Rise of the Robots: Technology and the Threat of a Jobless Future (39 page)

Throughout our economy and society, machines are gradually undergoing a fundamental transition: they are evolving beyond their
historical role as tools and, in many cases, becoming autonomous workers. Carr views this as dangerous and would presumably like to somehow put a stop to it. The reality, however, is that the astonishing wealth and comfort we have achieved in modern civilization are a direct result of the forward march of technology—and the relentless drive toward ever more efficient ways to economize on human labor has arguably been the single most important factor powering that progress. It’s easy to claim that you are against the idea of too much automation, while still not being anti-technology in the general sense. In practice, however, the two trends are inextricably tied together, and anything short of a massive—and certainly ill-advised—intrusion of government into the private sector seems destined to fail at any attempt to halt the inevitable, market-driven rise of autonomous technology in the workplace.

The Case for a Basic Income Guarantee

If we accept the idea that ever more investment in education and training is unlikely to solve our problems, while calls to somehow halt the rise of job automation are unrealistic, then we are ultimately forced to look beyond conventional policy prescriptions. In my view, the most effective solution is likely to be some form of basic income guarantee.

A basic, or guaranteed minimum, income is far from a new idea. In the context of the contemporary American political landscape, a guaranteed income is likely to be disparaged as “socialism” and a massive expansion of the welfare state. The idea’s historical origins, however, suggest something quite different. While a basic income has been embraced by economists and intellectuals on both sides of the political spectrum, the idea has been advocated especially forcefully by conservatives and libertarians. Friedrich Hayek, who has become an iconic figure among today’s conservatives, was a strong proponent of the idea. In his three-volume work
Law, Legislation and Liberty,
published between 1973 and 1979, Hayek suggested
that a guaranteed income would be a legitimate government policy designed to provide insurance against adversity, and that the need for this type of safety net is the direct result of the transition to a more open and mobile society where many individuals can no longer rely on traditional support systems:

There is, however, yet another class of common risks with regard to which the need for government action has until recently not been generally admitted. . . . The problem here is chiefly the fate of those who for various reasons cannot make their living in the market . . . that is[,] all people suffering from adverse conditions which may affect anyone and against which most individuals cannot alone make adequate protection but in which a society that has reached a certain level of wealth can afford to provide for all.

The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.
¹⁰

Those words might well come as something of a surprise to those conservatives who buy into the currently fashionable extreme right-wing caricature of Hayek. To be sure, when Hayek uses the words “Great Society” he means something quite different from what Lyndon Johnson envisioned when he used the same phrase. Rather than an ever-expanding welfare state, Hayek saw a society based on individual freedom, market principles, the rule of law, and limited government. Still, his reference to “the Great Society” as well as his recognition that “a society that has reached a certain level of wealth can afford to provide for all” seems to stand in stark contrast to today’s more extreme conservative views, which are more likely to embrace Margaret Thatcher’s statement that “there is no such thing as society.”

Indeed, a proposal for a guaranteed income would today almost certainly be attacked as a liberal mechanism for attempting to bring about “equal outcomes.” Hayek himself explicitly rejected this, however, writing that “it is unfortunate that the endeavor to secure a uniform minimum for all who cannot provide for themselves has become connected with the wholly different aims of securing a ‘just’ distribution of incomes.”
¹¹
For Hayek, a guaranteed income had nothing to do with equality or “just distribution”—it was about insurance against adversity as well as efficient social and economic function.

I think one of the primary takeaways from Hayek’s view is that he was fundamentally a realist rather than an ideologue. He understood that the nature of society was changing; people had moved from farms, where they were largely self-sufficient, to cities, where they depended on jobs, and extended family structures were breaking down—leaving individuals to assume higher risks. He had no problem with a role for government in helping to insure against those risks. This idea that the role of government can evolve over time is, of course, highly applicable to the challenges we face today.
*

The conservative argument for a basic income centers on the fact that it provides a safety net coupled with individual freedom of choice. Rather than having government intrude into personal economic decisions, or get into the business of directly providing products and services, the idea is to give everyone the means to go out and participate in the market. It is fundamentally a market-oriented
approach to providing a minimal safety net, and its implementation would make other less efficient mechanisms—the minimum wage, food stamps, welfare, and housing assistance—unnecessary.

If we adopt Hayek’s pragmatism and apply it to the situation likely to develop in the coming years and decades, it seems very likely that government will ultimately be called upon to take some type of action in the face of the increased risks to individual economic security brought about by advancing technology. If we reject Hayek’s market-oriented solution, then we’ll inevitably end up with an expansion of the traditional welfare state, along with all the problems that accompany it. It’s easy to imagine the eventual rise of vast new bureaucracies geared toward feeding and housing masses of economically disenfranchised people—perhaps in dystopian quasi-institutional environments.

Indeed, this is very likely the path of least resistance—and the default if we simply do nothing. A basic income would be efficient and would have relatively low administrative costs. A bureaucratic expansion of the welfare state would be far more expensive on a per capita basis, and far more unequal in its impact. It would almost certainly help fewer people, but it would create a number of traditional jobs, some of which would be very lucrative. There would also be abundant opportunities for private-sector contractors to jump on the gravy train. These elite beneficiaries—the high-level administrators, the private-company executives—are sure to exert substantial political pressure for things to evolve along this path.

