Universal Basic Income
Robot Taxes and Universal Basic Income: How Do We Manage Our Automated Future?
BY Rich Haridy
Automation and artificial intelligence are set to replace humans in a wider array of jobs than ever before, so how does society deal with it?(Credit: Aleutie/Depositphotos)
As more and more jobs are becoming automated, the world faces a dramatic shift in the underlying structures of its labor economies over the next 20 to 50 years. The conversation is slowly becoming more prominent in the mainstream with several major figures highlighting the problem and proposing different solutions. Elon Musk maintains that the idea of a universal basic income is the best solution, while Bill Gates advocates for a robot tax.
It’s undeniable, we are entering a revolution in our labor economy. Numerous recent reports have reached some confronting conclusions as to the effects of automation and artificial intelligence on our current work force. A striking report from Oxford University in 2013 estimated that about 47 percent of the total current US work force is at risk of becoming redundant due to automation or artificial intelligence. Another study in 2015 found that 45 percent of jobs in the US right now could be replaced by currently demonstrated technologies.
Late in 2016, Obama’s White House released a report warning that measures needed to be taken to manage the millions of jobs that could be lost in the coming years due to technological advances. Despite societies having faced similar labor transitions in the past due to technological advancements displacing workers, we seem to be speeding through a transitional phase at a pace that may exceed our ability to naturally adapt. In an interview with Wired in 2016, President Obama expressed his concern saying, “I do think that we may be in a slightly different period now, simply because of the pervasive applicability of AI and other technologies.”
The two big solutions to our looming unemployment crisis currently hitting the mainstream conversation are the institution of a tax on robots and a universal basic income.
How do we tax robots?
Billionaire philanthropist Bill Gates came out in favor of a robot tax in a recent interview with Quartz. Gates explained that in our current climate you have workers who earn income that is taxed, but when their job is replaced by a robot you are losing that income tax revenue. The clearest solution he sees is to tax the robots at a similar level to the human worker it has displaced.
The revenue garnered from these robot taxes could then be used to support and retrain those unemployed workers, ultimately moving them into new forms of employment. It’s an enticingly simple solution to a complex global problem. It’s also becoming popular in certain political arenas, with prominent advocacy from surprise socialist front-runner in the upcoming French election, Benoit Hamon.
So what’s wrong with a robot tax?
Well, apart from a confusing burden of implementation (for example, how much automation in a job would equal a taxable rate?), this really amounts to a tax on businesses that would inevitably result in a trickle down to the consumer. If a business was to make the decision to automate a percentage of its workforce, the technology itself would be a significant up-front cost before even adding an ongoing robot tax. The tax would ultimately either slow the rate of automated adoption and robotic development, or result in a sharp inflation of costs to the general public.
This is, of course, a simplistic interpretation of events, but not an unreasonable one. In fact, just recently the European Parliament debated this very issue, and while approving a raft of robot law proposals to regulate and manage the growing industry, they roundly rejected the idea of a robot tax.
The big alternative being touted around the world by many is the idea of a universal basic income.
Money for nothing
Elon Musk has been a vocal proponent of a universal basic income (UBI) for several years now. Most recently in February 2017 he reiterated his support of the idea at a summit in Dubai saying, “I don’t think we’re going to have a choice, I think it’s going to be necessary. There will be fewer and fewer jobs that a robot cannot do better.”
UBI is an even more simplistic solution to our oncoming problems than the robot tax. The idea proposes that all citizens of a country receive a regular unconditional sum of money, either monthly or annually, that is calculated to cover basic living expenses. The UBI is touted as being an efficient way to replace the unwieldy bureaucratic mechanisms of many governmental social welfare systems.
Economists are still debating the cost-effectiveness of UBI, but there are many who believe that the total cost of current large and inefficient welfare systems are higher than the potential cost of UBI. Charles Murray, a prominent advocate of UBI has prolifically written of a proposal to eliminate all current welfare systems in the United States and replace them with a universal US$10,000 guaranteed income for every citizen. He estimated that this would be cheaper than the combined costs of current systems in place, but that has been debated with others claiming his numbers are fundamentally wrong.
