by Karl Widerquist | Jun 6, 2018 | Opinion, The Indepentarian
This essay was originally published on Basic Income News in June 2014.
This book was recommended to me a a technology-based argument for the basic income guarantee (BIG), and it is, but its support is tentative and only for BIG in the form of the Negative Income Tax (NIT), not in the form of a Universal Basic Income (UBI).
The authors define the computer revolution that is currently underway as “the second machine age.” The industrial revolution was “the first machine age.” It brought machines that could apply power to do simple but profoundly important tasks, eventually replacing most human- and animal-powered industries with steam, electrical power, and so on. Machines of the first machine age could often do those tasks much better than humans or beasts of burden ever could. For example, the replacements for horses—automobiles, trains, and airplanes—can carry more people and more cargo father and faster than horses ever could.
Machines of the second machine age have gone beyond the application of power; they are also replacing some human brainwork. Calculators have been around so long that few people are aware they replaced a form of human labor, called “computers.” In the early 20th century, “computers” were people who did computations. It was skilled brainwork, far beyond the capabilities of the up-and-coming technologies of the day, such as the internal combustion engine. Computers (as we define the term today) have almost entirely replaced that form of human labor, and their ability to substitute for human labor only continues to increase—especially when combined with robotics.
The computational powers of computers are so strong can already beat the best chess masters and “Jeopardy” champions. Self-driving cars, which have turned driving into a complex computational task, will not only relieve us all of the task of driving to work, they have the potential to put every professional driver out of business. Perhaps computers, then, will someday learn not just to calculate, but also to think and evaluate. If so, might they eventually replace the need for all human labor?
Erik Brynjolfsson
Perhaps, but Erik Brynjolfsson and Andrew McAfee, the authors of the Second Machine Age, do not base their arguments on any such scenario. The possibility of a truly thinking computer is out there, but no one knows how to make a computer think, and no one knows when or how that might happen.
So, the authors focus on the improvements in computers that we can see and envision right now: machines that can augment and aid human thought with computational ability increasing at the current exponential rate. As long as computers are calculating but not truly thinking, humans will have an important role in production. For example, although computers can beat an unaided chess master, they cannot beat a reasonably skilled human chess player aided by computer. This is the focus of the book: computers and robotics taking over routinized tasks (both physical and mental), while humans still the deep thinking with access to aid from more and more computer power.
This change will be enough to radically transform the labor market and eliminate many (if not most) of the jobs that currently exist. At the enormous rate of increase in computing power, one does not have to envision a self-aware, sentient machine to see that the effects on the economy will be profound. According to the authors, “in the next 24 months, the planet will add more computer power than it did in all previous history; over the next 24 years, the increase will likely be over a thousand-fold.”
The book’s analysis of those changes is very much based on mainstream economic theory. In the books analysis, increases in unemployment and decreases in wages are attributed almost entirely to a decline in demand for labor thanks to the introduction of labor-replacing technology. Political economy considerations, in which powerful people and corporations manipulate the rules of the economy to keep wages low and employment precarious, are not addressed. When the authors consider shifting taxes from payroll to pollution, they don’t consider that powerful corporations have been using their power over the political process very effectively to block any such changes.
Andrew McAfee
Yet, the book demonstrates that even with purely mainstream economic tools, the need to do something is obvious. We have to address the effects of the computer revolution on the labor market. The second machine age creates an enormous opportunity for everyone to become free from drudgery, to focus their time on the goals that they care most about. But it also creates a great danger in which all the benefits of second machine age will go to the people and corporations who own the machines, while the vast majority of people around the world who depend on the labor market to make their living will find themselves fighting for fewer jobs with lower and lower wages.
The technology-replacement argument for BIG has been a major strand in BIG literature at least since the Robert Theobald began writing about the “triple revolution” in the early 1960s.[*] So, approaching this book as I did, I was on the lookout through a large chuck of the book, waiting for BIG to come up. I was very surprised to see the entire “Policy Recommendations” chapter go by without a mention of BIG.
The authors finally addressed BIG in the penultimate chapter entitled, “long-term recommendations.” In the audio version of the book, the authors spend about 20 minutes (out of the 9-hour audiobook) talking about BIG. They recount some of the history of the guaranteed income movement in the United States with sympathy, and write, “Will we need to revive the idea of a basic income in the decades to come? Maybe, but it’s not our first choice.” They opt instead for an NIT, writing “We support turning the Earned Income Tax Credit into a full-fledged Negative Income Tax by making it larger and making it universal.”
