Why UBI might be our only option // #23
Millions are unemployable due to demographics, technology and globalisation.
As a free-market guy that thinks we should minimise government mediation within the economy, I wasn't at all interested in UBI when I first heard about it and quickly dismissed it. But after seeing beta-UBI programs roll out in 2020 (US stimulus package & UK furlough) I think I ought to reevaluate it.
One question that’s been in my head throughout this year is ‘why are elderly people who have spent the last 30/40/50 years of their life working, broke and indebted, with minimal job prospects?’ My best guess is that it’s a trifecta between demographics, technology and globalisation.
In the 70s, the largest generation ever (baby boomers) began entering the labour force, creating an incredibly competitive job market. And guess what happened? Wages stopped going up. The supply of workers exceeded demand, and therefore wages stagnated, and have failed to recover since. As the chart below shows, real wages peaked 50 years ago in the US...despite the largest explosion of economic, technological and social growth ever.
With depressed wages, and the cost of living rising, how were people meant to finance their lives? They took out credit. They borrowed money, and lots of it. Cars, houses, everyday expenses, holidays, new business ventures, investments, you name it, all financed by borrowed money. And there you have the debt bubble that looms over us today. We’re seeing the largest cohort of workers ever retire, but as they’ve financed the last 50 years of their life off of credit, they’re dangerously indebted.
Factor in globalisation and how a steelworker from Sheffield now has to compete with a steelworker in China and the situation for baby boomers gets worse. The market (corporations) are always going to pick the cheaper Chinese labour, or even a machine, leaving the worker from Sheffield unable to provide value to the economy; and that’s exactly what we’ve seen over the last half-century in the developed world. Brexit, Trump, and all of these protectionist political trends are reactions to this process. Quotes like “Bring back jobs!” “Close our borders!” and “Make America GREAT again!” have prevailed over the last decade, because people have been priced out of the labour market. Interestingly, only 30% of youth voted for Brexit, whilst 62% of Baby Boomers did.
But it is not only cheap human labour that threatens our employability, we also have to consider the rise of technology and automation. Technological unemployment is a thing. Machines are here and are only growing more competent. In 20 years time I find it highly probable that bus drivers, shop workers, cleaners and maybe even waiters will no longer be jobs occupied by humans. When/if this happens, millions will have to look elsewhere for income. Just like millions of horses were made redundant when cars were invented, and factory workers were left unemployed in the midst of de-industrialisation, the same will happen to billions of humans when AI systems permeate across the globe.
To summarise the idea I’m putting forward: automation, demographics and globalisation have destroyed millions of peoples ability to provide value to the economy, leaving them poor, indebted, unemployed and helpless.
So...what do we do about it? What’s the solution to this calamity?
The most prominently discussed one is Universal Basic Income (UBI). UBI is helicopter money, distributed to individual citizens, who then have the freedom to spend this free money however they so please. The idea is that these payments will provide the people who have suffered from automation, globalisation and demographics, with enough money to cover the bare minimum to see out the rest of their finite lives (eg: food, rent, essential goods). Damn, that was a sad thing to type.
When thinking about UBI, I think it helps to remain apolitical. I don’t view it as a right-wing, or a left-wing policy, but rather a potential solution to one of the gravest humanistic crises of today. It isn’t a political issue. It’s a human issue.
A common critique of UBI, and one that I used to have, is that receiving free money every month replaces the need to work. People will opt to not seek employment, and receive their cheque every month, replacing their jobs with UBI payments.
But that has never been the purpose of UBI and I see that outcome as improbable. Humans are inherently designed to do things and explore curiosity; so the hope is that people may use these funds not only to buy essentials, but redirect this money into passions/investments/business ventures/education and other methods of developing income. Plus, if it were up to me, I wouldn’t be handing out enough money to incentivise people to stop working. It’d be a boost of morale and resources, serving as a tool to build long-term wealth.
But what does UBI look like? I don’t think universal basic income will be deployed across our western societies anytime soon. I see conditional basic income as a far more likely and successful project. Our mindsets, and those of our politicians and lobbyists are too capitalist to adopt such a progressive scheme.
