s an argument for continuing to experiment
  • All policy initiatives in response to the crisis are, likewise, experiments, if we are being honest. Staying with the status quo can no longer be defended
  • A bias against “something new” as being “irresponsible” is no longer tenable; everything in the current situation is unprecedented
  • Just as the public in each country have been watching how other countries have been changing health policies, they can now watch how other countries are changing social policies
  • When someone takes the leadership in effective economic and social policies, the whole world will be observing
  • The blossoming public conversation is going to highlight more clearly the injustices that have been in place for a long time without gaining proper attention before
  • The public will no longer accept a response in which banks get bail outs but essential workers just get applause

From Gennady Stolyarov:

  • A proposal that is currently receiving significant support from members of the US Transhumanist Party is “The United States Transhumanist Party supports for an immediate, universal, unconditional basic income of at least $1000 per month to be provided to every United States citizen for the duration of the COVID-19 outbreak and its immediate aftermath, without regard for individuals’ means or other sources of income.”
  • “The priority for this program should be to prevent massive and irreparable economic disruptions to the lives of Americans in the wake of the COVID-19 epidemic.”
  • This stands in dramatic contrast from the stimulus package negotiated in the US Congress, which contains only a one-time monetary payment, with many restrictions on who can receive it
  • As a result there is a risk of class resentment and class warfare
  • Means-tested payments are administratively complex and will hinder getting relief to people as rapidly as possible
  • Universal payments that reach billionaires form only a tiny fraction of the overall expenditure; it’s far simpler to include these people than to create admin systems to exclude them
  • There are means to fund a UBI other than raising taxes: consider the proposal by Zoltan Istvan (and developed by Johannon Ben Zion) of a “federal land dividend”
  • The western US, in particular, contains immense swathes of federally-owned land that is completely unused – barren scrub-land that could be leased out for a fee to corporations
  • That leasing would observe principles of environmental protection, and would allow use for agriculture, industry, construction, among other purposes

From a second round of comments from the initial five panellists:

  • Arguably the real issue is whether we put people first, and hope the economy gets better, or put the economy first, and hope that people are OK
  • By putting people first, with a basic income, it taps into the very thing that actually makes the economy work – the industry, imagination, and creativity of people
  • There is a strong psychological objection, from some, against any taxpayer money going to ultra-wealthy individuals – as would happen in a UBI
  • Economies are what makes it possible for all of us to have the goods and services we need to have a good life – so we cannot ignore the question of the health of the economy
  • The idea of paying for a social dividend from rents of public land dates back to the English radical Thomas Spence
  • By giving money to rich and poor alike, UBI would reinforce the important idea that everyone is a citizen of the same society
  • In the last forty years, the taxes on unearned income have fallen way below the taxes on working; fixing this would make it easier to afford a basic income
  • Why object to poor people receiving a basic income without working, when many rich people earn unearned income such as investment dividends or property rents without working?
  • Our monetary system is based on shared underlying stable beliefs; different ideas from radical thinkers threaten the stability of this belief system and could undermine it
  • The creation of lots of new money, to bail out companies, or to fund a basic income, is an example of an idea that could threaten the stability of the current financial system
  • Governance failures can have knock-on effects – for example, failures to regulate live animal markets can lead to the origination of new virus pandemics
  • For countries lacking sufficient unused land to fund a UBI via land lease, other public resources could fund a UBI – examples include the sovereign wealth fund in Norway
  • Economic progress, that would also help to fund a UBI, could be considerably accelerated by the application of technological innovation
  • This innovation is, unfortunately, too often constrained unnecessarily by the continued operation of outdated 20th century regulatory frameworks
  • Selected relaxation of regulations could enable lots of new economic activity that would make it easy to pay for a prosperous basic income for all

From Dean Bubley:

  • Rather than debating the long-term benefits of a UBI, we need to consider how any form of UBI could be implemented right now
  • How long would it take to implement either a one-off payment or a series of monthly payments, as an emergency solution, straight away
  • The UK finance ministry seem to have looked hard at lots of different options, and speed of implementation has been part of what has guided their choices
  • Any new IT project to support a UBI would by no means be a “small IT project”
  • In the future, once AI is smart enough to put lots of humans out of work, it will surely also be smart enough to allocate income payments in ways beyond simple uniformity

From Rohit Talwar:

  • Most of his contacts in the banking industry is anticipating a forthcoming 30%-80% job reduction due to automation
  • Corporations are responding to the current crisis by reconsidering the work they are doing – how much is essential, and how many tasks currently done by humans could be automated
  • Nearly all his contacts in the AI world are overwhelmed by requests to undertake projects to transform how businesses operate
  • We should therefore expect the automation of many jobs as early as the next twelve months, and a big new lump of unemployment in the short term
  • A stop-gap measure will be urgently needed to respond to this additional unemployment, until such time as people can be retrained into the new industries that will arise

