Aug 31, 2018        home | more politics

Automation, Wealth Distribution, and UBI

It is clear that automation will continue replacing work done by humans. And there will be fewer workers making the machines that are replacing workers. Those who accumulate wealth-creating machines will be paying wages to fewer people, and this threatens consumption and economic growth. Producers and collectors of rent benefit from people having wealth to buy things, pay their bills and pay their rent. What are they and others concerned about the economy thinking about the increase in robots? A UC Berkeley professor of Public Policy, Robert Reich, writes: "

If we continue on the path we're on, we will need to make fundamental choices about how to support human livelihoods and ensure equal participation in our economy and society.

If you have a lot of money and invest it well you can make money faster than can those with little money, and people with a lot of wealth have been accumulating it faster than common people. Those not concerned about growing disparity in the distribution of wealth are among us are those who believe the free market is best for the economy. We still have people who fault the Franklin Roosevelt administration for not leaving it to the free market to end the Great Depression. They oppose wealth distribution schemes and tend to follow Ronald Reagan's claim that "government is the problem." They believe that the free market will put enough wealth in the hands of common working people.

Wealthy people buy things too, but it has never been enough to keep the economy from declining when the unemployment of common people increases. We've had four recessions since 1980 and never did the free market solution reverse the widening distribution gap. Whatever you think of the Reagan recovery it included an increase in income inequality (which continued during the administrations Bush the Elder and Bush the Younger.

Taxes are a way of redistributing wealth, and there are government programs: social security, health insurance, free education, unemployment issurance, food for children, and other programs to help people who have little wealth. Robert Reich writes:

Here in the [San Francisco] Bay Area where I live, where inventors and engineers are busily digitizing everything, many civic and business leaders are touting something called a universal basic income, or UBI. It’s universal in the sense that everyone would receive it, basic in that it would be just enough to live on and cash income rather than voucher-based, like food stamps or Section 8 housing.

Decades ago the conservative economist Fredrich Hayek said he had no objection to a flat minimum security to everybody who cannot earn enough on the labor market. And the economist Milton Friedman ("Free to Choose") agreed. Friedman appreciated that Universal Basic Income put welfare into one program, reducing bureaucracy.

To afford UBI, governments would have to eliminate other programs, making the move to UBI a big leap. Germany, with less of a wealth distribution problem than the United States, rejected the Universal Basic Income back in 2013. In Sweden, UBI has been viewed as radical and utopian by the Social Democrats and by the major conservative party. Other Nordic countries have been thinking about it or working on pilot projects.

In the United States, Atlantic magazine has a video out by Jackie Lay and Annie Lowrey that supports "Universal Basic Income."

UBI is described as requiring public service and as providing benefits like childcare and help for the elderly. It's described as fair in that everyone is eligible and as help regarding education and job training. It's a leading subject at Kailo, a discussion website that offers pros and cons.

People ask about the ability of employers to keep people at jobs that are unpleasant (flipping burgers?) The answer: employers would need to pay more than the Basic Income guarantee to attract people who wanted or needed more money than Basic Income offered. Setting the Basic Income would be a big issue — more than the Minimum Wage is today.

Congress if likely to be slow in creating UBI. The owners of wealth producing robotic machinery may continue accumulating the wealth that these machine produce with an ever decreasing share going to working people. Great inequalities in wealth have existed across vast stretches of history, but we can hope that instead of the painful redistributions of the past there will be peaceful reform, if not for you maybe for your children.

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Copyright © 2018 by Frank E. Smitha. All rights reserved.