This year at BIL San Francisco 2017, talks such as “When the Robots Don’t Work”, “Are Robots Trying to Kill Us?”, and “Why AI Works – The Epistemology of Deep Learning” take on a subject similar to presentations given at BIL Oakland 2016, for example, the “Will Robots Take Our Jobs? panel”
Julia Bossman argued that, given an explosion in robots and AI, there will be massive unemployment, with Timothy Roscoe Carter arguing that we need a basic income to protect people from such unemployment. Edward Miller questioned the assumption that AI will permanently replace human labor, instead arguing that AI will cause disruptions that temporarily displace workers as they attempt to provide their ‘comparative advantage’, referencing the classical economist David Ricardo.
Miller goes on to state that Ricardo’s Law of Comparative Advantage, demonstrating that even parties who are worse at producing everything (e.g. futuristic humans) will still be involved in the productive economy. This is true even if the other parties, in this case robots, are vastly better at producing everything.
Bolstering his point with an example, he said that there are even cases of de-automation especially in poor nations where labor is much cheaper. Miller went on to say that basic income will tend to increase people’s rent, such that the benefit provided by a basic income will be siphoned off by people who own high-value land in places like the San Francisco Bay Area. He cites a similar dynamic in the Bay Area where an increase in many people’s wages have simply driven up rent.
It was mentioned in the panel that humans in the future will likely not be separate from AI, leveraging it to augment their own intelligence as cyborgs, as opposed to a disembodied super-computer. Perhaps AI will not “take” our jobs because we will merge with them.
Andrés Gómez Emilsson questioned the panel’s assumption about what humans would even desire in a world with advanced AI, saying that such advancement would enable humans to fundamentally alter their own motivational systems, indeed human nature, not to mention our economic systems. This tied in with Miller’s statement about barring fantastical futuristic scenarios like in The Terminator, ones where robots literally try to exterminate humans, and in effect do a lot more than merely take our jobs. A more sober view is one in which land, natural resources, and other fundamental aspects of political economy persist, regardless of technological advancement. In such a scenario, It was argued that a land value tax would be the best way to fund a basic income because, as the basic income bids up rent, these higher land values would be continuously recollected via the tax to fund increasingly higher levels of basic income.
BIL: Oakland 2016 Recession Generation was an Earthsharing.org conference in Oakland, California on July 9th. Foresight Institute president Julia Bossmann presented an argument for moving toward a post-work society, and the changes both economic and social that would be required to achieve this.
“They have theoretically unlimited memory, they have a way faster speed of reading, they can find insights and facts from all across and then draw connections and find patterns. So now that we may have reached the limit in medical research – that one human mind may not be enough to figure it all out – having a machine mind may open the floodgates to finding out much more.”
Bossmann’s scenario of a post-work society presents significant economic challenges, with a disruption of millions of jobs across the professional spectrum. Truck drivers could be an early casualty, but many others earning an income by selling their time and labor stand to lose their current employment due to automation.
“How would a human even compete with someone who can drive for thousands of hours at no end and not ask for a salary?”, Bossmann says.
In general, a person’s income is derived either from time, or from ownership of assets like land and other property. Bossmann states that “once the time goes away, the only thing left is ownership. And we all know that ownership is not distributed in a way that all of us could just live on that alone; in fact, most of us need to sell our time to live”. A radical shift in how we think about ownership is required if society is to remain prosperous, Bossmann says.
As artificial intelligence progresses, those who own the valuable sites where A.I. research takes place, especially in Silicon Valley, will continue to become more disproportionately wealthy vis a vis the appreciating value of their land: rents they can charge, prices for which they can sell, etc. They will become wealthier not by doing the research and development themselves, but simply by owning valuable space in areas doing R&D. Regardless of Bossman’s predictions about the rate of A.I. progress and its replacement of human labor, a greater proportion of the wealth created will continue to go to owners of prime land.
Those who own prime locations already have a large advantage over wage earners, simply by their ever-appreciating real estate values. We have seen a huge explosion in labor-saving devices, wealth production, and wealth inequality in the last two centuries. These gains disproportionately go to the owners of property. So, there is already a need to share the returns from owning natural resources like land.
This need to redistribute the benefits of land ownership become even more obvious in Bossmann’s prediction of the future – where she assumes a lack of A.I. winters/ceilings, no comparable human intelligence augmentation, and where the Law of Comparative Advantage (between humans and robots) no longer holds. In such a scenario, obedient robots would simply produce enormous amounts of wealth, and this wealth would all go to those humans who own the natural resource inputs needed for A.I. The people who did not own land, or receive a dividend/basic income of some kind, would simply have no income.
