by Guest Contributor | Mar 10, 2017 | Opinion
Written by: Rahul Basu
It is often argued that the existing system of benefits is riddled with flaws, and a universal basic income would be preferable. Arguments made include the high cost of administration, the errors of exclusion (target group not receiving the benefit), the errors of inclusion (people wrongly receiving the benefit), corruption, and the cost of access for the beneficiary, which includes time, effort, and suffering degradation at the hand of bureaucracy. What this explanation doesn’t specify is under what conditions is targeting preferable, and when is universalization better?
Let’s take a simple model to examine some scenarios. Assume that a country has 1,000 residents and a per capita income of $50,000. It pays a benefit to 200 people, 20% of its population. The benefit (say free food) for each person is $5,000, 10% of the average income of the country. This would cost 2% of the GDP:
| Population x Average income |
= Total income of country (GDP) |
| 1,000 x $50,000 |
= $50,000,000 or $50 million |
| 20% of Population x 10% of Average income |
= (20% x 10%) of Total income of country = 2% |
| 200 x $5,000 |
= $1,000,000 = $1 million = 2% of $50 million |
For the moment, let’s assume no administration costs or costs of access. Let’s also assume that 80 people (40% of the target group) do not receive the benefits, and instead the same number of people outside the target group wrongly receive the benefit. And everyone receives the full amount or nothing at all. Therefore, the scheme is correctly benefiting only 120 people (12% of the population (40% x 20% or 120/1,000)), and only $600,000 or 60% of the money is well spent (1.2% of GDP (60% x 2% or $0.6 million / $1.0 million)).
Suppose we withdraw this benefit and universalize it. Then each person in the country will receive a benefit of $1,000 or 2% of average income ($1 million / 1,000 or $1 million / $50 million). If we examine individual scenarios, we can draw up the following table:
| |
Benefit |
UBI |
Difference |
Pop |
Total |
| Beneficiaries |
$5,000 |
$1,000 |
-$4,000 |
120 |
-$480,000 |
| Excluded group |
$0 |
$1,000 |
$1,000 |
80 |
$80,000 |
| Wrongly inclusion |
$5,000 |
$1,000 |
-$4,000 |
80 |
-$320,000 |
| Remaining |
$0 |
$1,000 |
$1,000 |
720 |
$720,000 |
| Total |
|
|
|
1,000 |
$0 |
A few things jump out. More beneficiaries have lost (120) compared to those who have gained (80). The total amount going to the beneficiary group is now $200,000, a reduction of $400,000. Further, no beneficiary is receiving the full $5,000. And while 80 individuals correctly suffer a reduction in undeserved benefits, another 720 outside the beneficiary group are receiving $1,000.
The other aspect to consider is political. While everyone is receiving the same amount, 720 of the 800 net beneficiaries of the UBI are probably not strongly concerned by a 2% increase in income. However, the losers, while only 200, are more highly motivated to defend the benefit, as it is proportionately a greater loss. Further, the 120 rightful beneficiaries are likely to have below average income. This is the central political challenge in universalizing existing benefits.
Under what scenario would the errors be large enough for universalization to make sense? One basic threshold could be set at where the total money going to the target beneficiary group does not diminish. Under what circumstances does this occur?
Let the target group be T% of the population and the proportion correctly included under the benefit is C% of the target group. In this situation, when T% = C%, the total amount received by beneficiaries will be the same under the benefit and universalization. In other words, the proportion of the target group to the population is the same as the proportion of those receiving benefits to the target group.
Let’s examine our earlier example of a benefit of 10% of average income to 20% of the population. If only 20% of the target group is receiving the benefit (20% of 200 = 40), then universalization will keep the total amount received by the target group constant.
| |
Benefit |
UBI |
Difference |
Pop |
Total |
| Beneficiaries |
$5,000 |
$1,000 |
-$4,000 |
40 |
-$160,000 |
| Excluded group |
$0 |
$1,000 |
$1,000 |
160 |
$160,000 |
| Wrongly inclusion |
$5,000 |
$1,000 |
-$4,000 |
160 |
-$640,000 |
| Remaining |
$0 |
$1,000 |
$1,000 |
640 |
$640,000 |
| Total |
|
|
|
1,000 |
$0 |
This is a fairly strong condition. If 30% of the population benefits, universalization makes sense if less than 30% of the benefit amount is actually received by the beneficiaries. In other words, 70% is stolen, or the cost of access is high. Such poor implementation is unlikely to be found in any developed economy for a significant benefit. It may be possible to find such benefits in developing countries where the corruption may be high, and cost of access may be significant for some groups.
