However, one type of technology has the potential to force us to radically rethink how our economy is run: automation. On one hand, some level of automation does make humans more productive – for instance, imagine life as a statistician without spreadsheet software. On the other hand, automation and AI technology are also capable of legitimately replacing many of the jobs we see as normal careers; everything from retail to healthcare administration is at risk. As a result, we will be forced to live off of fewer jobs. This creates a crisis of aggregate demand because there will no longer be enough money circulating to actually purchase the goods these automated robots are making. There are many ways to approach this issue, but one solution that has potential to actually work is the implementation of a universal basic income policy (UBI). This will absolutely require a restructuring of how we as a society think about government financial intervention, as well as significant changes in the breakdown of government spending, but in the face of something as drastic as automated work, we must think outside the box to create new, long-term economic solutions.
In an article by Elizabeth Kolbert in the New Yorker, she breaks up types of work into four categories: manual routine, manual nonroutine, cognitive routine, and cognitive nonroutine. Manual routine jobs include those in manufacturing, and manual nonroutine jobs would include caregiving and nursing. Cognitive routine jobs include bookkeeping, while a cognitive nonroutine role would be in the creative industry. The important point about categorizing all jobs into these four categories is that the routine jobs are most at risk for automation. In fact, robots already complete many manual routine jobs, such as those in automobile manufacturing. In the future, though, cognitive routine jobs have the potential to be automated as well. Automation in the accounting sector through advanced AI and computing, for example, could eliminate an entire industry of well-paid, white-collar jobs.
The implications for widespread automation are dire. Not only will millions of people no longer have a way to support themselves, but the middle class will no longer exist as we know it, resulting in an even more unequal society. The reason behind the erasure of the middle class is that most routine jobs are in the middle of the pay scale – manual, nonroutine jobs like housekeeping are often the most underpaid, while cognitive, nonroutine jobs like consulting are some of the highest paid. This will create income inequality like the world has never known, especially when you take into account who owns the robots.
Widespread automation, because of the elimination of these industries, creates the aforementioned crisis of aggregate demand. Putting into place a UBI could actually solve many of the problems associated with automation, on a few conditions. First, it works best when not all jobs are fully automated. UBI requires a solid tax base, so with no work available, revenue from personal income tax would shoot to almost nothing, and there would be an increased, unsustainable reliance on corporate taxes. Some may ask why it’s not better to just raise taxes on the owners of capital (robots) and instead raise wages, but that doesn’t necessarily account for the mass unemployment caused by the automation of routine jobs. UBI works best in a future with a significant decrease in the number of conventional jobs available, not necessarily in a future without work. While said future is entirely possible (as some have promised), you’re looking at a significantly different set of policy issues, and for all we know, more jobs could just be created in the place of the jobs that will go away. In any case, a UBI would last a long time. On a more practical note, implementation of UBI requires the American electorate to recognize reality more so than it does now. America is an institutionally conservative country, and UBI is obviously a fairly liberal, though fundamentally bipartisan, response to automation. It’s liberal in that it is ultimately redistributive but is conservative in that it gives people full autonomy over how they spend the money. In the face of such a crisis, many more people will have to accept the fact that the world has changed, and we will need a newfound response to a newfound problem. This policy is necessary, and it’s time our leaders seriously consider it.
Andrew Yang was the only 2020 Democratic presidential candidate to bring UBI into the limelight. Unsurprisingly, his argument largely surrounded automation, and he no doubt increased public support for the policy. It seems like his ideas will stick in the back of many people’s minds for some time, as he has many counterarguments that prove the feasibility of the policy. Those counterarguments are written in prose that makes sense to the general public, which is important because this country will need a great deal of convincing for a policy like UBI to gain actual traction before it is too late. Furthermore, as seen by the numerous government shutdowns in recent years due to Congressional inaction on spending, the legislative branch does not have a great track record in terms of timeliness. But with something as upending as automation, it is essential that the government is proactive, which is why Yang’s one thousand dollar per month “Freedom Dividend” is a great place to start, as it eases the American public into the policy before a computer replaces your friendly hometown bank teller.
There’s an anecdote in Bob Woodward’s book Fear that does an excellent job of summing up the problem this country faces in trying to implement UBI. In a discussion about bringing back manufacturing to America, a major component of Trump’s 2016 campaign platform, Trump insists that America always has been and always will be a manufacturing nation. However, in a globalized world, we are a service economy, and our leaders need to recognize that some of the industry that was once a hallmark of American society no longer fits into our economy. This is why implementation of UBI requires a simultaneous radical rethinking of how the public thinks about government, and the government budget breakdown. Right now, there is a great deal of stigma surrounding those receiving welfare benefits, so it will be a major challenge when more routine jobs become automated. More people will have to rely on government support to stay afloat, and by no fault of their own. Much of our current government budget also goes to defense and other programs that don’t directly put money into citizen’s pockets. In the future, either we will have to monumentally increase the amount of spending (with an accompanying tax increase) or we must pursue a contraction of other appropriations in order to make room for UBI in the budget. This is by no means a small feat. However, in the medium to long run, assuming not all jobs are automated, UBI is a necessary and feasible initiative that confronts the impending crisis of aggregate demand head on. The technology for automation is here, and we should not put off responding to this issue – eventually, we will reach a crisis point and have to make back-breaking government spending decisions. It’s time we took this issue seriously, and invested in not only our own livelihoods, but those that come long after us, too.
I was forced to confront this limitation during my first year of college, when I was required to take two introductory economics courses. I was petrified, crippled by the horror stories older students shared about their experiences with economics. I studied all summer for the math placement exam and mentally prepared to fail the course. In my mind, it was irrefutable, unquestionable, and absolutely unavoidable that I would fail miserably. To my disbelief, I passed the class. Actually, I did more than pass; I got an A. I thought surely this was a fluke- I was convinced I would fail the preceding economics course. The following semester, I got another A.
The idea that I was intelligent and hard-working enough to excel in these math-based economics courses rocked the very foundation of my self-esteem. I had been taught since my childhood that math was something to fear- and that I should just stick to reading and writing.
These introductory classes changed the course of my life. They were both taught by the same professor, Dr. Irene Foster. The following year, she let me work as a learning assistant (which is sort of like an undergraduate TA) for her course: Mathematics for Economics. I met so many other women my age who felt the same way I had felt. That women aren’t “math people” and that courses involving math weren’t something we were meant to excel in.
Following my realization that I had the potential to excel in math, I decided to fully pursue a degree in economics. While completing my degree, I continued to witness the barriers and lack of opportunities women face in my field. For this reason, I began my work in uplifting the voices of other women as president of GW Women in Economics. Leading this organization has been the most rewarding part of my senior year. The women that I have met through this organization are absolutely incredible- the smartest, most hardworking women I’ve ever met! It has been quite difficult navigating such a young organization during such unprecedented times, and I couldn’t have done it without the fantastic women on our executive board. I’m so excited to see where this organization goes in the future!
Madeline De Quillacq is a current senior completing a Bachelor of Science in Economics and International Affairs with a concentration in international economics. Aside from serving as president of GW Women in Economics, she is a research assistant at the GW Institute for International Economic Policy and an intern at the Reshoring Institute.