Their discussion of why they prefer the NIT to UBI is perhaps the weakest part of the book. They favor work. They want to maintain the wage-labor economy, because, taking inspiration from Voltaire, they argue that work saves people from three great evils: boredom, vice, and need. I am skeptical about this claim. I view it as an employers’ slogan to justify a subservient workforce, but my skepticism about this argument is not why I find the book’s argument for the NIT over UBI to be the weakest part of the book. The reason is that the argument from work-incentives gives no reason to prefer the NIT to UBI. The authors view the NIT as a “work subsidy,” but it is no more a work subsidy than UBI.
The NIT and the UBI are both BIGs, by that, I mean they both guarantee a certain level below which no one’s income will fall—call this the “grant level.” Both allow people to live without working. UBI does this by giving the grant to everyone whether they work or not, but taxing them on their private income. NIT does this by giving the full grant only to those who make no private income and taking a little of it back as they make private income. In standard economic theory, the “take-back rate” of the NIT is equivalent to the “tax-rate” of the UBI, and so either one can be called “marginal tax rate.”
Applying standard mainstream economic theory (which is used throughout the book), the variables that affect people’s labor market behavior are the grant level and marginal tax rate. The higher the grant level and the higher the marginal tax rate, the lower the incentive to work whether the BIG is an NIT or a UBI. You can have an NIT or a UBI with high or low marginal tax rates and grant levels, and you can have a UBI or an NIT that have the same grant level and marginal tax rate. It is for this reason that Milton Friedman, the economist and champion of the NIT, gave for drawing equivalence between the two programs:
INTERVIEWER: “How do you evaluate the proposition of a basic or citizen´s income compared to the alternative of a negative income tax?”
FRIEDMAN: “A basic or citizen’s income is not an alternative to a negative income tax. It is simply another way to introduce a negative income tax”.
-Eduardo Suplicy, USBIG NewsFlash interview, June 2000, https://www.usbig.net/newsletters/june.html
If the book’s arguments for work incentives are sound, I seen an argument for a modest BIG with a low marginal tax rate, but I see no argument one way or another why the BIG should be under the NIT or the UBI model.
Whatever one thinks about the issue of NIT versus UBI, the book presents an extremely sophisticated and powerful argument for moving in the direction of BIG. Therefore, it is a book that anyone interested in any form of BIG should examine closely.
-Karl Widerquist, Cru Coffee House, Beaufort, North Carolina, June 2, 2014, revised June 14, 2014
Erik Brynjolfsson and Andrew McAfee. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: W. W. Norton & Company, 2014. Audio edition: Grand Haven, Michigan: Brilliance Audio, 2014.
by Sara Bizarro | Jun 6, 2018 | News
The 2018 NABIG (North American Basic Income Guarantee) Congress happened in Hamilton, Ontario, from May 24th to May 27th at McMaster University. There were around 120 people presenting and attendance between 270-280 people. The conference was notably diverse, with attendees from across the income spectrum, from people who have prospered in business, to people living in poverty. There were representatives from legislatures, civil services, business, academia and faith organizations, unions, agriculture, community service groups, advocacy groups, and First Nations communities. There were participants with long and deep knowledge about Basic Income, as well as people who were new to the concept. There was also a large number of young people, attending and presenting. There were participants from Australia, Brazil, Canada, Chile, Germany, Mexico, Portugal, Russia, the USA, and the UK, among others.
Guy Caron, Evelyn Forget, Art Eggleton, Sheila Regehr, Ian Schlakman and Laura Babcock.
The conference opened with welcome remarks from Hamilton Mayor Fred Eisenberger, followed by a panel that included Guy Caron, a federal Member of Parliament (MP) from Québec with the New Democratic Party; Art Eggleton, a Canadian Senator and former MP, and former long-serving mayor of the City of Toronto; Evelyn Forget, Manitoba health economist that uncovered the effects of Mincome on health and wellbeing; Sheila Regehr, chairperson of the Basic Income Canada Network and Ian Schlakman, Basic Income Action activist from the National Welfare Rights and Poor People’s Campaign. The moderator for that section was Laura Babcock, President of POWERGROUP Communications and a national current affairs commentator. Guy Caron spoke about his Basic Income proposal, a way to combine existing benefits such as the Canadian child benefit and tax credits into one policy that guarantees that no one would fall under the poverty line. Senator Eggleton also said he would be for an incrementalist solution to rolling out Basic Income in Canada. At the end of the panel, each speaker was asked to say one inspirational phrase that summed up their views and MP Guy Caron said: “Putting a man on the moon was a huge achievement. If we could end poverty in Canada, we would be the first country in the world to do so!”
