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Mother Pelican
A Journal of Solidarity and Sustainability

Vol. 13, No. 2, February 2017
Luis T. Gutiérrez, Editor
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Technology Creates and Destroys Jobs

Keith Zeff

This article was originally published in
Fifty Year Perspective, 1 January 2017
REPRINTED WITH PERMISSION


"Although technology also promises to create myriad new occupations not currently envisioned, it is likely that work in the future will require fewer hands to produce the goods and services to satisfy people’s needs."


Populist themes examined in the previous two blog posts expressed opposition to immigration, globalization, and international trade in both the U.S and the U.K. Similar sentiments are heard in several European countries heading into elections in the coming months. A common denominator in these movements is loss of jobs. Globalization and international trade have resulted in well-paying jobs being moved to lower-cost production countries, while immigrants are seen as competitors for the jobs that remain.

Yet, promises to bring jobs “back home” do not ring true. Both manufacturing jobs and service jobs that have been “off-shored” have been subject to automation, as have jobs that never moved but have just disappeared. A recent George Will column reported on a study that looked at the 5.6 million manufacturing jobs lost in the U.S between 2000 and 2010. Trade accounted for 13% of jobs lost while increased productivity accounted for over 85%. This trend is far from over, as technology finds ways to reproduce processes in algorithms that can be programmed for learning by machines.

A frequently-cited study from Oxford University examined steps involved in different jobs to assess their susceptibility to automation. That 2013 study looked at 700 detailed occupations from a list compiled by the U.S. Department of Labor. The Oxford study concluded that about 47 percent of total U.S. employment is at risk of being automated.

The study assigned a probability to each of the occupations for its likelihood of automation. The breadth of the analysis is evident in the specificity of the occupations. For example, chefs and animal trainers were each assigned a probability of 10 percent. Telemarketers were determined to be 99 percent likely for automation. Construction laborers were rated 88 percent probable for automation as prefabrication enables a greater share of construction work to be performed under controlled conditions in factories. Construction supervisors, on the other hand, scored only a 17 percent probability of automation.

Although technology also promises to create myriad new occupations not currently envisioned, it is likely that work in the future will require fewer hands to produce the goods and services to satisfy people’s needs. This prospect has driven much speculation as to how to address an increasing number of unemployed persons, in particular how to assure they can obtain adequate food, shelter, and clothing. These concerns are shared by governments, which are often the last resort for meeting human needs, and by businesses, which must have buyers for the goods and services they so efficiently produce.

Some people in the information technology sector find assurance in the assumption that new technology always creates more jobs than it destroys. As Kevin Maney wrote in a recent Newsweek article, “Nobody’s grandmother was a search engine optimization specialist.” Others are examining the concept of a universal basic income. The basic income is envisioned as a minimum guaranteed government payment to all citizens regardless of their private wealth. Some history of the concept is contained in an August 2, 2015 blog post. An update with recent research will be posted next on Fifty Year Perspective.


ABOUT THE AUTHOR

Keith Zeff is retired from two careers, first as a city planner for eighteen years, and later as a commercial real estate researcher for twenty-seven years. His education includes undergraduate degrees in architecture and a graduate degree in political science. His vocation and his avocation have been characterized by an interdisciplinary approach to decision-making. His concern for the future, both physical and social, plus his concern for the future of his eleven grandchildren, led him to research the complexities of globalization, geopolitics, and sustainability. Citing the frequent assertion by politicians that, “I am doing this for my children and grandchildren,” he decided to infer two generations with the title Fifty Year Perspective.



Experimenting with a Universal Basic Income

Keith Zeff

This article was originally published in
Fifty Year Perspective, 15 January 2017
REPRINTED WITH PERMISSION


"What the plan does address is equality of opportunity, giving everyone a chance to receive income while pursuing a home business, or community service, or lifelong learning."


How should governments address the trend of jobs being eliminated by technological advancements? If close to half of current occupations are projected to be displaced by automation, as put forward in the last blog post, how will families secure the income to provide themselves with even the basics for living, let alone the “Internet of Things” that technology promises?

The concept of a universal basic income (UBI), distributed to all citizens, is gaining support, especially from the technology sector which is rapidly replacing jobs of all skill levels. Although technology is creating unimaginable new jobs, it is not too much of a stretch to foresee a growing cohort of unemployed workers.

