UBI? My, Oh, My
David Atkinson
AI Legal Counsel | A.I. Ethics and Law | University Lecturer | Veteran
Part 3 of our bit-sized series on GenAI’s potential impact on the workforce.
Economic Impact
If many people lose their livelihoods or are forced into a constantly shifting, intermittent way of life it will have massive implications for the economy. If people don’t have money, they can’t spend it. If they aren’t buying houses or renting apartments, they aren’t buying the stuff that goes into those dwellings (beds, appliances, clothes, toys, furniture, etc.). They also probably aren’t spending on luxury goods and vacations. Meanwhile, the dozen or so leading AI companies will probably generate massive profits. What’s a nation to do?
One solution bandied about is for those wealthy entities to pay higher taxes and for those taxes to be redistributed via a universal basic income (UBI).[1] A UBI is the idea of giving everyone a set amount of money every month. Typically, it’s unconditional, meaning you get the money no matter what. The amount could vary a tremendous amount, but perhaps the government would want to value stability over minimizing the UBI, so they settle on $5,000 to every American every month ($60,000 a year).[2]?
Why would a government do this? One argument is that it ensures people have money to spend, which keeps cash flowing through the economic pipes, keeps the economy going, and keeps governments stable, reducing the odds of democratic and economic collapse and anarchy.?
Another argument would be that it’d just be the right thing to do morally. It ensures a basic standard of living is available to everyone.?
Yet another argument is that it’d provide a safety net for people to keep taking chances. If there is no income, a person may be less likely to invest in themselves, others, or property because they don’t have enough money to care for themselves should the investment turn sour. But if they know another paycheck is just a month away, they may be more inclined to invest in education, housing, or starting a business. It’s not the poorest among us who tend to partake in such activities, and the reason seems pretty obvious.
We must also consider how AI could help mitigate global labor shortages. Global population growth is expected to slow significantly by the middle to end of the century, so much so that we could see population decline. This has the potential to upend the global economy, which is dependent on growth in its current form. Why? Economic growth is tied to population growth.[3]
One notable example is Japan. That country has seen a birth rate decline for decades while life expectancy and standard of living have increased. However, the country’s future outlook is not good. It has seen many periods of negative or low economic growth for decades, and all trends point to continued poor economic growth in the future with the economy shrinking. Although relatively small, China, the world’s second-largest economy, is already seeing its population decline, and the consequences will not be contained to the Chinese economy.
This is where AI enters the picture. We have been talking about AI eliminating jobs and making it harder for people to find new jobs, but at the same time, we will be facing issues of aging populations and a shortage of working-age people. “The big macroeconomic question for the coming decade is which force proves more powerful — the undersupply of workers or the displacement of jobs caused by AI.â€[4] If the promises that AI will boost productivity — by a sufficient margin — come true, it may allow the global economy to keep increasing output even in the face of population decline (less consumers) and a shrinking workforce. To put this into perspective, we would need the ‘“1% to 1.5% productivity growth that we've been getting for decades or even a century,â€â€™ per John C. Williams, president of the Federal Reserve Bank of New York.[5] The estimates for AI’s impact range from less than 0.85% to over 1.5%.[6]
However, we must clearly distinguish between macro and micro economic impacts. At the macroeconomic level, we may have AI boosting productivity, indisputably a positive, but at the microeconomic level, we may have millions of people that will not see those benefits or any benefits. This serves as a caution that even if something is a net positive, there are still negatives, and at the population level, that can impact the lives of more people than one would initially expect.?
“If AI is as big a deal as many people think it could be, look for higher growth, higher incomes, higher real interest rates and lower inflation.†This is great for those who have jobs. As with everything, there will be winners and losers. Look at globalization as an example in recent history that has transformed the global economy and increased economic growth. The winners will be those with the more productive jobs that are more lucrative and harder to get. The exacerbation of existing inequalities and the creation of new ones has to be given more attention.
Post-UBI
Suppose the government implements a thoughtful, nuanced, highly effective version of UBI. Great, right? Well…
The impact of AI doesn't stop at the US border. In fact, it’s likely that poorer, less technologically literate nations will feel the sting of AI more than industrialized countries. Think of all the customer service operations in Mexico, India, and the Philippines working for US companies, for example. That’s only one job, and it affects many millions of people. Now, think of all the jobs that will be automated within the US. All of those jobs will likely also be automated in every other country as well.?
Now, think of where the profits from AI flow. The vast majority will go to a relatively small number of companies, most of which will be based in northern California. So, while the US government can tax those companies and use the money to pay a UBI to US citizens, Guatemala, Bolivia, Ghana, Bangladesh, and others won’t have that easily tapped source of funds. Instead, they’ll have huge populations of people who increasingly have less labor to offer at a competitive, sustainable price.
What are the odds that US-based companies will agree to fund UBI programs for other nations? Probably not great. What does a world look like where people can’t afford healthcare, transportation, or, in more dire circumstances, food and shelter when they once lived at least somewhat comfortably?
领英推è
The silence of large AI entities, including their policy departments, when asked about these concerns is telling. Often, they deflect, acknowledging that it’s a real concern and that someone should look into it. But who?[7]
Microsoft was founded in 1975 when the corporate tax rate was 48% and the individual income rate was over 70%. Do we think Bezos or Zuckerberg would’ve foregone founding a company if they could only make $10 billion rather than $100 billion? Federal Income Tax Brackets and Maximum Tax Rates: 1950-1980, Corporation Income Tax Brackets and Rates, 1909-2002
There are an infinite number of ways to administer UBI (amount, frequency, conditions, etc.).
“But other than mentioning the possibility of a universal basic income for people living in an AI-saturated society, Brockman [OpenAI’s president] agreed that ‘creative solutions’ to this problem were needed—without providing any.†The Unlikely World Leader Who Just Dispelled Musk's Utopian AI Dreams
The following students from the University of Texas at Austin contributed to the editing and writing of the content of LEAI: Carter E. Moxley, Brian Villamar, Ananya Venkataramaiah, Parth Mehta, Lou Kahn, Vishal Rachpaudi, Chibudom Okereke, Isaac Lerma, Colton Clements, Catalina Mollai, Thaddeus Kvietok, Maria Carmona, Mikayla Francisco, Aaliyah Mcfarlin