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When The World Changed – Part II

By Adrian Dore. Originally published at ValueWalk.

Burns Funding Top ten Long-term bond funds

This is part two and three of a multi-part series on When The World Changed.

Universal Incomes And Social Credits

John, understandably, is deeply upset with himself. His career has evaporated in front of him, and now he faces a bleak future. Of course, he should have seen it coming. He did see it coming. He saw all the signs around him but failed to act soon enough.

When he first went to university, activist groups were calling for radical social reform. Among their demands was the need for a universal income and a social credit system. According to them, they foresaw that artificial intelligence and robots would decimate the labour market. They predicted the polarisation of the labour market. This meant that a few elites would be employed in research and development work, because computers weren’t capable of performing their jobs. The only other employment would be in low-level jobs not worth automating. The rest of us would be out of work. Work could only be found on the extremes, or opposite poles of the labour market.

The huge unemployed masses would need an income. A universal income would be paid to all adults to meet their needs. However, income is only part of the employment issue. We work to earn, but we also work to provide purpose and meaning to our life. Work gives us a sense of pride in ourselves. Without providing for this, we have a social problem on our hands as big as the lack of income. Hence the idea of the social credit system. The system encourages people to seek opportunities to contribute to their community by providing their time and skills to address problems or opportunities within their community. Social credit schemes existed in the early ’20s. People or groups would post their requirements online, to which somebody would respond and earn social credits to complete the task. The idea was to upscale this and have it managed by a government body. Social credits could then be bartered or exchange for money. People could augment their universal income with these social credits.

Among the radicals proposing universal incomes and social credits, a school of thought suggested the government manage all payments to its citizens. If somebody were fortunate to be employed, their employer would pay their salary to the government. The government would then pay the worker their universal income, plus their salary, after tax deductions. Salaries would be lower because the universal income comprises part of it. For those unemployed but earning social credits, these credits would be paid to the government as well. The government would convert these into a monetary value and pay them to the individual less any tax deductions. Some believed it would be fairer, than a barter system.

No matter how the system was supposed to work, it would have provided a livable income, given purpose, meaning and pride back to people whose lives were ruined through the decimation of the labour market. Equally important, the social credit system would have focused the efforts of the many unemployed on building “common good.” A society’s strength is gauged by how well it looks after common interests or the common good. Unfortunately, since the 1970s, we placed self-interest ahead of common good. As a result of this self-interest, we have destroyed the planet’s ecosystem and brought about unimaginable social turmoil.

Detractors of the universal income scheme said we could not afford it, which is nonsense. Look what we’ve ended up with. They also said that with every technological advancement, rather than lose jobs, we created new ones, so there’s no need to implement the scheme. The vast difference with previous advances was that the technology was not intended to replace humans but enhance what humans did. Now we know robots have greater dexterity, strength, speed and endurance than humans. We also know that AI has advanced to such a level they far outperform the human brain, and they collaborate far better than humans. We can’t compete. What about ASI – Artificial Super Intelligence? Today we know computers are far more creative than we are in virtually every field; composing music, writing, art, designing buildings, and rockets, the list is endless. Right now, researchers are losing their jobs – obsolete and hopelessly inefficient. So, what new jobs did they think we could do? Clean and polish the computers. Robots do that better at this than us. What a disaster!

John heard these “radical” voices, but choose to ignore them. However, deep down, he knew they made sense, but he didn’t want to be seen siding with radical thinkers. In any event, he will have retired or been close to retirement when the changes they predicted occurred. Therefore, not his problem. Unfortunately, for John, his chickens have come home to roost early, and he and his young family will now pay the price. He has no Universal Income or Social Credit Scheme to fall back on. I don’t know what future awaits him, apart from a bleak one.

Some may say my condemnation of John is harsh. “What can one man do against powerful forces hellbent on putting profit ahead of the community?” The answer is – stand-up and fight for what you know is right. Your voice will merger with others. Soon that one voice becomes millions, and millions of voices bring about change. It all starts by taking a stand, not remaining silent. Believing it’s somebody else’s problem, is the problem.

