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(Trigger warnings: another AI post; Jean-Jacques Rousseau)
I want to talk about the economy in the face of the AI revolution, but let's go back to the basics first.
What is the purpose of a company? Not the stated one, the original one.
To provide value to its shareholders? Of course not, that's a very narrow view! It's like saying armies exist to kill people.
Do companies and markets provide a decentralized way to coordinate the efforts of large groups of people (choreography vs orchestration)? Yes, but what for?
Do companies and markets exist to maximize the economic output? Many would say yes, but the idea is wrong and will become more obviously wrong the more AI we inject into the economy.
Companies and markets exist to maximize the consumption! They exist so that more people consume more goods and services! The fact that these companies have to pay their workers is not an unwanted side effect, it's a feature! Companies exist to create and distribute goods and services to humans, and markets exist to ensure that each human gets a share that is sufficiently fair.
Both the industrial revolution and the transition to a service-based economy created millions, if not billions of new jobs, but is this an inevitable consequence of free markets? Will AI-fication of the modern economy do the same?
The correct answer is not "yes" or "no". It's "mu". If the economy reinvents itself again and people of the Global North find themselves new jobs, that's fine.
But if we suddenly start running out of jobs, accepting it as the inevitability of the market forces is the wrong way out. The right way out is retiring the market forces, not submitting to them. Creating shareholder value has always been the real side effect.
We can just as soon as redistribute the consumer tokens as we can ban the AI. Which is why I've been banging on about Universal Income with like a consumption tax this whole time. Banning AI won't work for many reasons, not least of which because other markets won't ban it.
I have multiple opinions about UBI.
One rationale for it that I see was it would replace much of the piecemeal welfare system we already have, and offset its net cost. Not just dollar for dollar, but also with every dollar moved, the administrative costs of those other programs will be eliminated. And as those tend to be conditions based, their overhead (in vetting and auditing) is much higher than a simple UBI program’s would be. The cost of even basic UBI is nevertheless quite high. And I think this is the only real criticism of it that holds up; like all the useful luxuries of civilization, a thing you should have, you only should buy only when you can afford it. We should as a community fund fire fighting, for example; but only if we as a community generate enough wealth that we can safely afford it. And so on down the line of every wise move civilizations have made.
It’d replace roughly $800 billion in other programs (from welfare to unemployment insurance), but it’d also replace about $800 billion in social security expenditures (since social security payouts wouldn’t add to UBI, but only make up any difference in average monthly benefits, which are already above $1,000) so UBI’s net cost in the U.S. would be “only” $1.4 trillion. But that’s without a national healthcare system, which we also should have, and also has to be paid for. That would cost roughly another 2 trillion dollars (after offsets and such are tabulated, e.g. such a system would replace medicare and medicaid altogether). So actually, we’re looking at $3.4 trillion a year in new spending, for a standard social safety net every other first world nation already has, and UBI.
If you calculate from IRS data, the entire collective incomes of the top 1% of earners (which means roughly everyone who earns more than half a million dollars a year) is just over 2 trillion dollars. If we surtaxed all income above half a million dollars at a flat rate of 50% (which means in addition to existing income taxes subject to deductibles and so on, etc.) we’d bring in new revenue of about $1 trillion dollars. And a national sales tax (VAT) of 15% could raise about 1.73 trillion a year. There are other successful nations that have just such a tax, so we know its effects on economies aren’t prohibitive. So those two revenue streams alone would make up all but $670 billion of the dollars needed. We already know improved enforcement of existing tax laws would bring in hundreds of billions a year, [about] $500 billion (according to a study I saw). That then leaves only $170 billion to account for. So the question then becomes, is it reasonable to gain the corresponding national benefits with a 60% “insane income” tax instead of only 50%, adding another $200 billion dollars to our national revenue?
The already existing budget shortfalls of almost a trillion dollars a year would gradually be made up if we returned to a pre-Reagan income tax regime (canceling all Republican tax cuts then and would also raise over $380 billion a year in current dollars), and greatly cut our spending on useless foreign wars (to the tune of $300+ billion a year) and corporate welfare (by the narrower definition, in adjusted dollars, gaining us some $70 billion), and enacted a reasonable drawdown in overall military spending (earning back $100+ billion).
It’d also replace roughly $100 billion dollars in federal employee costs by simply not duplicating UBI to federal employees and pensioners (i.e., if a federal retiree is receiving a pension of $1,500 a month, or a federal worker is receiving a salary of $1,500 a month, they would continue receiving ‘that’, instead of UBI). UBI would simply be part of the already agreed upon compensation package.
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