The Future of the United States Depends on the Immediate Adoption of UBI
Flaten the curve…
We’ve heard that phrase repeatedly as a result of the novel coronavirus in regards to the healthcare system. There are only so many healthcare workers, only so many hospitals with a limited number of rooms and beds, only so many ventilators and PPE. Because of these limits, we have to avoid surpassing them by stretching out the number of coronavirus infections over a longer amount of time.
We’ve heard that phrase repeatedly as a result of the novel coronavirus in regards to the healthcare system. There are only so many healthcare workers, only so many hospitals with a limited number of rooms and beds, only so many ventilators and PPE. Because of these limits, we have to avoid surpassing them by stretching out the number of coronavirus infections over a longer amount of time.Flattening that particular curve is something the public and governments both understand. A curve understood by far too few however is our safety net’s. There are only so many welfare workers, only so much website capacity, only so many phone lines and people to answer them. Because of these limits, we should avoid surpassing them too, by avoiding millions of people applying simultaneously for welfare programs as a result of their incomes evaporating, as spending on goods and services grinds to a crawl.
All over the world, safety nets are proving absolutely unable to keep up with the numbers of people filing for benefits. In Canada, an Employment Insurance worker wrote their representative to tell them that they were “completely fucking overwhelmed.” In Australia, people are lining up in the thousands in lines that go on for blocks, in the middle of a pandemic, to get income assistance. In the UK, people are waiting in online queues with over 70,000 people in front of them also waiting.
In system after system, websites are crashing under loads they were never designed to handle, and people are trying over and over again for days at a time to try to qualify for assistance during a time when pretty much everyone everywhere needs assistance. Some countries are responding in smarter ways than others. Denmark and the Netherlands for example are both trying to keep as many people employed as possible by picking up 90 percent of their employers’ payroll costs.
This strategy is based on Germany’s Kurzarbeit policy, which they also deployed in the 2008 financial crisis where it paid two-thirds of the wages of the workers who had their hours cut. This time around, workers are getting their hours cut to zero, but the goal remains to make sure that workers remain employed instead of becoming unemployed. This strategy is meant to try to better pause the economy, and then restart it more quickly.
This may sound like an effective strategy, however results are already casting doubt on this approach for countries it’s new to. In the attempt to keep people employed in the UK, 80% of people’s paychecks are to be picked up by the government by paying employers, and yet in just two weeks, one million people have filed instead for universal credit. This is up from the usual average of 100,000 every two weeks. People literally can’t afford to wait. They need the money immediately.
Whether the United States could have done a better job of utilizing the Kurzarbeit strategy is purely academic however, because the U.S believes in an entirely different strategy, if it can even be called a strategy at all, instead of an utter lack thereof. The U.S. has decided to just dump people en masse onto the unemployment rolls, and pay them an extra $2,400 per month on top of the unemployment checks their states usually provide them. Below are some of the ramifications of such a decision.
First, a large burden is dumped immediately right onto everyone’s laps as individuals. Everyone must go apply for unemployment income. Instead of just continuing to get paid by their employers, everyone must go jump through hoops to prove they are deserving of unemployment income. This means website crashes and long waits, but it also means tens of millions of lost hours that could have been spent more productively doing something else. It means utter frustration at having to fill in form after form, and waiting for hours, or even days or weeks. It means people being rejected because they don’t qualify, or because they fill in the blanks incorrectly.
With that in mind, consider just how many people are being pushed through this bureaucratic meat grinder right now, and who stand to be pushed through it in the weeks ahead. The most recent week in the U.S revealed a record-shattering number as 6.6 million people filed unemployment claims, which itself shattered the previous week’s record of 3.3 million. Before that, the highest number in one week was 665,000 back in 2009. This is only the tip of the iceberg too. It’s expected that by the peak of all of this, over 47 million people may have filed for unemployment, with unemployment rates possibly reaching 32 percent. It’s hard to grasp how unprecedented that is. None of this has ever happened before.
