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.
by Roland Duchatelet | Jan 18, 2017 | Opinion
Finding the money to pay for our social security is becoming more difficult, because paid work is being replaced by robots — the financial foundation of the social security system is crumbling. This is true whether we talk about financing basic income or any other social security system. Increasingly, automation is replacing “productive” jobs. There is still room to create jobs in basic services. However, such jobs do not create enough “added value” to “contribute” to the financing of our social security system. We are happy that these new jobs provide an income to those families. But it is too far stretched to believe that prices for such “proximity” services, helping each other, can be inflated by social security contributions.
Because the distribution of purchasing power is essential to fuel our economic system, time has come to search for other sources of funding, other than “social security contributions” from labour.
An obvious tax-free way to help fund social security is to reduce the cost of public administration and public services through productivity gains. Another tax-free way is to use the profits of state owned companies to fund social security. Many countries own companies, in full or in part, such as in transportation, mobility, housing, banks, car manufacturing, electricity, water distribution, telecommunication etc. Some of those companies do well, others do not. In most countries, the sum of the profits (and losses) derived from those state-owned companies is low in comparison to the cost of the social security system. Sovereign wealth funds are a special category of state owned companies. Their goal is to generate profit out of the collective savings by the country to cover future social security expenses, like retirement benefits, but also to conduct economic stimuli programs in periods of economic decline.
This induces a discussion regarding to which part of the social security should be funded by savings and which part should come from “redistribution” (sometimes referred to as “repartition”). There are both public and private schemes to fund retirement benefits out of savings. However, in most countries repartition funds the biggest part of the retirement budget. In most countries, the non-retirement social security benefits like child allowances, unemployment, illness, and health care are almost entirely funded by redistribution. It is largely recommended that no matter what state your country’s economy is in, you should always save money yourself for your retirement too. It is possible that you might become incapacitated and unable to decide how this money is handled due to old age, therefore electing someone to have power of attorney on your behalf is also a crucial part of planning for your future. You can learn more about power of attorney here.
Very little academic work has been done on the ideal mix of social security funding between savings or repartition. Imagine a social security system which would be completely funded by (public and private) savings. That would be a huge challenge for any economic system because the percentage of required savings in the real economy would be extremely high. Moreover, there would be huge asset inflation leading to high volatility in stock markets and perceived personal wealth, this in turn yielding high instability in spending in the real economy. The short answer therefore is that the part of savings in our social security system should be relatively low.
Some defend the idea of money creation to fund basic income. The problem with this proposal is that it supposes an expanding economy while the population in most European countries are starting to shrink.
What would happen if we dig a hole into the ground and we discover tonnes of gold, gold available in massive quantities, just like water? What would be its value? Except for a few industrial applications, gold is useless. The reason it is used in jewels is based on its scarcity rather than its beauty.
However, we found something more useful while digging: oil. It can be used to make plastics and all sorts of other useful materials. Moreover, it can be used to produce heat or electricity. In oil or gas-rich countries the oil industry is massively contributing to the state income: social security is funded, at least in part but often completely, by this “black gold.”
Astonishingly, so far, the benefits of the black gold bonanza were only moderately used in countries which do not have these natural resources. They could have levied far higher import or consumption taxes on oil products than they actually did.
Higher taxes on energy consumption is an obvious way to finance social security in 2017, rather than demanding low income workers to share a big part of their small income to fund their health care and future retirement. Such a tax would surely reduce energy consumption and lower CO2 emissions. What is wrong with that? Either way when it comes to finances and especially retirement in our day in age now, more people are in fear of their own instability, if you’re one of these people you should be looking at ways to increase your retirement pot.
Maybe there are other “good” taxes? In Macau, the gambling tax, which is mainly contributed by visitors, finances a yearly basic income for all inhabitants as well as a fair share of the health care system. While in Sweden, their gambling tax seems to be in order to regulate their gambling market, preventing it from spiraling. You can read more here – https://battrenyheter.se/artikel/spelskatten-taljer-guld-at-svensk-ekonomi/. Different countries require gamblers to file their winnings in different ways, so it’s important for people to check their country’s regulations on gambling income. For anyone who is interested in bringing in some gambling income, it might be worth looking for an online livemobile66 slot game. That will give users the option to play for money, allowing them to start bringing in some gambling money.
Any other taxes?
Taxes should fulfill 3 requirements:
- They should be significant enough such that the cost of enforcing and collecting them is small compared to the revenues.
- They should be socially desirable. For example, a tax on exchanging services with each other is undesirable. A tax on cigarettes is a very good tax, a tax on alcoholic beverages as well, just like a tax on electricity or oil products.
- They should be difficult to avoid or defraud.
Why not a smart tax on robots? For example, a tax on products made by robots, while it doesn’t matter if those products are made in the country or elsewhere. However, even if a smart phone would cost twice the current price, we still would buy it, just like we would buy our PC or fridge at twice the price. The easy way to implement such a tax in practice is to increase the value added tax or the sales tax on such products. The goal is to replace the “social security contributions” on low wage labour, because tax on low paid jobs is a bad tax. The problem is that the political world is not aware of that yet.