Further responses from the initial panellists:

  • Instead of looking at UBI as being a cost, we should look at it as being an investment
  • In 2008, the nation invested massively in saving the banks and the money system; we now need to invest in people throughout society
  • Basic income allocated to billionaires will be recovered straightforwardly by the tax system – there’s no need to obsess over these particular payments
  • It’s not just the “top 1%” who don’t need any basic income support; it’s more like the top 50%; that makes it more important that the system is targeted rather than universal
  • However, lessons from working inside the benefits system is that “targeting doesn’t actually reach its targets”
  • In the UK, between 20%-60% of people eligible for benefits do not receive them
  • Rather than debating conditions for payments being made, more focus should be put on levying appropriate taxes on corporate profits and unearned income such as inherited wealth
  • The issue isn’t so much one of inequality but one of insecurity
  • A two-phase approach can be pursued – an immediate response as a quick fix, followed by a larger process to come into operation later
  • The immediate quick fix payment can be covered by something Western governments do all the time, namely deficit spending
  • Even people who are not normally fond of deficit spending can appreciate the special circumstances of the current dire emergency, and make an exception
  • Any such deficit spending could be recovered in due course by the fruits of economic activity that is jump-started by the policy initiatives already mentioned

From Wendy Grossman:

  • Making a UBI conditional – for example, a decision to exclude the top 1% – would inevitably lead on to many other wrangles
  • For example, there could be arguments over constraints on how many children a woman is allowed to have, with each of them receiving the standard basic income
  • What about the moral hazard to companies: companies might feel little need to pay their employees much, if the employees are already receiving a UBI
  • Companies may feel able to behave in such a way, unless the UBI is high enough that employees are confident about walking away from poor salaries at work

From Tim Pendry:

  • We need to distinguish the acute short-term problem from the chronic longer-term problem. The acute problem is one of dealing with deflation
  • Our economies could be smashed by this crisis, not because of the 1% death rate, but because of our reactions to it. That’s why a UBI – or something like it – seems to be essential
  • But before a UBI can be adopted in the longer term, a number of problems need to be solved, including having sufficient productive capacity to sustain the economy
  • Major transformations of the economy are often accompanied by a great deal of pain and misery – consider the Industrial Revolution, and Stalin’s actions in the USSR
  • Separately, trades unionists may have legitimate concerns about UBI, since its introduction could be used as an excuse to unravel key pin-pointed elements of the welfare state
  • Not every recipient of UBI will respond positively to it, becoming more creative and lovely; some will behave as psychopaths or otherwise respond badly to money being thrown at them
  • As a possible worrying comparison, consider how “the mob” responded to unconditional hand-outs in ancient Rome
  • There’s a growing clash between privileged employees and precarious freelancers. The solution isn’t to make everyone employees. The solution is to make everyone freelancers with rights

Fourth round of panellist responses:

  • It would be helpful to explore the concept of “helicopter money” in which money is simply created and dropped into the economy on a few occasions, rather than an ongoing UBI
  • We should beware a false dichotomy between “people” and “economy”; the two are interdependent
  • Something that could change the lockdown conditions is if reliable antibody tests become available: that would allow more people to return to work and travel sooner
  • Even if antibody testing becomes available, there’s still a need for a stop-gap measure enabling people to pay for food, rent, and so on
  • Instead of UBI, perhaps the government could provide free UBS – universal basic services – paying fees to e.g. electricity companies on behalf of consumers
  • We need to combine pragmatic short-term considerations, with working out how to manage the larger longer-term societal shifts that are now increasingly realised as being possible
  • We need to anticipate potential new future crises, and work out coping mechanisms in advance, especially thinking about which unintended consequences might result

From Tony Czarnecki:

  • The Covid-19 crisis is likely to accelerate the advent of technological unemployment, due to greater use of robotics and a general surge in innovation
  • It’s possible there could as a result be 3-4 additional unemployed within just one year – this will pose an even greater social crisis
  • Various reports created in 2016 calculated that the cost of a meaningful UBI could be as low as 3% of the GDP (the figure might be closer to 2% today)
  • This would provide an annual adult income of £5k, £2.5k for a child, and £8k for a pensioner
  • Of course this won’t yet support luxurious prosperity, but it’s a useful transitional step forward
  • One more question: do we really understand what lies behind the apparent reluctance of politicians to implement a UBI?

