Return of the Crazy Thoughts: Dealing with the Robopocalypse [Part 2]

This was originally planned to be the followup to the post I wrote in March 2015.  However, like everything it seems in my life, there has been far, far too muh to do and too little time, so things slipped.  This one slipped the most.  Or close to it.

So!  Much later!  Here we go!

The topic for the post series is the Robopocalypse and what to do with the fact so many jobs which we have long relied upon to help power our economy are simply going to go away.  Machines will take the place of workers.  This will be a greater disruption to how the economy works than even the first Industrial Revolution.  How we as humanity cope with it will determine the future.  I don't mean to sound melodramatic, but consider capital, as in dinero, will be able to replace labor in vast swathes of the economy cannot help but make you take pause when you consider the implications.

We could end up a world of the hyper-rich and the rest of us as serfs in a techno feudalist society: Blomkamp's Elysium captures the flavour, but not the details.  Or we could have a Pournellian Welfare Island Scenario.  Alternately, we end up like the residents of Wall-E's Axiom.  Or we could end up completely irrelevant.  And the future could go downhill from there.  Or we could go the extreme in the other direction, a Neo Luddite approach where those who do embrace the robopocalypse render us and our economy irrelevant: we would be the 'North Korea' of the 21st/22nd century, economically speaking.  None of those potentialities are particularly appealing. 

In the previous post, it was established that jobs for at least 26 million working force Americans are going to go away under the Robopocalypse of the next 20 years. This is through straight replacement of people with automata in the low hanging fruit of robotic tasks.  

There are also knowledge base jobs which can and will be replaced with software: think IBM's Watson, Apple's Siri and MicroSoft Cortana amped up with massive back-end databases.  These will move into the white collar jobs as well.  And that in turn will have a significant, if less clear impact on the availability of those jobs. 

Then there are those jobs which might have existed, but will be rolled back simply because the spending from the tens of millions of people now unemployable do not have the extra money to spend.  The restaurant may only need five people to cater to thousands daily, but if there is no one who can afford to go to that restaurant, then it won't exist.  

Here we seek another way.

However, what could that way be?  After all, you have potentially more people driven to unemployment than in the Great Depression.  In fact, for many, those workers may even be unemployable!  There are simply no jobs which those workers can take, not even the emergency crap jobs most of us could resort to: the emergency, crap jobs will simply not exist. 

All of those people simply cannot earn a living.  Period.

This means they will not buy the goods of the rich, so the rich will not remain rich long.  ("After all all, Mr Ford...")

It is already a case where the average person finds it exceedingly hard to vault past getting by.  Until a family (or individual) can reach the point where they can regularly risk five to ten percent of their income without any fear of what may happen, they cannot begin to accumulate wealth.  In addition, that five to ten percent must be above certain thresholds as well: it must be in the thousands of dollars on a regular basis.  If not, they cannot do the necessary bootstrapping.  This is in the economy now.

Consider the economy of the robopocalypse where a huge number of people cannot work at all based on their current skillsets and even their probable ones with training: the majority of employees from Mickey D's are not (most likely) going to become rock star programmers, engineers or scientists. Even so, there will be intense competition for what jobs there are and we could end up with a very high, European-like unemployment.

With very large numbers of unemployed, that gets dangerous.  At some point, they are going to come looking for what they feel ought to be their's.

What to do?

There is an obvious answer, but its one which when I began pondering what to do about the robopocalypse was very unpalatable: a guaranteed minimum income.  This i the concept whereby everyone is always guaranteed an income, whether they hold a job or not for the entirety of their lives.  The mechanism is everyone, regardless of their income, is cut a cheque each month for a certain amount.  The intent is to make sure everyone is at least above the poverty line and can survive.  Guaranteed.  This is the ultimate welfare state.  

I had a real problem with this when I was thinking about it.  After all, I am a Republican[1] (*gasp*shock*hiss for many of my readers!).  I believe very strongly in the 'right to fail:' that is a person has the right to succeed or fail on their own hard work.  People ought to be rewarded for their hard work and ingenuity. 

