Some Silicon Valley leaders are convinced that the rise of artificial intelligence will generate significant wealth, even if it results in job losses for many. Their proposed remedy for the impending unemployment crisis is to use this newfound wealth from AI to fund a universal basic income for everyone.
This idea, while interesting, has significant flaws. However, perhaps it could be adjusted to address critical public policy challenges, such as financing for social security.
The notion of universal basic income isn’t new. Proposals have been around for years, often envisioning a government-funded redistribution of wealth where everyone receives a set amount monthly—typically between $500 and $1,000.
Notably, Twitter co-founder Jack Dorsey and Facebook co-founder Chris Hughes have invested their own resources into testing a limited universal basic income. They aren’t the only ones exploring this; Stanford University’s Basic Income Lab has numerous programs worldwide, mostly in the U.S. Some rely on donations, while others use taxpayer funding.
According to reports, OpenAI’s CEO Sam Altman supports UBI and conducted an experiment in 2016 that provided low-income individuals with $1,000 a month for three years. Elon Musk often speaks about a “universal high income,” arguing that AI can automate most production, allowing for shared revenues. Additionally, Andrew Yang proposed a $1,000 monthly UBI program during his unsuccessful presidential campaign in 2020.
What’s changed lately is that certain tech moguls now envision a future brimming with wealth attributable to AI. They suggest that this revenue could be redistributed, but how exactly remains uncertain. Typically, wealth is generated by those who possess it, and any redistribution relies on voluntary contributions unless the government enforces it. Even with a surge in federal revenue from AI, addressing the existing national debt of about $37 trillion and projected budget deficits is crucial.
Moreover, there are other complications. Research indicates that UBI may not significantly reduce income inequality and could lead to decreased work hours among recipients. Even some organizations that lean left are critical of it.
Finland’s recent UBI pilot initiative, where around 2,000 unemployed citizens received $634 monthly for two years, aimed to incentivize job seeking. However, reports question its effectiveness in helping people find work.
If the wealth that AI could generate is as significant as some believe, there might be alternative means to support both individuals and society. Instead of cash payments, perhaps a special individual retirement account system could be established for everyone. Workers would not contribute to these accounts during their working years, but instead, funding would come from anticipated AI-generated revenue.
Upon reaching retirement, individuals could choose between standard Social Security and these AI-funded retirement accounts. If adequately funded, these accounts might offer better options than traditional Social Security. Furthermore, the remaining balance could be passed on to their heirs.
Choosing this special retirement account would mean forgoing traditional Social Security claims, potentially reducing the burden on an already underfunded system. Those opting for traditional benefits would forfeit the special accounts.
This approach resembles a universal basic retirement plan rather than income, as individuals wouldn’t access these funds until retirement, eliminating any financial incentive to cease employment prematurely. It wouldn’t introduce new eligibility requirements since retirees would still have the choice between the two options.
AI may indeed generate substantial profits for certain individuals, but the expected large-scale revenue might not materialize as anticipated. That being said, if AI does create considerable wealth, leveraging it to improve retirement systems and bolster social security seems a more viable and beneficial alternative to simply offering universal basic income.
