With UBI a similar effect is had on the demand side: If you assume a higher base of income, then consumer credit, payday loans, friends-and-family-favors, etc. become less of a necessity for low-income workers. Higher-income workers with long-term debts like mortgages and student loans become free of their debt more quickly, and face fewer consequences if their income takes a hit. The workforce is therefore disentangled from a set of predatory financial interests that chain them to needing their current job and to stay in the good graces of their financial backers. Even a very small amount of UBI will create a substantial reduction in poverty traps, domestic abuse, and labor mistreatment.
I wasn't thinking of COVID-19 when I contemplated it though. It's not a new idea of course.
How can you justify this statement given the relatively low unemployment numbers pre-Covid?
This sounds like the same refrain heard at least since the early 1900's: Productivity and automation will set us free! Redistribute capital and income!
On the more pessimistic end, some people have always roiled against labor-saving technology.
In either case, both are predicting some future where humans are less necessary. Funny how this never seems to happen.
There will always be short term pain from displaced workers, but in the long term we will always have a need for humans to work. Technology is a multiplier and supports human effort.
Without a mechanism like UBI, however, wealth will get trapped into increasingly concentrated funnels and effectively stagnate. This is bad not only for the people that get left behind, but also bad in general for the economy as a whole as an economy sustains itself on the constant flow of back and forth between buyers and sellers and consumers and suppliers.
As more and more people get replaced through automation, the available pool of money from consumers decreases. If it gets to a point where this becomes too low, the economy effectively comes to a standstill as the products and services companies can offer, even as they become increasingly cheaper to produce due to the productivity gains from automating away human labor costs, stop getting bought due to insufficient funds from consumers.
“The pool of available work will never completely disappear” - I would say there’s no evidence the pool of available work for humans will even _decrease_ in a highly automated economy. It’s possible to have a 99% automated economy with human labor many times its present level. Disappointingly–despite all of our best efforts–new work always seems to arise in this universe.
My contention about the long term prospects for UBI is that before we spend the proceeds of our massively automated economy, we should first try to create it. The challenge is awesome, and the economics uncertain.
Of course, I too would like free money when available :)
That depends on how you define "available work". Historically automation has replaced the jobs requiring the least skill with fewer jobs that required more skill. As the skill cutoff rises, the eligible labor pool shrinks. Assuming the trend continues (in fact it appears to be accelerating) at some point the vast majority of humans won't be capable of any work that might still be available.
This is a compelling narrative, but it’s not true. Technological unemployment has not historically accompanied increased levels of automation. There are some economists who project that this will change, but that would be a break with the past.
Probably worth remembering that the current wave of automation struggles to replace jobs we consider “low skilled”, because they actually require high skill (they are impossible to automate with current tech) and are performed for little money (so the capital investment in automation is uneconomic).
I never claimed that mass technological unemployment had occurred historically, only that the minimum skill level required for employment has been steadily rising over the past ~150 years at an accelerating rate. The observation that "new jobs were always created in the past" fails to take into account the fact that the new jobs have _always_ required more skill than the old jobs they replaced.
Almost by definition, automation will perpetually struggle to replace the jobs we _currently_ consider low skilled. If they were easy to replace with current technology and expertise we presumably would have done so already. Those that remain are complicated enough not to be worth automating (yet), and thus remain the bottom of the barrel (for now).
That’s more than the entire global population was in 1964. So it’s not exactly like there’s a dwindling base of extremely high skilled jobs and majority unemployment. You are right that the minimum skill level is rising for many desirable jobs in developed countries. There are still plenty of jobs to be done that can be taught in one afternoon though.
It’s true that in many sectors in developed countries–such as agriculture–fewer workers use automation to achieve a higher level of productivity than historically. However, most industrial jobs lost in developed nations are a result of outsourcing to low cost economies, not being out-competed by automatons. The people who no longer have to toil in the fields didn’t just give up on life; they ended up as hairdressers, therapists, accountants, decorators, shopkeepers, software developers etc.
We’re not remotely close to automating vast numbers of jobs, and even when we do there will be more jobs to be done. Comparative advantage tells us that even if the machines are way better than people at everything, it will still make economic sense to put people to work at what they can do best.
The pool of available work will never completely disappear, but as the job pool decreases in size due to being replaced by some combination of machine/computer, providing stimulus through the intermediary of businesses begins to fail as it no longer reaches people efficiently.