The Answer to Automation Might Already Exist — Part 2
More details on the Alternative Social Guarantee, an ambitious welfare reform idea among many others
The Alternative Social Guarantee (ASG), presented in an earlier article, is a two-level safety net idea consisting of a combination of Universal Basic Income (UBI) as a first level, and a Job Guarantee (JG) as a second one. This reform idea is a potentially appropriate measure to deal with growing inequalities and forthcoming mass unemployment resulting from automation. One of the article’s leading suggestions was that automation could not and should not be fought or slowed down on a general level, but instead used to finance and update welfare systems to enable societies to embrace the future. The ASG would constitute a parallel social economy adjacent to the market economy, offering people the alternative to move from one side to another. The commentary was relatively short, and thus logically lacking details. Several readers asked stimulating questions, and I also encountered a few misunderstandings on the concept of ASG as a whole. To answer some of those inquiries and avoid misinterpretations, extra details on the ASG and how it differs from alternative reform options will be delivered in this writing piece.
Assumptions leading to the ASG
First of all, the ASG is undoubtedly not the only viable welfare reform option for the future. It is not a criticism of UBI or a JG, even though it ambitions to address their flaws while taking the best of both ideas. Presumptions have to be made to understand what lead to this idea. The first assumption behind the ASG is that more jobs will likely be destroyed than created because of automation and that the jobs created thanks to it won’t necessarily match the skills of the unemployed. Without this assumption of expected mass unemployment, the ASG does not make as much sense as UBI, a less bureaucratic solution. The second supposition is that automation cannot and should not be slowed down, but preferably used to update welfare systems to be ready to face mass unemployment and inequalities growing as a repercussion.
Why would the people running the market economy want to share the fruits of gained productivity with the society’s side that will fall out of the system if automation has its expected results? If the previous assumptions hold and a growth in unemployment rates is expected, it might be in everyone’s favor to keep people active and working for the common good while getting paid for it. Ascending inequalities and record earnings for the elite could potentially cause revolts, sequestrations, or even worse outcomes that could and should be avoided. Political and economic elites should be ready to sacrifice some gains from eventually increased productivity to keep the societies in harmony.
How the ASG would function
The ASG could be described as a more complete, social, and bureaucratic version of UBI, as it is fundamentally UBI connected with a JG. Its UBI part would concern the whole adult population of countries implementing it, while its JG side would only relate to the part of the population that needs and accepts a guaranteed job. This second part of the population would reasonably be much smaller than the part receiving UBI, making UBI the preeminent component of the ASG.
The jobs provided through the ASG or under a JG could be administered depending on localized needs, and transparently, thanks to new technologies such as blockchain. It could be imagined that the guaranteed jobs would be part-time, the number of hours worked variable, and the tasks changing ones. A typical assessment and misconception of JG programs affirms that people participating in guaranteed work would end up digging and filling up holes, which genuinely does not have to be the case. Another one professes that people would become lazy, and productivity would dive because of the protected side of work in such a system. Productivity would likely be lower than in the private sector, where there is no guarantee of keeping a job. Still, the assumption is only partially valid, as people taking part in guaranteed jobs could get fired for most of the same reasons as in today’s jobs, except for economic reasons. Thoughts would have to be given on how to handle people falling out of guaranteed jobs for behavioral reasons. For instance, there could be some system with the right to a certain amount of warnings before being thrown out of the guaranteed work for a certain amount of time. It is reasonable to expect people to act responsibly and behave according to the rules. If someone fell out of the program indefinitely despite being warned several times, that person would have to survive on UBI alone or find a job in the private sector. This warning system would ensure an acceptable level of productivity on the JG side of the ASG. The code of conduct would, by all means, have to be considered more thoroughly.
The ASG could achieve great things for humanity. The non-exhaustive list of low-skilled work that could be handed out includes maintaining public infrastructure, cleaning the environment, planting trees to improve air quality, building dams to secure areas facing global warming-related high water risks, taking seniors for a walk, cooking for homeless people, securing troubled neighborhoods through organized neighborhood watch and many more. Those are all projects requiring a large amount of low-skilled labor, which would benefit societies while helping avoid impending disasters, which has financial value despite not bringing direct revenue. For jobs that require a few more skills, short paid training could be included in the ASG.
Work given through the ASG or a JG could also bring revenue to the state, hence financing the program’s share. Those jobs could include ones from heavily regulated and/or strategic industries. The number of countries allowing medical and/or recreational marijuana use seems to keep increasing over the years. States deciding to follow that path could control each step of its production and supply with workers participating in guaranteed jobs. States could also choose to produce items or farm in specific cases that would never be pursued by the private sector because of the absence of financial sense behind them, but are strategically critical to the state’s sovereignty. Furthermore, if all of these suggestions are not enough, and people still dig up holes because of a lack of available projects, then the number of hours of work given through the program can be decreased. Such a structure could be made flexible.