When his proposal was put to a panel of expert economists, 58 percent either disagreed or strongly disagreed that it was a better policy than the status quo. It is worth noting many economists surveyed in that particular poll explained that they were responding more to the generalized extremity and lack of nuance in Murray’s specific system.
Pushing aside the economic factor for a moment, the most heated debates surrounding an implementation of UBI tend to be concern over the social consequences. After all, if people didn’t need to work then why would they? Would we basically be funding a future of lazy, unmotivated human beings?
But what would we all do?
This is a common concern railed against UBI, but it may be more of a philosophical concern than a pragmatic one. Several pilot UBI projects have shown that households receiving cash handouts have actually increased their labor and production outputs. In India several NGOs piloted UBI and found that those who received the grants doubled their production work when compared to similar households not receiving the grants.
An extensive trial in a small Canadian town in the 1970s produced similar results, showing the guaranteed income system resulted in a larger volume of high school students reaching the 12th grade, as well as an 8.5 percent drop in hospital visits and a reduction in domestic violence cases.
“It’s surprising to find that it actually works, that people don’t quit their jobs,” remarked Evelyn Forget, a sociology professor who recently reevaluated the records from that Canadian pilot study in the 1970s, “There’s this fear that if we have too much freedom, we might misuse it.”
At its core we return to the philosophical questions regarding the general effects of UBI on society. For generations our occupations have guided and structured our lives and our identities. It is undeniable that UBI would alter this, but it could easily be argued that this ideological shift is already happening anyway.
The new generation of millennials are currently redefining older perceptions of work and career. They are known as the job-hopping generation and have be shown to care more about personal fulfilment in their job over money.
These attitudes seem to signal that for the younger generations, UBI would offer a safety net allowing personal creative explorations, enhanced education, and even the ability to take the time to cultivate new income streams from different endeavors. As we look to almost half of our current workforce becoming redundant through automation over the coming years, we will certainly need to be working as a society to develop new industries, occupations and income streams. Is UBI the most straight-forward way to achieve this outcome?
Whatever you believe is the best way forward, be it robot taxes, UBI or its more pragmatic variant, the negative income tax, everyone can agree that our labor economies are facing some dramatic looming changes. Something will certainly need to be done and the discussion needs to be had, so let’s have it.
Tech CEOs Back Call for Basic Income as AI Job Losses Threaten Industry Backlash
Arjun Kharpal | @ArjunKharpal
It’s 2067 and robots have wiped out millions of jobs, AI is rampant, and unemployment is on the rise. Technology companies and CEOs have become public enemy number one.
This portrayal of the future is one tech executives are keen to avoid and has driven a growing chorus to support the idea of a universal basic income (UBI).
“There is going to be backlash when it comes to jobs,” Sayantan Ghosal, an economics professor at the University of Glasgow who has written about UBI, told CNBC by phone.
U.S. technology firms have been investing heavily in research and development of AI. Tesla with driverless cars, Amazon with workerless shops, and the likes of Google developing smarter-than-human software.
Even Sergey Brin, the co-founder of Google, recently stated that he was “surprised” by the pace of AI developments.
Basic Income ‘Necessary’
Over the past few months, major technology executives have come out in support of a UBI.
In an interview with CNBC in November, Tesla Chief Executive Elon Musk backed the idea. “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” Musk said. He reiterated his thoughts last week at the World Government Summit in Dubai, in which he said a UBI would be “necessary”.
Elon Musk: Robots will take your jobs, government will have to pay your wage
Marc Benioff, chief executive of Salesforce, warned of AI creating “digital refugees”. At the World Economic Forum (WEF) in Davos in January, Benioff said there was “no clear path forward” on how to deal with the job displacement that will occur.
Other tech executives talked up the industry’s responsibility.
“We should do our very best to train people for the jobs of the future,” Microsoft CEO Satya Nadella said at Davos.
Tech Firms Could be in ‘Firing Line’
Experts say that the tech industry is growing more aware of its role in driving future automation and displacement, and companies don’t want to be at the heart of any backlash from workers.
“That is a factor. The concern that suddenly public enemy number one will be robots and they (tech firms) will be in the firing line,” Guy Standing, professorial research associate at the School of Oriental and African Studies, told CNBC by phone.
“But I think the sort of people I am meeting in the industry are more worried about the grotesque inequality and political backlash against that.”
