Erik Van Alstine

Erik Van Alstine

Author. Leadership strategist. Expert in Perceptual IntelligenceTM.

Elon Musk, Pilzer’s Island, and the Question of Universal Basic Income

How are we going to live in the next fifty years? According to Tesla CEO Elon Musk, the answer could be, largely off government handouts.

In February Musk spoke at the World Government Summit in Dubai, where he envisioned a heavily automated world, creating massive unemployment, forcing governments to offer money to its citizens in the form of “Universal Basic Income.”

I’m not so sure about that, and this post explains why.

This might seem like a departure from my typical “live better lead better” theme, but it’s not. It’s about the nature of work, and the way we human beings find fulfillment in our work. It’s about how to live better in the future, and whether government payments will help us or hurt us.

The Automation Revolution and Massive Unemployment

Back to Elon. He’s concerned that autonomous transportation, and automation in general, could have a massive impact on the job market. Take transportation as an example. Within the next couple of decades almost all of the trucking industry will automate. Robots will drive semis. Public transportation will automate as well. Delivery driving will be taken over by technology. Taxis and Ubers will be driven by robots, not human beings.

“Twenty years is a short period of time to have something like 12-15 percent of the workplace become unemployed,” says Musk. And that’s just the estimate for transportation. Automation will displace workers in other industries as well.

Given this massive displacement, what will workers do? This is where Musk starts down the road to Universal Basic Income (UBI). “This is going to be a massive challenge,” says Musk. “And I think ultimately we will have some sort of universal basic income. I don’t think we’re going to have a choice.”

Pilzer’s Island and the Thrill of Technology-Driven Unemployment

Now, given the speed of displacement, Musk might be making a case for temporary support for displaced workers. But the idea of technology displacing workers shouldn’t scare us at all.

In fact, it should thrill us.

If we’ve heard the parable of Pilzer’s island. If we understand its implications. And if we think past the short-term pain of losing a job.

Economist and entrepreneur Paul Zane Pilzer, author of eleven books and a half a dozen companies, asks us to imagine “a self-sufficient island with ten men who make their living by fishing from a communal boat. Along comes a new, technologically better way of fishing — for example, using a large net instead of ten individual fishing lines. Now two fishermen, one to pilot the boat and one to throw the net, can catch the same amount of fish as ten fishermen could with lines.”1

On Pilzer’s island, technology just displaced 80% of the workforce. But is the island better off with this new technology? Absolutely. The island is creating the same amount of wealth as before, but now the other men are freed up to create more wealth by making hammocks and shoes, picking fruit, and cultivating crops. These eight men then trade with the two fishermen, because the two fishermen want more than just enough fish to feed themselves. They want a variety of food, and they want amenities to make island life easier. The technology and the displacement boosted island life for everyone who decided to go out and find other ways to serve.

But if the eight displaced fishermen decided they’d just keep fishing with poles, creating more fish than anyone wants, or not to work at all, since the only thing they thought they could do is fish, the new economy would be bad for them.

The Danger of the UBI

Now let’s introduce the UBI into the mix. What if the collective group of ten men, as a primitive form of government, mandated that the two men’s catch had to be forcibly distributed to the other eight men? Would the island be better off? Not one bit. There’d be no incentive to produce new good and services. The islanders are less likely create new crops, weave hammocks, or create shoes.

Which is why I question the merits of a UBI. It could be good as a temporary emergency backstop for struggling workers. But it also could be a trap that stifles human ingenuity and resourcefulness.

People live better when they feel they are productive, creative and resourceful. The UBI is highly likely to sabotage that productive drive, diminishing workers quality of life in the process.

1Paul Zane Pilzer, Unlimited Wealth: The Theory and Practice of Economic Alchemy (New York: Crown Publishers, Inc., 1990), p. 99.

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