These are far beyond Great Depression numbers. At its peak, the unemployment rate back then hit 25 percent, which was 11 million people looking for employment. This means, in both absolute and relative terms, more people are going to be unemployed soon than even at the height of the Great Depression. This time though, the government actually wants that. It is choosing unemployment instead of trying to keep people employed.
Not only is the U.S. choosing for more people to become unemployed than even in the Great Depression, it’s actively creating the incentive. It is expanding unemployment income to be claimable by more kinds of workers like the self-employed, and it is paying an absolute minimum of $600 per week to everyone who can prove they qualify. As an employer faced with the decision of reducing your workers’ pay to try and keep them on your rolls, or letting them go so they can get full pay (or even a federally funded raise), why even attempt to keep your workers? You will be hurting them by keeping them. Fire them. That’s the message the U.S. government is sending to employers. Fire your workers.
What then does this mean? First it means the loss of healthcare benefits in the middle of a pandemic. It also means permanent labor force participation loss in an entirely unprecedented way, because this time, technology exists at a low enough cost to replace a lot of the labor force that will be shed. We saw this happen in the years after 2009, and that was with fewer people unemployed, and with technology incapable of doing as much work as it can now, or if capable then, at a much lower cost now.
In 2017, I published an article about the realities of automation in America, and how we are already seeing the impacts on our labor force in the form of skills polarization, downward wage pressure, increasing suicide rates, the rise of alternative work arrangements, increasing periods of unemployment, and more. In that article I issued the following warning about what the next recession would bring:
“Technology is only getting cheaper, so each successive drop squeezes out more human labor, and is able to automate more lower-skill labor that is newly more expensive than machines. Expect the next recession to put over ten million of people out of work, and for the economy to realize they didn’t really need those people as workers after all to produce what was being produced… The economy simply doesn’t need the number of people it currently employs with the technology we already have available.”
What’s about to unfold is worse than I imagined. My projections were based on a standard recession. I never considered what would happen if a pandemic created the recession, and I never considered that the U.S. would be foolish enough to incentivize unemployment in response. Here’s what happens when a pandemic is the cause of a 21st century recession: immediate investment in automation. Automation already made sense for many reasons, most especially the savings from reducing the costs of labor, and increasing productivity. But a pandemic that pushes the pause button on our entire globalized supply chain uplifts one thing about robots above all others: robots never get sick.
The natural immunity of robots and code to pandemics may have just become the biggest reason of all to quickly automate as much human labor as possible. A global survey just asked about this and the result should shake people awake. 41 percent of employers in 45 countries are investing in accelerating their use of automation. And we haven’t even seen the peak of the economic impact of this yet. What’s now 41 percent will likely increase even further in the weeks and months ahead as businesses come to realize that human labor, if avoidable, should be avoided.
In a Vox interview, Mark Muro of the Brookings Institute summarized what’s coming quite succinctly when he said, “You have to think that what can be automated, likely will be now.” Why wouldn’t it be? The time is now to automate everything we can, which according to a report by McKinsey was 30 percent of all tasks for 60 percent of all jobs, and that was with technology from five years ago. That means either 28-hour weeks instead of forty for the same number of workers, or millions fewer workers.
If you’ve been paying attention to news stories about automation, you’ll have noticed that everyone who starts using some new form of automation inevitably says they plan to use it to increase their productivity. Think tablet ordering at your table at restaurants. The response is that they won’t be firing any servers. That response though, whether honest or not, is equivalent to crossing their fingers behind their backs. Here’s what really happens: when the workers who aren’t fired, quit, those positions aren’t refilled. Another common response is to reduce hours so workers earn less per week. Yet another response is greater output, but no hiring of additional workers to accomplish it as they would have otherwise.