Henry George, a prominent political economist and author from the late 19th century, argued that gains derived merely from the ownership of land and other natural resources should be considered the property of everyone, not just the title-holders. A system of land value taxation would be a pragmatic way of shifting the burden of raising public revenue from workers to landowners. It would be the obvious choice for funding a basic income that would protect people from unemployment now, and facilitate any kind of post-work society.
“Once we have figured out this dilemma, and we have machines that will do most of the work on the planet… we will look back and think that it was barbaric that people had to sell most of their living time on this planet, doing things they didn’t want to do,” Bossmann says. But reaching an economic consensus is not all that is required to reach a prosperous post-work society.
“Many of us define ourselves by our jobs, what we do for a living, how much money we make, all these things are important to so many of us. Are we willing to give up this kind of thinking for something better?”
Julia Bossmann is president of Foresight Institute, a think tank promoting transformative future technologies, and founder of Synthetic, a startup building A.I. of its own. Bossmann is a McKinsey Fellow, Singularity University GSP graduate and master of science in neuroscience and psychology. She lectures on Artificial Intelligence, hard technology, innovation, the future, and technology transforming society.
Photo: Tej3478 <a>Artificial Intelligence</a>. Licensed under Creative Commons.
WKZSU 90.1 FM Stanford University Radio Interviews EarthSharing.org
July 5th, 2016, Edward Miller and Jacob Shwartz-Lucas were invited onto Stanford University Radio to discuss an event they would organize in Oakland a few days later. The event was titled BIL Oakland 2016: The Recession Generation.
The discussion revolved around the event’s aim of helping young adults to navigate the challenges of living in our harsh economic climate and rapid technological disruption.
Jacob and Edward discussed their motivations for putting on the conference. This included explaining their backgrounds, and what changes they want to see in the world.
On a July night in 2009, Sophia Ramos and her two grandchildren pitched a tent on a family-owned patch of property in a rural area of Hawaii. The two boys were crying. These weren’t spoiled kids reluctant to go camping –they were homeless.
The Ramos family lost their home amid the mortgage foreclosure crisis that began in 2007. The story is a familiar one. Like so many homeowners’, the roots of Ramos’s troubles were in a loan she took out against the value of her home. She was, at the time, free of debt, having bought her family a modest house in Florida outright with the proceeds of the sale of her mother’s home back in Hawaii. Ramos, her three grandchildren, and her elderly parents shared the three-bedroom home. In 2004, Ramos took out a loan against the property to buy a lawn-care business to support the family. She was a hard worker and enjoyed mowing grass. Everything was going well until 2005, when driver pulled out in front of her minivan.
Ramos suffered a broken arm and other injuries, rendering her unable to work. Six months later, she fell behind on her mortgage payment. Bills piled up. Collections agencies started calling. Ramos was desperate. And then help came—in the form of another mortgage. Less than a year later, still unable to work and after months of financial struggle, Ramos took out yet another, much larger, loan. At this point, she owed $240,000. This may seem like an alarming amount of debt for someone with no job, but at the time, Ramos’s home was valued at around $400,000 and expected to keep gaining value at $40,000 a year. In that light, her loans seemed conservative. She just needed a little help until things turned around. It was December 2006, and Ramos’s financial world was about to collapse, along with that of the entire country.
Ramos’s plight is one of millions that followed similar trajectories in the mortgage foreclosure crisis. Last week, at Columbia University, I (Jacob) attended a screening of Rahman Bahrani’s thriller film 99 Homes, which dramatizes the human toll of the foreclosure crisis through the fictional story of Dennis Nash, an Orlando construction worker supporting his mother and son. Dennis falls behind on his mortgage payments when he becomes unable to find work in the construction industry. In the beginning of the film, Dennis pleads with a judge, explaining that the bank said it was trying to modify his mortgage. In the next scene, the Sheriff arrives and the family is forcibly evicted from their home. As the panicked family packs up everything they can in the few minutes they are given, Rick Carver, the real estate agent in charge of the eviction, drawls, “This ain’t your house anymore, son.”
Following the screening was a panel that included Nobel economist Joseph Stiglitz, whom I had the pleasure of meeting after the event. Dr. Stiglitz discussed the causes and conditions of the mortgage meltdown. From 2004 to 2006, housing prices skyrocketed in a bubble fueled by frenzied speculation and the availability of cheap loans. Like so many Americans, Ramos pulled funds from the rapidly growing equity in her home. In those two years, Americans extracted 1.5 trillion dollars from the value of their property. Just as Ramos did, a large portion of them did so through subprime loans. Subprime loans are loans made to risky borrowers, usually at high interest rates. Subprime loan brokers encouraged homeowners to borrow huge amounts of money against the speculative rise in the value of their homes–to pay off debts, improve their properties, to start businesses, or just to spend on luxuries such as vacations and new cars.