Living Proof, Hamilton Basic Income Speakers: Jodi Dean, David Cherkewski, Lance Dingman, Jayne Cardno, Rhonda Castello.
The conference also had the participation of the group Living Proof, a select group of speakers that are participants in the Hamilton Basic Income Pilot. The Basic Income recipients stood up, one by one, and told their stories. Each of the participants spoke of how they went from having a comfortable middle-class life to living in poverty and about the challenges they faced on a daily basis. Jodi, one of the Basic Income recipients, said that she had a normal middle-class life before a divorce left her and her children in a dire situation, especially since one of her children has Brittle Bone disease. She talked about a night when she had a child with a broken leg and had to worry about taking her to the hospital because she had no money to pay for parking. Others spoke about mental health and disability challenges and referred to several difficulties with the current social security system whose job is more felt as policing rather than helping them find exit strategies for their situation. Interestingly, all recipients said they started volunteering in their communities since they have been receiving the Basic Income and this has inspired them to try to change their situation of poverty and of those around them.
Living Proof, Hamilton Basic Income Speakers: Margie Gould, Jayne Cardno, Lance Dingman, Tim Button, Dave Cherkewski, Jodi Dean, Rhonda Castello and John Mills (Living Proof group coordinator).
The event was entitled, Basic Income: Bold Ideas, Practical Solutions, and the main plenary talks were on two themes, Convergence and Reality. The Convergence topic intended to presenting Basic Income from different perspectives, from social justice to health, human rights, faith, technology etc. The Reality theme, which goes beyond the reason why we need a Basic Income, included implementation issues on how a Basic Income should operate, e.g. how to fund it and how to gain public support.
The complete program can be downloaded here and the paper and presentations will be available at the Basic Income Canada Network website after June 17th.
More information at:
Nicole Smith, “Canada Could be the First Country to Eliminate Poverty”, Raise the Hammer, May 29th 2018
by Claire Bott | Jun 5, 2018 | News
Johann Hari, a successful non-fiction writer, has used his latest book, Lost Connections, to explore the topic of depression, looking at certain possible solutions to the debilitating condition.
Although most traditional solutions for depression are individual and aimed at the depressed person, Hari, who suffers from the illness himself, suggests that solutions for depression could include radical social change in order to avoid bringing about the conditions under which people tend to become depressed. Although, this is sometimes said to be difficult to control so many will opt to seek professional advice or try products like this penis envy dosage in order to uplift their mood.
Depression can happen to anybody, and it can occur for a number of different reasons. This is why no one ever fully understands what is going on in someone else’s head. For example, you might see someone enjoying Organic CBD Nugs, or another form of cannabis, and assume it’s purely recreational. However, that person could be using the substance to calm their feelings of anxiety and depression. It could be because you’ve been subjected to emotional, physical, or sexual abuse, you’ve experienced a death, or you could’ve been diagnosed with a serious illness. Unfortunately, the list goes on. People are able to seek out remedies in the form of marijuana, which they can get from online retailers like get kush, which may treat their symptoms of depression and help them to fight off the low moods – but only if they can afford it. Plus, they will need to obtain a medical marijuana card, which you can receive from places like Green Health Docs, to help relieve the symptoms this way, the same can’t be said about what happens socially. What happens in the environment around us is out of our control, so this could be the reason why people are experiencing depression, like Hari.
In the final chapter of the book, Hari explores the concept of universal basic income (UBI), including interviews with Rutger Bregman, the Dutch historian and author who wrote Utopia for Realists (by giving people money to meet their everyday needs, Bregman argues, we can improve their well-being, free them from pointless jobs, and allow everyone to engage in meaningful activity again), and Dr Evelyn Forget, the Canadian economist. In an interview about Lost Connections, Hari referred to UBI as “a really potent anti-depressant”. Research, though limited, seems to back up this idea, which includes the large basic income trial which happened in Manitoba, Canada, in the 1970s.
Edited by: Patrick Hoare
by Karl Widerquist | May 30, 2018 | Opinion, The Indepentarian
This essay was originally published on Basic Income News in December 2012.
This year Alaskans received a dividend of $878, not bad compared to all the other states, but this dividend is the smallest since 2005, and it is only the second time in more than 20 years that the dividend has been below $900 per person. Alaska’s Permanent Fund Dividend (PFD) needlessly fluctuates widely. This year’s dividend is 25 percent smaller than last year’s dividend of $1,174, and it is 57 percent smaller than the 2008 record-high dividend of $2,069 (not counting the one-time supplement of $1200 that was added to that year’s dividend).
