Tag: andrew yang

Universal Basic Income

I am very glad I found Andrew Yang’s book, The War on Normal People. It affirmed my own ideas and clarified a number of issues for me. Andrew is a bright non-politician who has declared his candidacy for the 2020 presidential elections. He may be a long-shot for the presidency, but he would make a major contribution if his ideas are able to influence the political agenda. He is a proponent of  Universal Basic Income (UBI), which is one of the solutions put forward to deal with disruptive technological shifts. Since many of you may not have the time to read his book (although I strongly recommend it), I will freely quote below from one of his chapters. UBI is not a new concept. Some form of UBI has been seen as an imperative by many voices.

Quote: Today, people tend to associate universal basic income with technology utopians. But a form of UBI almost became law in the United States in 1970 and 1971, passing the House of Representatives twice before stalling in the Senate. Versions of the idea have been championed by robust thinkers of every political persuasion for decades, including some of the most admired figures in American life. Here’s a sampling: Thomas Paine, 1796: Out of a collected fund from landowners, “there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance,… to every person, rich or poor.” Martin Luther King Jr., 1967: “I am now convinced that the simplest approach will prove to be the most effective—the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Richard Nixon, August 1969: “What I am proposing is that the Federal Government build a foundation under the income of every American family… that cannot care for itself—and wherever in America that family may live.” Milton Friedman, 1980: “We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash—a negative income tax… which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.” Bernie Sanders, May 2014: “In my view, every American is entitled to at least a minimum standard of living… There are different ways to get to that goal, but that’s the goal that we should strive to reach.” Stephen Hawking, July 2015: “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.” Barack Obama, October 2016: “What is indisputable… is that as AI gets further incorporated, and the society potentially gets wealthier, the link between production and distribution, how much you work and how much you make, gets further and further attenuated… we’ll be debating unconditional free money over the next 10 or 20 years.” Warren Buffett, January 2017: “[Y]ou have to figure out how to distribute it… people who fall by the wayside through no fault of their own as the goose lays more golden eggs should still get a chance to participate in that prosperity, and that’s where government comes in.” Bill Gates, January 2017: “A problem of excess [automation] forces us to look at the individuals affected and take those extra resources and make sure they’re directed to them in terms of re-education and income policies…” (Gates later suggested taxing robots.) Elon Musk, February, 2017: “I think we’ll end up doing universal basic income… It’s going to be necessary… There will be fewer and fewer jobs that a robot cannot do better. I want to be clear. These are not things I wish will happen; these are things I think probably will happen.” Mark Zuckerberg, May 2017: “We should explore… universal basic income so that everyone has a cushion to try new ideas.” Unquote. (Yang, Andrew. The War on Normal People (pp. 166-168). Hachette Books. Kindle Edition)

Yang calls his version of UBI the Freedom Dividend. He is proposing $12,000 (indexed to inflation) per person per year between the ages of 18 and 64 independent of their wealth status or income. The Freedom Dividend would replace a majority of the existing welfare programs. Yang contends that UBI will eliminate the disincentive to work that may be inherent in existing welfare programs. With UBI, if you work you can actually start saving and getting ahead.

Some other incentives of UBI that Yang argues for:

  • It would be a massive stimulus to lower-cost areas.
  • It would empower people to avoid making terrible decisions based on financial scarcity and month-to-month needs.
  • It would be a phenomenal boon to creativity and entrepreneurship.
  • It would enable people to more effectively transition from shrinking industries and environments to new ones.
  • It would reduce stress, improve health, decrease crime, and strengthen relationships.
  • It would support parents and caretakers for the work that they do, particularly mothers.
  • It would give all citizens an honest stake in society and a sense of the future.
  • It would restore a sense of optimism and faith in communities around the country.
  •  It would stimulate and maintain the consumer economy through the automation wave.
  • It would maintain order and preserve our way of life through the greatest economic and social transition in history.
  • It would make our society more equitable, fair, and just.

Yang calls his version of UBI the Freedom Dividend as he uses the analogy of a company distributing profits to its shareholders. Are citizens not similarly owners of the country entitled to a return on GDP – especially since GDP, with the help of robots can increase at human expense? In his book Yang offers practical ideas and ways to finance UBI.  If we can spend billions of dollars bailing out banks without any return, we can surely restructure our economy to support UBI and improve the quality of life for our citizens.

A Robot Will Not Buy Anything

More than 40 years ago when I was reading some books on economics, I came across the following sentence (paraphrased as I do not recall the author): “a robot will not buy anything.” This was in the 1980’s when technology was beginning to make strides in society. Naysayers and negative predictions about technology were silenced by quoting Joseph Schumpeter’s idea that capitalism and new ideas will replace the old, and therefore new technologies will replace old technologies which will continuously improve prosperity. However, that one statement, “a robot will not buy anything,” stuck with me as it struck at the core of economic theory where consumption is key.

Over the years, we have seen technology take over our lives, but the inevitable disruption appeared to be manageable. However, as increased technological change starts displacing more jobs, it behoves us to revisit that statement and the necessary economic and political changes that may need to be considered. Technological improvements are a good thing but their consequences need to be carefully considered and managed. The following is a simple, but by no means simplistic examination of the saying, “a robot will not buy anything.”.

So, “a robot would not buy anything”:  In the short term, robots will continue to keep producing things for the consumer market. Production efficiencies will be realized and profits will increase. But, consumers will need work to derive income that will allow them to continue to be consumers. When they are no longer able to consume, the particular market for that product will shrink and new markets need to be discovered to maintain consumption and profits. Wealth will be concentrated in the hands of the robot owners, who will use their wealth to improve their lot by lobbying legislation to promote their cause for labor regulations and access to markets. Over the long term however, as technology impacts other markets, the consumer market as a whole will shrink.  Let’s take this scenario to its logical conclusion. Rapid unmanaged technological change will cause massive disruptions in jobs and markets. As robots increase and human producers and human consumers decrease, the economy as we currently know it must necessarily evolve or implode.

We need to seriously look at managing the disruptions that technology is causing and going to cause. People whose jobs are being displaced by technology will need alternative forms of income, not only to survive, but to continue to be part of the economic consumption formula. So, terms like Universal Health Care, and, Universal Basic Income are not socialist ideas, but universal ones that are very timely and much needed for the survival of American society as we currently know it.

Our politicians are not going to help us as long as we keeping sending self serving and unthinking people to congress who can be readily influenced and/or bought by lobbyists. On the subject of technology, you only need to have listened to the questions posed to Facebook’s Mark Zuckerberg when he appeared before congress, to understand how clueless some of our legislators are about technology. They are not going to appreciate the import of the massive disruptions technology will cause us. We need our representatives in government to be honest and ethical, knowledgeable, continuous learners open to new ideas and learning, and committed first and foremost to the betterment of human capital in an economic society.

Since my retirement, my interest in the sentence “a robot will not buy anything” in the context of our current economy, has reoccupied my thinking. I hope to spend some time learning about and sharing some of the problems, ideas and possible solutions that surround this issue. One book on the issue that I am currently reading, that may be promising, is Andrew Yang’s “The War on Normal People.”