The basic income would be adequate to provide essentials. It would satisfy the immediate needs for the unemployed, and could encourage some who are employed to reduce work hours in order to pursue unfulfilled dreams. In support of an entrepreneurial spirit, a basic income could enable the creation of small businesses, or on-line start-ups, to grow to profitability. The basic income will establish equality of opportunity for those inclined to take advantage of it, while some people will be content to get by with their minimum monthly payments. Others may split a job between two people and work part-time, or volunteer, or take courses of interest.

There have been a number of studies of UBI proposals. Findings indicate that given the choice to work or not, people will work but often choose to do a different kind of work. They can accept a lower pay for doing preferred work by having the UBI make up the difference. One famous UBI experiment began in 1973 in Canada during the administration of Pierre Trudeau, encompassing the whole town of Dauphin in Manitoba province. In addition to increased productivity, the Dauphin experiment found a decrease of 8% in the number of people hospitalized, mental health improved, and more teenagers completed high school. On January 1st Finland began a two-year trial with 2,000 unemployed citizens receiving a basic monthly income of $587 as an experiment for cutting red tape, reducing poverty, and boosting employment.

These social welfare improvements are relevant to the UBI discussion because the concept is usually accompanied by a scheme to at least partially pay the costs of the system through savings in numerous social welfare programs. One source finds that in the U.S. there are currently 79 means-tested social welfare programs, not including Medicare or Medicaid.

A pilot study in Oakland, California is to begin soon under the sponsorship of Silicon Valley’s influential incubator, Y Combinator. It will begin with 1,000 families receiving between $1,000 and $2,000 a month. The goal will be to see how people’s lives change when they have a safety net preventing them from falling into poverty. A successful pilot will be followed by a much broader study involving thousands of citizens throughout the U.S., who will receive a regular monthly paycheck for five years.

As one Silicon Valley executive pointed out, this plan is not about income equality. If anything, income inequality may increase drastically as some recipients continue working at high-paying jobs or entrepreneurial positions. What the plan does address is equality of opportunity, giving everyone a chance to receive income while pursuing a home business, or community service, or lifelong learning.


ABOUT THE AUTHOR

Keith Zeff is retired from two careers, first as a city planner for eighteen years, and later as a commercial real estate researcher for twenty-seven years. His education includes undergraduate degrees in architecture and a graduate degree in political science. His vocation and his avocation have been characterized by an interdisciplinary approach to decision-making. His concern for the future, both physical and social, plus his concern for the future of his eleven grandchildren, led him to research the complexities of globalization, geopolitics, and sustainability. Citing the frequent assertion by politicians that, “I am doing this for my children and grandchildren,” he decided to infer two generations with the title Fifty Year Perspective.



The Basic Income and Job Guarantees
are Complementary, not Opposing Policies


Brad Voracek

This article was originally published in
Medium, 29 November2016
PUBLIC DOMAIN


"Basic Income Guarantee and Job Guarantee proponents, let’s not quibble. We’re on the same side. There’s work to be done. Get organized. Make it happen."


It’s disappointing to see debates between proponents of the Basic Income Guarantee (BIG) and the Job Guarantee (JG). These discussions detract from the fact that both of these ideal policies are distant from the policies we currently have in place. Supporters of either of these policies should be working together to get either one implemented, and we can debate adding the other later. Today, we need to move beyond our current disjointed welfare system to one that will help America, and either policy (or both!) seems like a step in the right direction.

If we look at the current system, the three largest welfare programs we have are Medicaid, the Earned Income Tax Credit (EITC), and the Supplemental Nutrition Assistance Program (SNAP). Before the Affordable Care Act (ACA), Medicaid was limited to certain low-income individuals, but the ACA expanded this program so that all adults with incomes below 138% of the federal poverty line are eligible. For FY 2015 Medicaid cost $532 billion to cover 73 million individuals. EITC provides additional income to low wage workers, and in 2014 paid out $67 billion to 27.5 million tax filers. Finally, SNAP guarantees an income to buy certain necessary items, and paid out $69 billion to 22 million households in 2015.

Then beyond those three largest programs, we have a smattering of additional programs that help the poor in this country. There’s a housing assistance program, Supplemental Security Income (SSI) for the elderly, Pell Grants for college tuition, the Temporary Assistance for Needy Families (TANF) program, the Child Nutrition Program, the Head Start preschool program, various Job Training programs (like AmeriCorps and Job Corps) under the Workforce Investment Act, Unemployment Insurance, the Child Tax Credit, Supplemental Nutrition for Women, Infants, and Children (WIC), and then there are others I’m sure I missed (oh yeah, the Obama phone!) along with various state and local programs. The amount of overlap, overhead, and bureaucracy involved with running all of these programs surely diminishes their effectiveness.

