Here’s a question for you. Assume that over a forty-five-year period, you deliberately end policies of full employment, you bust unions, suppress wages, and on top of that, discourage a university education through high tuition costs and student loan debt. Then, you endlessly badger the public with the false notion that the central government has no money of its own, that it needs taxpayer money to spend, that it borrows money from other countries, that only the so-called “private-sector” can create useful, productive jobs, and then you sum up by warning the population that there is no alternative.
What is the result?
A large pool of low-skilled, apathetic, poorly-educated labourers, and a population so propagandised by “free-market” nonsense that it will believe there is almost no hope in the face of automation. Therefore, a UBI is their only salvation. Nonsense. Automation is classic fear-mongering to make a UBI appear necessary.
For the automation argument to be valid, the UBI supporter must first prove conclusively that only the so-called “private-sector” can provide useful, productive jobs, which he or she cannot do. “The robots are coming!” is an invalid argument for two simple reasons. The first is that automation is not a production or an unemployment question, rather, it is always a productivity question.
Productivity is another word for “performance”. It examines how efficiently the resources are being used to create goods and services. Automation increases efficiency (productivity) in the production process for many reasons; one major reason being that the same robots can work 24 hours per day without stopping, except for occasional maintenance. Hence, on the individual level of the economy, some businesses will sack workers, and it is here where the fear tactics do their dirty work.
The size of the central government’s budget deficit is what matters
However, there is something that automation fear-mongers either know and don’t talk about, or do not understand, and that is when we are talking about the rate of unemployment, we are talking about the whole economy, not some individual bits of it, which leads us to reason two. Referring back to Part IV, we discovered that,
“The central point of any economy is the central government itself. Because the central government is the currency-issuing and regulatory authority, it creates the conditions that gives rise to markets which operate based on its currency. So, markets are a creation of the central government. All things “private-sector” are the end result of the decisions and actions of the central government, whether directly or indirectly.”
So, the unemployment rate is not determined by the level of automation, nor by any business, nor by market forces, nor by the so-called “private-sector”. As I mentioned in Part II, the unemployment rate is determined by the size of the central government’s budget deficit.
The central government controls the unemployment rate through its deficit spending. This is a fact of modern monetary economics in the UK, Australia, and the US, and it isn’t subject to opinion. If the central government’s budget deficit is too low, unemployment is the result. If large enough to support full employment, then full employment is the result. And job creation is not a private-sector phenomenon.
We are not at the whim and mercy of business to provide us with jobs and our daily bread. That is a fantasy. The economy doesn’t work that way. Without government spending first, there is no private-sector net savings, there is no consumer spending, there is no business income, and there are no jobs. The central government injects the money, and businesses and consumers play with it. It’s that simple. Businesses might come up with ideas. So what? It is the central government’s fiscal policy that funds the entire economy.
How the central government deploys and redeploys resources
One of the jobs of the currency-issuing central government is to deploy and redeploy real resources – things like land, factories, water, and human labour – through its fiscal policy to achieve its economic and social agenda. That is what fiscal policy is. By spending and taxing, the central government moves resources from one sector of the economy to another, or from an outdated pursuit to a new one, like pieces on a chessboard. The cigarette tax can serve as a basic demonstration.
Most think that cigarettes are highly-taxed to pay for something. No. The purpose is to discourage a certain behaviour that society feels is unacceptable. The tax modifies behaviour, and that’s all it does. It causes people to stop doing one thing, and to start doing another. The same applies to business.
The central government offers 0% tax rates for five years, and large subsidy payments to corporations if they stop drilling for oil, and retool for sustainable energy. Should they refuse, they will face massive tax rises. Several corporations take the offer. The energy sector’s behaviour has now been modified. Any oil workers who’ve lost their jobs can now be redeployed to brand new green energy jobs, and other new jobs related to it; jobs that didn’t exist beforehand. It’s called “job creation”.
In the same way, the currency issuer (the central government) uses its fiscal policy to redeploy workers that are displaced by automation. It always has done, and it always will.
Let’s look at what happened to the workforce over time
Some types of jobs must become obsolete as we become more sophisticated and advanced. As an example, consider farming. We’ve gone from many farmers in the 1800’s, to very few farmers today. Obviously, automation has had a hand in agriculture over the past century.
So, what happened to the workforce over that time? As Modern Monetary Theory (MMT) founder, Warren Mosler, pointed out, most people were farmers 200 years ago. Few people farm today. So, if arguments that automation will end the need for human labour were true, why hasn’t the unemployment rate been at over 90% for the last two centuries?
Automation has wiped out:
– Telegraph jobs
– Telegram jobs
– Switchboard operator jobs
– Lamplighter jobs
– Ice delivery and ice breaker jobs
– Linotype jobs
to mention just a few, yet is the unemployment rate today near 99%? Of course not. Obviously, there are an immense number of jobs today and millions of people doing those jobs, and in the future, the situation will be no different. That is why automation arguments are puerile nonsense.
Predicting the jobs of the future?
Face it, you do not know what a future economy will look like. Therefore, since you are not Nostradamus, you have absolutely no clue as to what types of jobs will exist in a future economy, nor do you know what humans will be doing. Do you really think Billy the Kid was sitting around thinking one day and said, “Ya know, about 150 years or so from now, there’s gonna be this thing called an iPhone, and manufacturing jobs will be created to build ‘em. All of those telegraph jobs for people skilled in Morse Code will be gone. Watch and see”?
If people wish to argue that we are still living with the adverse effects from the loss of telegraph operators, so be it. But, they’re only making themselves look silly.
“Very important people” want you to fear automation because they have a vested interest in you being afraid. If you’re afraid, they can end welfare and benefits by giving you a UBI that is doomed to fail, but will result in a massive upward transfer of income and wealth to themselves. Also, wage suppression is another reason, and I will get to that later in the series. But, I say to you that automation should not be feared at all. In fact, you should welcome it. It will free up labour from drudgery and outdated jobs, allowing us to do great things that we dream of doing.
Automation allows a portion of human labour to stop doing one thing and start doing something more worthwhile: Engaging in pursuits, both private and public purpose, that advance society and humanity.
Next Up: Part VI – Social Considerations of a UBI