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Basic Income: A Done Deal?

The First World War speeded up the emancipation of women; the Second World War led to the creation of welfare states in all the industrialised countries. What great change will the coronavirus crisis bring us?

This crisis has not yet killed tens of millions, and it probably never will. No great empires have fallen, and no human villain can be blamed for the problem. Yet there will probably be changes as great as those after the two world wars.

One great change will be in the pace of automation. As Microsoft CEO Satya Nadella put it, we have seen “two years’ worth of digital transformation in two weeks,” as tens of millions of people stayed at home and worked online. A great many of them will not go back to working in an office when the threat of the coronavirus recedes.

So does five weeks of lock-down equal five years’ worth of digital transformation? Probably yes. Last week Twitter became the first major Silicon Valley company to publicly accept this new reality, announcing that “If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen.”

But for the considerably larger number of people whose occupations do not allow them to work at home, the news is not so good. For them, the digital transformation means automation and unemployment. In a recent survey of company executives in 45 countries,
auditors Ernst and Young found that 41% of them are investing in greater automation of their work processes.

More will follow. The reason that the service industries (apart from retail sales) have largely escaped automation so far is that the new technology is expensive, disruptive, and annoys the customers, not that it doesn’t exist. But now the crisis is forcing the customers to get used to that kind of service, at the same time that the owners and managers are realising what a nuisance it is to depend on human employees.

The process that has already destroyed the assembly lines (and given us Donald Trump) will continue through the workforce until around half the existing jobs have been destroyed, as Carl Benedikt Frey and Michael Osborne of Oxford University predicted in their famous 2013 study. Their prediction was for the year 2033, but the coronavirus may be bringing that date forward.

However, the other great change wrought by the coronavirus works in the opposite direction. When unemployment suddenly leapt to 30% as lock-downs spread across the world, we were suddenly confronted with a working model of that future – and the social and economic changes that might deal with the mass destruction of jobs by automation are actually being road-tested right now.

In some countries, like the United States, it is real unemployment, only slightly alleviated by hand-outs like a $1,200 cheque signed by Trump. In most richer countries, it is some form of ‘furlough’, with the government paying 75%-85% of people’s wages, up to a limit that is high enough to let them live in modest comfort, until their jobs resume in two or three or four months’ time.

Either way, it does concentrate people’s minds, rather like the prospect of being hanged in the morning. A lot of them will notice a) that this is the level of unemployment that already lies in wait for them down the road; and b) that there is still enough money around to keep them going anyway. Or, in the case of the US, that there could be if the government was willing to try.

It’s a small step from there to the concept of a guaranteed basic income as the long-term solution for a society where half the jobs have been destroyed by automation but productivity is higher than ever.

There are, of course, a number of codicils to this conclusion. The current levels of income support could not be sustained long-term without a significantly higher rate of tax. Widespread job-sharing would be needed to avoid creating a permanent under-class of the unemployed and to keep people connected. There are no magic bullets.

We were already sleep-walking towards this level of unemployment anyway, just over a much longer period. At least now we’re awake to the fact that such things can happen, and we know that they can be managed.

More or less normal service will probably be resumed in a few months, or at worst in a year or so, but automation is getting a big boost and from now on it will be an ever-present companion. But the experience we are going through right now makes it a lot less scary.
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To shorten to 700 words, omit paragraphs 4. (“So does…happen”)

Half the Jobs Are Going

“The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is, to our minds, faintly ridiculous,” said one of the judges on the employment tribunal. So the tribunal ruled that Uber’s 30,000 drivers in London were actually employees, and therefore entitled to be paid the minimum wage, to be given sick pay, even to have paid holidays.

Uber promptly appealed the ruling, because it would wreck its business model in the United Kingdom and, if the example spreads, worldwide. But it was only a temporary victory for workers’ rights, because just as the real jobs have been replaced by fake “freelance” jobs like Uber that strip people of their old legal protections, so the “freelance” driving gigs will soon be replaced by – no jobs at all.