There are, of course, plenty of examples of this kind of thing already. Massive weapons programs that the Pentagon does not want are protected by Congress because they create a small number of jobs (relative to their enormous costs) and pad the profits of large corporations. The United States has a staggering 2.4 million people locked up in jails and prisons—a per capita incarceration rate more than three times that of any other country and more than ten times that of advanced nations like Denmark, Finland, and Japan.
As of 2008, about 60 percent of these people were nonviolent offenders, and the annual per capita cost of housing them was about $26,000.
¹²
Powerful elites—including, for example, prison guards’ unions and executives at the private corporations that operate many prisons—have strong incentives to ensure that the United States remains an extreme outlier in this area.

For progressives, a guaranteed income may be an easier sell in the current political environment. Despite Hayek’s argument to the contrary, many liberals would likely embrace the idea as a method to achieve more social and economic justice. A basic income could effectively become a brute-force algorithm designed to alleviate poverty and mitigate income inequality. At a stroke of the presidential pen, extreme poverty and homelessness in the United States might effectively be eradicated.

Incentives Matter

The most important factor in designing a workable guaranteed income scheme is getting the incentives right. The objective should be to provide a universal safety net as well as a supplement to low incomes—but without creating a disincentive to work and to be as productive as possible. The income provided should be relatively minimal: enough to get by, but not enough to be especially comfortable. There is also a strong argument for initially setting the income level even lower than this and then gradually increasing it over time after studying the impact of the program on the workforce.

There are two general approaches to implementing a guaranteed income. An unconditional basic income is paid to every adult citizen regardless of other income sources. Guaranteed minimum incomes (and other variations, such as a negative income tax) are paid only to people at the bottom of the income distribution and are phased out as other income sources rise. While the second alternative is obviously less expensive, it carries with it the danger of disastrous perverse
incentives. If the guaranteed income is means-tested at relatively low income levels, recipients will see an effective tax rate on any further earnings that can reach confiscatory levels. In other words, they can fall into a “poverty trap” where there is little or no benefit to working harder. Perhaps the worst possible example of this occurs with the Social Security disability program, which many people likely attempt to utilize as a kind of guaranteed income when their other options are exhausted. Once a person is approved for disability payments, any attempt to work beyond that point carries the danger of losing both the income and the accompanying health care benefits. As a result, virtually no one who gets into the program ever works again.

Clearly, if a guaranteed income is means-tested, then this should happen at a relatively high level, preferably well into middle-class territory. A person who decides to forego other earning opportunities then faces a long fall. Another good idea would be to discriminate between active and passive income. A guaranteed income might be means-tested aggressively against passive income such as a pension, investment income, or Social Security. Active income like wages from a job, self-employment income, or earnings from a small business either would not be means-tested at all or would occur at a much higher level. This should ensure a consistent incentive for everyone to work as hard as possible, given the opportunities available.

A guaranteed income scheme would also be likely to create a number of more subtle incentives for both individuals and families. Conservative social scientist Charles Murray’s 2006 book
In Our Hands: A Plan to Replace the Welfare State
argues that a guaranteed income would be likely to make non-college-educated men more attractive marriage partners. This group has been the hardest hit by the impact of both technology and factory offshoring on the job market. A guaranteed income might help increase marriage rates among lower-income groups, while helping to reverse the trend toward more children being raised in single-parent households. It would also, of course, make it more feasible for one parent to choose to stay at home
with young children. These are all things that might appeal to people across the political spectrum.

Beyond this, I think there are compelling reasons to go further and build some explicit incentives into a basic income program. The most important of these would be geared toward education, especially at the high school level. Recent data shows that there continues to be a strong economic incentive to pursue a college degree. However, the unfortunate reality is that this is the case not so much because opportunities for college graduates are expanding dramatically but because prospects for those with only a high school diploma are collapsing. I think this creates a real danger that, for a significant number of people who are not destined to graduate from college, the incentive to complete high school may be diminished. If a struggling high school student knows that he will receive a guaranteed income regardless of whether or not he graduates, that obviously creates a very powerful perverse incentive. Therefore, we ought to pay a somewhat higher income to those who earn their high school diploma (or the equivalent through testing).

The general idea is that we should value education as a public good. We all benefit when the people around us are more educated; this generally results in a more civil society as well as a more productive economy. If we are destined to transition into an era where traditional work becomes less available, then an educated population will be in a better position to find constructive uses for leisure time. Technology is creating many opportunities to spend time in productive ways. Wikipedia has been built through countless hours of labor by unpaid contributors. The open source software movement offers another example. Many people start small online businesses to supplement their income. Yet, in order to successfully participate in such activities you need to reach a minimal educational threshold.

Other incentives might also be implemented. For example, a higher income might be paid to those who volunteer for community service activities or participate in environmental projects. When I
suggested building explicit incentives of this type into a guaranteed income in my previous book,
The Lights in the Tunnel,
I received a fair amount of pushback from more libertarian readers who strongly objected to the idea of an intrusive “nanny state.” Nonetheless, I think there are some basic incentives—most critically education—that nearly everyone ought to be able to agree on. The essential idea is to replicate (albeit artificially) some of the incentives associated with traditional jobs. In an age when more education may not always lead to an improved career path, it’s important to ensure that everyone has a compelling reason to at least complete high school. To me, the resulting advantages to society seem obvious. Even Ayn Rand, if she were rational, would presumably perceive a personal benefit in being surrounded by people with a higher level of education and more options for constructive use of their free time.