Guaranteed minimum income? An interesting concept by economist Andrew McAfee
I recently watched a documentary “Inequality for all” where Robert Reich, an expert on economics, a professor of public policy at UC Berkeley, an author of 11 books and a labor secretary in Clinton Administration; talks about inequality in income and how it was created. He also talks about the future consequences of this inequality, especially for democracy. A very eye-opening movie of how there is so much inequality and what policies have caused this inequality.
I also came across this infographic from Avinash Kaushik’s profile on LinkedIn that shows the same inequality, visually. Unbelievable, that anyone making $5 million/year is listed in the bottom 99.99% and you have to use a bubble to show that salary range. In this post Avinash talks about leveling the playing field. Similarly, in the documentary there are some solutions that are provided by Robert Reich and not having read his books, I can still assume that there will be great many solutions detailed in these books. And, these solutions may also talk about leveling the playing field.
The playing field may get leveled but the march of technology, somehow makes me feel that the playing field is not going to be leveled soon. One simple reason is that technology is creating wealth at a faster pace than was possible before. On top of that it is with lesser labor. This is the double whammy of the new machine age. Less labor creating massive wealth in a shorter period of time. I heard a creative solution in one of the Ted talks given by Andrew McAfee, an economist.
It is guaranteed minimum income and here is what Andrew McAfee says in his own words.
But over the longer term, if we are moving into an economy that’s heavy on technology and light on labor,and we are, then we have to consider some more radical interventions, for example, something like a guaranteed minimum income. Now, that’s probably making some folk in this room uncomfortable,because that idea is associated with the extreme left wing and with fairly radical schemes for redistributing wealth. I did a little bit of research on this notion, and it might calm some folk down to know that the idea of a net guaranteed minimum income has been championed by those frothing-at-the-mouth socialists Friedrich Hayek, Richard Nixon and Milton Friedman. And if you find yourself worried that something like a guaranteed income is going to stifle our drive to succeed and make us kind of complacent, you might be interested to know that social mobility, one of the things we really pride ourselves on in the United States, is now lower than it is in the northern European countries that have these very generous social safety nets. So the economic playbook is actually pretty straightforward.
Check it out for yourself on Ted Talks and since this has piqued my interest, I will do a little bit more research and write another post with more details. In the meantime, what do you think of this idea that if there is abundance in future because of technological advances then is it a viable solution to guarantee a minimum income so that people don’t take to streets?
Thanks for reading and have a great day!