From Alexandria Black:

  • As an emergency solution, right now, payments could be made to special credit cards of individual citizens
  • These cards could also function as identifiers of someone’s Covid infection status
  • The cards will also assist in the vital task of contact tracing, to alert people of the spread of the virus
  • Another consequence of the Covid-19 crisis is an accelerating “crypto war” between China and the US
  • Measures which both countries seem to have been planning for some time may now being rushed out more quickly
  • Perhaps a “hackathon” investigation could be organised, to jump start a better understanding of the crypto war dimension of the current crisis

Final round of discussion points:

  • Rather than corporations potentially mistreating their employees who are receiving a UBI, the outcome could be the opposite: employees with a UBI will have more bargaining power
  • We’re all still at the learning stage of how best to organise ourselves as online digital citizens, able to bring about significant changes in social structures (such as a UBI)
  • The money supply isn’t fixed and static: if it wants to, the government can come up with more money
  • As a comparison, when governments go to war, they don’t ask how much it’s going to cost
  • UBI isn’t just about helping the poorest. It’s for everyone. It addresses the financial insecurity and precariousness that everyone can feel
  • UBI isn’t just for the people who have special creative talents. It’s for everyone, including people caring for family members or the elderly
  • Many who are wealthy keep working, for the sense of self-achievement from serving society via their business. Everyone deserves the opportunity to have that same sense of contribution
  • Today’s large companies may find clever ways to game any UBI system in their own favour – we’ll need to keep an eye on them throughout any transition to UBI
  • We should be open to having an unconditional universal payment being supplemented by conditional payments also available to everyone
  • The fundamental point is the ending of insecurity in society, rather than focusing on other topics such as redistribution or equality
  • Transhumanists like to talk about the goal of “Ending aging”; the goal of “Ending insecurity” belongs on that same list
  • Now is the perfect time to be starting the conversation about the bigger picture solution for the future, because if we don’t do it now, we’ll forget
  • As well as people representing civil society, key participants in such a conversation include the asset owners – the sovereign wealth funds and the big pension funds
  • The asset owners need to be on board, if governments are going to finance their new expenditure plans via debt
  • In effect we’re talking about a Marshall Plan for the planet.

For more details about the book project mentioned by Rohit Talwar at the end of the discussion, Aftershocks and Opportunities – Futurists Envision our Post-Pandemic Future, see here.

Thanks are especially due to all the panellists who spoke up during the event. This meetup page has more details of the event.

19 July 2018

Serious questions over PwC’s report on the impact of AI on jobs

Filed under: politics, robots, UBI, urgency — Tags: , , , , — David Wood @ 7:47 pm

A report (PDF) issued on Tuesday by consulting giant PwC has received a lot of favourable press coverage.

Here’s PwC’s own headline summary: “AI and related technologies should create as many jobs as they displace”:

AI and related technologies such as robotics, drones and driverless vehicles could displace many jobs formerly done by humans, but will also create many additional jobs as productivity and real incomes rise and new and better products are developed.

We estimate that these countervailing displacement and income effects on employment are likely to broadly balance each other out over the next 20 years in the UK, with the share of existing jobs displaced by AI (c.20%) likely to be approximately equal to the additional jobs that are created…

BBC News picked up the apparent good news: “AI will create as many jobs as it displaces – report”:

A growing body of research claims the impact of AI automation will be less damaging than previously thought.

Forbes chose this headline: “AI Won’t Kill The Job Market But Keep It Steady, PwC Report Says”:

It’s impossible to say precisely how artificial intelligence will disrupt the job market, so researchers at PwC have taken a bird’s-eye view and pointed to the results of sweeping economic changes.

Their prediction, in a new report out Tuesday, is that it will all balance out in the end.

PwC are to be commended for setting out their reasoning clearly, over 16 pages (p36-p51) in their PDF report.

But three major questions need to be raised about their analysis. These questions throw a different light on the conclusions of the report.

This diagram covers the essence of the model used by PwC:

Q1: How will firms handle the “income effect”?

I agree that automation is likely to generate significant amounts of additional profits, as well as market demand for extra goods and services.

But what’s the reason for assuming that firms will “hire more workers” in response to this demand?

Mightn’t it be more financially attractive to these companies to incorporate more automation instead? Mightn’t more robots be a better investment than more human workers?

The justification for thinking that there will be plenty of new jobs for humans in this scenario, is the assumption that many tasks will remain outside the capability of automation. That is, the analysis depends on humans having skills which cannot be duplicated by AIs, software, robots, or other automation. The assumption is true today, but will it remain true over the next two decades?

PwC’s report points to sectors such as healthcare, social work, education, and science, as areas where jobs are likely to grow over the next twenty years. But that takes us to the second major question.

Q2: What prevents acceleration in the capabilities of AI?

PwC’s report, like many others that mainstream consultancies produce, basically assumes that the AI of 10-15 years time will be a simple extension of today’s AI.

Of course, no one knows for sure how AI will develop over the years ahead. But I see it as irresponsible to neglect scenarios in which AI progresses in leaps and bounds.

