UBI Part I: Economics

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Kris Morgan  September 13, 2017

Breakthroughs in robotics are making it possible for businesses to replace employees with machines which can be programmed to perform repetitive tasks. The Economist cited a study which found, “…47% of workers in America had jobs at high risk of potential automation…  What determines vulnerability to automation is not whether the work is manual or white-collar but whether or not it is routine.”  This topic has the potential to do the same thing 9/11 did, that is, cause us enough anxiety that we follow a path of terrible decisions, beginning with the universal basic income (UBI). However, unlike 9/11, we see this coming.  If we are to be responsible citizens, we need to think clearly before we act.

UBI is very simple.  The state provides all citizens with enough income to survive on subsistence.  According to futurism.com, the average proposal is around $10,000 per household annually.  The idea is with so much automation, there simply won’t be enough work. By providing every household with a basic income, the laborers will still have enough money to acquire things they need and businesses can rest assured they will still make money.  The UBI could be funded by taxing businesses, issuing carbon taxes, increasing capital gains, decreases in military spending; conceivably anywhere the government can get it.

It is a tax on production, as all taxes are.  We are all accustomed to looking at taxation in the progressive paradigm, trying to determine which economic class will get hit hardest, but all taxes work their way through the economy.  Glass ceilings on the rich discourage investment and production, which means less work and fewer goods. Taxing the other classes would make them less able to purchase goods at the store, which will again result in decreased investments and production.  Whether it’s income, returns on investments, gasoline, property, emissions, etc. it all results in a net loss in our material well-being. Things that generate no revenue, no economic growth, cannot be taxed, as they have no source for taxable funds.  Taxation combined with subsidizing idle, unproductive activity, compounds the problem.

Let’s suppose all routine labor jobs get automated.  People could take on work that requires more flexibility and mental agility.  The labor class would shift into the creative fields, such as performing live music, plays, comedy shows, ballets, the service industry, and so on.  We already have a website which anyone can use to make their own television videos, called Youtube, and yes people make a living off it. When civilization began, labor was centered on agriculture.  The Industrial Revolution shifted workers to the factory.  We are in the middle of a technological revolution, and the UBI seems like an attempt at staving off the painful adjustments we will all have to make.  Won’t we rob future generations if we refuse to change today?

Making UBI a matter of taxation and law would most certainly freeze labor in its tracks. Our energies should be focused on learning programming, robotics, and other creative skills, not how we are going to use the law to ensure we don’t have to adjust. UBI and other layers that follow could trap us in stagnation, as increased taxes and regulations would make it harder to compete with already existing businesses.

The beautiful thing about freedom is we have the flexibility to respond to any social problem with a variety of solutions.  UBI would rob us of that.  When production is penalized, and idleness is subsidized, the motivation to be creative and take on problems in productive ways dies.  We all lose.  The idea that there’s a limit to the number of jobs a society has available is a Keynesian myth and meant to distract from the unemployment their own policies cause.  If it ever turns out that our choices are limited to UBI or the collapse of our civilization, we will work out our own UBI without the law being involved.

Progressive taxation is a product that creates its own demand.  Laying taxes on business to give to the poor reduces resources for said business to invest and produce, which means a reduction in existing work.  This cycle allows the system to feed itself. We have a welfare state and we see firsthand how taxing productivity and subsidizing leisure is a proven method for failure.  We will always have problems on top of problems that need answered before we reach our end goal, in this case economic stability in the midst of mass automation.  

Let’s not pretend we even comprehend all the complexities of the issue and know exactly what everyone must do.  Working together to face this challenge will be more effective than one idea being made law for everyone to follow.  We’re all uneasy about the future, but what will determine our success or failure as a society will be our ability to set our fears aside and think rationally.  When the solution is unclear, better we are free to try as many solutions as we can conjure up than be forced in a single system.  As Stephen Hawking stated so eloquently, “Intelligence is the ability to adapt to change”, so let’s be smart about this.

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