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AI Development, Unemployment, and Universal Basic Income

Introduction

A theme of AI-human relationships takes an important place in science fiction literature, movies, and video games, but it is not limited by them. In fact, AI could significantly affect the real-life future of humanity on multiple levels, especially in social and economic spheres. Moreover, this influence is already noticeable today, as the most prominent entrepreneurs of the current era already showed their concerns about AI making humans redundant. For instance, Pierre Omidyar, the founder of eBay, claimed that “automation is replacing traditional jobs” and “may make employment far less stable and reliable for supporting a livelihood” (qtd. in McGaughey 2). Elon Musk argued that “Twenty years is a short period of time to have something like 12-15 percent of the workforce be unemployed” (qtd. in McGaughey 1). Therefore, governments already have to think about the problem of massive AI-caused unemployment and start developing possible solutions.

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Even though the majority of contemporary AI technologies belong to the “narrow” or “specialized” category, and the machines cannot truly “think”, they already contribute to unemployment among humans. The AI can be inferior to human workers and still make them redundant because “it only needs to do the specific things you are paid to do” (Ford 230). A Universal Base Income (UBI) is often proposed as a possible solution to the emerging problem. At first glance, the idea of UBI might seem lucrative for the unemployed; however, the introduction of UBI is hardly feasible and has multiple flaws from economic, social, and ethical perspectives.

Economic Argument

Most importantly, the mass distribution of UBI would require a staggering amount of funds, which would be impossible to raise without a significant increase in taxes or severe cuts in another spending. This argument appears to be true both for the USA and Western European countries. In the American case, an annual UBI of $10 000 per adult citizen would cost the budget an extra $2,5 trillion (Kearney and Mogstad 3). This amount equals approximately 37,9% of all spending of the U.S. federal budget, which totaled $6,6 trillion in the 2020 fiscal year (Congressional Budget Office). In particular, spending on social security reached $1,1 trillion, Medicare cost $769 billion, and unemployment compensations — $473 billion (Congressional Budget Office). These numbers alone allow understanding the colossal pressure that UBI would create for the national economy.

Overall, even the very moderate UBI would cost the U.S. budget at least twice as much as all other spendings on social security combined. Ford suggests implementing a progressive scale of taxation to fund the basic income program (273). However, this measure seems highly unlikely to pass in current political circumstances, and the rate of new taxes would be extremely high. In addition, the UBI would create a new source of severe pressure on the federal budget, which deficit has already reached $3,1 trillion (Congressional Budget Office). Therefore, the economic basis for the UBI introduction in the USA hardly exists.

The economic grounds for the mass introduction of the UBI in Western European countries are also dubious. Pulkka admits that the European workforce will face difficulties adjusting to changes in skills demanded by automation (2). Nevertheless, he elaborates a very conservative approach to the introduction of the UBI because a monthly payment of €1000 would require raising the Finnish national tax rate to 60% (Pulkka 8). A UBI of €1500 would lead to a flat tax rate of 79% (Pulkka 8). Overall, even the basic analysis suggests that UBI would not be financially feasible even for the majority of the developed countries.

Social Argument

For the sake of argument, one can imagine that economic obstacles have somehow disappeared, and the UBI introduction has become possible from the financial perspective. Hypothetically speaking, that could be achieved by limiting the UBI to specific population groups, such as the unemployed, although in that case, the UBI would stop being “universal”. In fact, only one out of six UBI proposals in the USA included all U.S. citizens (Kearney and Mogstad 5). The other five proposals included certain eligibility criteria, such as age restriction.

Nevertheless, the UBI would have a possible side effect of causing unnecessary tensions in society. According to Sage and Diamond, the UBI would not improve the social status of the workers who would lose their jobs due to automation (29). Moreover, the UBI would create a dangerous social division and an extra ground for discrimination since the recipients of UBI would be viewed as “losers” in a world where paid work is still important. Therefore, the limited implementation of the UBI would mean a meager unemployment compensation instead of changing the beliefs around work in the age of automation.

