CNBC.com Careers Elon Musk says robots will push us to a universal basic incomeheres how it would work Catherine Clifford Friday, 18 Nov 2016 | 11:28 AM ET If robots take your job, the government might have to pay you to live Burger flippers, truck drivers, and cashiers are going to be out of work in the coming decades, thanks to the accelerating pace of robotics and automation technology, some experts warn. And as large swaths of the population lose their jobs, the only viable solution might be for the government to institute a universal basic income, which would mean paying every resident a fixed amount of money to cover their needs. There’s a lot that’s still unclear about universal basic income, but here is what’s known so far. Why universal basic income may be necessary A 2013 study by Oxford University’s Carl Frey and Michael Osborneestimates that 47 percent of U.S. jobs will potentially be replaced by robots and automated technology in the next 10 to 20 years. Those individuals working in transportation, logistics, office management and production are likely to be the first to lose their jobs to robots, according to the report. In less developed countries, the potential for job loss is more severe. A 2016 analysis from the World Bankestimated that roughly two-thirds of all jobs in developing nations around the globe are susceptible to replacement by automation. As the global workforce modernizes and low-skilled workers lose their jobs, momentum builds around the idea of a universal basic income, or a fixed, regular payment that all residents, no matter their employment status or wealth, would receive from the government. “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation.” -Elon Musk, Founder and CEO of SolarCity, Tesla, and SpaceX Elon Musk, the founder and CEO of SolarCity,Tesla, and SpaceX, recently declared that a universal basic income was a reasonable next step for the U.S. “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” Musk told CNBC. “Yeah, I am not sure what else one would do. I think that is what would happen.” The entrepreneur and futurist is not alone in his sentiments. While no country has fully implemented a universal basic income yet, individuals are experimenting with a version of the idea, as are several Scandinavian nations. Where universal basic income stands worldwide Finland is preparing to test out a universal basic income. Currently, the country is soliciting feedback, and the actual test is expected to be carried out in 2017 and 2018 with results available by 2019, according to a written statement from the country’s Ministry of Social Affairs and Health. As part of the study, 2,000 individuals will receive a payment of 560 euros ($598) per month, according to a press release. Activists in the Netherlands collected 60,000 signaturesrequesting that the government consider a referendum on a universal basic income. The Dutch group, which calls itself Basisinkomen 2018, promotes the idea of a basic income of 1000 euros ($1067) per adult and 200 euros ($213) per child. “We are in favor of a basic income because everybody has enough security to feel free and to make own choices. To care or to have an own business. To work or to volunteer,” writes Johan Luijendijk, the leader of the Basisinkomen 2018 movement, in an email with CNBC. “When someone can live starting from own talents and callings, it’s better for everyone. With basic income we can cut social security and huge bureaucracy.”‘ Meanwhile, Switzerland considered instituting a universal basic incomeof 2,500 Swiss francs ($2578) a month this summer. Voters ultimately rejected the plan. Where universal basic income stands in the U.S. In the United States, universal basic income remains a long shot. “Obviously, it’s politically not feasible. It’s not something that is going to happen in the near future here in the United States,” says Martin Ford, the author of the New York Times bestselling novel, Rise of the Robots: Technology and the Threat of a Jobless Future, in a phone conversation with CNBC. “When it comes to building social safety net programs we are not on the forefront, that is for sure. We are the worst of any industrialized country. I am pretty sure we are not going to lead the way,” says Ford. While President Obama was able to push through a version of universal health care, it is likely to be repealed under President-elect Trump. “This idea of giving people money for nothing is a real adjustment for people. It goes against our basic values.” -Martin Ford, Author of ‘Rise of the Robots: Technology and the Threat of a Jobless Future’ Countries like Finland, Switzerland, and the Netherlands are more likely to see a universal basic income before the United States, the author says, because they are smaller and more homogeneous. They are also already more supportive of government services. “When you have more racial divisions and so forth, politically it will be harder to pass strong safety net measures,” says Ford. “This idea of giving people money for nothing is a real adjustment for people [in America]. It goes against our basic values, a Protestant work ethic and all.” That said, there is currently one privately-funded, short-term pilot program being run by the Silicon Valley accelerator, Y Combinator, in California. The goal is to see how people react in the U.S., says Sam Altman, President, Y Combinator Group. The program gives “unconditional” payments to selected residents of Oakland. The administrators write, “we hope basic income promotes freedom, and we want to see how people experience that