The first self-driving cars are already on the roads. Automation, in the form of artificial intelligence, will probably abolish almost all the driving jobs in the next twenty years. In Britain alone, that means 400,000 jobs driving big trucks and almost 300,000 licensed taxi drivers. (The jobs driving delivery vans will last a little longer.)

Three-quarters of a million jobs gone, say, and nothing plausible coming down the road to replace them. Scale it up to the size of the United States, and that’s around 4 million more American jobs gone, not to foreign competition and “outsourcing” but just to technological change. It’s harder to replace drivers than bank tellers – “every ATM is the ghost of three bank tellers” – but it just takes a little longer to develop the right software.

There is a message here for all the angry people who voted for Brexit in Britain, who will vote for Donald Trump next week in the United States, who will vote for Marine Le Pen and the National Front in France next April. They are angry because the secure jobs and decent living standards they enjoyed in the latter half of the 20th century are gone. Something must be done about it, but the jobs are not coming back.

The newly insecure millions blame “globalisation” and the export of manufacturing jobs to lower-wage economies overseas for their plight, and in the early days that was indeed what killed most of the jobs. This is why they cheer for Donald Trump when he promises 40 percent tariffs on imported goods and the end of free trade deals like the North American Free Trade Agreement. They hope that he’ll bring the jobs home.

If he wins, he will destroy the Mexican economy, cause immense collateral damage to the Canadian economy, and trigger a full-scale trade war with China, but there is still no hope that those lost jobs will ever come home again. There might be more manufacturing in the United States, but automation would still ensure that most of the old jobs were eliminated. As they will one day be eliminated in their new homes overseas too.

This is a global economic transformation comparable to the industrial revolution, when entire populations went from overwhelmingly rural to overwhelmingly urban in only two generations. This time the transformation is from a full-employment economy to an economy of abundance that only requires a fraction of the population to work.

A 2013 study by Oxford University economists Carl Frey and Michael Osborne concluded that 47 percent of American jobs are likely to be destroyed by automation in the next 20 years. That’s change so big and so fast that people can’t believe it’s happening, and so they prefer to focus on something like out-sourcing that might be fixed by politics.

The industrial revolution was an angry, turbulent time, with urban uprisings and class warfare. We’ll be lucky if the damage this time is limited to demagogues like Donald Trump, who pander to the fear and anger of the newly displaced – and not just the displaced of the old working class, but the growing numbers of middle-class people who are also being displaced by machines.

They are not “right-wing” in the traditional sense, although many have become more socially conservative and some openly racist as their panic rises. “Populist” is a much better word: they hate the changes and the “elites” who seem untouched by them, and they want their old jobs and their self-respect back. But the old jobs are not coming back, and even populist politics cannot resurrect them.

Besides, most of them actually hated their jobs, from which they were only free for two weeks (the US and Japan) or at most five weeks (Europe) a year. The real task will be to find ways of providing a majority of our fellow-citizens with money and self-respect without those jobs. Some form of Guaranteed Minimum Income is probably the answer, but we have barely got round to asking the right question yet.

This is not a disaster; it’s a process. Last time it took over a century of mass misery and occasional mass bloodshed to get through it, but at the end most people were living much longer, healthier, more interesting lives than their peasant ancestors. We should try to do it a lot better and quicker this time.
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To shorten to 725 words, omit paragraphs 6 and 7. (“The newly…too”)

Supervolcanoes

6 January 2014

Supervolcanoes: Another Thing to Worry About

By Gwynne Dyer

The good thing about volcanoes is that you know where they are. If you don’t want to get hurt, just stay away from them. The bad thing about supervolcanoes is that you may know where they are, but there’s no getting away from them. They only blow up very rarely, but when they do, the whole world is affected. They can cover an entire continent with ash, and lower temperatures sharply worldwide for years.