Combine those existing behaviors with the unemployment of 50 million people. Combine that with the knowledge that automation will enable businesses to keep going when humans go home, and to have less overhead to better stay in business when they do. Combine that with the profound lack of consumer buying power we are about to see when businesses are able to open their doors again. All those people who stay unemployed are also consumers, and that’s the one job category that can’t be automated. Machines may be great workers, but they’re terrible customers. In a 70% consumer-based economy, that’s the crux of the automation problem. As long as the distribution of resources relies on people buying things, as automation increases, consumption decreases. The economy eats itself.
The suicide rate is about to increase even further. We know this because it happened last time. A 2014 Oxford study found that between 2007 and 2010, suicide rates increased by 4.8 percent in the U.S. Thousands of people ended their lives as a result of unemployment, debt, and the loss of their homes. We are about to see that play out again. Thousands of people are going to die, again purely for economic reasons, not COVID-19.
Abuse is about to increase too, because when it comes to despair, self-harm isn’t the only result. So too is abusive behavior. Again, we know this because it happened last time and is even already being observed. Studying various regions of the country during the last recession, rates of abusive head trauma in children rose by 65 percent. Three quarters of them were under a year old. 16 percent of them died. A hospital in Fort Worth, Texas has already seen a spike occur there with seven cases of severe child abuse in one day with two deaths in one week, where typically they would see that many cases in a month, and six deaths in a year.
Besides children, women also experience the brunt of abuse, and calls for help are already being heard as women feel even less able to flee abusive living arrangements where their “choice” is continued abuse or increased chance of COVID-19. The National Domestic Violence Hotline reports that a growing number of callers say their abusers are using COVID-19 as a means of further isolating them from their friends and family and as a mechanism of control by threatening to throw them out on the street to contract it.
During China’s recent lockdown, domestic violence cases tripled. This is not a unique response to the pandemic either. This is a typical response. A decade-long study that was ongoing during both the Dot-Com Bubble and the Great Recession found that “as men feel increasingly anxious and out of control over their jobs and financial security, they become more likely to increase control over their romantic partners, sometimes to the point of abuse.” It doesn’t even take unemployment or falling incomes. All it takes is the fear of those outcomes to turn to intimate partner violence. The trigger is the stress of living insecure lives in a fragile economy.
This economy is not just fragile. It is shattering before our eyes. In New York, reports of burglaries are already up over 75% and in Italy the singing has stopped and food delivery trucks are already been hijacked. Our world just changed in a huge way, and it’s not going back. All the billionaires’ robots and all the billionaires’ men will not be putting it back together again. The moment the novel coronavirus hit our shores, everything changed. However, there is still a way forward as long as we do it in time, and that way forward is a fully universal basic income implemented immediately.
Why UBI? Because UBI is the one policy that positively impacts all aforementioned issues. It’s a curve flattener. It’s a social vaccine that improves health and reduces crime. It’s money that reaches everyone and excludes no one. It’s the ability to buy food in grocery stores and farmers markets instead of relying on whatever overwhelmed food banks have to offer. It’s security in insecure times, and it’s buying power for a consumer-based economy. It’s bargaining power for workers and an unlimited strike fund for unions. It’s how to make automation grow the economy instead of eating it. It’s the future, and the future has arrived.
UBI in normal times is a floor that paychecks add to. These are not normal times, and so where a UBI floor would be around $1,000 per month, an emergency UBI would need to operate as both floor and paycheck. Here’s how different the future looks like if we decide to adopt a temporary emergency UBI of $2,000 per adult and $1,000 per kid: nine out of ten households immediately gain the ability to cover all of their basic monthly bills without any further assistance. This keeps the economy for basic goods and services alive. With incomes being directly provided by the government, businesses could cut their labor costs in order to survive. This would reduce the need to layoff employees, and also prevent many businesses from going out of business, while also better maintaining consumer spending. Effectively, this strategy would be a UBI-Kurzarbeit hybrid.
