We are at the most dangerous moment in the development of humanity… the rise of artificial intelligence is likely to extend job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.” – STEPHEN HAWKING
Between 2000 and 2014, five million manufacturing jobs were lost in the United States. This trend shows no signs of abating. Now there are more American men drawing disability insurance than there are working in production manufacturing jobs. Turning to retail, the pending apocalypse in that sector of our economy is illustrated by the elimination of 100,000 jobs just during the six months ending in May 2017.
The list goes on and on and is now beginning to impact not only the lower end of our country’s income spectrum but is also invading the space of middle-skill and professional sectors. Whenever tasks are routine, these jobs are candidates to be replaced by artificially intelligent robotic devices. With the Federal Reserve categorizing 44% of the current jobs in the United States as routine, that portends an uncertain, if not downright, scary future.
Artificial Intelligence is not the only contributing factor. We have for years exported jobs overseas to low-cost labor countries while we witness the decline of shopping malls as e-commerce sales grow in excess of $50 Billion per year. Meanwhile the income gap between the well-off and the not-so-well off continues to expand. Witness the ratio of CEO pay to the average worker in 1965 at 20 to 1 that now stands near 300 to 1. Yes Virginia, the stock market has done very well for the top 20 percent that own over 90 percent of the stock market holdings.
While there are many examples of job destruction and the widening income gap threatening our social fabric, space in this article will not permit me to list them all. One solution to mitigate this impending disaster is the adoption of a Universal Basic Income (UBI). Once, only a far-left proposition, UBI is beginning to gather bipartisan interest. Under most plans, it would modify or replace other social safety net government programs. It was reported just last month that Social Security payments are now exceeding revenues collected. Clearly, we cannot continue down this do-nothing path.
Most plans suggest a monthly minimum income to all adult U.S citizens of around $1000, which is near the individual U.S. poverty level. The intent is to grant this payment to all citizens, working and non-working. This could slow the pressure on private companies to increase minimum wage rates which is a chief reason to adopt automation over hiring workers.
Funding is obviously a major issue for such a program. Andrew Yang, in his book “The War on Normal People” is suggesting a European style Value Added Tax (VAT) at somewhere between 5 and 10 percent. Contrast this to the current 17% rate in Europe. Another suggestion is a negative income tax.
Funding issues aside, the first step to solving the problem is to recognize that we have a problem and that we are at an inflection point. And like most systemic social problems, denial is often present in their early stages. As the great Yogi Berra once said… “The future ain’t what it used to be.”
Rants, Raves & Reflections 