“This is something that, as a species, we will eventually have to deal with. It will happen in future,” said Dr Wim Malfait of ETH Zurich (the Swiss Federal institute of Technology) , lead author of a recent paper in “Nature Geoscience” that says supervolcano eruptions don’t even need an earthquake as a trigger. “You could compare it to an asteroid impact,” he says. “The risk at any given time is small, but when it happens the consequences will be catastrophic.”

I know you already have enough to worry about, what with climate change and asteroid strikes and the like, but I’m afraid there’s more.

Volcanoes and supervolcanoes both involve magma (molten rock deep underground) that breaks through to the surface, but in practice they are quite different. Volcanoes gradually build themselves into mountains by repeated, relatively modest eruptions of lava. Supervolcanoes are a single massive explosion of magma rising to the surface over a huge area, and blasting at least a thousand cubic km. of ash into the atmosphere.

How massive? The largest recent volcanic eruption was Mount Pinatubo in the Philippines, which blew about ten cubic km. of ash and gas into the upper atmosphere in 1991. The result was a 0.4 degree C drop in average global temperature for a year or so. But the eruption of the Yellowstone supervolcano 640,000 years ago was a hundred times as big.

It covered the entire North American continent with ash – and just like an asteroid strike, it threw massive amounts of dust and ash into the stratosphere, where it stayed for years, blocking out much of the sunlight. (It doesn’t rain in the stratosphere, so the debris stays there for a long time.) As a result the average global temperature fell by as much as 10 degrees C for a number of years.

It was temporary, but while it lasted there was a steep fall in the amount of plant material growing on the planet, and a corresponding collapse in animal populations as well. Not mass extinctions, so far as we can tell, and fairly soon the plant and animal species repopulated their former habitats, but it certainly spoiled the party for the equivalent of several human generations.

Homo sapiens was not around 640,000 years ago, but people like us certainly were around when another supervolcano, Toba in northern Sumatra, blew about 73,000 years ago. The event has been tentatively linked with a “bottleneck” in human evolution at that time in which, according to some genetic studies, the human population was squeezed down to only around 1,000 people.

This hypothesis has been challenged by a recent study of the sediments in Lake Malawi by an Oxford University-led team. They did not find any layer in the sediments with much reduced vegetation, which you would expect to see if there were a long-lasting cooling of the climate. This is puzzling, since Toba was the biggest supervolcanic blast in 2.5 million years: it boosted two to three times as much dust and ash into the air as the Yellowstone eruption.

But only a couple of years of severely diminished sunlight would still cause catastrophic population losses in both the plant and the animal kingdoms. Even a relatively short “volcanic winter” would be a huge catastrophe for human beings.

How many people would die if such a catastrophe happened now? It is unlikely that even half of the world’s 7 billion people would survive two or three years of severe hunger, and civilisation itself would take a terrible beating. Nor is there anything useful you can do to prepare for such a catastrophe, unless you are able to stockpile two or three years’ worth of food for the entire world.

At the moment, our global food reserve will feed the population for only three or four months, so that is not likely to happen. If it does not, then we just have to hope that the calamity doesn’t happen – knowing that we probably will not have much warning if it does.

What Dr Malfait’s team discovered is that the detonation of a supervolcano is entirely dependent on the temperature of the liquid rock in the underground chamber. As it gets hotter, it gets less dense than the solid rock around it. At this point, it will behave just like an air-filled balloon or football that is held underwater, trying to pop up to the surface.

Eventually, the magma forces its way to the surface over an area of hundreds of square kilometres, expands and explodes. On average, such an explosion only happens once every hundred thousand years, but in practice it could happen at any time, with as little as a few weeks warning. Just thought you’d like to know. Sleep well.

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To shorten to 725 words, omit paragraphs 8, 9 and 10. (“Homo…beings”)

 

Gwynne Dyer is an independent journalist whose articles are published in 45 countries.