The declining dividend does not mean that the PFD is in trouble. Actually the Alaska Permanent Fund (APF), which financed the PFD, is at near-record high levels. It closed the 2011-2012 fiscal year at 40.3 billion dollars. The dividend was low this year because the state uses a complex formula averaging the returns over a five-year period to determine yearly returns. The five-year average was chosen to smooth out fluctuations in market returns to create a more stable dividend, but—as Alaskans can easily see—a five-year average is not enough to do that job. Markets tend to have stable long-term trends, but they can have occasionally large yearly fluctuations (either up or down) that can dwarf a five-year average. The mid-2000s market boom, and the 2008-2009 market bust were just such fluctuations. Now, several years later with the boom returns falling out of the calculations but the decline still in, the 2008 market bust affects the dividend the more than it did at the time.
There’s a better, more stable way to calculate the dividend. It’s called percentage of market value (POMV). Most financial managers agree that an individual can afford to withdraw up to 4 percent of a well-invested diversified portfolio and still expect it to grow in real terms over time.
If Alaska used this rule to calculate the PFD, this year’s dividend would have been $2,380. It would have been a record-high dividend, because the APF closed the fiscal year at a record-high level. Suppose then there was a major sell-off in the markets and the fund declined by 25% to $30 billion. The dividend would decline by 25% as well, to $1,846. Suppose instead it rose by 25% to $50 billion. The dividend would rise by 25% as well, to $3,076. Because 25% is an unusually large fluctuation, we can expect this to be an unusually large change in the dividend. Most often it would change by less than 10% from year to year, and in most years it would increase.
Perhaps Alaskans should be more conservative. The goal of the fund is not just to payout as much as possible. It is also to save for the future. The more the APFC pays out in dividends now, the slower the APF and the PFD will grow over the long term. So, perhaps a POMV rule of 3% would be better—a little more cautious—than the 4% rule. If so, payouts this year would have been $1860. Payouts after a 25% decline to $30 billion would be $1,395. Payouts after a rise to $50 billion would be $2325, and Alaska could expect to larger reinvestments by the APFC to help the APF get to $50 billion much more quickly.
POMV just makes sense. Nobody likes the big fluctuations. No one wants their dividend to be less than half of what it was a few years ago. POMV stabilizes dividends, making it easier for Alaskans to plan, and it can be part of a conservative payout strategy that will keep the fund growing over time.
-Karl Widerquist, Doha, Qatar, November 2012
by Guest Contributor | May 26, 2018 | News
Scott Santens published on Medium the transcription of a speech he wrote for a keynote session he presented in Sweden in 2017, with the title “It’s time for technology to serve all humankind with Unconditional Basic Income.”
The speech revolves around the impact of automation on society, acting as a disruptor in the labour market, making many jobs obsolete without creating more and better jobs for humans. This is a trend that goes on since the ‘90s: “Yes, it already happened. It’s not in the future. It’s in the past”.
Technological unemployment is a reality, he says, and it’s observable from the decline in occupation of the US population since 2000, the year in wich human labour peaked. Ephemeralization made a lot of middle-skilled jobs obsolete, creating an occupational vacuum filled by low-skilled jobs, as jobs are automated “from the middle out”. This translated in income stagnation for the middle class, growth in incomes monthly variance and rising income inequality. All factors which ultimately affect the wellbeing of individuals and society as a whole, producing a costant sense of insecurity in the population. But, according to Santens, we shouldn’t fear automation:
“We have the opportunity to forever free humanity from drudgery and toil, but as long as people require money to live, and jobs are the primary way of obtaining money, people will fear automation.”
Technologic unemployment ends up hindering productivity itself, because automation of the medium skilled jobs makes workers shift toward the low skilled ones, increasing the offer of low paid work and thus making automation less convenient and postponable.The answer resides in decoupling work from income, through the introduction of an Unconditional Basic Income, a solution which would make income circulate from top to bottom. It would eliminate the necessity to work in order to survive, thus driving very many undesirable jobs out of the labour market and making automation more impellent. With a better distribution of wealth, full automation could be reached, eliminating many unnecessarry and unsatisfactory jobs, and society would be ultimately able to floursih. Scott Santens puts this clearly:
“…how much are we holding civilization back by allowing impoverishment to continue? How much more could we accomplish as a species, if we made the choice, that’s right, THE CHOICE, to abolish poverty and extreme inequality forever, by simply investing in humanity — in each other?”
More information at:
Scott Santens, “It’s Time for Technology to Serve all Humankind with Unconditional Basic Income”, Medium, April 13th 2018
