Accelerated impact of AI makes basic income rethink – 05/15/2023 – Market

The book “Deaths from Despair and the Future of Capitalism”, by Anne Case and Angus Deaton, winner of the Nobel Prize in Economics, addresses how the American middle class has been harmed by technological advances and globalization, leading to disillusionment, frustration and even impulses anti-democratic movements that culminated in the invasion of the Capitol on January 6, 2020. Faced with the acceleration of innovation in artificial intelligence and robotics, it is essential to update public policies to effectively face the social impacts of these changes and, who knows, mitigate populist and authoritarian tendencies.

Austrian economist Joseph Schumpeter coined the term “creative destruction” to describe the process in which innovation and technological progress generate cycles of growth and socioeconomic disruption. In the book “The Second Machine Age: Work, Progress and Prosperity in an Age of Brilliant Technologies” (2014), Erik Brynjolfsson and Andrew McAfee argue that the pace of these Schumpeterian Cycles has been accelerating globally in all sectors.

Faced with the advance of automation and technological transformations, it is relevant to rethink the ethics of conventional work and reflect on the potential benefits of policies such as universal basic income (UBI). In the book “Basic Income: A Radical Proposal for a Free Society and a Healthy Economy” (2017), Philippe Van Parijs and Yannick Vanderborght explore the role of UBI in facing the challenges presented by automation and the acceleration of Schumpeterian Cycles. According to the authors, the UBI would make it possible to carry out more rewarding jobs, eliminating the need to engage in repetitive and monotonous activities to guarantee subsistence.

RBU experiences around the world demonstrate its effectiveness. In Finland, there was an improvement in the well-being and mental health of beneficiaries. In Stockton, California, contrary to what many feared, greater employability was observed, in addition to improved mental health. In Ontario, respondents were more financially stable and sought more education and job training. In Kenya, the GiveDirectly project resulted in increased consumption, investment in education and health, and improved psychological well-being.

Targeted programs like Bolsa Família are cheaper, but require a bureaucratic process for selecting beneficiaries, which can be counterproductive in an increasingly volatile job market and in crises that require a quick response, such as during the recent pandemic. In contrast, RBU provides a constant safety net that does not require activation with every disruption or acute economic crisis. Furthermore, the RBU can become more targeted if combined with a more progressive income tax.

The acceleration of the Schumpeterian Cycles also has implications for educational policy. It is necessary to prepare young people for a job market in constant evolution. Technological advances increase the risk of human capital obsolescence and generate greater uncertainty about career prospects. A Deloitte study projects that, over the next 15 years, the demand for lawyers in the United States will suffer a 10% reduction as a result of artificial intelligence.

To meet this challenge, it is crucial to promote lifelong learning and the development of transferable skills, including adaptability, critical thinking, creativity and problem-solving skills.

The Schumpeterian Cycles tend to accelerate in the future, making it essential to rethink education and income transfer policies now. Fostering adaptability, encouraging continuous lifelong learning and designing transfer policies, such as the Universal Basic Income (UBI), it is possible to build a more resilient society in a world in constant transformation and, perhaps, prevent the strengthening of anti-democratic movements .