The replacement of high added value jobs by robots undermines the current mechanism of redistribution of wealth, such that some political voices emerge which are pleading to reduce social security benefits. We need to find a better way to fund our social security. This is essential to win the battle for basic income.
by Kate McFarland | Dec 22, 2016 | News
The most recent report from the US President’s Council of Economic Advisers mentions, but rejects, the suggestion that a universal basic income be implemented to mitigate economic disruption caused by the automation of labor.
On December 20, the Council of Economic Advisers to US President Barack Obama released a report on policy responses to the threat of job loss due to artificial intelligence (AI) and other labor-displacing technologies.
The report recommends three general strategies: (1) greater investment in AI research (noting that, despite the challenges posed by technological unemployment, AI promises myriad benefits), (2) job training and education for the highly skilled jobs of the future, and (3) strengthening the social safety net, including the provision of unemployment insurance to displaced workers. In discussing the third strategy, the authors make clear that their recommendation is to strengthen the existing social safety net, rather than to replace current programs with a universal basic income (UBI).
Jason Furman, CC BY-ND 2.0 Center for American Progress
Although the main body of the report does not directly address UBI, a prominent sidebar quotes a speech made by Council Chairman Jason Furman in a White House workshop last July, in which he dismisses UBI as a reasonable response to concerns about potential technological unemployment (see page 40). In the quoted passage, Furman acknowledges that proponents of UBI have many diverse motivations, including ”real and perceived deficiencies in the current social safety net, the belief in a simpler and more efficient system, and…the premise that we need to change our policies to deal with the changes that will be unleashed by AI and automation more broadly.”
Despite this, Furman goes on to cast UBI as policy “premised on giving up on the possibility of workers’ remaining employed” — a possibility that he himself does not believe the US government should rule out. Instead, according to Furman, “our goal should be first and foremost to foster the skills, training, job search assistance, and other labor market institutions to make sure people can get into jobs, which would much more directly address the employment issues raised by AI than would UBI.” The Council of Economic Advisers’ latest report continues to affirm this approach.
President-elect Donald Trump will take office in January 2017. As reporters like April Glaser (Recode) and Mike Brown (Inverse) point out, it is unlikely that Trump’s Cabinet will be receptive to many of the proposals in the report, which call for increased funding for welfare programs and public education.
References
Complete Report
Executive Office of the President, “Artificial Intelligence, Automation, and the Economy,” December 20, 2016.
Media Coverage
Mike Brown, “White House: Basic Income Won’t Solve Robot Automation,” Inverse, December 21, 2016.
Klint Finley, “The White House’s Fix for Robots Stealing Jobs? Education,” Wired, December 21, 2016.
– Includes commentary from Jim Pugh of the Universal Income Project, a California-based basic income advocacy group, regarding the narrowness of the conception of UBI in Furman’s remarks.
April Glaser, “The White House says the U.S. will need a stronger social safety net to help workers displaced by robots,” Recode, December 20, 2016.
Reviewed by Genevieve Shanahan
White House in snow photo, CC BY-ND 2.0 U.S. Embassy, Jakarta
by Kate McFarland | Nov 5, 2016 | News
The Seventh Bowling Green State University (BGSU) Workshop in Applied Ethics and Public Policy, to be held at the BGSU campus on April 7-8, 2017, will be organized around the theme “The Future of Work, Automation, and a Basic Income”.
The two keynote speakers are Matt Zwolinski, a political philosopher at the University of San Diego who has developed a libertarian justification of basic income, and Evelyn Forget, an economist at the University of Manitoba who is known in the basic income community for analyzing the results of Manitoba’s “Mincome” experiment.
A call for abstracts has been released (submissions due December 1), and additional information will become available at BGSU’s website.
Photo CC BY 2.0 Anthony Crider
by Kate McFarland | Nov 1, 2016 | News
On October 4, The New York Times published a symposium called “Easing the Pain of Automation”, which raised the issue of universal basic income among other strategies for managing the prospect of technological unemployment.
Contributors included Arun Sundararajan (New York University), Dean Baker (Center for Economic Policy Research), Maya Eden (World Bank), Andy Stern (former President of the Service Employees International Union), Jerry Kaplan (author of Artificial Intelligence: What Everyone Needs to Know), and Andrew McAfee (MIT Initiative on the Digital Economy).
Stern, whose short article is titled “A Universal Basic Income Would Insure Against Job Loss”, argues that the United States should institute a universal basic income now as “insurance against the difficult transition to new jobs or future job losses” (the main thesis of his recent book Raising the Floor).
Other contributors also bring up UBI in passing.
Sundararajan, for instance, mentions UBI as a possible part of a package of policies designed to ensure that the benefits of automation are shared (including also, for example “investments in physical and social infrastructure”):
Fashioning and funding a next-generation social contract, perhaps as a new partnership between the government, the individual and the institution, or maybe even as a universal basic income, may be instrumental in preventing modern-day versions of the Luddite rebellions that accompanied the Industrial Revolution.
Meanwhile, McAfee thinks that our present strategy should be to “give the economy every possible chance to create new types of good jobs”. He sees UBI a possible long-range solution–although one not yet in demand:
We might someday have a super automated, labor-light economy that requires large-scale wealth redistribution via something like a universal basic income. But it’s not here yet, so let’s not get ahead of ourselves. There’s too much work to do right now.
Read the full symposium:
“Easing the Pain of Automation” (October 4, 2016) The New York Times.
Reviewed by Ali Özgür Abalı
Photo CC BY-SA 2.0 Matthew Hurst