The essential result doesn’t change even if we assume that beneficiaries receive a part of the benefit (due to corruption or cost of access issues). In order to achieve the same total amount received by beneficiaries under universalization, the ratio of net amount received by beneficiaries to the total entitlement / spend should be equal or less than the ratio of beneficiaries to the population.
To take a simplified real life example, the Economic Survey of the Government of India discusses the desirability and feasibility of a UBI in depth. Appendix 2 of Chapter 9 estimates for the flagship Public Distribution Scheme (PDS), 36% was lost to corruption, 36% to the non-beneficiary group and 28% to the target group. It further estimates that 60% of the target group are receiving benefits, and that the target group is 40% of the population. Only 28% of the budget is being received by the target group of 40% of the population. Clearly, a UBI (which eliminates corruption as well), would ensure that 40% of the budget is received by 40% of the population that needs it most, which would be an improvement on the status quo. This assumes the budget is kept proportionate and numerous other considerations have been set aside (the entire food supply chain for example).
While these are examples, they bring out clearly the extreme inefficiency and corruption required to make substituting a benefit for a UBI a net positive for the target beneficiaries. There are other considerations of course.
Iran replaced its enormous fuel subsidy, which was largely benefiting the rich and industry, with a UBI of a lower aggregate amount. Similar subsidies that have been captured by the rich can be a fertile ground for such structures. The carbon tax + dividend proposal is one on similar lines. By not pricing carbon emissions, the rich are being provided a benefit by the state. A carbon tax eliminates the benefit, while the dividend universalizes it.
Advocates for replacing targeted benefits with a UBI have a high standard to meet, and must demonstrate that there is a net benefit from universalization of existing benefits.
About the author: Rahul Basu is a member of the Goenchi Mati Movement, which asks for minerals to be treated as a shared inheritance. Mining is the sale of the family gold. For fair mining, there must be zero loss mining, saving all mineral money in a permanent fund, and distribute the real income only as Citizens’ Dividend.
by Michael Lewis | Mar 4, 2017 | Opinion
Michael A. Lewis
Silberman School of Social Work at Hunter College
In “Why a Universal Basic Income is a Poor Substitute for a Guaranteed Job,” Claire Connelly praises guaranteeing people a right to a job as opposed to guaranteeing them a right to an income. I’ve been involved in quite a few discussions, some of them debates, about the relative merits of basic income versus guaranteed jobs proposals. My position has always been that I have no problem, in principle, with guaranteeing someone a job. If guaranteeing jobs and an unconditional basic income were both financially and politically feasible, I’d be a proponent of both. But if I had to choose one of these policies over the other, I’d prefer the basic income. This is because I think guaranteeing people access to the resources they need to survive has priority over guaranteeing them the right to sell their labor. This, however, isn’t the debate I want to have here. What I want to do, instead, is raise a question about guaranteed jobs proposals: what would it really mean to guarantee someone a job? If those arguing that automation will result in a net loss of jobs for human beings are right, this question becomes especially salient.
Let me start by framing the question more precisely: under what conditions would the government, in its employer of last resort role, hire people? Connelly seems to be supporting the idea of government serving as a buffer stock mechanism. That is, it would step in to hire labor when private sector demand was low and, presumably, step aside when such demand was high. This would put a floor under the price of labor because private sector employers couldn’t, during economic downturns, use the threat of unemployment to get workers to accept lower wages.
As many readers of this site are no doubt aware, some have argued that automation is increasing rapidly and will only continue to do so. Now I’m no expert in this area. So I don’t know if these folks are right that we’re on the path to seeing robots take our jobs. But if they are, this would seem to cause a problem for the buffer stock idea.
