Guaranteed National Income and Jobs (updated)

George Rebane

We in the IT development industry became aware over thirty years ago that the coming technology revolution would destroy more human jobs than create new ones.  Things would be different, very different.  No one believed us, least of all government types and those in the social sciences.  They all had their eyes in the rear view mirror.

That awareness became a reality in the late 1980s when when research made large gains in machine intelligence – Bayes nets, neural nets, robotics, fuzzy logic, causality, … - that quickly began to be integrated into various industries ranging from defense, through manufacturing and services, to medicine and finance.  While all this was happening our central planners were still firmly focused looking backward in their attempts to look ahead; no one in the public policy arena was looking through the windshield.

The early harbinger of the yet to come was and still is systemic unemployment – workforce age people in and out of the job market unwilling and/or unable to economically sustain themselves.  What to do about it eludes our governing elites to this day – half of them don’t recognize the problem, the other half would rather not talk about it.  Ten years ago I ran some numbers and predicted that by 2020 the US would harbor around 70M systemically unemployed – even though no one believed me, I was wrong.  Technology accelerated at rates that even amazed me; five years ago I upped my prediction to 90M as reflected in these pages.  I was wrong again because today we have already reached that 90M figure, and now people (excluding locals and liberals) are beginning to take notice.

The fraction of people required to create any given amount of wealth in America is shrinking along with the numbers who are able to do so.  The fraction that is permanently out of the free labor markets is growing by leaps and bounds as workers’ skills become ‘redundant’ and hordes of the under-educated leave our schools every year.

In recent years the greater impediment to an economy that can still create jobs has been our federal government operated by a dismally ignorant and hubristic administration, one that history will judge harshly given that our government will not proscribe such historians as today it displays every intention of doing.  Despite desperate paeans of propaganda that cover the countryside, our economy’s so-called "expansion" has been mismanaged to an extent unexperienced that, according to government statistics, has left today's diminished aggregate workforce with incomes lower than at the 2009 depth of the ‘Great Recession’.  In the meanwhile our Potemkin economy is heralded daily by progressives citing the faux unemployment figures made possible only by huge numbers of Americans leaving the workforce (see nearby plot).  Going hand-in-hand are equally misleading job creation numbers presented to hold up their end of this great National Lie – e.g. created jobs are mostly part-time requiring low skills, with manufacturing and even the number of IT jobs contracting. More here and here.

So what to do?  The only solution, discussed here for years, is the redistribution of wealth from those who can to those who can’t or won’t.  In recent years a new approach to this notion has gotten a lot of traction among conservatives, libertarians, and capitalists in general.  (Only the collectivists keep beating their long dead horse solution that calls for just taxing the bejeezus out of ‘the wealthy’.)

In our again prescient discussion of this issue, I was surprised this morning to see a major essay addressing guaranteed national income (GNI) in the 4jun16 WSJ.  The piece by celebrated socio-economist and political scientist Dr Charles Murray (much covered in RR) presents yet the latest detailed argument to replace the current desultory and destructive welfare system with what Murray labels universal basic income (UBI).  As reported here and elsewhere, the Swiss and Finns are seriously considering various forms of GNI, but without necessarily doing away with their other extensive social safety nets.  Murray argues that his UBI would work only if it replaces the entire gamut of government transfer programs, and it would fail miserably if it became yet another add-on bureaucracy to redistribute the country’s wealth (more here).

In his essay, Murray covers a bit of the history of America’s private institutions ministering to the poor and destitute, institutions that were crowded out by the federal government beginning during the Great Depression.  This has not provided the uniform benefit to the nation’s impoverished for all the reasons long debated, and summarized by Murray’s own conclusion that “government agencies are the worst of all mechanisms for dealing with human needs.  They are necessarily bound by rules applied uniformly to people who have the same problems on paper but who will respond differently to different forms of help.”  He then makes the point that “whether religious or secular, nongovernmental organizations are inherently better able to tailor their services to local conditions and individual cases.”