freedom.” If it is successful, the plan is to follow up the pilot with a larger, longer-term program. “I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale,” says Altman, in a blog post about the project. “50 years from now, I think it will seem ridiculous that we used fear of not being able to eat as a way to motivate people.” What a universal basic income would entail If the U.S. were able to set the political and cultural challenges aside and implement a universal basic income, most estimates Ford has seen float in the $1,000 per month range. The goal would be to keep the hand-outs low enough that citizens would remain incentivized to keep working, perhaps part-time or by starting their own businesses. “Some day in the far future we might have an automatic economy where robots and computers are doing all the work. Right now that’s a long way out. We don’t have that and we are not going to have that any time soon so we don’t want to destroy that incentive to work,” says Ford. “When you have a safety net, people will take more risks.” -Martin Ford, author of Rise of the Robots: Technology and the Threat of a Jobless Future Determining exactly where that line would lie is a delicate task that will require testing and experimentation. Even if provided with regular payments from the government, Ford predicts that America’s workforce won’t give up altogether. “The vast majority of people will do more. They will want to work if they can. They might work part time; maybe they can only find a part-time job. That combined with the basic income will be enough. Or maybe they will start a business.” Indeed, giving individuals a safety net could actually spur creativity and innovation. “A lot of people might do more entrepreneurial things. One thing that they have shown is that when you have a safety net, people will take more risks,” says Ford. “It could actually result in a more dynamic economy.” “Of course,” Ford adds, “some people, hopefully not too many, will do nothing. They will stay home and play video games, they will take drugs, whatever. That is unavoidable, that’s part of the cost you are going to have to accept.” How governments could afford to pay a universal basic income Paying to help support every resident is a mammoth undertaking. If each of the 319 million people living in the U.S. right now get $1,000 a month, it would cost $319 billion a month to pay a universal basic income. That’s nearly $4 trillion a year. In the Netherlands, the universal basic income would be paid for with revenue from a number of taxes, including a 30 percent tax on business profits, tax on air pollution, and a higher tax on “big fortunes,” according to Luijendijk. Also, the Basisinkomen 2018 advocacy group argues that the universal basic income would be affordable because it would replace other government support programs, like social security. The Dutch proposal to use universal basic income as a replacement for other social welfare programs is unique, though. The thought-leaders at Basic Income European Network (BIEN), which in 2004 expanded its scope to be include the whole world, agreed at its most recent general assembly in Seoul in 2016 that universal basic income should not be a replacement of other social services or entitlements, but instead should work in combination with other services, according to Karl Widerquist, the founder of Basic Income News and an Associate Professor at SFS-Qatar, Georgetown University. Universal basic income “is not ‘generally considered’ as a replacement for the rest of the social safety net. Some see it primarily as a replacement. Others see it as a supplement, filling in the cracks,” says Widerquist in an email with CNBC. “Some people who want it to be a replacement try to create the impression that it is generally considered to be so. But that’s not accurate.” The New York Times The Opinion Pages| Op-Ed Contributors Why Finlands Basic Income Experiment Isnt Working By ANTTI JAUHIAINEN and JOONA-HERMANNI MÄKINENJULY 20, 2017 Finlands capital, Helsinki. Credit Ilvy Njiokiktjien for The New York Times HELSINKI, Finland Universal basic income is generating considerable interest these days, from Bernie Sanders, who says he is absolutely sympathetic to the idea, to Mark Zuckerberg, Facebooks chief executive, and other tech billionaires. The basic idea behind it is that handing out unconditional cash to all citizens, employed or not, would help reduce poverty and inequality, and increase individual liberty. This discussion is still largely theoretical, though, because universal basic income hasnt been rigorously tested. Most experiments in the United States in the 1970s; in the Dutch city of Utrechttoday have been local and based on small sample sizes. A nonprofit organization has run a larger program in Kenya. But that effort, which is aimed at decreasing poverty in a poor country, has little bearing for advanced economies and lacks the rigor of a state-mandated nationwide program. This is why eyes turned to Finlandat the beginning of the year, when the government initiated a national test run for universal basic income. As a rich country in the European Union, with one of the highest rates of social spending in the world, Finland seemed like an ideal testing ground for a state-of-the-art social welfare experiment. In reality, the Finnish trial was poorly designed, and is little more than a publicity stunt. Kela, the national social-insurance institute, randomly selected 2,000 Finns between 25 and 58 years of age who were already getting some form of unemployment benefits. The