AI – A warning for society
As Agentic artificial intelligence (AI)’s threat to jobs spreads ever wider, the concept of Universal Basic Income (UBI) is shifting from theory to, frighteningly, a central pillar of Silicon Valley’s vision for our future.
Love him or hate him now, OpenAI’s Sam Altman was the first to publicly discuss a UBI, announcing in early 2016 that Y Combinator would fund a multi-year, large-scale UBI study to prepare for an automated future. Elon Musk followed later that year, saying in a CNBC interview that UBI is “going to be necessary” because “there will be fewer and fewer jobs that a robot cannot do better.”
Then, in 2017, Bill Gates cooled everyone’s heels, suggesting, “the world is not ready” for UBI and that it was “too early” to implement it.
As AI transforms from a tool into a colleague – and eventually, for many, a replacement – the gazillionaires building this future are increasingly vocal about how society will afford to keep its citizens afloat and who will pay for it.
Altman
Sam Altman has offered arguably the most detailed, formalised proposal. In an essay entitled “Moore’s Law for Everything,” Altman argues AI will drive the cost of goods and services toward zero (I think the jury is out on that one because a raw material or input costs remains), wealth will shift from labour (people working) to capital (companies and land).
According to Altman’s public proposal, the funding for a UBI would come from a major fund he dubbed ‘The American Equity Fund’ (AEF). The AEF would be a national fund that would tax large companies above a predetermined valuation (presumably indexed?) at 2.5 per cent of their market value annually. Altman proposes the tax would be payable in shares to the fund (without diluting his wealth and ownership, of course). Altman further proposed taxing 2.5 per cent of the value of all privately held land annually.
While I am not sure how land owners recently rendered unemployed by Altman’s AI will fund the tax on their illiquid property, his logic is that by taxing assets rather than income, the system captures the value created by AI-driven productivity without stifling the growth of the companies themselves, which he would continue to be privately owned and controlled, by him, of course?
I think it’s fair to suggest that if nobody is gainfully employed, then everybody should own the operations that put them out of work. So instead of a privately owned and controlled entity that is taxed, the entity itself is owned by the ‘commonwealth’ and distributions made by some other logic.
Musk
Elon Musk’s public position on Universal Basic Income (UBI) has evolved alongside the capabilities of his “Optimus” robot. Originally, Musk said a UBI was a “necessity” due to automation. More recently, however, he’s pivoted towards populism and to the concept of Universal High Income (UHI).
But who pays for the UHI?
Musk suggests that the funding is essentially a byproduct of extreme abundance. If robots can perform all human labour, the “cost” of products falls to the cost of raw materials.
While Musk hasn’t proposed a specific tax system, he has said that AI and robots are the “only things” that can solve the U.S. debt crisis. I’m assuming the implication is the government would provide this income through massive tax revenue and productivity gains generated by a fully automated economy.
So it looks like neither Altman nor Musk give up their ownership and control of the entities upon which, in their vision of the future, we all depend.
Dorsey
A tech titan with a different view is Jack Dorsey, co-founder of Twitter (sold to Musk) and CEO of Block. Dorsey has been more ‘boots-on-the-ground’ through his #StartSmall initiative, donating US$634 billion to fund girl’s health and education, Bitcoin enterprise, and UBI pilots across the U.S.
Dorsey suggests using billionaires’ personal wealth to prove the concept works, advocates for UBI as a “tool to close the wealth gap” that should eventually be funded at the federal level, at least in the U.S., (to move away from conditional, inefficient welfare bureaucracies), and use Bitcoin as the rails for UBI to ensure transparency and lower the administrative costs of government middlemen.
But again, there is no suggestion that the billionaires join the ranks of the ‘universally’ unemployed in general.
Centralising power. Again.
Admittedly, there’s something I find disturbing about listening to tech billionaires proselytise about how the population will need financial help, while never offering to cede their own financially elevated status, and ideating solutions that ensure the population remains dependent on them.
