Originally posted May 7, 2017.
It seems that a large portion of our country has an almost religious, cult-like following of entrepreneur Elon Musk, the CEO of Tesla. So when he mentioned in an interview that the guaranteed basic income will one day be necessary, many took it as fact.
“Elon Musk has spoken, it shall come to pass” seemed to be the mindset of his cult-like followers. This is not to say that he is not a smart person. He is an innovator and a disruptor, but nonetheless a mortal who is bound by the laws found in the book of Ecclesiastes just like the rest of us.
What is the guaranteed basic income? Put simply, it’s free money that the government would give to everyone so that those without marketable or useful skills would be able to pay the bills.
It’s a belief that’s been around for a while, and whenever a new technological advance comes along, people wonder if computers, robots, or automation will replace humans.
In fact, the famous economist John Maynard Keynes believed something similar several decades ago. He believed that his grandkids’ generation would only have to work 15 hours a week. Keynes was also a very smart person who still has an almost cult-like following like Musk does. (Well, Keynes’ followers are probably not as cool. Musk’s followers are hipster techie people in Silicon Valley or pioneering entrepreneurs, while Keynes’ followers are politicians or sophomore economics students who have never been on a date. … OK, maybe that’s a bit of an exaggeration.)
Much has been automated since Keynes said that. But today we work on average 34 hours a week, down from 38 when Keynes first made that statement 60 years ago.
Since then, more people across the globe use automation every day. Our factories, warehouses, and our homes are more automated. More people use dishwashers to automate the washing of dishes, more people use laundry machines and dryers to automate the washing of clothes, more people use cars to automate transportation, and the list can go on.
Yet the vast majority of our workforce is employed, and the unemployment rate today is at 4.4%. Many economists consider full employment to be in effect when the unemployment rate is 4%.
The labor market has decreased, but it’s decreased more because of an aging workforce than because of automation.
None of us know what the future may hold, and we don’t know yet all the jobs that automation will displace. But we do know that most of the jobs that are around today will either change or be displaced by other jobs.
Keynes overlooked several nuances to the economy, and he’s considered one of the top economists of the past century. Musk is also probably overlooking some nuances in the economy.
But in a way, many developed countries already have a system in place to take care of what the guaranteed basic income would do. We offer free or reduced-cost food, health care, housing, utilities, and insurance to our low-income or moderate-income citizens. If they can’t find work, we have subsidies in place. We also provide income for individuals who are of Social Security age, and we provide money to others through tax credits such as the earned income tax credit.
We can certainly disagree whether those subsidies are enough or whether anyone falls through the cracks.
There is one major caveat: a guaranteed basic income would be a good idea if it replaced many of the programs listed above — food stamps, subsidized housing, Medicare, Social Security, and other means-tested programs.
Even libertarian economist Milton Friedman advocated for the guaranteed basic income through a negative income tax. But he essentially advocated for it as a lesser of evils option, and one that would be more helpful and impactful on families than dozens of means-tested programs. That way individuals in need could be sure to take care of basic expenses without having to go through bureaucracies to solve their problems. Also, that way they would be more responsible for their own expenses.
However, this would assume that we would have the political willpower to scale back these programs that are bankrupting our country. That would be completely unrealistic.
So for now, we contend that we’re already spending enough money and that our own government admits that something needs to change.
So until we get that resolved, let’s please avoid talking about just giving away free money to people as though our government is a money tree.