David A. Grogan | CNBC
Marc Benioff, CEO of SalesForce at the World Economic Forum in Davos Switzerland.
Standing is also a co-founder of the Basic Income Earth Network (BIEN), a non-governmental organisation that promotes the policy. He is currently advising Y Combinator, a large U.S. start-up accelerator, on its basic income experiment. The firm is looking into a basic income experiment in Oakland.
How a basic income project might work in the future is unclear and the technology industry is still not sure. One idea is for governments to pay everyone a monthly sum. Experts say it will not disincentivize workers because it will provide a bare minimum of living. Instead, workers will still want to get a higher standard of living by working.
But any policy will be tough to fund.
“If you think of a basic income as providing a kind of floor to the standard of living for most people, then it will far exceed current benefit expenditure,” Ghosal said.
‘Robot Tax’
One way for governments to pay for a UBI is through a sovereign wealth fund, where they take a small two to three percent equity stake in all the publicly listed companies in the country and earn money in that way.
Another idea that CEOs are slowly turning towards, is the taxing of “super profits”, according to Standing. The academic told CNBC that a major technology CEO he spoke to said that he was convinced the industry would need to start making “concessions” in the form of taxing more profits.
Microsoft founder Bill Gates recently floated the idea of a “robot tax” as a way for governments to get more money in the future.
“If a human worker does $50,000 of work in a factory, that income is taxed,” Gates said in a recent interview with Quartz. “If a robot comes in to do the same thing, you’d think we’d tax the robot at a similar level.”
Academics like Standing and Ghosal say that like previous technological revolutions, workers are likely to be displaced, then retrain and get back into work. UBI would still let people work, but would give them some support as they find new skills.
“Universal basic income will provide a cushion and will allow people to rework and allow them to move and take advantage of new opportunities elsewhere,” Ghosal said.
Increasing Automation & GDP = A Basic Income?
Here’s How We Might Actually Do It
BY BEN SCHILLER FAST COMPANY
Andy Stern, former head of the SEIU, makes the case for a universal payment to end poverty—and offers a strategy for how we get there.
[Images: Photobank gallery, cepera via Shutterstock]
The idea of a universal basic income (UBI) potentially solves a lot of problems at once. By sending a regular payment to all citizens, we could end abject poverty, deal with technological unemployment, reduce the overall cost of government, give more autonomy to people, and gain support from across the ideological divide as we do it (in theory, anyway). In its long history, some form of UBI has been supported by everyone from Martin Luther King to the libertarian economist Milton Friedman, indicating its unusual appeal.
But, as yet, no government has ever introduced a UBI at significant scale, and, as such, there are a lot of unanswered questions. For example, how much would a UBI cost overall? Should everyone get it, or just people who really need it (then it’s not so universal)? How should it be distributed exactly? And, should people have to do anything in return to get it? While there are a lot of compelling reasons to implement UBI, there are obviously a lot of trade-offs to consider.
One of the nice things about Andy Stern’s new book, Raising the Floor, is that he gets into some of this nitty-gritty. In the last chapter, he offers a blueprint for introducing UBI, covering the funding side, the politics side, and the out-in-the-streets mobilization side. Not everyone will agree with the choices he makes (Stern, a former president of the Service Employees International Union, is a man of the left). But at least he’s asking the sort of questions that need to be asked if we’re going to introduce UBI.
Stern would pay all American adults (234 million people) $1,000 a month, which is roughly the federal poverty line ($24,000 a year for a family of four). The idea is to meet people’s fundamental needs (food, housing), rather than make them rich and discourage them from ever working again. Probably, there would need to be regional variations to reflect cost-of-living differences, and perhaps additional payments for under-18s, but Stern says we could discuss that later once we’ve got the main program established. Future increases to the monthly $1,000 would be tied automatically to GDP growth, ensuring politicians can’t prevent the dollar amount from increasing with the times, as has happened with the minimum wage.
Paying everyone $1,000 a month would cost roughly $2.7 trillion a year, which is about 15% of the GDP and four to five times the size of the defense budget. To pay for this, Stern would cash out most existing antipoverty programs, which cost about $1 trillion a year, including food stamps ($76 billion a year), housing assistance ($49 billion), and the Earned Income Tax Credit ($82 billion). Then, he would cut military spending and phase out most tax expenditures (tax breaks), which currently cost $1.2 trillion a year. In addition, he also supports a federal sales tax (which we currently don’t have) and a financial transaction tax (which some European countries are now introducing).
