Could AI have done a better job at writing the Budget than Rachel Reeves?

Forget Bolitics (My word for Politics) with its agendas and biases. I gave an LLM (Perplexity) the challenge of writing a budget given the UK’s problems and the coming AI and Automation Revolution. You decide if AI can make better fairer economic decisions than boliticians.

A revised budget for the UK that addresses the current economic challenges while incorporating the potential impacts of AI and automation, we will examine Rachel Reeves' recent budget figures and suggest how to raise funds for proposed initiatives. The focus will be on long-term growth, fiscal responsibility, and addressing systemic issues exacerbated by technological advancements.

Current Budget Overview

According to Rachel Reeves' recent budget, several key figures are noteworthy:

• Increased Spending: Day-to-day public service spending is set to rise by approximately ￡20 billion this year and over ￡40 billion annually thereafter.
• Tax Increases: The budget includes tax hikes worth around ￡40 billion to fund public services, primarily through increased employer National Insurance contributions and a crackdown on tax avoidance.
• Public Sector Net Investment: The budget allows for around ￡25 billion a year in additional capital investment.

Economic Challenges

The UK faces several pressing economic issues:

1. Low Productivity Growth: Persistent low productivity hampers wage growth and living standards.
2. Income Inequality: A significant wealth gap exists, with many relying on low-wage jobs.
3. Aging Population: Increased spending on health and social care is necessary as the population ages.
4. Investment Deficit: Low levels of investment have resulted in outdated infrastructure and insufficient support for innovation.

Proposed Revised Budget

To address these challenges effectively while considering the impact of AI and automation, the following measures are proposed:

1. Increase Public Investment

• Infrastructure Development: Allocate an additional ￡30 billion annually for infrastructure projects that enhance productivity (transport, digital connectivity).
• Housing Initiatives: Invest ￡10 billion annually to increase housing supply, addressing affordability and stimulating construction jobs.

2. Enhance Skills Development

• Retraining Programs: Allocate ￡5 billion annually for comprehensive retraining programs aimed at upskilling workers for technology-driven roles.
• Education Reform: Invest ￡3 billion in education initiatives focused on STEM (Science, Technology, Engineering, Mathematics) subjects to prepare future generations for emerging job markets.

3. Implement Universal Basic Income (UBI)

• Introduce UBI funded by taxes on automated labor and corporate profits. Initial funding could be set at ￡15 billion annually, gradually increasing as automation becomes more prevalent.

4. Foster Regional Economic Development

• Direct an additional ￡10 billion towards underperforming regions to close productivity gaps with London through targeted investments in innovation hubs and business incubators.

5. Modernize Taxation

• Increase taxes on higher incomes and wealth (e.g., capital gains tax) to generate an additional ￡10 billion annually.
• Implement a windfall tax on profits from companies benefiting disproportionately from AI and automation, projected to raise around ￡5 billion.

Funding Sources for Proposed Initiatives

To finance these initiatives while balancing the books, the following funding sources are proposed:

1. Increased Tax Revenue:
2. Reduction in Inefficiencies:
3. Utilization of Borrowing for Investment:

Conclusion

The proposed revised budget aims to address the UK's pressing economic challenges while preparing for the future impacts of AI and automation. By increasing public investment, enhancing skills development, implementing UBI, fostering regional growth, and modernizing taxation, the UK can create a more resilient economy that promotes long-term growth and equity. This approach balances the need for immediate action with fiscal responsibility by identifying diverse funding sources that can sustain these initiatives over time. As we navigate this transformative era, it is essential to adopt strategies that not only respond to current challenges but also position the UK for success in an increasingly automated world.