But again, there's no way for many people to get to the point where they can earn any money under the robopocalypse.  And eschewing the robopocalypse in favour of human employment won't work either.  So, again, even if the answer makes you uncomfortable, it is still the answer.  Whether or not you like it.

It turns out there is actually a some conservative support for a guaranteed minimum income.  Milton Friedman wrote about a variant in his influential book Capitalism and Freedom.  Here is a very, very respected and most definitely conservative economist who advocated a minimum income to alleviate poverty and that was in the pre Robopocalyptic economy.

There is another "conservative[2]" who is quite famous who tried to get a minimum income implemented in the United States: Richard Nixon.  The monster report on this was his Commission on Income Maintenance that he followed up with trying get Congress to pass bills in support.  It failed and I am sure there might have been some nontrivial political distractions which helped preemptively derail any second attempts at getting it passed[3]. 

Finally, Alaska has its Permanent Fund.  Regular payments are made out of it in the form of dividends to every long term resident of Alaska...and Alaska is hardly noted for being a blue state. 

If the economist who came up with the conservative touch stone of school vouchers, the president who employed Pat Buchanan and one of the reddest states in the Union were & is ok with the concept with a guaranteed minimum income, then my conservative side ought to get over itself.

First Caveat: The Welfare Trap

The first problem is we are setting everyone up for the welfare trap.  This is where working at all is disincentivized.  If you work and earn above a certain level, then you lose your guaranteed income. This is part of the problem with a negative income tax.  There is little reason to work if you are not going to get more out of it by doing so.

The answer here is to guarantee everyone gets the income irregardless of how much they are making.  If you are a citizen of the United States, you get an income.  Whether you are a gazllionaire or fresh off the boat and unable to do anything other than breathe, you get an income.

Second Caveat: The Stratification Trap

Even with the implementation of a guaranteed minimum income, we still have a problem.  And sadly, its as big of a problem in its own way.  By providing everyone with the minimum to survive but no mechanism to thrive, we end up with a society of the immensely rich getting richer and the rest just to survive.  There must be a method built in for people to thrive not just survive.

The guaranteed income by itself is insufficient to make a healthy society.  You have a different case of the peasants and aristocracy.   People who survive and people who own everything.  Not good.  Even worse than things are today.

Despite having just proposed a very socialist concept here for the first half of the mechanism for dealing with the robopocalypse, the other half is going to be a very capitalist solution.  Even after the robopocalypse, there is going to be a need for businesses of various sorts.  Small, large, everything between.  The single biggest problem with starting a business is access to capital.  People have ideas, often very good ones which fill needs, but cannot get the money to get started.

The proposal here would be to create method for people to propose businesses and have them funded.  It need not be a solitary mechanism.  There may be several.  One may be the equivalent of kickstarter (properly regulated) whereby people can directly invest rather than donate to.  Another may be a form X number of loan guarantees per life time for a person from a larger, reformed SBA targeted at startup companies, allowing for larger amounts of capital to move there rather than just the standard small business loan.  It might even be a direct investment or loan by the government fund to the individual.

Third Caveat: The Structural Trap

How you set the fund up for this is really important.  Its funding source should not be raidable by Congress or the rest of the government.  Ideally, it ought to be built up in a manner similar to the Alaska Permanent Fund such that it will, over time, increase without increasing revenue streams if at all possible.  Likewise, it ought to be structured such it should be insulated from market fluctuations: a economic downturn could wipe out the fund if mismanaged.  That's dangerous and ought to be protected: people's lives are depending on this fund.

Fourth Caveat: The Funding Trap

The largest elephant in the room is funding.   Indeed, if you were to chop up the entirety of the budget of the United States and simply pay it out to every person in the country, you would end up only getting $11,000 individually.  That's too little for anyone to actually live on and would fail to provide for a defense or other government functions.