The buffer stock approach seems based on a model of the economy where unemployment is due to periodic downturns. The public sector steps in to absorb the resulting labor surplus, but this is meant to be temporary. Once the economy starts growing again, and unemployment declines, public sector employment can contract, as those who worked in the public sector are absorbed by the private one. But automation isn’t supposed to work like that. Instead, there is a steady, but permanent, decline in many types of work as machines take our jobs. I know there’s a huge debate about whether other types of jobs will develop to replace the one’s lost to robots: but suppose such replacement doesn’t happen. Perhaps it’s premature to do so, but I wonder if guaranteed jobs proponents have thought about how their guaranteed jobs plan would work in such an environment. Would government indefinitely hire all those who’ve lost their jobs to machines?
by Michael Lewis | Feb 28, 2017 | Opinion
Written by: Michael A. Lewis
Silberman School of Social Work at Hunter College and the CUNY Graduate Center
When I first became interested in the basic income, I was a graduate student studying welfare reform. For those who aren’t in the know, “welfare” is the more common name used in the U.S. to refer to a program called Temporary Assistance for Needy Families (TANF) and which used to be called Aid to Families with Dependent Children (AFDC). TANF and AFDC aren’t exactly the same programs, but they do have some key things in common: they provide financial support to low income persons, most of those who receive such support are women and children, and, I think it’s fair to say, both programs are somewhat controversial.
The controversy around welfare has to do with the fact that many of those who receive benefits are apparently “able-bodied” persons who’re thought capable of working (“working” in this context means selling one’s labor in return for a wage, instead of, say, taking care of one’s children, something many would regard as work). Yet not enough of those on welfare are working, according to a common belief among many U.S. citizens/residents as well as, apparently, politicians. So in an attempt to socialize welfare beneficiaries into understanding the importance of work, many of them are required to work in return for their benefits, a practice commonly called “workfare.” Many also remain poor, even after receiving benefits, because the financial support they receive is pretty meager.
As a graduate student, I thought workfare, as well as the low level of benefits provided to recipients was a very unjust way of assisting poor persons; I also thought we could do better (in fact, I still think these things). My entry into the world of basic income was because I believed it a more just way of addressing poverty than welfare and related programs.
Once I started studying basic income and meeting others interested in the idea, I heard other justifications for it. It would enhance freedom, it would allow people to engage in care work if they so choose, it would give people an income representing their share of commonly owned natural resources, it would be a way of replacing some or all of the welfare state (which, of course, assumes there is something wrong with the current system), etc. But the argument that seems to have caught on the most, at least in the U.S., is the idea that a basic income will become necessary as robots/machines take our jobs.
I have to admit that part of me has been a bit concerned about the degree to which the automation argument seems to dominate basic income discussions. My worry is that as we spend so much time debating who’s right about whether robots will take most, or perhaps all, of our jobs and, therefore, whether there’ll be a need for a basic income, other arguments for such a policy get “crowded out” of the discussion. Yet as I’ve voiced this concern, mainly to myself, I’ve also wondered why this argument for a basic income seems to have caught on in a way that others haven’t?
I think part of the answer has to do with where I started—U.S. citizens/residents worry a lot about the degree to which healthy people work to take care of themselves (and their families) and are quite skeptical about policies they believe will allow people to shirk this responsibility. But I think another part of the answer has to do with the role of race in our society. I suspect that in the minds of many citizens/residents the degree to which a basic income would allow people to shirk their obligations to work would vary by race. To put it bluntly, I suspect many assume that black and brown people would be more likely to shirk this responsibility than whites would be. If I’m right about all this, then perhaps it shouldn’t be surprising that the U.S. isn’t naturally the most fertile place for the basic income idea to take hold. But why would it take hold in the form of the automation argument? I think the answer here might be pretty simple. If machines are about to take all our jobs, then automation represents a relatively indiscriminant force. That is, “hard working white people” might be threatened just as much as “lazy shiftless brown ones” are. Perhaps this has been enough to get white folks to take notice of a policy that perhaps could address the problem.
