Universal Basic Income and Automated Technology


SEATTLE — The rise of technology has propelled automation in the workplace; businesses have found their profits increased by laying off their workers and switching their production to automated technology instead, the result is a heavy loss of employment for the workers, sometimes entire job sectors are replaced by robots. A 2013 study by Oxford Univeristy estimates that 47 percent of U.S. jobs will potentially be replaced by robots and automated technology in the next 10 to 20 years.

The production and service sector jobs will take a hard hit, according to a report by the McKinsey Global Institute, the jobs that are most likely to be replaced by robots are jobs in hospitality and food services, manufacturing, agriculture, transportation and retail.

Entrepreneur Elon Musk has recently stated that a universal basic income would be a necessary and inevitable step for governments to take, due to the eventual shortfall of jobs which automated technology will oust, “I think we’ll end up doing universal basic income… these are not things I wish will happen; these are things I think probably will happen,” Musk said at the World Government Summit in Dubai.

The economic consequence of automation would be dire for third world countries who depend completely on production jobs which robots could easily replace, a 2016 analysis from the World Bank estimated the roughly two-thirds of all jobs in developing nations around the globe are susceptible to replacement by automation.

Work that could experience significant automation is actually higher in developing countries. Having been replaced by third world countries, many of the jobs susceptible to automation have already disappeared in advanced countries. With a struggling economy, many developing nations will be unable to provide the counterbalance effects of universal basic income, which could result in a higher income inequality.

Jobs which third world countries are highly dependent on for making a living could get replaced by automation; global trends have indicated how technology has led to a disruption in the market, resulting in higher inequality. Recent studies have linked technological change to a rising inequality; the share of national income that has gone to labor, has fallen quite sharply in many developing countries; moreover, middle-skilled employment in developing countries is also declining; with many of these jobs being near the top of the income distribution in low-income countries, as in Africa.

Many economists are quick to point to the negatives of instigating a universal basic income while others support the idea, pointing to countries such as Finland, Switzerland, and the Netherlands as being likely catalyst for establishing universal income, the reasons being that they already issue a very high rate of tax, and also since they’re smaller and more homogeneous.

Proponents believe that giving everyone a substantial amount of revenue will spur creativity and innovation, a sort of safety net that will allow more people to take more risks, yet those opposed believe it will be harder to incentivize citizens to keep working, since they would automatically have a paycheck there would be no point of working.

Most estimate that if a universal basic income was instituted in the U.S. it would be roughly $1000 per month range, when adding this up to all individuals living in the country that would result in nearly $319 billion a month to pay a universal basic income, which is nearly $4 trillion a year, a lot of money needed in taxes. Yet proponent assure that this amount of revenue could be possible to raise taking into account the new profits gained from increased productivity of automation which would make economies wealthier, thus being able to tax more from the wealthy, “The output of goods and services will be extremely high. With automation there will come abundance. Almost everything will get very cheap. I think we’ll end up doing universal basic income,” Musk said.

Yet in Finland where they are experimenting with a basic income, economist and trade unions have opposed the new move, “We think it takes social policy in the wrong direction,” said Ilkka Kaukoranta, chief economist of the Central Organisation of Finnish Trade Unions (SAK).

Whether or not there will a universal basic income, it’s unquestionable that automation will continue to take the jobs of countless of workers, as a result there will be new difficulties presented in changing people’s beliefs on how to give meaning to their lives, “That’s a much harder problem to deal with,” Musk said.

– Marcelo Guadiana


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