subsidies were offered to people who had been unemployed for about one year or more, or who had less than six months of work experience. Participants in the trial would receive 560 (about $645) a month from January 2017 to December 2018, whether or not they came to earn any additional income. The trial size was cut to one-fifth of what had originally been proposed, and is now too small to be scientifically viable. Instead of giving free money to everyone, the experiment is handing out, in effect, a form of unconditional unemployment benefits. In other words, there is nothing universal about this version of universal basic income. And so even when the experiments official results are known, in 2019, they will reveal little and far less than they could have about the effects that universal cash payments could have on income inequality or peoples attitudes toward work and their quality of life. The shortcomings of Finlands universal basic income experiment are best understood against the backdrop of the countrys lackluster economic performance and the resulting political developments. At the time of the 2015 parliamentary election, the Finnish labor market had experienced three recessionssince the 2008 financial crisis. The public debt level increased from more than 38 percent of G.D.P. in 2008 to 75 percent in 2015. The Center Party, traditionally an agrarian party with broad support from rural areas, won the election on a conservative platformpromoting public-debt reduction and tough reforms to boost the economy. The party leader, Juha Sipila, a wealthy former tech C.E.O., formed a government with the conservative National Coalition Party and the populist, nationalist Finns Party, based partly on their shared commitment to austerity. The Center Partys manifestocalled for reducing wages and raising the retirement age. It also briefly mentioned testing a system of universal basic income. Starting in the 1980s, Finnish progressives began discussing how distributing unconditional income might be a way to combat poverty and inequality resulting from declining employment in the industrial sector. The theory was that receiving a guaranteed income could free all citizens and allow groups like the jobless, students, stay-at-home parents and the elderly to meaningfully contribute to society through, say, caretaking, charity or artistic projects. But by the time Finland actually attempted the experiment, a conservative government committed to economic austerity was in power. How could it spearhead a leftist benefits program in the midst of economic hardship? It didnt. The government has made no secret of the fact that its universal basic income experiment isnt about liberating the poor or fighting inequality. Instead, the trials primary goal is promoting employment, the government explained in a 2016 document proposing the project to Parliament. Meaning: The project was always meant to incentivize people to accept low-paying and low-productivity jobs. At the same time that the government has begun testing a universal basic income, it has been tightening the requirements for receiving unemployment, disability and child care benefits. Yet according to a recent reportby the Organization for Economic Cooperation and Development, replacing existing social support with a stingy, or even modest, universal basic income, as in Finland, may actually increase poverty rather than alleviate it. An article in The Economistlast month quoted Olli Kangas, who helped design the Finnish program and coordinates it for Kela, complaining about the politicians lack of follow-through with the trial. He compared them to small boys with toy cars who become bored and move on. A second, expanded experiment was supposed to start in early 2018, but there are signs like silence that the government may renege on that plan. The universal basic income program in Finland is being whittled down before it even properly begins. So what can we learn from all of this so far? How not to conduct a trial of this kind. Universal basic income can only succeed if the effort is sustained and widespread and not available only to the unemployed. The program should not be intended to force people into low-paying jobs. The Finnish government has a chance to correct its course. It should expand the trial in early 2018, as originally planned, and steer it back to its original ideals: a bold experiment to collect hard data about how a much-debated idea actually works in practice. Only that would honor Finlands tradition of experimenting with innovative social policies. Antti Jauhiainen and Joona-Hermanni Mäkinen are co-directors of Parecon Finland, an economic think tank, and the authors of the upcoming book Hyvinvointivaltion vastaisku (The Welfare State Strikes Back). Opinion Universal basic income Universal basic income doesnt work. Lets boost the public realm instead Anna Coote A study of UBI trials concludes that making cash payments to all is no solution to poverty and inequality Anna Coote is co-author of Universal Basic Income: A Union Perspective Mon 6 May 2019 04.00 EDT Last modified on Mon 6 May 2019 10.29 EDT Universal basic income experiments in India and Kenya [above] have been funded, respectively, by Unicef and Give Directly, a US charity supported by Google. Photograph: Noor Khamis/Reuters A study published this weeksheds doubt on ambitious claims made for universal basic income (UBI), the scheme that would give everyone regular, unconditional cash payments that are enough to live on. Its advocates claimit would help to reduce poverty, narrow inequalities