Answers on feedback and questions on the ASG
A common criticism of a JG program, and the ASG is that the goal of life should not be to work and that people could live on UBI while spending their time the way they want to. Despite being attractive, this belief seems a bit far-fetched in the short-term, work having a significant role in people’s lives and identities. In the case of this ideology prevailing in the long-run, the ASG could be somewhat of a transition between the current state of working societies and future societies where a large part of society does not work for X reason. However, it is conceivable that a large share of unemployed people would want a paid activity in today’s societies. A realist level of UBI or other welfare programs would not change that in the short-term. The ASG could thus potentially be an arrangement that would serve as a transition between today’s welfare schemes and societies with high enough UBI combined with a system of volunteering, instead of a lower UBI and paid guaranteed work.
The last example of an assertion made by readers is that the private sector is better at creating jobs than the public sector and better at matching workers to them. The first article on the ASG does not state the opposite. The private sector tends to be more efficient than the public sector in many ways. Still, the ASG is not about taking that role away from the private sector, or about making the public sector compete with it on creating jobs and matching workers to them. The JG part of the ASG would preferably be there to fill the holes left by the private sector and by high-skilled public sector jobs by matching people that did not find work with guaranteed jobs.
The ASG vs. alternative reform options
The ASG is, in many ways, very similar to UBI, as it mostly consists of it. UBI gives people freedom while incentivizing them to follow any projects they want to, but it does not solve involuntary unemployment. One of UBI’s key upsides is that it simplifies bureaucracy, and can conceivably lead to cuts and saving in the public administration of welfare programs. This would also be the case for the UBI part of the ASG. Still, the ASG’s JG side has the drawback of requiring new administration to organize the guaranteed work, meaning that the number of public workers and the administration’s cost would not necessarily decrease, but rather be directed at different tasks. The ASG thus solves problems that UBI does not, but is more complicated in terms of organization.
Another reform that can be a serious alternative to the ASG is the JG. A JG assures a job to anyone that wants one and reaches for a society without involuntary unemployment. The ASG has a JG in it, and in this manner, boasts the same advantages. A JG sets a floor price for labor below which no one would want to work, and that floor price would be equal to the salary earned through guaranteed work. People taking part in a JG program would only be paid if working, producing public goods and services. In such a system, people can be fired for not showing up or threatening others, but as stated earlier, cannot be let go for economic reasons. In that sense, a JG and thus the ASG would have some common traits with workhouses in England and Wales, where discipline was strictly enforced to keep workers behaving and life was intended to be arduous enough to ensure that only those in need would join.
Nonetheless, a JG is not perfect. It is more complicated than UBI in terms of administration and requires many other welfare systems to stay in place, as it does not provide those who cannot participate in the guaranteed work. If someone wants to start a company, become an artist, or is physically or mentally unable to work, they should not be penalized on welfare protection. The ASG and UBI take care of that part better than a JG, aiming to universally solve poverty, while a JG would only do it for those accepting the job offered by the government.
The life account is the last alternative model put forward in this article, despite it being far less known as UBI and the JG. It is influenced by the Singaporean model, based on saving, and has been advocated by Libera members, a Finnish independent liberal think tank. Described the following way in their 2013 report written in collaboration with the Swedish Reforminstitutet, the life account foresees a loan-based social security system, in which records are kept of the charges paid and benefits received over one’s lifetime. Benefits are debited to one’s own account and if the balance is not sufficient to cover the cost, the state will lend the missing amount. If the account balance is positive at the end of the account lifecycle, the account holder will keep the amount. Any negative balance will be written off. The life account permits more flexible planning of the personal economy in the various phases of life and the withdrawal of benefits when necessary. A needs assessment will be increasingly assumed by individuals themselves, and the state will step in only when assistance is required. At present, a significant part of income transfers takes place within the lifecycle of the one and the same person instead of between the lifecycles of different people. With the life account, some of the bureaucracy resulting from this unnecessary shuffling of money will be avoided. Lepomäki, an advocate of the life account, is a member of the Finnish Parliament and one of the most followed liberal ideologists in Finland. The life account has the advantage of making people accountable for their activities by keeping count, but as UBI, it does not solve the problem of involuntary unemployment. Placing too much responsibility on citizens over their welfare could also be hazardous. Nevertheless, the life account stays a fascinating idea with the capacity to compete with reforms such as UBI, and I plan to write a more detailed article on it later on.
The ASG has its share of flaws.
First of all, as stated earlier, UBI helps to make cuts in public administration and simplify bureaucracy in general. The UBI part of the ASG would do the same, but the JG part of it would increase bureaucracy at the same time. One risk involved with having a welfare state so developed that it would provide both UBI and a JG to the citizens and legal residents of a country is the potential decrease in voluntary work, charity, community watch, and so on as a consequence. This could happen as an aftereffect of workers on the ASG taking care of activities that used to be taken care of voluntarily.
The ASG would also possibly create stigmas by dividing society into two. On one side, there would be those working in the private sector and high-skilled public sector jobs, and on the other side, people working on guaranteed jobs, which would at least partially be financed by the first group.
Conclusion
The ASG is not a welfare reform for today. It is not a perfect plan, but a long-term concept, using the assumption of a future made of growing inequalities and mass unemployment. The fundamental motivation behind this idea is to make the debate of ideas advance on the questions of UBI and alternative reforms. Finally, I want to thank the people who gave feedback and asked questions on my previous article, enabling them to assess questions that were not covered in the first part.