Just as the whole field of AI was given a huge shot in the arm by unexpected breakthroughs in the performance of deep learning from around 2012 onwards, we should be open to the possibility of additional breakthroughs in the years ahead, enabled by a combination of the following trends:

  • Huge commercial prizes are awaiting the companies that can improve their AI capabilities
  • Huge military prizes are awaiting the countries that can improve their AI capabilities
  • More developers, entrepreneurs, designers, and systems integrators are active in AI than ever before, exploring an incredible variety of different concepts
  • Increased knowledge of how the human brain operates is being fed into ideas for how to improve AI
  • Cheaper hardware, including easy access to vast cloud computing resources, means that investigations of novel AI models can take place more quickly than before
  • AI can be used to improve some of its own capabilities, in positive feedback loops, and in new “generative adversarial” settings
  • Hardware innovations including new chipset designs and quantum computing could turn today’s crazy ideas into tomorrow’s practical realities.

Today’s AI already shows considerable promise in fields such as transfer learning, artificial creativity, the detection and simulation of emotions, and concept formulation. How quickly will progress occur? My view: slowly, and then quickly.

Q3: How might the “displacement effect” be altered?

In parallel with rating the income effect much more highly than I think is prudent, the PwC analysis offers in my view some dubious reasoning for lowering the displacement effect:

Although we estimate that up to 30% of existing UK jobs could be at high risk of being automated, a job being at “high risk” of being automated does not mean that it will definitely be automated, as there could be a range of economic, legal and regulatory and organisational barriers to the adoption of these new technologies…

We think it is reasonable to scale down our estimates by a factor of two thirds to reflect these barriers, so our central estimate of the proportion of existing jobs that will actually be automated over the next 20 years is reduced to 20%.

Yes, a whole panoply of human factors can alter the speed of the take-up of new technology. But such factors aren’t always brakes. In some circumstances – as perceptions change – they can become accelerators.

Consider if companies in one country (e.g. the UK) are slow to adopt some new technology, but rival companies overseas act more quickly. Declining competitiveness will be one reason for the mindset to change.

A different example: attitudes towards interracial marriages, or towards same-sex marriages, changed slowly for a long time, until they started to change faster.

Q4: What are the consequences of negligent forecasting?

Here’s a bonus question. Does it really matter if PwC get these forecasts wrong? Or is it better to err on the conservative side?

I imagine PwC consultants reasoning along the following lines. Let’s avoid panic. Changes in the job market are likely to be slow in at least the shorter term. Provided that remains the case, the primary pieces of policy advice offered in the report make sense:

Government should invest more in ‘STEAM’ skills that will be most useful to people in this increasingly automated world.

Place-based industrial strategy should target job creation.

The report follows up these recommendations with a different kind of policy advice:

Government should strengthen the safety net for those who find it hard to adjust to technological changes.

But the question is: how much attention should be given, in relative terms, to these two different kinds of advice? Should society put more effort into new training programmes, or in redesigning the prevailing social contract?

So long as the impact of automation on the job market is relatively small, perhaps less effort is needed to work on a better social safety net. But if the impact could be significantly higher, well, many people find that too frightening to contemplate. Hence the desire to sweep such ideas under the carpet – similar to how polite society once avoided using the word “cancer”.

My own view is that the balance of emphasis in the PwC report is the wrong way round. Society urgently needs to anticipate new structures (and new philosophies) that cope with large proportions of the workforce no longer being able to earn income from paid employment.

That’s the argument I made in, for example, my opening remarks in the recent London Futurists conference on UBIA (Universal Basic Income and/or Alternatives):

… and I took the time at the end of the event to back up my assertions with a wider analysis:

To be clear, I see many big challenges in working out how a new post-work social contract will operate – and how society can transition from our present system to this new one. But the fact these tasks are hard, is all the more reason to look at them calmly and carefully. Obscuring the need for these tasks, under a flourish of proposals to increase ‘STEAM’ skills and improve apprentice schemes is, sadly, irresponsible.

18 June 2018

Politics for normal people: strongly recommended!

Filed under: politics, UBI — Tags: , , — David Wood @ 9:19 am

The first that I heard about Andrew Yang was something like this: a supporter of universal basic income (UBI) wants to become the President of the United States, and has written a book in favour of the idea.

I confess I was a bit sceptical. Most books written by aspiring politicians are lightweight.

However, it turns out that to describe the book Yang has written as simply a book about UBI, is to vastly understate its scope and the power. I’ve just finished listening to the audio version of it, and I’m very impressed.

Yes, the book says sensible, thoughtful things about the likely advantages of UBI, and how it might be paid for. But it says much more than that.

The title of the book is “The war on normal people”. These “normal people” are ones with statistically median characteristics – median education levels, median income, median family circumstances, and so on. These aren’t the people who tend to congregate in the parts of the USA where the economy is still doing well – such as New York, Boston, Silicon Valley, and Seattle. As Yang highlights in chapter after chapter of grim but compelling reading, the prospects for these normal people are bad – if trends continue on their current trajectories.