About the author: Michael A. Lewis is a social worker and sociologist by training whose areas of interest are public policy and quantitative methods. He’s also a co-founder of USBIG and has written a number of articles, book chapters, and other pieces on the basic income, including the co-edited work The Ethics and Economics of the Basic Income Guarantee. Lewis is on the faculties of the Silberman School of Social Work at Hunter College and the Graduate and University Center of the City University of New York.
by Pierre Madden | Feb 24, 2017 | Opinion
Translated from a series of French fictional stories based on the basic income: https://revenudebase.quebec/histoires/ (in French)
Written by the Revenu de Base Quebec Team
Translated by Pierre Madden
Notice
These stories are fiction. Let’s face it, Basic Income is not yet a reality anywhere (with the exception of Alaska), only a promising proposal, tested successfully on a small scale. While any resemblance to persons living or dead is purely coincidental, the situations described do resemble what real people experience every day and illustrate how Basic Income can work in practice and what impact it can have on peoples’ lives.
1. Mady and her family
Her name is really Madelyn. Everyone calls her Mady. 57 years old and recently widowed, her husband’s long illness forced her to cut her work hours in half. She was on the edge of bankruptcy. Things are better now that she is back to full-time. Going through something like bankruptcy can be tough on a person, that is why there are steps in place to help them through this with assistance like a Chapter 13 Bankruptcy Attorney Milwaukee firm or a firm within their area, that can stop foreclosures and repossessions of property. Luckily Mady didn’t get to this stage.
Her youngest, Samuel, born just before it was too late, is now 20 and still in school. He lives at home. If he hadn’t worked at least 15 hours per week since the age of 15, the phone, the scooter, the computer and the few name brand clothes he splurged on would have been out of reach. He took an extra year to finish junior college: taking all the required courses was not always possible. He is about to start college in another city. Mady doesn’t know how she is going to be able to help him pay for 4 years of university. Her other children, Helen and James,35 and 33, have their little families. They get by…
Actually, James is doing much better than Helen. Even if he and his wife don’t have permanent jobs, they manage to make enough at consulting for him and translation for her, to have a relatively comfortable life with their two kids. To get to that point, they had to survive 3 lean years around the time the children were born. They had no paid parental leave. The problem now is managing everything. Day care for one child, elementary school for the other, a bit of sports and music for all, and the constant search for contracts, a job in itself for freelance workers.
“Poor Helen!” laments Mady, “her boyfriend left her with three kids” and she calls him names we can’t print. She met him in her early thirties; they were in love; she felt it was time to have kids; now or never; he seemed to agree. Four eventful years and three children later she finds herself in an all too common misery: rare odd jobs, trading services with other “single parents” who can’t afford childcare, clothes from hand-me-downs or thrift shops, expensive rent, minimal groceries, finicky welfare agents and all the rest.
However, it is her parents that worry Mady the most. Her mother is 82 and her father 87. He is becoming senile; she is in good health. She is exhausted taking care of her husband. Mady can see that her mother won’t last long. After sixty years of marriage, she refuses to be separated from her man. Mady’s siblings live in other cities so sooner or later she will have to pick up the slack: if not with her father , then with her mother. She worries a lot about how she will manage.
Mady, her family and a basic income for all.
Let’s imagine what it would be like…
Although Helen would be no less alone with her children, she would benefit the most from a Basic Income. Her personal allocation, combined with those of her children, would not necessarily amount to more than what she receives now in aid. However these sums are without condition, without meetings with government agents, without reports, without intrusion into her private life.
Best of all, she could build on this revenue by earning more without penalty: she could really think of improving her situation by working more and more, progressively, while still taking the time to raise her kids. The future would hold promise for her and her family.
James and his wife would have had an easier time when the children were born. They could have worked a bit less and enjoyed a less crazy life. Then again, young and ambitious, they liked the hectic pace. For sure, with less uncertainty comes less stress.
Samuel would probably be a year ahead in his studies, his child’s Basic Income permitting him to not work or work much less, just to pay for a few indulgences or to help out his mother during his father’s illness. On turning 18, he gets the full adult Basic Income; at university in another city, with an apartment, food and schooling to pay, his finances would still be very tight.