A year ago Cato launched a serious national discussion of GNI in its May 2015 ‘The Pros and Cons of a Guaranteed National Income’ (Policy Analysis #773) by senior fellow Michael Tanner.  In this extensive analysis Tanner concludes with a cautionary note advising us to proceed with a crawl/walk/run approach -

As strong as the argument in favor of a guaranteed income may be, there are simply too many unanswered questions to rush forward with any such plan. Opponents of the welfare state have long criticized its supporters for believing that even good intentions justified failed programs. In considering some form of a universal basic income, we should avoid falling into the same trap.Instead we should pursue incremental steps: consolidate existing welfare programs, move from in-kind to cash benefits, increase transparency, and gather additional data. This would allow us to reap some of the gains from a universal income without the costs or risks.

The bottom line here is that our current economic order is going to end through a combination of existential forces – political, globalization, and technical.  In the political arena there is the ever-present surge of populist socialism to implement ‘from those according to their ability, to those according to their need’.  Globalization is not going away, no matter the campaign frothings of Sanders and Trump – ‘if trade does not cross borders, armies will’.  And all the while accelerating technology is relentlessly delivering on its promise to bit by piece replace man in the affairs of Man during these pre-Singularity years, until that time when Man will hopefully be presented with the choice to ‘climb aboard’ or face extinction.

[update]  When it rains it pours.  My 4jun16 issue of The Economist arrived in the mail today, and you guessed it – two major pieces on GNI that are worth your time.  For those not familiar with ‘the world’s oldest newspaper’,  The Economist is a globally respected publication that considers all aspects of human affairs.  It is famous for editorializing in all of its articles, and its political leaning appears a bit left of center which many in Great Britain consider rightwing.  Here and here are the links.

Comments

[Paul Emery]

George

I have to remind you that is was a Republican President, Richard Nison that first proposed a GAI in 1969.

http://www.remappingdebate.org/article/guaranteed-income%E2%80%99s-moment-sun?page=0,2

[George Rebane]

PaulE 114pm - Milton Friedman would disagree with you on this side of the Atlantic, and many more for the other side of the pond.

GNI has been promoted for a while, the only debate that remains is whether a sustainable method can be found to implement it that does not rapidly descend to tyranny. In that the Left has demonstrated for over 150 years that it doesn't have a clue. Maybe getting some greedy capitalists involved will yield something better.

[Russ Steele]

GENEVA (AP) — Would you accept about $2,500 from your government every month, no questions asked?

Swiss voters get a choice Sunday in a referendum that, while not specifying a figure, asks if they want “unconditional basic income.” Experts estimate a minimum of 2,500 Swiss francs ($2,560) per month is needed for an individual to make ends meet in wealthy Switzerland, where private-sector health insurance is required and the cost of living is sky-high.

Critics warn that the policy would explode the state budget. The Swiss government itself advises voters to reject the proposal, and polls suggest it will fail in a country known for free-market policies and a high-tech, capitalistic financial sector.

Proponents, however, insist the time has come for a minimum monthly wage as sweeping 21st-century economic changes like robots displacing factory workers make jobs more precarious in the digital age. They say they’re seeking momentum more than outright victory.

Polls have suggested that only about one-quarter of Swiss voters back the idea.

http://www.breitbart.com/news/handout-or-no-swiss-mull-2500-monthly-income-for-all/

Stay Tuned we will know tomorrow if more than 25% of the Swiss populations are socialist.

[George Rebane]

RussS 308pm - You may also be interested that as mentioned above, RR reported this in the 3jun16 scattershots ;-)

[BradC]

Here is a Wiki on GNI, seemed to have been around in some form or another for a while,

https://en.m.wikipedia.org/wiki/Guaranteed_minimum_income

[Russ Steele]

George,03:18PM

I saw your post but thought the Breitbart story had more analysis of the possible success of the initiative.

[Bill Tozer]

While not directly related to guaranteed atonal income, those who leave th job market are under 65 years old are eligible for Medicaid. Big Bro always gets stuck in the one size fits all.
http://thehill.com/blogs/congress-blog/healthcare/279796-how-medicaid-audits-hurt-children-in-my-home-state

[Account Deleted]