Yang has an impressive CV of activities he undertook prior to announcing his interest in becoming President. Here’s an extract from his online biography:

I’m not a career politician—I’m an entrepreneur who understands the economy. It’s clear to me, and to many of the nation’s best job creators, that we need to make an unprecedented change, and we need to make it now. But the establishment isn’t willing to take the necessary bold steps…

I was born in upstate New York in 1975. My parents immigrated from Taiwan in the 1960s and met in grad school. My Dad was a researcher at IBM—he generated 69 patents over his career—and my Mom was the systems administrator at a local university. My brother and I grew up pretty nerdy. We also grew up believing in the American Dream—it’s why my parents came here.

I studied economics and political science at Brown and went to law school at Columbia. After a brief stint as a corporate lawyer, I realized it wasn’t for me. I launched a small company in the early days of the internet that didn’t work out, and then worked for a healthcare startup, where I learned how to build a business from more experienced entrepreneurs. In my thirties, I ran a national education company that grew to become #1 in the country. I also met my wife, Evelyn, and got married. My education company was acquired, and with Evelyn’s support, I decided to take my earnings and committed myself to creating jobs in cities hit hard by the financial crisis. By that time I understood the power of entrepreneurship to generate economic growth, so I founded Venture for America (VFA), an organization that helps entrepreneurs create jobs in cities like Baltimore, Detroit, Pittsburgh, and Cleveland.

VFA resonates with so many people because it’s clear there’s a growing problem in the U.S.: automation is destroying jobs and entire regions are being left behind. For years I believed new business formation was the answer—if we could train a new generation of entrepreneurs and create the right jobs in the right places, we could stop the downward spiral of growing income inequality, poverty, unemployment, and hopelessness. VFA created jobs by the thousands and continues to do amazing work across the country. But along the way, it became clear to me that job creation will not outpace the massive impending job loss due to automation. Those days are simply over.

Yang draws on many of his personal experiences in the book. He describes how, despite lots of good intentions from existing political and social leaders, much of the interior of the USA has been heading steadily downhill. The fixes that are often proposed, such as retraining people from one career skillset to another – aren’t going to work on the scale needed.

Hence Yang’s summary:

I fear for the future of our country. New technologies – robots, software, artificial intelligence – have already destroyed more than 4 million US jobs, and in the next 5-10 years, they will eliminate millions more. A third of all American workers are at risk of permanent unemployment. And this time, the jobs will not come back.

Despite the depressing analysis in the opening two thirds of the book, the final sections are full of what I see as credible optimism.

Here’s his headline vision:

As president, my first priority will be to implement Universal Basic Income for every American adult between the ages of 18 and 64: $1,000 a month, no strings attached, paid for by a new tax on the companies benefiting most from automation.

However – of key importance – Yang’s book makes clear that he understands that the financial payments are only a small part of the transformation that needs to be taken.

UBI is just the beginning. A crisis is underway—we have to work together to stop it, or risk losing the heart of our country. The stakes have never been higher.

Yang makes lots of interesting proposals about changes to communities (including systems of “digital social credits”), healthcare, and education. These build on his own experiences within the healthcare and education industries, and resonate with my personal observations from my own career. For example, Yang urges that we shouldn’t think of education and being primarily about preparing someone for employment. Instead, it should be about the development of character.

Anyone else considering running for political office would do well to compare their vision with that of Andrew Yang. I wish him the best of success.

14 May 2018

The key questions about UBIA

Filed under: Economics, London Futurists, politics, UBI — Tags: , , , , , , , , — David Wood @ 7:13 am

The first few times I heard about the notion of Universal Basic Income (UBI), I said to myself, that’s a pretty dumb idea.

Paying people without them doing any work is going to cause big problems for society, I thought. It’s going to encourage laziness, and discourage enterprise. Why should people work hard, if the fruits of their endeavour are taken away from them to be redistributed to people who can’t be bothered to work? It’s not fair. And it’s a recipe for social decay.

But since my first encounters with the idea of UBI, my understanding has evolved a long way. I have come to see the idea, not as dumb, but as highly important. Anyone seriously interested in the future of human society ought to keep abreast of the discussion about UBI:

  • What are the strengths and (yes) the weaknesses of UBI?
  • What alternatives could be considered, that have the strengths of UBI but avoid its weaknesses?
  • And, bearing in mind that the most valuable futurist scenarios typically involve the convergence (or clash) of several different trend analyses, what related ideas might transform our understanding of UBI?

For these reasons, I am hosting a day-long London Futurists event at Birkbeck College, Central London, on Saturday 2nd June, with the title “Universal Basic Income and/or Alternatives: 2018 update”.

The event is defined by the question,

What do we know, in June 2018, about Universal Basic Income and its alternatives (UBIA), that wasn’t known, or was less clear, just a few years ago?