As opposed to making it a universal program, offer it to only those who need it - not like the coronavirus stimulus package in the US which everyone was free to claim. Common requirements may include: not applicable to those under the age of 40, consistent proof of job seeking, out of work for +3 months etc.
Not only is it imperative to cap accessibility, but also the quantity handed out. Again, no program should disincentivise work and we’d have to vigilantly evaluate how much is distributed. Because if not, we may begin falling down the slippery slope of socialism where people begin demanding more and more from the state, providing less & less. As the 20th century showed, this is an avenue we should be very hesitant of walking down (cue: “but socialism has never been properly implemented” comments).
Alongside this you need education like apprenticeship schemes, taking inspiration from Germany’s dual system efforts, to restructure the labour force and to increase the number of skilled workers. As technology displaces humans and destroys jobs, it will also open the door to new jobs and industries. We will certainly need humans manning these operations, let's make sure we're prepared to do them.
Those in Silicon Valley created the technologies & software that's making humans redundant. They are the culprits here. So there is a reason why the idea of UBI came from Silicon Valley - because they are the ones who understand that their creations make humans redundant and useless for our economy. It's their attempt to say "Hey, we're destroying billions of people's ability to earn money and forge a career, and think someone needs to something about it."
The world today is not the same as it was half a century ago. Back then, irrespective of whether you're well studied, been to jail or just sit around all day smoking weed, you could still find a local job to cover the bills (delivering pizza, street cleaner, waiter, cinema assistant, etc). But now with the parabolic rise in globalisation, automation & total population, there is not a job for everyone. Humans are no longer the only intelligent form of life on earth and unless an effort is made to remain employable, it’s going to be very easy to find yourself unemployed, with limited job opportunities.
Within the digital echo chambers I find myself within, I see UBI getting a lot of hate. In fact, the hate far exceeds the love. But where’s the alternative? It’s very easy to criticise, not so easy to create a solution. As I mentioned, I am yet to come across a solution that addresses the issues at hand in a way that UBI could.
I look forward to chatting with some of you about how this disaster could be solved.
3 Great Bits of News
I don't think I've mentioned Nuclear Fusion since Issue 03 , but here's some more encouraging news. One step closer to unlimited, carbon-neutral energy that can be generated anywhere on the globe.
In April I wrote about the threat of Clearview.ai (peep that here), and today I'm reporting on a solution to that issue. Upload a photo to this site, and have dozens of AI-generated alternatives of your face produced. The idea is for people to select a photo to represent them in the digital world, protecting the privacy of their physical self.
Scotland becomes the first (hopefully of many) nations to provide sanitary products for free. Read more here.
Best of the Week
🎵 Song of the Week
One of the most magical songs my ears have ever heard.
Pure Imagination - Gene Wilder
🧠 Wisdom of the Week
"It is far better to devote yourself to a few authors than to get lost among the many." Seneca
✔️Random Fact
Armadillo shells are bulletproof. Of course, a man from Texas had to test this, only to be greeted with a bullet to the jaw that had ricocheted off the shell.
🔀Random Resource
Best piece I've read all week is this. It explores why our methods of transportation and food & energy creation have remained unchanged for the past half century, as well as why things may be changing.
Also this week
// Our DNA still thinks food is scarce, that's why we over-eat and are fat. A really interesting read exploring this idea and how hunter-gatherers used to eat
// An Italian music artist created a jibberish song, mimicking the english language, in an attempt to show that the Italian market would love it, irrespective of the fact that it had no message. It's actually a banger and I recommend you listen to it here
// Tony Hsieh, one of the greatest business owners of our generation has sadly passed away at the age 46. As someone who got to study Tony whilst at business school, I can say he is one of the most inspiring, helpful, virtuous, original thinkers I've ever come across. The world has lost a beautifully weird genius.
// Bitcoin locked in a new all-time-high price of $19,850ish yesterday.
// Some surreal photos taken from Ronda, an ex-Roman & Moorish settlement within the region of Malaga.
Shower Thoughts:
According to Spotify, I spent 28 days listening to songs this year & 8 days on Spotify podcasts.
Nuts.