My local debate club recently held a debate about a specific Universal Basic Income (UBI) proposal. This was the Motion:
The Motion: This House Supports a Basic Income for All US Residents
Motion Summary: Basic income recipients would include children and adults; the employed and unemployed; and citizens, permanent residents, and all other residents who could prove a residency duration of at least three years. The amount given would start at $1,000 per person per month and be pegged to GDP growth going forward. No programs in the existing social safety would be replaced by this policy.
I was speaker against the motion. This series of posts expands upon my arguments. Long story short: UBI --> huge tax increases, most households would pay more in taxes than they receive in UBI, work disincentives, declining labor market participation, insolvency, and the misuse of Alaska as a UBI proxy. See posts I-VIII for more details.
But wait! Won’t robots and AI free us from the need for labor? So can't we just ignore all the evidence re work disincentives and labor market participation?
Here's the thing: robots and their AI cousins are simply smart machines. Employers invest in smart machines when 1) they calculate the machines will produce more output for less input; 2) they can afford or borrow the initial capital investment; and 3) they predict positive business conditions for their product/service for several years ahead. If a lot of employers did this and their businesses did indeed become more productive as a result, we'd see higher US productivity growth. Instead...
And here’s what the Bureau of Labor Statistics (2017) has to say about robots:
"There are an estimated 1.5–1.75 million robots in operation, with the number expected increase to 4–6 million by 2025…Increasing the number of robots decreases the cost of production, thus expanding the industry and increasing the demand for labor.”
As it is, the BLS projects the number of jobs in the US will increase from 156 million in 2016 to 168 million by 2026. And many are good jobs with positive job outlooks that lead to middle-class earnings*.
That includes truck drivers, whose job prospects are now expected to improve with self-driving vehicles! (Thanks to the technology-labor “complementarity” effect)
Plus, contrary to rumors, the US is going to need more, not fewer, workers over the next 3 decades, as baby boomers stop working (and they’d stop sooner if they got a basic Income of $1000/month). In the "picture is worth a 1000 words" department:
Source:https://commons.wikimedia.org/wiki/File:Social_Security_Worker_to_Beneficiary_Ratio.png
We are actually looking at labor shortages for the next several decades. Not a good time to introduce a labor-zapping UBI scheme.
--
* For a list of 90 occupations with a good job outlook, see last month's post: How to Reach the Middle-Class without Getting a College Degree.
Links:
https://www.bls.gov/opub/mlr/2017/beyond-bls/the-impact-of-technology-on-labor-markets.htm
https://www.bls.gov/emp/ep_table_107.htm
https://medium.com/@UberATG/the-future-of-trucking-b3d2ea0d2db9
http://philosophicaldisquisitions.blogspot.com/2015/09/why-havent-robots-taken-our-jobs.html
https://www.bls.gov/emp/ep_projections_methods.htm. Re BLS methodology. Part of what the BLS does is look at surveys of approximately 149,000 businesses and government agencies, representing approximately 651,000 individual worksites. Re these surveys, see: https://www.bls.gov/ces/.
https://www.bls.gov/opub/mlr/2015/article/evaluation-of-bls-employment-labor-force-and-macroeconomic-projections-1.htm Re: the accuracy of BLS employment projections. The main responsibility of the BLS projections is to produce comprehensive and trustworthy information to help people choose careers. While the projections may not exactly match the actual data in the target year, they should capture the long-run trend, direction, and growth of the labor force, the macroeconomy, and industry. …Generally, BLS projections were consistent for the target years 2006, 2008, and 2010.]