In 1930, in an essay titled “Economic Possibilities for Our Grandchildren,” John Maynard Keynes warned about “technological unemployment… due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” Today, Keynes’ prediction of technological unemployment seems to be turning into reality, though a centuries-old concept might prove to be an effective remedy.
Calls and proposals for the implementation of a universal basic income, or UBI, aren’t new. In fact, it’s a concept introduced as early as the 16th century. Although it has long and rich history, the idea of a basic income — a form of social security which guarantees all citizens regularly receive an unconditional amount of money — has not been as welcome in modern economic thought as many might expect. In fact, whenever brought up, it has drawn much opposition and criticism, especially in the United States.
However, as automation increases and workers’ skills become increasingly outdated throughout the United States, a nationwide movement calling for the implementation of a universal income has begun to emerge. However, some might argue new jobs that result from automation will counter the effects of technological unemployment, rendering the implementation of a universal basic income unnecessary.
While this has been the case in the past, it must be noted that this new era of automation will be unprecedented. The jobs resulting from this will likely require at least some form of a college-level education, and even that might not be enough. This means that new jobs won’t be replacing old ones immediately. Therefore, we should consider the idea’s effectiveness in mitigating the possibly disastrous effect of “technological unemployment.”
Some critics of the universal basic income also argue that giving people cash, instead of implementing targeted aid programs, means that much of that income will be wasted and will take away the incentive to work. This couldn’t be further from reality. Evidence from pilot studies by Guy Standing, the co-founder of the Basic Income Earth Network, suggests the contrary.
“When people stop working out of fear, they become more productive,” Standing says. “Cash grant households were three times as likely to start a new business or production activity as others, with a majority attributing that to the cash grants.”
A universal basic income might also help make the market fairer. If purchasing power is determined by your income, and prices in the market are determined by those who have purchasing power, it must follow that those with purchasing power are the ones determining the market’s direction. By providing a basic income, we ensure that everyone gets a voice in this process by providing everyone with a basic purchasing power.
While the structure of such a program is still far from clear, it is evident that it wouldn’t be cheap. Depending on how the program is actually structured, it would likely cost at least ten to twelve per cent of our gross domestic product. Additionally, given the current state of American politics, such a proposal would seem politically impossible. However, some have argued the implementation for such a program would be better than our current welfare system.
Also, public funding isn’t the only route when it comes to UBIs. Private crowdfunding has proven to be an alternative route for advocates. For example, in Germany, a group of more than 19,000 advocates have funded 11 people so far with living stipends of 1,000 euros per month — a modest start, but also impressive given it only began a few months ago.
If we want to prevent the possibly harmful economic consequences that might arise from a new era of automation, we need to consider new strategies with which we can counter the effects, and the implementation of a universal basic income should be one of them.
Carlos Lopez is an Opinion columnist for The Cavalier Daily. He can be reached at c.lopez@cavalierdaily.com.
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