Bibliography

Appendix A: Why do we need a UBI? There are several reasons why a UBI is needed, but the primary reason is straightforward. – we simply no longer have enough worthwhile jobs for all who need and want them. A good job has been the path by which the average person could enter the ranks of the middle class, but that path is no longer available to a large, and increasing, share of our population. How have we reached this situation? The answer to that question is also simple: Automation, computerization, corporate mergers, and globalization have been responsible for eliminating those good jobs. And those same processes will very likely accelerate, and the job shortage will only worsen. The reader can rightly claim that such a statement of the problem requires evidence, and that will be provided shortly. But first, we should understand why a UBI is a fair and reasonable solution to this job shortage. As mentioned previously (in “Why is a UBI a Birthright?”), society has accumulated, over centuries, a large body of knowledge and technology. Society has also built considerable and expensive physical, educational, legal, and military infrastructure. Without these things, today’s businesses would be much less prosperous or even non-existent. This knowledge, technology, and infrastructure are all in the public domain. In other words, they are public property. Therefore, it is right to expect businesses to pay for the use of that property. In the past, payment was made in the form of worthwhile jobs that enabled workers to claim a fair share of the economic pie. However, in this age of ever-increasing automation, not enough worthwhile jobs are being created, so another payment method is necessary. That method is the Universal Basic Income. As promised, evidence will be presented showing that automation, computerization, etc. are responsible for the elimination of worthwhile jobs. This will be done using economic data from several sources. However, it should be mentioned that this Handbook was produced during the economic disruption of the coronavirus pandemic. That disruption caused extreme changes to economic statistics that can distort any conclusions drawn from them. Therefore, only statistics from periods prior to the pandemic are used. Many economists point out that, over time, technology and automation have created more and better jobs than they have destroyed. Others will agree but will say that that is no longer happening. Let’s examine the evidence.

This chart shows the distribution of the U.S. labor force by economic sector from 1840 to 2010. Economists often divide an economy into three sectors: Agriculture (which includes hunting, fishing, forestry, and farming), Industry (which includes construction, mining, and manufacturing), and Services which is conveniently defined to include everything else. That is nice since it makes the percentages on this chart add to 100 percent. We see that in 1840 nearly 70% of our labor force was involved in Agriculture. Since that time, due to automation and the consolidation of small farms into larger ones, the Agriculture labor force has declined to less than 2% of our overall labor force today. And yet we have all of the food we need and a nice surplus for export. Clearly, automation has not created more and better-paying jobs in Agriculture than it destroyed. But then, no one claimed that automation would create new jobs in the same sector in which they were lost. And, in fact, we see that the percentage of our labor force in the Industrial sector increased steadily from 1840 to 1950 with a short dip during the Great Depression. But then in 1950 the percentage of workers in Industry also began to decline. According to the Bureau of Labor Statistics, U.S. manufacturing employment peaked in 1979, and by 2019, it had fallen by over one-third. Clearly, automation has not created more and better-paying jobs in Industry than it destroyed. Many like to claim that our declining industrial employment was a result of sending production work overseas. But consider these numbers: U.S. Manufacturing Employment* January 1987 = 17,465,000 January 2019 = 12,825,000 U.S. Real Manufacturing Output** (2012=100) January 1987 = 63.155 January 2019 = 105.469 *Source: Bureau of Labor Statistics **Source: Federal Reserve Bank of St. Louis U.S. manufacturing employment fell by over 26 percent between 1987 and 2019. However, our inflation-adjusted domestic industrial output increased by 67 percent during that period. Not only did our domestic production increase, but output per worker more than doubled. That only one worker is now needed to produce what used to require two is not the fault of overseas labor. It is simply due to improved automation. Some employers will claim they hire fewer workers because they can’t find enough with the proper qualifications. But when you look beneath the surface, you see that those jobs often don’t pay enough to justify the time, effort, and expense of training and the cost of relocating to take the job. And consider that in the U.S., the percentage of people with four years of college has increased from about 12% in 1970 to over 30% today. Yet, according to the Bureau of Labor Statistics, 260,000 Americans with bachelor’s degrees were earning the federal minimum wage or less in 2013. And that was more than double the number in the same situation in 2005. On the value of more education, we have the following quote from page 252 of Martin Ford’s book “Rise of the Robots” (B3): We are running up against a fundamental limit both in terms of the capabilities of the people being herded into colleges and the number of high-skill jobs that will be available for them if they manage to graduate. The problem is that the skills ladder is not really a ladder at all: it is a pyramid, and there is only so much room at the top. So – workers have been forced off the farm and out of the factories, but since the unemployment rate is consistently low, they must be finding work in the Services Sector. Therefore, everything is fine – right? No! Everything is NOT fine since the unemployment rate is a misleading statistic. It is defined as the percentage of workers actively looking for work who are still unemployed. It does not count those who became discouraged and dropped out of the labor force altogether. Those dropouts are accounted for in the “labor force participation rate”.

