December 03, 2016
Job Automation And Universal Basic Income

Elon Musk thinks a universal basic income is inevitable. Musk doesn't see plausible alternatives. I hope not. So here's the optimistic scenario: On the one hand, manual and low skilled work will mostly get automated out of existence. So one could imagine why demand for people at lower skill levels and lower levels of cognitive ability could just evaporate. On the other hand, automation will cut costs and boost the wealth of those still employed. Even if the pay of manual laborers is low the goods a manual laborer will need to survive should become very cheap. So any upper class people who can find a use for them might pay them enough to survive.

But I see a stronger case against continued demand for lower skilled workers. Consider the Industrial Revolution's impact on horse employment. In America "Peak Horse" happened somewhere around 2015 or 2020. After that cars, trucks, and farm tractors rather quickly replaced horses for almost all uses. Horses survive today primarily for sports and as pets. The same has happened with most working dog breeds. City dwellers do not use them for hunting and rarely for guarding. Most herding dogs are pets, not animal herders.

Similarly, in America routine human work peaked around 2001. Also, chart 4 shows that since year 2000 in manufacturing employment has increased for advanced degree holders while going down for everyone else. So manufacturing is phasing out manual laborers and this trend will continue in the decades to come.

The employment-population ratio by education level is the most astounding ignored set of social indicators in America today. The less educated are increasingly not working. So maybe we've already hit peak high school drop-out employment.

McDonald's is joining the list of fast food companies installing self serve ordering kiosks and they'll also let you order by mobile app. Start-ups are working on automated chefs. Imagine restaurants with a quarter of the current number of employees. On the bright side, ordering will be much faster with everyone doing it on their phones rather than waiting in line.. ordering before arriving will become a widespread practice. Waiting times will be slashed due to earlier ordering also due to robotic food prep.

Trucking and logistics look set for a revolution too. Automated truck loading systems and driverless trucks are coming. A few million truck drivers will be replaced with autonomous vehicles in the next 20 years. Cab drivers will similarly be replaced.

Moshe Vardi, a professor of computational engineering at Rice University, thinks by 2045 the unemployment rate could be 50%. Says Vardi:

"We are approaching a time when machines will be able to outperform humans at almost any task," Vardi said. "I believe that society needs to confront this question before it is upon us: If machines are capable of doing almost any work humans can do, what will humans do?"

A highly effective human will pair with computers to guide them to combine ideas and designs to produce highly innovative creations. But I do not think most humans will be able to work with computers to make the computers more productive.

Share |      Randall Parker, 2016 December 03 08:39 PM 

Tj Green said at December 4, 2016 6:59 AM:

We could be less than ten years from the singularity. I believe this will be good for humanity.

James Bowery said at December 4, 2016 7:31 AM:

Economic Man is unnecessary to The Economy. Demand can be automated as well as supply. Ownership can be automated as well as supply and demand. At that point, Man is optimized out of The Economy. The objective function of corporations is profit. Optimizing that objective function involves Man only incidentally. Indeed, optimizing that objective function involves Life only incidentally. This is the end product of "our invention" characterized in this quote, by Plato, of Socrates: "Let us begin and create in idea a State; and yet a true creator is necessity, which is the mother of our invention." There is no justification for Man if Man finds it "necessary" to sacrifice his sovereignty.

The fact that all of our "great and good", including the likes of Charles Murray and Gregory Clark, are incapable of facing the true depth of the implications of "the singularity", renders the liquidation of Man quite plausible.

This has started, not so much with automation, but with the demographic transition.

The demographic transition is basically about a bidding war for young women -- a bidding war between the economy and the family. In this bidding war the family loses and with the family's loss, the economy loses, in the next generation, the very characteristics it demanded. In short, social scientists failed to reify "the cost of replacement reproduction" as the primary metric of political economy. Aldous Huxley foresaw this in his dystopian novel "Brave New World" in which corporations faced this dilemma squarely and solved it by becoming hives -- breeding and rearing clones to supply the labor force. What Huxley didn't foresee was that before the transition to this hive society -- before the corporations had faced the reality of what they were doing -- the people might object to demographic destruction.