Mady, for her part, would not have risked bankruptcy during her husband’s illness. She could even have stopped working to care for him. Also, she would have less apprehension at the thought of caring for her parents or of her children caring for her in the future.
2.Peter Martin Inc.
Young and prosperous industrialist, Peter Martin’s success does not go unnoticed: big house with three garages, an equally imposing cottage by a prestigious lake, a sleek and fast number to get him from his homes to the factory. Family finances certainly benefit from his wife’s medical specialist income. And their two kids can dream of studying anywhere on the planet, a planet they know well, having traveled all over, both with their parents and alone.
Peter is past forty and greying: he had to work hard to get to where he is; he had to go through a bankruptcy and several other very difficult periods. Even if in the past few years his company is in constant growth, he never gets a moment’s rest: competition is fierce and worldwide. He has to constantly win new markets in an increasingly complex environment and continue to offer high-quality innovative products to distinguish himself from everybody else.
And if only that was the end of it! Creating products, exploring markets, that’s what he does best; that’s why he built his business. He started with a few employees and worked directly with them on the shop floor. Now that there are several hundred more, it’s a different game. Recruitment and employee turnover have become factors as critical as competition and innovation. That is why implementing effective performance appraisals of employees is important to make sure they are working to their highest level, and management is doing what they are required to meet employee’s needs. To support these appraisals, employers can also look at adding in a management strategy such as real-time feedback that can help with tracking the employee’s work that they have been completing throughout the year, so when the appraisal comes they can have all the information needed at that moment.
Easy, the life of a rich industrialist? Only on the surface. Exhilarating for sure, though; Peter Martin would not think of trading places with anyone.
Peter Martin Inc., 20 years later
At the age when a salaried worker has retired, Peter Martin is still going strong and has just gone through most eventful period in his professional life: the implementation of Basic Income.
When this “thing” began to appear in the public debate, he was dead set against it
like most of his business colleagues: he thought it was raving lunacy. However, as general support for this social measure grew, at home in Quebec, in Canada and globally, he had to take it seriously.
The fundamental discussions he had had with his employees to establish joint management of his factories and profit sharing had shown him how far such measures could contribute to improving the working climate and even the product quality, not a negligible bonus. Discussions with his employees about Basic Income, heated at first, finally convinced him to take the project seriously.
From an opponent he became a supporter unlike most of his entrepreneur colleagues. When the policy was finally adopted, he couldn’t help feeling a bit nervous…
Guess what? No cataclysm occurred; no massive resignation of his personnel, his main fear. Of course a few left: most of them, temporarily, to look after a sick family member or to complete a personal project. Crazy demands for raises did not materialize. In fact, filling entry level jobs became easier and turnover in highly specialized employees dropped. Workers’ motivation improved and productivity went up. An unexpected consequence was the sharp drop in sick days, because lower stress levels employees felt in their lives and in their work.
3. Gwen and Max’s story
Small family that wants to devote more time and money to their kids, Gwen and Max were married in 2003. Tom was born in 2005, Marie in 2008, Tom is a little boy in perfect health. Unfortunately, his sister was born with a hearing deficit that delayed speech and reading development. Thanks to the help from the local hospital and from her teachers, Marie is improving every day.
Max was a union worker in the automotive industry. He was laid off in 2008 after the economic crisis and now works part-time operator mechanic, and while he worked there he may or may not have been using an auto repair invoice template for the work he does in the side but unfortunately doesn’t now due to a sharp drop in pay. If he could pay for the training, he would upgrade his skills to get a commercial job.
Gwen tops up the family revenue by working part-time in local businesses. Her hours change constantly, which on top of low pay, prevents her from being with her children as much as she would like. The parents are concerned that they won’t be able to provide their kids with the best chances of success such as the school aid programs and other opportunities available to their classmates.
If Gwen, Max, Tom and Marie could benefit from a Basic Income, their situation would improve considerably. Marie could take dance classes after school to help with her integration and get support to improve her reading. Tom could afford hockey equipment and join the school team. Thanks to a secure source of funds each month, Max could undertake the training needed to reorient his career. Gwen could spend more time with her children by not having to work while they are at home. This small additional revenue would greatly improve their family life and the future prospects of both parents and children.
