Resource Curse, Useless Populations and Universal Basic Income

Podcast here: https://soundcloud.com/user-280580802/224-resource-curse-useless-populations-and-universal-basic-income

Alexander Etkind (2021) argued in his book “Nature’s Evil” that some countries’ reliance on fossil fuel export has made them very unequal, as the state leaders draw on the oil revenues to enrich themselves and their friends, and wage destructive wars against their neighboring countries. To keep legitimacy at home, they lavish a welfare state on their citizens, who become dependents on this largesse and do not form an independent middle class based on professions that would form a civil society that could challenge the power of the dictators. This is the classic resource curse (Ross 1999) or petro-aggression (Colgan 2013). Etkind is surely thinking of his home country, Russia. Russia’s petro-state aggression is now backfiring because the military conquest in Ukraine is not successful. But if they do succeed, they have the encouragement to push the envelope with more aggression in Europe.

Contrast that with labor-dependent countries: they export goods and services that require a large input of industrial or service/ professional labor. They have a substantial middle class who expect a high standard of living and democratic participatory political institutions, and could not support large-scale wars over long periods of time. The political leaders feel directly accountable to their citizens and direct most of the government spending toward building further economic capacity, e.g. public infrastructure, education, health care, and strengthening internal political legitimacy, e.g. social care, pensions. The Europeans and some East Asians (Japan, South Korea) are the major examples of labor-dependent countries. The US combines both features of being labor-dependent (top universities, top finance, top technology firms) and resource-dependent (shale gas, oil and minerals), and using that pre-eminent political and economic power to (1) maintain internal democracy and (2) fight/ fund foreign wars.

Etkind makes another interesting point in that the resource-dependent countries are as dependent on the goods and services provided by the labor-dependent countries, as the reverse. The elites of the resource-dependent countries need the rule of law, the private banks, the elite private schools, the elite medical care and cars of the labor-dependent countries, while the labor-dependent countries require the natural resources to produce their goods and maintain their high standard of living. Most of the benefits accrue to the labor-dependent, i.e. rich, countries, and the resource-dependent populations get very little save for their resource-controlling elites. This passage of the book is best quoted in full:

Let’s look at a trade between two states, one resource-dependent and the other labor-dependent. This is a typical situation in the field of international relations- a game for two players, one of whom sells a precious resource which the other buys, exchanging it for goods produced by the labor of its people. The labor-dependent state encourages internal competition, protects property rights, secures technical progress, and promotes public goods and services. None of this occurs in a resource-dependent state and its monopolies. In such a country, institutions don’t develop, nature is degraded, and the people fail to thrive. All this is a curse for the resource-dependent country but a blessing for its partner. Since the rulers of resource states do not guarantee property rights in their countries, they cannot rely on their own capital or hand it down to their children. Along with their subjects, the rulers also suffer from the absence of public goods such as fair justice or clean air. Their spouses need private goods which only labor-dependent states are capable of offering. Children need the high-quality education which is available only on the other side of the border. Parents need good doctors and hospitals. But while textiles or gadgets come from abroad, safe parks, clean beaches, or good schools and clinics are not available to import. So the next step ensues: the elite from a resource-dependent state keeps bank deposits in a labor-dependent state. This is where the elite settles its disputes, buys houses, establishes its families. Exported capital -a converted form of oil and gas- turns into a bank account in Switzerland, a chateau in France, a business in Germany, or shares in American corporations. This capital, significant by any standards, is profitable to the recipient. The Swiss bank gets a percentage, London property prices rocket, new businesses pay taxes in the host countries. This wealth trickles down, but those who benefit from it are very far away from the places where it was pumped or mined. Paradoxically, the resource-holding elite invests in the same institutions abroad that it ignores, or even destroys, at home: the judiciary, universities, parks. In a dual economy of the post-Soviet type, Rawl’s first principle is realized at one end of the earth, but his second at another. The wealth is created in one country and trickles down in a different country. The blessings for some do not balance the curses for many others: the sum of happiness declines and inequality grows. (Etkind 2021: 284-5)

The main sociological insight is that unearned wealth, i.e. natural resources that fund the wealth of the labor-dependent countries, creates a lot of inequality, low economic development and corrupt political institutions. It gives credence to Weber’s Protestant work ethic thesis, according to which it is necessary to work hard due to the belief that this would make one accepted by God, and, by the way, it gives you democratic political institutions, rule of law and a welfare state.