Where the income comes from for the fund is very important: it needs to be able to sustain paying for 310+ million people while not producing a crushing burden on those who are making money above and beyond.  Let's list the potential sources.  Reminder, these are meant to be suggestions, rather than absolutely required.

1.  A progressive income tax for income above the dividend paid out by the "US Permanent Income Fund."  It probably could be quite similar to what we have now, just with the equivalent of 'zero' tax being when someone does not earn anything above the guaranteed income.  The except to keeping everything the same or very similar would be to get rid of most of the deductions: the rich won't end up paying like Mitt Romney (15%), but what they really ought to (somewhere around 35%).  An exception might be for mortgages; however, but with a limit on the total amount of interest which can be claimed. 

2.  Social insurance taxes - since this would be largely replacing the social security - bring in another almost $1.1 trillion.  Raise the limit for social security taxes: currently this is only paid up to around $120k.  Everything you earn above that is social insurance tax free.  This could easily raise the amount of revenue significantly and could potentially pay even more than the regular income tax.

3.  Corporate taxes.  Guess what?  Corporations in the United States paid less than one fourth what individuals did in taxes in 2015.  That could easily be rectified.  After all, Google, Apple and others have a combined in excess of $100 billion in cash.

4.  A carbon tax.  Originally I was going to state a fossil fuel tax, but its largely the same.  Natural gas is cheaper in the US than anywhere in the world.  Add a moderate tax.  Coal is environmentally destructive and adds to our carbon emissions hand over fist. If a tax for the equivalent of 10 cents per gallon for carbon emissions were added at a flat rate across the board for all carbon sources, the US would collect over $500 billion.  If an associated carbon tariff is also employed, then the intake would at least be comparable to the income tax intake.

Up to this point, all we've done is balanced the US budget, neglecting other sources of income for the government.  And the carbon tax, we hope, will slowly decrease in revenue.  This

5.  A robot tax.  This would be a direct, specific tax on the bot which is replacing Assuming a bot costs the same as one year's salary for the employee the robot is replacing, even a significant tax at the time of purchase would hardly be arduous since the bot will be far, far cheaper over the long term.  A 100% tax would be possible (though perhaps not advisable) if the bot was replaced every 5 years, the business owner still comes out way ahead.  Even with the price drop of the goods as there is a race to the bottom for pricing, the revenue from the 'robot tax' would be quite significant; doubly so since the cost of services and goods would decrease and allow for more production and bots and the associated tax.  In fact, there would be enormous amounts of growth if costs really dropped that much.  A tariff of a similar kind would probably be necessary as well.  How that would work with free trade deals, I have no idea, to be honest.

Recap:

The idea here is everyone gets a guaranteed minimum income.  This is intended only to make sure people have comfortable, but not luxurious life.  Additionally, the cost of this would be born by those who can afford it, the corporations which make far more than individuals do and pay far less taxes, the bots which are replacing people and a carbon tax (really a lot like the petroleum based funds if you think about it).

However, a mega welfare state is not the sole change.  The second change would also be to greatly increase the access to capital by the average person through a major expansion of the SBA (with the understanding most of the businesses would fail and not ding the person) and other potential methods as well.  This would also allow for people to start their own businesses and with the aid of the robopocalypse potentially bootstrap themselves.

The fundamental idea here is people are taken care of at comfortable, but not luxurious level.  Then it is up to them to bootstrap themselves - and they have the tools to do so now - past that point.  However, that takes their own hard work to do so.

There are questions which need to be answered - besides verifying we can afford this plan - and those will be addressed in the next post.  Which might take a while.





1.  I'm a fiscal conservative, social liberal, foreign policy conservative and technological liberal.

2.  He'd be comfortably within the left wing of the Democratic Party these days...how bizarre.

3.  While I do not like Nixon much at all, I'm none too fond of LBJ and he, while seemingly a loathesome man, succeeded in doing some pretty impressive legislation.  Nixon might have produced some good socially if not for his paranoid stupidity that led him his criminal acts.