4. Jane’s story: raising your child alone
Jane is 40, her daughter Emily is 12. It’s just the two of them. Emily’s father left them when she was 4. Jane wants to make sure that her daughter does not follow in her footsteps. Jane works as a waitress in a local restaurant and has trouble making ends meet. Paying the bills while still putting healthy food on the table for Emily is a challenge. Jane finds welfare humiliating so she has not applied for government aid even if she is eligible. She would like to earn more but has neither the training nor the opportunities to increase her revenues.
With a Basic Income, added to her waitress salary, Jane would be better able to take care of her daughter, spend more time with her when necessary, provide balanced meals, let her study, do sports. Jane just needs more freedom in her choices, without having to answer to the government.
With a Basic Income, Jane’s economic situation would have no impact on Emily’s schooling. Her daughter would have the same chance of professional success as children born in more privileged environments.
5. The story of Gabe, entrepreneur
Gabe has always dreamed of being his own boss. Although, at the moment, he works for a big company and earns a comfortable living, what he really wants is to start his own business. When he was in college, Gabe invented a more efficient cement pouring system which could save up to 25% of the time needed to lay foundation in large construction sites. Unfortunately, because he had to pay back his student loans, Gabe was unable to launch his business and instead took a job in a civil engineering firm.
In 2012, because of rising rent, he bought a little condo. He was about to make a move when he realized that his monthly payments made it unrealistic to leave a stable job and go for it. In case things did not work out, he would lose his condo and have to go crawling back to his old employer.
A Basic Income would give Gabe the financial security he needs to create his business. Indeed, the monthly amount would be sufficient to cover his student and condo payments and have enough to eat. A bank loan would become possible in order to launch his company. He would then have the credibility to approach his current employer to enlist his support for the project. Gabe figures it would take a year of hard work to demonstrate the potential of his new technology and start generating revenues.
Basic Income is the launching pad he needs to become his own boss.
6. Arnold Choi’s story
Arnold arrived in Canada in 2013 with only a work permit in hand. Now he is a permanent resident and well on the way to becoming a Canadian citizen.
As an engineer from China, he came to Montreal to earn money to send back to his family back in Beijing. Arnold fell in love with Canada. He is well integrated in the community, goes to church every Sunday and volunteers at a food bank.
He works as an engineer in a buildings and public works company and has been able to put aside enough money to think of bringing his wife Suzanne and their children to Canada.
Unfortunately, his father became very ill in 2014. Arnold had to return to Beijing, to look after him and accompany him in his final days. Medical and funeral expenses were substantial and now Arnold can no longer afford to bring his family to Canada.
With a Basic Income, Arnold could have brought his family to Canada and supported them in their new life. Arnold can appreciate to what extent the Canadian population is the fruit of immigration. Arnold being a member of the community, it is only fair that he should bring his family. A Basic Income would give him enough security to reunite his family and perhaps make new citizens for Canada.
by Tyler Prochazka | Feb 22, 2017 | Opinion
Bill Gates made headlines when he suggested robots that take human jobs should be taxed at a similar rate as humans. The money, he said, could slow the rate of automation, and be used to fund government jobs.
Gates could not be more wrongheaded on this proposal.
The problem with Gates’ idea is that it assumes robots taking human jobs is something to be discouraged. The opposite is true. We should welcome robots doing more tasks for humans, thus freeing up humans to engage in other fulfilling endeavors.
Imagine the government took Gates’ approach with Microsoft computers to prevent their machines from taking jobs. Humanity would be worse off because of the unrealized productivity, connectivity, and convenience that would be impossible without computers.
The crucial component in response to automation that Gates does not mention is the Universal Basic Income (UBI). UBI will ensure that those who lose their jobs to robots will have a flexible cash grant that could be used for training, education, or to pursue whatever the individual’s passion may be.
There is a legitimate worry that the companies that own the robots will accumulate most of the wealth, and the rest will be left behind. A basic income addresses this automation cliff more effectively than attempting to delay inevitable automation with taxation.