But work is generally considered to be odious and was only done if we had to. Aristotle and other Greek philosophers thought that women and slaves would do the essential work, while the aristois (landowners) would be politicians, generals and philosophers- all of them considered leisure (non-productive) activities. The Latin root word for “labor” is “laborare” which is toil or trouble. Recall the Adam and Eve story, when the two original humans were not required to do any work in the Garden of Eden until Eve tried the forbidden apple. The angry God came down and forced Adam to labor for his food and other economic needs, while Eve and all her daughters and granddaughters would suffer from the “labor” or pain of childbirth. Consider also that before the rise of modern medicine the maternal mortality rate was shockingly high. Only the unnatural and unliked things require motivation to do, such as work requiring the Protestant work ethic. There is no need for a sex ethic or food ethic, because lust and hunger are written in our DNA and we will pursue them even without elaborate motivational beliefs.

While capitalism starts with the necessity of the universal belief in hard work, it is not clear whether this hard work for the common social benefit, as in Etkind’s labor-dependent countries of the developed capitalist world, is a continuing necessity at all due to the rise of artificial intelligence. So far automation has not been net labor displacing because there are still niches where humans have a comparative advantage to machines, e.g. interpersonal, service oriented work. The continuing advances in AI imply that more and more tasks will be taken over by AI, thus increasing the labor-replacing and diminishing the labor-reinstating elements of technology.

With ever improving technologies, we can see the rise of bullshit jobs, i.e. those jobs where even the jobholders themselves do not believe that they are adding any value to the economy. Any quasi-monopolist organization operates according to soft budget constraint e.g. governments, higher education, hospitals, for-profit banks or tech companies. In a soft budget constraint, there is no threat by customers to withdraw their purchase, so output prices are far in excess of the cost price and profits are very high. High profits can fund extra administrative personnel, who are becoming paper-pushers for some arbitrary administrative goal. Are these goals worthwhile or are they reached? It doesn’t matter. If other organizations have them, you need them too, so the payroll will be inflated but the wealthier the country becomes (hence more automation), the more of these useless positions this economy will have.

There are different forms of resistance against pointless jobs. The greatest cultural response has been the narrative around the “Great Resignation”, i.e. people quitting their jobs during the pandemic, in part, because they wanted to reconsider their life options and accept a pay cut to start their own business or not work at all for a certain period of time. People wanted remote work options and a better work-life balance. Some cities had implemented temporary eviction bans, because the officials feared the economic hardship during the pandemic shutdowns. Surely, this was a temporary measure but never before or since have so many people had the taste of freedom from economic necessity. The irony is that a tighter labor market encourages automation, which will more permanently lower labor demand. The economic whiplash returned but we see more young people being open to work less and have a more modest lifestyle. Gen Z are less likely to have a driver’s license than the earlier generations at their age. Teenage employment has been on the decline since the early 2000s.

The classroom behavior of current students is a portending factor for society’s future. The introduction of ChatGPT in late-2022 has altered classroom expectations in that teachers must assume that students are using it to do many of their assignments. Students are also spending less and less time doing any schoolwork, and administrators are pushing the line that students are consumers who must be pleased at all means, i.e. everyone should have an A/ grade inflation (Yglesias 2024). Student loans are also through the roof, though at this point the federal government is the largest creditor (93%, see Hanson 2021). To the extent that the government imposes debt moratoriums (like during the pandemic) or cancels some of the debt outright, we are obtaining free college through stealth (but with plenty of private loan industry profits and economic anxiety among borrowers along the way). Student absenteeism is through the roof, and even as student activism is roiling campuses across the country due to Israel’s devastating war on Gaza, there is quite little concern about what learning students might be missing out on. If the AI job displacement hypothesis is true, then the students are absolutely doing the right thing in resisting hard work and becoming slackers. Even for researchers and teachers, there are elementary questions of our own obsolescence: why not have AI collect/ analyze the data and write up the findings? Why not shift instruction and learning to an AI chatbot that is programmed to serve the individual student, as opposed to the generic instruction that doesn’t serve the smartest or struggling students?