The event website highlights various components of that question, which different speakers on the day will address:

  • What are the main risks and issues with the concept of UBIA?
  • How might the ideas of UBIA evolve in the years ahead?
  • If not a UBI, what alternatives might be considered, to meet the underlying requirements which have led many people to propose a UBI?
  • What can we learn from the previous and ongoing experiments in Basic Income?
  • What are the feasible systems (new or increased taxes, or other means) to pay for a UBIA?
  • What steps can be taken to make UBIA politically feasible?
  • What is a credible roadmap for going beyond a “basic” income towards enabling attainment of a “universal prosperity” by everyone?

As you can see from the event website, an impressive list of speakers have kindly agreed to take part. Here’s the schedule for the day:

09:30: Doors open
10:00: Chair’s welcome: The questions that deserve the most attention: David Wood
10:15: Opening keynote: Basic Income – Making it happen: Prof Guy Standing
11:00: Implications of Information Technology: Prof Joanna Bryson
11:30: Alternatives to UBI – Exploring the Possibilities: Rohit Talwar, Helena Calle and Steve Wells
12:15: Q&A involving all morning speakers
12:30: Break for lunch (lunch not provided)

14:00: Basic Income as a policy and a perspective: Barb Jacobson
14:30: Implications of Artificial Intelligence on UBIA: Tony Czarnecki
15:00: Approaching the Economic Singularity: Calum Chace
15:30: What have we learned? And what should we do next? David Wood
16:00-16:30: Closing panel involving all speakers
16:30: Event closes. Optional continuation of discussion in nearby pub

A dumb idea?

In the run-up to the UBIA 2018 event, I’ll make a number of blogposts anticipating some of the potential discussion on the day.

First, let me return to the question of whether UBI is a dumb idea. Viewing the topic from the angle of laziness vs. enterprise is only one possible perspective. As is often the case, changing your perspective often provides much needed insight.

Instead, let’s consider the perspective of “social contract”. Reflect on the fact that society already provides money to people who aren’t doing any paid work. There are basic pension payments for everyone (so long as they are old enough), basic educational funding for everyone (so long as they are young enough), and basic healthcare provisions for people when they are ill (in most countries of the world).

These payments are part of what is called a “social contract”. There are two kinds of argument for having a social contract:

  1. Self-interested arguments: as individuals, we might need to take personal benefit of a social contract at some stage in the future, if we unexpectedly fall on hard times. What’s more, if we fail to look after the rest of society, the rest of society might feel aggrieved, and rise up against us, pitchforks (or worse) in hand.
  2. Human appreciation arguments: all people deserve basic stability in their life, and a social contract can play a significant part in providing such stability.

What’s harder, of course, is to agree which kind of social contract should be in place. Whole libraries of books have been written on that question.

UBI can be seen as fitting inside a modification of our social contract. It would be part of what supporters say would be an improved social contract.

Note: although UBI is occasionally suggested as a replacement for the entirety of the current welfare system, it is more commonly (and, in my view, more sensibly) proposed as a replacement for only some of the current programmes.

Proponents of UBI point to two types of reason for including UBI as part of a new social contract:

  1. Timeless arguments – arguments that have been advanced in various ways by people throughout history, such as Thomas More (1516), Montesquieu (1748), Thomas Paine (1795), William Morris (1890), Bertrand Russell (1920), Erich Fromm (1955), Martin Luther King (1967), and Milton Friedman (1969)
  2. Time-linked arguments – arguments that foresee drastically changed circumstances in the relatively near future, which increase the importance of adopting a UBI.

Chief among the time-linked arguments are that the direct and indirect effects of profound technological change is likely to transform the work environment in unprecedented ways. Automation, powered by AI that is increasingly capable, may eat into more and more of the skills that we humans used to think are “uniquely human”. People who expected to earn money by doing various tasks may find themselves unemployable – robots will do these tasks more reliably, more cheaply, and with greater precision. People who spend some time retraining themselves in anticipation of a new occupation may find that, over the same time period, robots have gained the same skills faster than humans.

That’s the argument for growing technological unemployment. It’s trendy to criticise this argument nowadays, but I find the criticisms to be weak. I won’t repeat all the ins and outs of that discussion now, since I’ve covered them at some length in Chapter 4 of my book Transcending Politics. (An audio version of this chapter is currently available to listen to, free of charge, here.)

A related consideration talks, not about technological unemployment, but about technological underemployment. People may be able to find paid work, but that work pays considerably less than they expected. Alternatively, their jobs may have many rubbishy aspects. In the terminology of David Graeber, increasing numbers of jobs are “bullshit jobs”. (Graeber will be speaking on that very topic at the RSA this Thursday. At time of writing, tickets are still available.)