With universal basic economic security installed into the economy, a whole slew of other effects would ensue. Besides all essential workers having higher incomes than the unemployed, instead of the same or even lower incomes (thanks to the employed and unemployed both receiving UBI), more people could afford to self-quarantine. Combined with stronger immune systems, fewer people would catch and transmit the coronavirus. Fewer people would feel the stress and despair that would lead to their suicides or substance abuse, or the abuse of their partners or children. Fewer partners would take the abuse too. In Kenya, a basic income experiment resulted in the number of women being kicked, dragged, or beaten by their husbands falling by 51 percent.
The likelihood of violent civic unrest would drop. Freed from insecurity, more people would be able to focus on more constructive uses of their time than worrying about surviving, like for example volunteering to help get meals to people, or crafting homemade masks, or working on a new startup to launch post-crisis, or just spending more quality time with their families. In experiment after experiment, UBI has been shown to improve wellbeing and also rates of entrepreneurship.
UBI means an economy that actually restarts. People would actually have money to spend in restaurants that reopen, and that money would become paychecks earned on top of UBI that is then spent elsewhere to enable more businesses to restart, and more paychecks to be distributed. UBI also means that the machines who “take our jobs” pay us all to buy what they’re producing. It makes automation literally work for all of us, especially if the amount that a permanent UBI is set at is indexed to productivity.
Our choice of future has long been Star Trek or Mad Max, but over the course of the next decade. That choice is now right here. It’s right now. Either we implement UBI to get us all through this and beyond it in a way that saves lives and improves our well-being, or we don’t, and people die amid historic mass suffering.
I thought we had until 2025 at the latest to adopt UBI. I was wrong. We have a matter of weeks at the latest to adopt UBI to avoid the barely still avoidable. If we don’t, complete social breakdown may just occur in a worst-case scenario where an obviously broken government loses all faith in it by the public at large. In a best-case scenario, the pandemic ends, the economy restarts, and millions of people remain unemployed in a weak economy of even greater inequality, more insecurity, more poverty, more suicides, more abuse, more crime, worse health, and an annihilated American dream.
I don’t know how we’re going to get from where we are right now to where we need to go, but we need to get creative, we need to organize, and we need to do it right now. Now is the time to start demanding that our representatives in Congress include UBI in the next bill. Now is the time to start organizing a general strike and an Internet blackout and whatever else we can think of, to make them do what they must do.
Our time has almost run out. It’s not yet too late, but it’s about to be. We’ve arrived at a historic fork in the road. This is the moment in history where we choose our path. Dystopia or utopia? There is no other way forward.
What we decide in this moment, decides the fate of tens of millions of living breathing human beings, who we may not know and we may never meet, but who are our brothers and sisters in the family that is our civilization.
Flattening the curve is not enough. We must finally recognize what Martin Luther King, Jr. described as “our inescapable network of mutuality.” It’s time to build a new social contract that uplifts everyone and leaves no one behind. The old social contract, or what’s left of it, died of COVID-19.
The new social contract is ours to write, ours to sign, and ours to start living by in the future that we build from this day forward.
One final thing to consider: disasters like this lower our aspirations. A study of Pakistan’s devastating 2010 floods and their response to it found that the floods dramatically reduced aspirations for the future, except among those who received flood relief in the form of unconditional cash equivalent to about 10% of annual household expenditures for the following three years.
Lowered aspirations are the difference between striving to achieve the improbable, and the learned helplessness of lost hope. A post-pandemic U.S. without UBI replaces coronavirus with a plague of hopelessness. A post-pandemic U.S. with UBI is vaccinated against that plague, and moves beyond simply trying to survive, to finally endeavoring to thrive.
Hope is what keeps us going, and my hope is that a disaster as large as this teaches us a lesson we never forget about events that suddenly befall us through no fault of our own that forever change the course of our lives… these events we call disasters.
– Scott Santens, April 8th 2020