Indeed, 2 years ago, today, I posted the following which foreshadowed the emerging Trump phenomenon, citing Elizabeth Warren's own research which she tragically abandoned, in its true substance, upon entering politics.

chris said at December 5, 2016 4:14 AM:

The thing which worries me about a universal basic income is we could essentially turn humans into a low paternal investment species. If the females can survive and succesfully reproduce on this income, they won't need any support from men, and we will see a selection for cads/low investing fathers.

Brett Bellmore said at December 6, 2016 3:27 AM:

You're back! We were worried...

What Chris said. Entropy never rests, and evolution doesn't have to proceed in a direction we approve of.

What maintains the traits we think of as positive? Intelligence? Conscientiousness? Initiative?

What maintains them against entropy, is that they contribute to reproductive success! Or, used to, anyway.

We've broken that link. As James points out, even reversed it to some extent. And as a result, we are now evolving away from such traits, in favor of simple fecundity.

The process hasn't proceeded very far yet, we're not doomed. But we can't, long term, ignore this problem. We need to restore the link between positive traits and reproduction.

Brett Bellmore said at December 6, 2016 3:28 AM:

You're back! We were worried...

What Chris said. Entropy never rests, and evolution doesn't have to proceed in a direction we approve of.

What maintains the traits we think of as positive? Intelligence? Conscientiousness? Initiative?

What maintains them against entropy, is that they contribute to reproductive success! Or, used to, anyway.

We've broken that link. As James points out, even reversed it to some extent. And as a result, we are now evolving away from such traits, in favor of simple fecundity.

The process hasn't proceeded very far yet, we're not doomed. But we can't, long term, ignore this problem. We need to restore the link between positive traits and reproduction.

aleahy said at December 6, 2016 8:57 AM:

Humans will do just fine if you deregulate labor markets so that you can decrease the external costs of employing people and allow (or, force by market conditions?) people of all skill sets to move to where their labor is really needed. The problem with decreased labor needs in manufacturing isn't new, and it's the same as what happened with farming. Increased investment in capital reduced the need for human labor . . . and that labor moved elsewhere, mostly to sectors people hadn't dreamed about before they were invented. In rural America, a lot of that labor went into light manufacturing, but that evaporated when it started to make more sense investing capital in China than in the U.S. And given current costs for external things like healthcare, liability, government services, etc, no, it doesn't often make a lot of sense to invest in human capital in the U.S. (Didn't the president of Foxconn have a great quote about how it was a terrible idea to open a factory in the U.S.?) But capital investments didn't cause this problem, politics did.

Actually, more recently it's the high-tech Silicon Valley business models that I've been wondering about. By selling their doohickeys, Apple makes huge amounts of money that's shared by both well-compensated employees and investors, but it's primarily a design firm--having profitably outsourced most of their mundane manufacturing to China. The problem (I claim) is that the government is effectively subsidizing this business model by running huge deficits to shield people from the cost of everything else. If you believe these guys

the federal debt this year will be about $600B (with a number closer to $6T if you use GAAP). That's almost $2000 per capita and a lot more per wage earner. What would happen if the government socked people with these costs instead of pushing them off to the future? No, people wouldn't starve. But $600 cell phones, $1200/year cell phone plans, and new laptops every other year would be the first thing on the chopping block for most people. The business of thriving off rapid technological obsolescence would probably collapse (along with the housing market in Silicon Valley), and we'd likely see millions of people moving into the business of fixing computer equipment instead of trashing it and buying more. But, really, who knows.

This is just another version of the world you are imagining for the future, where goods and services magically appear at low cost with the help of robotics or AI instead of Chinese outsourcing. Musk realizes he'll need massive subsidies somewhere to pay for his dream world, and he's right--and that's the problem with it. If the unemployed masses don't have the money to pay for these goods and services (and with $20T in debt just at the federal level today we REALLY don't have the money to pay for them even now . . . ), then by definition you aren't giving people what they need at a price they can afford and the whole business model collapses. Even Henry Ford figured that out.

(This same thing is already happening in another part of the economy if you know where to look for it. In addition to all of the other private money flowing into the medical sector, if you look at the link above, the Federal Medicare/Medicaid line item is about $1.1T. That's a tax burden of about $3000 per capita (much more per wage earner). For, say, almost any family of four that's a huge amount of money. It's also a direct subsidy for some of the wealthiest people in the country, who are essentially being rewarded for providing us with a package of goods and services that many [most?] people literally cannot afford instead of developing products that we CAN afford. God knows how we're going to dig out from underneath that mess, and Musk is proposing we develop another one just like it? Good luck with that.)

