As more and more jobs are becoming automated, the world faces a dramatic shift in the underlying structures of its labor economies over the next 20 to 50 years. The conversation is slowly becoming more prominent in the mainstream with several major figures highlighting the problem and proposing different solutions. Elon Musk maintains that the idea of a universal basic income is the best solution, while Bill Gates advocates for a robot tax.
It's undeniable, we are entering a revolution in our labor economy. Numerous recent reports have reached some confronting conclusions as to the effects of automation and artificial intelligence on our current work force. A striking report from Oxford University in 2013 estimated that about 47 percent of the total current US work force is at risk of becoming redundant due to automation or artificial intelligence. Another study in 2015 found that 45 percent of jobs in the US right now could be replaced by currently demonstrated technologies.
Late in 2016, Obama's White House released a report warning that measures needed to be taken to manage the millions of jobs that could be lost in the coming years due to technological advances. Despite societies having faced similar labor transitions in the past due to technological advancements displacing workers, we seem to be speeding through a transitional phase at a pace that may exceed our ability to naturally adapt. In an interview with Wired in 2016, President Obama expressed his concern saying, "I do think that we may be in a slightly different period now, simply because of the pervasive applicability of AI and other technologies."
The two big solutions to our looming unemployment crisis currently hitting the mainstream conversation are the institution of a tax on robots and a universal basic income.
How do we tax robots?
Billionaire philanthropist Bill Gates came out in favor of a robot tax in a recent interview with Quartz. Gates explained that in our current climate you have workers who earn income that is taxed, but when their job is replaced by a robot you are losing that income tax revenue. The clearest solution he sees is to tax the robots at a similar level to the human worker it has displaced.
The revenue garnered from these robot taxes could then be used to support and retrain those unemployed workers, ultimately moving them into new forms of employment. It's an enticingly simple solution to a complex global problem. It's also becoming popular in certain political arenas, with prominent advocacy from surprise socialist front-runner in the upcoming French election, Benoit Hamon.
So what's wrong with a robot tax?
Well, apart from a confusing burden of implementation (for example, how much automation in a job would equal a taxable rate?), this really amounts to a tax on businesses that would inevitably result in a trickle down to the consumer. If a business was to make the decision to automate a percentage of its workforce, the technology itself would be a significant up-front cost before even adding an ongoing robot tax. The tax would ultimately either slow the rate of automated adoption and robotic development, or result in a sharp inflation of costs to the general public.
This is, of course, a simplistic interpretation of events, but not an unreasonable one. In fact, just recently the European Parliament debated this very issue, and while approving a raft of robot law proposals to regulate and manage the growing industry, they roundly rejected the idea of a robot tax.
The big alternative being touted around the world by many is the idea of a universal basic income.
Money for nothing
Elon Musk has been a vocal proponent of a universal basic income (UBI) for several years now. Most recently in February 2017 he reiterated his support of the idea at a summit in Dubai saying, "I don't think we're going to have a choice, I think it's going to be necessary. There will be fewer and fewer jobs that a robot cannot do better."
UBI is an even more simplistic solution to our oncoming problems than the robot tax. The idea proposes that all citizens of a country receive a regular unconditional sum of money, either monthly or annually, that is calculated to cover basic living expenses. The UBI is touted as being an efficient way to replace the unwieldy bureaucratic mechanisms of many governmental social welfare systems.
Economists are still debating the cost-effectiveness of UBI, but there are many who believe that the total cost of current large and inefficient welfare systems are higher than the potential cost of UBI. Charles Murray, a prominent advocate of UBI has prolifically written of a proposal to eliminate all current welfare systems in the United States and replace them with a universal US$10,000 guaranteed income for every citizen. He estimated that this would be cheaper than the combined costs of current systems in place, but that has been debated with others claiming his numbers are fundamentally wrong.
When his proposal was put to a panel of expert economists, 58 percent either disagreed or strongly disagreed that it was a better policy than the status quo. It is worth noting many economists surveyed in that particular poll explained that they were responding more to the generalized extremity and lack of nuance in Murray's specific system.
Pushing aside the economic factor for a moment, the most heated debates surrounding an implementation of UBI tend to be concern over the social consequences. After all, if people didn't need to work then why would they? Would we basically be funding a future of lazy, unmotivated human beings?
But what would we all do?
This is a common concern railed against UBI, but it may be more of a philosophical concern than a pragmatic one. Several pilot UBI projects have shown that households receiving cash handouts have actually increased their labor and production outputs. In India several NGOs piloted UBI and found that those who received the grants doubled their production work when compared to similar households not receiving the grants.
An extensive trial in a small Canadian town in the 1970s produced similar results, showing the guaranteed income system resulted in a larger volume of high school students reaching the 12th grade, as well as an 8.5 percent drop in hospital visits and a reduction in domestic violence cases.
"It's surprising to find that it actually works, that people don't quit their jobs," remarked Evelyn Forget, a sociology professor who recently reevaluated the records from that Canadian pilot study in the 1970s, "There's this fear that if we have too much freedom, we might misuse it."
At its core we return to the philosophical questions regarding the general effects of UBI on society. For generations our occupations have guided and structured our lives and our identities. It is undeniable that UBI would alter this, but it could easily be argued that this ideological shift is already happening anyway.
These attitudes seem to signal that for the younger generations, UBI would offer a safety net allowing personal creative explorations, enhanced education, and even the ability to take the time to cultivate new income streams from different endeavors. As we look to almost half of our current workforce becoming redundant through automation over the coming years, we will certainly need to be working as a society to develop new industries, occupations and income streams. Is UBI the most straight-forward way to achieve this outcome?
Whatever you believe is the best way forward, be it robot taxes, UBI or its more pragmatic variant, the negative income tax, everyone can agree that our labor economies are facing some dramatic looming changes. Something will certainly need to be done and the discussion needs to be had, so let's have it.
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