All of these programs provide support by doling out income or necessities, with or without a requirement that the recipient be working. BIG and JG would both be ways to consolidate all of these programs, and then the debate becomes how much does someone have to work in order to receive assistance. A lot of people who advocate for BIG think that our current system has a lot of pointless jobs, and BIG would be away to allow those people to pursue something more constructive. Considering that most entrepreneurs have one thing in common?—?access to capital — that may not be too far off. Then there are JG proponents who probably agree with that point, but think we can use the policy to help organize jobs that need to be done (liking cleaning up our environment, or producing local food). Most people who support BIG worry that a JG would create “make-work”, quoting Keynes famous “bury bank notes and dig them back up” line. To them, just giving people the bank notes makes more sense. On the other hand, JG proponents worry about not having the social utility of work. People want to contribute to society, and they see work that needs to be done. Both policies seem hard to pass in todays political climate.

I think proponents of both policies are disappointed with a U6 unemployment rate of 9.5%, current companies lack of interest in maintaining our environment, and over 45 million Americans living in poverty. Call it whatever you want, let’s guarantee every American access to the necessities: healthy food, shelter, healthcare, and a planet to live on. Clearly this is going to require some people to do some work, so let’s make sure that work gets done with our social structure as well. Calling it a BIG or a Basic Necessities Guarantee (BNG) or a JG doesn’t matter so much to me.

In fact, I’d probably start with calling it the EITC. Get rid of the minimum income phase in, and we instantly have a “BIG”, with all the infrastructure already in place. It would only go to unemployed or low income citizens, since the EITC phases out, which helps it be a progressive policy. So that it can cover the housing benefits and others, we can expand the credit a bit too. How do we pay for this? It’s simple. Scrap the other welfare programs (ok, keep Medicaid, that one’s complicated). The overhead of having all of these programs is gross. How feasible is this plan? Honestly, no clue. I’ve never made a policy. I’ve barely even met anyone who makes policy. It seems like the closest option there is, however. I can see the complaints already though. These ungrateful welfare abusers will buy alcohol and drugs with their new found income! Somehow it’s not OK to drink and do drugs if you’re poor, but if you’re rich, go for it, right? If you get rid of SNAP, people won’t buy food for themselves! Well surprise, there’s already a way to trade SNAP benefits for cash — it’s called craigslist.

Then there’s the other major complaint this would cause — now there is no incentive to work. We have to keep abject poverty as a social option so that people keep working at McDonalds making the McObese, and keep stocking the Wal-Mart shelves so that Wal-Mart can pay starvation wages which allow people to be eligible for the EITC in the first place. I’m not really sure those are the jobs that need to be done. If our low wage workers were working on local farms producing fruits and vegetables, I’d probably agree… someone has to do those things (or make robots to do them!). Yet I haven’t seen any proof an income stops people from working. It’s all speculation. I bet people still do things. Here I am, incomeless, and I’m doing something. I’m writing. I’m volunteering. I’m applying to jobs that I want to do and think will have a positive benefit. Getting rejected, but still, I’m trying.

Let’s see what happens when everyone has some cash on hand. If we start starving and need the government to force us to produce food, we’ll do it then. Yet from the friends I’ve talked to, boredom is a very potent driver of change. I know my fellow millennials and I have dreams of growing our own food in our parents’ backyards, or the empty lot across the street, or the empty K-Mart, or the empty mall. If only they’d let us. If only we had a little income, a little land, and some water to give it a try. If only the police weren’t killing and hurting us. If only Nestle wasn’t pumping out water from government land for free and forcing us to spend money on it. A lot of us worked our asses off at school, and what did we get? The choice between huge corporations who we see as destroying the environment, or low incomes working retail living with our family and friends. Meh. My friends and I want something different. I want to believe there’s something better than choosing between two evils.

Remember when the public hated huge corporations for destroying small business, not each others’ identities? Do we remember The High Cost of Low Price? BIG and JG proponents, let’s not quibble. We’re on the same side. There’s work to be done. Get organized. Make it happen.


ABOUT THE AUTHOR

Brad Voracek grew up in California and went to UC Berkeley to study Computer Science. After graduating and working in tech for a short while he came to the Levy Institute to study the economic system rather than computer systems. He is a regular contributor to The Minskys: Destabilizing Stable Economics and can be contacted at brad@theminskys.org.


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