Yet another related concept is that of the precariat – people whose jobs are precarious, since they have no guarantee of the number of hours of work they may receive in any one week. People in these positions would often prefer to be able to leave these jobs and spend a considerable period of time training for a different kind of work – or starting a new business, with all the risks and uncertainties entailed. If a UBI were available to them, it would give them the stability to undertake that personal voyage.

How quickly will technological unemployment and technological underemployment develop? How quickly will the proportion of bullshit jobs increase? How extensive and socially dangerous will the precariat become?

I don’t believe any futurist can provide crisp answers to these questions. There are too many unknowns involved. However, equally, I don’t believe anyone can say categorically that these changes won’t occur (or won’t occur any time soon). My personal recommendation is that society needs to anticipate the serious possibility of relatively rapid acceleration of these trends over the next couple of decades. I’d actually put the probability of a major acceleration in these trends over the next 20 years as greater than 50%. But even if you assess the odds more conservatively, you ought to have some contingency plans in mind, just in case the pace quickens more than you expected.

In other words, the time-linked arguments in favour of exploring a potential UBI have considerable force.

As it happens, the timeless arguments may gain increased force too. If it’s true that the moral arc of history bends upwards – if it’s true that moral sensibilities towards our fellow humans increase over the passage of time – then arguments which at one time fell below society’s moral radar can gain momentum in the light of collective experience and deliberative reflection.

An impractical idea?

Many people who are broadly sympathetic to the principle of UBI nevertheless consider the concept to be deeply impractical. For example, here’s an assessment by veteran economics analyst John Kay, in his recent article “Basic income schemes cannot work and distract from sensible, feasible and necessary welfare reforms”:

The provision of a universal basic income at a level which would provide a serious alternative to low-paid employment is impossibly expensive. Thus, a feasible basic income cannot fulfil the hopes of some of the idea’s promoters: it cannot guarantee households a standard of living acceptable in a modern society, it cannot compensate for the possible disappearance of existing low-skilled employment and it cannot eliminate “bullshit jobs”. Either the level of basic income is unacceptably low, or the cost of providing it is unacceptably high. And, whatever the appeal of the underlying philosophy, that is essentially the end of the matter.

Kay offers this forthright summary:

Attempting to turn basic income into a realistic proposal involves the reintroduction of elements of the benefit system which are dependent on multiple contingencies and also on income and wealth. The outcome is a welfare system which resembles those that already exist. And this is not surprising. The complexity of current arrangements is not the result of bureaucratic perversity. It is the product of attempts to solve the genuinely difficult problem of meeting the variety of needs of low-income households while minimising disincentives to work for households of all income levels – while ensuring that the system established for that purpose is likely to sustain the support of those who are required to pay for it.

I share Piachaud’s conclusion that basic income is a distraction from sensible, feasible and necessary welfare reforms. As in other areas of policy, it is simply not the case that there are simple solutions to apparently difficult issues which policymakers have hitherto been too stupid or corrupt to implement.

Supporters of UBI have rebuttals to this analysis. Some of these rebuttals will no doubt be presented at the UBIA 2018 event on 2nd June.

One rebuttal seeks to rise above “zero sum” considerations. Injecting even a small amount of money into everyone’s hands can have “multiplier” effects, as that new money passes in turn through several people’s hands. One person’s spending is another person’s income, ready for them to spend in turn.

Along similar lines, Professor Guy Standing, who will be delivering the opening keynote at UBIA 2018, urges readers of his book Basic Income: And How We Can Make It Happen to consider positive feedback cycles: “the likely impact of extra spending power on the supply of goods and services”. As he says,

In developing countries, and in low-income communities in richer countries, supply effects could actually lower prices for basic goods and services. In the Indian basic income pilots, villagers’ increased purchasing power led local farmers to plant more rice and wheat, use more fertilizer and cultivate more of their land. Their earnings went up, while the unit price of the food they supplied went down. The same happened with clothes, since several women found it newly worthwhile to buy sewing machines and material. A market was created where there was none before.

A similar response could be expected in any community where there are people who want to earn more and do more, alongside people wanting to acquire more goods and services to improve their living standard.

(I am indebted to Standing’s book for many other insights that have influenced my thinking and, indeed, points raised in this blogpost. It’s well worth reading!)

There’s a broader point that needs to be raised, about the “prices for basic goods and services”. Since a Basic Income needs to cover payments for these goods and services, two approaches are possible:

  1. Seek to raise the level of Basic Income payments
  2. Seek to lower the cost of basic goods and services.

I believe both approaches should be pursued in parallel. The same technologies of automation that pose threats to human employment also hold the promise for creating goods and services at significantly lower costs (and with higher quality). However, any such reduction in cost sits in tension with the prevailing societal focus on boosting economic prices (and increasing GDP). It is for this reason that we need a change of societal values as well as changes in the mechanics of the social contract.

