A guaranteed minimum income: faux solution for the new industrial revolution

Summary: Solutions are proposed as the shockwave of the new industrial revolution becomes visible on the horizon. Naturally, we first get small and comfortable ones — such as a guaranteed minimum income, which guarantee high and growing levels of inequality. We might even implement these, leaving the resulting social turmoil for the next generation. First of 2 posts about the GMI.

Our future if we distribute technology’s gains via welfare.
Well-fed, well-dressed menials bow before the aristocrats.

First, the new industrial revolution was debunked. When it become too obvious to ignore, the coming destruction of jobs was denied. Now that too has become obvious — so attention turns to easy solutions. Most commonly recommended is a guaranteed minimum income — a greatly expanded welfare system. For example…

• “Could a basic income solve the biggest challenge of the digital economy?” by Andrew White in The Guardian — “With growing numbers of jobs threatened by automation, reviving old ideas of an unconditional income may be the best way to protect workers.”
• “What If Everybody Didn’t Have to Work to Get Paid?” by David Wheeler in The Atlantic — “Advocates say that a guaranteed basic income can lead to more creative, fulfilling work. The question is how to fund it.”

Productivity has risen, but the gains went to profits (not workers ), then flowed through to the top few percent of households, leaving little for the rest.

The industrial revolution just beginning will produce fantastic increases in productivity — and destroy millions of jobs. How should we distribute these? All other things being equal, the gains will continue to flow to profits — and hence to those at the top. The previous industrial revolutions show that the resulting social tension can become unpleasant or disastrous (e.g., the revolutions of 1848, the Russian revolution). They can make rich nations into poor ones (no longer does anyone say “rich as an Argentinean).

Higher minimum wages help those with jobs. A guaranteed minimum income helps those without jobs. Is this a solution? Yes, if you believe the Britain of Pride & Prejudice is a model for 21st century America. Both create income floors, but allow the unequal division of income — and so would create a two-tier society: a rich aristocracy and a large class of low-income workers and those on the dole (with a small middle class between).

Where will political power concentrate? With income, at the top. We’ve seen this movie.

What are other solutions?

The earlier industrial revolutions were fore-shocks. This is the big one, with machines able to replace not just manual labor and jobs requiring low levels of intelligence — but even those using sophisticated sensors and thinking (see how robots and algorithms are taking over). This might be more like the invention of agriculture, fire, and the wheel.

After varying amounts of pain and struggle, we harnessed those waves of new technology. We can do so now. But the incremental changes that worked before — even expanded — might not suffice. Bolder and larger innovations might be necessary.

My guess (emphasis on guess) is that only some drastic form of income sharing will work — not a trickle to the bottom from welfare, but an equitable division from the top. Combined with free markets, democracy, and a wide distribution of power — we can build a wonderful future. Many mechanisms might work: heavy taxation, a share of public ownership, or some else. Different nations will experiment; some will find working combinations. They will be the winners of the 21st century.

This is just an introductory sketch of this complex issue. For more detailed analysis see Why a guaranteed minimum income won’t protect us from the coming automation wave.

Other posts in this series

1. 50 years of warnings about the new industrial revolution. It’s here. Ignore the naysaysers.
2. The coming big inequality. Was Marx just early?
3. The coming Great Extinction – of jobs.
4. Steps to make the tech revolution boost America, not just the 1%.
5. The robots are coming, bringing hope of a better future.
6. Our future will be Jupiter Ascending, unless we make it Star Trek.
7. Well-meant minimum wage increases will accelerate automation.
8. The battle of institutions vs. technology = rising wage inequality.

See all posts describing the 3rd industrial revolution and about inequality and social mobility.

For More Information

If you liked this post, like us on Facebook and follow us on Twitter. See these books to learn about the new industrial revolution now in progress…

• The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee (2014).
• Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford (2015).
• The Future of the Professions: How Technology Will Transform the Work of Human Experts by Richard and Daniel Susskind (2016).