This diagram shows the U.S. labor force participation rate for men and women – separately and also together. The participation rate is defined as the percentage of working-age persons who are currently working or are actively looking for work. For men, that percentage has been declining steadily – from 87% in 1950 to under 70% in 2015. The only reason our overall participation rate increased after 1950 was the increased participation of women. The participation rate for women rose from 33% in 1950 to 60% in 2000 but has declined since then. The result is that, as of 2015, total labor force participation stands at a 38-year low. So – automation and consolidation drove workers off the farm and out of the factories and into the Services sector. And while the overall unemployment rate is relatively low, that statistic conveniently ignores the decline in the labor force participation rate. Further, the situation is seen to be even worse when we consider how worker compensation has fared.

This chart shows how the increase in real per capita GDP compares to the increase in real median household income in the thirty-four years between 1984 and 2018. As you know, the median level is the level at which half are below and half are above. We can’t compare the dollar amounts easily, as they are indexed to different years, but we are only interested in the percentage of increase. We see that median household income is up just 22.1 percent in those thirty-four years while per capita GDP is up 77.8 percent. The fact that per capita GDP has risen so much faster than median household income tells us that much of the increase in our national output is not reaching the typical household. That is clear proof that “trickle-down” economics does not trickle down. The reason is quite simple – supply and demand. Computerization and automation have simply resulted in less demand for our labor, and household income has suffered. All of the preceding evidence stands in support of the primary reason we need a UBI – we simply no longer have enough worthwhile good-paying jobs for all who need and want them. That evidence also brings us to the second reason we need a UBI. – to correct an unjustifiable level of income inequality. Inequality is built into our capitalist economic system (and rightly so) because some people simply work harder than others and some work smarter, and others simply have better luck. But working harder or smarter does not give a person or company the right to take the value created by our infrastructure and put it into their own pockets. That part of the value belongs to all of us. If that value is not being paid for through the creation of jobs that pay a decent wage or through a Universal Basic Income, then that value is being misappropriated. The author understands that that is a powerful statement – that he is essentially saying that an ongoing theft is occurring. But that needs to be said, and it needs to be heard. The general public needs to understand this situation because a UBI will not be enacted until they demand it. It will not be enacted until more people realize that politicians’ promises to “bring back our jobs” are just empty political rhetoric. It will not be enacted until more people realize that the fast-food job they took while they search for a real job, has become their new career. The push for a UBI will not come from the top because those at the top are the ones who benefit from the status quo. And this brings us to a third reason we need a UBI. – to save capitalism. A natural goal in a capitalist economy is to reduce costs by replacing human labor with less expensive and more efficient automated machinery. Lowering costs is laudable, but only if everyone shares the results. If a UBI is not enacted to enable that sharing, an angry public may sweep aside our Capitalist system and replace it with something that will benefit no one. Nick Hanauer (V7) gave an excellent TED talk titled: “Beware, fellow plutocrats, the pitchforks are coming”. He makes an eloquent case that a UBI can save capitalism even though he never mentions a UBI. At one point, he says, “What do I see in our future today? I see pitchforks – as in angry mobs with pitchforks”. However, his solution is simply to raise the minimum wage, but, of course, that only works for those who still have a job and does not make a significant dent in income inequality. Also, consider the following quote from Andy Grove, co-founder of Intel Corporation and a champion of our capitalist system. He says: Our generation has seen the decisive victory of free market principles over planned economies. So we stick with this belief largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better. The author firmly believes that “modification” is a Universal Basic Income paid for by charging fees for the use of society’s infrastructure.