The vision of goods and services having prices approaching zero is, by the way, sometimes called “the Star Trek economy”. Futurist Calum Chace – another of the UBIA 2018 speakers – addresses this topic is his provocatively titled book The Economic Singularity: Artificial intelligence and the death of capitalism. Here’s an extract from one of his blogposts, a “un-forecast” (Chace’s term) for a potential 2050 scenario, “Future Bites 7 – The Star Trek Economy”, featuring Lauren (born 1990):

The race downhill between the incomes of governments and the costs they needed to cover for their citizens was nerve-wracking for a few years, but by the time Lauren hit middle age it was clear the outcome would be good. Most kinds of products had now been converted into services, so cars, houses, and even clothes were almost universally rented rather than bought: Lauren didn’t know anyone who owned a car. The cost of renting a car for a journey was so close to zero that the renting companies – auto manufacturers or AI giants and often both – generally didn’t bother to collect the payment. Money was still in use, but was becoming less and less necessary.

As a result, the prices of most asset classes had crashed. Huge fortunes had been wiped out as property prices collapsed, especially in the hot-spot cities, but few people minded all that much as they could get whatever they needed so easily.

As you may have noticed, the vision of a potential future “Star Trek” economy is part of the graphic design for UBIA 2018.

I’ll share one further comment on the question of the affordability of UBI. Specifically, I’ll quote some comments made by Guardian writer Colin Holtz in the wake of the discovery of the extent of tax evasion revealed by the Panama Papers. The article by Holtz has the title “The Panama Papers prove it: America can afford a universal basic income”. Here’s an extract:

If the super-rich actually paid what they owe in taxes, the US would have loads more money available for public services.

We should all be able to agree: no one should be poor in a nation as wealthy as the US. Yet nearly 15% of Americans live below the poverty line. Perhaps one of the best solutions is also one of the oldest and simplest ideas: everyone should be guaranteed a small income, free from conditions.

Called a universal basic income by supporters, the idea has has attracted support throughout American history, from Thomas Paine to Martin Luther King Jr. But it has also faced unending criticism for one particular reason: the advocates of “austerity” say we simply can’t afford it – or any other dramatic spending on social security.

That argument dissolved this week with the release of the Panama Papers, which reveal the elaborate methods used by the wealthy to avoid paying back the societies that helped them to gain their wealth in the first place…

While working and middle-class families pay their taxes or face consequences, the Panama Papers remind us that the worst of the 1% have, for years, essentially been stealing access to Americans’ common birthright, and to the benefits of our shared endeavors.

Worse, many of those same global elite have argued that we cannot afford to provide education, healthcare or a basic standard of living for all, much less eradicate poverty or dramatically enhance the social safety net by guaranteeing every American a subsistence-level income.

The Tax Justice Network estimates the global elite are sitting on $21–32tn of untaxed assets. Clearly, only a portion of that is owed to the US or any other nation in taxes – the highest tax bracket in the US is 39.6% of income. But consider that a small universal income of $2,000 a year to every adult in the US – enough to keep some people from missing a mortgage payment or skimping on food or medicine – would cost only around $563bn each year.

This takes us from the question of affordability to the question of political feasibility. Read on…

A politically infeasible idea?

A potential large obstacle to adopting UBI is that powerful entities within society will fight hard against it, being opposed to any idea of increased taxation and a decline in their wealth. These entities don’t particularly care that the existing social contract provides a paltry offering to the poor and precarious in society – or to those “inadequates” who happen to lose their jobs and their standing in the economy. The existing social contract provides them personally (and those they consider their peers) with a large piece of the cake. They’d like to keep things that way, thank you very much.

They defend the current setup with ideology. The ideology states that they deserve their current income and wealth, on account of the outstanding contributions they have made to the economy. They have created jobs, or goods, or services of one sort or another, that the marketplace values. And no-one has any right to take their accomplishments away from them.

In other words, they defend the status quo with a theory of value. In order to overcome their resistance to UBIA, I believe we’ll need to tackle this theory of value head on, and provide a better theory in its place. I’ll pick up that thread of thought shortly.

But an implementation of UBI doesn’t need to happen “big bang” style, all at once. It can proceed in stages, starting with a very low level, and (all being well) ramping up from there in phases. The initial payment from UBI could be funded from new types of tax that would, in any case, improve the health of society:

  • A tax on financial transactions (sometimes called a “Tobin tax”) – that will help to put the brakes on accelerated financial services taking place entirely within the financial industry (without directly assisting the real economy)
  • A “Greenhouse gas tax” (such as a “carbon tax”) on activities that generate greenhouse gas pollution.

Continuing the discussion

The #ubia channel in the newly created London Futurists Slack workspace awaits comments on this topic. For a limited time, members and supporters of London Futurists can use this link to join that workspace.

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