In the coming decades, Western nations are going to be faced with a number of problems stemming from the technological revolution. Some are already with us. We are now post-scarcity societies, where we have more than enough food, medicine and housing for our citizens and even some non-citizens. The pruning force of scarcity is no longer doing its magic to keep the population fit or even sensible. The next big problem is what to do with the tens of millions of extra humans, no longer needed to contribute to society.
The hardest part of the automation wave coming in the next decades will simply be language. What do you call people who no longer have any purpose, in terms of producing goods and services through their labor? For as long as anyone has been alive, the very small slice of the population that has fit this definition could simply be dismissed on moral terms. The underclass is assumed to be lazy or anti-social. Trying to fix this has been a good way to keep the useless off-spring of the middle classes busy is social work.
When the numbers swell as automation eliminates the need for human labor in wide swaths of the economy, it will be impossible to dismiss the idle. When many of the idle are people who formerly occupied office jobs or semi-skilled laboring positions, blaming their condition on a lack of ambition is not going to be possible. The current labor participation rate is about 63% right now. This is about where it was in the Carter years. In the coming decades, that number will fall below 50% due to automation and demographics.
The other challenge is how to support the swelling ranks of the useless in a way that keeps them from causing trouble. The hot idea currently is the universal basic income, which is being experimented with in Finland. In the US, some states are talking about how to replace their welfare programs with something more simple like the UBI. Libertarian economists like the idea of the UBI, because it theoretically allows the under classes to participate in the market economy, unencumbered by the state.
The trouble with this idea, one that they can never overcome, is math. If all citizens have a floor, in terms of their basic income, whatever that floor is, will be the new zero. The only possible way to have a negative income, in real terms, is if someone is paying their employer for the right to work. There may be some bizarre situations where that exists, but in the main, zero is the smallest number that can appear in box #1 of your W2. If that number is bumped up by the UBI, that becomes the new zero, the lowest possible.
Think of it this way. Imagine the government decides to help BMW sell more cars, so they offer every citizen $5000 if they spend it on a BMW, rather than some other car. BMW is now facing a wave of people coming into American dealerships toting a $5,000 check payable to BMW. The logical thing for BMW to do is raise the price of their low end models by $5000. That way, they don’t increase production costs, but they increase the profit per car. In effect, the floor for entry level buyers was just raised by $5000 by the government.
There’s a pretty good real world example of this. The government decided to do something to help working class people get into college. Since many need remedial help, before taking on college work, the scheme was to offer a subsidy to be used for community colleges. The students would use the money to prep for college then head off to a four year university, presumably using loans and aid at that level. The result, however, was the community colleges just raised their tuition by about 65% of the subsidy.
The Universal Basic Income would most likely follow the same pattern. By guaranteeing that no one would earn less than some amount, in lieu of traditional welfare payments, the absolute floor becomes the subsidy level. In effect, the new zero becomes the subsidy so all other wages would be based off that, as the price of goods and services would correspondingly adjust. It is really no different than printing up money and dropping it from helicopters into the ghetto. The UBI would be as inflationary as debasing the currency.
The truth is, the zeroes that our rulers will be forced to address are zero population growth and zero TFR among the surplus populations. For example, you could fix Baltimore in a generation with mandatory Norplant for the underclass. A generation of childless females means the last generation of 80 IQ residents with a propensity for violence. The reason Baltimore is a violent city is not an excess of hard working, college educated STEM workers. The reason the city is a violent mess is the surplus of violent stupid people.
It also means zero immigration. When 80% of today’s immigrants end up on public assistance, the immigrants of tomorrow will be nothing more than useless people to police, feed and house. Japan is the model to follow. They have no immigration and their population levels are about to drop in the coming decades. They are the only nation on earth that is truly ready for the automated future, as they have the demographics to meet a shrinking demand for labor. They also have the cultural confidence to pull it off.
There’s one other zero the West will have to tackle and that is zero participation. The fact is, free-market consumerism and mass democracy work when the right answer is not obvious. As automation takes over more and more tasks, the number of issues that need to be hashed out collectively will diminish. Rule by robot means exactly that, which means voting and popular government will have to be reconsidered. What’s the point of being mayor when there are no more patronage jobs to dole out to friends and family?
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