You're going to need another model of the future, because this one doesn't work.

David Friedman said at December 9, 2016 7:32 PM:

One possible explanation for high unemployment rates among less educated workers is that automation makes them not worth hiring at any wage, but there are at least two other possibilities. One is that the minimum wage and other restrictions on the labor market mean that people whose productivity is positive but low cannot be profitably hired. Another is that the lower your wage if employed is the more attractive other alternatives such as welfare or unemployment compensation are.

If either of these is the correct explanation, you could have a free market equilibrium in which everyone was employed, with some people employed at much lower wages than others. How bad that situation would be for such people depends on the other half of the story--how far down the technologies that replace labor with capital push prices.

Part of what bothers me about the UBI is that it creates a situation where a large part of the population is of no value at all to the rest, indeed a net cost--and it is that rest that is going to have most of the power in the society.

Bruce Dunn said at December 13, 2016 12:20 AM:

On December 6 the government of the Canadian province Prince Edward Island passed a motion to partner with the Federal government to establish a "universal basic income" pilot project. The small province, which has a population of about 150,000 sees itself as a good place to try the idea out.

News article:

The wording of the motion is here:

Swarup said at December 13, 2016 9:32 AM:

I sometimes follow the posts in FuturePundit . One thing I notice is a opinion that the more intelligent smart people are winning and succeeding in life and the poor, dumb guys/gals will get wiped out without jobs . This is not at all the case and in fact the opposite is true . Our society will be dumber and dumber in future as technology advances . I am from a third world country . I notice in my country that the intelligent , more successful people have far less kids than the poor class people . The thing has worsened after the entry of women in workforce . For women the correlation of iq and reproductive success is highly negative . As for the dumber poor people while they may be unsuccessful materialistically somehow they are managing to bring up the next generation , in greater proportion than the intelligent people . And it will continue like this in future, there will be some kind or the other political arrangement which will see that the poor people do not riot and are able to eat , sleep , and raise as many kids as they want . The more intelligent people, especially the female one will get more and more caught up with modern life style and will not reproduce . What does this site has to say regarding this phenomenon which is real everywhere .

jp straley said at December 14, 2016 8:27 AM:

Developments like automated truck driving are a direct attack on working class Americans. It's not removing the coal-shovelling fireman from a diesel locmotive, it's the knockout of a large classification of jobs.

Right now we bear the cost of goods-transportation quite handily, it's not a hobble to progress. So who receives the increment gained from firing truckers? Hey-ho, not to those drivers, they will be living in trailers and eating gov't scraps. So where's the dignity in this? Where's the small-government principle? Why do it?

Its sure that over time labor productivity will increase, and the need for direct labor will decrease. Thus, why allow immmigration? Why, to divert more money into the owners' pockets! Seems to me that's the main goal these days. As long as external costs of immigration are transferred to government, it makes economic sense for owners to do this. Perhaps Mr. Trump is aware of this.

And in back of all this there is the likelihood of genetic rejiggering to provide increased fitness (which includes increased IQ, of course) for our citizens. With this in mind, the spectre of low-IQ hordes in the trailer parks is not very likely.

The human dimension changes slowly, generationally. Willy-nilly knockout of whole classification of jobs can be done pretty quickly.
Just as with immigration, external costs of the knockout are transferred to government. Clearly, this mechanism greatly increases the cost of government and is totally disrespectful of the American working man. Going more slowly makes more sense to me.

James Bowery said at December 21, 2016 8:47 AM:

I wrote up a concise way of viewing an unconditional basic income that creates a sound anarcho capitalist society.

The problem is, it's sexist and ageist as hell.

But, hey, that's what you get when being eugenic and dealing squarely with demographic transition's dysgenic genocide:

It starts with designing a sound monetary system in which money is backed by the property rights recognized as legitimate.

Trevor Loughlin said at March 22, 2021 9:12 AM:

When even the upper classes end up automated out of a job UBI will be inevitable. In third world Islamic countries some sort of one child policy for low IQ religious psychopaths will be required.

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