Life with A.I.

Ex-Labor Secretary: Some kind of cash handout 'seems inevitable'

Robert Reich, former U.S. Labor Secretary
Bloomberg
Robert Reich, former U.S. Labor Secretary

Count former U.S. Labor Secretary Robert B. Reich as the latest notable figure who thinks universal basic income will eventually become a reality.

Reich, who oversaw policy regarding the nation's workforce when he served as Secretary of Labor under President Bill Clinton, says he thinks the rise of automated jobs could mean the United States will have to institute a cash handout program, or universal basic income. Generally, universal basic income programs provide that a government distributes cash payments to all of its citizens, regardless of employment status.

In a book review published in The New York Times on Monday, Reich uses Annie Lowry's "Give People Money" and Andrew Yang's "The War On Normal People," as a springboard for a wide-ranging exploration of universal basic income.

“To the rest of America, a [universal basic income] may seem like a pipe dream, but from my vantage point some form of it seems inevitable,” he writes. For Reich, the matter also hits close to home, because he happens to live in the San Francisco Bay Area in California, where many tech leaders have been discussing the idea of universal basic income (UBI) in recent years.

“Here in the 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 U.B.I.,” writes Reich. “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.”

Facebook founder and CEO Mark Zuckerberg promoted the idea of universal basic income in his commencement address to Harvard in May 2017. The President of start-up incubator Y Combinator Sam Altman has indicated his interest in universal basic income and the start-up shop’s research arm is planning a five-year study of UBI. The idea was even officially included on the California Democratic Party's 2018 party platform. And in Stockton, Calif., a small city two hours away from Silicon Valley, young mayor Michael Tubbs is instituting a universal basic income experiment to alleviate poverty.

Universal basic income is a necessary, but insufficient, piece of a future where automation plays an increasingly prevalent role in the way work gets done, Reich writes. The former Labor Secretary adds that "we will have to confront the realities of vastly unequal economic and political power" in the future, and even cash handouts from the government might not be enough to level the playing field for some Americans.

“A world inhabited only by robots, their billionaire owners and a large and increasingly restive population is the plotline for countless dystopian fantasies, but it’s a reality that appears to be drawing closer,” 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."

Automation is expected to make a significant impact on the job market. A December 2017 study from the McKinsey Global Institute found that by 2030, 75 million workers around the globe will need to switch careers due to automation and 400 million individuals could be potentially displaced and need to find new jobs. And, if automation is adopted by employers at a faster rate, those numbers could climb even higher.

That’s not to say that all jobs will go away. Less than 5 percent of jobs will be fully automated, while the majority of jobs will only see about one-third of their tasks become automated, according to McKinsey Global estimates that are based on an analysis of 46 countries that includes 90 percent of global gross domestic product and a mid-level pace of adoption of automation.

Several prominent and wealthy billionaire entrepreneurs have publicly indicated that a universal basic income will be a necessary outcome of an ever more automated workforce.

"There is a pretty good chance we end up with a universal basic income, or something like that, due to automation," Tesla and SpaceX boss Elon Musk told CNBC in 2016. "Yeah, I am not sure what else one would do. I think that is what would happen."

Billionaire serial entrepreneur Richard Branson has recently said universal basic income is both a reasonable response to the rise in artificial intelligence and a potential solution for income inequality. “A basic income should be introduced in Europe and in America,” Branson told David Gelles of The New York Times in a piece published at the end of June. “It’s a disgrace to see people sleeping on the streets with this material wealth all around them,” Branson said.

Reich says that while automation is not taking away jobs, it is decreasing the quality of jobs.

“Even today, with technology having already displaced many workers, there’s no jobs crisis. The official rate of unemployment is at a remarkably low 3.8 percent,” Reich writes. “Instead, we have a good jobs crisis. The official rate hides millions of people working part time who would rather have full-time jobs, along with millions more who are too discouraged to look for work (many ending up on disability), college grads overqualified for their jobs and a growing army of contingent workers with zero job security.”

Yang is running for President in 2020 on a platform that revolves around the notion that the United States should institute a universal basic income. "The most direct and concrete way for the government to improve your life is to send you a check for $1,000 every month and let you spend it in whatever manner will benefit you the most," he writes on his campaign website. The government has "plenty of resources, they're just not being distributed to enough people right now," he says.

Not everyone is a fan of the idea of cash handouts, points out Reich. Some argue it would dampen productivity and cause people to stop working. “U.B.I.’s critics understandably worry that it would spur millions to drop out of the labor force, induce laziness or at least rob people of the structure and meaning work provides,” Reich writes.

Bridgewater Associates founder Ray Dalio says that a cash handout should be a last resort. “I don’t believe that transferring money to people who are unproductive is good for the people or the economy, unless there are no other good alternatives. I believe that it’s both far better and it’s possible to find ways for making most of these people productive,” the billionaire hedge fund financier says.

That said, Dalio is concerned about automation's effect on the job market: “My view is that algorithmic/automated decision-making is a two-edged sword that is improving total productivity but is also eliminating jobs, leading to big wealth and opportunity gaps and populism, and creating a national emergency."

Indeed, Reich warns that the economic inequality being propelled by the rise of automation could also have ripple effects in other areas of American culture.

"What will happen when robots push most people out of steady work and into lower-wage gig jobs?" he asks. "I doubt we’ll see a revolution. A more likely scenario is a slow slouch toward authoritarianism and xenophobia. We may already be there.”

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