We should all be a little worried because, in this, the second year of the current U.S. administration, the line between Silicon Valley’s boardroom and the Oval Office is already severely blurred. The idea of a shift toward “tech-driven oligarchy” is not pure fiction. Recently, the BBC Panorama program Trump and the Tech Titans documented how Elon Musk, Peter Thiel, and David Sacks have influenced Donald Trump’s rise to power. It noted their continuing influence of the Trump administration’s adoption of AI, cryptocurrency, and surveillance technology, how they have fundamentally rewired the American political landscape and how, through digital ‘soap boxes’ (most notably Musk’s acquisition of X), they have provided a platform for Trump’s return to power, bypassing traditional media gatekeepers. It also highlighted the ‘Broligarchy’s’ push for a future where AI handles national productivity, potentially funds a Universal Basic Income (UBI) and simultaneously centralises power in the hands of the companies (theirs) that own the compute.
Is UBI an admission of capitalism’s failure?
The elephant in the room is whether UBI is an admission that capitalism has failed. If capitalism’s goal is to reward labour and innovation with capital, a world where labour and innovation are worthless seems illogical.
Proposing a UBI is an admission that today’s version of capitalism – the one that relies on a circular flow of workers earning wages to buy products – is unsustainable. This is especially true if AI captures all the wages.
And if, as I have suggested many times, the natural evolution of capitalism is to concentrate wealth in the hands of a few trillionaires (the owners of AI, perhaps), then the rest of the population loses their bargaining power and their means of survival.
It may seem extreme, but in that light, UBI would merely be a band-aid for a capitalist system that has fundamentally failed or crashed. A UBI may therefore ultimately be a temporary measure.
Predictably, Altman and Musk don’t frame it as a failure. They frame it as Capitalism 2.0. They argue we’re moving from an era of scarcity (where we had to compete for resources) to an era of abundance. Musk has noted, for example, “If you have a world with no shortage of goods and services, the meaning of ‘poverty’ changes entirely.”
Don’t expect anyone to escape their own perspective!
As an aside, another billionaire – mining magnate Robert Friedland, points out that in order for the U.S. to grow three per cent per year for the next 18 years, more copper would need to mined than has been in total in the past 10,000 years. He believes technology’s advance is going to be restricted by the availability of power, noting, “all this stuff about AI, everything you’re hearing, it’s a fantasy because we don’t have the energy.”
You need us. But do we?
The AI broligarchs see UBI not as a handout, but as a dividend – one from them to us (you should be grateful!) but framed as a ‘share’ of the social equity we all ‘own’ by being part of a civilisation that finally automated the drudgery of life. Of course, if they own the tools, they control everyone’s well-being. By owning the dividend machine, they’re positioned as the benevolent dictators.
Historically, free markets balanced increased production with increased wages, but the AI optimist’s premise is that this link is finally snapping.
Labour has always served two purposes, and maybe three: a necessity for production and a way for people to earn the money to buy that production. It arguably also provides purpose, a reason for existence itself.
But if a single corporation can eventually produce everything with only 50 human employees, the circular flow of the economy collapses into something potentially dysfunctional, and UBI is a life-support system for a market that has effectively automated its own customers out of wages and independence.
On purpose
I might be alone here, but I would also argue that the work ethic isn’t an expendable feature of society, but its backbone. We’re created for relationship and created for work. Witness the aimlessness of children whose parents gave them everything without having to earn it. As French Poet Charles Baudelaire famously noted: “Everything considered, work is less boring than amusing oneself”.
A demographic that is unwilling to work could become a societally disastrous new norm, UBI could become a tool for total government compliance and worst of all, Musk, and Altman et. al. could represent a future with tyrannical autocrats. And don’t forget, if your entire livelihood is a direct deposit from the state or from an AI company, that so-called ‘unrestricted’ cash could or would one day come with behavioural and compliance strings attached – turning a safety net into a leash.
If the tech elite are the ones funding the UBI through their companies, do they also become the ones who dictate the terms of our lives? A UBI funded by a “2.5 per cent tax on companies” effectively makes the government a minority shareholder in Silicon Valley.
While the cash is ‘unrestricted’ for the recipient, the source of that cash remains highly concentrated, giving rise to a new social contract in which the “trillionaires” provide the floor but also own the ceiling.
Capitalism, if left unregulated, without military intervention or a societal uprising, will naturally and eventually concentrate all wealth in the hands of one person. The discussion of UBI raises an interesting, perhaps ultimate, question: is UBI an admission of capitalism’s failure or proof of its natural conclusion?
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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