It is possible in the future, humans will be able to scale back their work hours, while still receiving a comparable overall income through UBI because robots would be doing the bulk of humanity’s work. An individual could spend more time on volunteering, entrepreneurship, their family, civic engagement, and creative endeavors.
The greater the dividend humanity receives from robots because of their higher productivity, the larger the basic income can be without disrupting the economy.
Gates and others are stuck in the mindset that humans are meant to spend eight hours a day, five days a week in a traditional work environment. Robots are threatening to upend the system, which should be welcomed as it opens new possibilities for what people can do with their time.
Just because someone receives a wage from a company does not mean they are maximizing their potential for themselves and what they can provide to society. For example, is a single mother doing more for society by working twelve hour shifts, or spending more time raising her child?
As automation intensifies and countries inevitably start to implement basic income, many will continue to work full-time in the traditional system. Others will work part-time. And still more will find different ways to contribute to society. There is a basic human drive to develop one’s self and bring positive change to the world.
Traditional work will not necessarily cultivate each person’s true comparative advantage. The irony is that robots taking more jobs will give us more freedom to choose our best path, if coupled with an unconditional basic income.
Instead of taxing robots, we should tax activities that we want to discourage. For example, activities that harm the environment, such as fossil fuel use, animal agriculture, and resource extraction. Land ownership could also be taxed at a higher level. This could raise the same amount of revenue from wealthy individuals as Gates’ suggested robot tax in order to fund UBI and other government services, without discouraging the positive good of robotic development.
The dramatic expansion of automated jobs is going to remake the economic order and will require governments around the world to respond. The biggest mistake will be fighting this change and attempting to preserve the same system we have now, instead of using the opportunity to drastically improve it.
Image: Red Maxwell, Flickr, Ted Talk: 2009.
by Tyler Prochazka | Feb 18, 2017 | Opinion
China’s spectacular growth in the past thirty years has begun to slow down in recent years. Emerging signs suggest that China is woefully unprepared for the fallout from exponentially rising automation of manufacturing jobs. While businesses are still going to sites like https://gembah.com/guides/manufacturing-in-china-like-a-pro/ to find the best way they can manufacture their products, the factories in China need to make sure they are prepared for the increased automation that will be coming to the manufacturing industry in the coming years.
The former Supreme Leader Deng Xiaoping of the People’s Republic of China (PRC) orchestrated the country’s economic miracle through a dramatic increase in exports to the rest of the world. For the next several decades, China reoriented the world economy, and many companies stationed their factories within China to take advantage of the cheap labor. Many of these factories might be making use of system integration software soon to increase the efficiency of their factories. I hear it reduces a lot of admin work and increases productivity. As wages rise and the population ages, the value of the original bargain is starting to erode.
In absolute terms, China is leading the world in the number of robots used for production. Over the next decade, China will start to catch up to other advanced economies in terms of per capita robots. By 2019, China may even nearly double its number of robots. At the same time, robots will complete increasingly complex tasks, threatening an even wider range of jobs for humans. Inevitably, this will cause many low-skilled workers in China (and around the world) to lose their jobs. And absent incredibly disruptive government intervention that would likely do more harm than good, these low-skilled jobs will never come back.
Young people in China are more educated than ever, and are increasingly less likely to want to pursue factory jobs anyway. Automation can help propel China toward a more innovative and service-based economy by freeing up labor for these higher value pursuits. In the meantime, though, college-educated Chinese are having difficulty finding jobs as China’s economy readjusts. Without a proper safety net in place, China risks facing social unrest as automation begins to accelerate.
As it stands, China’s main welfare program dibao is too bureaucratic and ineffective to handle the influx of unemployed individuals because of all of the conditions attached to the program. When addressing automation, China’s best solution may be to universalize the dibao to create a universal basic income. This would allow for a smooth transition away from China’s reliance on human-led manufacturing. The need for product inspection in China is highly important for manufacturers, as they must make sure everything is made to the highest specifications. Using a China inspection service can help prevent issues and malfunctioning products, hopefully, this form of checking is not looked over when the change to more automated manufacturing is completed. China acts as a pillar for world economic growth. The basic income would not only stave off the most destabilizing aspects of the coming automation revolution in China, but it is also crucial for the stability of the international economy.