On a side note, I argue that liberal arts education is the most valuable major in an AI world, not the hard skill majors in STEM. That is not because humans will be better in novel writing, music composition or philosophizing than AI and not because we will earn more money in creative careers. It is because liberal arts is one of the few contemplative activities that we enjoy doing for its own sake, and we should have more time to enjoy contemplation in the age of AI. If machines can do all of our assignments, what is the point of being alive? I am not looking down on any mathematicians or physicists, who also enjoy their subjects for their own sake, though if they do so, I would put them in the same non-commodified camp as the liberal arts, who have been placed on the defensive in capitalist society that dislikes any activity that does not generate revenue. The core function of schooling and universities must be leisure coordinating services, not technical training institutes for jobs that will soon be replaced by AI. Universities claiming to perform the latter function struggle anyway with meeting it: at the end of the day, no university can guarantee employment. It can only offer a piece of paper that some employers will likely recognize. Universities are facing a crisis of legitimacy regarding the employability of their graduates that is much more serious than any of the current culture war issues. Within the logic of capitalism, there is no way to escape this logic.

Even China is turning away from hard work. It is the home of world industrial production and they have their own version of Protestantism which can be labeled the “Confucian work ethic”. Their traumatic pandemic experience coincided with an economic slowdown, the reduction of employment opportunities, growing US hostility and a weakening real estate sector. Lying flat (tangping) and letting it rot (bailan) have become common terms in the internet youth subculture. This is very different from the Boomer and Xer generation that have flooded into the factories in the large cities and founded companies to benefit from China’s integration into the global economy from the 1980s until the early-2010s. That generation was optimistic and shared in the CCP’s vision of an economically ascending China. In the absence of elections and a new economic boom, where will the CCP restore public legitimacy? Would they have to invade Taiwan?

Bullshit administrative workers are the more fortunate members of the human tribe. What about the workers who are displaced by technology and have no equivalent replacement work? We are in the world of the death of despair: the rise of suicide, alcohol and drug addiction. There is a growing concern about a “useless population”, i.e. those without jobs. In resource-dependent states, the large useless population is written into the social contract, but labor-dependent states have prided themselves in providing full employment to their populations. We are fortunately not in an extreme situation regarding technological unemployment yet, because unemployment is low, the labor markets are tight, the workforce is aging rapidly (although immigration is also high). But we also know that these deaths of despair have happened. The US is being flooded by marijuana, methamphetamine, cocaine, fentanyl (CBP 2024), and from the early-2000s until 2021, the number of drug overdose deaths have quintupled to over 100,000 (NIH 2023).

As AI is getting better, what do we do with the useless population? We evidently need a universal basic income to restore more economic security to the population. But is economic security and not starving to death enough to stave off political instability? Those who are dedicated to the Protestant work ethic and the favorable democratic political arrangement of labor-dependent states argue that becoming a charity welfare case creates authoritarian war. Why should the leaders in the formerly labor-dependent states treat their subjects with the same respect and reverence as when they used to be labor-dependent? UBI in combination with an anti-labor design would recreate the oppressive political economy that we currently know from resource-dependent states. Even worse, autonomous AI will decide that after we reached 100% unemployment that we are a superfluous species and, therefore, must be wiped out. The true social conservatives will adapt Etkind’s argument on the oppression of resource dependency to defend the Protestant work ethic and the capitalist economy. That itself sounds like a dystopian outcome.

We have to consider whether UBI is a ceiling or a floor. Is it a maximum regarding effort and income in a workless future, where we don’t starve but must twiddle our thumbs and hope that our benevolent overlords don’t decide to send us to the gulag or into self-destructive imperialist wars abroad? In that case, we must never have UBI and we should seek to extend the labor-dependent capitalist economy with a firm commitment to the Protestant work ethic. Or is UBI a minimum income that people can live on, so they can build businesses, leisure or communal activities, some remunerated and others not? In that case, we don’t have to worry too much about falling into the resource-dependent kleptocratic trap.

The positive vision for UBI is predicated on the floor metaphor, and we have to be clear in our minds that the objective must be to abolish jobs but to keep on working. Recall that jobs are a social and political formation where people sell their labor to an employer, so they pay these workers a wage. Work is any physical or mental exertion that creates a use-value for somebody. Do you decide to hire a chef to feed you, and that person is working a job, or do you cook your meals yourself, in which case you are self-providing work but are not working a job. We have to remove the job obligation while opening up the realm of personal freedom to pursue the work they desire to as many people as possible.

We must not fall into a trap of equating UBI with a resource curse, where the dictators who own the robots think that we subsist on their charity. Conservatives make a cogent case that we have never lived in a “brave new world” where most people are freed from the realm of toil and necessity. So we must not even try. My contention is that we must try it, and we must work hard to build a future that is ecologically sustainable, socially just, economically secure and politically democratic. Join me in trying to figure out how to get there.