He is also sympathetic to an idea inspired by Thomas Paine: that we all, to a certain extent, have a right to income from wealth that “we inherit or create together.” As argued by the entrepreneur Peter Barnes in his book With Liberty and Dividends for All, our water, air, electromagnetic spectrum, and collective intellectual property (the inventions passed down from Edison and others) have enormous value that’s largely unrealized. We could charge companies a fee for using these public goods (and not allowing others to infringe on their rights), which would go into a “Sky Trust” modeled on the Alaska Permanent Fund. According to Barnes, this could pay a dividend of $5,000 per person every year.
Stern supports a UBI for everyone, even though paying fewer people—like focusing only on those made unemployed by automation—would obviously be cheaper. He gives two reasons. One, a universal payment would have a greater effect on the labor market, allowing more people to move between jobs, projects, and gigs. And two, universal systems, like Social Security, tend to be more popular and enduring, as everyone benefits and nobody gets jealous. They are also easier to administer because you don’t have to track people’s income and check up on their status all the time.
As for distribution, Stern supports paying people in the form of a monthly check or bank account transfer. In 1968, Milton Friedman proposed a Negative Income Tax, where people earning below a certain level receive a payment, rather than having to pay taxes. In other words, it’s a way of paying a basic income through the tax system rather than the welfare system, which, according to its proponents, means it’s simpler to understand and manage.
The disadvantage, according to Stern, is that it’s an annual payment, like the EITC, making it more like a windfall payment than a living wage.
“Writing frequent checks, like Social Security, makes it more economically viable for people who are trying to pay rent and eat every month,” Stern says in an interview. “There’s less complication and less chance for fraud.”
The simplicity of UBI is precisely what attracts so many people to the idea. It’s a flat payment to everyone, irrespective of need, no questions asked. As soon as you start means testing, or placing conditions on it, it becomes diluted and open to debate that can be corrosive and self-defeating. Some say we should ask people to “give back” before they receive money (maybe by volunteering) or not engage in certain behaviors (like taking drugs). But these inevitably add a contentious moral element (not everyone thinks taking drugs is wrong) and yet more bureaucracy. The whole attraction of UBI is to do away with complexity and give power back to citizens rather than pencil pushers.
Of course, it’s unlikely that the federal government will want to rip up hundreds of programs overnight to implement something that’s still untried. But cities and states could experiment with UBI first, as they’re now doing in the Netherlandsand Canada. “I think that we’ll see mayors of governors at some point asking for waivers to experiment, which will [set the stage] before we do a universal or national program,” Stern says. He also hopes to see political candidates adopt UBI—or even a UBI party—and the equivalent of the Townsend Clubs that mobilized support for Social Security in the 1930s. In short, UBI can become a post-political rallying point for remaking government in the age of extreme automation and technological unemployment.
“Any time you try to write specific laws, all of the weeds tend to grow larger and people don’t necessarily see the grass,” Stern says. “But I think there will be a huge conceptual agreement at some point that the best way to end poverty and prepare for the future is some kind of guaranteed income. In 10 or 15 years, there’ll be a stronger sense, particularly for people born in the 21st century, to just let people make their own choices, which is what the Internet has allowed us to do already.”
From <http://www.fastcoexist.com/3059419/you-want-a-basic-income-heres-how-we-might-actually-do-it>
Related: Mark Cuban: Robots Will ‘Cause Unemployment and We Need to Prepare’
Related: Elon Musk: Robots Will Take Your Jobs, Government Will Have to Pay Your Wage — Basic Income
Elon Musk Thinks Universal Basic Income Is Inevitable
Elon Musk shared his thoughts on the future of jobs and the government’s role in a rapidly changing society.
Basic is the key word, because all that a universal basic income would do is inflate the normal prices to the level equivalent to the basic income amount. For instance, if a basic income of 12k was given to every single U.S. citizen every year. If the price of rent was 12k on average in the U.S. The price after the basic income distribution would be 24k.