Of course, there we numerous other events and incidents which conveyed the same message as the “radical” university group. The only thing the group got wrong was their timing. They underestimated the speed of change. Change accelerates change, so it’s challenging to predict the timing of change precisely. They could not have foreseen the massive changes made in the mid to late ’20s.

One of the biggest milestones reached early in the ’20s was the mass introduction of autonomous vehicles. This decimated the labour market. A large portion of the population worldwide was employed as drivers. Over a relatively short time, most lost their jobs. This brought to the fore the evils of automation, which had silently encroached on the labour market for many years. This encroachment had seen millions of productive individuals sidelined, no longer part of the employment market. The social impact of this was huge but generally kept quiet by the wealthy elite, who benefited from this automation. However, the huge job losses created through autonomous vehicles were on a scale they could not hide.

Following swiftly on the heels of autonomous vehicles was the explosion in blockchain and distributed ledger technology. In essence, it introduced a super-secure method of storing, authenticating, and protecting data, which revolutionised many aspects in business transactions. This resulted in the loss of tens of millions of white-collar jobs, particularly in sectors that had previously acted as “trusted agents”, such as brokers.

These tectonic changes set in motion trends that saw the decline in marriage and increased single-parent families. Men could no longer commit to marriage and buying a house, as they had no work prospects. Families are at the centre of a stable society, so this break-up of the family saw the start of the collapse of our society. An increase in drug and alcohol abuse followed, as well as gambling. These are the consequences of desperate people turning to illusive solutions, leading to their accelerated downfall. The break-up of the family and increased anti-social activities, as a result of no work, was the toxic cocktail tearing the fabric of society apart. When people lose access to legal work, they are driven to illegal opportunities. When there are so many without work, crime, in every shape and form, explodes. We have seen the proliferation of illegal micro drug and alcohol producers. These producers put just about any crap they can lay their hands on into their toxic brews. This just compounded our social and economic woes. When we thought it couldn’t get any worse, it did.

The foundation of this problem is that we are a society who put market needs before those of people. We falsely believed our purpose was to serve the markets when markets are supposed to serve the needs of the people. This false vision was promoted by the wealthy elite because the market serves them. The economy, like democracy, is supposed to serve the people. Unfortunately, we lost our way in the 1970s with the introduction of “free-market” thinking; making markets our master.

The signs of social decay were more than apparent in the early ’20s, for those who cared, and were concerned enough to look for it. By the mid-’20s autonomous vehicles and blockchains had pushed the problem into your face; something you could no longer ignore, even if you tried. You would have thought that such radical change and coverage of the problems would lead to economic and social reform. They did not. The “evils of social democracy,” such as a Universal Income, and Social Credits, were pushed harder. At the same time, the merits of free-market as our “saviour” were expounded even harder. How sick and twisted are we? However, the real sickness was the complacent attitude of the masses, who were being destroyed by free-market thinking. The smell of revolution should have been in the air. But it wasn’t.

Part III

As an intern, John came face-to-face with the consequences of a shrinking labour market and its social consequences. On the A&E wards, the increased incidents of violence fuelled by an upsurge in broken families, aided and abetted by drug and alcohol abuse, had soared to new all-time highs. Self-harm, attempted suicides and suicides also reached new, astronomical heights. All around him, the signs of a broken society were evident. He read the daily news feeds on his phone. He knew of the adverse effects autonomous vehicles and blockchains were having on the labour market, economy and society. He did nothing. He’s only a medical doctor.

He was thankful when he received a posting to a rural surgery. Hopefully, he could close his eyes, and all these problems would disappear. Perhaps the authorities would sort them out – that’s their job. Of course, this was all wishful thinking. He knew nothing was being done, and the same problems would be felt everywhere. Rural Britain could not escape change of this magnitude. When the vast majority lose their jobs, the economy shrinks. This shrinking affects other businesses who either close or reduce staff. The downward cycle accelerates. Many small businesses go to the wall early on. This included farmers. Being self-employed during an economic downturn causes untold stress on its owners. As a result, new business start-ups had almost ceased. The vital supply of new business blood had dried up. John faced the same problems in his rural environment as that in the city. Hardship and misery abounded. It even affected him personally.