This GNI 'solution' is typical of modern thinking. Problem? Just wave a magic govt wand solution and all will be well. Even the article that seems to favor the GNI scheme admits to there being just a few little issues that might arise. Suppose the US institutes this scheme. Overnight, 9/10 of Mexico will be pouring through our borders. The suggestion that the money needed to pay for it will come from increased taxes completely failed to account for the devastation of the economy that will ensue. The idea that most or all of this money could come from increased taxes on land was hilarious. I know we land owners would otherwise just throw that money in a bonfire out back. And the clueless suggestion that it would cause land owners to then make their land more productive was a total joke. Maybe in some part of the galaxy but you go ahead and just try to make money off of your land and the reality of zoning laws, neighborhood restrictions, environmental laws and the fact that all the other land owners would be trying the same thing reduces that idiocy to ashes.
Hate to be a broken record folks, but the problem is that humans need to be productive in some way that is of value to other humans. It's called society. If you're not pulling your weight, you are a drag on the rest of us. Being productive takes many forms and is not limited to having a paid job. Just going out and painting your house or picking up the garbage or making something useful or repairing something makes you a productive person. The idea that we can solve the problem by printing money and handing it to millions that aren't productive is just another step down on the path to the unravelling of society. The GNI 'solution' is just another way to kick the can down the road. It's not a solution. We are a wealthy country, but we didn't get that way by paying folks to sit around and promise not to riot.
The GNI idea is nothing more than the economic equivalent of the perpetual motion machine.
Have fun!

[Russ Steele]

Update:

ZURICH/BERN (Reuters) - Swiss voters rejected by a wide margin on Sunday a proposal to introduce a guaranteed basic income for everyone living in the wealthy country after an uneasy debate about the future of work at a time of increasing automation.

Supporters had said introducing a monthly income of 2,500 Swiss francs ($2,563) per adult and 625 francs per child under 18 no matter how much they work would promote human dignity and public service.

Opponents, including the government, said it would cost too much and weaken the economy.

Projections by the GFS polling outfit for Swiss broadcaster SRF showed nearly four out of five voters opposed the bold social experiment launched by Basel cafe owner Daniel Haeni and allies in a vote under the Swiss system of direct democracy.

[Bill Tozer]

GNI makes sense to the Left. A 12 year study involving 100,000 people spread over 40 states confirms this. Nothing we did not already know.

http://gopthedailydose.com/2015/06/01/new-study-reveals-liberals-have-a-lower-average-iq-than-conservatives/

Switzerland is darn impossible to immigrate to unless you have a big wad of greenbacks in the bank. Is not this the same country that requires citizens to own firearms? The no vote of the GNI in Swtzerland was a no-brainer.

[Gregory]

What we have now in the US is worse than a minimum income. Hiring people who ostensibly could do real work at three+ times the minimum income in order to make sure people who are given less than the minimum income aren't actually working on the side is an expensive disaster.

The biggest positives of Milton Friedman's negative income tax scheme is that work is always rewarded, not punished, and you get to fire huge number of Federal and State bureaucrats who will then go do something more productive, which, ironically, includes sitting at home with their thumb where the sun doesn't shine.

[Gregory]

Regarding BT's study about the IQ of the left vs the right, the original publication of the story ended with the following disclaimer:

Oh yeah, and everything in that bullsh*t you just read is completely and totally false. There has been no such conclusive study, and all of the "Finds" are based on public paranoia. Chances are good that if you are a conservative, you were empowered by this new find.

If you, even for a second, thought this find might be true, you are probably an idiot.

You've been pwned.

[BradC]

Oh dear, Mr. Tozer, I think you stepped in it. I believe much of what reverberates through the various echo chambers also stinks of this.

[Account Deleted]

"...and you get to fire huge number of Federal and State bureaucrats who will then go do something more productive, which, ironically, includes sitting at home with their thumb where the sun doesn't shine."
Hey - I'm with you in spirit, but we're supposed to be talking about reality. We already 'get' to fire millions of govt workers, but the actual chances of that happening are zero. It just won't ever occur.

[Bill Tozer]

Oh Brad (and Gregory). Punked? Me? Nah. First clue was this is a sponsored site, not a news story.. Second clue was Obama running away down a strange corridor, and 3rd was Hillary hanging up when she discovered the topic was being mentioned at all. Did like the Communists fairing higher up the evolution ladder than liberals. Good one. And the smartest of the bunch is those non affiliated souls.
Yes, I was waiting for our fact checkers to tell me I have been punked so I could reply, "Nah, you have been punked." Slow news day.

[Jon Dozer]

Good job Tozer! :) Very, very funny stuff.