Neely Young: A World Without Work?
The following is a scary proposal floated during this political season, and it might be implemented sooner than later. Be very afraid.
This big idea is for our government to provide a Universal Basic Income (UBI). One advocate is billionaire Bill Gross, who worries that robots are taking over traditional jobs. His solution is for the government to give everyone a supplemental wage.
Unless we want to enter into an extended recession, the government needs to start guaranteeing income for everyone, Gross says. He doesn’t want to raise taxes for this but just have the Federal Reserve print more money and put it in normal circulation.
The most serious proposal in discussion among both liberal and conservative policy makers comes from Libertarian economist Charles Murray. Murray has proposed that we should replace welfare with this UBI. It would give every American citizen over 21 years of age $13,000 yearly. All adults in America would get a $13,000 annual grant deposited into their bank accounts in monthly installments.
In exchange for the annual grant, Murray says, all existing transfer payments would go away, including food stamps, housing subsidies, Social Security, Medicare, supplemental social security income, agricultural subsidies, free lunches in schools and any and all government social services programs. All the government bureaucracies that run these programs would disappear.
The UBI grant would provide healthcare benefits at a cost of $3,000, leaving $10,000 in annual income. People could earn additional income up to $30,000, but the grant would drop as low as $6,500 for someone who earns $60,000 or more.
The notion that everyone should receive a basic monetary grant came from the conservative economist Milton Friedman. He believed in the virtues of a free market system with minimal government intervention. He was an advisor to Ronald Reagan and Conservative British Prime Minister Margaret Thatcher.
While the UBI at first sounds like another liberal giveaway, remember, under this idea, all government programs would close down and the agencies that administer the transfer payments would cease to exist. If the proposal was added to our existing system, it would not work. But if the program eliminated all transfer payments, it is estimated that the UBI would be about $200 billion cheaper than the current system (as of 2014).
The UBI would hope to deal with a coming labor market crisis that will be like no other in history. Both white-collar and blue-collar jobs are disappearing at an alarming rate due to increasing use of robots, drones and 3-D printing, where parts for autos and other manufactured items are made on the spot instead of coming from outside production plants.
White-collar upper-income jobs are at risk as well. Artificial Intelligence (AI) has taken over many professions. Computer programs have replaced workers in professions like accounting and law. In New York there are large office buildings now nearly empty, a result of thousands of bond traders losing their jobs due to technology. There is a glut of unemployed Ph.D.s, because online college courses are increasing at a rapid pace and eliminating much of the face-to-face instruction.
Driverless cars and trucks could soon be the norm, replacing 3.5 million truck drivers all over the U.S. The list goes on and on. The march toward automation is sweeping the U.S., and soon jobs will be even scarcer than they are now.
Charles Murray, Bill Gross and others believe that a guaranteed basic income will be a safety net that will protect American civil society; the idea has support from both the left and right.
But it seems to me that just handing people cash instead of giving aid like food stamps or funds for assisted housing could be a wasted effort. If everyone has a guaranteed income, it could take away their incentive to find a job and make us into a nation of sorry, demoralized citizens.
It would hurt the poor more because employers will have little obligation to pay decent wages if the government is sending everyone over 21 years of age a supplemental monthly check. Furthermore, where will more than 400,000 social service government employees find work?
UBI could be a bigger job killer than technology. This idea is already under heavy discussion in Europe and other countries and will soon drift over here. When it comes, be very afraid.