Keep in mind that to say people were speculating on “homes” is somewhat misleading. Often times, the lot a house is on is worth more when the structure is removed. This is because structures, like all physical assets, depreciate over time, while the location of the property appreciates, as it did rapidly in the years preceding the crash. So, it was really the land–or more precisely the locationof the home–that was being speculated on, not the home itself. We’ll talk about the importance of that later.
The loans for such land speculation came with variable interest rates that could double or triple, as well as large penalties for paying them off early. In many cases, the borrowers could not afford the loans, and the brokers knew it. Unscrupulous mortgage brokers had incentive to make bad loans, as they could simply take their hefty servicing fees and then sell the loans off to investment firms. Often they used fraud, including falsifying people’s incomes, to get the loans approved. Then, such loans were packaged with hundreds of others and sold and resold. A block of subprime loans might be owned by thousands of investors in mortgage-backed securities.
Beginning in 2007, the bottom fell out of the housing market and the economy tanked. As unemployment climbed, people defaulted on their mortgages, many of them subprime loans that they couldn’t afford in the first place. With housing prices on a steep decline, people could no longer sell their homes to pay off the debt. All too often, those homes were now worth less than what they owed.
This all became a self-perpetuating cycle as the value of mortgage-backed securities dropped, the economy crashed, and more and more people lost their jobs—especially those in the construction industry. As people struggled to make payments on their mortgages, it fell to the mortgage service companies (often banks) to deal with the avalanche of defaults, which cost them money to actively manage. They also saved on payroll by under-staffing the offices handling the defaults, often with under-qualified employees, leading to massive mismanagement of paperwork and wrongful foreclosures.
In 2009, the Obama administration launched the Home Affordable Modification Program, a $75 billion program meant to help homeowners avoid foreclosure by offering banks incentives to modify mortgages for borrowers who were in trouble. However, applications for loan modifications were egregiously mishandled by the loan servicers in the form of delays, errors, and lost paperwork. According to sworn statements by Bank of America employees, they dealt with the glut of paperwork by routinely denying applications en masse with made-up reasons such as missing documentation. Foreclosure proceedings went on in parallel with the mortgage modification process, meaning homeowners who qualified for the program lost their homes before they could be approved.
As this catastrophe unfolded, fingers pointed in all directions–mostly to “irresponsible” homeowners or “predatory” lenders–to cast blame. Hands were wrung and barrels of ink spilled by economists trying to explain just what went wrong and how we could prevent it in the future, including many reasonable proposals such as not lending money for land and avoiding the inflation of location values caused by artificially low interest rates. All of this, however, could have been prevented by a simple fiscal measure –taxing the value of land. Taxing land value would have stopped the bubble from inflating in the first place. This is because a strong land value tax would have reduced land’s selling price in the same way that our current low property taxes do to a small degree–by creating a liability on the part of the de facto owner, the holder of the deed or the bank that owns the mortgage, to regularly pay a tax. Think of it this way: the greater the tax you will have to pay for holding onto land, the less you will be willing to pay up front. Pay more now, pay less later. Pay less now, pay more later. For this reason and others, Dr. Stiglitz is a supporter of the land value tax as a means of keeping such bubbles from inflating in the first place.
“One of the most important but underappreciated ideas in economics is the Henry George principle of taxing the economic rent of land…” -Joseph Stiglitz
Behind all the statistics, terminology, and tangled interplay of economic mechanisms that caused the foreclosure crisis are the tales–each unique in the manner of snowflakes–of families whose worlds were turned upside down in their pursuit of the fabled “American Dream” that, in those two heady years of economic boom, seemed so vivid. In 99 Homes, Dennis and his family find themselves living in a motel filled with other families in like situations. Desperate to save them from this fate and get his house back, Dennis goes to work for Carver, the unscrupulous real estate agent who had evicted them. Under Carver’s direction, he starts by cleaning up foreclosed homes and stealing the appliances only to replace them–for a cut of Carver’s ill-gotten gains. In an ironic twist of fate, Dennis is groomed to carry out evictions himself. The morality play of the film unfolds as Dennis accepts handfuls of cash from Carver to show up to door after door and throw people just like him out of their homes.
In one scene, Carver places the blame for his decisions on the system. His father, he says, was “a sucker,” a construction worker who played by the rules but lost his home anyway. Carver is determined to “survive.” While we must hold the Carvers of the world morally accountable for their decisions, we also need to turn a critical eye to the system that pushes them toward such despicable tactics in the first place. If people can make more money speculating on the rising value of land than they can working an honest job, then we have a problem much deeper than a group of greedy bankers.