and tackle the effects of automation on jobs and income. Research conducted for Public Services International, a global trade union federation, reviewed for the first time 16 practical projects that have tested different ways of distributing regular cash payments to individuals across a range of poor, middle-income and rich countries, as well as copious literature on the topic. Benefit or burden? The cities trying out universal basic income It could find no evidence to suggest that such a scheme could be sustained for all individuals in any country in the short, medium or longer term or that this approach could achieve lasting improvements in wellbeing or equality. The research confirms the importance of generous, non-stigmatising income support, but everything turns on how much money is paid, under what conditions and with what consequences for the welfare system as a whole. From Kenya and southern India to Alaska and Finland, cash payment schemes have been claimed to show that UBI works. In fact, whats been tested in practice is almost infinitely varied, with cash paid at different levels and intervals, usually well below the poverty line and mainly to individuals selected because they are severely disadvantaged, with funds provided by charities, corporations and development agencies more often than by governments. Experiments in India and Kenya have been funded, respectively, by Unicefand Give Directly, a US charity supported by Google. They give money to people on very low incomes in selected villages for fixed periods of time. Giving small amounts of cash to people who have next to nothing is bound to make a difference and indeed, these schemes have helped to improve recipients health and livelihoods. But nothing is revealed about their longer-term viability, or how they could be scaled up to serve whole populations. And there is a democratic deficit: people who get their basic income from charities or aid agencies have no control over how payments are made, to whom, at what level or over what period of time. The Alaska Permanent Fund, built from the states oil revenues, pays all adults and children a dividend each year in 2018, it was $1,600 (£1,230). The scheme is popular and enduring; it has been found to produce some positive impacts on rural indigenous groups, but it makes no claim to sufficiency and has done nothing to reduce child poverty or to prevent widening income inequalities. FacebookTwitterPinterest Finland undertook a two-year trial but the government has refused to fund further expansion. Helsinki city centre. Photograph: peeterv/Getty Images/iStockphoto Finland undertook a two-year trial, from January 2017 to December 2018, of modest monthly payments of 560 (£477) to 2,000 unemployed people but the government has refused to fund further expansion. It told us little about UBI except that, when push comes to shove, elected politicians may balk at paying for a universal scheme. Get Society Weekly: our newsletter for public service professionals Read more The cost of a sufficient UBI scheme would be extremely highaccording to the International Labour Office, which estimates average costs equivalent to 20-30% of GDP in most countries. Costs can be reduced and have been in most trials by paying smaller amounts to fewer individuals. But there is no evidence to suggest that a partial or conditional UBI scheme could do anything to mitigate, let alone reverse, current trends towards worsening poverty, inequality and labour insecurity. Costs may be offset by raising taxes or shifting expenditure from other kinds of public expenditure, but either way there are huge and risky trade-offs. Money spent on cash payments cannot be invested elsewhere. The more generous the payments, the wider the range of recipients, the longer the scheme continues, the less money will be left to build the structures and systems that are needed to realise UBIs progressive goals. As this weeks report observes, If cash payments are allowed to take precedence, theres a serious risk of crowding out efforts to build collaborative, sustainable services and infrastructure and setting a pattern for future development that promotes commodification rather than emancipation. This may help to explain why UBI has attracted support from Silicon Valley tycoons, who are more interested in defending consumer capitalism than in tackling poverty and inequality. Money for nothing: is Finland’s universal basic income trial too good to be true? Read more The report concludes that the money needed to pay for an adequate UBI scheme would be better spent on reforming social protection systems, and building more and better-quality public services. Redistributing the personal tax allowanceand developing the idea of universal basic services (UBS)could offer a more promising alternative. This calls for more and better quality public services that are free to those who need them, regardless of ability to pay. Healthcare and education are obvious examples, and it is argued that a similar approach should be applied to areas such as transport, housing, social care and information everyday essentials that should be available to all. Collective provision offers more cost-effective, socially just, redistributive and sustainable ways of meeting peoples needs than leaving individuals to buy what they can afford in the marketplace. Anna Coote is principal fellow at the New Economics Foundation and co-author of Universal Basic Income: A Union Perspective(Public Services International) with Edanur Yazici
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