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One might argue that UBI would still be helpful for those in need since it would provide them with financial safety cushion for the hard times. However, that goal could be achieved by increasing the traditional unemployment compensation. In addition, people who lost their jobs due to one or another reason are generally expected to receive support from the state while they are looking for a new job. The UBI could create hostility towards those people since temporary financial support through the unemployment compensations would turn into “money paid for nothing”. Therefore, even if the governments would be able to fund the UBI, they would have to work hard to prevent discrimination against the UBI recipients.

Ethical Argument

The ethical argument against the feasibility of the UBI is twofold. On the one hand, the UBI would go against the ethical value of paid work perceived by society (Sage and Diamond 29). The UBI recipients would have only two ways out of that moral dilemma. The first way would be finding a job at the cost of losing the UBI (assuming that the UBI is paid to all unemployed adult citizens). The second option would be dropping out of the workforce to continue receiving the UBI, which would contribute to the justification of hostility towards all UBI recipients.

On the other hand, the necessity to fund the UBI would likely demand cuts in other social security programs. According to Kearney and Mogstad, funding a basic UBI in the USA would require a radical increase in taxes and sacrifice of all other social programs (15). As a result, the UBI recipients, even those who deliberately dropped out of the workforce, would receive financial support that could have helped the older adults and children. Such a situation can hardly be called fair from the ethical perspective since the most vulnerable population groups would be endangered even further to fund the UBI. This sentiment has found confirmation in European Social Survey results, which showed strong support for reducing inequality as opposed to guaranteed basic income (Dermont and Weisstanner 5). In that regard, direct support of the unemployed through the increased compensations and professional training seems to be a fairer approach than the UBI. Overall, targeted social programs are better suited for helping specific population groups than a mere monthly payment.

Conclusion

AI technologies are developing at an increasing pace, and humanity can already witness how they reshape social and economic aspects of life. Even the “specialized” types of AI in the form of robots designed for specific tasks are already replacing humans in certain professions. Therefore, national governments, especially in those states that have achieved a higher level of technological development, should focus on mitigating the possible effects of AI-induced unemployment. A slow response to the challenges of the new era could likely lead to a severe social crisis.

However, the Universal Basic Income (UBI) does not seem like a feasible solution to unemployment. Most importantly, the UBI is hardly feasible from the economic perspective since it could be funded only through heavy taxation and cutting the other spheres of budget spending. Even if those issues were solved by implementation on a limited scale, the UBI would create a dangerous social gap between the employed and those who would be dropped out of the workforce. Finally, the implementation of the UBI is questionable from the ethical point of view since the necessary funding would likely demand cutting the social programs aimed at helping the most vulnerable groups of the population. Given these circumstances, the UBI looks like an impractical initiative that would harm the unemployed instead of aiding them. A more efficient alternative to UBI would be increased unemployment compensations and a broader implementation of measures dedicated to human capital development.

Works Cited

Congressional Budget Office. “The Federal Budget in Fiscal Year 2020: An Infographic.” Congressional Budget Office, Web.

Dermont, Clau, and David Weisstanner. “Automation and the Future of the Welfare State: Basic Income as a Response to Technological Change?” Political Research Exchange vol. 2, no. 1, 2020, pp. 1–12.

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Ford, Martin. Rise of the Robots: Technology and the Threat of a Jobless Future. Basic Books, 2015.

Kearney, Melissa S., and Magne Mogstad. “Universal Basic Income (UBI) as a Policy Response to Current Challenges.” Report, Aspen Institute, 2019, pp. 1–19.

McGaughey, Ewan. “Will Robots Automate Your Job Away? Full Employment, Basic Income, and Economic Democracy.” Centre for Business Research, University of Cambridge, Working Paper 496, 2018, pp. 1–34.

Pulkka, Ville-Veikko. “A Free Lunch with Robots – Can a Basic Income Stabilise the Digital Economy?” Transfer: European Review of Labour and Research vol. 23, no. 3, 2017, pp. 295–311.

Sage, Daniel, and Patrick Diamond. “Europe’s New Social Reality: The Case Against Universal Basic Income.” Foundation for European Progressive Studies, 2017, pp. 1–39.

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