We need to attack the root of the problem–taxes on wages and subsidies for owning land. In this drama, we are the serfs, and the financial institutions are acting as lords of the manor. We pay taxes on our earnings and pay the rest to them in the form of rent and mortgages. But who rightfully owns the land? We the people, or the oligarchs? By forcing them to pay a tax on land value, we can take back our earnings and fix the root of the problem.
Critics of welfare programs charge that support from the government makes people less inclined to go out and find work. They cite examples of the extraordinary determination of some poor people to better themselves. But isn’t there a basic fallacy in that? If there are fewer available jobs than there are workers seeking them, won’t the success of the ambitious few just increase the competitive pressure on everyone else?
Idle Jack and Busy Bert
Idle Jack is the hate figure of the welfare system. No matter how low the unemployment benefit is, he would rather take it than work. This really bothers Busy Bert. He is looking for a good job, but in the meantime has taken a boring minimum wage one instead. There do not seem to be lots of good jobs around. Once Bert pays his fares and his rent, he does not feel that he is much better off than Idle Jack.
Bert struggles out of bed — Jack lies in. Bert goes on a long horrible commute — Jack only has to go to his local jobcentre and that not every day. Bert has to put up with boring work and a boss who does not realise Bert’s true potential. Bert has busily taken work-related courses so he can get a better job, yet here he still is, stacking crates.
It isn’t good enough. In his break, Bert reads his favourite paper. It tells him all about Idle Jack and how much he is getting from the state and how little he deserves it. Surely Bert should be better off than Jack? If he can’t be better off, then at least Jack should be worse off. He too should have a taste of worker hell. Bert’s favourite paper is all for workfare.
If Bert lived in a cooperative society instead of a competitive one, then making Jack work more would mean Bert worked less. “Come on, Comrade Jack,” he could cry. “From each according to his ability, to each according to his needs! The less work you do, the more the rest of us have to put in. Get out of bed and get stuck in.” This is the way Bert feels things work.
However, in a competitive society, that is not how things work. If everybody were as desperate to get a job as Bert, then more jobs could pay minimum wage and still get workers. If somebody even busier wants Bert’s job, that does not mean that they can share the work as in the cooperative society. It means that unless Bert works harder he could find himself out on his ear and replaced by an even more exploited wage slave. On the other hand, if ever an employer were so short of labour that they wanted to hire Idle Jack, they would have to improve pay or conditions or both, because Jack does not really want a job.
Cooperative society: Jack working hard helps Bert, Jack being idle harms Bert. Competitive society: Jack working hard hurts Bert, Jack being idle helps Bert.
Bert does not see this. He does not connect making Jack desperate to get a job with the precarity of his own position at work. He just feels that if he could wipe the smile off Jack’s idle face, the world would be a better place. Jack must have more duties and restrictions. The benefits system is therefore designed to bring about the employment of Idle Jack, whom nobody wants to hire.
If only Busy Bert realised how much of the firm’s assets were being tied up in a nice pension package for his employer, Wealthy Willie! He might then realise how near he is to getting the same deal as Idle Jack. The dreadful day arrives, the firm fails, and Bert is unemployed. He has been lining a pit with spikes that he himself is about to fall into.
Bert feels that the system that is designed to thwart Idle Jack won’t thwart him, but it will. Bert will try to get part time work if he can’t get full time work. The system will penalise part time work, because it might be Idle Jack’s route out of full time work. Because the benefits system does not allow for expenses, Bert’s part time work might leave him worse off than Jack, who does none. Bert will try to take another work related course. The system will restrict this, because it might be Idle Jack’s way of avoiding a proper job. At least they will let me do voluntary work and get some experience, thinks Bert. This too will be restricted. The system may even stop Bert doing voluntary voluntary work and force him to do compulsory voluntary work instead.
As Bert struggles and argues with the system, he may spot Wealthy Willie as he floats away to safety on his yacht. Willie has been organising a comfortable escape route from the failing firm while Bert had his envious eyes on Jack.
And if there were a Citizen’s Income instead? Jack could idle away in peace. But Bert would also have more options. He could hold out for a better job or take a low paid one and strike for more pay. He could train or work part time more easily. He could devote more time to voluntary work if he liked. He could consider having his own business, because he would have something to live on while starting it up. And, as long as he worked for pay, even if part time, Bert would be better off than Jack, because his pay would not be clawed back by the benefits system but added to his CI.
The terror that people will choose to be idle will influence a lot of people against CI. But they do not realise that the system that permits idleness also permits enterprise. Certainly, destitute people can be very enterprising, but their enterprise is more likely to take the form of cleaning a windscreen and holding out a hopeful palm than of developing a hot new invention for the market.
So — which is best? A system that claims to punish the idle but sometimes hits the deserving as well? Or a system that gives something to everybody and lets them make their own choices? — Diana E. Forrest
Let us know what you think is the best way to pay for a citizen’s income in the comment section below.