His brother-in-law ran a successful restaurant. He gave up his profession as an architect because of the encroachment of AI. The role of the architect was being replaced by software. He didn’t see much future for himself in his profession, and he wanted to pursue his dream of running his own restaurant. In the beginning, things went well, but then slowly, the market started shrinking. There were fewer and fewer employed people who could afford to eat out. It soon got to the point the business started losing money. He closed it down and tried to get back into architecture, but with no success. He’s been unemployed for some time now, with no prospects for the future. He has no money. John and his wife help him and his family when they can, but they don’t have a lot to spare either. John had got to the point of telling him he can no longer support him, as he has done in the past. The reason being his parents require additional support as their state pension has been severely cut and their savings eroded, as investments under-perform.

The economy has shrunk so significantly now that unemployment is sitting (officially) at 68%. Most believe it to be much higher. The problem with AI and automation is that computers and robots don’t buy groceries, eat out, buy clothes, travel, or go on holiday. Not as much money circulates in the economy anymore. John’s first priority has to be with his immediate family, so he was about to break the bad news to his brother-in-law. Hopefully, he would understand. But having said that, his brother-in-law used to joke, “at least you’ve got a job for life.” How wrong he was. Now the only breadwinner in the wider family is in the same boat as everybody else, except John, has a lot more debt. They will lose everything: their home, car, furniture. Possibly, the shirt on his back.

Here’s the problem I face. On the one hand, I have no hesitation in condemning John’s lack of action. On the other, I feel sorry for him and believe there must be something I’m missing. What stops an intelligent, caring individual from taking timely action? If he had the hindsight I now write with; I’m sure he would have been actively involved in introducing social and economic reform. I’m convinced he would have become involved during his early university days. He would not have left himself, and his family unprotected from this nightmare. But he didn’t. I must be missing something. John is an intelligent person. He is also a caring person. Despite being fully aware of the problems and possible solutions, he did nothing to bring about change. Why? He seemed to think it was somebody else who would have to fix the problems. This doesn’t make sense to me. As a result, I’m finding it difficult to feel any sympathy for him, despite the bleak future he faces. He knew, and he did nothing, so he’s equally responsible as those who mercilessly decimated the labour market, knowingly causing social and economic havoc. In legal terms, that’s referred to as “an accessory after the facts,” making him as guilty as those who committed the “crime” of decimating the labour market and economy.

It would appear that John believed he lived in a bubble. He must have thought that as long as his bubble remained secure, he and his family would be safe. All he need do was maintain the bubble, and his future was assured. If he knew that bubble would burst only sixteen years from him entering university, he would have fought tooth and nail for social and economic reform. Clearly, John thought his bubble would never burst, or only when he had retired. As soon as the U-BEscopic was introduced, he should have seen it meant the beginning of the end. Perhaps he did, but realised he had left his disagreement with the state of the economy too late. However, if that were true, then he would not have reacted in the way he did – surprised and horrified, when he learnt he had lost his job.

So why do intelligent people like John and you, live in a bubble? I include you as well because had you also taken action, in the early 20’s we would not be facing the crisis of losing our last secure job, with no social or economic support in place. If you did respond, you probably left it too late. Either way, nothing has happened and we’re in a real pickle now.

The “bubble syndrome” affects most, if not all the rich elite. They believe their wealth will protect them in their bubble. In the past, this may have been true. However, by changing our circumstances so radically, this has changed everything. People who made a fortune from AI and robotics are now in the process of losing it all. Without the purchasing power of the masses, we have set off a downward economic cycle which doesn’t seem to be stopping. Like John, their bubble has burst.

It’s easy to be tolerant or unconcerned about matters which are unlikely to affect you. You tolerate mass job losses or unfair labour practices because they won’t affect you, or perhaps even benefit you. You tolerate or even support lenient immigration policies because the consequences are unlikely to affect you. You pay little attention to the suffering of others caused through economic downturn and their concomitant social problems because they don’t affect you. It would be an entirely different story if they affected you directly and seriously. When something is patently wrong and adversely affecting the majority of your fellow citizens, I believe you are duty-bound to take action, even while you remain unaffected.

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