[Viewpoint] What Are the Issues with AI and Basic Income?

Jung Manki, Chairman of the Korea Industrial Alliance Forum (KIAF)

In the early stages of the 19th-century Industrial Revolution, Marx focused on the mass unemployment caused by machines replacing labor and the deterioration of working conditions. The invention and enhancement of machines increased capital surplus but also brought side effects such as worsening labor conditions. This led to the formation of what Marx called the "industrial reserve army," who were mobilized for production during boom periods but became unemployed during downturns. The expansion of this group produced a proletariat class that, lacking their own means of production, had no choice but to sell their labor to survive. Marx argued that this proletariat would overthrow the capitalists and establish socialism through a proletarian revolution.

Two hundred years later, we find ourselves in a similar situation. It is due to artificial intelligence (AI) and robots. The advent of AI threatens jobs not only in manufacturing but also in the service sector. For example, Japan’s Fukoku Mutual Life Insurance uses AI to replace human judgment in determining appropriate insurance claim amounts. Banks have seen 30 to 40% of their branches disappear. This trend will spread rapidly. When the era of autonomous vehicles arrives, commercial drivers will have to worry about their jobs.

There is another similarity. The labor share decreases while the capital share increases. In countries like the United States, the labor share has declined over the past 20 years, whereas the capital share has risen. Due to automation and intelligence, the portion of total income going to workers has decreased, while that going to investors and capitalists such as banks has increased. This resembles the increase in capital surplus relative to labor in Marx’s time.

Various solutions have been proposed. These include the introduction of wealth taxes or robot taxes, specialized retraining, or the implementation of basic income. Basic income differs from other measures in that it could bring about fundamental changes to social structure. Although the core idea has many variations, it generally involves the state providing all citizens with a guaranteed minimum income sufficient for a decent life, regardless of wealth or employment status. Funding would come from various tax sources such as robot taxes or wealth taxes, while the government would aim to meet some basic needs and also strive to reintegrate the unemployed into the workforce.

There are some doubts. First, regarding AI’s impact on job reduction. Despite Marx’s predictions, the Western world experienced decades of golden growth after World War II. Although factory-level jobs decreased due to machines, many new industries and countless jobs emerged. Aviation, subways, overseas tourism, and electronic devices are clear examples. Similarly, while AI may eliminate many jobs, it will also create numerous new ones. Jobs in gaming and platform industries, which did not exist ten years ago, are good examples. If AI combines with fields like space, biotechnology, and hydrogen technology, predicting future jobs is difficult at this point.

What about basic income? Its uniformity raises concerns about unfairness, as welfare funds intended for vulnerable groups might instead go to the wealthy. Securing the necessary funds is also challenging. In the United States, providing $12,000 per person annually would require about $3 trillion?twice the 2016 federal social security budget and 10% of GDP?but the effects might be minimal for some individuals.

The limitation is that this proposal was not presented as a scientific solution to problems but rather as an idealistic approach. Rooted in the ideology first advocated by Thomas Paine in the late 18th century, it risks lowering investment and labor motivation without guaranteeing a decent life for all. This underscores the need for empirical and scientific solutions to social problems and explains why the basic income issue has faded after votes and experiments in countries like Switzerland and Finland.

This content was produced with the assistance of AI translation services.