So the basic income would immediately become useless. It wouldn’t be so cut and dry since the inflation would come from multiple sources and streams and would eventually lead to an amount of inflation that was much greater than the universal amount distributed in the first place. That is why the term “basic” is used in Musk’s theory. The rich would still get richer because the 12k increase in the rent would go straight into the rich’s pocket. Thus, turning the basic income distribution into feeding the wealthy. All in the matter of seconds.
Jobs were a big topic in the 2016 Presidential election in the United States and continues to be a hot-button issue. The loss of manufacturing jobs in the Rust Belt states was largely responsible for propelling Donald Trump to a surprise win. As President-elect, Trump has continued to push the jobs message, making deals like his recent involvement in the fate of Indiana’s Carrier plant to show that he will bring jobs back to regions with great job loss. Yet, regardless of such efforts, many futurists are predicting that a large amount of our jobs will be replaced by automation and robots within a very foreseeable future. Professor Moshe Vardi projected recently that more than half of the workers in the world will be replaced by robots in just 30 years from now. This is in line with a 2013 Oxford University study that put the future number of robot-replaced jobs in America at 47%.
What to do about this looming threat? One obvious solution would be re-educating the labor force, finding a way for it to work with the automation and artificial intelligence that will become ubiquitous. Still there is a strong likelihood that the inequality of wealth distribution will continue to grow around the world, and large parts of the labor force will be simply unable to find meaningful employment.
Elon Musk waded into this discussion recently by suggesting that a different economic system would have to be in place.
“There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” Musk told CNBC in an interview. “Yeah, I am not sure what else one would do. I think that is what would happen.”
The idea of universal basic income (UBI) is that the government would provide citizens with a minimum amount of money to live on. Proposals for UBI are being considered in Switzerland, Finland and the Netherlands, while Canada is instituting a pilot program in 2017 to provide supplemental income to keep people above poverty level in the province of Ontario.
While it will dramatically change our lives, Musk doesn’t see automation as an inherent evil, however. It’s just an inevitable transformation in society.
“People will have time to do other things, more complex things, more interesting things,” said Musk. “Certainly more leisure time. And then we gotta figure how we integrate with a world and future with a vast AI.”
Will Universal Basic Income come to the United States? It’s hard to believe that now when even discussions around increasing minimum wage, which has not kept up with inflation, get bogged down in inaction due to partisan bickering in Congress. But the reality of more than half the population having no work will likely prompt many changes we cannot yet anticipate or feel comfortable with. It’s important to start the discussion now, before being confronted with more and more people who are out of the labor force because there are simply not enough jobs they can perform.
Bill Gates: If a Robot Takes a Human Job, Tax It
Robots are taking human jobs. But Bill Gates believes that governments should tax companies’ use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment.
It’s a striking position from the world’s richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.
In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.
“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. “You cross the threshold of job replacement of certain activities all sort of at once,” Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them.
Below is a transcript of Gate’s video above, lightly edited for style and clarity.
Quartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.
Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.
And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.
So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers.
And so you could introduce a tax on robots…
There are many ways to take that extra productivity and generate more taxes. Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now. Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.
Could you figure out a way to do it that didn’t dis-incentivize innovation?
Well, at a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, “OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?”
You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net benefit. It’s important to have the policies to go with that.
People should be figuring it out. It is really bad if people overall have more fear about what innovation is going to do than they have enthusiasm. That means they won’t shape it for the positive things it can do. And, you know, taxation is certainly a better way to handle it than just banning some elements of it. But [innovation] appears in many forms, like self-order at a restaurant—what do you call that? There’s a Silicon Valley machine that can make hamburgers without human hands—seriously! No human hands touch the thing. [Laughs]
And you’re more on the side that government should play an active role rather than rely on businesses to figure this out?
Well, business can’t. If you want to do [something about] inequity, a lot of the excess labor is going to need to go help the people who have lower incomes. And so it means that you can amp up social services for old people and handicapped people and you can take the education sector and put more labor in there.
Yes, some of it will go to, “Hey, we’ll be richer and people will buy more things.” But the inequity-solving part, absolutely government’s got a big role to play there. The nice thing about taxation though, is that it really separates the issue: “OK, so that gives you the resources, now how do you want to deploy it?”