Money for nothing

1 January, 2019

Conor Purcell speaks to a presidential candidate who aims to use Universal Basic Income to combat the coming AI upheaval

Andrew Yang is pretty sure of two things. One, he’s going to be the next president of the United States of America. And two, if the world doesn’t face up to the biggest issue known to mankind, there won’t be much of humanity left to lead.

You probably haven’t heard of Andrew Yang. If elected president, he would be the first Asian-American and the 13th multi-millionaire to the reach the office. Born in New York to Taiwanese parents, he made his fortune in the education sector before getting the political bug after setting up a non-profit, Venture For America (VFA), which mentored promising graduates before sending them to startups in developing cities across the US such as Detroit, Las Vegas and Providence. By the time Yang stepped down from his role as CEO last year, VFA had raised more than US$40 million and created 2,500 jobs. And it’s jobs, and what he believes is going to happen to them, that inspired Wang to run. He believes that if the world doesn’t get ready for the coming automation revolution, workforces around the world will be devastated in a way that will make the 2008 recession look like a walk in the park. So is he right? Are we all doomed unless we start to take this seriously?

This is a world in which everyone from truck drivers to radiologists will be out of a job, their abilities superseded by the power of the processing chip. In the next twelve years, 1 in 12 Americans are at risk of losing their jobs to AI, and no amount of retraining will enable them to start afresh. The figures are stark: The Oxford Martin School estimates that over the next 20 years 47 per cent of US jobs, and around 40 per cent of UK and European jobs, could be replaced by machines.

For a glimpse of what happens when wide-scale redundancies occur, head to the Rust Belt that stretches from New York to Iowa. There you can see the ravages of the post-industrial economy: mass unemployment, grinding poverty and opioid abuse. The scary thing is that Wang, and increasing numbers of business leaders, politicians and economists, believe that the coming AI apocalypse will create a permanent Great Depression for most workers. Wang tackled this in his book, The War on Normal People, which makes for sobering reading. “We are already seeing record levels of income inequality and social distress in America,” he told us via email. “Suicide rates are up, as are disability and overdoses. It is all tied together. It is unclear what a breaking point would be aside from a continuing degradation of the quality of life for an increasing number of people.”

“We are in the third inning. The problem is that it is in no one’s interest to acknowledge the problem. Who does it help? From government officials to tech companies to media companies, no one benefits from saying, “Hey, we are automating away larger and larger numbers of jobs. The feedback mechanism is meant to be political, but that is broken in America to a large extent.”

Of course critics of the doomsayers argue that every generation sees certain trades go extinct and that new technology has always created more jobs than it has wiped out. This is referred to as the “Luddite Fallacy” after the group of textile workers in the 19th Century who destroyed the new weaving machines that made their skills redundant. And while many point to the disappearance of elevator operators, there are very few other jobs that have been completely wiped out in the past fifty years. There is a feeling though that this time it’s different. As Jerry Kaplan, a Stanford University academic wrote in his book, Humans Need Not Apply, automation is “blind to the colour of your collar.” Whereas the past technological revolutions have adversely affected the working classes, the AI revolution will affect everyone from truck drivers to financial analysts.

For Wang, and many others, there is only one real solution to this impending crisis: Universal Basic Income. It’s not a new idea. The philosopher and humanist, Sir Thomas More argued for UBI in his book Utopia, written in 1516. The American revolutionary and writer Thomas Paine argued for the same thing in the late 18th century, while even Richard Nixon proposed a form of UBI in the early 1960s. As neoliberal economics and market capitalism took hold in the Western world in the 1980s, UBI was all but forgotten. Then from the mid-2000s onwards, the concept became fashionable again, partly due to the growing realisation that trickle-down economic theory was a failure, but also due to the issues that automation was starting to bring with it.

A number of places began to experiment with various forms of UBI. Barcelona, Hamilton in Ontario, Canada, and Stockton in California have all given certain residents a fixed amount of monthly income in a bid to see if it would alleviate social issues. The experiment that gained the most column inches was the one in Finland, which started in 2015 before ending earlier this year. The trial involved a random sample of 2,000 unemployed people getting a monthly stipend of $635. Participants were under no obligation to find employment, and they continued receiving payments even if they got a job. Critics claim that the fact the experiment ended at all proved it didn’t work, whereas its defenders say the sample size was too small to make any judgements.

Others argue that UBI will just dissuade people from looking for work, but if there is no work to be had, then it’s hard to see what other alternatives there are. UBI’s defenders believe the experiments need to be widespread and last longer than a few years or a few months to prove they work. And while some of UBI’s proponents might seem surprising at first glance – the likes of Elon Musk, Mark Zuckerberg and Richard Branson all have very good reasons to support it. With more and more of their businesses being automated, why wouldn’t they welcome the state ensuring the workers they lay off don’t fall below the poverty line? “We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas,” Zuckerberg said at a Harvard commencement address in May 2017. With tech companies getting more and more bad press, the last thing they need is to be seen to be ushering in this new era of AI without thinking of the men and women who will be kicked to the curb. But, as Matt Bruenig, of the progressive think tank Demos, pointed out, one US state has been running a type of UBI for decades. “Alaska’s Permanent Fund Dividend programme has been providing modest basic incomes to their residents for more than thirty years with much success,” he said.

It’s worth examining the Alaskan model in more detail. The US$60 billion fund was established in 1976 and collects revenue from Alaska’s oil and mineral leases to fund an annual payment to Alaskans. Since 1982, the fund has sent a dividend check to every Alaskan resident. In recent years, that’s reached up to $2,072 per person, which works out as $8,288 for a family of four.

Researchers who studied the Alaskan experiment came to a rather surprising realisation: residents in full-time employment did not change at all, and the number of Alaskans who worked part-time jobs increased by 17 per cent. Those extra jobs were almost all in the service sector, which led the researchers to believe that increased income meant more jobs in shops and restaurants as more people spent more money. Bruenig believes the reticence to implement UBI is more about appearances than actual evidence. “A pilot [scheme] might provide some evidence about UBI that could persuade policymakers, but policy is more about politics than it is about evidence,” he says.

Which brings us back to Andrew Yang. Although the Democratic party has yet to figure out who it will pit against Donald Trump in 2020, Wang is confident he will make a dent in the race. “Of course I can win. 57 per cent of Americans cannot afford an unexpected $500 bill, and I’m the only one pointing out the cause of the misery and acting to change it. My chances of victory? Considerable, I’d say.”

Words: Conor Purcell